In Reid v. Siniscalchi, C.A. No. 2874-VCN (May 25, 2012), the Court addressed a request for additional deposition discovery requested by the plaintiff to prove that the Court had jurisdiction over the defendants.
Whether the court had personal jurisdiction over certain corporate defendants (the “Entity Defendants”), and whether the Court should allow jurisdictional discovery of witnesses not under the control of the Entity Defendants.
The Court found that it did have personal jurisdiction over the Entity Defendants, and as a result it granted the plaintiffs motion, compelling the Entity Defendants to produce for deposition any of the proposed deponents they control. For any proposed deponent that the Entity Defendants did not control, the Entity Defendants were required to search for and produce any agreement governing the post-employment relationship between the Entity Defendants and any proposed deponent who is a former employee. The Court also ruled that it would issue letters of request for the plaintiff to pursue depositions abroad of those proposed deponents not under the Entity Defendants’ control.
Plaintiff Dennis A. Reid had filed an action alleging that the Entity Defendants conspired with Vincenzo Siniscalchi and Giorgio Capra to divest U.S. Russian Telecommunications, LLC of its share of the proceeds of a business venture undertaken with the Entity Defendants. The Entity Defendants filed a motion to dismiss which was granted. The Supreme Court later reversed and remanded the case for resolution of the issue of whether the Court of Chancery had personal jurisdiction over the Entity Defendants. Reid moved for entry of an order (1) compelling the production of certain witnesses for depositions; and (2) for the issuance of compulsory process sufficient to enable to deposition of witnesses not under the control of the Entity Defendants. Prior decisions in this case were highlighted on these pages here.
Because personal jurisdiction was being challenged, Reid had the burden of showing: (i) a basis for the Court’s exercise of personal jurisdiction; and (ii) that he was entitled to “reasonable discovery in aid of mounting such proof.” Under Court of Chancery Rule 26(b)(1), the Court can limit discovery if it determines that: (i) the discovery sought is unreasonably cumulative or duplicative; (ii) the party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or (iii) the discovery is unduly burdensome or expensive. The Entity Defendants contend that the proposed depositions meet all three of these criteria. In addition, they argue that Reid’s motion should be denied because the proposed depositions are not likely to lead to evidence relevant to personal jurisdiction, and that Reid failed to comply with the Court’s rules regarding compulsory service.
The Entity Defendants argued that the proposed depositions were unreasonably cumulative or duplicative because Reid had already obtained jurisdictional discovery that had not yielded evidence supporting his conspiracy theory of jurisdiction, and that some of the depositions may be cumulative or duplicative. However, the court found the proposed depositions were relevant to Reid’s conspiracy theory and that none of the 26(b)(1) discovery limitations were implicated.
The Court also rejected the Entity Defendants argument that Reid had ample opportunity to obtain the information sought in the proposed depositions, finding that Reid acted reasonably by waiting until he received the complete production of documents and responses to interrogatories from the Entity Defendants before seeking to depose witnesses because the deposition process in this case would be costly and complicated.
The Court also rejected the Entity Defendants’ argument that the discovery that was sought was unduly burdensome or expensive because most of those depositions would be taken abroad, subject to foreign law, and likely require translators. The Court noted that while the proposed depositions would likely be burdensome and expensive, Reid cannot be faulted for the fact that the people with knowledge reside overseas, and therefore the burden and expense are not unduly.
Finally, the Court rejected the Entity Defendants’ argument that the requested depositions would not lead to relevant information finding that either: (i) the proposed deponents were former employees; (ii) defendants in this case; or (iii) non-parties who were close to the project at issue in the litigation. The Court held that there was enough evidence to establish that if the alleged conspiracy existed, the testimony of these proposed deponents would be relevant, or reasonably calculated to lead to relevant evidence.
The Court did find that while Reid had technically failed to comply with the Court’s rules regarding compulsory service because he had not yet obtained letters of request related to the proposed depositions pursuant to Court of Chancery Rule 28(b), the Court stated that it understood the form of relief that Reid was seeking was that the Court issue such letters of request (described as “perhaps styled as letters rogatory”) to enable him to pursue those depositions as the precise thing that the Entity Defendants claim he lacked, making the argument unavailing. Thus, the Court stated that it would issue letters of request for the proposed deponents.
This summary was prepared with the assistance of Laura Bottaro, a summer intern at Eckert Seamans.