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BRIEF IN SUPPORT re 26 Motion to Extend Time Brief in Support of Motion to Extend… — Greathouse Capitalplus (Dkt. 27)
Summary
A brief filed February 25, 2022 by Defendants Capital Plus Financial, LLC (CPF) and Crossroads Systems, Inc. in Greathouse v. Capital Plus Financial, LLC, Case No. 4:21-cv-01243-BRW (E.D. Ark.), Doc. 27. It supports a motion to extend all discovery deadlines, including the Rule 26(f) conference and initial disclosures set by the January 20, 2022 Initial Scheduling Order, until a ruling on the pending Motion to Dismiss. The defendants argue that the Motion to Dismiss raises lack of personal jurisdiction in Arkansas, lack of standing, and failure to state claims for breach of contract and unjust enrichment. The brief adds that discovery in a putative nationwide class action would be broad and costly and that plaintiff Eric Greathouse would suffer no prejudice from the extension.
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“BRIEF IN SUPPORT re 26 Motion to Extend Time Brief in Support of Motion to Extend… — Greathouse Capitalplus (Dkt. 27).”
Original at storage.courtlistener.com, No. 4:21-cv-01243-BRW, Doc. 27. Archived at Pandemic Darlings, https://pandemicdarlings.com/court-filings/full-docket-greathouse-capitalplus-ared-131205/2022-02-25-gov-uscourts-ared-131205-27-0-doc-27/
, SHA-256 1f3fd7d76409fbb36369e1971f38e799103aa8a5832c221b8b955d40fe26a29a.Full text
Case 4:21-cv-01243-BRW Document 27 Filed 02/25/22 Page 1 of 7
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF ARKANSAS
CENTRAL DIVISION
Eric Greathouse, individually and on §
behalf of all others similarly situated, §
§
Plaintiff, §
§
v. § Case No. 4:21–cv–1243–BRW
§
Capital Plus Financial, LLC and §
Crossroads Systems, Inc., §
§
Defendants.
§
______________________________________________________________________________
Defendants Capital Plus Financial, LLC’s and Crossroads Systems, Inc.’s Brief in Support
of Motion to Extend Discovery Deadlines Pending a Ruling on Motion to Dismiss
______________________________________________________________________________
Pursuant to Federal Rules of Civil Procedure 26(c) and 16(b)(4), Defendants Capital Plus
Financial, LLC (“CPF”) and Crossroads Systems, Inc. (“Crossroads” and collectively
“Defendants”) respectfully move this Court for an order extending all discovery deadlines,
including the deadline for the Rule 26(f) conference and report set in this Court’s Initial Scheduling
Order entered on January 20, 2022, (ECF 6) and the deadline for initial disclosures pursuant to
Federal Rule of Civil Procedure Rule 26(a), pending this Court’s resolution of Defendants’ Motion
to Dismiss (ECF 24) for lack of personal jurisdiction, lack of standing, and failure to state a claim
(hereinafter, the “Motion to Dismiss”). Defendants do not request this extension for the purposes
of delay and would respectfully request a hearing as soon as possible on this issue after the briefing
by both parties is completed. In support of this motion, Defendants respectfully state as follows:
INTRODUCTION & RELEVANT BACKGROUND
CPF is a certified Community Development Financial Institute that principally serves the
Hispanic community in Texas. Crossroads is a holding company CPF’s parent company. Plaintiff
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Case 4:21-cv-01243-BRW Document 27 Filed 02/25/22 Page 2 of 7
Eric Greathouse (“Plaintiff”), on behalf of a putative class, filed his complaint in this case on
December 29, 2021 (the “Complaint”). Generally, the Complaint alleges that Plaintiff applied to
receive a PPP loan from the SBA, was approved, and received a promissory note which he signed
and returned. Complaint ¶¶ 73–81. Plaintiff alleges that he was advised by email that his loan
was approved and would be funded, yet that he did not actually receive the funds. Id. at ¶¶ 82–88.
The Complaint asserts two causes of action against both Defendants: (1) breach of contract and
(2) unjust enrichment.
On February 25, 2022, Defendants filed their Motion to Dismiss at ECF 24 which requests
that the Court dismiss every cause of action alleged in the Complaint for lack of personal
jurisdiction, and, in the alternative, for lack of standing and for failure to state a claim for breach
of contract and unjust enrichment. Defendants also filed at ECF 25 a brief in support of the Motion
to Dismiss (“Motion to Dismiss Brief”).
ARGUMENT
Pursuant to Fed. R. Civ. P 26(c), for good cause a district court has discretion to grant an
extension of discovery for pending its ruling on a dispositive motion. Fed. R. Civ. P. 26(c)(1)(b)
(for “good cause,” the court may issue order “specifying the terms, including the time … for the
disclosure or discovery”). See Rosenbaum v. Kissee, 2017 WL 11496952, at *1 (E.D. Ark. Dec.
20, 2017); see also Pipes v. Life Invs. Ins. Co. of Am., 2008 WL 11343419, at *2 (E.D. Ark. May
29, 2008) (“This power is ‘incidental to the power inherent in every court to control the disposition
of the causes on its docket with economy of time and effort for itself, for counsel, and for
litigants.’”). The same “good cause” standard applies where a deadline for discovery or other
matters sought to be extended is set forth under a scheduling order. Fed. R. Civ. P. 16(b)(4) (“A
schedule may be modified only for good cause and with the judge’s consent.”).
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Case 4:21-cv-01243-BRW Document 27 Filed 02/25/22 Page 3 of 7
To evaluate whether to extend discovery deadlines pending resolution of a dispositive
motion, courts in the Eighth Circuit have repeatedly held that judges can “[take] a ‘peek’ at the
merits of the pending dispositive motion, consider[] the breadth of pending discovery, and
balance[] the harm produced by delaying discovery against the possibility that the entire matter
will be resolved by the motion.” See, e.g., Rosenbaum, 2017 WL 11496952, at *1; TE Connectivity
Networks, Inc. v. All Sys. Broadband, Inc., 2013 WL 4487505, at *2 (D. Minn. Aug. 20, 2013)
(“Where a complaint is clearly without merit, or where a motion to dismiss otherwise seems likely
to resolve the entire litigation, a stay of discovery may be appropriate.”). In this case, the pertinent
factors weigh heavily in support of extending the current discovery deadlines pending the Court’s
resolution of Defendants’ Motion to Dismiss.
Likelihood of dismissal. The “possibility that the entire matter will be resolved” by
Defendants’ Motion to Dismiss is significant. Federal courts, including those within the Eighth
Circuit, have held that an extension of discovery pending a ruling on a motion to dismiss is
appropriate when the motion to dismiss raises a dispositive jurisdictional question . See
Rosenbaum, 2017 WL 11496952, at *1 (finding that an extension of discovery was proper because
there was a jurisdictional question that was dispositive on all claims); see also Buc-ee's Ltd. v.
Bucks, Inc., 2018 WL 443320, at *4 (D. Neb. Jan. 16, 2018) (“Common situations in which a court
may determine that staying discovery pending a ruling on a dispositive motion occur when
dispositive motions raise issues of jurisdiction, venue, or immunity.”). In this case, Defendants
raise not one—but two—dispositive jurisdictional questions.
First, Defendants’ Motion to Dismiss Brief explains in detail that personal jurisdiction over
both CPF and Crossroads is plainly lacking in Arkansas. The “minimum contacts” test for
purposes of evaluating personal jurisdiction over a defendant requires that the plaintiff establish
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Case 4:21-cv-01243-BRW Document 27 Filed 02/25/22 Page 4 of 7
either “general jurisdiction” or “specific jurisdiction.” Motion to Dismiss Brief at 13. General
jurisdiction almost always requires that the defendant maintain either its principal place of business
or state of incorporation in the forum state, or that it otherwise “essentially at home” in the forum
state. Id. at 14. Specific jurisdiction requires that the plaintiff demonstrate a “substantial
connection” between the defendant’s suit-related conduct and the forum state. Id. at 15. General
jurisdiction is lacking because it is undisputed that neither Defendant maintains either its principal
place of business or state of incorporation in Arkansas (Complaint ¶ ¶ 11–12), Defendants have
submitted a sworn declaration from their Chief Financial Officer explaining that neither CPF nor
Crossroads have any employees, offices, or operations of any kind in Arkansas (Motion to Dismiss
Brief, Ex. A ¶¶ 6–7). Indeed, Plaintiff affirmatively pleads that Defendant CPF is a limited liability
company organized under the laws of the state of Texas with its principal place of business in
Texas. Complaint ¶ 11; see Motion to Dismiss Brief at 7, 15. Plaintiff also affirmatively pleads
that Defendant Crossroads is a corporation organized under the laws of Delaware with its principal
place of business in Dallas, Texas. Complaint ¶ 12; see Motion to Dismiss Brief at 7, 15. Nor
does the Complaint allege any other connections between either Defendant and Arkansas; rather,
the only times the Complaint even mentions Arkansas is when it provides the location where
Plaintiff currently lives and works. See Complaint ¶¶ 10, 73, Ex. A at 12 (PDF 47).
Specific jurisdiction is also lacking because Plaintiff has not alleged that his claims arose
out of Defendants’ significant contacts with Arkansas. Motion to Dismiss Brief at 15–16. Again,
the Complaint says nothing about Arkansas whatsoever, apart from alleging that it is where
Plaintiff currently lives and works. See id. Motion to Dismiss Brief at 16.1 Put bluntly, Plaintiff’s
1
Even if there were sufficient contacts with Arkansas (and there are not), exercise of personal jurisdiction would still
be improper in this case, because to do so would offend traditional notions of fair play and substantial justice. Motion
to Dismiss Brief at 20–23.
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Case 4:21-cv-01243-BRW Document 27 Filed 02/25/22 Page 5 of 7
basis for establishing personal jurisdiction over Defendants in this case hangs on nothing more
than a few passing mentions of Arkansas in the Complaint that are entirely unconnected to
Defendants.
Second, an extension of discovery is also appropriate because of the likelihood that the
Court will grant a Motion to Dismiss for lack of standing and for failure to state a claim.
Defendants’ Motion to Dismiss identifies a critical defect in each and every one of Plaintiff’s
claims including, as a threshold issue, that Plaintiff has failed to plead facts sufficient to show he
has Article III standing to sue for both breach of contract and unjust enrichment. Id. at 23–25, 32–
33. Nor does Plaintiff state a claim for breach of contract or unjust enrichment, his only two causes
of action. Id. at 29–30, 33–34. Plaintiff has no injury in fact that would give him standing to sue,
fails to plead an enforceable contract, and, even if he did plead an enforceable contract, the
documents he alleges to be the contract contain a release of all claims. Id. at 30–31. Plaintiff
similarly fails to state a claim for unjust enrichment because he does not allege that he conferred a
benefit on Defendants, and, to the extent he has pled a contract, the contract’s release bars this
claim as well. Id. at 35.
Simply put, Defendants have raised multiple bases on which this case would be disposed
in its entirety—including lack of jurisdiction. Good cause would plainly be served by a short
extension of discovery to enable to the Court to consider these threshold dispositive issues.
Breadth of discovery. Third, an extension of discovery pending a ruling on the Motion to
Dismiss is warranted because this is a putative nationwide class action for which potential
discovery would be both broad and complex and would be expected to involve significant non-
recoverable costs. See Complaint ¶ 93–103. Even having to prepare responses to initial
disclosures will involve significant costs in a case of potentially nationwide breadth. These costs
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are grossly unbalanced against Defendants, who are companies with multiple employees and
significant amounts of documents, whereas plaintiff is only one individual. These costs would be
avoided altogether if the court grants Defendants’ Motion to Dismiss, but cannot be recouped if
expended prior to the Court’s decision.
No prejudice. Finally, an extension of discovery pending a ruling on Defendants’ Motion
to Dismiss will not prejudice Plaintiff in any way. Defendants’ Motion to Dismiss raises questions
of law that can be resolved on the face of the Complaint alone without need for discovery.
Moreover, it is subject to and without waiver of an argument that the Court lacks personal
jurisdiction over the Defendants, which is a straightforward issue for the Court to resolve given
the dearth of allegations in the Complaint supporting personal jurisdiction to begin with. Plaintiff
has opted to file this case as putative nationwide class action, which, if certified, could be expected
to take years to resolve, and as such there is no reason Plaintiff cannot wait a short amount of time
on the front end before conducting discovery in order for the Court to determine the dispositive
threshold issues Defendants have raised. Moreover, the injuries alleged in this case, to the extent
they are even legally cognizable at all, stem from Plaintiff’s inability to obtain a loan under a
gratuitous federal program; this is simply not a situation where there is a need for discovery to be
expedited.
III. CONCLUSION
For the foregoing reasons, Defendants respectfully request that the Court exercise its
discretion and extend all discovery deadlines, including the deadline for the Rule 26(f) conference
and report set in this Court’s Initial Scheduling Order entered on January 20, 2022, (ECF 6) and
the deadline for initial disclosures pursuant to Federal Rule of Civil Procedure Rule 26(a), pending
resolution of the Motion to Dismiss and to such other and further relief to which they may be justly
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Case 4:21-cv-01243-BRW Document 27 Filed 02/25/22 Page 7 of 7
entitled. Defendants further request a hearing as soon as possible on this issue after the briefing
by both parties is completed.
Respectfully submitted this February 25th, 2022.
Karen P. Freeman
MITCHELL, WILLIAMS, SELIG,
GATES & WOODYARD , P.L.L.C.
4206 South J.B. Hunt Drive, Suite 200
Rogers, Arkansas 72758
Tel.: (479) 464–5650
Fax: (479) 464–5680
Kfreeman@mwlaw.com
Graham Talley
MITCHELL, WILLIAMS, SELIG,
GATES & WOODYARD , P.L.L.C.
425 West Capitol Avenue, Suite 1800
Little Rock, Arkansas 72201
Tel.: (501) 688–8800
Fax: (501) 688–8807
Gtalley@mwlaw.com
Katherine G. Treistman (pro hac vice)
Andrew D. Bergman (pro hac vice)
ARNOLD & PORTER KAYE SCHOLER LLP
700 Louisiana Street, Suite 4000
Houston, Texas 77002–2755
Tel.: (713) 576–2400
Fax: (713) 576–2499
Katherine.Treistman@arnoldporter.com
Andrew.Bergman@arnoldporter.com
Eric N. Whitney (pro hac vice)
ARNOLD & PORTER KAYE SCHOLER LLP
250 West 55th Street
New York, New York 10019–9710
Tel.: (212) 836–8000
Fax: (212) 836–8689
Eric.Whitney@arnoldporter.com
Attorneys for Defendants Capital Plus
Financial, LLC and Crossroads Systems, Inc.
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