Case: Insurance Corp. of Ireland, Ltd. v.

Compagnie des Bauxites de Guinee

(1982; US) [App. 90-96]
456 U.S. 694

Facts: Pl obtained insurance against business interruption through Df. Pl

alleged there was a business interruption, and Df refused to pay. Pl brought suit
in PA. Dfs are foreigners, and challenged jurisdiction. Pl responded by making
certain requests for discovery. Df refused, saying the request was too
burdensome. Court ordered the discovery, but Dfs refused. Court, as a sanction,
entered a finding for personal jurisdiction.
○ Df argues that application of Rule 37 (sanctions for failure to comply
with discovery orders) violates due process. Until a court has jurisdiction over a
party, they need not comply with discovery orders, and court cannot assume
jurisdiction.

Issue: Whether Rule 37(b) [sanctions for failure to comply with discovery
orders] applies to facts that form the basis for personal jurisdiction over a Df.
- Yes.

Holding: Sanction imposed by lower court was not an abuse of discretion under the
facts of this case.

Reasoning:
○ Pl had a prima facie case showing minimum contacts, but this is not the
only way to get personal jurisdiction.
§ Waiver theory
□ Requirement for personal jurisdiction flows from due process
clause, which recognizes an individual liberty interest. Because of this, personal
jurisdiction may be waived (voluntarily or not).
□ Sanction (under Rule 37) applied to a finding of personal
jurisdiction creates no more due process problem than a Rule 12 waiver (which says
that PJ can be waived if not timely objected)
□ The mere use of procedural rules does not in itself
violate the Df's due process rights.
§ Presumption theory
□ The preservation of due process was secured by the presumption
that the refusal to produce evidence material to the administration of due process
was but an admission of the want of merit in the asserted case.

Concurring Opinion: J. Powell agrees with judgment but not with the reasoning
(this seems important*)
○ The due process issue of minimum contacts is very important. You can't
just waive it like majority opinion did here. Violates due process and
constitution to use Rule 37 to get PJ.
○ (re: rule 37 as allowing sanction of finding PJ) But, Rule 37 doesn’t say
you can do this.
§ Rule 82: language seems to establish that Rule 37 should not be
construed as a jurisdictional grant: "these rules shall not be contrued to extend
… jurisdiction of the U.S. district courts or the venues of actions therein."
○ However, Pl made a prima facie case showing minimum contacts, which was
sufficient to warrant discovery orders. When Df failed to comply with those
orders, then its ok for court find minimum contacts existing, either under Rule
37, waiver, or assumption.

Notes
• What is in dispute?
 ○ Getting discovery from D's regarding PJ
○ Whether or not jurisdiction exists in PA
• P served discovery requests on that issue
○ Want to know info on contacts in PA (to get minimum contacts)
○ D refused to answer
○ P moves to compel answer
• In support of that motion, P proffered affidavit suggesting that many of the D's
had consented to jurisdiction
○ There is good reason to think there is jurisdiction in PA, b/c docs they
had
○ Not requesting just because hoping to find contacts
§ This makes a difference - prevents fishing expeditions
• Abuse - to claim something if you don’t know if its true or not, and hope to get
discover docs that prove it
○ The more the discovery demand touches on a sensitive area (like whether
court has privilege), you have to show that you have a good reason, before court
orders the discovery
○ If there is no issue, then judge shouldn’t permit discovery
• Practical litigation matter, and limitations on the court
• In this case, the district court granted the motion to compel, and held as a
sanction for their refusal, that there would be a finding that there was PJ.
• Supreme court affirms
○ Majority says: you are subject to an orderly process of PJ. But if you
chose to answer the complaint. Not only will you be subject to the legal ruling of
jurisdiction, but also subject to an orderly process of fact finding of that legal
ruling.
○ Half theory - (pg 367) if you don’t answer the questions, a presumption
arises that the answer would be unfavorable
§ They did a fact finding of PJ, based on the presumption. This is weak
and they don’t press it.
○ Better theory - once you raise a defense, then other side should be able
to test it. There is at least provisional jurisdiction - jurisdiction to determine
jurisdiction.
• Theory #2 (Powell)
○ No good. If no PJ, then they don’t have to submit to the court's discovery
orders either.
○ So how does he concur? - he looks to existing record and sees that the Ps
had made a prima facie showing of PJ, and since D didn’t rebut that, it was
perfectly fine for district court to decide it had PJ.
§ You cant just allege PJ, and rely on the fact that they answered the
complaint to get discovery. If no PJ, then not entitled to discovery. You have
to have a reasonable basis to proceed with discovery, which there was here, so it
was ok for court to proceed as it did.

• Review element here:

○ Between personal liberty rationale on limitations of PJ

• Majority is saying : trying to protect individual liberty, and Ds waived it by

inappropriate complaint. They didn’t have to answer the complaint, but since they
chose to they waived it. Powell more worried about court's power, unless there is
some showing of reasonableness to proceed.