06 July 2015

Section 1782: American dream… or nightmare?


Did you know that parties to non-US proceedings can readily obtain information found in the US for use in those non-US proceedings? They can, under 28 USC 1782 ('Section 1782').

The heading of Section 1782 is at first blush seemingly innocuous: 'Assistance to foreign and international tribunals and to litigants before such tribunals'. In practice, however, the statute's reach is broad and subject to few limitations.

Whether Section 1782 is an American Dream or an American Nightmare may depend on whether your client is on the making or receiving end of a Section 1782 request for discovery. Persons or companies doing business in (or even travelling through) the US ought to be aware of its reach and take appropriate precautions. Conversely, foreign litigants should consider using Section 1782 when information helpful to their case may be found in the US.

THE BASICS

Section 1782 provides two methods for obtaining discovery. The first is by letters rogatory issued by a foreign or international tribunal through diplomatic channels. This can be a time-consuming, bureaucratic exercise. This note focuses on the second, simpler, method of applying to the United States District Court for an order to provide discovery.

Section 1782 reads, 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, including criminal investigations conducted before formal accusation. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or 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.

A person may not be compelled to give his testimony or statement or to produce a document or other thing in violation of any legally applicable privilege.' [1]

A US District Court has wide discretion to grant discovery under Section 1782 and, in exercising its discretion, must take into account the following four factors:

  • Whether the person from whom discovery is sought is a participant in the foreign proceeding;
  • The nature of the foreign tribunal, the character of the proceedings underway in the tribunal, and the receptivity of the foreign tribunal / government / court / agency to federal judicial assistance from the US court;
  • Whether the request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the US; and
  • Whether the request is unduly intrusive or burdensome. [2]

THE DETAILS

Federal courts have interpreted the text of the statute broadly and, at times, inconsistently. Practitioners should take note of a few key terms within the statute and the Intel Corp. v Advanced Micro Devices, Inc. decision. The evolution of the statute and case law can be helpful or a hindrance to parties, depending on which side of the Section 1782 request they find themselves. The key elements of the statute for consideration are:

'…in which a person resides or is found…'

A US District Court's power to exert jurisdiction over a person residing in the US is straightforward. However, so-called 'tag jurisdiction', where personal jurisdiction is satisfied by nothing more than physical presence, is sufficient for a Section 1782 request. In Re Edelman [3], a French national was served with a Section 1782 subpoena for his deposition while visiting an art gallery in New York.

The Second Circuit upheld the subpoena, finding that 'when a potential witness comes to the United States it is neither unfair nor inappropriate under the statute to undertake his discovery here'. [4] It follows that persons concerned about receiving a Section 1782 request ought to be careful while visiting the US or, taken to the extreme, even passing through the US en route to another jurisdiction. Similarly, if a non-party to foreign proceedings spends time in the US, it may be worth looking into whether the non-party can be served while in the US in order to get information.

'…to produce a document or other thing…'

Section 1782 previously applied only to (1) deposition testimony of any witness in the US and (2) for use in proceedings 'in a foreign country with which the United States is at peace'. The statute is no longer so limited in scope and, while in practice a Section 1782 request typically seeks documents or deposition testimony, its reach is far wider.

For example, a number of courts have ordered individuals in the US to provide a genetic sample for use in foreign paternity proceedings on the basis that providing such samples is routine , neither unduly intrusive nor burdensome, and does not infringe on rights under the Hague Convention [6]. It would seem the long-arm of Section 1782 can reach inside one's cheek for a DNA swab, and family practitioners in particular ought to be aware of the scope of the statute.

'…a proceeding in a foreign or international tribunal…'

It is unclear whether a private international arbitration constitutes a 'foreign or international tribunal' for the purposes of Section 1782. The Second [7] and Fifth Circuit [8] Courts of Appeal have held that private arbitral tribunals fall outside the scope of Section 1782. The Eleventh Circuit Court of Appeal, on the other hand, suggests that courts conduct 'a functional analysis focusing on whether a body acts as a first-instance adjudicative decision maker, permits the gathering and submission of evidence, has the authority to determine liability and impose penalties, and issues decisions subject to judicial review.' [9]

While the Eleventh Circuit declined to decide the point, this approach seems sensible. Parties to private arbitral tribunals are recommended to seek advice from local counsel and should bear this guidance in mind if seeking an order under Section 1782 and, if possible, might want to avoid making a Section 1782 request in the Second or Fifth Circuits.

Whether the person from whom discovery is sought is a participant in the foreign proceeding

If the person from whom discovery is sought is participating in the foreign proceeding, the need for assistance under Section 1782 is 'not as apparent as it ordinarily is'. This is because the foreign tribunal has jurisdiction over parties appearing before it and can order them to produce evidence. [10]

Where the court feels the true target of the request for discovery is a party to the foreign proceedings, this will weigh against a request under Section 1782 [11]. This defence to a Section 1782 request may well arise where the subject of the Section 1782 request is, for example, a US based advisor to one of the parties to the foreign proceedings. When considering making a Section 1782 request, it is important to demonstrate that the request is not an attempt to short-cut the discovery procedures already available in the foreign proceedings.

In the Intel case, the US Supreme Court opined that 'nonparticipants in the foreign proceeding may be outside the foreign tribunal's jurisdictional reach; hence, their evidence, available in the United States, may be unobtainable absent' Section 1782. Courts are deeply split on whether the language 'available in the United States' means that the evidence sought must be physically located in the US. In this era of cloud technology and increasingly global firms and clients, those concerned about making their information Section 1782 'proof' might wish to consider taking steps to insulate their information, as best they can, from the reach of the US District Court.

The nature of the foreign tribunal, the character of the proceedings underway in the tribunal, and the receptivity of the foreign tribunal / government / court / agency to federal judicial assistance from the US court

In order to apply for discovery under Section 1782, a formal proceeding in the foreign jurisdiction need not be pending or even imminent. All that is necessary is that a 'dispositive ruling' by a foreign adjudicative body is 'within reasonable contemplation' [12]. Section 1782 is therefore useful at an earlier stage than the statutory language might suggest and may assist in settlement discussions ahead of formal proceedings beginning.

Whether the request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the US

A foreign litigant making a Section 1782 request may struggle to obtain an order for discovery if the litigant has already had an opportunity, in the foreign proceedings, to do so.

Some commentators have sensibly suggested eliciting the views of the foreign tribunal on the discovery requests to (1) educate the US court on its discovery rules and (2) demonstrate that the request is not a back door attempt to get discovery that would be impermissible under its rules [13].  It may also assist to set out evidence showing that the parties to the foreign proceedings do not possess the desired information.

Also, the party making the request should also seek, in the first instance, to obtain the information by informal means (such as a simple letter) rather than making a formal Section 1782 request at the outset. This may assist, should it become necessary to make a formal application, in demonstrating to the court that judicial assistance really is necessary.

Whether the request is unduly intrusive or burdensome

The request ought to be sufficiently narrowly tailored to minimise the imposition on the recipient of the Section 1782 request. The request should also be timely; a court may be less likely to order discovery under Section 1782 in the run up to the foreign proceedings on the basis it imposes too tight a timetable for production of the information sought.

GUIDANCE

Section 1782 is a powerful tool for use before and during disputes taking place outside the US. If the reported cases are any indication, use of the statute is on the rise. This is of particular importance to companies and individuals with connections to the US, as they may be caught by Section 1782's scope unexpectedly. This underscores the need to seek local advice in the US before making a Section 1782 request or immediately upon receiving one.

Familiarity with the issues set out above may lead to an American Dream for those seeking information from persons in the US, and prevent an American Nightmare for those seeking to protect information found in the US.

1. 28 USC 1782(a).
2. Intel Corp. v Advanced Micro Devices, Inc., 542 US 241 (2004).
3. In re Edelman, 295 F.3d 171 (2nd Cir. 2002).
4. In re Edelman at 179.
5. In re Letter of Request from Local Court of Pforzheim, 130 F.R.D. 363, 366 (W.D. Mich. 1989).
6. In re Request for Judicial Assistance from the Dist. Court in Svitavy, 748 F. Supp. 2d 522 (E.D. Va. 2010).
7. NBC v. Bear Stearns & Co., 165 F.3d 184.
8. Republic of Kazakhstan v. Biedermann Int'l, 168 F.3d 880, 881 (5th Cir. 1999).
9. Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 747 F.3d 1262 (11th Cir. 2014).
10. Intel Corp. at 264.
11. In re Application of Mare Shipping Inc. and Apostolos Mangouras, 13 Misc. 238 (S.D.N.Y. Oct. 23, 2013).
12. Intel Corp. at 258-59.
13. Hanchet, Houpt, and Lakatos, 'Recent cases illustrate benefits and pitfalls of Section 1782 discovery', Mayer Brown LLP (17 March 2014).

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