Kash Patel Wins Libel Case Against Substacker Jim Stewartson: Key Ruling Explained

Chief Judge Andrew Gordon of the U.S. District Court for the District of Nevada issued a procedural ruling in Patel v. Stewartson that clarifies key aspects of default judgments in defamation cases. The decision, handed down in 2023, addresses Kashyap Patel and the Kash Foundation, Inc.’s libel lawsuit against Substack writer Jim Stewartson.

Patel and the Kash Foundation sued Stewartson in 2023, alleging that he made defamatory statements about them on Twitter (now X) and Substack between June 2021 and May 2023. Stewartson did not respond to the lawsuit, leading Judge Gordon to enter a default judgment in favor of the plaintiffs, awarding $100,000 in compensatory damages and $100,000 in punitive damages.

Stewartson later filed a motion to set aside the default judgment and to dismiss the case for lack of personal jurisdiction. He argued that he was not properly served with the lawsuit and that he lacked sufficient ties to Nevada to justify the court’s jurisdiction. The court rejected these arguments, stating that Stewartson had actual notice of the suit and that the plaintiffs had substantially complied with service rules.

Burden of Proof on Personal Jurisdiction Remains Unresolved

The court acknowledged a critical uncertainty: who bears the burden of proof regarding personal jurisdiction in cases where a defendant receives actual notice but fails to respond until after a default judgment is entered.

The Ninth Circuit has not yet issued a definitive ruling on this issue. However, the court cited two key precedents:

• Thomas P. Gonzalez Corporation v. Consejo Nacional de Produccion de Costa Rica: Suggested that the plaintiff bears the burden of proving minimum contacts for jurisdiction.
• Internet Solutions Corp. v. Marshall: Held that a defendant who allows a default judgment to be entered and later challenges it should bear the burden of proof, aligning with the principle that such defendants must face the consequences of their delay.

The court noted that Internet Solutions may indicate a shift in the usual burden, which typically places the responsibility on plaintiffs to establish valid service under Federal Rule of Civil Procedure 4. This could extend to the burden of proving minimum contacts for jurisdiction.

Circuit Courts Divided on Jurisdictional Burdens

The decision highlights a broader split among federal circuits on this issue:

• The Eleventh Circuit places the burden of establishing minimum contacts on the plaintiff.
• The Ninth Circuit has not yet resolved whether the burden shifts in default judgment cases.

The court ordered supplemental briefing to further explore these procedural questions, signaling that the ultimate resolution may require appellate clarification.