United States: Second Circuit Limits Use Of Section 1782 Discovery Against Law Firms

28 U.S.C. § 1782 ("Section 1782") is a powerful tool that allows litigants to obtain broad, US discovery to gather evidence for use in proceedings before non-US or international tribunals.1 On July 10, 2018, the Second Circuit issued an opinion that struck a blow against abusive use of Section 1782. Reversing in relevant part the decision of the trial court, the Second Circuit, in Kiobel v. Cravath, Swaine & Moore LLP, No. 17-424, held that plaintiffs' lawyers could not use Section 1782 to obtain discovery of documents for use in a Dutch action for several reasons, including that plaintiffs' lawyers were: (1) attempting an end run around limitations on discovery in the Netherlands, (2) seeking documents directly from counsel (rather than from the party), and (3) seeking documents that were subject to a confidentiality order issued in a prior US litigation. The case offers comfort to those who share non-US documents with their US lawyers and to those who produce documents subject to a confidentiality order and underscores the importance of obtaining such orders.

Background

In 2002, in Kiobel v. Royal Dutch Petroleum ("Kiobel"), Esther Kiobel and 11 other Nigerian plaintiffs filed a lawsuit in the Southern District of New York against four defendants affiliated with Royal Dutch Shell ("Shell"), alleging that Shell aided and abetted violations of international law committed by the Nigerian government.2 Pursuant to a stipulated confidentiality order, most of the documents Shell produced were to be used "solely for the purposes" of Kiobel (or other related actions). Ultimately Kiobel was dismissed, a decision affirmed by the Supreme Court pursuant to a presumption against extraterritoriality.3

Years later, Ms. Kiobel prepared to file suit against Shell once again, this time in the Netherlands. In October 2016, plaintiffs' lawyer representing Ms. Kiobel filed a Section 1782(a) petition, seeking authorization to serve a subpoena on Cravath, Swaine & Moore, which represented Shell in Kiobel. The subpoena would request the documents that Shell produced to the plaintiffs in Kiobel (and related cases).

The district court granted the Section 1782 petition, holding that Ms. Kiobel needed the documents to file suit in the Netherlands; not all of the documents she sought were likely to be still in Shell's possession over a decade after litigation began in the United States; and the production would be minimally burdensome for Cravath. The district court directed the parties to sign a new stipulation governing the terms for which Cravath would produce the documents to Ms. Kiobel.

The Second Circuit's Decision

On appeal, the Second Circuit held that the district court had abused its discretion in granting Ms. Kiobel's petition. The factors relevant to a court's exercise of discretion are set forth in the Supreme Court's decision in Intel.4  One Intel factor is whether the person from whom discovery is sought is a participant in a foreign proceeding, in which event the need for a § 1782(a) aid is not as apparent. The Second Circuit held that the real party from whom Ms. Kiobel sought the documents is Shell, a party to foreign proceedings, and thus, this factor weighed against granting the Section 1782 petition. Another Intel factor is whether the § 1782(a) request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country. In considering this factor, the Second Circuit noted that in a declaration, Ms. Kiobel's counsel stated that "it is hardly possible for a party to obtain evidence from another party pre-trial" in the Netherlands. Based on this, the Second Circuit concluded that Ms. Kiobel's lawyers were trying to evade the Netherlands' more restrictive discovery practices.

The importance of not permitting litigants to circumvent non-US proof-gathering restrictions was particularly acute in this context, where the documents at issue were being sought from US lawyers. The Second Circuit emphasized that attorney-client communications and relations would be chilled if documents unreachable in a foreign country were to become discoverable once a litigant sends them to a US lawyer.

Importantly, the Second Circuit differentiated this case from another, where the US counsel had voluntarily disclosed documents to the Securities and Exchange Commission, thereby subjecting the documents to a Section 1782 petition.5 Although Shell had produced the documents at issue to its adversaries in the prior litigation, Shell produced the documents pursuant to a confidentiality order that expressly barred Ms. Kiobel from using the documents in any other litigation. The Second Circuit warned that to modify that confidentiality order now "would be perilous for multiple reasons."6 For one, providing Ms. Kiobel with access to the Shell documents held by Cravath would undermine confidence in confidentiality orders. For another, modifying the order would deny Shell its day in court: "[t]he decision to alter the confidentiality order without Shell's participation, and without considering the costs of disclosure to Shell, makes this case exceptional, and mandates reversal."7

Conclusion

Although the Kiobel decision is welcome news for US law firms and their clients abroad, its potential impact may be limited by certain factors. For instance, the Second Circuit considered Kiobel's attempt to modify its confidentiality order post-hoc to be an "extraordinary, possibly unique" feature of the case. The facts of the case are even more "exceptional" due to the district court's decision to modify the confidentiality order without the consent of one of the parties to that order. That said, this case underscores the importance of entering into confidentiality stipulations and of carefully weighing the implications of complying with subpoenas or other discovery requests from US regulatory agencies and other third parties.

Moreover, despite the ruling here, US law firms and their foreign clients should be aware that documents in the possession of US entities, especially those documents that are not protected by confidentiality orders, could remain susceptible to future Section 1782 petitions. Firms and their clients should, therefore, discuss how long it is necessary for the firm to retain documents in the United States following the completion of a case.

Footnotes

1 Section 1782 "provide[s] federal-court assistance in gathering evidence for use in foreign tribunals." Opinion, Kiobel v. Cravath, Swaine & Moore LLP, No. 17-424 (2d. Cir. July 10, 2018), ECF No. 148 at 5 (quoting Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 247 (2004)). The statute provides, 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. The order may be made . . . upon the application of any interested person . . . . 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." 28 U.S.C. § 1782(a).

2 See Kiobel v. Royal Dutch Petroleum Co., 456 F. Supp. 2d 457 (S.D.N.Y. 2006), aff'd in part, rev'd in part, 621 F.3d 111 (2d Cir. 2010), aff'd, 569 U.S. 108 (2013).

3 Kiobel, 569 U.S. at 124.

4 Intel Corp., 542 U.S. at 244-45.

5 See Ratliff v. Davis Polk & Wardwell, 354 F.3d 165, 167 (2d Cir. 2003).

6 Kiobel, No. 17-424, ECF No. 148 at 13.

7 Id. at 14.

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2018. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions