Royal Ten Cate USA, Inc. et al v. TTAH Trust Company Limited et al

Filing 55

ORDER GRANTING 29 Motion to Conduct Jurisdictional Discovery. Signed by Judge Andrew W. Austin. (td)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
ROYAL TEN CATE USA, INC., et al.
v.
TTAH TRUST CO. LIMITED, et al.

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A-11-CA-1057 LY

ORDER
Before the Court are: Plaintiffs’ Motion to Conduct Jurisdictional Discovery (Clerk’s Doc.
No. 29) filed April 11, 2012; Defendant TT Investors’ Response to Plaintiffs’ Motion for
Jurisdictional Discovery (Clerk’s Doc. No. 47) filed May 7, 2012; and Plaintiffs’ Reply in Support
of Motion to Conduct Jurisdictional Discovery (Clerk’s Doc. No. 50) filed May 24, 2012. Having
reviewed the motion, response, reply, and entire case file, the Magistrate Judge enters the following
Order.
I. Background
This case was filed on December 9, 2011. Plaintiffs filed their Amended Complaint (Clerk’s
Doc. No. 39) on April 19, 2012. In their Amended Complaint, Plaintiffs, Royal Ten Cate USA, Inc.,
a Delaware corporation, Koninklijke Ten Cate N.V., a Dutch company, and Ten Cate UK Limited,
a British company (collectively, “TenCate”) allege a breach of certain warranties contained in a
confidential Acquisition Agreement entered into on February 4, 2009, by TenCate and Defendants
TTAH Limited1 f/k/a Tiger Turf Americas Holdings Limited (“TTAH”), a New Zealand company,
and TT Investors Limited f/k/a Tiger Turf International Limited (“TTI”), also a New Zealand
company (collectively, “Defendants”).

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In their Original Complaint, Plaintiffs named TTAH Trust Company Limited as a Defendant,
but substituted TTAH Limited as the proper party in their Amended Complaint.

Pursuant to the Acquisition Agreement, TenCate agreed to purchase from Defendants the
shares in four operating subsidiaries, including TigerSports Americas Inc., (“TigerSports”), a Texas
corporation with its principal place of business in Austin, Texas. Under the Acquisition Agreement,
Defendants gave a number of warranties pertaining to the business of TigerSports, including whether
the business faced any contingent liabilities. TenCate alleges that Defendants did not disclose
contingent liabilities that Defendants either knew or should have known about.
Defendants have moved to dismiss TenCate’s claims based upon FED . R. CIV . P. 12(b)(1) and
12(b)(2). Defendants assert that the Court cannot properly assert personal jurisdiction over the
defendants TTI and TTAH because they are foreign corporations with no business presence in Texas
and passive stockholders of TTAH. TenCate alleges that TTI and TTAH are subject to personal
jurisdiction in Texas under theories of both specific and general jurisdiction, and advance various
arguments in support of their claim that this Court has personal jurisdiction over Defendants based
upon minimum contacts with the forum. These arguments include: that the parties entered into a
contract contemplating performance in Texas; that the Acquisition Agreement required the parties
to undertake obligations in Texas related to the sale of TigerSports; that Defendants loaned money
to a Texas resident so that he could purchase a minority interest in TigerSports; that the Acquisition
Agreement required the Defendants to make certain warranties about TigerSports; and that the
Defendants asserted direct control over the business operations and affairs of TigerSports, making
them “alter egos” of TigerSports for jurisdictional purposes. Plaintiffs move to conduct limited
jurisdictional discovery in order to further investigate Defendants’ jurisdictional contacts with Texas.
Defendant TTI opposes the Motion claiming that the record is fully developed and that Plaintiffs

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cannot advance an “alter ego” theory of jurisdiction because they have failed to plead this theory in
their Amended Complaint and because TTI never owned stock in TigerSports America.
II. Analysis
A court may grant jurisdictional discovery when the plaintiff makes a preliminary showing
of jurisdiction. See Fielding v. Hubert Burda Media, Inc., 415 F.3d 419, 429 (5th Cir. 2005) (citing
Toys “R” Us, Inc. v. Step Two, S.A., 318 F.3d 446, 456 (3d Cir. 2003)). A preliminary showing is
less than a prima facie showing; if the plaintiff made a prima facie showing, jurisdictional discovery
would be unnecessary. When the lack of personal jurisdiction is clear, discovery is also unnecessary.
Kelly v. Syria Petroleum Dev. B. V., 213 F.3d 841, 855 (5th Cir. 2000) (internal quotation marks
omitted). “If the plaintiff presents factual allegations that suggest with reasonable particularity the
possible existence of the requisite contacts between the party and the forum state, the plaintiff's right
to conduct jurisdictional discovery should be sustained.” Eurofins Pharma U.S. Holdings v.
BioAlliance Pharma SA, 623 F.3d 147, 157 (3d Cir. 2010) (internal quotation marks and alterations
omitted).
After careful consideration of the record, the Court concludes that Plaintiffs have made a
sufficient preliminary showing of personal jurisdiction sufficient to allow jurisdictional discovery.
Plaintiffs have identified various issues relevant to personal jurisdiction on which they wish to
inquire further, and additional information would enhance the Court’s jurisdictional analysis. To
support the request to conduct jurisdictional discovery, the Plaintiffs offer evidence that the
Defendants share common ownership and that Graham Ellery served as managing director of TTI,
sole director and president of TTAH Limited, and president of TigerSports. Contrary to TTI’s
contentions, Plaintiffs are not required to allege an alter ego theory in their Complaint in order to
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advance an alter ego theory for jurisdictional purposes. Plaintiffs’ alter ego argument is not a claim
seeking to impose liability on TTI , but rather contends solely that the theory may be used to
establish jurisdiction over TTI. Also, TTI’s argument that TTI cannot be the alter ego of TSA
because it did not own stock in TSA is without merit. In the jurisdictional context, federal courts
“[g]enerally . . . demand proof of control by [one corporation] over the internal business operations
and affairs” of another corporation to make the other its agent or alter ego, and hence “fuse the two
together for jurisdictional purposes.” Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1160 (5th Cir.
1983) (collecting cases). In determining whether a plaintiff asserting personal jurisdiction has
overcome the presumption of corporate separateness, federal courts consider a variety of nonexhaustive factors, including common stock ownership. Id. However, the ultimate issue is one of
control, and stock ownership is merely a factor to be considered, and is not determinative.
III. Order
Accordingly, Plaintiffs’ Motion to Conduct Jurisdictional Discovery (Clerk’s Doc. No. 29)
is GRANTED. Plaintiffs shall have 60 days from the date of this order to propound to Defendants
ten (10) interrogatories and twenty (20) request for production and to take three (3) depositions of
no more than four hours each, all on issues relevant to the question of personal jurisdiction.
SIGNED this 22nd day of June, 2012.

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ANDREW W. AUSTIN
UNITED STATES MAGISTRATE JUDGE

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