Global Commodities Trading Group, Inc. et al v. Beneficio De Arroz Choloma, S.A. et al

Filing 99

ORDER signed by District Judge Troy L. Nunley on 12/28/2016 ORDERING that defendants' 94 Request for Reconsideration is DENIED AS MOOT. (Zignago, K.)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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GLOBAL COMMODITIES TRADING
GROUP, INC., and THE INSURANCE
COMPANY FOR THE STATE OF
PENNSYLVANIA, PHILADELPHIA,
Plaintiffs,

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ORDER DENYING REQUEST FOR
RECONSIDERATION

v.

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No. 2:16-cv-01045-TLN-CKD

BENEFICIO DE ARROZ CHOLOMA,
S.A., a Honduran Company, SADY
FARID ANDONIE REYES, an Individual,
JOYCE MARY JARUFE DOX, aka
JOYCE JARUFE DE ANDONIE, an
Individual, and DOES 1 TO 50, inclusive,

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Defendants.

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Plaintiffs Global Commodities Trading Group, Inc., and the Insurance Company for the

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State of Pennsylvania, Philadelphia (jointly “Plaintiffs”) filed the instant action on September 25,

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2014, in the Superior Court of the State of California, County of Placer. (ECF No. 1-1.) On May

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17, 2016, Defendants Beneficio De Arroz Choloma1, Sady Farid Andonie Reyes (“Andonie”),

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and Joyce Mary Jarufe Dox’s (“Jarufe”) (jointly “Defendants”) removed the action to this Court.

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(ECF No. 1.) On November 17, 2016, Magistrate Judge Carolyn K. Delaney issued an Order

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Defendant Beneficio De Arroz Choloma does not join in the instant request for reconsideration. All further
references to “Defendants” refer to Sady Farid Andonie Reyes and Joyce Mary Jarufe Dox.

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(ECF No. 92) granting in part and denying in part Defendants’ motion for a protective order

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staying merits discovery. Defendants subsequently filed a Request for Reconsideration of the

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Magistrate Judge’s Order (ECF No. 94). Plaintiffs filed an opposition. (ECF No. 97.) On

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December 19, 2016, Defendants filed a notice that they had complied with Magistrate Judge

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Delaney’s November 17 Order. However, neither Plaintiffs nor Defendants moved to strike the

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motion or request that the Court not rule on the merits of said motion. For that reason, the Court

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turns to the merits of the motion.

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Federal Rule of Civil Procedure 72(a) permits a party to file a request for reconsideration

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to a magistrate judge’s non-dispositive order within 14 days of being served with a copy of the

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order. “A district judge in the case must consider timely objections and modify or set aside any

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part of the order that is clearly erroneous or contrary to law.” Fed. R. Civ. P. 72(a). The “clearly

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erroneous” standard applies to the magistrate judge’s factual findings and requires the district

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court to overturn the magistrate judge’s ruling when the court is “left with the definite and firm

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conviction that a mistake has been committed.” Concrete Pipe & Prods. of Cal., Inc., v. Constrs.

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Laborers Pension Trust, 508 U.S. 602, 622 (1993). In contrast, a “contrary to law” standard is

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applied to the magistrate judge’s legal conclusions and amounts to a de novo review. United

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States v. McConney, 728 F. 2d 1195, 1200–01 (9th Cir. 1984) (en banc) abrogated on other

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grounds by Pierce v. Underwood, 487 U.S. 552 (1988).

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Defendants contend that Magistrate Judge Delaney erred in finding that Plaintiffs made a

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colorable showing of personal jurisdiction over Defendants such that they are subject to discovery

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proceedings. (ECF No. 94 at 10–12.) With respect to Defendant Andonie, Defendants assert that

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Magistrate Judge Delaney’s finding was based on the new claims in Plaintiffs’ proposed first

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amended complaint and that those claims cannot be a basis for jurisdiction because they are not

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yet at issue. (ECF No. 94 at 10–11.) Plaintiffs argue that Defendants’ cited authority is not

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conclusive. (ECF No. 97 at 3.) Plaintiffs further assert that even if the case law supported

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Defendants’ view, personal jurisdiction arises out of the claims in Plaintiffs’ Original Complaint.

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(ECF No. 97 at 3.) Plaintiffs allege that the Original Complaint asserts breach of contract claims

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against Andonie. A review of the evidence demonstrates that Plaintiffs proffered information
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showing that Andonie came to California on multiple occasions to pursue business between the

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companies, specifically in January 2012 to discuss the contracts at issue in the case. (ECF No. 66

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¶¶ 8, 12.) Based on this information, Magistrate Judge Delaney’s ruling could rely on the

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Original Complaint as a means of finding that a colorable showing of personal jurisdiction exists.

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Based on the foregoing, the Court cannot say that Magistrate Judge Delaney’s ruling was clearly

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erroneous as the Court is not left “with the definite and firm conviction” that she is mistaken.

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As to Defendant Jarufe, Defendants argue that Plaintiffs disavowed the testimony which

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demonstrated a colorable showing of personal jurisdiction over Jarufe. (ECF No. 94 at 11.)

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Defendants claim that a new declaration contradicts a previous declaration by the same individual

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and thus the Court should not rely on the declarations to determine if Plaintiffs make a colorable

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showing of personal jurisdiction over Jarufe. (ECF No. 94 at 12.) Plaintiffs contend that the

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declarations presented are not contradictory, but rather explain that Jarufe’s signature appears on

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a contract at issue in the case, but no one witnessed her sign it. (ECF No. 97 at 4–5.) Plaintiffs

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further argue that they did not learn that Jarufe’s signature may be a forgery until Defendants

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raised the issue in support of their motion to dismiss. (ECF No. 97 at 5.) The Ninth Circuit has

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held that “discovery should ordinarily be granted where pertinent facts bearing on the question of

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jurisdiction are controverted or where a more satisfactory showing of the facts is necessary.”

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Laub v. U.S. Dep’t of the Interior, 342 F. 3d 1080, 1093 (9th Cir. 2003). However, jurisdictional

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discovery is not appropriate “when it is clear that further discovery would not demonstrate facts

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sufficient to constitute a basis for jurisdiction,” Am. W. Airlines, Inc. v. GPA Group, Ltd., 877

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F.2d 793, 801 (9th Cir. 1989), or where the request for discovery is “based on little more than a

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hunch that it might yield jurisdictionally relevant facts.” Boschetto v. Hansing, 539 F. 3d 1011,

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1020 (9th Cir. 2008). Plaintiffs are correct that Defendants called into question the validity of

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Jarufe’s signature and in doing so raised the issue of whether personal jurisdiction exists. As

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such, the Court finds that Magistrate Judge Delaney’s order is not clearly erroneous since

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Plaintiffs are entitled to discovery to demonstrate whether personal jurisdiction exists with regard

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to Jarufe.

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Lastly, Defendants argue that permitting merit discovery on Request For Production
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(“RFP”) 8 and Interrogatories 12 and 13 is contrary to law. Defendants assert they have met this

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Court’s two-step analysis to determine when to issue a protective order if there are outstanding

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dispositive motions. This Court required that “the pending motion must be potentially dispositive

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of the entire case, or at least dispositive on the issue at which discovery is aimed. [Then], the

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court must determine whether the pending, potentially dispositive motion can be decided absent

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additional discovery. If the moving party satisfies these two prongs, the court may issue a

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protective order.” Mlejnecky v. Olympus Imaging America, Inc., No. 2:10–cv–02630 JAM KJN,

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2011 WL 489743, at *6 (E.D. Cal. Feb. 7, 2011). Defendants assert that Mlejnecky also finds that

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“[f]or the second prong, the Court is not to analyze whether the discovery is merely relevant to

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the potentially dispositive motion, but rather whether that motion can be decided absent

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discovery.” (ECF No. 94 at 13.) The Court does not agree with Defendants’ reading of

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Mlejnecky and cautions Defendants on what appears to be a misrepresentation before this Court.

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The court in Mlejnecky observed that the parties did not dispute that a protective order should not

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issue if the pending dispositive motion cannot be decided without the discovery at issue.

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Mlejnecky, 2011 WL 489743, at *6. However, the court went on to observe that the Ninth Circuit

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has found that a district court abuses its discretion when it prevents a party from conducting

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discovery that is relevant to the basis for the pending dispositive motion. Id. (citing Alaska Cargo

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Transport, Inc. v. Alaska R.R. Corp., 5 F. 3d 378, 383 (9th Cir. 1993)). Mlejnecky requires this

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Court to permit discovery that is relevant to an outstanding motion, even if the motion could be

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decided without it, because preventing discovery on information relevant to the potentially

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dispositive motion would be an abuse of this Court’s discretion.

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Defendants assert that Magistrate Judge Delany necessarily found that Defendants met the

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test because she denied all other merit-based discovery. (ECF No. 94 at 13.) However, the Court

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notes that Magistrate Judge Delaney could have determined — as this Court does — that the three

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discovery requests at issue are relevant to Defendants’ pending motion to dismiss. Because the

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Ninth Circuit in essence requires discovery where the information is relevant to a potentially

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dispositive motion, the Court cannot find that Magistrate Judge Delaney’s ruling to permit

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discovery on RFP 8 and Interrogatories 12 and 13 is contrary to law. Based on the foregoing
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analysis, Defendants’ request for reconsideration is denied on the merits.
As the Court previously stated, on December 19, 2016, Defendants filed a notice that they

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had complied with Magistrate Judge Delaney’s November 17 Order. Thus, Defendants have

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complied with the discovery order at issue in the request for reconsideration. In light of this, the

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also Court hereby DENIES Defendants’ Motion for Reconsideration (ECF No. 94) as moot.

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IT IS SO ORDERED.

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Dated: December 28, 2016

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Troy L. Nunley
United States District Judge

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