IN THE MATTER OF A PETITION FOR JUDICIAL ASSISTANCE PURSUANT TO 28 U.S.C. § 1782 BY MACQUARIE BANK LIMITED, Petitioner.
Case No. 2:14-cv-00797-GMN-NJK
UNITED STATES DISTRICT COURT DISTRICT OF NEVADA
May 28, 2015
(Docket No. 14)
Pending before the Court is a motion to compel filed by Petitioner Macquarie Bank Limited (“Petitioner” or “Macquarie“). Docket No. 14. Respondent Sherman Ching Ma (“Respondent” or “Mr. Ma“) filed a response in opposition, and Petitioner filed a reply. Docket Nos. 21, 24. Petitioner also filed a supplement, which the Court has considered. See Docket Nos. 30, 32. The motion came on for hearing on February 27, 2015. Docket No. 33; see also Docket No. 34 (hearing transcript). For the reasons discussed more fully below, the motion to compel is hereby DENIED and the subpoenas at issue are hereby QUASHED.
I. BACKGROUND
The matter before the Court involves a long-running legal dispute primarily fought far from Nevada. Petitioner is an Australian company. See, e.g., Docket No. 21-1 at 8. Petitioner lent approximately $11,000,000 to Juno Holdings N.V. (“Juno“), which at the time was a Netherlands Antilles company but later became a Luxembourg company. First Rumora-Scheltema Decl. at ¶¶ 4, 7 (Docket No. 1 at 15). The loan was made in connection with the possible initial public offering of shares
In an effort to collect on that judgment, Petitioner obtained an attachment of Juno‘s shares in another subsidiary, Jupiter Holdings B.V. (“Jupiter“), a Dutch company. Id. at ¶ 9. Petitioner obtained that attachment based on its belief that Jupiter owned shares in Minerva Financial Group Pty Ltd. (“Minerva“), an Australian company, and Minerva in turn owned Liberty. Id.
Petitioner then filed a petition with the District Court of Amsterdam to execute on the attachment. Id. at ¶ 10 (“Juno Proceeding“). That petition sought an order to sell and transfer Juno‘s shares in Jupiter. Id. The District Court of Amsterdam granted that petition, and Juno‘s appeal was ultimately rejected by the Supreme Court of the Netherlands in 2013. Id. at ¶¶ 10-11.1
Respondent and Cooperative Minerva and Artemis Holdings U.A. (“Cooperative Minerva“) themselves then attached Juno‘s shares in Jupiter on the basis of a notarial deed, which constitutes an executory title for enforcement under Dutch law. Id. at ¶ 13. Shortly thereafter, Respondent and Cooperative Minerva filed their own petitions in the District Court of Amsterdam claiming to be Juno creditors. Id. at ¶ 14 (“Juno-Ma Proceeding” and “Cooperative Minerva Proceeding“). Those actions are currently stayed. See Decker Decl. at ¶ 6 (Docket No. 21-1).
In addition to the above, Petitioner represents that it is contemplating initiating another action in the District Court of Amsterdam against Respondent for claims akin to fraudulent transfer action. See, e.g., Docket No. 14 at 6; Hearing Tr. at 48 (the “contemplated proceeding“).2
The legal dispute found its way to this District in light of
On September 11, 2014, Petitioner served Respondent with the subpoenas the Court had authorized. See Docket No. 14-5. Respondent did not provide the subpoenaed discovery and, instead, now challenges the subpoenas by opposing the pending motion to compel. See, e.g., Docket No. 21 at 3 (“The order allowing the subpoenas should be vacated . . .“).
II. MAGISTRATE JUDGE AUTHORITY
The pending motion has been referred to the undersigned magistrate judge. Before turning to the merits of the pending motion, the Court evaluates its authority to decide the matter. The authority of the undersigned magistrate judge is derived from
Courts are split on whether motions regarding discovery under § 1782 are dispositive matters requiring the issuance of a report and recommendation. See In re Application of Chevron Corporation, 2010 WL 3584520, *3 (S.D. Cal. Sept. 10, 2010). Nonetheless, most courts have found that ruling on a § 1782 motion is a non-dispositive matter within the province of a magistrate judge‘s authority under
At bottom, the pending motion is a discovery dispute and magistrate judges are frequently tasked with resolving discovery disputes. See, e.g., Columbia Pictures, Inc. v. Bunnell, 245 F.R.D. 443, 448 (C.D. Cal. 2007). The pending motion is procedural in nature and does not address substantive issues. Duizendstraal, 1997 WL 195443, at *1. The Court‘s disposition of the pending motion does not dispose of any claim or defense in the underlying actions. See id. While the Court‘s ruling may terminate this miscellaneous action, it does so only because of the procedural posture inherent in § 1782 actions and does not render the resolution dispositive in nature. Id.; see also Agincourt Gaming, LLC v. Zynga, Inc., 2014 WL 4079555, *2 (D. Nev. Aug. 15, 2014) (citing Feist v. RCN Corp., 2012 WL 4835038, *1 (N.D. Cal. Oct. 4, 2012)) (the fact that a discovery order may terminate a miscellaneous action does not render it “dispositive” for § 636 purposes).
III. STANDARDS
A court is authorized to allow discovery pursuant to § 1782 once the enumerated statutory requirements have been satisfied. See, e.g., Schmitz v. Bernstein Liebhard & Lifshitz, LLP, 376 F.3d 79, 83-84 (2d Cir. 2004). Even where those statutory requirements have been satisfied, however, the Court is not required to grant the § 1782 petition. Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264 (2004). Instead, it analyzes several discretionary factors to determine whether the discovery sought should be allowed. See id. at 264-65.
Section 1782 provides in relevant part that:
The 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, including criminal investigations conducted before formal accusation. The order may be made . . . upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court.
If the Court has determined that it has the statutory authority to grant the request, then it turns to whether it should exercise its discretion to do so. Lazaridis v. Int‘l Ctr. for Missing & Exploited Children, Inc., 760 F. Supp. 109, 112, (D.D.C. 2011). “Congress gave the federal district courts broad discretion to determine whether, and to what extent, to honor a request for assistance under
- whether the material sought is within the foreign tribunal‘s jurisdictional reach and thus accessible absent Section 1782 aid;
the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court jurisdictional assistance; - whether the Section 1782 request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States; and
- whether the subpoena contains unduly intrusive or burdensome requests.
See, e.g., In re Premises Located at 840 140th Ave. NE, Bellevue, Wash., 634 F.3d 557, 563 (9th Cir. 2011). The foreign location of documents sought may be considered as part of the discretionary analysis. See Four Pillars, 308 F.3d at 1079-80; see also Astronics Advanced Elec. Sys. Corp. v. Lufthansa Technik AG, 561 Fed. Appx. 605 (9th Cir. Mar. 7, 2014).4 “The court may also consider whether the section 1782 request is a fishing expedition or a vehicle for harassment.” Matter of Action and Protection Foundation, 2015 WL 1906984, *6 (N.D. Cal. Apr. 27, 2015) (internal quotations and citations omitted).
These discretionary factors “involve overlapping considerations, are considered collectively by the court in exercising its discretion, and are not stand-alone categorical imperatives.” In Matter of Application of Action & Protection Foundation Daniel Bodnar, 2014 WL 2795832, *5 (N.D. Cal. 2014). Courts must exercise their discretion under § 1782 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. See, e.g., Pott, 945 F. Supp. 2d at 1199 (quoting Schmitz, 376 F.3d at 84).
As noted above, this Court has already granted Petitioner‘s ex parte request for the issuance of subpoenas pursuant to § 1782. Macquarie I, 2014 WL 7706908. In light of the ex parte nature of the request, the Court expressly provided Respondent the ability to challenge the allowed discovery. See
IV. ANALYSIS
In light of the analytical framework outlined above, the Court first assesses whether the statutory requirements are met to allow the § 1782 discovery and, if so, then turns to the discretionary factors.
A. STATUTORY REQUIREMENTS
As discussed above, § 1782 includes several statutory requirements, including that: (1) the person from whom discovery is sought resides or is found in this District; (2) the discovery is for use in a proceeding before a foreign or international tribunal; and (3) the application is made by a foreign or international tribunal or any interested person. These requirements are met in this case. Respondent has conceded that he resided in this District at the time the subpoenas were served and that this Court may properly exercise jurisdiction over him, so the first statutory requirement is met. See Hearing Tr. at 33.5 Respondent also does not challenge that Petitioner (a party to the foreign proceedings) is a proper party to bring the application for discovery, and the Court finds that the third statutory requirement is met. See Macquarie I, 2014 WL 7706908, at *2.
The parties’ briefing argued extensively about whether the discovery sought is “for use” in a foreign proceeding. Since the time of the briefing, however, the bailiff appointed to oversee the sale of Jupiter shares in the Juno Proceeding has confirmed that he is receptive to receiving any relevant information obtained through this proceeding. See Docket No. 30-1 at 4 (“I confirm that because of the court decision in the Netherlands and my proceedings out of that, I would like to receive any relevant information obtained in the US proceedings“). In light of this communication, the Court finds that the discovery sought is “for use” in a foreign proceeding, so the second statutory requirement is met.
Having determined that the Court has the authority to require Mr. Ma to provide discovery pursuant to § 1782, the Court turns to whether it should exercise its discretion to order him to do so. As discussed above, the Court exercises its discretion by analyzing: (1) whether the material sought is within the foreign tribunal‘s jurisdictional reach; (2) the nature of the foreign tribunal, the character of the proceedings, and the receptivity to this Court‘s assistance; (3) whether the party seeking discovery here is attempting to circumvent foreign proof-gathering restrictions; and (4) whether the subpoena contains unduly intrusive or burdensome requests. In addition, the Court may also consider whether some or all of the documents are located abroad. The Court addresses each factor below.
1. Whether the Material is Within the Foreign Tribunal‘s Jurisdictional Reach
The first discretionary factor looks to whether the “person from whom discovery is sought is a participant in the foreign proceeding.” Intel, 542 U.S. at 264. The Supreme Court explained that “when the person from whom discovery is sought is a participant in the foreign proceeding . . . , the need for § 1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant in the matter arising abroad” because “[a] foreign tribunal has jurisdiction over those appearing before it, and can itself order them to produce evidence.” Id. (citations omitted). On the other hand, “nonparticipants in the foreign proceeding may be outside the foreign tribunal‘s jurisdictional reach; hence, their evidence, available in the United States, may be unobtainable absent § 1782 aid.” Id. (citation omitted). Although the case law at times refers to whether the “person” is within the foreign tribunal‘s jurisdictional reach, the key issue is whether the material is obtainable through the foreign proceeding. In re Application of Ooo Promnefstroy, 2009 WL 3335608, *5 (S.D.N.Y. Oct. 15, 2009) (“it is the foreign tribunal‘s ability to control the evidence and other production, not the nominal target of the § 1782 application, on which the district court should focus“); see also In re Microsoft Corp., 428 F. Supp. 2d 188, 194 (S.D.N.Y. 2006) (“The relevant inquiry is whether the evidence is available to the foreign tribunal“); In re Ex Parte LG Electronics Deutschland GmbH, 2012 WL 1836283, *2 (S.D. Cal. May 21, 2012) (finding this factor weighed against allowing § 1782 discovery even though subpoena was directed to a non-party to the foreign proceeding because the information sought could be obtained from a party to the foreign proceeding). This factor militates against allowing § 1782 discovery when
Mr. Ma asserts repeatedly that the documents at issue can be obtained by the bailiff directly from Juno in the Juno Proceeding: “There is no need for the District Court of Amsterdam to request records from Mr. Ma when it can request all records he might possess and more directly from Juno. All of the material sought is within the jurisdiction of the District Court of Amsterdam.” Docket No. 21 at 15; see also Deckers Decl. at ¶ 8. The bailiff has been tasked with collecting the information necessary to complete the sale of the Jupiter shares. See Docket No. 14-2 at 7. Petitioner acknowledges that the Dutch court has “ordered Jupiter to provide the bailiff with any information the bailiff requests in order to establish the value of the shares and facilitate the sale.” Docket No. 14 at 7.6 Petitioner also acknowledges that “some of the information Macquarie seeks here, for example documents concerning the assets and liability of Juno and Jupiter . . . is similar to the information the bailiff was ordered to seek.” See id. Nonetheless, Petitioner worries that there is “no guarantee” that the bailiff will be successful in obtaining the information he requests. Id.
Respondent has the better argument. Juno is a party to the on-going Dutch proceedings and its documents are within the jurisdictional reach of the District Court of Amsterdam. Respondent here has indicated that Juno is cooperating with the bailiff‘s request for information in those proceedings. See Ma Decl. ¶ 6. Moreover, Petitioner acknowledges that there is an overlap of the discovery sought here
Accordingly, this factor militates squarely against allowing the discovery sought here.
2. The Nature of the Foreign Tribunal, the Character of the Proceedings, and the Receptivity to this Court‘s Assistance
The second discretionary factor focuses on whether the foreign tribunal is willing to consider the information sought. See Siemens A.G. v. Western Digital Corp., 2013 WL 5947973, *3 (C.D. Cal. Nov. 4, 2013) (citing Schmitz, 376 F.3d at 884). “[I]f there is reliable evidence that the foreign tribunal would not make any use of the requested material, it may be irresponsible for the district court to order discovery, especially where it involves substantial costs to the parties involved.” In re Babcock Borsig AG, 583 F. Supp. 2d 233, 241 (D. Mass. 2008). Historically speaking, courts in the Netherlands have been receptive to United States judicial assistance. See Macquarie I, 2014 WL 7706908, at *3; see also Duizendstraal, 1997 WL 195443, at *2.
As noted above, the District Court of Amsterdam has appointed a bailiff in the Juno Proceeding to collect relevant information as necessary to conduct the sale of Juno‘s shares in Jupiter. Docket No.
Accordingly, based on the current record, the Court finds this factor weighs to be neutral.
3. Circumvention of Proof-Gathering Restrictions or other Policies
The next discretionary factor focuses on whether “the § 1782 request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country of the United States.” Intel, 542 U.S. at 265. “A perception that an applicant has ‘side-stepped’ less-than-favorable discovery rules by resorting immediately to § 1782 can be a factor in the court‘s analysis.” In re Cathode Ray Tube (CRT) Antitrust Litig., 2013 WL 183944, *3 (N.D. Cal. Jan. 17, 2013) (citing Application of Caratube Int‘l Oil Co., 730 F. Supp. 2d 101, 107-08 (D.D.C. 2010)). “Put differently, the § 1782 applicant‘s conduct in the foreign forum is not irrelevant.” In re Application of Gilead Pharmasset LLC, 2015 WL 1903957, *4 (D. Del. Apr. 14, 2015) (quoting In re IPC Do Nordeste, LTDA,2 012 WL 4448886, *9 (E.D. Mich. Sept. 25, 2012)).
Respondent argues strenuously that Petitioner seeks discovery from this Court as a means of circumventing the restrictions in the District Court of Amsterdam. In particular, Respondent notes that
Petitioner argues that the District Court of Amsterdam only denied its discovery request as moot given the bailiff‘s directive to collect information himself. See id. at 5. Petitioner also notes, without elaboration, that it had been unable to locate Mr. Ma to serve him with the subpoenas until September 11, 2014, despite its diligent efforts. See Docket No. 14 at 2. Lastly, Petitioner argues that the bailiff has now indicated that he is willing to receive any relevant documents obtained through this proceeding. See Docket No. 30-1 at 4.
The fact that Petitioner waited to serve the subpoenas until the day its request for discovery was denied by the District Court of Amsterdam certainly gives the impression that Petitioner was attempting to side-step the District Court of Amsterdam‘s ruling. While the Court agrees with Petitioner that its request was essentially denied as moot, it is equally clear that the District Court of Amsterdam‘s order envisioned the information being given directly to the bailiff at his request rather than being collected by Petitioner. In particular, the District Court of Amsterdam held that Petitioner‘s request to obtain the discovery was denied because “[t]he information must be provided to the bailiff, and the request will therefore be settled in another manner.” Docket No. 14-2 at 7. Rather than allow for that process to unfold through the bailiff, however, Petitioner immediately served the subpoenas to obtain the discovery itself from Respondent through this proceeding. Moreover, Petitioner has not meaningfully responded to Respondent‘s argument that the discovery sought circumvents the stays in place in the Juno-Ma Proceeding or Cooperative Minerva Proceeding. The Court finds that it does.
At the same time, however, while the bailiff appears to have been equivocal previously in his desire to receive discovery obtained through this proceeding, he has now indicated that he will receive any “relevant” information that Petitioner gathers through this proceeding. Docket No. 30-1 at 4.
4. Burden on Respondent
The next discretionary factor focuses on the burden on the person responding to the discovery request. The Supreme Court has made clear that “unduly intrusive or burdensome requests may be rejected or trimmed.” Intel, 542 U.S. at 265. “Recent cases suggest that courts should be more inclined to grant applications that seek either a single document or only those documents relating to a particular event.” Kreke Immobilien, 2013 WL 5966916, at *7 (collecting cases).10 When the information sought is equally available through the foreign proceeding from a party to that proceeding, such requests targeting a different person in the United States are by their very nature unduly burdensome. See In re Fischer Advanced Composite Components AG, 2008 WL 5210839, *3-5 (W.D. Wash. Dec. 11, 2008) (exercising discretion not to allow discovery because the discovery was unduly burdensome in that it was available from subsidiary company as a party to the foreign proceeding); see also In re Metallgesellschaft AG, 121 F.3d 77, 79 (2d Cir. 1997) (when the discovery is “equally available in both foreign and domestic jurisdictions, a district court might rely on this evidence to conclude that the § 1782 application was duplicative“). When a party chooses to serve overly broad discovery, it runs the risk that the discovery will be denied outright without an opportunity to narrow it. See, e.g., CRT
Petitioner argues that its “requests are limited to discrete transactions.” See Docket No. 14 at 4. The Court disagrees. While the subpoenas in some respects are directed to specific transactions, they also include broad and virtually all-encompassing categories of information. For example, the subpoena for documents seeks copies of “[a]ll [d]ocuments concerning the assets and liabilities” of six different corporate entities. See Docket No. 14-3 at 11-12.11 Adding to the significant breadth of the requests, the subpoena covers a time-period of more than a decade and requires not only that business files and email accounts be searched for responsive documents, but also that personal email accounts and social media accounts be searched. See id. at 8-9. As noted below, the subpoena also contains no geographical limitation as to the location of the documents and Petitioner has urged this Court to issue an order requiring the production of documents regardless of location. See Docket No. 14 at 9-12. Moreover, Respondent acknowledges that the information sought here is in some respects duplicative of the information sought by the bailiff in the District Court of Amsterdam directly from Juno. See Docket No. 14 at 7.
The subpoena for Mr. Ma‘s deposition is similarly expansive. The deposition topics mirror the categories of documents sought. As such, Petitioner seeks to depose Mr. Ma regarding, inter alia, the “assets and liabilities” of the six entities. See Docket No. 14-4 at 8-9. The subpoena again sets the relevant time range at more than a decade. See id. at 8.
Respondent filed a declaration indicating that producing the requested documents and preparing for such a deposition would require extensive travel, document review and preparation time. Ma Decl. ¶ 7. The Court agrees that the scope of discovery sought is overbroad and unduly burdensome, especially given that the material appears to be in significant part within the jurisdictional reach of the District Court of Amsterdam.
5. Location of the Documents
Mr. Ma next argues that Petitioner impermissibly seeks documents and information located outside of the United States. The legislative history to § 1782 indicates that it was intended to aid in “obtaining oral and documentary evidence in the United States” and some of its drafters have expressed policy concerns with applying it more broadly, which together have given courts “reason to think that Congress intended to reach only evidence located within the United States.” See Application of Sarrio, S.A., 119 F.3d 143, 147 (2d Cir. 1997); see also Advanced Micro Devices, Inc. v. Intel Corp., 292 F.3d 664, 665 (9th Cir. 2002) (describing § 1782 as permitting “domestic discovery” for use in foreign proceedings). To that end, courts are reluctant to turn American federal courts into “clearing houses for requests for information from courts and litigants all over the world in search of evidence to be obtained all over the world.” In re Godfrey, 526 F. Supp. 2d 417, 423 (S.D.N.Y. 2007); see also Four Pillars, 308 F.3d at 1080 (finding magistrate judge did not err in denying discovery of materials in China since “Chinese courts are well situated to determine whether such material is subject to discovery, and in what manner“).
As a threshold matter, it is clear that at least some responsive documents are located in the United States. See Mills Decl. at ¶ 15 (Docket No. 14-1); see also Hearing Tr. at 21. Nonetheless, it appears that a significant portion of the documents sought are not located in the United States. Mr. Ma has submitted a declaration that, with respect to Juno specifically, he is not the custodian of records, the documents he has in the United States relate primarily to the ongoing litigation and those documents are either privileged or likely already in Petitioner‘s possession. See Ma Decl. at ¶ 6.12 Mr. Ma also states that he does not have any of Juno‘s management accounts or records in the United States. See id.
As the record stands, it appears that a significant amount of the documents sought are not located in the United States. Accordingly, this factor militates against allowing the discovery sought here.
V. CONCLUSION
The Court is sympathetic to Petitioner‘s concerns that Mr. Ma has engaged in conduct designed to thwart its ability to collect on its judgment obtained in the Netherlands Antilles. Allegations like those made here of fraudulent transactions and vexatious litigation strategies are very serious and warrant serious consideration on the merits in the appropriate forum. Making such weighty allegations does not, however, automatically render this the proper forum in which to seek discovery supporting those allegations. The only connection that the parties and proceedings have to this District is the fact that Mr. Ma resided here at the time the subpoenas were served. The necessary parties are litigating their dispute in the Netherlands, and the material at issue is within the jurisdictional reach of the District Court of Amsterdam. The discovery requested in this District is extremely broad in nature and targets documents located outside of the United States.
//
//
//
//
//
//
IT IS SO ORDERED.
DATED: May 28, 2015
NANCY J. KOPPE
United States Magistrate Judge