In re Herald, Primeo and Thema Funds Securities Litigation

Filing 313

ORDER: that plaintiffs' application to compel discovery is denied. (Signed by Magistrate Judge Henry B. Pitman on 9/7/2011) (ft)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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In re HERALD, PRIMEO and THEMA
FUNDS SECURITIES LITIGATION,

:
ORDER
:

This Document Relates to:
:
ALL ACTIONS.
:
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09 Civ. 289 (RMB)(HBP)
(Consolidated with
09 Civ. 2032 and
09 Civ. 2558)

PITMAN, United States Magistrate Judge:

By letter dated August 18, 2011, plaintiffs seek to
compel discovery with respect to the motion of certain defendants
that (1) the Court lacks in personam jurisdiction over certain
defendants and (2) the action should be dismissed pursuant to the
doctrine of forum non conveniens.

Oral argument on plaintiffs'

application was held on September 6, 2011, and at the conclusion
of the argument, I denied plaintiffs' application for discovery.
I write to supplement the reasons stated on the record for
denying plaintiffs' application.
Plaintiffs' application is prompted by a motion to
dismiss made by defendants on June 29, 2011.

27 of the 48

defendants seek dismissal of the pending complaint for lack of in
personam jurisdiction.

43 of the defendants seek dismissal on

the ground of forum non conveniens.

With a few exceptions, most

of the defendants who assert lack of in personam jurisdiction

challenge only the sufficiency -- and not the accuracy -- of
plaintiffs' jurisdictional allegations.

A few of the defendants

have challenged plaintiffs' specific factual allegations and have
submitted affidavits or affirmations averring that putative trips
to New York never occurred or that purported New York offices
were not the offices of a defendant in this action.
Plaintiffs' discovery requests, which consist of five
interrogatories and one document request, are extremely broad and
untethered to the facts relevant to either in personam jurisdiction or the doctrine of forum non conveniens.

Specifically,

plaintiffs' interrogatories seek the following:
1. Identify all documents showing your or any of
your representatives' communications in or originating
from the United States and/or the State of New York
with any person related to Madoff or BMIS, whether
directly or indirectly.
2. Identify all documents showing your or any of
your representatives' communications with BMIS and/or
Madoff, whether directly or indirectly.
3. Identify all documents showing your or your
representatives communications with any defendant in
this action concerning BMIS or Madoff.
4. Identify all documents showing your or your
representatives' communications with any person related
to BMIS or Madoff.
5. Identify all persons who were consulted,
directly or indirectly, in order to respond to these
interrogatories.

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(Ex. C to Plaintiffs' Letter to the Court, dated August 18,
2011).

Plaintiffs' single document seeks "all documents identi-

fied in Interrogatories No. 1 through No. 4" (Ex. D to Plaintiffs' Letter to the Court, dated August 18, 2011).

Plaintiffs

have not served any discovery requests aimed at the specific
factual averments made by certain of the defendants in support of
their motion.
The standards applicable to a motion seeking discovery
on the issue of in personam jurisdiction were set forth by the
Honorable Gerard E. Lynch, then District, now Circuit Judge, in
Ayyash v. Bank Al-Madina, 04 Civ. 9201 (GEL), 2006 WL 587342 at
*5 (S.D.N.Y. Mar. 9, 2006):
"District courts have considerable discretion in determining how best to handle jurisdictional questions,"
Best Van Lines, Inc. v. Walker, No. 03 Civ. 6585, 2004
WL 9642009, at *3 (S.D.N.Y. May 5, 2004), citing CutCo
Indus. v. Naughton, 806 F.2d 361, 364-65 (2d Cir.
1986), and "generally" may permit a plaintiff to conduct "limited discovery with respect to the jurisdictional issue." Filius v. Lot Polish Airlines, 907 F.2d
1328, 1332 (2d Cir.1990); see also APWU v. Potter, 343
F.3d 619, 627 (2d Cir. 2003) (cautioning that "a court
should take care to give the plaintiff ample opportunity to secure and present evidence relevant to the
existence of jurisdiction" (quoting Phoenix Consulting,
Inc. v. Republic of Angola, 216 F.3d 36, 40 (D.C. Cir.
2000)). Such discovery has typically been authorized
where the plaintiff has made "a threshold showing that
there is some basis for the assertion of jurisdiction[,] facts that would support a colorable claim of
jurisdiction." Daval Steel Prods, v. M.V. Juraj
Dalmatinac, 718 F. Supp. 159, 162 (S.D.N.Y. 1989); see
also Strategem Dev. Corp. v. Heron Int'l N.V., 153
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F.R.D. 535, 547-48 (S.D.N.Y. 1994) (authorizing jurisdictional discovery where plaintiff "made a sufficient
start" toward establishing jurisdiction, though not a
prima facie showing).
A court does not abuse its discretion by denying jurisdictional
discovery to a plaintiff who has failed to make a prima facie
showing of in personam jurisdiction.

Best Van Lines, Inc. v.

Walker, 490 F.3d 239, 255 (2d Cir. 2007); Girl Scouts of the U.S.
v. Steir, 102 F. App'x 217, 221 (2d Cir. 2004); Jazini v. Nissan
Motor Corp., 148 F.3d 181, 186 (2d Cir. 1998).

However, a prima

facie showing of in personam jurisdiction is not a sine qua non
to jurisdictional discovery.

Ehrenfeld v. Mahfouz, 489 F.3d 542,

550 n.6 (2d Cir. 2007); Ayyash v. Bank Al-Madina, supra, 2006 WL
587342 at *5 n.7.
When a court decides a motion to dismiss for lack of in
personam jurisdiction prior to any discovery, a plaintiff's
burden is not unduly heavy.
Prior to discovery or an evidentiary hearing, plaintiff
need only make a prima facie showing of jurisdiction
through pleadings, affidavits, and supporting materials. DiStefano v. Carozzi N. Am. Inc., 286 F.3d 81, 84
(2d Cir. 2001); Whitaker v. Am. Telecasting, Inc., 261
F.3d 196, 208 (2d Cir. 2001); Jazini v. Nissan Motor
Co., Ltd., 148 F.3d 181, 184 (2d Cir. 1998).
For purposes of a Rule 12(b)(2) motion, the Court
must accept the well-pleaded factual allegations contained in plaintiffs complaint as true and resolve all
factual disputes in plaintiff's favor. Thomas v.
Ashcroft, 470 F.3d 491, 495 (2d Cir. 2006). Specifically, all allegations are to be construed in a light
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most favorable to the plaintiff and all factual disputes resolved in plaintiff's favor, regardless of
controverting evidence submitted by the defendant.
A.I. Trade Finance, Inc. v. Petra Bank, 989 F.2d 76,
79–80 (2d Cir. 1993). See also Hoffritz for Cutlery,
Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985)
(when considering motion to dismiss for lack of personal jurisdiction, court must construe the pleadings
liberally for the benefit of the plaintiffs); CutCo
Indus., Inc., 806 F.2d at 365 (court must resolve all
factual disputes regarding personal jurisdiction in
plaintiff's favor).
WorldCare Ltd. Corp. v. World Ins. Co., 767 F. Supp. 2d 341, 34849 (D. Conn. 2011) (Haight, D.J.); accord Zibiz Corp. v. FCN
Tech. Solutions, CV-10-1575 (SJF)(WDW), 2011 WL 837757 at *5
(E.D.N.Y. Mar. 2, 2011).
In light of the foregoing standards, there are several
problems with the discovery sought to be propounded by plaintiffs.

First, the vast majority of defendants have not raised

any specific factual issues with respect to plaintiffs' jurisdictional allegations and contend only that plaintiffs' jurisdictional allegations are insufficient.

With respect to these

defendants, there is no factual issue to be resolved concerning
in personam jurisdiction, and, therefore, jurisdictional discovery is not necessary.

Nationwide Mut. Ins. Co. v. Morning Sun

Bus Co., 10–CV–1777 (ADS)(AKT), 2011 WL 381612 at *10 (E.D.N.Y.
Feb. 2, 2011) ("A plaintiff is not entitled to jurisdictional
discovery simply to augment an inadequate pleading if the defen-

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dant merely challenges the legal sufficiency of the jurisdictional allegations in the complaint, and does not place the
factual basis for personal jurisdiction in issue." (inner quotations omitted)); accord Philip Morris USA Inc. v. Veles Ltd., 06
Civ. 2988 (GBD), 2007 WL 725412 at *3-*5 (S.D.N.Y. Mar. 12, 2007)
(Daniels, D.J.); Langenberg v. Sofair, 03 Civ. 8339 (KMK), 2006
WL 2628348 at *6-*7 (S.D.N.Y. Sept. 11, 2006) (Karas, D.J.).
Second, although plaintiffs offer some specific contentions concerning the contacts of some defendants with New York,
it has not offered specific contentions tending to show the
connections of all defendants with New York.

Nevertheless,

plaintiffs seek the same broad discovery from all defendants.
Thus, even under the more permissive standard set forth in Ayyash
v. Bank Al-Madina, supra, 2006 WL 587342 at *5-*6 plaintiffs have
not shown a justification for the discovery it seeks from each
defendant.
Third, the discovery that plaintiffs seek is plainly
more aimed at the merits of the case than the issue of in personam jurisdiction.

Jurisdictional discovery should necessarily

be aimed at a defendant's contacts with the forum state.

Plain-

tiffs are not seeking information concerning matters such as the
defendants' visits to New York, assets in New York or volume of
business transacted in New York.

Instead, plaintiffs have served
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broad interrogatories and document requests which, on their face,
have more to do with the merits of the case than the jurisdictional issues.

Plaintiffs' discovery requests seek, in principal

part, information concerning all communications between defendants and Madoff and his related entities without regard to the
location of the parties to the communications.

Although paper or

electronic communications with a party in New York may, under
some circumstances, support a finding of in personam jurisdiction, see generally Fischbarg v. Doucet, 9 N.Y.3d 375, 880 N.E.2d
22, 849 N.Y.S.2d 501 (2007); Deutsche Bank Secs., Inc. v. Montana
Bd. of Inv., 7 N.Y.3d 65, 850 N.E.2d 1140, 818 N.Y.S.2d 164
(2006), plaintiffs' requests are vastly overbroad because they
are not limited to communications in which one of the parties was
located in New York.
Finally, to the extent that plaintiffs attempt to
justify their discovery requests as being relevant to the motion
of certain defendants to dismiss on the ground of forum non
conveniens, their argument also fails.

None of the discovery

requests relate to the issues that are material to a motion to
dismiss on the ground of forum non conveniens.

See Iragorri v.

United Techs. Corp., 274 F.3d 65, 73-75 (2d Cir. 2001) (en banc)
(identifying factors relevant to forum non conveniens motion).
In addition, the "well established practice" in this Circuit is
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to decide forum non conveniens motions on the basis of affidavits
or declarations alone.

Alcoa S.S. Co. v. M/V Nordic Regent, 654

F.2d 147, 158-59 (2d Cir. 1980) (en banc); see also, e.g.,
Transunion Corp. v. PepsiCo, Inc., 811 F.2d 127, 130 (2d Cir.
1987) ("Motions to dismiss for forum non conveniens may be
decided on the basis of affidavits. . . . Indeed, as the Court
noted in Piper Aircraft, 454 U.S. at 258, 102 S.Ct. at 267,
'[r]equiring extensive investigation would defeat the purpose of
[the] motion.'" (inner citations omitted)); Fitzgerald v. Texaco,
Inc., 521 F.2d 448, 451 n.3 (2d Cir. 1975) ("[A] motion to
dismiss for forum non conveniens does not call for a detailed
development of the entire case; rather discovery is limited to
the location of important sources of proof. . . . Nor did the
district court in this case abuse its discretion, on this motion
to dismiss for forum non conveniens, in failing to require
detailed disclosure by the defendants of the names of their
proposed witnesses and the substance of their testimony.").

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Accordingly, for all the foregoing reasons, plaintiffs'
application to compel discovery is denied.
Dated:

New York, New York
September 7, 2011

SO ORDERED

HENRY PI
United States Magistrate Judge
Copies transmitted to:
All Counsel

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