How To Dismiss a Lawsuit in Delaware Filed Against a Delaware Corporation That Does No Business In Delaware
Companies that are incorporated in Delaware but do no business in this state are sometimes sued in the Delaware courts simply because they are incorporated here. If the company has no offices in Delaware or anywhere else in the U.S. for that matter, it makes sense to try to get the lawsuit thrown out (dismissed) rather than have to litigate here.
Your Delaware attorney will file a Motion to Dismiss on your behalf. The argument supporting the motion is that the Delaware court has no jurisdiction over your company. Once the Motion to Dismiss is filed, the plaintiff has the burden of alleging facts that make a prima facie showing of personal jurisdiction over your company (the defendant). To meet this burden, the plaintiff is required to adduce facts which "establish with reasonable particularity'" that the defendant transacts business in Delaware. To assist the plaintiff in establishing with reasonable particularity that there is jurisdiction over the defendant, the Court generally allows the plaintiff to take what’s known as jurisdictional discovery before the Court decides whether to dismiss the case. However, jurisdictional discovery will not be allowed if the plaintiff’s claim is frivolous.
If the defendant files an affidavit with the Court stating facts that show the Court does not have jurisdiction, the plaintiff will not be allowed to rely on unsupported allegations in the Complaint.
For the Court to exercise jurisdiction over the defendant, the plaintiff has to show either:
(1) that defendant regularly does business or solicits business in Delaware, engages in any other persistent course of conduct in Delaware, or derives substantial revenues from the services or products used or consumed in Delaware; or
(2) that the defendant engaged in conduct that falls within at least one of the activities described in the Delaware long-arm statute, and that the plaintiff’s cause of action arises from defendant’s acts or omissions that took place in Delaware.
When the Court is faced with mere unsupported allegations regarding personal jurisdiction over the defendant, allowing the plaintiff to conduct jurisdictional discovery would amount to allowing it to conduct a fishing expedition in order to construct a basis for jurisdiction. In that event, jursdictional discovery will be denied, and the case will be dismissed.
