IN RE: CATALYST MANAGERIAL SERVICES, DMCC. Catalyst Managerial Services, DMCC, Appellee, v. Libya Africa Investment Portfolio, Intervenor-Appellant, Citibank, N.A., Respondent.
No. 16-2653-cv
United States Court of Appeals, Second Circuit.
February 23, 2017
37
APPEARING FOR APPELLEE: NAZY MODIRI, Kellner Herlihy Getty & Friedman LLP, New York, New York.
PRESENT: BARRINGTON D. PARKER, REENA RAGGI, CHRISTOPHER F. DRONEY, Circuit Judges.
SUMMARY ORDER
Intervenor Libya Africa Investment Portfolio (“LAP“) appeals from the district court‘s grant of Catalyst Management Services, DMCC‘s (“CMS“) petition for judicial assistance pursuant to
A district court‘s discovery discretion under § 1782 “must be exercised in light of the twin aims of the statute: providing efficient means of assistance to participants in international litigation in our federal courts and encouraging foreign countries by example to provide similar means of assistance to our courts.” Mees v. Buiter, 793 F.3d 291, 297-98 (2d Cir. 2015) (internal quotation marks omitted). The Supreme Court has identified the following factors as relevant to a
1. Fourth Intel Factor
LAP faults the district court‘s conclusion that CMS‘s discovery request is not unduly burdensome, contending that (1) the discovery was not relevant because CMS could not articulate how it would be used in the UK proceeding, and (2) the district court failed to perform the proportionality analysis required by § 1782‘s incorporation of
We conclude that the district court acted within its discretion in determining that the fourth Intel factor weighed in favor of discovery because CMS had sufficiently shown that the documents were necessary to support its lost-profits-damages claim in the UK proceeding. LAP‘s two aforementioned arguments fold into one because any proportionality analysis depends upon the relevance of the information sought—and, in the case of a § 1782 petition, relevance is assessed with regard to the foreign proceeding. LAP does not dispute that at least a portion of the profits CMS expected to earn pursuant to the contract were tied to LAP‘s revenues. Accordingly, it was not outside of the range of permissible decisions for the district court to conclude that documents showing the wire transfers made by and to LAP and its affiliates through U.S. banks could be used to establish the extent of CMS‘s lost profits following termination of the contract. This is particularly so where, as the district court found, a question has been raised as to whether the financial statements produced by LAP in the UK proceeding are accurate or complete. No different conclusion is compelled by the inability of CMS‘s counsel to articulate precisely how a forensic accountant would extrapolate lost profits from the requested records.
In urging otherwise, LAP contends that CMS‘s professed intent to use the requested discovery to support its lost-profits claim in the UK proceeding is a pretext for a fishing expedition to identify potential targets for enforcement actions if CMS were to obtain a judgment against LAP. LAP cites Euromepa, S.A. v. R. Esmerian, Inc., 154 F.3d 24 (2d Cir. 1998), to argue that § 1782 cannot be used to obtain discovery in aid of enforcing a foreign judgment. But the discovery request in Euromepa pertained to a foreign dispute that had already been adjudicated. See id. at 28. In that context, we concluded that
LAP argues that the plain language of
Finally, LAP contends that proper proportionality review would have revealed that § 1782 discovery was unnecessary because LAP had and would continue to provide CMS with financial statements as part of the ongoing UK proceeding. The district court, however, noted record representations (including by the UK court and by LAP itself) calling into question the completeness and accuracy of those statements. This prompted it to conclude that § 1782 discovery could be used, at the very least, to check the accuracy of LAP‘s UK productions. While LAP here disputes the facts underlying this conclusion, the mere existence of the record representations identified by the district court was sufficient to support its decision.
Further, we have held that a district court may not deny § 1782 discovery solely because the foreign court did not have the opportunity to consider it first. See In re Malev Hungarian Airlines, 964 F.2d 97, 100 (2d Cir. 1992) (stating that “requiring an interested person first to seek discovery from the foreign or international tribunal is at odds with the twin purposes of
Accordingly, the district court did not abuse its discretion in concluding that the requested discovery was not unduly burdensome and complied with
2. First Intel Factor
LAP argues that the first Intel factor, which asks whether the party from whom discovery is sought is a participant in the foreign proceeding, should be construed to ask whether the requested documents are within the jurisdictional reach of the foreign court. It contends that the documents here requested are in the UK court‘s reach by virtue of its ability to order LAP to access them from third parties and produce them. The cases cited by LAP do not support its reading of this factor. In In re Elvis Presley Enterprises LLC, No. 15-mc-386 (DLC), 2016 WL 843380 (S.D.N.Y. Mar. 1, 2016), denied a request to take discovery from a company whose subsidiary was a party to the foreign proceeding. In In re OOO Promnefstroy, Misc. No. M 19-99 (RJS), 2009 WL 3335608 (S.D.N.Y. Oct. 15, 2009), denied a request to take discovery of documents that were actually in the possession of parties to the foreign proceeding. Even accepting, however, that the documents requested are accessible to LAP, the district court did not abuse its discretion in relying on evidence that questions had been raised about LAP‘s productions in the UK proceeding to conclude that it should allow the discovery to go forward as a means of checking the accuracy of those productions. Moreover, we have rejected the requirement that an applicant must first seek discovery abroad before bringing a § 1782 petition. See In re Malev Hungarian Airlines, 964 F.2d at 100; see also In re Gianoli Aldunate, 3 F.3d 54, 62 (2d Cir. 1993) (holding that finding as to availability under foreign law of discovery of information sought by § 1782 petition is unnecessary where district court relied on statute‘s “twin purposes” to grant petition).
3. Third Intel Factor
Finally, LAP argues that CMS filed its § 1782 petition to circumvent foreign proof-gathering restrictions. LAP points to CMS‘s stated intent to use the discovery, in part, to discredit a witness statement submitted by LAP in support of a motion to stay execution pending appeal of a since-vacated judgment in the UK proceeding. CMS sought to challenge the statement through cross-examination and its own witness testimony, which the UK court rejected because the validity of the statement was moot in light of the fact that LAP subsequently secured the stay by posting security. The argument fails because the UK court rejected CMS‘s attempt to impeach only in the context of the stay litigation. It did not rule that CMS was precluded from doing so in any later context, specifically, the merits proceeding.2 Indeed, LAP‘s argument is inconsistent with its concession that “there is no evidence that the UK judge would be hostile towards receiving this assistance from this court.” S.P.A. 13. Accordingly, the district court did not abuse its discretion in concluding that the requested documents would “supplement and not circumvent discovery in the UK.” Id. at 24.
4. Conclusion
We have considered LAP‘s remaining arguments and conclude that they are without merit. Accordingly, we AFFIRM the order of the district court.
Jonathan ROSS, David Levin,
Plaintiffs-Appellants,
v.
AXA EQUITABLE LIFE INSURANCE