In rе Ex Parte Application of Sumitomo Pharma UK Holdings, Ltd.,
24-MC-290 (VSB) (HJR)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
1/2/2025
HENRY J. RICARDO, United States Magistrate Judge.
REPORT AND RECOMMENDATION
Petitioner Sumitomo Pharma UK Holdings, Ltd. (“Sumitomo“) filed an ex parte application under
A. Factual and Procedural Background
Sumitomo filed the Petition on June 21, 2024. ECF No. 1. As explained in the Memorandum of Law and declarations filed in support of the Petition, Sumitomo is a party to the Bermuda Proceeding, which is an appraisal proceeding filed by two minority shareholders in Myovant Sciences Ltd. (“Myovant“), a publicly traded company based in Bermuda. ECF No. 2 (hereafter, “Sumitomo Mem.“) at 5. Sumitomo acquired a majority stake in Myovant in 2019 and later sought to acquire its remaining shares through a merger transaction. Id. at 3–4. Alpine and another minority shareholder, APS Holding Corporation, commenced the Bermuda Proceeding to exercise the appraisal rights provided by Section 106(6) of the Bermuda Companies Act of 1981, which are available to a “shareholder who did not vote in favour of the amalgamation or merger.” Id. at 5–6. Through the instant Petition, Sumitomo seeks documents from Clear Street, Alpine‘s broker-dealer, concerning Alpine‘s holdings of Myovant stock. Sumitomo contends that these documents are relevant to whether Alpine has standing in the Bermuda Proceeding and to what damages Alpine can obtain.
Alpine initially opposed the Petition. ECF No. 12 (hereafter, “Alpine Mem.“). As described in greater detail below, Alpine contended that the Petition does not satisfy the requirements of Section 1782 because the requested discovery is not relevant to the Bermuda Proceeding, аnd further argued that the Petition should be denied based on the discretionary factors set forth in Intel Corp. v. Advanced Micro Devices Inc., 542 U.S. 241 (2004)
On November 14, 2025, the Bermuda Court issued a 36-page single-spaced ruling denying Alpine‘s request for an anti-suit injunction (the “Bermuda Ruling“). ECF No. 21-2. As promised, the Bermuda Ruling is both helpful and informative in considering the Petition. Sumitomo filed a reply brief in further support of its Petition responding to Alpine‘s arguments in light of the intervening Bermuda Ruling. ECF No. 20 (hereafter, “Sumitomo Reply“). In short, the Sumitomo Reply argues, “Alpine‘s arguments in this Court are foreclosed by the [Bermuda Ruling] and are otherwise unavailing under well-settled precedent.” Sumitomo Reply at 2. Alpine then withdrew its opposition to the Petition on December 27, 2024. ECF No. 22.
II. DISCUSSION
Here, thеre is no dispute as to the first and third of these statutory requirements. Sumitomo seeks discovery from Clear Street, which resides in this District. See Henslee Decl. Ex. 7 (Clear Street Form X-17A-5), ECF No. 3-7. Additionally, Sumitomo is a party to the Bermuda Proceeding, and is thus an interested person that may invoke Section 1782. Intel, 542 U.S. at 256.
The parties initially disagreed as to whether the Petition seeks discovery “for use” before a foreign tribunal. In order to satisfy this second requirement, Sumitomo must demonstrate that the discovery it seeks “will be employed with some advantage or serve some use in the proceeding[.]” Mees v. Buiter, 793 F.3d 291, 298 (2d Cir. 2015). A Section 1782 application fails to satisfy this requirement where the discovery sought is not relevant to the foreign proceeding. See Certain Funds, 798 F.3d at 116; In re BonSens.org, 95 F.4th 75, 81 (2d Cir. 2004). This is, however, a “low hurdle.” In re B&C Kb Holding GmbH, 2024 WL 3170983 at *4 (2d Cir. June 26, 2024). Indeed, the Second Circuit has warned against “sрeculative forays into legal territories unfamiliar to federal judges because such a costly, time-consuming, and inherently unreliable method of deciding section 1782 requests” would undermine the aims of this statute. Mees, 793 F.3d at 298 (cleaned up).
In its opposition to the Petition, now withdrawn, Alpine claimed that this discovery is not relevant because Section 106 of the Bermuda Companies Act confers standing on “[a]ny shareholder who did not vote in favour of the amalgamation or merger.” Alpine Mem. at 11–12. Further, Alpine claimed the
In addition to opposing the Petition directly, Alpine attacked it collaterally by asking the Bermuda Court to enjoin Sumitomo from pursuing the Petition. Now that the Bermuda Court has denied Alpine‘s appliсation, Sumitomo cites the November 14 Bermuda Ruling as support for its relevance arguments. Sumitomo Reply at 4–5. Given that the parties’ dispute concerning Section 1782‘s “for use” requirement depends entirely on what is relevant under Bermuda Law, the Bermuda Ruling is informative on this point. In addressing the relevance of the discovery at issue here, the Bermuda Court explained:
The documents sought go to a fundamental issue as to Alpine‘s standing and the number of shares for which they are entitled to seek appraisal. This is at the core of the appraisal exercise the Court is required to undertake. The Court‘s job under section 106 (6) of the Companies Act of 1981 is quasi-inquisitorial. The Court itself will need to consider all aspects of both the value and number of shаres which are the subject of the appraisal, in addition to understanding the nature of the objections.
Bermuda Ruling ¶ 119(ii). Further, the Bermuda Court rejected Alpine‘s legal argument that the only relevant question under Section 106 is whether the shareholder, i.e., Alpine, voted against the merger, explaining that Bermuda law is not entirely clear on this point.
The special circumstances (if thе Court is required to hold that they exist in order to exercise the discretion) are to be found in the unusual facts of the case. There have only been a few cases under section 106 (6), and none has
raised this point of standing before (or the entitlement of a shareholder who acquires shares after the announcement but before the meeting). It is important for all the parameters of the Court‘s jurisdiction to be considered fully. This is not a routine case where the law has been well-established over years of litigation.
Bermuda Ruling ¶ 137(d).
Mindful of the Second Circuit‘s admonition against “speculative forays into legal territories unfamiliar to federal judges,” and considering that Alpine expressly asked this Court to await a ruling by the Bermuda Court on the theory that such ruling “will certainly help inform this Court‘s consideration . . . of Bermuda law,” Alpine Mem. at 25, and that Alpine withdrew its opposition to the Petition after the Bermuda Ruling, Sumitomo has met the “low hurdle” of demonstrating that it seeks discovery “for use” in the Bermuda Proceeding. See In re B&C Kb Holding GmbH, 2024 WL 3170983 at *4. Sumitomo‘s construction of Section 106 of the Bermuda Companies Act is plausible and the discovery that Sumitomo seeks is faciаlly relevant to whether Alpine is properly considered a “shareholder who did not vote in favour of the . . . merger” within the meaning of Section 106. Indeed, the Bermuda Court views the application of Section 106 in these circumstances as uncertain and wishes to consider the discovery sought by the Petition. Based on the foregoing, the Petition satisfies the second statutory rеquirement that the discovery is “for use” before a foreign tribunal.
A. Intel Factors
Even when an applicant meets the three statutory requirements for obtaining discovery, the Supreme Court‘s Intel decision provides four factors that
1. Factor 1: Whether the Person from whom discovery is sought is a participant in the foreign proceeding or is within the jurisdiction of the tribunal administering the foreign proceeding
Clear Street is not a party to the Bermuda Proceeding, which weighs in favor of the Petition. See id. at 265. But Alpine argued that this factor does not depend on the nominal target of thе application, but instead concerns “the foreign tribunal‘s ability to control the evidence and order production.” Alpine. Mem. at 15–16 (quoting In re Hulley Enterps., 358 F. Supp. 3d 331, 345 (S.D.N.Y. 2019), order aff‘d, 400 F. Supp. 3d 62 (S.D.N.Y. 2019)). Alpine argued that because the requested documents are all either communications with Alpine or documents about Alpine‘s account with Clear Street, Alpine has “possession, custody or power” over all requеsted documents and the Bermuda Court has the ability to compel Alpine to produce them. See Alpine Mem. at 16–18. In response, Sumitomo claims it has attempted to obtain the requested documents from Alpine, but Alpine either
The Petition seeks discovery from a non-party, Clear Street, that is beyond the power of the Bermuda Court: (a) testimony by Clear Street, and (b) documents in Clear‘s Street‘s possession, custody or control that Alpine has been unable to obtain. This factor wеighs in favor of the Petition. Whether the requested discovery would be unwelcome in the Bermuda Proceeding or constitutes an end-run around the rulings of the Bermuda Court is discussed in connection with the second and third Intel factors below.
2. Factor 2: The nature of the foreign tribunal, the character of the proceedings underway abroad, and receptivity of the foreign court to U.S. assistance
The Second Circuit has explained that this second factor should not weigh against discovery absent a “clear directive” from the foreign country specifically rejecting the use of evidence gathered under foreign proceedings. See Euromepa, S.A. v. R. Esmerian, Inc., 51 F.3d 1095, 1100 (2d Cir. 1995). Here, the Court need not speculate as to whether the Bermuda Court is receptive to this Petition because it hаs answered this question directly.
It is clear that the question of Alpine‘s standing has been raised on legitimate grounds and that Sumitomo should have the ability to explore the background leading up to Alpine‘s acquisition of the shares. The fact that Alpine has claimed that it has no other documents than the two that it produced does not preclude Sumitomo from seeking
to challenge that by whatever means that lie open to it. This includes making applications to the Court in Bermuda and overseas if they regard that as being the most effective way of doing so. In my view, based on the principles summarised above, had the Court been asked to grant prospective permission in my view it would have done so.
Bermuda Ruling ¶ 137(a) (emphasis added). Where a foreign tribunal directly states that U.S. discovery would be helpful, the second Intel factor weighs strongly in favor of the Petition. See Optimal Invs. Servs., S.A. v. Berlamont, 773 F.3d 456, 461 (2d Cir. 2014).
3. Factor 3: Whether the request attempts to circumvent foreign evidence-gathering restrictions or other policies of the foreign country or the United States
Alpine argued that the third Intel factor weighs against the Petition because Sumitomo‘s effort to obtain the requested discovery constitutes an attempt to circumvеnt the Directions Judgment issued by the Bermuda Court after a July 19 hearing. In short, Alpine asserted that Sumitomo asked the Bermuda Court to provide broad discovery for all documents relating to ownership and voting instruction regarding the Myovant shares held by Alpine, but the Bermuda Court instead limited discovery to instructions that “were given by the Plaintiffs” that are “in the possession of Plaintiffs.” Alpine Mem. at 19 (quoting Directions Judgment ¶ 38). Alpine characterizes this ruling as a rejection of Sumitomo‘s broader requests.
However, the November 2024 Bermuda Ruling sided with Sumitomo‘s construction of paragraph 38 of that court‘s earlier Directions Judgment.
Paragraph 38 of the learned Chief Justice‘s Directions Judgment makes it clear that Alpine‘s ownership and the instructions that it gave as to voting in relation to the shares it acquired is a relevant issue as it goes to the standing issue described above. That is not disputed. However, the qualification in paragraph 38 that the documents must be in the possession of Alpine does not restrict Sumitomo from pursuing all other avenues that lie open to it to investigate whether Alpine‘s agent Clear Street holds documents relevant to the question of what shares Alpine owned, when and whether it gave voting instructions in relation to them.
* * *
In my view, Sumitomo is entitled to seek to impeach Alpine‘s disclosure by making the section 1782 Application, and nothing in the Directions Order (or the Directions Judgment) prevents it from doing so. Therefore, Alpine‘s argument is not sufficient to persuade the Court that the combination of the Directions Judgment and the NDA amounts to the equivalent of a forum selection or exclusive jurisdiction clause which is capable of being “enforced” by an anti-suit injunction.
Bermuda Ruling ¶¶ 68, 71 (emphasis added). Thus, this Petition is not properly viewed as an effort to evade limitations set by the Bermuda Court.
4. Factor 4: Whether the request is unduly intrusive or burdensome
In support of its claim that the requested discovery is unduly burdensomе, Alpine mainly repeated points made in connection with the other three factors. In particular, Alpine contended that Sumitomo‘s document requests are duplicative because the documents in question have already been produced or are not relevant to the Bermuda Proceeding. Alpine Mem. at 23. Additionally, Alpine asserted that Sumitomo is seeking documents that Clear Street does not have. Alpine Mem. at 23–24. However, nether Alpine nor Clear Street quantifies the burden of
As discussed above, the Bermuda Court rejected Alpine‘s relevance argument and has explained why it is appropriate for Sumitomo to obtain discovery from Clear Street despite Alpine‘s assertion that it already produced any relevant documents. See Bermuda Ruling ¶ 68 (“However, the qualification in paragraph 38 that the documents must be in the possession of Alpine does not restrict Sumitomo from pursuing all other avenues that lie open to it to investigate whether Alpine‘s agent Clear Street holds documents relevant to the question of what shares Alpine owned, when and whether it gave voting instructions in relation to them.“); ¶ 71 (“In my view, Sumitomo is entitled to seek to impeach Alpine‘s disclosure by making thе section 1782 Application, and nothing in the Directions Order (or the Directions Judgment) prevents it from doing so.“); ¶ 137(a) (“The fact that Alpine has claimed that it has no other documents than the two that it produced does not preclude Sumitomo from seeking to challenge that by whatever means that lie open to it.“). And if Clear Street does not actually have the documents that Sumitomo seeks, which pertain to a specific client relationship over a limited period of time, the burden of searching for and producing them is minimal. Thus, Sumitomo‘s requests are not unduly burdensome.
For the foregoing reasons, the Petition satisfies the requirements of
PROCEDURE FOR FILING OBJECTIONS
Pursuant to
FAILURE TO FILE OBJECTIONS WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW.
Dated: January 2, 2025
New York, New York
Henry J. Ricardo
United States Magistrate Judge