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Compelling evidence in the U.S. in aid of a non-U.S. proceeding

by | Jul 30, 2017 | Business, Business and Commercial Law, Firm News |

Lawyers in Germany and elsewhere outside the US are often confronted with a practical and often frustrating discovery issue: How does one obtain documents or information for use in a non-U.S. proceeding if it is located solely in the United States. Like many tribunals in other countries, German courts lack the authority to issue subpoenas to non-parties in the U.S., thus making it extremely difficult to obtain such documents or information.

Voluntary disclosure by the U.S. person or entity is always a possibility, though in practice, not a likely scenario unless such disclosure is in that person’s or entity’s best interest. U.S. law, however, provides a useful discovery method, which allows a party to a non-U.S. proceeding or investigation to subpoena documents or take testimony in the United States for use in that proceeding or investigation. The law is codified at 28 U.S.C. § 1782.

The U.S. Congress enacted this law to (1) provide efficient means of assistance to participants in international litigation in U.S. federal courts and (2) encourage foreign countries by example to provide similar means of assistance to U.S. courts. With these aims in mind, U.S. courts are generally in favor of cooperating with international proceedings by granting discovery applications even where the admissibility of the evidence in the international tribunal is in question. See Malev Hungarian Airlines v. United Tech. Int’l Inc., et al., 964 F.2d 97 (2d Cir. 1992); In re Application of Grupo Qumma, S.A. de C.V., et al., 2005 WL 937486 at *3 (S.D.N.Y.).

Section 1782 may be applied in a variety of legal matters in Germany and elsewhere abroad, including matrimonial and estate proceedings, criminal investigations, employment disputes, civil actions involving the fraudulent transfer of money, and private arbitration. Although circuit courts are split as to whether Section 1782 may be applied to private arbitration, the growing trend in the district courts has been to allow such applications in light of the U.S. Supreme Court’s decision in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004). In Intel Corp., the Court held that Section 1782 requires only the tribunal make a dispositive ruling that is reviewable by the courts. Intel Corp., 542 U.S. at 259. “[T]he Supreme Court in dictum quoted a law review article for the proposition that ‘[t]he term ‘tribunal’ [in the statute] . . . includes investigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies, as well as conventional civil, commercial, criminal, and administrative courts.” In re Chevron Corp., 2010 U.S. Dist. LEXIS 47034 (S.D.N.Y. May 10, 2010) citing Intel Corp., 542 U.S. at 258. Since the Intel Corp. decision, lower courts have held that Section 1782 also applies to proceedings that have not yet commenced as long as such a proceeding is within “reasonable contemplation.” Intel Corp., 542 U.S. at 258.

The process to obtain a subpoena includes an affidavit or declaration stating the reasons why the applicant is seeking discovery and should also include a memorandum of law since many district judges may not be particularly familiar with the legal standard of the statute.

The court has broad discretion in granting the application if three elements are met: (1) the person from whom the discovery is sought resides or is found in the district; (2) the discovery is “for use” in a proceeding before a foreign or international tribunal; and (3) the application is made by a foreign or international tribunal or any interested person.

The court will also look at four factors in determining whether to grant an application: (1) whether the documents or testimony sought are within the foreign tribunal’s jurisdictional reach, and thus accessible absent the subpoena application; (2) the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance; (3) whether the subpoena request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States; and (4) whether the subpoena contains unduly intrusive or burdensome requests. Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264 (2004).

Courts generally defer to narrowly tailored subpoenas, rather than denying relief outright if there are questions regarding the scope of discovery. See Euromepa S.A. v. R. Esmerian, Inc., 51 F.3d 1095, 1101 (2d Cir. 1995), citing Malev Hungarian Airlines v. United Tech. Int’l Inc., et al., 964 F.2d 97, 102 (2d Cir. 1992). If the subpoenaed party objects to the scope of the subpoena, then that party is permitted to file a motion to modify or quash the subpoena. See Fed. R. Civ. P. Rule 45(c). After the court signs the order, subpoenas are served on the appropriate persons or institutions. The court may also require that the parties in the non-U.S. proceeding be notified of the application. In re Merck & Co., 197 F.R.D. 267, 271 (M.D.N.C. 2000).

If no objections are made, the subpoenaed party transmits the documents within weeks, or at a time stipulated by counsel. Depositions may also be scheduled.

In litigation, cases are won by the facts. If you believe that the facts to win your case are located solely in the U.S., Section 1782 provides a unique, relatively fast, and cost-efficient way to obtain those facts.

by Eric S. Waldman