Tim-Minn, Inc. v. Tim Hortons USA, Inc.

Background

Tim-Minn, Inc. brought a franchise-related lawsuit against Tim Hortons USA, Inc. and Restaurant Brands International Limited Partnership (RBI). Tim-Minn alleged that it was a Tim Hortons franchisee and area developer in Minnesota, that Tim Hortons USA was the U.S. franchisor, and that RBI was its parent.

Tim-Minn relied on diversity jurisdiction, which allows a federal court to hear certain disputes between citizens of different states when the amount in controversy exceeds $75,000. Because RBI was alleged to be a limited partnership, the citizenship of each general and limited partner had to be considered. Judge Joan N. Ericksen previously gave Tim-Minn opportunities to amend its complaint to allege those facts. Tim-Minn’s amended complaint identified some information about RBI and 3G Restaurant Brands Holdings LP but did not identify the citizenship of RBI’s partners, including 3G Restaurant Brands Holdings LP’s partners.

Instead of filing another amended complaint after Judge Ericksen’s April 17, 2019 order, Tim-Minn moved to stay the case and requested limited jurisdictional discovery. Tim-Minn’s counsel stated that publicly available information did not disclose all of RBI’s limited partners. The proposed discovery sought information about the citizenship of 3G Restaurant Brands Holdings LP’s partners and RBI’s other limited partners.

Arguments and analysis

Tim-Minn argued that a stay would allow it to determine whether federal subject-matter jurisdiction existed and would not significantly affect the court’s resources or create duplicative work. The defendants argued that jurisdictional discovery was speculative and burdensome and that Tim-Minn’s claims against RBI were frivolous or unlikely to succeed. They also argued that there was no operative complaint to stay because of the jurisdictional deficiencies.

The court found that the requested information was directly relevant to the jurisdictional issue and that Tim-Minn had exhausted publicly available sources. The defendants’ counsel acknowledged that publicly available information likely would not identify RBI’s partners or their citizenship. The court also found that the defendants had not supported their burden argument with evidence.

The court declined to decide the defendants’ arguments about personal jurisdiction or whether the claims stated a valid claim for relief. It stated that those issues were premature and could be raised later in a properly briefed motion to dismiss. The court also rejected the argument that there was nothing to stay, explaining that Judge Ericksen had not dismissed the amended complaint.

Order

The court granted Tim-Minn’s Motion to Stay and for Leave to Conduct Limited Jurisdictional Discovery. Tim-Minn received 60 days from the date of the order, or from an order upholding the ruling after an objection, to conduct discovery concerning the citizenship of RBI’s partners. The case was otherwise stayed during that period.

Tim-Minn must file a second amended complaint within seven days after the jurisdictional-discovery period expires, following the requirements in Judge Ericksen’s April 17, 2019 order. The order stated that additional time was unlikely to be provided without good cause. The court did not determine whether diversity jurisdiction exists, whether the defendants are subject to personal jurisdiction in Minnesota, or whether Tim-Minn’s claims will succeed.