The three appellant banks, headquartered in China, hold records that the United States government thinks may clarify how North Korea finances its nuclear
I.
For decades, the Democratic People's Republic of Korea (better known as North Korea) has aspired to a battle-ready nuclear weapons program. Seeking to defuse the threat, the U.S. government has imposed stiff financial sanctions on the North Korean regime and its instrumentalities, exercising authority located in the International Emergency Economic Powers Act. See
The facts uncovered by this investigation so far are a case in point. The U.S. government has collected substantial evidence that a now-defunct Chinese company called [Redacted] ("the Company") acted as a front for [Redacted], a North Korea-owned entity ("the NKE"), by facilitating transactions that violated the sanctions orders. In fact, to date the government's "investigation [has] not yield[ed] any evidence that" the Company "was ever used as a legitimate business." Declaration of [Redacted] ("FBI Declaration") ¶ 10, Joint Appendix ("J.A.") 864. Unsurprisingly, then, in addition to the NKE itself, the government has sanctioned the Company and two of its alleged founders. Actions Taken Pursuant to Executive Order 13382, [Redacted] (designating the NKE); Notice of [Office of Foreign Asset Control (OFAC) ] Sanctions Actions, [Redacted] (designating the Company); Notice of OFAC Sanctions Actions, [Redacted] (designating alleged co-founder [Redacted] ); Notice of OFAC Sanctions Actions, [Redacted] (designating alleged co-founder [Redacted] ).
According to the government, the scheme operated like this: Hobbled by the worthlessness of North Korea's currency, the NKE would use the Company to make or receive payments in U.S. dollars. These transactions helped North Korea access resources that would otherwise have been beyond its reach. For example, the Company's assistance allegedly enabled North Korea to export hundreds of millions of dollars of coal and other minerals, generating
In these transactions, the Company routinely took advantage of U.S. correspondent bank accounts-that is, accounts held by banks outside the United States at banks located inside the United States. See 31 U.S.C. § 5318A(e)(1)(B) (defining "correspondent account" to mean "an account established to receive deposits from, make payments on behalf of a foreign financial institution, or handle other financial transactions related to such institution"). Such accounts allow foreign "banks to conduct business and provide services for their customers in" the United States even if "the banks have no physical presence" here. Minority Staff of the Senate Permanent Subcommittee on Investigations, Correspondent Banking: A Gateway for Money Laundering , S. Hrg. 107-84, 107th Cong., app. 287 (2001). This, in turn, enables a foreign bank's customers to "receive many or all of the services offered by [a] U.S. bank" without forming a direct-client relationship with an American institution.
These accounts are how the appellant banks (collectively, the "Banks") enter the story. All three are China-based-indeed, the Chinese government owns a substantial minority of each-and hold correspondent accounts in the United States. Banks One and Two also operate branches in the United States, but according to the government the Company relied on the three Banks' U.S. correspondent accounts to execute its scheme.
To better grasp the full scope of the Company's operations, the government seeks certain records from the Banks. The United States and China have a bilateral agreement for obtaining just these kinds of records. Known as the Mutual Legal Assistance Agreement (MLAA), it obligates the two countries to assist each other "in proceedings related to criminal matters," including by "providing ... records or articles of evidence" and "executing requests for inquiry," and specifies the "[f]orm and [c]ontents" of any requests. Agreement Between the Government of the United States of America and the Government of the People's Republic of China on Mutual Legal Assistance in Criminal Matters, arts. 1, 4, June 19, 2000, T.I.A.S. No. 13,102. Absent an MLAA request, Chinese law prohibits banks from disclosing records to international investigators.
In this case, however, the United States chose not to go through the MLAA. Stymied by what it perceives as sluggish and typically fruitless cooperation from Chinese authorities in the past, the government unilaterally issued subpoenas to all three Banks in December 2017. The two banks with branches in the United States-[Redacted] ("Bank One" and "Bank Two," respectively)-received grand jury subpoenas. See Federal Rule of Criminal Procedure 17(e)(1). The third-[Redacted] ("Bank Three")-has no branch in the United States and received a subpoena from the Attorney General pursuant to the Patriot Act, which gives the Attorney General and the Treasury Secretary special investigatory tools when it comes to U.S. correspondent bank accounts. See
In correspondence with the U.S. government, the Banks and the Chinese government protested that complying with the subpoenas would violate multiple Chinese laws, including the law designating the MLAA process as the exclusive mechanism for disclosures. They claimed that failure to use the MLAA channel would expose the Banks to administrative and criminal penalties. In response, the U.S. government took the position that such a request would be futile, given China's slow and spotty history of providing records requested through that process.
There matters stood for about a year. Despite traveling twice to China for what proved to be unproductive negotiations with the Chinese government, there were no major breakthroughs: the United States refused to submit an MLAA request, and the Banks continued to withhold the records. At last, in November 2018, things kicked back into gear when the government moved the district court to compel enforcement. Still resisting, the Banks disputed the district court's personal jurisdiction and contended that enforcing the subpoenas would violate deeply ingrained principles of international comity. Bank Three also protested that the scope of its subpoena exceeded the Attorney General's Patriot Act authority.
The district court granted the government's motion to compel. In re Grand Jury Investigation of Possible Violations of
About a month later, after the Banks made clear they would not comply with the compulsion order, the district court held them in contempt. In re Grand Jury Investigation of Possible Violations of
II.
The Constitution forbids federal courts from exercising personal jurisdiction absent sufficient "minimum contacts" to satisfy " 'traditional notions of fair play and substantial justice.' " International Shoe,
All three Banks contest personal jurisdiction. "Reviewing the district court's assertion of personal jurisdiction de novo ," United States ex rel. Miller v. Bill Harbert International Construction, Inc.,
A.
Congress requires any "foreign bank" to acquire "prior approval of the" Federal Reserve before it "may establish a branch or an agency" in the United States.
When Banks One and Two applied to open their U.S. branches, both executed agreements with the Federal Reserve to assure compliance with relevant provisions of American law. As part of that deal, they "consent[ed] to the jurisdiction of the federal courts of the United States ... for purposes of any and all ... proceedings initiated by ... the United States ... in any matter arising under U.S. Banking Law." Letter from [Redacted], Vice Chairman & President, [Redacted] to Board of Governors of the Federal Reserve System 1 [Redacted], J.A. 1659 ("Bank One Consent"); Assurances Commitment and Consent to Jurisdiction Commitment [Redacted] 1, J.A. 1663 ("Bank Two Consent"). The agreements define "U.S. Banking Law" expansively to include "all federal criminal laws of which violation(s) arise(s): ... under ... the Bank Secrecy Act." Bank One Consent 3 n.2, J.A. 1661; Bank Two Consent 1 n.2, J.A. 1663.
The plain language of those agreements covers this case. This investigation is unquestionably a "proceeding[ ] initiated by ... the United States" and, as the government explains, "the grand jury is investigating whether those financial institutions that provided services in the United States"-for example, the American institutions hosting the foreign Banks' correspondent accounts-"exercised due diligence." Appellee's Br. 18 (citing
The banks' contrary arguments amount to nothing more than an unsuccessful effort to move the goalposts. They insist that there must be a reasonable showing that someone actually violated the Bank Secrecy Act. Bank Two Br. 8. Not so. All our precedent requires is a " 'reasonable probability that ... the facts necessary for the exercise of jurisdiction' " exist. In re Sealed Case,
Read properly, the consent agreements demand only that "U.S. Banking Law" form the basis of the investigation. The government has cleared that threshold here. Even if, as the banks suggest, this investigation's potential to yield successful prosecutions is uncertain, the banks have offered no basis for doubting that "U.S. Banking Law" constitutes this investigation's subject matter.
The banks also suggest that there is a problem with personal jurisdiction because the subpoenaed records are located outside the United States. But that fact has no bearing on personal jurisdiction given that the banks' consent agreements supply the basis for jurisdiction. The argument is better conceived as a challenge to the scope of the subpoenas-an understanding not evident from the banks' briefs. Even were we to entertain the argument, however, it would go nowhere. Federal courts have long required the production of documents held abroad. See, e.g., In re Marc Rich ,
B.
Bank Three, by contrast, has neither opened a U.S. branch nor consented to personal jurisdiction. We therefore must determine whether it "has purposefully directed" its relevant "activities" at "the forum." Burger King Corp v. Rudzewicz,
That, of course, requires us to correctly identify "the forum," a task ordinarily linked to where Congress has authorized service of process. See BNSF Railway Co. v. Tyrrell, --- U.S. ----,
According to Bank Three, a state-specific contacts analysis is appropriate
We begin by observing that the usual process of looking to where federal law authorizes service of process as a proxy for whether Congress sought to trigger a federal court's nationwide territorial reach is, perhaps, not a perfect fit for this provision of the Patriot Act. Because the statute confers authority to issue a subpoena directly on the Attorney General and the Treasury Secretary, rather than on a federal district court, Congress may have given little consideration to the territorial reach of a district court considering a motion to compel enforcement of such a subpoena. But given that Bank Three assumes that authorizing nationwide service in this context would trigger a nationwide contacts analysis, we shall too. See Sickle v. Torres Advanced Enterprise Solutions, LLC,
Here, that service-of-process provision, codified in
We know, for instance, that Congress has many different ways of authorizing nationwide service of process. Sometimes it makes its intention abundantly clear by authorizing service "anywhere in the United States." See, e.g., 7 U.S.C. § 499g(b) (service for enforcing in federal district courts certain orders of the Secretary of Agriculture);
Bank Three's position makes some intuitive sense. After all, as a matter of physics, the designated representative will have a single location. On further reflection, however, this logic fails to resolve things in the Bank's favor. After all, both Bank Three and the government agree that language authorizing service "wherever a defendant may be found" authorizes nationwide service, see Bank Three Br. 51, Appellee's Br. 25 n.20, even though in many instances that defendant, too, will only be located in one place at a time.
Even more instructive, in other service-of-process regimes involving designated representatives, when Congress wants to specify a particular location or district for service, it says so directly. For example, in certain trademark actions, Congress has instructed foreign mark holders to designate a U.S. agent and authorized service of process "by leaving with that person or mailing to that person a copy [of the process] at the address specified in the last designation so filed ." 15 U.S.C. § 1141k(f) (emphasis added). Congress has even provided a backup option, explaining that "[i]f the person so designated cannot be found at the last designated address" then "process may be served on the Director" of the United States Patent and Trademark Office.
Reading section 5318(k) to authorize nationwide service also aligns with the Patriot Act's structure and purpose. Cf. United States International Trade Commission v. ASAT, Inc. ,
Having defined the forum as the entire United States, we would usually go on to assess whether the Bank's contacts with that forum are sufficient. In this case, however, Bank Three placed all its eggs in the forum-identification basket; it claims only that it lacks the necessary contacts with the District of Columbia, offering no argument that its contacts with the United States as a whole are insufficient. See Bank Three Br. 46-47 ("The only way the government can prevail is by showing that the relevant forum is the United States as a whole."). We therefore have no occasion to question the district court's conclusion that Bank Three's maintenance of correspondent accounts in the United States supplies the necessary nexus. March Op. 56-58. With no further jurisdictional hurdles in our path, we proceed to the merits.
III.
Bank Three, the only bank to receive a Patriot Act subpoena, argues that its subpoena exceeds the Attorney General's statutory authority. Although "[w]e generally review district court decisions enforcing document subpoenas only for arbitrariness or abuse of discretion," we afford no deference to a decision that applies "the wrong legal standard." In re Sealed Case ,
Congress enacted section 5318(k)(3) "to increase the strength of United States measures to prevent, detect, and prosecute international money laundering and the financing of terrorism." Pub. L. No. 107-56, § 302(b)(1),
Bank Three claims the subpoena it received strays outside the statutory lines because it is "not expressly confine[d]" to documents related to the Bank's correspondent accounts in the United States. Bank Three Br. 23. To be sure, the subpoena is comprehensive: it seeks "[a] 11 documents relating to [the Company's] correspondent banking transactions"-including, it would seem, documents related to transactions using correspondent accounts in countries other than the United States. Bank Three Subpoena, J.A. 771; see also
With respect to this particular case, however, the government has a compelling response. It argues, as it did before the district court, that evidence already collected during the investigation shows that the Company's "exclusive raison d'etre" was to serve as "a progenitor of U.S. dollars for" the NKE. Appellee's Br. 62; see also
The parties' dispute turns on the meaning of the term "related to" as used in section 5318(k)(3). Arguing for a narrow interpretation, Bank Three reads the statute to authorize collecting only those records of transactions that themselves passed through Bank Three's U.S. correspondent accounts. For its part, the government advocates a more expansive reading-one that would cover all records that have a "connection with" the Company's use of Bank Three's U.S. correspondent accounts, even if some individual transactions made no use of a U.S. correspondent account. Appellee's Br. 60 (internal quotation marks omitted).
To assess how broadly the phrase "related to" sweeps, we look to the "traditional tools of statutory interpretation-text, structure, purpose, and legislative history." Tax Analysts v. IRS,
"[W]hen asked to interpret statutory language including the phrase 'relating to,' ... th[e] [Supreme] Court has typically read the relevant text expansively." Lamar, Archer & Cofrin, LLP v. Appling, --- U.S. ----,
The government's interpretation finds further support in the one example that Congress offered of a record "related to" a U.S. correspondent account: "records maintained outside of the United States relating to the deposit of funds into the foreign bank."
Resisting this expansive text, Bank Three offers two reasons to prefer a more circumscribed understanding of the statute. First, it again looks to the presumption against extraterritoriality. But here, the statute contains no ambiguity requiring us to resort to that presumption. See Validus Reinsurance, Ltd. v. United States,
Second, Bank Three points to the Justice Department's attempt to persuade Congress to amend the statute to allow the government to obtain not just "records relating to" a foreign bank's U.S. correspondent account, but also "any records" pertaining to "any related account at the foreign bank, including records maintained outside of the United States, that are the subject of any investigation of a criminal violation of United States law." Department of Justice, Title III, Anti-Corruption Legislative Proposals, 114th Cong., at 4 (May 5, 2016), https://www.justice.gov/opa/file/849986/download (emphases added). The Bank would have us infer from Congress's failure to adopt the amendment that section 5318(k)(3) as currently written can never reach "[a]ll documents" relating to "all" of a company's "correspondent banking transactions," as this subpoena does. Bank Three Subpoena, J.A. 771. But the Supreme Court has long cautioned against reading too much into congressional
We therefore conclude that records "related to" a U.S. correspondent account include records of transactions that do not themselves pass through a correspondent account when those transactions are in service of an enterprise entirely dedicated to obtaining access to U.S. currency and markets using a U.S. correspondent account. All that remains is to determine whether the government has adequately shown that the Company was such an enterprise.
The district court found that the government had made the necessary showing. Specifically, it found that "[n]o part" of the Company could "be separated from the ploy to put money through the United States financial market." March Op. 61. On the record before us, that finding was not clearly erroneous. See Boca Investerings Partnership v. United States,
Nor does any record evidence suggest that the NKE used the Company to launder money through currencies other than U.S. dollars. Indeed, the NKE had a special need for dollars because "commodity companies, such as those operating in China, Thailand, and Singapore, frequently prefer to take payments in U.S. dollars because of the dollar's global demand and stability." Id. ¶ 26, J.A. 871; see also Correspondent Banking: A Gateway for Money Laundering , S. Hrg. 107-84 app. 287 n.12 ("U.S. dollars are one of a handful of major currencies accepted throughout the world. They are also viewed as a stable currency, less likely to lose value over time and, thus, a preferred vehicle for savings, trade and investment."). Further, the government explains, and Bank Three nowhere contests, that before 2017-and consequently during the vast majority of the period covered by this subpoena-the NKE "could legally conduct transactions in other currencies" besides the U.S. dollar (such as the euro), Appellee's Br. 61, signaling that the NKE would have had no need of a front company to conduct transactions in those currencies.
IV.
"Comity refers to the spirit of cooperation in which a domestic tribunal approaches the resolution of cases touching the laws and interests of other sovereign states." Société Nationale Industrielle Aérospatiale v. U.S. District Court for the Southern District of Iowa ("Société Nationale "),
A.
A comity analysis typically starts by determining whether a "true conflict" exists between the implicated legal systems. Hartford Fire Insurance Co. v. California ,
After this initial inquiry, the question is whether "the factual circumstances" of the case at hand counsel against applying American law. Laker Airways ,
The district court diligently applied this "constellation of factors" to the facts at issue here. March Op. 63. In so doing, it observed that two factors indisputably weigh against enforcing the subpoenas: the documents originated outside the United States, see id. at 69, and the Banks have acted in good faith throughout this litigation, see id. at 77 ("[T]he government agrees that none of the banks has acted in bad faith."). According to the district court, another pair of factors just as clearly weighs in favor of enforcement: the documents contain unique information vital to the investigation-indeed, "the government avows the subpoenaed documents are the foundation of the United States' investigation," id. at 67 (alteration and internal quotation marks omitted), and the subpoenas target an appropriately specific collection of records-that is, "the subpoenas are tailored to specific financial records, for a defined date range, at banks [the Company] is known to have used to launder funds," id. at 68.
Parsing the more complex remaining factors, the district court emphasized the government's goal of learning how North Korea has thwarted American sanctions in pursuing weapons of mass destruction. "[N]on-enforcement" of the subpoenas, the district court stressed, "would undermine a critical national interest." Id. at 72. Although acknowledging that China has a "legitimate" "interest in the development of a sound banking system," the district court concluded that the United States' national security interest easily outweighs China's interest in safeguarding its banking secrecy laws. Id. at 73; see also id. (observing that because "even Chinese authorities recognize that bank secrecy can co-exist with limited disclosure to government agencies," "China's interest would not be undermined by enforcement of the subpoenas").
The district court recognized that the U.S. government had declined to take advantage of an alternative channel through which the United States might obtain the documents at issue: the Mutual Legal Assistance Agreement, which creates a process to exchange "documents" and "records" relevant to criminal investigations. MLAA art. 1(2)(c); see March Op. 68-72 (discussing the MLAA). But based on the U.S. government's declarations that China has failed to satisfactorily engage in the MLAA process in many other cases over the past decade, the district court accepted the Executive Branch's representation that requiring the government to first exhaust the MLAA process would just "[a]llow[ ] China to gum up [the] United States' investigations" and, therefore, that "[t]he Department of Justice no longer needs to take overtures of China's willingness to assist the United States[ ] with investigations into North Korea seriously." March Op. 71.
Finally, with respect to the hardship facing the Banks, the district court acknowledged that compliance with the subpoenas
Affording the most weight to the United States' unassailable interest in successfully investigating and, with any luck, frustrating North Korea's arms programs, see id. at 77 (calling "the interests of the relevant countries" the "most important factor"), the district court concluded that "[o]n balance, international comity is not a reason to refrain from compelling compliance with the subpoenas," id. On appeal, the Banks argue that the district court applied the incorrect legal standard, that enforcing the subpoenas runs afoul of our case law, that "[c]omity dictates that the Chinese government at least be given an opportunity to comply with an MLAA request before forcing a Chinese bank to violate Chinese law on Chinese soil," Bank Two Br. 19, and, finally, that the district court incorrectly balanced the relevant factors.
B.
Before considering these arguments, we must first ascertain the appropriate standard of review. Although we "ordinarily review[ ] a district court's grant of a motion to compel ... for abuse of discretion," Recording Industry Ass'n of America, Inc. v. Verizon Internet Services, Inc.,
Employing that standard, we ask whether the district court "based its ruling on an error of law, a clearly erroneous assessment of the evidence, or an improper weighing of the factors limiting its discretion." Fraenkel v. Islamic Republic of Iran ,
Bank One first argues that "the District Court used the wrong legal standard to review the Government's request to enforce the Subpoenas"-that is, the court should not have adopted "the multifactorial approach of ... Restatement (Third) of Foreign Relations." Bank One Reply Br. 1. This argument gets the Banks nowhere. In Société Nationale , the Supreme Court explained that the Restatement's "factors are relevant to any comity analysis."
This brings us to the Banks' related assertion that "[t]he present case is controlled by" Sealed Case I . Bank One Br. 14. But that case by its own terms constricts its holding to its facts: "If any of the facts we rest on here were different," we cautioned, "our holding could well be different." Sealed Case I ,
The Banks' more powerful argument is that, due to the factual parallels between Sealed Case I and this case, "it was an abuse of discretion to enforce the Subpoena[s]." Bank Two Br. 25. The Sealed Case I court identified several facts central to its decision not to enforce the contempt order at issue, and they might sound familiar. First, and "[m]ost important," the "sanctions represent[ed] an attempt by an American court to compel a foreign person to violate the laws of a different foreign sovereign on that sovereign's own territory."
As the Banks point out, each of those facts maps neatly onto this case, in which the government asks us to compel Chinese banks owned in significant part by the Chinese government to violate Chinese law on Chinese territory. The Banks have acted in good faith, they are currently third parties to the criminal investigation, and the MLAA, at least on its face, provides an alternative path that would allow the government to obtain the records at issue.
What's more, to the extent there are differences, there is some reason to believe that this case is an even better candidate for comity than Sealed Case I. For one thing, where the subpoena recipient in Sealed Case I was being asked to violate the laws of a "different foreign sovereign,"
The district court ignored none of these considerations. Quite to the contrary, it grappled with each and instead found persuasive two other "critical" differences between the cases. March Op. 64.
The district court first pointed out that Sealed Case I concerned a "domestic law enforcement matter," which "hardly compares to the national security interests and associated potential harm caused by non-compliance with a subpoena related to an investigation into funding a state-sponsor of terrorism's nuclear weapons program." Id. at 64. This is an important distinction. The government justifiably believes that the subpoenas will unearth information concerning North Korea's use of third-party front companies to evade economic sanctions, and nothing in Sealed Case I suggests any "sovereign interest[ ]," Société Nationale ,
We acknowledge, as the Banks point out, that the government here has failed to proceed as though North Korea were about to push the nuclear launch button. Indeed, the government took nearly a year to enforce the subpoenas in court and never sought to expedite this case until the district court instructed it to do so. It did not, however, sit on its hands during that time, as the Banks repeatedly assert, but "engaged in intra- and inter-agency deliberations" and "twice sent a delegation to China" during that period. March Op. 67. More to the point, we are reluctant to second-guess the Executive Branch's assessments of national security interests and how to best serve them. See Frugone v. Central Intelligence Agency ,
The Banks next observe that "if the Government receives the documents via the MLAA, its national security interests will be fully vindicated." Bank Two Br. 26. The district court, however, concluded that the futility of the MLAA process sets this case apart from Sealed Case I , in which testimony from the bank's manager appeared to offer a sure-fire way of securing at least some of the desired information. "[I]n this investigation," by contrast, the district court observed, "the government insists that without compelling compliance, the requested information is out of reach." March Op. 64. Forcefully disagreeing with this conclusion, the Banks insist that the MLAA process provides a channel specifically designed to allow the U.S. government to obtain exactly the types of records it seeks. Allowing it to eschew that process without so much as making an initial MLAA request, they argue, neglects comity's "spirit of cooperation." Société Nationale,
Recall that the MLAA establishes a procedure for the U.S. and Chinese governments to obtain documents from each other in criminal investigations. Specifically, the process provides that "insofar as national law permits," if, say, the United States makes a request, China's "Central Authority" must search for and then send the requested records. MLAA arts. 2(1), 14(1), (3). Nothing in the MLAA, however, designates it as the exclusive means of obtaining evidence in a criminal investigation.
In this case, China's Central Authority, the Ministry of Justice, id . art. 2(2), expressed a "willingness to cooperate with a DOJ MLAA request" as early as March 2018, Letter from Hank B. Walther & Samidh Guha to Zia Faruqui & Ari Redboard 3 (Mar. 23, 2018), J.A. 830. Bank Three communicated China's overture to the U.S. Department of Justice, observing that the MLAA process "would allow DOJ to obtain the documents it seeks, while avoiding the time, cost, and risk of litigating the Patriot Act subpoena."
The Ministry then directly communicated with the district court multiple times, assuring that court that the Ministry "would timely review and handle the requests for assistance sought by the DOJ in accordance with the [MLAA] and applicable domestic laws." Letter from Du Yaling, Director General of International Cooperation Department of the Ministry of Justice to Chief Judge Beryl A. Howell 4 (Jan. 6, 2019), J.A. 76. If the government submits a "request in line with the [MLAA]," the Ministry pledged, "China will provide the assistance to the United States accordingly."
The district court considered all these facts but ultimately concluded that pursuing the MLAA process would result in an inadequate production of documents. According to the Associate Director of the Office of International Affairs-which serves as the United States' Central Authority under the MLAA-the United States has submitted fifty MLAA requests for bank records over the past decade and has received no responsive records to thirty-five; the government found most of China's responses in the remaining fifteen cases inadequate or untimely. And of the
Moreover, the district court recognized that the government is especially pessimistic about the chances of success in this case given that the investigation involves a perfect storm of disagreements between the United States and China: "Chinese authorities have a demonstrated failure in supporting foreign and U.S. sanctions and U.S. law enforcement actions involving North Korea," and "the Chinese government has specifically objected to the imposition of sanctions on [the Company] and other Chinese front companies." FBI Declaration 180, J.A. 888. Drawing the district court's attention to a case "nearly identical" to this one, id. at 37, J.A. 884, an FBI special agent submitted a declaration pointing out that although in that case, China had "nominally agreed to work jointly with the U.S. authorities" on MLAA requests for bank records involving North Korea, id. 172, J.A. 885, nothing ever came of that initial agreement; offering various excuses, China never handed over any records. "Based on these facts," the agent "concluded that the MLAA process is not an effective way to obtain bank records from Chinese authorities with respect to investigations involving North Korea." Id. ¶ 75, J.A. 886; see id. ("[O]ne reason that Chinese authorities do not want to assist with North Korean investigations is that producing such records could reflect badly on the Chinese government and the Chinese financial industry.").
Given this record, we see no abuse of discretion in the district court's decision to enforce the subpoenas despite the fact that the United States chose not to pursue the MLAA process. The Supreme Court has made clear that evidence-sharing arrangements set up by international agreements, although often valuable, can also prove "unduly time consuming and expensive, as well as less certain" than court-enforced subpoenas "to produce needed evidence." Société Nationale ,
We need not tarry over the Banks' remaining arguments that the district court abused its considerable discretion in balancing the comity factors. Cf. Morley v. Central Intelligence Agency ,
We proceed with extreme caution when enforcing subpoenas that would require recipients to violate a foreign sovereign's domestic laws. As we said in Sealed Case I , "[w]e have little doubt ... that our government and our people would be affronted if a foreign court tried to compel someone to violate our laws within our borders,"
V.
Finally, Banks One and Three challenge the district court's April 2019 contempt order, arguing that it was unjustified given the government's concession that the Banks acted in good faith to obtain the Chinese government's permission to produce the records covered by the subpoenas. "[W]e review ... the contempt finding ... for abuse of discretion." In re Fannie Mae Securities Litigation ,
A civil contempt citation is appropriate "only if the putative contemnor has violated an order that is clear and unambiguous, and the violation must be proved by clear and convincing evidence." Broderick v. Donaldson,
The banks insist that the district court should not have held them in contempt because they acted in good faith (albeit unsuccessfully) to secure the Chinese government's permission to produce the records at issue. This is a rather thin reed to begin with, rendered more slender still by the fact that the more recent Restatement (Fourth) of Foreign Relations Law significantly diminishes the importance of a putative contemnor's "good faith": the Restatement (Fourth) simply states that courts "have discretion to excuse violations of law, or moderate the sanctions imposed for such violations, on the ground that the violations are compelled by another state's law" if "the person in question appears likely to suffer severe sanctions for failing to comply with foreign law" and "has acted in good faith to avoid the conflict." Restatement (Fourth) of Foreign Relations Law § 442 (2018) (emphasis added)). In any event, this court has long held that "[t]he intent of the recalcitrant party is irrelevant in a civil contempt proceeding because, unlike a criminal contempt proceeding, a civil contempt action is a remedial sanction used to obtain compliance with a court order or to compensate for damage sustained as a result of noncompliance." Food Lion, Inc. v. United Food & Commercial Workers International Union, AFL-CIO-CLC ,
Confronted with clear non-compliance in the face of a perfectly pellucid order, the district court reasonably found that "the banks have not demonstrated good faith in a way relevant to contempt" and that, because "the requested records are essential to an investigation into a matter of national security[,] ... continued contumacy threatens tremendous harm." April Op. 9 (internal quotation marks omitted). Under these circumstances, the banks have given us no basis for concluding that the district court abused its discretion.
VI.
For the foregoing reasons, we affirm the district court's contempt orders against all three Banks.
So ordered.
Notes
NOTE: Portions of this opinion contain sealed information, which has been redacted.