On September 18, 2017, the United States District Court for the District of New Jersey granted a motion to dismiss for improper venue in Telebrands Corp. v. Illinois Industrial Tool, Inc.,No. 17-cv-3411 (D.N.J. Sept. 18, 2017) (slip op.). In granting the motion, the court denied the plaintiff’s request for venue-related discovery. The court held that allowing discovery would be inappropriate where the plaintiff had no evidence that venue was proper and had made only generalized allegations of venue in the complaint. This raises the more general question: what, if anything, must a plaintiff show in order to obtain venuerelated discovery? As noted below, courts appear to be trending toward requiring some preliminary showing that venue may be proper before allowing discovery on the issue.
The United States District Court for the District of Delaware issued two decisions this month that illustrate when venue-related discovery may be appropriate. In Boston Scientific Corp. v. Cook Group Inc., 15-cv- 980 (D. Del. Sept. 11, 2017) (slip. op.), the court denied the plaintiff’s request for venue related discovery. The court held that such discovery is only proper if the plaintiff can “state a non-frivolous basis for venue and do so with reasonable particularity.” Otherwise, allowing discovery would be the equivalent of permitting a “fishing expedition.” The court found that the plaintiff, Boston Scientific, failed to meet this standard. In particular, while the defendant had provided declarations showing that venue was improper in Delaware, Boston Scientific had failed to “identify any reason to doubt the veracity of the . . . declarations.”
On the same day as the Boston Scientific decision, the District of Delaware allowed discovery in BristolMyers Squibb Co. v. Mylan Pharmaceuticals Inc., No. 17-cv-379 (D. Del. Sept. 11, 2017) (slip op.). In Bristol Myers Squibb, the court held that plaintiff had articulated a “non-frivolous” and “reasonably particul[ar]” basis for believing venue may be proper in Delaware: (i) the defendant, Mylan, was a member of a corporate family with 40 Delaware entities; and (ii) Mylan was distributing products to customers in Delaware. The court noted that allowing discovery would assist in “understanding the relationship among the 40 Delaware Mylan entities” and also “the way that the [generic drug] industry operates” in Delaware. (For more on the Boston Scientific and Bristol-Myers Squib Co. decisions, see our articles here and here).
Other courts have seemingly been more lenient in granting venue-related discovery. For example, the Southern District of New York granted discovery in Regenlab USA LLC v. Estar Techs. LTD et al., No. 16- cv-08771 (S.D.N.Y. Aug. 17, 2017) (slip op.) despite the defendant’s assertion that they had no offices, real estate, phone number, or secretarial services in New York. The court explained that given the lack of binding precedent over what constitutes a “regular and established place of business, “some additional factual development would be useful.” The rationale in Regenlab would seem to permit the very type of “fishing expedition” that the District Court found inappropriate in Boston Scientific.
As with many venue-related issues post-TC Heartland, the availably of discovery is an evolving issue. Based on the decisions discussed above, a plaintiff is likely not entitled to venue-related discovery as a matter of right when facing a motion to dismiss. At the same time, if the plaintiff is able to articulate the types of evidence it anticipates finding, courts seem willing to allow discovery.