IN RE: APPLICATION OF ANTONIO DEL VALLE RUIZ AND OTHERS FOR AN ORDER TO TAKE DISCOVERY FOR USE IN FOREIGN PROCEEDINGS PURSUANT TO 28 U.S.C. § 1782
Docket Nos. 18-3226 (L), 18-3474 (Con), 18-3629 (XAP)
United States Court of Appeals For the Second Circuit
October 7, 2019
August Term, 2018. Argued: March 25, 2019. Appeal from the United States District Court for the Southern District of New York Nos. 18-mc-85, 18-mc-127 – Edgardo Ramos, Judge.
Before: PARKER, HALL, and DRONEY,
Banco Santander S.A. (“Santander”) acquired Banco Popular Español, S.A. (“BPE“) after a government-forced sale. Petitioners, a group of Mexican nationals and two investment and asset management firms, initiated or sought to intervene in various foreign proceedings contesting the legality of the acquisition. Petitioners then filed in the Southern District of New York two applications under
We are first asked to delineate the contours of
We are next tasked with deciding whether
Having so held, we affirm the district court‘s orders.
AFFIRMED.
JAVIER H. RUBINSTEIN, P.C. (C. Harker Rhodes IV, Kirkland & Ellis LLP, Washington, DC, Lauren F. Friedman, Lucila I.M. Hemmingsen, Joseph Myer Sanderson, Kirkland & Ellis LLP, New York, NY, on the brief), Kirkland & Ellis LLP, Chicago, IL, for Petitioners-Appellants Antonio del Valle Ruiz, et al.
DAVID MADER (Peter Evan Calamari Bento, on the brief), Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, for Petitioners–Appellants-Cross-Appellees Pacific Investment Management Company LLC and Anchorage Capital Group, LLC.
ELBERT LIN (Samuel A. Danon, Hunton Andrews Kurth LLP, Miami, FL, Johnathon E. Schronce, Hunton Andrews Kurth LLP, Richmond, VA, Joseph J. Saltarelli, Hunton Andrews Kurth LLP, New York, NY, on the brief), Hunton Andrews Kurth LLP, Richmond, VA, for Respondents–Appellees Banco Santander, S.A., Santander Holdings U.S.A., Inc., and Santander Bank, N.A. and Respondent-Appellee-Cross-Appellant Santander Investment Securities Inc.
HALL, Circuit Judge:
Banco Santander S.A. (“Santander“) acquired Banco Popular Español, S.A. (“BPE”) after a government-forced sale. Petitioners, a group of Mexican nationals and two investment and asset-management firms, initiated or sought to intervene in various foreign proceedings contesting the legality of the acquisition. Petitioners then filed in the Southern District of New York two applications under
We are first asked to delineate the contours of
We are next tasked with deciding whether
Having so held, we affirm the district court‘s orders.
I.
Section 1782 provides that “[t]he 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.”
A.
As of June 2017, BPE was Spain‘s sixth-largest bank, with assets of approximately €147 billion. After the financial crisis of 2008, however, BPE became aware that it had many toxic and nonperforming assets (“NPAs”) on its books. BPE implemented between 2012 and 2016 a variety of measures to address its exposure to NPAs and did so without any government assistance. By the end of 2016, however, business conditions began to deteriorate after Spanish governmental entities started making large withdrawals.
In May 2017, BPE, contemplating a private sale, created a virtual data room for interested buyers. Among those interested was Santander, which retained New York-based UBS and Citibank to advise on a contemplated bid. After completing its due diligence, Santander purportedly was prepared to offer to buy BPE for €3 billion with an additional capital injection of €4 billion. Meanwhile, BPE suffered an all-out run on deposits after reports that it was a bankruptcy risk and facing resolution, a form of government-forced sale.1
On June 6, 2017, the European Central Bank informed the European Single Resolution Board that BPE was “failing or likely to fail.” J. App. 115. That same day, and at the direction of the Single Resolution Board, Spain‘s national banking supervisory authority (“FROB“) invited several banks, including Santander, to submit bids by midnight, ostensibly pursuant to a resolution. Only Santander submitted a bid, and that bid was for one Euro (€1).2 On June 7, 2017, it was publicly announced that Santander‘s bid had been accepted. Apparently, another potential bidder had complained that it did not have enough time to prepare a bid. According to a news report, Santander‘s CEO had stated that “Santander was able to do it because we
As a result of BPE‘s resolution, a group of 55 Mexican investors in BPE (the “del Valle Ruiz Petitioners”), as well as United States-based investment and asset management firms Pacific Investment Management Company LLC and Anchorage Capital Group, LLC (the “PIMCO Petitioners”), suffered significant financial losses. Both sets of petitioners brought legal challenges to the BPE resolution in the Court of Justice of the European Union, the del Valle Ruiz Petitioners brought an international arbitration proceeding against Spain, and the PIMCO Petitioners sought to intervene in Spanish criminal proceedings against BPE. Santander has sought, but at the time of argument had not yet been granted leave, to intervene in these proceedings, all of which are ongoing.3
B.
The del Valle Ruiz Petitioners filed a
documents or witnesses located overseas, and discovery was otherwise unwarranted. Santander conceded that SIS “resides or is found” in the Southern District but contended that SIS was not involved with the acquisition of BPE.
C.
The district court denied the del Valle Ruiz Petitioners’ application and denied in part the PIMCO Petitioners’ application, but the court granted the PIMCO Petitioners’ request for discovery from SIS. See generally In re del Valle Ruiz, 342 F. Supp. 3d 448 (S.D.N.Y. 2018). The court first concluded that whatever the statutory meaning of “found,” at a minimum
The district court concluded that SIS “resides or is found” in the Southern District of New York, the court thus had discretion to grant discovery against SIS, and discovery was warranted under Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004). In re del Valle Ruiz, 342 F. Supp. 3d at 459-60. In doing so, the court noted Santander was not a party to any of the foreign proceedings and, although it had been ordered to produce some discovery in the Spanish criminal proceeding, it was not “an especially active participant” in that proceeding. Id. at 549. The court rejected Santander‘s extraterritoriality argument, concluding that producing documents located abroad would not be unduly burdensome or intrusive. Id. at 459-60 (citing In re Accent Delight Int‘l Ltd., Nos. 16-mc-125, 18-mc-50, 2018 WL 2849724, at *4 (S.D.N.Y. June 11, 2018), appeal docketed, No. 18-1755). The district court did not mention SIS specifically in its Intel analysis. These consolidated appeals follow.
II.
These appeals present several issues of first impression. The parties dispute the proper interpretation of
limits of personal jurisdiction consistent with due process (and that less process is due for nonparties), whereas Santander argues that we must restrict
III.
“We review de novo a district court‘s ruling that a petition satisfies Section 1782‘s jurisdictional requirements.” Kiobel by Samkalden v. Cravath, Swaine & Moore LLP, 895 F.3d 238, 243 (2d Cir. 2018). We likewise review de novo a district court‘s personal-jurisdiction ruling, “construing all pleadings and affidavits in the light most favorable to the [party asserting jurisdiction] and resolving all
Section 1782 does not define “found.” Neither did the district court. It instead concluded that even if “found” extended to the limits of personal jurisdiction consistent with due process, Petitioners failed to demonstrate that Santander was subject to either the court‘s general or specific personal jurisdiction. This is where we begin.
A.
Santander urges us essentially to cabin “found” to the facts of In re Edelman, 295 F.3d 171 (2d Cir. 2002). Effectively, this would limit
In In re Edelman, this Court‘s only case to address the “found” requirement of
We further noted that “the question of what it means to be found in a particular locale is already the subject of well-settled case law on territorial jurisdiction,” i.e., tag jurisdiction. Id. at 179 (citing Burnham v. Superior Ct. of Cal., 495 U.S. 604 (1990) (plurality opinion)). “Given that this so-called tag jurisdiction is consistent with due process,” we reasoned, “we do not think that
Santander nonetheless finds some support for its position in In re Edelman‘s analysis of
Santander is not alone: Hans Smit, “a leading academic commentator on the statute who played a role in its drafting,” Certain Funds, Accounts and/or Inv. Vehicles v. KPMG, L.L.P., 798 F.3d 113, 119 (2d Cir. 2015), has stated of the term “found” that “[t]he evident statutory purpose is to create adjudicatory authority based on presence. Insofar as the term applies to legal rather than natural persons, it may safely be regarded as referring to judicial precedents that equate systematic and continuous local activities,” i.e., general jurisdiction, “with presence.” Hans Smit, American Assistance to Litigation in Foreign and International Tribunals: Section 1782 of Title 28 of the U.S.C. Revisited, 25 SYRACUSE J. INT‘L L. & COM. 1, 10 (1998) (footnote omitted).
We are not convinced. Courts have consistently given broad interpretations to similar “found” language in other statutes. See, e.g., Waeltz v. Delta Pilots Ret. Plan, 301 F.3d 804, 810 (7th Cir. 2002); Varsic v. U.S. Dist. Ct., 607 F.2d 245, 248-49 (9th Cir. 1979); see also Appellant Br. at 27-32. We see no reason to replace the “flexible reading of the phrase ‘resides or is found” that we considered appropriate in In re Edelman, 295 F.3d at 178, with the cramped reading Santander suggests. Indeed, we have repeatedly recognized Congress‘s intent that
Having so concluded, we turn next to whether Santander‘s contacts with the Southern District were sufficient to subject it to the district court‘s specific personal jurisdiction.9
B.
“The inquiry whether a forum State may assert specific jurisdiction over a nonresident defendant focuses on the relationship among the defendant, the forum, and the litigation.” Walden v. Fiore, 571 U.S. 277, 283-84 (2014) (internal quotation marks omitted). “[T]he touchstone due process principle has been that, before a
For specific jurisdiction, “there must be an ‘affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.‘” Bristol-Myers Squibb Co. v. Superior Ct. of Cal., 137 S. Ct. 1773, 1780 (2017) (alteration in original) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). Put differently, “[s]pecific jurisdiction ... permits adjudicatory authority only over issues that ‘aris[e] out of or relat[e] to the [entity‘s] contacts with the forum.” Gucci Am., 768 F.3d at 134 (some alterations in original) (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984)).
In principle, the two-step analysis is well established: First, the court must decide if the individual or entity has “purposefully directed his activities at . . . the forum and the litigation . . . arise[s] out of or relate[s] to those activities.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (internal quotation marks and citation omitted). Second, the court must “determine whether the assertion of personal jurisdiction would comport with fair play and substantial justice.” Id. at 476 (internal quotation marks omitted). But “[t]he Supreme Court has not ... addressed specific jurisdiction over nonparties.” Gucci Am., 768 F.3d at 136.
In Gucci America, we suggested the following framework for nonparties: (1) “first assess the connection between the nonparty‘s contacts with the forum and the order at issue” and (2) “then decide whether exercising jurisdiction for the purposes of the order would comport with fair play and substantial justice.” Gucci Am., 768 F.3d at 137. We further noted that at least one circuit had likewise applied a “translated” version of the specific-jurisdiction test to discovery requests “by focusing on the connection between the nonparty‘s contacts with the forum and the discovery order at issue.” Id. at 141 (citing Application to Enforce Admin. Subpoenas Duces Tecum of the SEC v. Knowles, 87 F.3d 413, 418 (10th Cir. 1996)). This provides a starting point, but several issues somewhat muddy the analysis.10
Petitioners ask that we add clarity to two unresolved issues of specific personal jurisdiction. Petitioners first request that we address exactly what process is due an entity such as Santander, which is not subject to potential liability. They insist that less process is due and that the process Santander received was thus sufficient. Petitioners next seek guidance on what contacts are necessary to give rise to specific personal jurisdiction. That is, what exactly do “arising out of” and “related to” mean in this context? Petitioners insist that “related to” encompasses a much broader swath of conduct than “arising out of,” and it includes conduct such as Santander‘s forum contacts here.
Petitioners first urge us to conclude that the process due nonparties is less than that due defendants, though Petitioners fail to define what that “less” might mean.11 True, we have recognized that a “person who is subjected to liability . far from home may have better cause to complain of an outrage to fair play” than a nonparty. First Am. Corp. v. Price Waterhouse LLP, 154 F.3d 16, 20 (2d Cir. 1998). But we have also observed that a nonparty may have interests, such as avoiding the burdens of discovery, “genuinely independent” of any intent to frustrate a court order. See Heyman v. Kline, 444 F.2d 65, 65-66 (2d Cir. 1971); see also Gucci Am., 768 F.3d at 137 n.17 (recognizing these views). We decline to hold that there is a categorically lower showing of due process needed to obtain discovery from a nonparty. Instead, we think it enough for purposes of due process in these circumstances that the nonparty‘s contacts with the forum go to the actual discovery sought rather than the underlying cause of action.
2.
Petitioners next ask us to divine the difference between “arising out of” and “related to,” a difference the Supreme Court has yet to concede, much less construe. See Helicopteros Nacionales, 466 U.S. at 415 n.10 (declining to reach the
issues). But regardless of what, if any, conceptual distance separates “arising out of” and “related to,” we have always required some causal relationship between an entity‘s in-forum contacts and the proceeding at issue. See SPV Osus, 882 F.3d at 344 (observing that courts differ on whether proximate or but-for causation is sufficient for specific personal jurisdiction but noting that “the standard applied [in this Circuit] depends on ‘the relationship among the defendant, the forum, and the litigation.” (quoting Chew v. Dietrich, 143 F.3d 24, 29 (2d Cir. 1998))).
In the liability context, “[t]he exercise of specific jurisdiction depends on in-state activity that gave rise to the episode-in-suit.” Waldman v. Palestine Liberation Org., 835 F.3d 317, 331 (2d Cir. 2016) (internal quotation marks omitted); see also Bristol-Myers Squibb, 137 S. Ct. at 1781 (holding that unrelated contacts cannot diminish the required showing of an affiliation between the forum and the underlying controversy).
Translated to account for a
That settled, we turn to the case at hand. The district court concluded that Santander‘s related forum contacts all postdated the acquisition of BPE and could therefore not be even but-for “causes” of the availability of the evidence sought in discovery. With one exception, we agree. That exception is Santander‘s use of two New York City firms, UBS and Citibank, to conduct due diligence on BPE for a private sale that fell through before BPE was forced into resolution. According to Santander‘s CEO, but for having conducted that due diligence, “it would have been impossible” for Santander to submit its resolution bid in time. See J. App. 469. But this is Santander‘s only forum contact that was connected to the discovery sought. Petitioners were therefore required to show that this contact was the proximate reason the evidence sought was available, not merely that the evidence would not have been available but for the contact. This they failed to do. The only conduct that Petitioners claim is a cause of their discovery request is described in their affidavit as follow: “According to media reports, Santander apparently was able to complete a full due diligence of BPE approximately 20 days before the Resolution... and had retained UBS and another New York-based investment banking and financial services company as advisors in the contemplated bid.” J. App. 108. This in-forum conduct relates only to BPE‘s preresolution effort to seek a buyer. But the Petitioners’ claim here (and likewise the bulk of the discovery sought) arises from a separate financial transaction: the forced sale of BPE.13 See SPV Osus, 882 F.3d at 344-45. We thus conclude that the district court properly held that it lacked personal jurisdiction over Santander.
The district court did conclude, however, that it had general personal jurisdiction over SIS, a conclusion not challenged on appeal. We thus turn next to whether
IV.
Santander, on behalf of SIS, insists that the district court erred by not applying a per se bar against discovery under
The “canon of statutory construction known as the presumption against extraterritoriality” states that “[a]bsent clearly expressed congressional intent to the contrary, federal laws will be construed to have only domestic application.” RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090, 2100 (2016). The presumption both “serves to avoid the international discord that can result when U.S. law is applied to conduct in foreign countries” and also “reflects the more prosaic commonsense notion that Congress generally legislates with domestic concerns in mind.” Id. (internal quotation marks omitted).
The presumption against extraterritoriality is “typically appl[ied] to discern whether an Act of Congress regulating conduct applies abroad.” Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108, 116 (2013). But
Still, lower courts in this Circuit have split on whether
extraterritorially. The Eleventh Circuit reasoned that the text of
The Eleventh Circuit concluded, then, that “the location of responsive documents and electronically stored information—to the extent a physical location can be discerned in this digital age-does not establish a per se bar to discovery under
Having so decided, we turn finally to Santander‘s argument that the district court abused its discretion by granting discovery against SIS.
V.
Once a district court has concluded that it has jurisdiction, “[w]e review the decision to grant a Section 1782 petition for an abuse of discretion.” Kiobel by Samkalden, 895 F.3d at 244.
“To guide district courts in the decision to grant a Section 1782 petition, the Supreme Court in Intel discussed non-exclusive factors (the ‘Intel factors‘) to be considered in light of the ‘twin aims’ of section 1782 . . . .” Id. “The Intel factors are not to be applied mechanically,” and “[a] district court should also take into account any other pertinent issues arising from the facts of the particular dispute.” Id. at 245. Those factors are (1) whether “the person from whom discovery is sought is a participant in the foreign proceeding,“ in which event “the need for
Santander primarily protests that the district court failed to analyze any of the factors with respect to SIS. The district court stated that it considered the Intel factors as to SIS and found “that discovery against SIS is appropriate” but failed to identify SIS in its subsequent analysis. See In re del Valle Ruiz, 342 F. Supp. 3d at 459. Nonetheless, the factors plainly weighed in favor of discovery against SIS. First, SIS is not a party to any of the foreign proceedings. Second, there is no evidence that the foreign proceedings would be unreceptive to the evidence. Third, no argument has been made that Petitioners are attempting to procure documents from SIS in contravention of restrictions in place in the foreign proceedings. And fourth, neither Santander nor SIS has made any showing that the production of any responsive documents would be unduly intrusive or burdensome.
CONCLUSION
For the foregoing reasons, we hold that (1)