United States' Opposition to Joint Motion to Stay Discovery — U.S. ex rel. Pietschner v. Petralia (E.D. Tex.)
- Date
- 2025-04-28
Summary
United States' Opposition to Defendants' Joint Motion to Stay Discovery in United States of America, et al., ex rel. Paul Pietschner v. Kathryn Petralia, Robert Frohwein and Spencer Robinson, Civil Action No. 4:21-CV-110-SDJ, in the U.S. District Court for the Eastern District of Texas, Sherman Division, filed April 24, 2025 as Document 74. The government opposes the defendants' motion (ECF No. 71) to stay discovery after initial disclosures until the Court rules on their motions to dismiss for lack of personal jurisdiction and improper venue. It argues the defendants have not shown good cause under Fed. R. Civ. P. 26(c)(1) and that their jurisdiction challenges are not substantial, citing 31 U.S.C. § 3732(a). In the alternative, it asks the Court to stay all deadlines, including the April 28, 2025 initial disclosure deadline and the May 2, 2025 joint report deadline.
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Case 4:21-cv-00110-SDJ Document 74 Filed 04/24/25 Page 1 of 7 PageID #: 828
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
UNITED STATES OF AMERICA, et al.,
ex rel. PAUL PIETSCHNER, Civil Action No. 4:21-CV-110-SDJ
Plaintiffs,
v.
KATHRYN PETRALIA; ROBERT FROHWEIN; and
SPENCER ROBINSON,
Defendants.
UNITED STATES’ OPPOSITION
TO DEFENDANTS’ JOINT MOTION TO STAY DISCOVERY
Plaintiff, the United States of America (the “United States” or the “Government”) by and
through undersigned counsel, hereby opposes Defendants Kathryn Petralia, Robert Frohwein, and
Spencer Robinson’s (“Defendants”) Joint Motion to Stay Discovery (ECF No. 71, the “Stay
Motion”). Defendants seek a selective “stay of all discovery and deadlines”—to take effect only
after the parties “exchange initial mandatory disclosures” (Stay Mot. 1−2 1)—until this Court rules
on Defendants’ pending motions to dismiss for lack of personal jurisdiction and improper venue.
ECF Nos. 65, 67, and 68 (the “Dismissal Motions”). This Court should deny the Stay Motion or
alternatively stay all dates and deadlines in the Order Governing Proceedings (ECF No. 69, the
“Order”), including for initial mandatory disclosures, which are currently due on April 28, 2025.
Defendants have not shown, and cannot show, “good cause” for the Stay Motion as
required Fed. R. Civ. P. 26(c)(1). Defendants’ challenges to this Court’s personal jurisdiction are
wholly without merit, making it unlikely that the resolution of the Dismissal Motions will preclude
1 Page references are to the page numbers of the cited motions, located at the bottom
of the page, not to the page numbers applied by ECF.
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Case 4:21-cv-00110-SDJ Document 74 Filed 04/24/25 Page 2 of 7 PageID #: 829
the need for further discovery in this Court. See generally United States’ Omnibus Opposition to
Defendants’ Motions to Dismiss (ECF No. 72, the “Opposition to Dismissal”) at 3−29; Williams
v. Tava Ventures, Inc., No. 4:24-CV-122, 2024 WL 4024037, at *1 (E.D. Tex. May 14, 2024)
(Jordan, J.). Moreover, the Stay Motion improperly cherry-picks aspects of the Order to stay while
leaving others in force. That position is inconsistent with the Defendants’ apparent view that this
Court lacks jurisdiction, and therefore also the power to require disclosures or to enter discovery
orders to safeguard the Government’s interests in the documents it produces as part of its initial
mandatory disclosures. See Williams, 2024 WL 4024037, at *1 (“Without jurisdiction the court
cannot proceed at all in any cause.” (quoting Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514
(1868))). For the following reasons, the Stay Motion should be denied.
BACKGROUND
The United States concurs with the Background in the Stay Motion, with the following
additions. Prior to the Rule 26(f) conference, the United States circulated to Defendants proposed
draft clawback and protective orders for review and comment. At the Rule 26(f) conference, the
United States advised Defendants that it anticipated making substantial production of documents
with its initial mandatory disclosures and requested that protective and Rule 502(d) clawback
orders be in place before the initial disclosure deadline. Counsel for at least one Defendant
indicated an intention not to produce any documents to the United States with his initial disclosures
beyond those produced pursuant to a 2023 Civil Investigative Demand. Also at the Rule 26(f)
conference, the parties began but did not complete their discussions about the items required in the
joint report of attorney conference, including a proposed scheduling order. The parties are
currently in discussions about the terms of those agreements and the joint report of attorney
conference.
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Case 4:21-cv-00110-SDJ Document 74 Filed 04/24/25 Page 3 of 7 PageID #: 830
ARGUMENT
I. The Court Should Deny the Stay Motion Because Defendants Have Not Made a
Substantial Challenge to Personal Jurisdiction.
Although Defendants are correct that courts—including this Court—have found good
cause to stay discovery pending resolution of a Rule 12(b)(2) or (3) motion, it remains the
“exception rather than the rule.” Tava Ventures, 2024 WL 4024037, at *1; see also Order at 7 (“A
party is not excused from the requirements of a Rule or scheduling order by virtue of the
fact that dispositive motions are pending . . . .” (emphasis in original)). That exception does not
apply, however, unless defendants have made “substantial arguments for dismissal” and that
resolution of the motion “might reduce or preclude the need for discovery.” Spadafora v. Hotel
Rsrv. Serv., Inc., No. 4:23-CV-735, 2023 WL 11762558, at *1 (E.D. Tex. Dec. 29, 2023) (Jordan,
J.) (quotation marks omitted). Otherwise, a discovery stay serves no purpose other than delay.
As explained in the Government’s Opposition to Dismissal, however, the personal
jurisdiction arguments in the Dismissal Motion are anything but ‘substantial.’ Defendants’
arguments ignore the plain language of the FCA, 31 U.S.C. § 3732(a), which gives a federal district
court venue and personal jurisdiction if “any one defendant” was “transact[ing] business” in the
district when the lawsuit was filed or where “any act proscribed by” the FCA occurred. See
Opposition to Dismissal 9−18. Defendants also ignore that this lawsuit was filed in 2021, that
original qui tam defendant Kabbage was undisputedly transacting business in the Eastern District
of Texas at that time, and that the Government’s Complaint alleges FCA violations occurred here
in the Eastern District of Texas. Id. Defendants’ due process challenges to this Court’s exercise
of personal jurisdiction ignores recent, controlling Fifth Circuit precedent holding that the
“national contacts” standard governs where, as here, a federal statute grants nationwide service of
process, see Double Eagle Energy Servs., LLC v. MarkWest Utica EMG, LLC, 936 F.3d 260, 264
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Case 4:21-cv-00110-SDJ Document 74 Filed 04/24/25 Page 4 of 7 PageID #: 831
(5th Cir. 2019), and that where that standard applies due process is satisfied by Defendants’ U.S.
residency alone. Opposition to Dismissal at 19−29. Defendants’ flawed challenges to this Court’s
exercise of personal jurisdiction are unlikely to result in dismissal, or to “reduce or preclude the
need for discovery.” Spadafora, 2023 WL 11762558, at *1 (quotation marks omitted).
Defendants’ Stay Motion should be denied in its entirety.
II. Alternatively, the Court Should Stay All Discovery, Including Initial Mandatory
Disclosure Deadline.
If, however, this Court is nevertheless inclined to exercise its “broad discretion and inherent
authority” to stay discovery while it considers Defendants’ dispositive motions, see id. (quoting
Fujita v. United States, 416 F. App’x 400, 402 (5th Cir. 2011)), the United States respectfully
requests that the Court stay all deadlines in the Order, including the April 28, 2025, deadline for
initial mandatory disclosures, the May 2, 2025, deadline for the joint report of attorney conference,
and the May 28, 2025, Rule 16 management conference.
Defendants assert that their requested partial stay “would not prejudice the Government”
(Stay Mot. 5) without acknowledging the fundamental inconsistency in their positions or the
burdens those inconsistencies create for the Government. The Defendants’ challenge to this
Court’s jurisdiction—however meritless—is a contention that this Court is “powerless to proceed”
in this action. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999); Williams, 2024 WL
4024037 at *1. And yet Defendants maintain that the Court’s Order should remain in force and
that the Government should be required to comply with its initial disclosure deadline. Stay Mot.
2. Also, presumably, in the Defendants’ view, this Court is powerless to enter a binding protective
order or a Rule 502(d) clawback order in this case, as the Government has requested before making
its initial disclosures. Moreover, because Defendants waited until April 14, 2025, to file their Stay
Motion, the May 2, 2025, deadline for the parties to submit their joint report of attorney conference
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Case 4:21-cv-00110-SDJ Document 74 Filed 04/24/25 Page 5 of 7 PageID #: 832
(and perhaps even the May 28, 2025, Rule 26 management conference date) will come and go
before this Court can rule on the stay or the Defendants’ various 12(b) motions. Defendants
contend that “it would be a waste of the parties’ and the Court’s resources to proceed with
discovery” at this time (Stay Mot. 5) but would have discovery proceed as to the items Defendants
chose not to include in their stay request.
Accordingly, if the Court imposes a stay, it should apply to all deadlines in the Order.
CONCLUSION
For these reasons, we respectfully request that this Court deny Defendants’ Joint Motion
to Stay Discovery, or in the alternative to stay all deadlines in the Court’s Order Governing
Proceedings, including but not limited to the deadlines to make mandatory initial disclosures, file
a joint report of attorney conference, and the date of the Rule 16 management conference.
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Case 4:21-cv-00110-SDJ Document 74 Filed 04/24/25 Page 6 of 7 PageID #: 833
Dated: April 24, 2025 Respectfully submitted,
MICHAEL D. GRANSTON
Deputy Assistant Attorney General
ABE MCGLOTHIN, Jr.
Acting United States Attorney
Eastern District of Texas
/s/__Betty S. Young____
JAMES G. GILLINGHAM, Texas Bar
#24065295
BETTY S. YOUNG, Texas Bar #24102498
Assistant U.S. Attorneys
Eastern District of Texas
110 N. College Street, Suite 700
Tyler, Texas 75702
E-mail: James.Gillingham@usdoj.gov
E-mail: Betty.Young@usdoj.gov
(903) 590-1400
(903) 590-1436 (facsimile)
JAMIE ANN YAVELBERG
COLIN M. HUNTLEY
SARAH E. LOUCKS
KELLY E. PHIPPS
Attorneys, Civil Division
United States Department of Justice
P.O. Box 261
Ben Franklin Station
Washington, D.C. 20044
E-mail: Sarah.E.Loucks@usdoj.gov
E-mail: Kelly.E.Phipps@usdoj.gov
(202) 616-4203
(202) 514-0280 (facsimile)
ATTORNEYS FOR THE
UNITED STATES OF AMERICA
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Case 4:21-cv-00110-SDJ Document 74 Filed 04/24/25 Page 7 of 7 PageID #: 834
CERTIFICATE OF SERVICE
I hereby certify that on April 24, 2025, I caused a true and correct copy of the foregoing
document to be transmitted through the Court’s electronic mailing service (CM/ECF) to all counsel
of record who have consented to electronic service by the Court’s electronic mailing service
(CM/ECF).
/s/ Betty Young__________
BETTY S. YOUNG
7
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