In Re: Application of BM Brazil 1 Fundo de Investimento em Participacoes Multistratgia, BM Brazil 2 Fundo de Investimento em Participacoes Multistratgia, and ANRH Cooperatief U.A.
1:23-mc-00208
S.D.N.Y.May 7, 2024Background
- Appian, through affiliated entities, initiated proceedings under 28 U.S.C. § 1782 seeking discovery from Moelis & Company to support related breach of contract litigation in the High Court of Justice in England and Wales.
- Moelis acted as financial advisor to Sibanye in the proposed purchase of Appian’s interests in two Brazilian mines, a transaction that collapsed after Sibanye terminated the agreements, citing a purported Material Adverse Effect.
- Moelis withheld certain documents from production, asserting privileges on Sibanye’s behalf, triggering a dispute over whether such privilege claims were valid and which legal system’s privilege law applied.
- The privilege dispute centered on whether English or U.S. law governs, especially given the English law and forum selection clauses in the transaction agreements and the fact the litigation is pending in England.
- The court conducted in camera review of 33 disputed documents to assess the validity of the asserted privileges under applicable law.
Issues
| Issue | Appian's Argument | Sibanye's Argument | Held |
|---|---|---|---|
| Proper forum to decide privilege | U.S. court should resolve as it issued the subpoena | English court is more appropriate, given choice of law/forum clauses | U.S. court should decide the privilege issues |
| Which privilege law applies | U.S. law may be relevant; English law discussed | English law governs, per transaction documents and litigation forum | English law governs per the “touch base” test |
| Scope of privilege under English law | Docs with commercial/financial analysis not privileged | Legal advice and litigation privilege extend to shared communications | Most documents privileged under English legal advice/litigation privilege, some not |
| Impact of disclosure to third-party | U.S. law would generally find waiver by third-party sharing | English “limited waiver” rule preserves privilege if disclosed in confidence | English law’s “limited waiver” applies; privilege preserved if confidentiality was maintained |
Key Cases Cited
- In re Erato, 2 F.3d 11 (2d Cir. 1993) (interpreting Section 1782’s recognition of privileges under foreign law)
- Mangouras v. Boggs, 980 F.3d 88 (2d Cir. 2020) (choice-of-law analysis for privilege in international discovery)
- Deravin v. Kerik, 335 F.3d 195 (2d Cir. 2003) (interpreting the scope of “any legally applicable privilege”)
- United States v. Int’l Bus. Machines Corp., 66 F.R.D. 215 (S.D.N.Y. 1974) (movant’s burden to demonstrate relevance in discovery)
- Fireman’s Fund Ins. Co. v. Great Am. Ins. Co. of N.Y., 284 F.R.D. 132 (S.D.N.Y. 2012) (responding party's burden to justify discovery limitations)
- Astra Aktiebolag v. Andrx Pharms., Inc., 208 F.R.D. 92 (S.D.N.Y. 2002) (touch base test for privilege in international disputes)
- Golden Trade v. Lee Apparel Co., 143 F.R.D. 514 (S.D.N.Y. 1992) (predominant interest analysis in privilege disputes)