IN RE GREEN DEVELOPMENT CORPORATION S.A. DE C.V., Petitioner.
Civil No. WDQ-15-2985
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND
October 1, 2015
Beth P. Gesner, United States Magistrate Judge
ECF No. 14
The above-referenced case was referred to the undersigned by the Honorable William D. Quarles to provide a report and recommendation, pursuant to
I. Procedural Background
Although Petitioner did not label its Application as ex parte, neither Respondent Michael McNicholas (the subject of Petitioners discovery and subpoena request) nor the adverse parties in the related foreign litigation have been served with copies of this Application. A party may
In light of the recommendations stated herein, it is not necessary that Respondent or any of the parties in the related foreign litigation be served with—or be required to respond to—Petitioners Application. It is appropriate, however, that Respondent McNicholas receive a copy of this Report and Recommendation, as there is no indication that he has been made aware of the instant proceedings or the allegations contained therein. Under these circumstances, I further conclude that this entire case should be placed under seal for sixty (60) days in order to allow Respondent Michael McNicholas—if he so desires—to review and respond to this Report and Recommendation, or to seek further sealing of this matter.
II. Factual Background
Petitioner Green Development Corporation S.A. de C.V. is a Sociedad Anónima de Capital Variable (i.e., variable capital corporation) (Petitioner) organized under the laws of Honduras. ((ECF No 1., ¶ 1.) Its principal place of business is San Pedro Sula, Honduras.
Respondent Michael McNicholas (Respondent) is an United States citizen and resident of Carroll County, Maryland. (Id., Ex. J.) He is the resident agent of Pathfinder Consulting USA, LLC, a Limited Liability Company organized under the laws of the state of Maryland. (Id., Ex. K.) Mr. McNicholas is also an author who has written on issues related to maritime security and counter-narcotics. (Id., ¶ 10.)
Petitioner alleges that an unspecified, adverse party engaged in improper, ex parte communications with the Honduran Supreme Court, and that the content of these communications is prejudicial to Petitioner. (ECF No. 1, ¶ 7.) Specifically, Petitioner alleges that:
...one of the defendant banks surreptitiously sent to the Justices presiding over the case a copy of an article that Michael McNicholas authored and IOS Press BV published. That article contains outlandish defamatory claims accusing Green Developments CEO (Mohammad Yusuf Amdani) and two companies of laundering money in furtherance of international terrorism, smuggling drugs, and even aiding al-Qaeda.
(Id.)
In this Court, Petitioner seeks discovery, including the production of documents and a deposition of Mr. McNicholas, in order to test the factual sufficiency of statements found in the Article and to discover information regarding McNicholas improper motive... (Id., ¶¶ 19-21.) Petitioner asserts that the fruits of its intended discovery expedition in the United States, to be submitted to the Honduran Supreme Court, would mitigate the adverse effect of its opponents improper, ex parte communications to that Court. (Id.)
III. Discussion
A. Jurisdictional Requirements of 28 U.S.C. § 1782
There are four jurisdictional requirements before a party may obtain discovery pursuant to Section 1782. First, the target of the discovery request must reside or be found within the
Here, Section 1782s jurisdictional requirements are satisfied. First, the target of Petitioners discovery requests resides in Carroll County, Maryland, and is thus within the territorial jurisdiction of this Court. Second, while it is not entirely clear from Petitioners application how the fruits of its intended discovery would be used in the pending appellate proceeding before the Honduran Supreme Court1, the federal courts broad interpretation of this statutory requirement leads me to conclude that the requested discovery is for use in a proceeding. See e.g., In re Application for an Order for Judicial Assistance in a Foreign Proceeding in the Labor Court of Brazil, 466 F. Supp. 2d 1020, 1027 (N.D. Ill. 2006) (explaining that evidence need not be admissible in the foreign court in order to be discoverable). The third statutory element, requiring that the tribunal be foreign, is undoubtedly satisfied here. The final jurisdictional requirement is also satisfied: a party to a foreign proceeding seeking discovery in the United States is no doubt an interested person for purposes of § 1782. Intel, 542 U.S. 241, at 257.
B. Intel Discretionary Considerations
Even where the threshold, jurisdictional requirements are satisfied, the district court has broad discretion in deciding whether to grant discovery requests under Section 1782. Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 244-45 (2004); see also In re Chevron Corp., 753 F. Supp. 2d 536, 539 (D. Md. 2010). The Supreme Court has identified four discretionary factors to be considered when reviewing § 1782 discovery requests: (1) whether the person from whom discovery is sought is a participant in the foreign proceeding; (2) the nature of the foreign tribunal, the character of proceedings underway abroad, and the receptivity of the foreign government, court, or agency to federal-court judicial assistance; (3) whether the § 1782 request attempts to circumvent foreign proof gathering restrictions or other policies; and (4) whether the documents or testimony sought are unduly intrusive or burdensome. Intel, 542 U.S. at 264-65. On all four factors, Petitioners application fails to show that the requested discovery is appropriate in these circumstances.
1. Though Respondent is not a party to the Honduran litigation, it does not appear that the information sought is beyond the jurisdictional reach of the Honduran court.
The Court in Intel explained that the need for discovery under § 1782 is not as apparent when the target of the discovery request is a party to the foreign litigation, as parties to foreign proceedings would presumably be within the foreign courts jurisdictional reach. Intel, 542 U.S. at 264. As Mr. McNicholas is not party to (nor alleged to have any direct interest in) the Honduran litigation and is a resident of Maryland, he would presumably be beyond the Honduran courts jurisdictional reach and not subject to discovery there. These facts seemingly would point in favor of Petitioner. The mere fact that Mr. McNicholas is not a party to the Honduran litigation, however, does not necessarily mean that he should be subject to Petitioners discovery requests; such an open-ended rule would potentially subject all residents of the United States to § 1782 discovery. Here, there is no evidence or even an allegation that Mr. McNicholas has any relationship with or knowledge of any information regarding an adverse party in the Honduran proceedings—or, indeed, that he had anything to do with the alleged sharing of his article with the justices of the Honduran Supreme Court. To the contrary, Petitioner asserts that
2. It is unclear how the Honduran Supreme Court would receive the requested discovery.
Courts reviewing § 1782 applications next consider the nature of the foreign tribunal, the character of proceedings underway abroad, and the receptivity of the foreign government, court, or agency to federal-court judicial assistance when determining whether to order discovery. Intel, 542 U.S. at 264. The Honduran Supreme Court has not requested this Courts assistance in obtaining any information for use in the proceedings before it. There is no evidence that Petitioner has indicated to the Honduran court its purported need for the information sought.3 Nor is there any reason to believe that the Honduran court would be receptive to the introduction of new information during its appellate review of Petitioners case pending before
3. Though it is unclear whether Petitioners request is an attempt to circumvent Honduran law, the intended discovery raises significant First Amendment concerns.
Section 1782 discovery should not be used to conceal[] an attempt to circumvent foreign proof gathering restrictions or other policies of a foreign country or the United States. Intel, 542 U.S. at 244-45. The peculiar circumstances giving rise to Petitioners motion—the allegedly wrongful, ex parte delivery of Mr. McNicholas article to several justices of the Honduran Supreme Court—leave it unclear whether Petitioners intended discovery constitutes an attempt to circumvent foreign proof gathering restrictions or other policies. Intel, 542 U.S. at 244-45. While there are presumably Honduran legal mechanisms for seeking sanctions or relief from such improper conduct, Petitioner has neither identified them nor indicated how its intended discovery might be used in the foreign proceeding.6 What Petitioner purportedly seeks is to test
This Court is further concerned about the significant national security and First Amendment issues raised by Petitioners request. Specifically, Petitioner seeks to expose the identity and content of [McNicholas] sources. (ECF No. 1, ¶ 20.) Petitioner also seeks to obtain discovery regarding the contents of the Operation Cazando Anguilas report7 and information relating to the Reports author(s), editor(s), and contributor(s). This would include, inter alia, a request for the name(s), (email) address(es), and telephone number(s) of the author(s), editor(s), and contributor(s) to the Report. (Id.) Finally, Petitioner seeks to discover information regarding McNicholas improper motive in either the creation of the Report, the conference presentation, or the publication of the article. (Id. at ¶ 21.)
First, the fact that Petitioner seeks discovery regarding a Department of Defense report which Petitioner itself recognizes is not publicly available suggests that the information sought may be secret, classified, or otherwise protected as a matter of national security. (ECF No. 1-1 at 10.) As Petitioner has not explained the status of the report nor, critically, shown any need at all for such information, this Court will not entertain this part of Petitioners request.
Second, insofar as Petitioner seeks to force the journalist Mr. McNicholas to reveal confidential sources used in the preparation of his article about Mr. Amdani, Petitioner raises substantial First Amendment and privilege concerns. Well-established Fourth Circuit precedent
Finally, this Court rejects as irrelevant Petitioners intended discovery about Mr. McNicholas allegedly improper motive in his professional activities. Discovery pursuant to § 1782 is limited by the same principle as discovery under the Federal Rules of Civil Procedure: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any partys claim or defense.
4. Petitioners request is unduly intrusive and burdensome.
For the reasons stated above, this Court also concludes that Petitioners request is unduly intrusive or burdensome and would similarly reject[] Petitioners request based on this discretionary factor.9 Intel, 542 U.S. at 265.
IV. Conclusion
For the reasons stated above:
- It is hereby ORDERED that this case be placed under SEAL for a period of sixty (60) days;
- I respectfully recommend that Petitioners Application (ECF No. 1) be DENIED;
- I direct the Clerk to mail a copy of this Report and Recommendation to Petitioners Counsel at the address listed on the docket;
- I also direct the Clerk to mail a copy of this Report and Recommendation to Respondent Michael McNicholas.
Date: 10/1/15 /s/
Beth P. Gesner
United States Magistrate Judge