Case 1:22-cv-23753-KMM Document 162 Entered on FLSD Docket 04/26/2023 Page 1 of 22
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`IN THE UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF FLORIDA
`MIAMI DIVISION
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`Case No. 22-cv-23753-MOORE/BECERRA
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`EDWIN GARRISON, et al., on behalf of
`themselves and all other similarly situated,
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`Plaintiffs,
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`v.
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`SAM BANKMAN-FRIED, et al.,
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`Defendants.
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`/
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`MOTION TO STAY DISCOVERY (INCLUDING INITIAL DISCLOSURES)
`BY DEFENDANTS THOMAS BRADY, GISELE BÜNDCHEN, STEPHEN CURRY,
`LAWRENCE DAVID, THE GOLDEN STATE WARRIORS, LLC,
`UDONIS HASLEM, WILLIAM TREVOR LAWRENCE, SHOHEI OHTANI,
`KEVIN O’LEARY, DAVID ORTIZ, AND NAOMI OSAKA
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`Defendants Thomas Brady, Gisele Bündchen, Stephen Curry, Lawrence David, the Golden
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`State Warriors, LLC (“GSW”), Udonis Haslem, William Trevor Lawrence, Shohei Ohtani, Kevin
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`O’Leary, David Ortiz, and Naomi Osaka (collectively, the “Non-FTX Defendants”) move to stay
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`discovery—including initial disclosures under Rule 26—pending the Court’s rulings on Movants’
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`Motion to Dismiss under Rule 12(b)(6), ECF 154 (“12(b)(6) Mot.”), certain Defendants’ Motion
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`to Dismiss for Lack of Personal Jurisdiction, under Rule 12(b)(2) (ECF 139 (“PJ Mot.”)), and the
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`individual motions to dismiss (ECFs 156-59) (collectively, the “Motions to Dismiss”).
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`INTRODUCTION
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`This is exactly the type of case where a stay of discovery pending the Court’s rulings on
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`case-dispositive motions to dismiss is warranted. In this putative class action, Plaintiffs bring
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`claims against the Non-FTX Defendants—a group of eleven current or former professional
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`athletes, a professional basketball team, a supermodel, a television personality, and a comedian—
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`based on their involvement in FTX advertisements and other marketing by FTX, the now-defunct
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`cryptocurrency platform. Plaintiffs’ allegations are extraordinary and unfounded. They contend
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`that because the Non-FTX Defendants appeared in or were mentioned in advertisements, postings,
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`or other statements by FTX—or, in the case of GSW, because FTX’s logo was displayed at its
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`arena—they are liable for Plaintiffs’ alleged losses stemming from their claimed “purchases” of
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`Yield Bearing Accounts (“YBAs”) offered by FTX. Plaintiffs make these claims even though they
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`have not alleged a single statement by any of the Non-FTX Defendants regarding YBAs, and for
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`many, not a single statement regarding FTX at all. The blame for Plaintiffs’ alleged losses falls on
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`FTX, not on the Non-FTX Defendants, who Plaintiffs have needlessly dragged into this case in
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`search of deep pockets following FTX’s Chapter 11 proceedings.
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`On April 14, 2023, the Non-FTX Defendants filed the Motions to Dismiss. As set forth in
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`the Motions, Plaintiffs fail to state any claim against the Non-FTX Defendants. Each of Plaintiffs’
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`inadequate claims, including their lead securities claim, is subject to dismissal on multiple grounds.
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`See ECF 154. In addition, the Court lacks personal jurisdiction over five of the Non-FTX
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`Defendants.1 Plaintiffs have failed to—and could not—plead any basis for the Court to exercise
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`personal jurisdiction over these defendants, who are non-residents with no alleged (or actual) ties
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`Defendants Curry, David, GSW, Ohtani, and Osaka (collectively, the “Non-Florida
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`1
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`Defendants”) seek dismissal for lack of personal jurisdiction. PJ Mot. 1. By seeking a stay, no
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`Defendant intends to waive or waives any of their personal jurisdiction arguments, each of which
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`is reserved. See, e.g., Modis, Inc. v. Amir, No. 3:06-cv-483-J-25HTS, 2006 WL 8439290, at *3
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`(M.D. Fla. Nov. 17, 2006) (no waiver where defendant moved to dismiss for lack of personal
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`jurisdiction in conjunction with seeking to stay action).
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`to or relevant conduct in Florida. See PJ Mot. 6-15. A quick “peek” at the Motions to Dismiss
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`shows that Plaintiffs’ claims are nonmeritorious and the Motions are likely to be granted.
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`As for the other defendants, one (Sam Trabucco) has also moved to dismiss on personal
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`jurisdiction and other grounds, see Def. Sam Trabucco’s Mot. Dismiss (ECF 155 (“Trabucco
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`Mot.”)) 6-12, one (Sam Bankman-Fried) has moved to stay the case against him, see Mot. Stay
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`(ECF 152), and the remaining defendants have not yet appeared.2 The U.S. Attorney’s Office has
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`moved to stay discovery related to these and other FTX Insiders in other matters and potentially
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`will in this case as well.
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`The Court has already recognized this is a “complex and costly litigation for all parties
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`involved[.]” Order at 3, ECF 133. Because the Plaintiffs’ claims are nonmeritorious, the Court
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`would be well within its broad discretion to—and should—stay all discovery pending its rulings
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`on the Motions to Dismiss. Absent a stay, the Non-FTX Defendants will be subjected to expensive,
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`excessive, and burdensome discovery regarding claims that are likely to be dismissed. After the
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`Non-FTX Defendants filed the Motions, Plaintiffs sent correspondence indicating that they seek
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`to take seventeen separate depositions, including depositions of all eleven Non-FTX Defendants,
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`within the next 45 days and to propound written discovery requests to all eleven Non-FTX
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`The only “celebrity” defendant who has not yet appeared is Shaquille O’Neal, who was
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`2
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`allegedly recently “served” through the process server throwing papers at his moving vehicle. See
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`ECF 161. Four of the “FTX Insider Defendants” (Gary Wang, Caroline Ellison, Nishad Singh,
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`and Dan Friedberg) also have not appeared.
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`Defendants.3 Then, on April 21st, Plaintiffs sent proposed deposition notices and proposed broad
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`requests for production to Defendants Curry, David, GSW, Ohtani, and Osaka—which Plaintiffs
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`claim is “jurisdictional discovery”—even though they are not permitted to serve discovery because
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`the parties have not yet held the initial Scheduling Conference. See Rule 26(d)(1).4 Copies of these
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`discovery requests, which establish the burden the Non-FTX Defendants face absent a stay, are
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`attached as Composite Exhibit A.
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`The Eleventh Circuit has repeatedly held that the Court should exercise its broad discretion
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`to stay discovery in this very circumstance: where Plaintiffs have brought a nonmeritorious action
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`and seek to impose significant discovery burdens and costs on the Non-FTX Defendants prior to
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`the likely dismissal of the case. As stated by the Eleventh Circuit:
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`Allowing a case to proceed through the pretrial processes with an
`invalid claim that increases the costs of the case does nothing but
`waste the resources of the litigants in the action before the court,
`delay resolution of disputes between other litigants, squander scarce
`judicial resources, and damage the integrity and the public’s
`perception of the federal judicial system.
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`Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1368 (11th Cir. 1997); see also, e.g., Isaiah v.
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`JPMorgan Chase Bank, N.A., 960 F.3d 1296, 1308-09 (11th Cir. 2020) (citing Chudasama, 123
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`F.3d at 1367); Diulus v. Am. Express Travel Related Servs. Co., 823 F. App’x 843, 847 (11th Cir.
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`2020) (same); Redford v. Gwinnett Cty. Jud. Cir., 350 F. App’x 341, 346 (11th Cir. 2009) (same).
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`All the factors that the Court must consider in exercising its broad discretion favor a stay
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`Because Local Rule 7.7(b) prohibits attorneys from furnishing the Court with copies of
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`3
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`correspondence between or among counsel, Movants do not attach the email exchange, but will
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`promptly do so at the Court’s request.
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`4
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`Since Defendant O’Neal was only recently “served,” see n.2 supra, the deadline to hold
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`the Scheduling Conference and submit the joint scheduling report is May 8, 2023. See ECF 101.
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`of discovery. First, a “preliminary peek” at the Motions to Dismiss shows that they are meritorious
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`and, if granted, would dispose of all claims against the Non-FTX Defendants. See Lewis v.
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`Mercedes-Benz USA, LLC, No. 19-cv-81220, 2020 WL 4923640, at *2 (S.D. Fla. Mar. 25, 2020)
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`(Ruiz, II, J.) (citation and quotation marks omitted).
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`Second, without a stay, the Non-FTX Defendants would be subject to the considerable
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`burden and expense of discovery in a case with seven named plaintiffs and eighteen defendants,
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`and where there are parallel bankruptcy and criminal proceedings—all to litigate nonmeritorious
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`claims that should be dismissed. Plaintiffs’ proposed discovery—both “initial” merits and so-
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`called “jurisdictional” discovery—demonstrates the substantial and needless burden that would be
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`imposed upon the Non-FTX Defendants if discovery is not stayed. Plaintiffs’ fishing expedition,
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`if allowed, includes “initial” merits discovery consisting of depositions of all eleven Non-FTX
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`Defendants within 45 days, extensive written discovery, and depositions and discovery requests
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`from FTX’s accountants, advertisers, and non-party FTX employees (for a total of seventeen
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`depositions). Plaintiffs also have provided proposed notices for so-called “jurisdictional”
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`depositions of Defendants Curry, David, GSW, Ohtani, and Osaka for the coming weeks, and also
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`provided these Non-FTX Defendants with proposed exceedingly broad requests for production.
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`The Non-FTX witnesses would have to prepare and sit for these proposed depositions—
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`which would be attended by counsel for all other Non-FTX Defendants—and address substantial
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`discovery requests that will unquestionably involve objections and discovery litigation. In
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`addition, as Plaintiffs’ response to the Order to Show Cause issued in the Norris action shows,
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`Plaintiffs intend to seek a delay in briefing the Motions to Dismiss for this proposed
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`“jurisdictional” discovery to occur. See Norris ECF 47 at 1. All this means that the Non-FTX
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`Defendants could collectively spend (at least) hundreds of thousands of dollars participating in
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`depositions and responding to discovery centered on nonmeritorious claims.
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`Third, there will be no prejudice to Plaintiffs. A stay of discovery would not deny Plaintiffs
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`the right to take discovery: if the Court denies the Motions to Dismiss and finds that Plaintiffs have
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`stated plausible claims—which the Non-FTX Defendants submit is unlikely—Plaintiffs will have
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`the opportunity to take the discovery that they seek. Moreover, the duration of the proposed stay
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`is modest—the Motions to Dismiss have already been filed and should be fully briefed and ripe
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`for adjudication in short order. A minimal delay in discovery follows the precedent laid down by
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`the Eleventh Circuit in Chudasama and its progeny and is not at all prejudicial to Plaintiffs.
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`In short, the Court should not allow Plaintiffs to proceed with expensive, wide-ranging,
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`and burdensome discovery unless and until the Court finds Plaintiffs have stated any claim for
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`relief and that the Court has jurisdiction over each Non-FTX Defendant which has moved to
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`dismiss on that basis. The Court’s discretion to stay discovery exists for this exact reason: to
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`prevent unnecessary and costly discovery with respect to nonmeritorious claims.
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`MEMORANDUM OF LAW
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`A. The Court Has Broad Authority To Stay Discovery
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`District courts possess “broad discretion to stay proceedings as an incident to [their] power
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`to control [their] own docket[s].” Clinton v. Jones, 520 U.S. 681, 706 (1997); see Johnson v. Bd.
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`of Regents of Univ. of Ga., 263 F.3d 1234, 1269 (11th Cir. 2001). This includes “‘broad discretion
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`to stay discovery pending decision on a dispositive motion.’” Internaves De Mexico s.a. de C.V.
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`v. Andromeda Steamship Corp., No. 16-cv-81719, 2017 WL 7794599, at *1 (S.D. Fla. Feb. 24,
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`2017) (Middlebrooks, J.) (quoting Panola Land Buyers Ass’n v. Shuman, 762 F.2d 1550, 1560
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`(11th Cir. 1985)). To that end, the Eleventh Circuit held in Chudasama that “[f]acial challenges to
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`the legal sufficiency of a claim or defense, such as a motion to dismiss based on failure to state a
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`claim for relief, should . . . be resolved before discovery begins.” 123 F.3d at 1367 (footnote
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`omitted). This principle equally applies where there is a pending motion to dismiss for lack of
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`personal jurisdiction. See Lewis, 2020 WL 4923640, at *2-3.
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`A stay of discovery pending a ruling on a case-dispositive motion is appropriate because
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`the mere filing of a complaint should not “unlock the doors of discovery for a plaintiff armed with
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`nothing more than conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). Indeed,
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`“discovery follows the filing of a well-pleaded complaint. It is not a device to enable the plaintiff
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`to make a case when his complaint has failed to state a claim.” Carter v. DeKalb Cty., 521 F. App’x
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`725, 728 (11th Cir. 2013) (citations and quotation marks omitted); see also Isaiah, 960 F.3d at
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`1309 (“[T]he District Court . . . did not abuse its discretion in staying discovery pending resolution
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`of [defendant’s] 12(b)(6) motion to dismiss challenging the legal sufficiency of [plaintiff’s]
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`claims.”); Diulus, 823 F. App’x at 847 (“[B]ecause their complaint failed to state a claim,
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`[plaintiffs] were not entitled to discovery[.]”); Redford, 350 F. App’x at 346 (affirming discovery
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`stay where motion to dismiss “raised serious questions regarding the viability of [plaintiff’s]
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`complaint”).
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`In Chudasama, the Eleventh Circuit elaborated on why a stay of discovery in the
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`circumstances before the Court here is proper:
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`If the district court dismisses a nonmeritorious claim before
`discovery has begun, unnecessary costs to the litigants and to the
`court system can be avoided. Conversely, delaying ruling on a
`motion to dismiss such a claim until after the parties complete
`discovery encourages abusive discovery and, if the court ultimately
`dismisses the claim, imposes unnecessary costs. For these reasons,
`any legally unsupported claim that would unduly enlarge the scope
`of discovery should be eliminated before the discovery stage, if
`possible. Allowing a case to proceed through the pretrial processes
`with an invalid claim that increases the costs of the case does
`nothing but waste the resources of the litigants in the action before
`the court, delay resolution of disputes between other litigants,
`squander scarce judicial resources, and damage the integrity and the
`public’s perception of the federal judicial system.
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`In sum, as the burdens of allowing a dubious claim to remain in the
`lawsuit increase, so too does the duty the district court finally to
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`determine the validity of the claim. Thus, when faced with a motion
`to dismiss a claim for relief that significantly enlarges the scope of
`discovery, the district court should rule on the motion before
`entering discovery orders, if possible. The court’s duty in this regard
`becomes all the more imperative when the contested claim is
`especially dubious.
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`Chudasama, 123 F.3d at 1368 (footnotes omitted).
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`A court should enter a discovery stay under Chudasama where the movant shows “good
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`cause and reasonableness.” Taylor v. Serv. Corp. Int’l, No. 20-cv-60709, 2020 WL 6118779, at *1
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`(S.D. Fla. Oct. 16, 2020) (Ruiz, II, J.) (citations and quotation marks omitted). “Courts have found
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`good cause to stay discovery exists when the resolution of a preliminary motion may dispose of
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`the entire action.” Pierce v. State Farm Mut. Auto. Ins. Co., No. 14-cv-22691, 2014 WL 12528362,
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`at *1 (S.D. Fla. Dec. 10, 2014) (Williams, J.) (citation omitted). In making this determination, the
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`Court must take a “preliminary peek at the merits of the dispositive motion to see if it appears to
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`be clearly meritorious and truly case dispositive.” Taylor, 2020 WL 6118779, at *3 (citation and
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`quotation marks omitted); see also Rodriguez v. Imperial Brands PLC, No. 20-cv-23287, 2022
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`WL 2231504, at *3 (S.D. Fla. May 25, 2022) (Otazo-Reyes, M.J.) (same).
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`In addition, courts “must balance the harm produced by a delay in discovery against the
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`possibility that the [dispositive] motion will be granted and entirely eliminate the need for such
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`discovery.” Rodriguez, 2022 WL 2231504, at *3 (citation and quotation marks omitted) (alteration
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`in original). This balancing test also involves assessing “the likely costs and burdens of proceeding
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`with discovery” on claims that may be dismissed. Dayem ex rel. Dayem v. Chavez, No. 13-cv-
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`62405, 2014 WL 12588513, at *1 (S.D. Fla. Mar. 11, 2014) (Cooke, J.) (citation and quotation
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`marks omitted).
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`Applying these principles, the Eleventh Circuit has repeatedly reaffirmed Chudasama’s
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`central holding that a stay of discovery is proper where a case may be dismissed or materially
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`narrowed at the threshold stage. See Isaiah, 960 F.3d at 1309 (“[T]he failure to consider and rule
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`on . . . potentially dispositive pretrial motions [before discovery] can be an abuse of discretion.”);
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`Lawrence v. Governor of Ga., 721 F. App’x 862, 864 (11th Cir. 2018) (affirming partial stay
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`because the district court “specifically identified our warnings in Chudasama, and heeded them”);
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`Rivas v. Bank of N.Y. Mellon, 676 F. App’x. 926, 932 (11th Cir. 2017) (“Granting a discovery stay
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`until an impending motion to dismiss is resolved is a proper exercise of th[e Court’s]
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`responsibility.”); Roberts v. FNB S. of Alma, Ga., 716 F. App’x 854, 857 (11th Cir. 2017) (“[I]n
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`general, motions to dismiss for failure to state a claim should be resolved before discovery
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`begins.”) (citation and quotation marks omitted); Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d
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`1267, 1292 (11th Cir. 2005) (noting the importance of resolving facial challenges before discovery
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`begins, “especially when the challenged claim will significantly expand the scope of allowable
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`discovery”). In accordance with these rulings, this Court (as discussed below) and other Judges in
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`this District have often stayed discovery when presented with legitimate facial challenges to a
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`complaint that could dispose of the entire case or greatly narrow the issues.5
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`Further, discovery stays are “particularly appropriate in large putative class action cases
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`such as this,” where discovery will be sought from multiple defendants, Taylor, 2020 WL
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`6118779, at *3, and “has the potential to consume vast resources,” In re Mednax Servs. Inc.
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`See, e.g., Padilla v. Porsche Cars N. Am., Inc., No. 18-cv, 24988, 2019 WL 1281484, at
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`5
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`*1 (S.D. Fla. Mar. 19, 2019) (Moreno, J.) (noting that “[i]n a series of rulings, the undersigned has
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`consistently followed Chudasama’s guide”); Zinn v. SCI Funeral Servs. of Fla., Inc., No. 12-cv-
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`80788, 2013 WL 12080175, at *2 (S.D. Fla. Mar. 4, 2013) (Ryskamp, J.) (citing Chudasama in
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`granting discovery stay); Staup v. Wachovia Bank, N.A., No. 08-cv-60359, 2008 WL 1771818, at
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`*1 (S.D. Fla. Apr. 16, 2008) (Cohn, J.) (staying all discovery, including Rule 26 disclosures).
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`Customer Data Sec. Breach Litig., 21-md-02994, 2021 WL 10428229, at *2 (S.D. Fla. Oct. 9,
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`2021) (Ruiz, II, J.) (citation and quotation marks omitted); see also, e.g., Lewis, 2020 WL 4923640,
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`at *4; In re Managed Care Litig., 00-md-1334, 2001 WL 664391, at *3 (S.D. Fla. June 12, 2001)
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`(Moreno, J.).
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`B. The Court Should Stay Discovery Pending a Ruling on the Motions to Dismiss
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`As shown below, good cause to stay discovery exists because (i) there is a strong likelihood
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`that the Court will dismiss Plaintiffs’ claims for failure to state a claim and on jurisdictional
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`grounds, (ii) the Non-FTX Defendants face intrusive, needless, and expensive discovery with
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`respect to claims that should be dismissed with prejudice at the threshold pleading stage, and
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`(iii) Plaintiffs will not be prejudiced by a short stay of discovery.
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`1. The Motions to Dismiss are Clearly Meritorious and Case Dispositive
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`In taking a “preliminary peek” at the Motions to Dismiss, the Court need not “offer any
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`substantive opinion on the merits of said Motion[s].” In re Mednax Servs., Inc., 2021 WL
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`10428229, at *3 n.2. Rather, if, after a preliminary peek, the Court finds that the Non-FTX
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`Defendants have raised “significant questions” about the viability of Plaintiffs’ claims and have
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`identified “notable pleading deficiencies,” the Court is well within its authority to—and, indeed,
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`should—stay discovery pending resolution of the threshold challenges. Id. at *2. Here, even a
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`cursory review of the Motions to Dismiss shows that that they would dispose of this action as to
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`the Non-FTX Defendants.
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`The Motion to Dismiss Under Rule 12(b)(6)
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`As set out in full detail in the Rule 12(b)(6) Motion to Dismiss, each of Plaintiffs’ claims
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`is likely to be dismissed on several independent grounds. Plaintiffs’ theory of this case is
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`fundamentally untenable and unprecedented—the Non-FTX Defendants cannot be held liable for
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`securities violations (and other alleged claims) related to the YBAs offered by FTX simply because
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`the Non-FTX Defendants are alleged to have been involved in advertisements and marketing by
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`FTX, none of which is even alleged to have mentioned (or did mention) a YBA.
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`Plaintiffs’ lead cause of action is a claim under the Florida Securities and Investor
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`Protection Act, Fla. Stat. § 517.07, where Plaintiffs allege that the Non-FTX Defendants were
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`“agents” of FTX who personally participated in the sale of YBAs. See 12(b)(6) Mot. 6. This claim
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`fails for several reasons. First, the Non-FTX Defendants are not persons who can be held liable
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`under Section 517.07 because none of the Non-FTX Defendants was in privity with Plaintiffs (who
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`are alleged buyers of YBAs) and because the Non-FTX Defendants do not qualify as officers,
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`directors, or agents of FTX merely by virtue of their involvement in FTX advertisements or
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`marketing. See id. at 6-7. Second, none of the Non-FTX Defendants is alleged to have personally
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`participated or aided in the sale of YBAs to Plaintiffs—nor could any such allegation be made.
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`The Non-FTX Defendants only allegedly appeared in FTX advertisements or had a business
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`agreement with FTX regarding FTX’s marketing efforts—but crucially, none of the Non-FTX
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`Defendants ever mentioned YBAs. See id. at 7-8.
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`Plaintiffs’ other claims are also fundamentally defective. The FDUTPA claim is barred as
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`a threshold matter because claims related to securities transactions, as alleged here, cannot be
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`brought under FDUTPA. See id. at 9-10. Additionally, the alleged deceptive conduct was not pled
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`with particularity in satisfaction of Rule 9(b). See id. at 11. This, by itself, is a basis for the
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`requested stay, because a stay of discovery is appropriate “especially where, as here, Defendants
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`are alleging that Plaintiffs failed to plead fraud with particularity as required by” Rule 9(b). Tradex
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`Global Master Fund SPC Ltd. v. Palm Beach Cap. Mgmt., LLC, No. 09-cv-21622, 2009 WL
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`10664410, at *1 (S.D. Fla. Nov. 24, 2009) (Moreno, J.). In addition, the claim is based on
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`statements that are non-actionable puffery, 12(b)(6) Mot. 11, the Non-FTX Defendants did not
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`participate in the alleged misconduct underlying the claim, id. at 12-13, and the Non-FTX
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`Defendants were not the proximate cause of Plaintiffs’ alleged losses, id. at 13-14. Finally, the
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`claims for civil conspiracy and declaratory judgment likewise fail, including because the
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`underlying securities and FDUTPA claims upon which they are based fail. Id. at 14-16.
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`In sum, there is good cause for a threshold stay of discovery because the Court is faced
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`with a lawsuit that is likely to be dismissed.
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`The Motion to Dismiss for Lack of Personal Jurisdiction
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`Five out of eleven Non-FTX Defendants, as well as Defendant Trabucco, moved to dismiss
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`for lack of personal jurisdiction. See PJ Mot.; Trabucco Mot. 6-12. This fundamental jurisdictional
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`challenge serves as an alternative and independent basis to stay discovery.
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`As this Court has recognized, “‘when faced with legitimate jurisdictional challenges . . .
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`discovery should not commence until such challenges are resolved.’” Oueiss v. al Saud, No. 20-
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`cv-25022 (S.D. Fla. Apr. 5, 2021) (Moore, J.) (copy attached as Exhibit B) at 5 (quoting Lewis,
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`2020 WL 4923540, at *3); see also Gillier v. Servicios Agecom, LLC, No. 17-cv-23155, 2017 WL
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`6994217, at *1 (S.D. Fla. Nov. 27, 2017) (Scola, J.) (staying discovery given “strong likelihood”
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`that motions to dismiss based on lack of personal jurisdiction would be granted, in which case
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`“proceeding in this forum . . . would be improper”). This is true even where a threshold
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`jurisdictional challenge is brought by some (but not all) defendants because “[a] stay of discovery
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`may logically be applied to all parties in an action, even those who do not raise jurisdictional
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`challenges.” Oueiss, No. 20-cv-25022 at 5 (citing Iqbal, 556 U.S. at 685-86).
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`In Oueiss, the plaintiff, an international journalist, sued eighteen domestic and foreign
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`defendants for, inter alia, hacking and defamation. See id. at 2. All defendants brought a motion
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`to stay discovery pending resolution of various motions to dismiss. Id. at 3. Certain foreign
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`defendants argued that their personal jurisdiction issues necessarily had to be resolved before the
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`Court could require them to engage in discovery. Id. at 3-4. While the U.S. defendants did not raise
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`personal jurisdiction challenges, they still joined the motion to stay based on the jurisdictional
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`challenges, arguing that “discovery should not proceed in piecemeal fashion.” Id. at 4. This Court
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`found that discovery could not commence against the foreign defendants who raised personal
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`jurisdiction challenges. Id. at 5. As a result, the Court stayed discovery entirely, even as to the non-
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`movants, because it would be inefficient to proceed otherwise. See id. at 5-6.
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`Here, where almost half of the Defendants who have appeared have brought meritorious
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`challenges to the exercise of personal jurisdiction—in part, based on the complete absence of any
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`adequate allegations, see, e.g., PJ Mot. 7-11—the Court should stay all discovery, as it did in
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`Oueiss. There is no dispute that the Court does not have general jurisdiction over the Non-Florida
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`Defendants, who are non-resident individuals and a California professional sports team. See id. at
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`6-7. And there is no specific jurisdiction because Plaintiffs do not allege that any of these
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`defendants marketed or sold YBAs (or even generically promoted FTX) in Florida, which means
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`that Plaintiffs do not satisfy the “connexity” requirement; plus, Plaintiffs’ allegations fall severely
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`short of satisfying the “minimum contacts” test. See id. at 8-15.
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`Plaintiffs should not be permitted to avoid a stay—or delay the adjudication of the Motions
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`to Dismiss—through purported “jurisdictional discovery.” Review of Composite Exhibit A shows
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`that the highly burdensome and expansive requests are not “jurisdictional discovery,” but, instead,
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`go to the merits of Plaintiffs’ claims. See id. Beyond that, however, Plaintiffs’ “jurisdictional
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`discovery” requests are premature. No Rule 26(f) conference has occurred and a plaintiff seeking
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`jurisdictional discovery “must move the Court to grant the jurisdictional discovery it seeks.”
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`Zamora Radio, LLC v. Last.fm LTD., No. 09-cv-20940, 2011 WL 2580401, at *12 (S.D. Fla. June
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`28, 2011) (Torres, M.J.) (citing United Techs. Corp. v. Mazer, 556 F.3d 1260, 1280-1281 (11th
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`Cir. 2009)).
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`Finally, no such “jurisdictional discovery” could be appropriate because Plaintiffs fail to
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`Case 1:22-cv-23753-KMM Document 162 Entered on FLSD Docket 04/26/2023 Page 14 of 22
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`plead a prima facie case of personal jurisdiction. See, e.g., Butler v. Sukhoi Co., 579 F.3d 1307,
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`1314 (11th Cir. 2009) (“Inasmuch as the complaint was insufficient as a matter of law to establish
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`a prima facie case that the district court had jurisdiction, the district court abused its discretion in
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`allowing the case to proceed and granting discovery on the jurisdictional issue.”); Diulus, 823
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`F. App’x at 847 (“because their complaint failed to state a claim, [plaintiffs] were not entitled to
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`discovery”). As this Court has ruled, a plaintiff “is foreclosed from pursuing jurisdictional
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`discovery in an attempt to marshal facts that he ‘should have had—but did not—before coming
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`through the courthouse doors.’” Thompson v. Carnival Corp., 174 F. Supp. 3d 1327, 1339 (S.D.
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`Fla. 2016) (Moore, J.) (quoting Lowery v. Ala. Power Co., 483 F.3d 1184, 1216 (11th Cir.2007)).
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`That principle fully applies here.
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`2. Without a Stay, the Court and the Non-FTX Defendants Will Be Unduly
`Burdened By Needless and Expensive Discovery
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`
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`Without the requested stay, the Non-FTX Defendants will be subject to the unnecessary,
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`expensive, and significant burden of engaging in discovery in this “complex and costly litigation,”
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`Order at 3, ECF 133, which the Court should dismiss with prejudice at the threshold stage. This
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`factor—the “likely costs and burdens of proceeding with discovery” on nonmeritorious claims—
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`weighs heavily in favor of a stay. And, of course, the Court would have to expend the time and
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`effort involved in addressing a substantial number of discovery challenges, given the excessive
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`breadth of Plaintiffs’ supposedly-limited “jurisdictional discovery.” See Comp. Ex. A.
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`In Chudasama, the Eleventh Circuit highlighted that discovery “imposes several costs on
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`the litigant from whom discovery is sought,” which is a strong basis to stay discovery. 123 F.3d at
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`1367. As the court explained:
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`[Discovery] burdens include the time spent searching for and
`compiling relevant documents; the time, expense, and aggravation
`of preparing for and attending depositions; the costs of copying and
`shipping documents; and
`the attorneys’ fees generated
`in
`interpreting discovery requests, drafting responses to interrogatories
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`and coordinating responses to production requests, advising the
`client as to which documents should be disclosed and which ones
`withheld, and determining whether certain information is privileged.
`The party seeking discovery also bears costs, including attorneys’
`fees generated in drafting discovery requests and reviewing the
`opponent's objections and responses. Both parties incur costs related
`to the delay discovery imposes on reaching the merits of the case.
`Finally, discovery imposes burdens on the judicial system; scarce
`judicial resources must be diverted from other cases to resolve
`discovery disputes.
`
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`Id. at 1367-68 (footnote omitted).
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`As noted above, the burdens of discovery are especially apparent in this litigation.
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`Composite Exhibit A shows the expansive nature of just the “jurisdictional discovery” Plaintiffs
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`seek, which belies any assertion by Plaintiffs that they seek only “narrow” discovery “at this stage”
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`of the proceedings. On top of the “jurisdictional discovery,” Plaintiffs intend to seek “initial”
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`merits discovery that would involve (i) merits depositions of all eleven Non-FTX Defendants,
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`(ii) requests for production for all documents related to the Non-FTX Defendants’ endorsement,
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`sponsorship, or other agreements with FTX, (iii) interrogatories regarding persons involved in the
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`Non-FTX Defendants’ decision to enter into agreements with FTX; (iv) non-party discovery and
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`depositions of t