Getty Images (US), Inc. v. Stability AI, Inc.

Filing 27

Letter to The Honorable Gregory B. Williams from Michael J. Flynn regarding discovery dispute - re 25 Letter. (Flynn, Michael)

Case 1:23-cv-00135-GBW Document 27 Filed 07/20/23 Page 1 of 5 PageID #: 2196

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
GETTY IMAGES (US), INC.,
Plaintiff,
v.
STABILITY AI, LTD. and
STABILITY AI, INC.,
Defendants.

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C.A. No. 23-135 (GBW)

DEFENDANTS’ ANSWERING LETTER BRIEF REGARDING DISCOVERY DISPUTE

OF COUNSEL:
Nicole M. Jantzi
Paul M. Schoenhard
FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON LLP
801 17th Street, NW
Washington, DC 20006
[phone]
Amir R. Ghavi
Michael C. Keats
Nicholas D. Winkley
FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON LLP
One New York Plaza
New York, NY 10004
[phone]
July 20, 2023

MORRIS, NICHOLS, ARSHT & TUNNELL LLP
Jack B. Blumenfeld (#1014)
Michael J. Flynn (#5333)
1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19801
[phone]
[e-mail]
[e-mail]
Attorneys for Defendants Stability AI, Inc. and
Stability AI Ltd.

Case 1:23-cv-00135-GBW Document 27 Filed 07/20/23 Page 2 of 5 PageID #: 2197

Dear Judge Williams,
I write on behalf of Stability AI, Inc. and Stability AI Ltd. (“Defendants”), in response to
Getty Images (US), Inc.’s (“Getty”) July 18, 2023 letter (D.I. 25).
Getty is not entitled to the jurisdictional discovery it seeks. As Defendants set forth in their
Motion to Dismiss (D.I. 16), Getty has failed to plead facts sufficient to establish a prima facie
case for this Court’s exercise of personal jurisdiction over Stability AI Ltd. Nonetheless,
Defendants have spent considerable time and resources engaging in good-faith discussions with
Getty and have provided Getty with a more-than-reasonable scope of discovery, with the hope of
avoiding the need for the Court’s intervention. Now, Getty claims that it is entitled to more. It is
not. Jurisdictional discovery (to the extent it was ever warranted at all) is not an excuse for Getty
to conduct a fishing expedition into Defendants’ operations. Jurisdictional discovery is over.
It is well-established in this Circuit that a plaintiff’s right to jurisdictional discovery “is not
unconditional.” Aldossari on Behalf of Aldossari v. Ripp, 49 F.4th 236, 259 (3d Cir. 2022). Rather,
jurisdictional discovery is only appropriate where a plaintiff has pled “factual allegations that
suggest ‘with reasonable particularity’ the possible existence of the requisite ‘contacts between the
party and the forum state.’” Id. (citation omitted). Jurisdictional discovery is appropriately denied
where “even accepting [a plaintiff’s] allegations in the complaint as true, they fail to establish a
prima facie case of personal jurisdiction.” Eurofins Pharma US Holdings v. BioAlliance Pharma
SA, 623 F.3d 147, 156–57 (3d Cir. 2010).
Getty’s complaint does not meet this standard, and thus no jurisdictional discovery is
warranted. Apparently recognizing this Court’s lack of personal jurisdiction over Stability AI Ltd.,
Getty filed its initial complaint on February 3, 2023, without naming Stability AI Ltd. as a party,
despite referencing it as “affiliated” with Stability AI, Inc. (D.I. 1 at 1 & ¶ 14.) It was only after
Stability AI, Inc. informed Getty’s counsel that it intended to move to dismiss on the grounds that
Stability AI Ltd. is a necessary and indispensable party that Getty named Stability AI Ltd. as a
defendant. But Getty’s Amended Complaint (D.I. 13) does not contain any allegations that, if true,
would support an exercise of personal jurisdiction over Stability AI Ltd.
With respect to Delaware’s long-arm statute, Getty did not even attempt to plead any
statutory basis for jurisdiction. Getty does not claim that the purportedly infringing acts relating
to the training of Stable Diffusion occurred in Delaware; rather, Getty alleges that such training
took place outside the United States. (D.I. 13 ¶¶ 48, 18.) Getty likewise failed to plead any basis
for jurisdiction under the federal long-arm statute, which requires that the plaintiff demonstrate
that the defendant is not subject to jurisdiction in any state—including Delaware. Fed. R. Civ. P.
4(k)(2). And Getty does not allege that Stability AI Ltd. is “at home” in Delaware and is thus
subject to general jurisdiction, or sufficiently allege that Stability AI Ltd. has purposefully directed
activities at residents of Delaware and is thus subject to specific jurisdiction. Getty has thus failed
to provide any showing—let alone the required showing with reasonable particularity—that
Stability AI Ltd. is amenable to suit in Delaware. See Hansen v. Neumueller GmbH, 163 F.R.D.
471, 475 (D. Del. 1995) (“[A] court cannot permit [jurisdictional] discovery as a matter of course
simply because a plaintiff has named a particular party as a defendant. The court must be satisfied
that there is some indication that this particular defendant is amenable to suit in this forum.”).
Apparently realizing that Stability AI Ltd. lacks sufficient contacts with Delaware to
establish personal jurisdiction, Getty attempts to rely on the existence of Stability AI, Inc., Stability

Case 1:23-cv-00135-GBW Document 27 Filed 07/20/23 Page 3 of 5 PageID #: 2198
The Honorable Gregory B. Williams
July 20, 2023

Page 2

AI Ltd.’s Delaware-incorporated parent company under an “alter ego” theory. But Getty’s
unsupported allegations of alter ego cannot serve as a basis for jurisdictional discovery. See
Telcordia Techs., Inc. v. Alcatel S.A., No. 04-874 GMS, 2005 WL 1268061, at *9 (D. Del. May
27, 2005) (“[A] plaintiff may not rely on the bare allegations in his complaint to warrant further
discovery.”); Fid. Nat’l Info. Servs., Inc. v. Plano Encryption Techs., LLC, No. 15-777-LPS-CJB,
2016 WL 1650763, at *5 (D. Del. Apr. 25, 2016) (“FIS does nothing more than simply recite the
factors relevant to the test for assessing whether two entities are alter egos, and then state that ‘on
information and belief’ the factors are at play here. That does not suggest facts that might support
FIS’s claim.”), adopted, 2016 WL 11695472 (D. Del. June 23, 2016).
In any event, Getty’s alter ego allegations, “even if found, would be unlikely to support an
exercise of personal jurisdiction over Defendants.” In re Mobile Telecomms Techs., LLC,
243 F. Supp. 3d 545, 553 (D. Del. 2017) (denying jurisdictional discovery based on alter-ego
allegations); see also Pearson v. Component Tech. Corp., 247 F.3d 471, 485 (3d Cir. 2001) (noting
that the alter ego standard is “notoriously difficult for plaintiffs to meet.”). That is because Getty’s
principal allegations—that the Defendants have overlapping directors and share a principal place
of business and website—are inherent in any parent-subsidiary relationship and do not establish
that the companies are alter egos. See Westfield Ins. Co. v. Interline Brands, Inc., 2013 WL
6816173, at *23 (D.N.J. Dec. 20, 2013) (denying jurisdictional discovery where plaintiff’s
argument “[a]t most . . . suggest[ed] a parent-subsidiary relationship . . .. Even if the corporate
boards . . . were identical, which they are not, this would not establish an alter ego relationship.”).
What’s more, Getty made no attempt to allege any element of fraud or injustice in Defendants’ use
of the corporate form, which dooms its request for jurisdictional discovery. See Fid. Nat’l Info.
Servs., Inc., 2016 WL 1650763, at *7 (“Yet the Court here cannot see any support for the claim
that inequity or some other injustice is at play, sufficient to put [Plaintiff’s] charges on this score
beyond the realm of the ‘clearly frivolous.’”); see also LivePerson, Inc. v. NextCard, LLC, No. 08062-GMS, 2009 WL 742617, at *5–6 (D. Del. Mar. 20, 2009). Accordingly, jurisdictional
discovery is not warranted in this case.
Nonetheless, and without seeking the Court’s leave to do so, Getty served Defendants with
no less than 29 interrogatories (not counting discrete subparts) and 66 requests for the production
of documents. With no obligation to respond, but with the goal of resolving their disputes without
the need for the Court’s intervention, Defendants voluntarily provided Getty with detailed
information regarding:
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the relationships of all entities owned in whole or in part by Stability AI, Inc.;
the Defendants’ respective incorporation and corporate governance;
their principal places of business and office locations;
the identities of their officers and directors;
the separate bank accounts each maintains; and
Stability AI Ltd.’s operations, including:
o the 2022 revenues it realized on a U.S. state-by-state basis;
o the locations of its U.S.-based computing systems;
o the contracts into which it has entered with U.S.-based counterparties;
o the U.S.-based individuals it has employed (directly or indirectly); and
o its specific contacts with the State of Delaware.

Case 1:23-cv-00135-GBW Document 27 Filed 07/20/23 Page 4 of 5 PageID #: 2199
The Honorable Gregory B. Williams
July 20, 2023

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And, although Getty did not request (much less notice) any deposition(s), Defendants repeatedly
offered their declarant, Peter O’Donoghue, for deposition, and even reserved a date for such a
deposition within the agreed-upon discovery period. (Exhibiting a complete lack of regard for Mr.
O’Donoghue’s and counsel’s schedules, Getty refused to accept or decline the offered deposition.)
Now, because the information Defendants have provided clearly establishes what they
argued in their Motion to Dismiss or Transfer—that this Court cannot exercise personal
jurisdiction over Stability AI Ltd.—Getty seeks to impose additional costs and burdens on
Defendants in the hope it will uncover some information that might salvage its theory. For
example, Getty repeatedly states that it seeks additional discovery to “test” the statements made in
Mr. O’Donoghue’s declaration. But Mr. O’Donoghue’s Declaration may be relied upon by courts
in “any matter” requiring an evidentiary basis. 28 U.S.C. § 1746. And Getty refused to proceed
with a deposition of Mr. O’Donoghue during the parties’ agreed-upon discovery period,
notwithstanding Defendants’ repeated suggestion that he could likely provide whatever
clarification Getty legitimately needed. Indeed, Getty did not request (much less notice) any
deposition(s) during the parties’ agreed-upon discovery period. Accordingly, Getty’s request that
the Court compel still-unspecified deposition(s) that were never previously noticed should not be
entertained—especially in view of the significant cost and burden associated with taking a
deposition in the United Kingdom (particularly during the summer holiday months).
Nor should Defendants be forced to bear the burden of producing the additional
information Getty seeks. For example, Getty’s demand for transaction-level financial detail
between Stability AI, Inc. and Stability AI Ltd. is clearly unreasonable, both in terms of the burden
it would impose and in terms of its limited relevance, as there is no reason separate corporate
entities cannot engage in as many financial transactions as they wish without collapsing the
corporate form. Indeed, much of the information Getty continues to seek is simply not relevant to
Getty’s theories of personal jurisdiction, which primarily concern whether the distinction between
the Stability Defendants “is little more than a legal fiction,” not simply whether resources were
ever transferred between the two. Pearson, 247 F.3d at 485. And despite clear law to the contrary,
Getty seeks to have Stability AI Ltd. undertake a 50-state survey of its users based on nothing
more than the operation of a website that is accessible worldwide. See inno360, Inc. v. Zakta,
LLC, 50 F. Supp. 3d 587, 597 (D. Del. 2014) (holding that evidence “of defendant’s website to
show that Delaware residents could, along with the rest of the internet-using world, access
defendant’s website . . . is insufficient to support a request for jurisdictional discovery”);
Registered Agents, Ltd. v. Registered Agent, Inc., 880 F. Supp. 2d 541, 548 (D. Del. 2012) (same).
Finally, Getty’s unreasonableness is further exemplified by it seeking a 7-day deadline for
Stability AI Ltd.—a foreign defendant over which personal jurisdiction has not been established—
to produce additional information and a 10-day deadline to produce a witness for deposition in the
midst of the summer holidays. See Telcordia Techs., Inc., 2005 WL 1268061, at *8 (“[T]he United
States Supreme Court has held that courts should ‘exercise special vigilance to protect foreign
litigants from the danger that unnecessary, or unduly burdensome, discovery may place [on]
them.’”) (citing Societe Nationale Industrielle Aerospatiale v. United States District Court for
Southern Dist. Iowa, 482 U.S. 522, 546 (1987)). Accordingly, Defendants respectfully request
that the Court deny Getty’s requests for an order compelling additional jurisdictional discovery.

Case 1:23-cv-00135-GBW Document 27 Filed 07/20/23 Page 5 of 5 PageID #: 2200
The Honorable Gregory B. Williams
July 20, 2023

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Respectfully,

Michael J. Flynn (#5333)
Counsel for Defendants Stability AI, Inc.
and Stability AI Ltd.
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