Hepler Broom, LLC

Responding to Personal Jurisdiction Discovery after Daimler

September 13, 2018

Are you at home in the jurisdiction where you are being sued? Did the cause of action arise from your contacts in that jurisdiction? If you are a corporate defendant in a lawsuit and neither applies to your company, you should probably at least raise an objection to Personal Jurisdiction in your initial response to preserve it, if for no other reason. Once you have done that, there is a decent chance the other side will serve you with discovery relating to Personal Jurisdiction. That discovery may be directly related to whether you are “at home” in the forum state, it may contain requests that are only arguably related to whether you conducted substantial enough business in the forum state to confer jurisdiction, and it may contain requests that are not at all related to the issue of Personal Jurisdiction. The question is do you need to respond to all, part, or none of it.

Illinois Supreme Court Rule 201(l) states that discovery relating to issues other than Personal Jurisdiction cannot be obtained except by agreement or court order. Generally, discovery may be obtained regarding information relevant to the subject matter of the pending action whether it relates to the claim or a defense. There are of course exceptions relating to privilege. One basis for not responding to discovery is to prevent unreasonable annoyance, expense, disadvantage, or oppression. (See Illinois Supreme Court Rule 201(c).) There may be a basis for limiting or denying discovery on issues relating to Personal Jurisdiction, even if a Personal Jurisdiction motion is being pursued.

The U.S. Supreme Court in Daimler AG v. Bauman, et al. 571 U.S. 117 (2014) held that a court may exercise jurisdiction over a foreign company when its affiliations are so continuous and systematic as to render it essentially at home in the forum state. The Court went on to state that the “paradigm” forums in which a corporate defendant is at home is where it is incorporated, and where it has its principal place of business. The Court goes on to state that in an “exceptional case” a corporate defendant’s operations in another forum may be so substantial and of such a nature so as to render the corporation “at home” in that state. Daimler 571 U.S. at 139. Similarly, the Illinois Supreme Court in Aspen American Insurance Company v. Interstate Warehousing Inc. 2017 IL 121181 held that general jurisdiction would be conferred only in an “exceptional case” if a corporate defendant was not incorporated nor had its principal place of business in the forum state. The court in Aspen held that having warehouses in Illinois falls short of showing Illinois was a “surrogate home” for the defendant.

Logically, it follows that a corporate defendant would not pursue an objection to jurisdiction if it is incorporated in the forum state or has its principal place of business in the forum state. Therefore, the discoverable inquiry would be whether an “exceptional case” exists where its contacts are so substantial as to make the forum state a surrogate home for the defendant. Discovery should be limited to determining if there are exceptional circumstances and what those “substantial contacts” are, if any.

Courts should be sympathetic to the argument that extensive discovery on issues regarding Personal Jurisdiction should not be required, particularly in a case where general jurisdiction is at issue. The argument is that once a defendant establishes it is not at home in the forum state as contemplated in Daimler there is no need for further inquiry unless there are allegations that the cause of action arose out of activities in the forum state. Broad discovery asking about specific activities in the forum state where there are no allegations that the injury/claim arose in that state should not be required. Those types of requests should be objected to as beyond the scope of the issue of Personal jurisdiction. In a case involving specific jurisdiction, discovery should be limited to whether the cause of action arose out of contacts in the forum state.

There may be strategic reasons for not pursuing an objection to Personal Jurisdiction. If you are pursuing the objection, you may be inclined to provide as much and as detailed information as possible, thinking it will help your motion. However, you do not want to get into the habit of disclosing non-relevant information, especially if it could be used against you in future litigation. Best practices are always to know your opponent, the judge and jurisdiction. Is it likely that opposing counsel will push for detailed responses and/or a deposition of a corporate representative on issues relating to Personal Jurisdiction? Is the judge likely to allow it, particularly if it is clear that the corporate defendant is not “at home” in that jurisdiction? Courts may not agree, but a good faith argument can be made.