From Russia With Love: 11th Circuit Affirms the Utility of 28 U.S.C. §1782 in international Discovery

The tool kit of the international litigator, both foreign and domestic, has long included the powerful discovery device set forth in 28 U.S.C. §1782. The statute is the product of nearly 150 years of efforts by Congress to provide federal court assistance in gathering evidence for use in foreign tribunals.¹ The statute currently provides in pertinent 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….The order may be made…upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court….To the extent that the order does not prescribe otherwise, the testimony or statement shall be taken, and the document or other thing produced, in accordance with the Federal Rules of Civil Procedure.”²

The statute “authorizes, but does not require,” that district courts provide judicial assistance to §1782 applicants.³

The utility of the statute and the broad discretion of the district courts in giving it effect was significantly bolstered by the 11th Circuit’s recent decision in Sergeeva v. Tripleton International Ltd., Nos. 15-13008 & 15-15066, 2016 WL 4435616 (11th Cir. Aug. 23, 2016). In Sergeeva, the court held that the §1782 applicants may reach documents located outside of the U.S. if they are in the possession, custody, or control of a U.S. resident, and that a party that refuses to comply with an order requiring the gathering and production of such documents may be subject to monetary sanctions and be held in contempt.⁴

The Facts and Reasoning in Sergeeva

In Sergeeva, former spouses Mikhail Leopoldovich Dubin and Anna Sergeeva commenced a proceeding in their home nation of Russia regarding division of their marital assets after a 16-year marriage. Anna was adamant that Mikhail had been concealing and dissipating marital assets through a series of “offshore companies” located around the globe. While Anna attempted to obtain discovery relating to these offshore entities, Mikhail opposed her efforts at every turn, often employing tactics that served no other purpose but to evade or delay the production of documents. The clash between the former husband and wife took the legal dispute to places such as Cyprus, Latvia, and the Bahamas — and eventually the United States. In the U.S., Anna sought documents from an Atlanta-based corporation, Trident Corporate Services, Inc. (Trident Atlanta), which she believed possessed information that would evidence her ex-husband’s beneficial interest in a Bahamian corporation. When Trident Atlanta did not comply, Anna filed an action pursuant to 28 U.S.C. §1782 in the district court with the goal of receiving judicial assistance in obtaining documents from Trident Atlanta. After review, a magistrate judge granted Anna’s ex parte application and authorized service of two subpoenas — one of which was directed at Trident Atlanta.

Critically, the subpoena issued to Trident Atlanta referenced other Trident Corporate Services’ entities located outside of the United States, and instructed Trident Atlanta to furnish all responsive documents in its “possession, custody, or control, regardless of whether such documents or material are possessed directly by [Trident Atlanta] or by any of [Trident Atlanta’s] agents, representatives, attorneys, or their employees or investigators.” Trident Atlanta objected to the subpoena on numerous grounds, most notably that the subpoena required the production of documents located outside of the United States. Trident Atlanta also moved to vacate the magistrate judge’s ex parte order and quash the subpoena but was unsuccessful, as the magistrate judge denied the motions and required Trident Atlanta to produce all documents responsive to the subpoena in their “possession, custody, or control.”

Ultimately, Trident Atlanta produced a mere 23 pages of documents from its Atlanta office only and objected to the magistrate judge’s orders upholding the subpoena and requiring production. The district court judge overruled these new objections, and Trident Atlanta filed an appeal. While this appeal was pending, Anna sought sanctions as a result of Trident Atlanta’s failure to produce the responsive documents. The district court granted her motion, holding Trident Atlanta in contempt and ordering Trident Atlanta to pay attorneys’ fees and costs and to produce the responsive documents or pay a sanction of $500 per day for up to 60 days for “any continued non-compliance.” Trident Atlanta requested relief from the contempt order — which was denied — and a second appeal to the 11th Circuit ensued. For purposes of judicial economy, the 11th Circuit consolidated Trident Atlanta’s first and second appeal.

The crux of Trident Atlanta’s argument on appeal was that the provisions of §1782 did not permit litigants to reach documents located in foreign countries because “American courts were not intended to serve as clearing houses for requests for information from courts and litigants all over the world” (the so-called “extraterritoriality argument”).⁵ The 11th Circuit found this argument to be unpersuasive. Noting that this was a matter of first impression in the circuit — and that there was a dearth of caselaw elsewhere — the 11th Circuit undertook an analysis grounded principally in the text of §1782, which echoed the sentiments of the lower court.⁶ The court reasoned that the very language of §1782 authorized the production of documents in accordance with the Federal Rules of Civil Procedure, the significance of which was twofold.⁷ First, the federal rules require that documents — whether in tangible or electronic form — must be produced if they are in the possession, custody, and control of the party to whom the subpoena is directed.⁸ Secondly, the only geographical limitation imposed by the federal rules in this context relates to the act of production, not where the documents themselves are located.⁹ As a result, it was immaterial where the documents requested of Trident Atlanta were located so long as those documents were in its possession, custody, or control. The court reasoned that a narrow reading of the statute, as urged by Trident Atlanta, would directly conflict with and curtail the broad scope of the federal rules in the discovery context — something the 11th Circuit expressly declined to do.¹⁰ The 11th Circuit, therefore, affirmed the orders requiring the production of the responsive documents located in foreign countries and holding Trident Atlanta in contempt and subject to monetary sanctions.¹¹

Comity and Judicial Discretion

The decision in Sergeeva sends a signal to the world that U.S. federal courts can and will extend their reach worldwide to serve the legitimate interests of foreign litigants. The decision is sound when viewed not only in the light of the broad reach of discovery under the federal rules but in the light of this country’s long history of extending comity in international judicial matters.¹² At its core, comity rests on the notion that U.S. courts should lend assistance in foreign judicial proceedings to the extent such assistance is not inconsistent with local law or public policy.¹³ The U.S. has long been, for example, one of the most receptive nations when it comes to the recognition and enforcement of foreign judgments. Importantly, the extension of comity serves not only the interests of foreign litigants and courts but also the vital interest of U.S. citizens.¹⁴ Extending comity serves the vital interest of U.S. citizens by making it more likely the foreign courts will reciprocally lend assistance to U.S. citizens and U.S. courts when they become entangled in matters involving international discovery or the recognition and enforcement of U.S. ^judgments.15

The decision is likewise sound because it reiterates that assistance under the statute is always committed to the sound discretion of the district courts.¹⁶ This allows the district courts broad leeway to deal with thorny issues that arise in the context of international discovery, such as the problem of 1) litigants who are seeking information that would not be admissible in the foreign proceedings; 2) litigants that are seeking information in direct violation of foreign court orders or laws; and 3) litigants who will be sanctioned civilly or criminally if they cooperate in U.S.-based discovery.¹⁷ These difficult issues can be dealt with on case-by-case basis.

Conclusion

For litigants seeking to invoke judicial assistance under §1782, it should be kept in mind that federal courts have established four prima facie requirements that must be met before a district court may exercise its authority under the statute: 1) The request must be made “by a foreign or international tribunal” or by “any interested person”; 2) the request must seek evidence, whether it be the “testimony or statement” of a person or the production of “a document or other thing”; 3) the evidence must be “for use in a proceeding in a foreign or international tribunal”; and 4) the person from whom discovery is sought must reside or be found in the district of the district court ruling on the application for assistance.¹⁸ If the litigant meets these requirements, the district court then has discretion to decide whether and how to grant an applicant’s request for relief under §1782.¹⁹ The decision in Sergeeva makes clear that such discretion includes the power to compel a U.S. resident to gather and produce documents located outside the U.S. and to enforce such order through the court’s power of contempt. The decision serves as an important reminder that §1782 is a powerful tool that should be kept on the top shelf of any international litigator’s tool kit.

This column is submitted on behalf of the International Law Section, Alvin F. Lindsay, chair, and Rafael Ribeiro, editor.