Jurisdictional Discovery – Better than it Sounds!
By: Pat Wallace
The Supreme Court of the United States has taken a renewed interest in personal jurisdiction –see e.g., Bristol-Myers Squibb Co. v. Superior Court of California, 137 S.Ct. 1773 (2017), Daimler AG v. Bauman, 571 U.S. 117 (2014) – and defendants have likewise grown more bullish on filing challenges to personal jurisdiction at the pleading stage. While in some cases it is obvious who the appropriate parties are, many companies intentionally create opaque networks of entities that obscure which one is liable for the harm done to our clients. This article provides one tool for unearthing the proper defendant in a case: jurisdictional discovery.
Jurisdictional discovery is a limited form of discovery meant to uncover facts relevant to whether the court has jurisdiction over the parties named in a suit. Ultimately, it is the plaintiff’s burden of establishing personal jurisdiction, but a court has discretion to allow jurisdictional discovery. Rich v. KIS California, Inc., 121 F.R.D. 254, 259 (M.D.N.C. 1988) (citing Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981)) (“In determining a motion to dismiss for lack of personal jurisdiction, the Court may either postpone the decision and permit discovery, determine the motion on the basis of the pleadings and affidavits, or hold an evidentiary hearing.”); Laub v. U.S. Dep't of the Interior, 342 F.3d 1080, 1093 (9th Cir.2003) (“discovery should ordinarily be granted where pertinent facts bearing on the question of jurisdiction are controverted or where a more satisfactory showing of the facts is necessary.”).
One appropriate basis for seeking jurisdictional discovery is to cut through a confusing and complex corporate structure. See Wallace v. Greystar Real Estate Partners, LLC, 2019 WL 4305849 (M.D.N.C. Sep. 11, 2019) (granting jurisdictional discovery because “Defendants’ complex corporate structure and practice of using the term ‘Greystar’ to refer to multiple different entities make it difficult for an outsider, like Plaintiff, to determine which Greystar subsidiary is responsible for which actions.”). The failure to allow jurisdictional discovery when the need is substantiated may even be an abuse of discretion. Patent Rights Protection Group, LLC v. Video Gaming Technologies, Inc., 603 F.3d 1364, 1372 (Fed. Cir. 2010) (district court abused its discretion in denying plaintiff jurisdictional discovery).
While a plaintiff has the right to seek jurisdictional discovery, the plaintiff must not only establish a need for discovery but also demonstrate how the requested discovery will effectively resolve the jurisdictional issue in the plaintiff’s favor. Am. W. Airlines, Inc. v. GPA Grp., Ltd., 877 F.2d 793, 801 (9th Cir. 1989) (“it is difficult to see how receiving answers to the interrogatories would have provided AWA with information to aid its assertion of jurisdiction.”). Threadbare allegations and claims that a court has jurisdiction are not enough to convince a court to allow for jurisdictional discovery, especially when local practice defers discovery until after the resolution of Rule 12 motions. See Carefirst of Maryland, Inc. v. Carefirst Pregnancy Centers, Inc., 334 F.3d 390, 403 (4th Cir. 2003).
Therefore, the groundwork for establishing the need for jurisdictional discovery begins with the complaint. If you anticipate that personal jurisdiction will be an issue, it is imperative to set out the basis for why you have a good faith belief that certain entities are liable in the case. For example, a complaint can allege that entities use a single trade name and general website for its various lines of business without differentiation. In addition, any assertions made by a defendant in a personal jurisdiction challenge can be likewise contested through a competing declaration.
At this point, a legitimate question may arise: is jurisdictional discovery worth the effort? Of course, the only appropriate answer is an unsatisfactory one: maybe. But there are a number of benefits that jurisdictional discovery provides besides the obvious one: ensuring a responsible defendant remains in the case. Jurisdictional discovery allows for a more-informed framework to obtain merits discovery. For example, information gleaned from jurisdictional discovery can be used to understand the defendants’ document management system and the identification of key decision makers. In addition, defense counsel and witnesses are less likely to be enmeshed in their own strategy, thereby increasing the likelihood of obtaining candid and truthful answers. Though jurisdictional discovery requires committing time and resources to a (seemingly) non-merits issue, it can also provide an early window to the defendant of the plaintiff’s tenacity and creativeness.
Finally, how jurisdictional discovery is requested will often inform whether the request is granted. By communicating the limits imposed on jurisdictional discovery, a plaintiff can diminish the inevitable defense complaints (e.g., burdensomeness) and provide assurance to the court that the requested relief is relatively minor in scope. Practically speaking, it is important to communicate not just the number of interrogatories and requests of production sought, but also the number of depositions and the specific topics that discovery will encompass. Lastly, providing a truncated time to complete jurisdictional discovery will convey to the court that jurisdictional discovery will be quick and harmless.
Ultimately, the decision whether to pursue jurisdictional discovery is fact and case specific. However, there are a number of benefits to pursuing jurisdictional discovery that, if executed well, can better position a case toward a successful resolution.
Patrick Wallace
Whitfield Bryson LLP
Raleigh, NC
pat@whitefieldbryson.com
Patrick Wallace focuses on fighting for individuals and homeowners in complex litigation, including construction defect, mass tort and product liability. Patrick attended the University of Illinois at Urbana-Champaign where he received his B.A. in Philosophy. After his undergraduate studies, Patrick earned his law degree from Wake Forest University School of Law. While at Wake Forest, Patrick was a member of Moot Court, a regional finalist for the 2013 AAJ Trial Advocacy Competition and a semi-finalist for the 2014 AAJ Trial Advocacy Competition. In addition, Patrick was a part of Wake Forest’s Appellate Advocacy Clinic, where he briefed and argued a case before the Fourth Circuit Court of Appeals and helped prepare an argument before the United States Supreme Court.
Patrick also worked as a law clerk for the Land of Lincoln Legal Assistance Foundation and for the North Carolina Department of Justice. Upon graduating from Wake Forest, he worked as a law clerk to the Honorable Catharine R. Aron, Chief Judge of the United States Bankruptcy Court for the Middle District of North Carolina. Patrick joined Whitfield Bryson LLP in 2015.