Availability of Pre-Action Discovery Through 28 USC § 1782
By Robert C. Sentner, Sentner Safran LLP
Parties to disputes before tribunals outside the United States can obtain U.S. Court orders directing the production of documents or testimony for use in those proceedings. One aspect of this law, which has lately been the subject of debate and attention, is well worth highlighting: the availability of such orders to compel the production of materials for a planned future proceeding, rather than one which is pending or ongoing. This is a powerful tool, particularly in legal systems that mandate detailed factual pleadings and provide for little, if any, discovery.
Recent decisions clarify the criteria with respect to this aspect of 28 USC § 1782.
On October 14, 2015, the United States District Court for the Southern District of New York granted a 28 USC § 1782 discovery order in Mees v. Buiter, 793 F. 3d 291 (2d Cir. 2015). That case arises out of the all-too-familiar tale of three Dutch economists entwined in a love triangle, the progression of romantic love to heartbreak, denial, break-up, claims of stalking and lying, and then arrest, and the jailing of one jilted economist. This, of course, leads to a planned defamation action in the Dutch courts, which makes hotel receipts, e-mails, and credit card statements relevant in order to prove the affair. Since these facts provide a more interesting context for a 28 USC § 1782 discussion than the usual commercial dispute, we start here.
The story, as told by Dr. Mees’ public filing seeking 28 USC § 1782 relief, is as follows: She and Dr. Buiter, both well known Dutch economists, had a lengthy romantic affair. However, Dr. Buiter was married to a third Dutch economist. Drs. Mees and Buiter met in hotels around the world from late 2008 through early 2013, and were in frequent contact by e-mail and Skype. In November 2009, Dr. Buiter’s wife learned of the affair. Dr. Buiter told her he would end it. However, he did not. The affair continued until 2013.
In May 2013, Dr. Buiter (who lived in New York) complained to the New York City Police Department that Dr. Mees was stalking him. He presented as evidence numerous e-mails Dr. Mees had sent him – but allegedly concealed that her e-mails were part and parcel of a mutual relationship. He thus created the false impression of a one-sided obsession. He obtained an order of protection against her. She was arrested, spent four days in jail, and lost her job as a professor at New York University.
If one accepts Dr. Mees’ version of events, Dr. Buiter’s motivation was presumably that in 2013, his wife had found e-mails from Dr. Mees, years after Dr. Buiter had told her the relationship was ended. Rather than come clean that the affair had continued, Dr. Buiter explained away the e-mails by claiming (falsely) that Dr. Mees was stalking him. The momentum of this lie compelled him to then go to the police to obtain the order of protection. This led to Dr. Mees’ arrest, jailing and loss of employment, all of which he may, or may not, have foreseen. Dr. Buiter, on the other hand, denies all of this, and insists that Dr. Mees was stalking him, and that her 28 USC § 1782 action is simply another step in that effort.
In any event, we are not interested in these facts. None of it is our concern or business. No, they are discussed here only to provide the context for an issue that is interesting to us – the availability of 28 USC § 1782 discovery prior to commencement of an action in a non-U.S. court.
In her application for discovery, Dr. Mees said she intended to file a defamation suit against Dr. Buiter in the Netherlands, and needed evidence in that action to prove he lied, and that her relationship with Dr. Buiter was a mutual, romantic, and consensual one, not the disturbing unilateral one described by Dr. Buiter. She said she needed this information to draft the initial pleading in the Dutch court. For this reason, she sought an order requiring Dr. Buiter to produce hotel receipts, e-mails, and credit card statements in his possession. (She has since filed the Dutch case.)
28 USC § 1782(a) states in relevant part: "The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation." (Emphasis added.)
Thus, among other things, 28 USC § 1782 requires that the documents or testimony sought be “for use in a proceeding.” So the question here is, what does “for use” mean, and does the phrase “in a proceeding” require that the proceeding be pending at the time of the application in connection with a civil case?
The lower court denied Dr. Mees’ request for 28 USC § 1782 discovery. She appealed, and on appeal, the Second Circuit Court of Appeals reversed and remanded the case. The Court of Appeals considered the two questions highlighted above in light of several prior decisions addressing the issue.
First, in the United States Supreme Court case Intel Corp. v. Advanced Micro Devices, 542 U.S. 241 (2004), the applicant (AMD) had filed an antitrust complaint against Intel with the Directorate-General for Competition of the European Communities. AMD requested the Directorate-General to request discovery of documents in the U.S., but it declined to do so. AMD then filed a 1782(a) application itself with a U.S. Court. When the United States Supreme Court considered the case, it stated, “we reject the view . . . that § 1782(a) comes into play only when adjudicative proceedings are ‘pending’ or ‘imminent.’ Instead, we hold that §1782(a) requires only that a dispositive ruling by the Commission, reviewable by the European courts, be within reasonable contemplation.”
Dr. Buiter argued that pre-action discovery is not available at all to a private party in connection with a potential future civil case, but rather, is only available in connection with criminal cases, or where the evidence is sought by a tribunal. He contended that Intel v. Advance Micro Devices was distinguishable because there, the investigation was being conducted by a foreign tribunal, whereas in the Mees case, there was no foreign tribunal involved yet in any way.
The Mees Court rejected that argument, holding that “nothing in Intel limits its reasoning to investigations by a government or an international tribunal.” The Court thus concluded that Ms. Mees, as a private citizen, was entitled to invoke 28 USC § 1782 to obtain materials prior to instituting an action.
Having accepted the general principle that pre-action discovery was available, the question turned to the criteria for deciding whether to order it. The Intel decision applied a standard that the future proceeding must be “within reasonable contemplation.” Other U.S. courts have applied the “within reasonable contemplation” standard to purely private civil actions. For instance, Bravo Express v. Total Petrochemicals & Ref., 2015 U.S. App. LEXIS 9178 (5th Cir. June 2015), cited with approval Consorcio Equatoriano v. JAS Forwarding, 747 F.3d 1262 (11th Cir. 2014), in which the U.S. Court of Appeals for the 11th Circuit stated: "The future proceedings must be more than speculative . . . and a district court must insist on reliable indications of the likelihood that proceedings will be instituted within a reasonable time."
Applying that standard to the Mees case, the Court held that so long as the foreign proceeding was within “reasonable contemplation” at the time she filed her application, 28 USC § 1782 discovery was available. The Court accepted that Dr. Mees had established that she would file the Dutch case within a reasonable amount of time.
The next issue was whether Dr. Mees satisfied the 28 USC § 1782 requirement that the materials be “for use” in the anticipated foreign proceeding.
In that respect, Dr. Mees argued that the materials were necessary for her to draft the initial pleading because of strict Dutch pleading requirements. Her application stated that the claimant is not guaranteed a chance to introduce evidence after the respondent’s statement of defense, and that if she did not provide the documents she sought initially, there was a chance she would not have the opportunity to effectively present her case. Dr. Buiter argued that Dr. Mees had sufficient information already to draft the pleading, that Dutch pleading requirements were not nearly as demanding as Dr. Mees claimed, and that she had no present need for the materials sought. Both parties engaged Dutch law experts who submitted conflicting affidavits about Dutch pleading requirements.
The Court of Appeals ultimately found the debate on that issue irrelevant. It held that the applicant need not show that the documents or testimony are necessary to draft the initial pleading, nor that the information is necessary for the applicant to prevail in the case. The Court held that imposing such a necessity requirement “would entail a painstaking analysis not only of the evidence already available to the applicant, but also of the amount of evidence required to prevail in the foreign proceeding. Such an enquiry would therefore ‘require interpretation and analysis of foreign law[,] and . . . ‘comparisons of that order can be fraught with danger.’ Brandi-Dohrn, 673 F.3d at 82 (alteration omitted), quoting Intel, 542 U.S. at 263.”
Rather, the Court held: “Under § 1782, an applicant may seek discovery of any materials that can be made use of in the foreign proceeding to increase her chances of success.” The Court held that pre-action use of § 1782 could be invoked to seek documents that would be used at any point in the proceeding, not just the pleading stage. The applicant need not wait until the stage in the foreign proceeding in which the materials are to be used before applying for discovery under § 1782. Thus, pre-action § 1782 relief can be sought even for documents that are not to be used until late in the case. The Mees Court accepted that the materials would be used to increase Dr. Mees’ chances of success in the Dutch case, and that she would use them at some point in the Dutch proceeding, even if she did not need them at the pleading stage. Thus, it determined that she had met those criteria.
One month after the Court of Appeals issued the Mees v. Buiter decision, it issued another decision addressing 28 USC § 1782 pre-action discovery, which contrasts with Mees. Certain Funds v. KPMG, 2015 U.S. App. LEXIS 14614 (2d Cir. Aug. 20, 2015), arose out of losses to investors in connection with two Saudi conglomerates. The applicants sought documents from accounting firms in New York. They asserted that they intended to begin actions in English courts, and argued that the documents sought would be “highly relevant” to those proceedings.
The Court of Appeals held that this did not satisfy the “for use” requirement: "By adopting the phrase 'for use,' Congress plainly meant to require that § 1782 applicants show that the evidence sought is "something that will be employed with some advantage or serve some use in the proceeding." Mees, 2015 U.S. App. LEXIS 12360, 2015 WL 4385296, at *4. The key question, therefore, is not simply whether the information sought is relevant, but whether the Funds will actually be able to use the information in the proceeding."
Further, the Court held that the evidence submitted at the time the application was made indicated only that the applicant and its counsel were “discussing the possibility of initiating litigation.” Thus, the Court also held that the applicant had not established that the planned proceeding was “within reasonable contemplation.” The Court thus denied the request for 28 USC § 1782 discovery.
The Certain Funds v. KPMG decision holding that the § 1782 applicant must demonstrate that the materials sought are to be actually used in the foreign proceeding raises the question of whether the applicant must demonstrate that the materials will be admitted into evidence by the foreign tribunal. Will the applicant need to present expert affidavits showing that the documents will be admissible under the evidentiary rules of the foreign tribunal? Will the U.S. court refuse to order production of materials if the opponent of the application can show the foreign tribunal will refuse to admit the documents because 28 USC § 1782 provides broader discovery than the foreign tribunal’s own rules allow?
Case law establishes that U.S. courts are not to delve into these questions. In Euromepa v. Esmerian, 51 F.3d 1095 (2d Cir. 1995), the District Court refused a section 1782 application, finding that the sought-after discovery would abrogate the authority of the French Court right to control (and limit) the discovery process. Reversing, the Court of Appeals reasoned that the French courts would be able to control what was done with any materials obtained in discovery. The Court made clear that courts are not to conduct extensive analysis of the parameters of foreign law, stating that § 1782 was intended to be unilateral, and did not depend on whether such discovery would be permitted under the laws of the country in which the action was pending. Further, the Court held that the District Court could tailor its order to require that the applicant submit all documents it obtained to the French Court whether they helped its case or not. In order to address the potential unfairness that the applicant could obtain documents but not have to produce any itself (since it was not in the U.S.), the Court could condition its order on the reciprocal exchange of information.
Similarly, in Brandi-Dohrn v. IKB Deutsche Industriebank AG, 673 F.3d 76 (2d Cir. 2012), the lower court denied the section 1782 application on the ground that the documents sought would not likely be admitted into evidence in the German proceeding. The Court of Appeals reversed, holding: “Accordingly, as a district court should not consider the discoverability of the evidence in the foreign proceeding, it should not consider the admissibility of evidence in the foreign proceeding in ruling on a § 1782 application.”
Thus, while in Certain Funds v. KPMG, the Court held that the applicant must show that the materials will be used, or employed, in the foreign proceeding (and not just be relevant to it), the courts in Brandi-Dohrn and Euromepa held that the court should not attempt to wade deeply into the foreign tribunal’s discovery rules, rules of evidence, or make a decision on whether the documents would actually be admitted in the foreign proceeding.
In sum, 28 USC § 1782 permits an interested party to obtain discovery for use in a future foreign proceeding, so long as the applicant provides reliable indications that the proceeding will be instituted within a reasonable time. In this respect, successful applicants for pre-action 28 USC § 1782 discovery have generally included detailed affidavits evidencing precisely the nature of the anticipated foreign proceeding, the Court it will be filed in, when, and the expected use of the materials sought in that proceeding (e.g., Bravo Express; Consorcio Ecuatoriano, supra).
The applicant must show that the materials will be used at some stage in the proceeding, and must be for the purpose of increasing the applicant’s chances of success in that case. While the materials must be for use in the foreign proceeding, the U.S. Court is not to engage in an in-depth analysis of the foreign tribunal’s rules of evidence or discovery to assess whether that court will actually permit use of the materials. Rather, if there is any question as to the admissibility of the documents, that analysis should be left to the foreign tribunal, and the court’s order granting the section 1782 relief should be tailored to address any concerns about equality and fairness before that tribunal. Thus, opposition to the application that centers on evidentiary rules of the foreign tribunal, or laws of the foreign tribunal that do not allow for such expansive discovery, will not likely be successful, unless both sides agree the documents will not be admissible.
This brings us back full circle to Mees v. Buiter. The Court of Appeals remanded the case back to the District Court, which on October 14, 2015 ordered that Dr. Buiter provide the discovery Dr. Mees seeks, including that he be subject to a deposition. However, the Court did so on the condition that Dr. Mees first make herself available for a deposition to be conducted by Dr. Buiter’s counsel. Thus, the Court struck the balance of fairness laid out in Euromepa. This of course highlights a factor that 28 USC § 1782 applicants should take into account – what is good for the goose is good for the gander.
So, if Dr. Mees wants Dr. Buiter to testify, she will have to do the same herself. If she does, Dr. Buiter will have to testify and produce hotel receipts and credit card charges that Dr. Mees contends will prove they had an ongoing affair, which Dr. Buiter had apparently concealed from his wife and the police. If in fact Dr. Mees is correct about this, and Dr. Buiter the cad she claims, then the title of our next column may be, “Is There a Sanction Remedy Under 28 USC § 1782 For Destruction of Evidence,” or, “Spoliation of Evidence Under Dutch and U.S. Law: A Comparison.”
On the other hand, the article might be entitled, “Do 28 USC § 1782 Applicants Subject Themselves To U.S. Jurisdiction For Sanctions Purposes – An Update.”