Aviva Sports, Inc. v. Fingerhut Direct Marketing, Inc.

Background

Aviva Sports, Inc., now called ASI Inc., obtained a default judgment of approximately $8.5 million against Manley Toys Ltd. in 2013. The judgment included damages, attorney fees and costs, and sanctions. Aviva reported that it had collected almost nothing.

In 2015, the court ordered Manley to respond to Aviva’s post-judgment discovery requests. Those requests sought financial and corporate information, including records about assets, transfers, sales, profits, products, customers, distributors, licensing, insurance, ownership, and relationships among companies. Manley never responded.

Manley later began voluntary liquidation proceedings in Hong Kong and related Chapter 15 bankruptcy proceedings in New Jersey. Mat Ng and John Robert Lees served as Manley’s liquidators and foreign representatives. They took custody of about twenty boxes of Manley records, including financial statements, ledgers, bank statements, purchase orders, invoices, bills of lading, and payment vouchers. Manley ultimately dissolved in 2021, and the liquidators became former liquidators. The documents remained in their custody.

The Motion and Jurisdictional Issues

Aviva moved to compel production of the Manley documents and to enforce the court’s earlier discovery order. The liquidators opposed the motion, arguing that the court lacked subject-matter jurisdiction and personal jurisdiction over them.

The court rejected the subject-matter-jurisdiction argument. It held that a federal court retains ancillary jurisdiction—authority connected to an existing case—to enforce its own judgment and related orders. Because the original case involved federal false-advertising claims and the earlier production order concerned enforcement of the judgment, Aviva did not need to establish a new basis for original or diversity jurisdiction over the motion.

The court also held that it had limited specific personal jurisdiction over Ng and Lees for this discovery dispute. Although both individuals denied having personal contacts with Minnesota, the court considered their contacts in their roles as Manley’s liquidators. They took custody of the documents because of their official roles, knew about the Minnesota judgment and production order, and were the only people able to fulfill Manley’s discovery obligations. The court found that their conduct was sufficiently connected to Minnesota and that exercising jurisdiction was consistent with fairness and substantial justice. It also concluded that the limited exercise of jurisdiction did not create unacceptable concerns about respecting Hong Kong’s authority.

The court did not treat the liquidators as continuing corporate representatives of Manley after Manley’s dissolution. Instead, it concluded that it could exercise jurisdiction over the liquidators individually because of their connection to the documents and the court’s order.

Ruling and Required Production

Judge Hildy Bowbeer granted Aviva’s Motion to Compel Production of Manley Documents and Enforce the Court’s Prior Discovery Order. The order requires Ng and Lees to produce to Aviva all documents and electronically stored information they received from Manley, including but not limited to the documents covered by the earlier production order. They may not withhold the materials based on relevance, responsiveness, privilege, or another discovery protection, although the order states that disclosure does not waive an otherwise applicable privilege or protection in this or another federal or state proceeding.

For physical records, the liquidators must ship the originals unless the parties agree to another form of production. Electronically stored information must be sent in its original or native format, with the transfer method agreed upon by counsel. The liquidators must preserve the materials in an unchanged form until production. Unless the parties or court ordered otherwise, production was due by December 15, 2021. Aviva must pay the liquidators’ actual storage, transmission, and shipping costs.

Aviva must preserve the materials it receives and make them available for inspection, upon reasonable notice, to parties in this case or related litigation. Aviva’s alternative request to substitute the liquidators as parties for Manley was denied as moot.