Jurisdiction at Issue in First Order of Alleged eDiscovery Mismanagement Case

25 Sep 2013

In the background to the case Kroll Ontrack, Inc. v. Devon IT v. Mitts Law, LLC, Civil No. 13-302(DWF/JJG)(D. Minn. July 26, 2013), Devon IT hired Mitts Law (“Mitts”, formerly Mitts Milavec) as legal counsel to file a case against IBM in Pennsylvania. Devon alleged Mitts had represented the worth of the lawsuit to be in the $100 million range. Mitts encouraged Devon to hire electronic discovery provider Kroll Ontrack, based in Minnesota. Devon did so, and Mitts was the main contact and supervisor of the electronically stored information (ESI) project regarding the Pennsylvania litigation.

Mitts contended it was dissatisfied with Kroll’s services, and it refused to pay the $250,000 Mitts had received to pay Kroll’s invoices. Due to non-payment, Kroll ceased its electronic discovery services and cut off Devon’s and Mitts’ access to the document review database. The underlying Pennsylvania case settled (the amount was confidential), but Devon contented that the failure to pay Kroll and being cut off from the database hurt its case and took away its leverage in the settlement negotiations.

Kroll filed suit against Devon as defendant for breach of contract and other causes in Minnesota district court. Devon filed a counterclaim against Kroll and also filed a claim against Mitts, naming it as a third-party defendant. Mitts, a Pennsylvania company, filed a motion seeking to dismiss the third-party complaint based on lack of personal jurisdiction.

As the Minnesota long-arm statute affords personal jurisdiction to the maximum limit with federal due process, the court considered whether third-party defendant Mitts had “certain minimum contacts” with Minnesota sufficient enough to “reasonably anticipate being hailed into court” in that state. Reviewing the facts, the court noted that Mitts engaged in regular communication with Kroll, negotiated a Statement of Work with Kroll, had contacted Kroll directly, and had recommended the company to its former client, Devon. The court concluded such actions to be sufficient to confer specific jurisdiction over Mitts in Minnesota.

We will keep updating this story and the fallout of the alleged eDiscovery mismanagement as this case moves forward…in Minnesota (although Mitts filed an interlocutory appeal, currently pending).

ILS – Plaintiff Electronic Discovery Experts