in Re Skadden, Arps, Slate, Meagher & Flom LLP ( 2022 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-21-00393-CV
___________________________
IN RE SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Relator
Original Proceeding
67th District Court of Tarrant County, Texas
Trial Court No. 067-325026-21
Before Kerr, Birdwell, and Womack, JJ.
Memorandum Opinion by Justice Kerr
MEMORANDUM OPINION
Real party in interest The Harold E. Riley Foundation sued Relator Skadden,
Arps, Slate, Meagher & Flom, LLP. Skadden filed a special appearance. The
Foundation moved to compel production of certain documents, and in turn, Skadden
moved for protection. The trial court granted the Foundation’s motion to compel and
denied Skadden’s motion for protection.
Skadden seeks mandamus relief against that order. Because the trial court
authorized discovery exceeding what is reasonably calculated to lead to evidence
relevant to the special appearance, we conditionally grant Skadden’s petition.
Background
Skadden is a law firm organized in Delaware with its principal office located in
New York.1 The Foundation is a Texas nonprofit that exists entirely for the benefit of
Baylor University and Southwest Baptist Theological Seminary.
In August 2020, the Foundation’s then-trustees contacted Skadden in New
York and hired it to file a lawsuit in Colorado on the Foundation’s behalf. That suit
involved the Foundation’s control rights over a Colorado corporation.
In September 2020, Baylor and the Seminary sued the Foundation in the 67th
District Court of Tarrant County. To defend that suit, the Foundation hired
Thompson & Knight LLP, a Texas law firm. Although Skadden did not represent the
1
Skadden has offices in numerous cities, including in Houston, Texas.
2
Foundation in that case, Skadden communicated with attorneys at Thompson &
Knight about it.
In February 2021, Baylor and the Seminary settled with the Foundation, the
fallout of which was that Baylor and the Seminary gained control of the Foundation.2
According to Skadden, its engagement letter with the Foundation provided that a
change of control automatically terminated Skadden’s representation. Skadden thus
informed the Foundation that its representation had ended in February 2021 and
asked the Foundation for a final payment of some $94,000 in outstanding legal fees.
This amount was in addition to the approximately $2.5 million that the Foundation
had already paid Skadden to represent it in the Colorado lawsuit.
The Foundation asked Skadden for a copy of its entire client file to scrutinize
Skadden’s representation and its bills. But Skadden balked: “[T]he request is currently
broader than what [the Foundation] agreed would constitute its Client File in the
engagement letter, dated August 23, 2020 . . . , including that it is not entitled to
Skadden Work Product, which is owned by the Firm.”3 In the same response,
Skadden again asked for payment of its outstanding legal fees.
Various power struggles over the Foundation after its founder had died are not
2
relevant here.
Both “Client File” and “Work Product” were defined terms in the engagement
3
letter.
3
In May 2021, the Foundation sued Skadden in Tarrant County for a declaration
that it was entitled to everything in the client file, including Skadden’s internal
correspondence and work product. It also alleged that Skadden had overbilled it. 4
Skadden filed a special appearance and, subject to that special appearance, a motion to
change venue to Harris County, where Skadden has a Texas office.
In late June, the Foundation served a document request to which Skadden—
claiming that the request went far beyond any discovery needed to resolve the
threshold jurisdictional issue—responded with a motion for protection. In October
2021, the Foundation moved to compel production and, a month later, responded to
Skadden’s motion for protection. Skadden responded to the Foundation’s motion to
compel.
After a hearing, the trial court signed an order on November 11, 2021, granting
the Foundation’s motion to compel and denying Skadden’s motion for protection.
Skadden’s mandamus followed.
4
In the Foundation’s mandamus response, it summarized its suit against
Skadden as follows: “The underlying lawsuit is about the substance of Skadden’s
representation of the Foundation and its charging of exorbitant and wasteful fees, in
part to benefit individual, self-dealing Foundation Trustees [who] were not its clients
[and who] were unqualified and conflicted as to the Foundation – Skadden’s true
client.”
4
Discussion
I. Mandamus
Mandamus relief is proper only to correct a clear abuse of discretion when
there is no “adequate remedy at law, such as a normal appeal.” In re H.E.B. Grocery Co.,
L.P., 492 S.W.3d 300, 304 (Tex. 2016) (orig. proceeding) (quoting State v. Walker,
679 S.W.2d 484, 485 (Tex. 1984) (orig. proceeding)). When the benefits of mandamus
outweigh its detriments, appellate courts must consider whether the appellate remedy
is adequate. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex. 2004) (orig.
proceeding). A clear failure by the trial court to analyze or apply the law correctly
constitutes an abuse of discretion. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992)
(orig. proceeding). Moreover, mandamus is appropriate to correct “[a]n order
compelling discovery that is well outside the proper bounds.” In re Am. Optical Corp.,
988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding).
II. Special Appearances
A nonresident defendant may file a special appearance to object to the trial
court’s jurisdiction on the ground that the defendant “is not amenable to process
issued by the courts of this State.” Tex. R. Civ. P. 120a(1). The purpose of a special
appearance is to allow a nonresident defendant to attack the trial court’s jurisdiction
over it without subjecting itself to the jurisdiction of the court generally. C.W. Brown
Mach. Shop, Inc. v. Stanley Mach. Corp., 670 S.W.2d 791, 793 (Tex. App.—Fort Worth
1984, no writ).
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The plaintiff bears the initial burden of pleading allegations sufficient to show
the proper exercise of jurisdiction. Luciano v. SprayFoamPolymers.com, LLC, 625 S.W.3d
1, 8 (Tex. 2021). The burden then shifts to the defendant to negate all the alleged
jurisdictional bases. Id.III. Special Appearances and Discovery
Under Rule 120a, a defendant who files a special appearance is entitled to have
the issue of personal jurisdiction heard and decided before any other matter; thus,
discovery is limited to matters directly relevant to the special appearance. In re Doe,
444 S.W.3d 603, 608 (Tex. 2014) (orig. proceeding); Stanton v. Gloersen, No. 05-16-
00214-CV, 2016 WL 7166550, at *6 (Tex. App.—Dallas Nov. 30, 2016, pet. denied)
(mem. op.) (citing Doe, 444 S.W.3d at 608). A court should not reach the merits of the
case when deciding a special appearance. See Michiana Easy Livin’ Country, Inc. v. Holten,
168 S.W.3d 777, 791–92 (Tex. 2005); In re Cho, No. 02-17-00254-CV,
2017 WL 3911002, at *2 (Tex. App.—Fort Worth Sept. 7, 2017, orig. proceeding)
(mem. op.). To allow general discovery against a defendant over which the trial court
may not have personal jurisdiction denies the defendant the protection that Texas
procedure affords it. Doe, 444 S.W.3d at 608.
IV. Personal Jurisdiction
To issue a binding judgment, a court must have both subject-matter jurisdiction
over a case and personal jurisdiction over the parties. Luciano, 625 S.W.3d at 7–8.
Personal jurisdiction involves a court’s ability to bind a party to its judgment. Id. at 8.
6
Whether a court may exercise power over a party is a legal question, which we review
de novo; but resolving this question of law may require a court to decide questions of
fact. Id. When, as here, the trial court does not issue findings of fact, we presume that
all factual disputes were resolved in favor of the trial court’s decision unless they are
challenged on appeal. Id.
A defendant’s contacts with the forum may authorize the court to exercise
either general or specific jurisdiction. Id. A court has general jurisdiction over a
nonresident defendant whose affiliations with the State are so continuous and
systematic as to render it essentially at home in the forum State. Id. By contrast,
specific jurisdiction covers defendants who are less intimately connected with a State.
Id. The minimum contacts necessary for specific jurisdiction are established if (1) the
defendant purposefully avails itself of the privilege of conducting activities in the
forum state and (2) the suit arises out of or relates to the defendant’s contacts with the
forum. Id. at 8–9.
The due-process touchstone for specific jurisdiction is “purposeful availment.”
Michiana, 168 S.W.3d at 784. “Purposeful availment” has three aspects:
• First, only the defendant’s contacts with the forum count—“purposeful
availment” ensures that a defendant will not subject itself to jurisdiction
based solely on another party’s or a third person’s unilateral activity.
• Second, the acts relied on must be purposeful rather than fortuitous—a
defendant who reaches out beyond one state and creates continuing
relationships and obligations with citizens of another state is subject to the
latter’s jurisdiction in suits based on those activities; by contrast, a defendant
7
will not subject itself to jurisdiction based solely on random, isolated, or
fortuitous contacts.
• Third, the defendant must seek some benefit, advantage, or profit by
“availing” itself of the jurisdiction—jurisdiction is premised on the notion
that a nonresident impliedly consents to suit if it invokes the benefits and
protections of a forum’s laws.
Luciano, 625 S.W.3d at 9–10; Michiana, 168 S.W.3d at 785.
Because neither party argues that general jurisdiction exists, we consider only
specific jurisdiction. See Luciano, 625 S.W.3d at 9.
V. Application
A. Abuse of Discretion
The mere existence of an attorney-client relationship, without more, does not
confer personal jurisdiction over a nonresident attorney in the forum state. Ahrens &
DeAngeli, P.L.L.C. v. Flinn, 318 S.W.3d 474, 484 (Tex. App.—Dallas 2010, pet.
denied), overruled on other grounds by Steward Health Care Sys. LLC v. Saidara, 633 S.W.3d
120, 127–29, 127 n.8 (Tex. App.—Dallas 2021, no pet.). Telephone calls and
correspondence directed at the forum state are generally insufficient. Id. Work
performed outside the state is also insufficient. Id.; Markette v. X-Ray X-Press Corp.,
240 S.W.3d 464, 468–69 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (op. on
reh’g).
Attorneys from Skadden’s Delaware and New York offices worked on the
Colorado lawsuit. Skadden contends that its attorneys performed that work in
8
Delaware, New York, or Colorado. As noted, these attorneys also communicated with
Thompson & Knight about the Texas litigation.
The Foundation sought (and the trial court allowed) discovery of Skadden’s
Delaware and New York attorneys’ internal communications and analyses primarily
about the Texas litigation and, to a more limited extent, about the Colorado litigation,
with the latter targeting Skadden’s communications and analyses about whether the
Colorado litigation presented a conflict of interest between the Foundation and its
former trustees:
(1) Internal communications, memoranda, and documents related to
Skadden . . . attending and assisting with deposition preparation of
Foundation witnesses for their Texas depositions in the
Baylor/[Seminary] Litigation, and subsequent review of the
deposition transcripts;
(2) Internal communications, memoranda, and documents related to
Skadden[’s] research into the role of Foundation directors and
application of Delaware law to issues arising in the Texas litigation;
(3) Internal communications, memoranda, and documents related to
Skadden[’s] research into any conflicts of interest in Foundation
directors placing themselves on the Board of [the Colorado
company];
(4) Internal communications, memoranda, and documents related to
Skadden[’s] research into Director Qualification Memorandum
prepared by Skadden . . . for use in the Texas litigation;
(5) Internal communications, memoranda, and documents related to
Skadden[’s] research into Cost Bullets Memorandum to be used in
the Texas litigation; and
(6) Internal documents reflecting its preparation for (including
developing strategies with Texas counsel), attendance at, and
subsequent review of the transcripts of any of the hearings
9
conducted in the Baylor/[Seminary] Litigation [that] was pending in
[Tarrant County].
The Foundation asserts in response to Skadden’s mandamus arguments that
the subject matter of the communications and analyses are relevant: “The internal
communications sought by the Foundation will likely reveal the breadth of Skadden’s
involvement and its purposeful availment in participating in the . . . Baylor/[Seminary]
[Tarrant County] Litigation.” The Foundation adds, “It is apparent that Skadden
failed to produce many documents relevant to its contacts with Texas—such as
internal communications related to . . . the prior Baylor/[Seminary] Litigation.”
Skadden’s mandamus reply synthesizes its argument differently:
Skadden has already produced every communication with [the
Foundation] and the Thompson & Knight lawyers, as well as with
lawyers who represented the former directors of [the Foundation]. In
contrast, the trial court’s order compels the production of Skadden’s
wholly internal communications and documents that were never sent to
anyone who appeared in the parallel Texas litigation. [Footnotes
omitted.]
As Skadden argued, “[i]nternal communications that were not sent to [the
Foundation] or its lawyers at Thompson & Knight cannot reveal any new contacts
with Texas. That information instead relates to the merits of the dispute.” We agree
with Skadden.
Because the Skadden attorneys worked out of the Delaware and New York
offices and performed some work in Colorado, it follows that the discovery the
Foundation seeks relates to activities performed in Delaware, New York, or Colorado.
10
For specific-jurisdiction purposes, the Foundation’s requested discovery cannot help
it establish personal jurisdiction over Skadden. Regardless of the subject matter of the
internal communications, they neither originated in Texas nor were they directed
toward anyone in Texas. See Michiana, 168 S.W.3d at 791–92 (“[W]e disapprove of
those opinions holding that . . . specific jurisdiction turns on whether a defendant’s
contacts were tortious rather than the contacts themselves.”);5 Markette, 240 S.W.3d at
469 (“[T]he supreme court has rejected the notion of focusing on where a defendant
directed a tort or where the effects of tortious conduct will be felt in determining
specific jurisdiction.”). 6 And the work that Skadden performed occurred in
jurisdictions other than Texas. See Ahrens & DeAngeli, P.L.L.C., 318 S.W.3d at 479–80,
484, 486–87;7 Markette, 240 S.W.3d at 469 (“[The Indiana attorney’s] judgment, which
will be the focus of the underlying litigation, was exercised in Indiana . . . .”).
In Michiana, the plaintiff alleged tort, contract, and statutory claims.
5
168 S.W.3d at 791.
In Markette, the plaintiff alleged legal malpractice “and many related claims,
6
including fraud, negligent misrepresentation, breach of fiduciary duty, and breach of
contract.” 240 S.W.3d at 466.
7
In Ahrens & DeAngeli, the record showed that attorneys with places of
businesses in Washington and Idaho performed legal work in Washington or Idaho,
not Texas, on behalf of their Texas client and that the attorneys communicated with
their Texas client from Washington or Idaho. The court concluded that the
Washington and Idaho attorneys, their Washington law firm, and a corporation that
the attorneys had formed with its place of business in Idaho had negated the existence
of contacts between each of them and Texas and that the trial court had thus
improperly exercised personal jurisdiction over them. 318 S.W.3d at 479–80, 484,
486–87.
11
The Texas Supreme Court’s recent case, In re Christianson Air Conditioning &
Plumbing, LLC, does not change our analysis. No. 20-0384, 2022 WL 333367 (Tex.
Feb. 4, 2022) (orig. proceeding). That case dealt with discovery relevant to personal
jurisdiction that overlapped with discovery relevant to the merits. Id. at *4. The
question was whether the overlapping merits discovery justified denying the personal-
jurisdiction discovery, with the supreme court observing that “[n]othing in Rule 120a
or our cases suggests that jurisdictional discovery must relate exclusively to the
jurisdictional question, as the court of appeals held. To the contrary, we have
indicated that jurisdictional discovery may overlap with merits issues in certain
circumstances.” Id. at *3. In contrast, the Foundation’s discovery will not lead to
anything relevant to personal jurisdiction, nor do we purport to hold that the
Foundation is limited to discovery “exclusively” related to jurisdiction.
Another recent case to which the Foundation has called our attention, Ringham
v. Bernstein, is also distinguishable. No. 05-21-00526-CV, 2022 WL 68221 (Tex.
App.—Dallas Jan. 5, 2022, no pet. h.). There, the out-of-state defendants—who were
appealing the denial of their special appearances—specifically targeted a Texas
resident as their client. Id. at *5. Here, the Foundation specifically sought out services
from Skadden offices outside Texas.
Because the trial court authorized discovery exceeding what was reasonably
calculated to lead to evidence relevant to the special appearance, we hold that the trial
12
court abused its discretion by granting the Foundation’s motion to compel and by
denying Skadden’s motion for protection.
B. Inadequate Remedy at Law
The Foundation next argues that we should deny mandamus relief because
Skadden has an adequate remedy by interlocutory appeal after the trial court rules on
Skadden’s special appearance: “Finally, Skadden is not entitled to mandamus relief
because it has an adequate remedy at law through a possible interlocutory appeal in
the event it believes the trial court incorrectly denies Skadden’s special appearance.”
We disagree.
For good reason, Skadden has not asked us to review the trial court’s ruling on
its special appearance—the trial court has not yet ruled on it. Rather, Skadden has
asked us to review the trial court’s discovery order in the context of its special
appearance.
Mandamus lies if a trial court permits a plaintiff to engage in discovery
unrelated to a defendant’s pending special appearance. See Cho, 2017 WL 3911002, at
*2 (citing Doe, 444 S.W.3d at 608). The trial court’s order might well advance the
Foundation’s merits discovery, but it will not advance resolving Skadden’s special
appearance. Mandamus is appropriate to correct an order compelling discovery that is
well outside the proper bounds. Am. Optical Corp., 988 S.W.2d at 713.
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Conclusion
We hold that the trial court abused its discretion by granting the Foundation’s
motion to compel and by denying Skadden’s motion for protection and that Skadden
has no other adequate remedy at law. We conditionally grant Skadden’s petition and
direct the trial court to:
• vacate its November 11, 2021 order directing Skadden to produce the
documents identified in categories (1) through (6) above pending the special
appearance;
• grant Skadden’s motion for protection of these documents pending the
special appearance; and
• deny the Foundation’s motion to compel production of these documents
pending the special appearance.8
Because we are confident that the trial court will comply with these directives, the writ
will issue only if the trial court fails to do so.
/s/ Elizabeth Kerr
Elizabeth Kerr
Justice
Delivered: February 18, 2022
The order also required Skadden to produce a witness for a deposition to
8
address personal jurisdiction. Skadden does not request any relief from that portion of
the order.
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