On January 20, 2023, the Court of Appeals for the Fifth District of Texas reversed the lower court’s ruling and granted ASICS’ petition for a writ of mandamus, dismissing the effort of ASICS’ opponent to assert a US$100 million claim in a Texas subpoena proceeding, where the same claims are being litigated in California. The win was particularly noteworthy because this was the second time ASICS’ opponent has tried to forum shop the same claims in a Texas court, and Sidley has successfully defeated both efforts.
This ruling arises from a breach of contact claim filed by ASICS against defendant Shoebacca in California. Shortly thereafter, Shoebacca sued ASICS in Dallas for claims relating to the same agreement. On our motion, the 160th District Court in Dallas stayed Shoebacca’s Texas suit in favor of the first-filed California action.
Discovery proceeded in the California lawsuit, including an out-of-state subpoena issued to a Texas resident who had represented Shoebacca. ASICS filed an ancillary proceeding in Texas to enforce the third-party subpoena. In response, Shoebacca filed a complaint-in-intervention, not only to object to the subpoena, but to re-assert substantive claims. The ancillary proceeding was assigned to a different Texas court (the 134th District Court of Texas), which issued an order denying ASICS’ motion to strike Shoebacca’s intervention petition. The 134th District Court also set a trial date on Shoebacca’s claims that would allow it to preempt the first-filed and long-running California action.
Sidley then filed a petition for a writ of mandate to the Dallas Court of Appeal — an extraordinary form of relief that is rarely granted. The appellate court adopted Sidley’s arguments that Shoebacca could not use an ancillary subpoena proceeding as a vehicle for asserting substantive claims of relief, and that Shoebacca’s tactics were “tantamount to forum shopping.” Accordingly, the Court of Appeal vacated the trial court’s order of September 7, 2022.
This case provides critical guidance regarding forum shopping between states and application of state law in one state (Texas) to compel discovery related to an active lawsuit in another state (California). Ultimately, with this ruling, the appellate court rejected Shoebacca’s attempts to hijack a proceeding over the enforcement of an out-of-state subpoena so that it could leapfrog actions occurring in California and have Texas courts resolve a dispute first filed in California. Had the appellate court ruled differently, it would have signaled that an out-of-state subpoena could be used to create duplicative lawsuits and interfere with discovery proceedings in other states.
Collin Wedel and David Carpenter (both Los Angeles) directed the appellate strategy on behalf of a multi-office team led by Jack Yeh (Century City) and Yolanda Garcia (Dallas). The team also included Phillip Aurentz, Lauren De Lilly, Rara Kang, Peter De Golia, Tatiana Fields, Chelsea Wu, Melina Bales, Annabeth Reeb, and paralegal Diane Padilla.
