Court filing
Defendants’ Reply in Support of Stay of Discovery — Pietschner v. Kabbage (E.D. Tex.)
Filed May 9, 2025 in Pietschner v. Kabbage; one of 17 filings from this case.
Record facts
| Court | U.S. District Court for the Eastern District of Texas, Sherman Division |
|---|---|
| Filed | 2025-05-09 |
U.S. District Court for the Eastern District of Texas, Sherman Division · No. 4:21-cv-00110-SDJ · Doc. 86 · 2025-05-09 · Docket on CourtListener
Full text
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
UNITED STATES OF AMERICA, ex rel.
PAUL PIETSCHNER,
v.
KATHRYN PETRALIA, ROBERT
FROHWEIN, and SPENCER ROBINSON.
Case No. 4:21-cv-110-SDJ
DEFENDANTS’ JOINT REPLY BRIEF IN SUPPORT OF THEIR
JOINT MOTION TO STAY DISCOVERY
At the very first scheduling conference among the parties in this matter, Defendants
notified the Government of their position that discovery should be stayed pending a resolution of
Defendants’ jurisdictional defenses. On the same day Defendants learned of the Government’s
opposition to Defendants’ requested stay, Defendants timely filed the Joint Motion to Stay
Discovery (ECF No. 71, the “Joint Motion”). In the Joint Motion, following the precedent of this
Court, Defendants sought to stay discovery, other than mandatory initial disclosures, until after the
Court ruled on their challenges to the Court’s personal jurisdiction over them. Joint Motion at 1.
On April 24, 2025, the Government filed its Opposition to Defendants’ Joint Motion (ECF No. 74,
“Opp.”), first asking that the Joint Motion be denied on the stated basis that “Defendants have not
made a substantial challenge to personal jurisdiction.” Opp. at 3-4. In the alternative, the
Government asks that the Court stay all deadlines in the Court’s Order Governing Proceedings
(ECF No. 69), including for initial mandatory disclosures, which were already due (and the parties
already served) on April 28, 2025. Id. at 4-5. Neither of the Government’s arguments is
persuasive, and the Court should stay discovery pending a ruling on Defendants’ jurisdictional
Case 4:21-cv-00110-SDJ Document 86 Filed 05/01/25 Page 1 of 5 PageID #: 887
2
defenses.
First, the legal and factual bases for Defendants’ motions to dismiss for lack of jurisdiction
are well-substantiated. Contrary to the Government’s repeated assertions in its Opposition,
Defendants do not ignore either the law or the facts in seeking dismissal of this case for lack of
jurisdiction. Indeed, the only stated basis for venue and personal jurisdiction in the Government’s
Complaint in Intervention (ECF No. 40, the “Complaint”) is that Defendants “transacted business”
in the Eastern District of Texas. Compl. ¶¶ 6-7. But none of the Defendants transacted business
in the Eastern District of Texas when the Complaint was filed on December 20, 2024. See ECF
No. 65 at 9-10; ECF No. 67 at 6-7; ECF No. 68 at 4.
Rather, in its Opposition, the Government seeks to create new law and rely on new unpled
allegations so it can move forward with this case in the Eastern District of Texas despite that none
of the Defendants are at home here. Specifically, the Government argues that there is personal
jurisdiction over the Defendants so long as there was venue over them when the relator filed his
qui tam complaint back in February 2021. The Government’s novel argument is not only legally
wrong1 but factually incorrect, as none of the Defendants transacted business in the Eastern District
of Texas in 2021.2 Because the Government fails to establish venue under the False Claims Act
(“FCA”), it cannot benefit from the FCA’s nationwide service of process provision to obtain
personal jurisdiction over the Defendants. And because the Government claims no other basis on
which personal jurisdiction exists over the Defendants, dismissal is appropriate both for improper
venue and lack of personal jurisdiction. Moreover, Defendants have shown that if the Court were
1 See U.S. ex rel. Salomon v. Wolff, 268 F. Supp. 3d 770, 774 (D. Md. July 24, 2017) (noting that the issue of whether
venue in an FCA action should be evaluated based on the government’s complaint in intervention or on the original
relator complaint is an “interesting question of first impression”).
2 See, e.g., Compl. ¶¶ 10-12 (noting each of the three Defendants stopped working for Kabbage in October 2020); id.
¶ 81 (acknowledging KServicing, a “new entity,” serviced Kabbage’s former loans after the AmEx transaction in
October 2020).
Case 4:21-cv-00110-SDJ Document 86 Filed 05/01/25 Page 2 of 5 PageID #: 888
3
to engage in a Fourteenth Amendment minimum contacts with the State of Texas analysis, the
Government would fail that test too. See ECF No. 65 at 6-9; ECF No. 67 at 6-9; ECF No. 68 at
12-13.3 Because Defendants’ motions to dismiss raise serious jurisdictional challenges for which
no discovery is required, the Court should enter a short stay of discovery through the pleadings
stage.
Second, the Government’s alternative requested relief is moot. Initial disclosures were due
on April 28, 2025, and Defendants and the Government met that deadline. Moreover, Defendants’
requested relief is not novel. In the Joint Motion, Defendants cited three cases in which this Court
stayed discovery pending the Court’s decision on the Defendants’ motions to dismiss, and in each,
the parties still complied with the Court’s initial mandatory disclosures deadline despite discovery
ultimately being stayed. See Williams v. Tava Ventures, Inc., No. 4:24-CV-122-SDJ, ECF Nos.
84-85, 96 (E.D. Tex.) (granting motion to stay on May 14, 2024, after the parties exchanged
disclosures on April 15, 2024); Spadafora v. Hotel Rsrv. Serv., Inc., No. 4:23-CV-735-SDJ, ECF
Nos. 12, 25 (E.D. Tex.) (granting motion to stay on December 29, 2023, after the parties exchanged
disclosures on October 19, 2023); Gardner v. Gary Sinise Found., No. 4:23-CV-99-SDJ, ECF Nos.
24, 28 (E.D. Tex) (granting motion to stay on June 5, 2023, after the parties exchanged disclosures
on May 15, 2023). There is no legitimate reason why this case should not follow suit.
For these reasons, the Court should grant Defendants’ Joint Motion to Stay Discovery and
stay all forthcoming discovery deadlines.
3 Contrary to the Government’s assertion (Opp. at 3-4), Defendants address Fifth Circuit nationwide service of process
cases head on. Those cases do not change the end result: this Court does not have personal jurisdiction over the
Defendants and venue is not proper in the Eastern District of Texas.
Case 4:21-cv-00110-SDJ Document 86 Filed 05/01/25 Page 3 of 5 PageID #: 889
4
Dated: May 1, 2025
Respectfully submitted,
/s/ George P. Varghese
Melissa R. Smith
Gillam & Smith LLP
303 South Washington Ave.
Marshall, TX 75670
Telephone: (903) 934-8450
Fax: (903) 934-9257
melissa@gillamsmithlaw.com
Anjan Sahni (pro hac vice)
Wilmer Cutler Pickering Hale and Dorr LLP
7 World Trade Center, 250 Greenwich Street
New York, NY 10007
Tel: (212) 230-8800
Fax: (212) 230-8888
anjan.sahni@wilmerhale.com
Christopher E. Babbitt (pro hac vice)
Michaela S. Wilkes Klein (pro hac vice)
Wilmer Cutler Pickering Hale and Dorr LLP
2100 Pennsylvania Avenue NW
Washington, DC 20037
Telephone: (202) 663-6000
Fax: (202) 663-6363
christopher.babbitt@wilmerhale.com
michaela.wilkesklein@wilmerhale.com
George P. Varghese (pro hac vice)
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, MA 02109
Telephone: (617) 526-6000
Fax: (617) 526-5000
george.varghese@wilmerhale.com
Counsel for Kathryn Petralia
/s/ Alexander J. Chern
Nicholas M. Mathews
Alexander J. Chern
McKool Smith, PC - Dallas
300 Crescent Court, Suite 1500
Dallas, TX 75201
Telephone: (214) 978-4258
Fax: (214) 978-4044
Nmathews@mckoolsmith.com
Achern@mckoolsmith.com
Miranda Hooker (pro hac vice)
Kate E. MacLeman (pro hac vice)
Kara N. Czekai (pro hac vice)
Goodwin Procter LLP
100 Northern Avenue
Boston, Massachusetts 02210
Telephone: (617) 570-1000
Fax: (617) 523-1231
MHooker@goodwinlaw.com
KMacLeman@goodwinlaw.com
KCzekai@goodwinlaw.com
Counsel for Robert Frohwein
/s/ Henry W. Asbill
Henry W. Asbill (pro hac vice)
Christopher B. Mead (pro hac vice)
Lisa H. Schertler (pro hac vice)
Paola Pinto (pro hac vice)
Schertler Onorato Mead & Sears
555 13th Street NW Suite 500W
Washington, DC 20004
Telephone: 202-628-4199
Facsimile: 202-628-4177
hasbill@schertlerlaw.com
cmead@schertlerlaw.com
lschertler@schertlerlaw.com
ppinto@schertlerlaw.com
Counsel for Spencer Robinson
Case 4:21-cv-00110-SDJ Document 86 Filed 05/01/25 Page 4 of 5 PageID #: 890
5
CERTIFICATE OF SERVICE
I hereby certify that on May 1, 2025, I caused the foregoing to be electronically filed with
the Clerk of the Court using the CM/ECF system, which sent notification of filing to all attorneys
of record.
/s/ Alexander J. Chern
Alexander J. Chern
Case 4:21-cv-00110-SDJ Document 86 Filed 05/01/25 Page 5 of 5 PageID #: 891File and source
- File
- CASE_TXED_4-21-cv-00110_US-Pietschner-v-Petralia-Kabbage_doc86_MISC.pdf
- Size
- 145,853 bytes
- SHA-256
- 6864ef8272ea028e3bfede6c74cf515a8e67b5eb11c1454b66c467d9f6a0fe67
- Original
- PACER (login required)