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Posted: November 23, 2013

Jurisdictional Claims Survive But Only Jurisdictional Discovery Allowed

On November 20, 2013, the Second Department issued a decision in Goel v. Ramachandran, 2013 N.Y. Slip Op. 07708, illustrating the liberal standard applied to jurisdictional claims prior to discovery.

In Goel, the plaintiffs alleged that there was jurisdiction over a foreign defendant because it was a “mere department of” its US parent. The Second Department affirmed the denial of the foreign defendant’s motion to dismiss on jurisdictional grounds, noting that while in general,

plaintiffs need only make a prima facie showing that . . .  jurisdiction exists, [where] plaintiffs oppose a motion to dismiss . . . on the ground that discovery on the issue of personal jurisdiction is necessary, plaintiffs need not make a prima facie showing of jurisdiction, but instead need only demonstrate that facts may exist to exercise personal jurisdiction over the defendant. If it appears from affidavits submitted in opposition to the motion that facts essential to justify opposition may exist but cannot then be stated, a court may, in the exercise of its discretion, postpone resolution of the issue of personal jurisdiction.

(Internal quotations and citations omitted) (emphasis added).

However, the Second Department reversed that part of the trial court’s decision that ordered the case to move forward and provided that the defendant could assert its jurisdictional defense at trial. The Second Department held that

[b]y permitting the case to move forward in such a manner, the Supreme Court exposed [the foreign defendant] to the full panoply of burdens inherent in defending this case, despite the fact that the court may not have jurisdiction over it. Under the circumstances of this case, the Supreme Court should have denied that branch of the . . . motion without prejudice to renewal upon the completion of limited discovery confined to the issue of whether [the foreign defendant] was a mere department of [the US defendant].

(Internal quotations and citations omitted).

There is something for everyone in Goel. For plaintiffs, it shows that without access to the jurisdictional facts, a plaintiff has to make only a non-frivolous factual showing for jurisdictional claims to survive. For defendants, it shows that where a plaintiff has not met its burden of making a prima facie showing of jurisdiction, a court should, where practical, limit discovery against the defendant to that necessary to show whether there is jurisdiction.

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