Opinion ID: 808041
Heading Depth: 2
Heading Rank: 1

Heading: jurisdiction

Text: The district court had subject matter jurisdiction under 28 U.S.C. § 1331. This Court has jurisdiction under 28 U.S.C. § 1291. While a discovery order generally is not a final, appealable order under Section 1291, we have held that we “[have] jurisdiction over an otherwise unappealable order if the appellant demonstrates that the order (1) conclusively determines the disputed question, (2) resolves an important issue completely separate from the merits of the action, and (3) is effectively unreviewable on appeal from a final judgment.” Goodman v. Harris Cnty., 443 F.3d 464, 468 (5th Cir. 2006) (citation and internal quotation marks omitted); see also Wiwa v. Royal Dutch Petroleum Co., 392 F.3d 812, 815-16 (5th Cir. 2004) (noting that “we have jurisdiction over the denial of a discovery order directed to a non-party to an underlying lawsuit pending in another circuit”). These elements are met here, where: 1) the controversy is the discovery dispute; 2) the matter involves procedural due process and discovery 1 Jan Veldwijk is Prime’s Chief Executive Officer. 6 Case: 12-20515 Document: 00511977189 Page: 7 Date Filed: 09/06/2012 No. 12-20515 issues, which are separate from the merits of the underlying contractual and tort claims; and 3) the district court’s order is effectively unreviewable because there is no other recourse for reviewing the order, since the merits litigation is in a foreign jurisdiction. Cf. Wiwa, 443 F.3d at 816 (asserting jurisdiction over a discovery order, in part, because “[a]ny appeal of the Texas district court’s denial lies only with this court”). Thus, jurisdiction is proper here. B. The District Court’s Grant of Prime’s Motion to Quash Texas Keystone’s Subpoenas Texas Keystone argues that the district court abused its discretion by not allowing Texas Keystone an opportunity to respond to Prime’s Motion to Quash prior to ruling on the motion and by not providing any reasons for the reversal of its order authorizing the subpoenas just one month earlier. Further, Texas Keystone asserts that Prime has failed to meet its burden of showing why the requested information in the subpoenas is irrelevant or burdensome to produce. Prime argues that Texas Keystone had a meaningful opportunity to be heard because Texas Keystone’s memorandum in support of its application for authorization of its subpoenas under 28 U.S.C. § 1782 more than adequately demonstrated Texas Keystone’s reasons for seeking the subpoenas. Prime also argues that the district court did not abuse its discretion because Prime’s Motion to Quash clearly shows that the documents and testimony that Texas Keystone seeks are irrelevant and that the requests are burdensome to Prime. Before addressing our review of the district court’s decision, an overview of 28 U.S.C. § 1782 is necessary in order to provide a context for the procedural posture of the case below and for Prime’s arguments in opposition.
Section 1782 allows an interested party to a foreign proceeding to apply to a United States district court in order to obtain discovery related to the foreign proceeding where the source of the discovery is not a party to the foreign 7 Case: 12-20515 Document: 00511977189 Page: 8 Date Filed: 09/06/2012 No. 12-20515 proceeding and can be found within the jurisdiction of the district court. It provides, in relevant part: 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 . . . . 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 . . . . To the extent that the order does not prescribe otherwise, the testimony or statement shall be taken, and the document or other thing produced, in accordance with the Federal Rules of Civil Procedure. 28 U.S.C. § 1782(a). Thus, once an interested party makes the requisite showing that it has met the statutory factors, the district court judge has the discretion to grant the application seeking the authority to issue subpoenas. Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 247 (2004) (“[Section] 1782(a) authorizes, but does not require, a federal district court to provide judicial assistance to foreign or international tribunals or to ‘interested person[s]’ in proceedings abroad.”).2 Several courts have observed that this discretion is informed by the “twin aims of the statute,” which are “to provide efficient means of assistance to participants in international litigation in our federal courts and 2 In addition to these statutory factors, “[t]he Supreme Court has suggested that district courts should consider [several discretionary factors]: (i) whether the person from whom discovery is sought is a participant in the foreign proceeding, since nonparticipants in the foreign proceeding may be outside the foreign tribunal’s jurisdictional reach and therefore their evidence may be unobtainable absent § 1782(a) aid, (ii) 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 judicial assistance, (iii) whether the § 1782(a) request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States, and (iv) whether the § 1782(a) request is unduly intrusive or burdensome.” Ecuadorian Pls. v. Chevron Corp., 619 F.3d 373, 376 n.3 (5th Cir. 2010) (citing Intel, 542 U.S. at 264-67) (internal quotation marks omitted). 8 Case: 12-20515 Document: 00511977189 Page: 9 Date Filed: 09/06/2012 No. 12-20515 to encourage foreign countries by example to provide similar means of assistance to our courts.” In re Ishihara Chem. Co., 251 F.3d 120, 124 (2d Cir. 2001), abrogated on other grounds by Intel, 542 U.S. 241 (citation and internal quotation marks omitted); Intel, 542 U.S. at 247 (“Section 1782 is the product of congressional efforts, over the span of nearly 150 years, to provide federal-court assistance in gathering evidence for use in foreign tribunals.”). Additionally, several circuits have elaborated on the threshold standard that Section 1782 establishes. “[Section] 1782 does not establish a standard for discovery. Instead, it provides for a threshold determination of whether to allow foreign litigants to enjoy discovery in U.S. courts in accordance with federal rules. The manner in which discovery proceeds will be determined by normal discovery rules.” Govt. of Ghana v. ProEnergy Servs., LLC, 677 F.3d 340, 343 (8th Cir. 2012). The Seventh Circuit has stated: The section 1782 screen . . . is designed for preventing abuses of the right to conduct discovery in a federal district court for use in a foreign court. Once the court has determined that such abuses are unlikely, the ordinary tools of discovery management, including [Fed. R. Civ. P.] 26, come into play; and with objections based on the fact that discovery is being sought for use in a foreign court cleared away, section 1782 drops out. Heraeus Kulzer, GmbH v. Biomet, Inc., 633 F.3d 591, 597 (7th Cir. 2011) (internal quotation marks omitted).3 In light of the foregoing, the Federal Rules of Civil Procedure governed the underlying discovery requests once the district court granted Texas Keystone’s Section 1782 application.
3 See also Weber v. Finker, 554 F.3d 1379, 1384 (11th Cir. 2009) (“Once discovery is authorized under § 1782, the federal rules, Fed. R. Civ. P. 26–36, contain the relevant practices and procedures for the taking of testimony and the production of documents.”). 9 Case: 12-20515 Document: 00511977189 Page: 10 Date Filed: 09/06/2012 No. 12-20515 We review a district court’s grant of a motion to quash for abuse of discretion and will affirm the district court’s decision unless it is “arbitrary or clearly unreasonable.” Wiwa, 392 F.3d at 817. Under Rule 45 of the Federal Rules of Civil Procedure, “a court may quash or modify a subpoena if [the subpoena] (1) fails to allow a reasonable time for compliance; (2) requires a person who is not a party to travel more than 100 miles from where the person resides; (3) requires disclosure of privileged or protected matter; or (4) subjects a person to undue burden.”4 Id. at 817-18 (citing Fed. R. Civ. P. 45(c)(3)). In its Motion to Quash, Prime’s objections to Texas Keystone’s subpoenas arise under the fourth factor, undue burden. Texas Keystone relies on our decision in Sandsend Financial Consultants v. Federal Home Loan Bank Board, 878 F.2d 875 (5th Cir. 1989), to argue that the district court abused its discretion by granting the Motion to Quash before providing Texas Keystone an opportunity to respond to the motion. Texas Keystone also cites Wiwa v. Royal Dutch Petroleum Company, 392 F.3d 812 (5th Cir. 2004), to argue that the district court abused its discretion by providing no reasons on the record for its grant of the Motion to Quash. We address each argument in turn. In Sandsend, the Federal Home Loan Bank Board (“FHLBB”) issued a subpoena for bank records pursuant to its statutorily-authorized investigatory powers. Sandsend, 878 F.2d at 878. The account holder filed a motion to quash the subpoena and the district court granted the motion before the FHLBB’s time to respond had expired. Id. at 877. The case had two alternative holdings. First, we held that the district court committed reversible error by failing to comply with certain requirements of the Right to Financial Privacy Act (“RFPA”), 12 U.S.C. § 3401 et seq., before granting the motion to quash. Second, 4 While Rule 45 has been amended since Wiwa was decided, the substance of this provision has remained the same. 10 Case: 12-20515 Document: 00511977189 Page: 11 Date Filed: 09/06/2012 No. 12-20515 we held that, even in the absence of the RFPA, the district court erred by not providing the FHLBB an opportunity to respond to the motion. Regarding the latter holding, this court stated: For the sake of brevity, we notice only two of the court’s procedural errors, either of which would be dispositive. In ruling on Sandsend’s motion to quash before the FHLBB’s time to respond had expired, the court erred twice: it neglected to follow the RFPA’s procedures for resolving a customer challenge and it denied the FHLBB an opportunity to respond . . . . Even without Section 3410(b) [the provision of the RFPA that the district court failed to comply with], the district court’s action constituted error, for it denied the FHLBB an opportunity to be heard. We may reverse the district court on these grounds alone. Sandsend, 878 F.2d at 881 (internal footnotes and citations omitted) (emphasis added). Thus, under Sandsend, the district court here abused its discretion when it failed to provide Texas Keystone an opportunity to respond to Prime’s Motion to Quash. Moreover, in Wiwa, the district court granted a motion to quash and denied a motion to compel directed at a non-party to the underlying litigation, and it provided no reasons, written or oral, for its decision. Wiwa, 392 F.3d at 815. This court stated: In circumstances analogous to this situation–appellate review of a denial of a motion for abuse of discretion–we and other courts have held that a district court’s denial of such a motion, unaccompanied by reasons–either written or oral–may constitute an abuse of discretion. Here, the district court quashed the subpoena and denied the motion to compel outright without providing oral or written reasons for doing so. Neither did the district court attempt to explain any deficiencies in either the subpoena or the motion so that [the non- moving party] might have an opportunity to cure any defects. Nor did the district court attempt to modify the 11 Case: 12-20515 Document: 00511977189 Page: 12 Date Filed: 09/06/2012 No. 12-20515 subpoena to cure any overbreadth; the district court even failed to set or hold a hearing on the breadth of the subpoena. There is no record evidence that the district court considered and applied the factors . . . [for] determin[ing] whether the subpoena is overbroad. We hold that this constitutes an abuse of discretion under the circumstances present here. Id. at 818-19 (acknowledging that “[g]enerally, modification of a subpoena is preferable to quashing it outright”). We held that the district court abused its discretion by quashing the subpoena and granting the motion to compel outright without giving any reasons for its decision. Id. at 819. Therefore, based on Wiwa, the district court here also abused its discretion by providing no reasons for its decision granting the Motion to Quash. Prime attempts to distinguish Sandsend and Wiwa by arguing that: 1) neither case involved a Section 1782 application; and 2) unlike the parties in Sandsend and Wiwa, Texas Keystone had a meaningful opportunity to be heard in its nineteen-page Section 1782 application and accompanying exhibits.5 However, Prime’s arguments are unavailing for several reasons. First, as the foregoing discussion of Section 1782 demonstrates, the normal federal discovery rules applied once Texas Keystone made the requisite showing in its Section 1782 application. See, e.g., Heraeus Kulzer, 633 F.3d at 597 (noting that “with objections based on the fact that discovery is being sought for use in a foreign court cleared away, section 1782 drops out”). Therefore, the fact that a case involves a discovery request pursuant to this authority is not a distinguishing factor for assessing the request on the merits. Second, Texas Keystone submitted its application in order to meet the threshold standard 5 Prime also argues that Sandsend is distinguishable because it held that the district court abused its discretion when it violated the RFPA. However, as we have observed already, Sandsend pronounced alternative holdings, one premised on the failure to comply with RFPA and one based on a violation of procedural due process. 12 Case: 12-20515 Document: 00511977189 Page: 13 Date Filed: 09/06/2012 No. 12-20515 under Section 1782, not in defense of a motion to quash, which requires a different analysis under the Federal Rules of Civil Procedure. Texas Keystone did submit a Section 1782 application supported with material related to the principal issues involved in the case, but it was not defending against a specific motion to quash or other objection at the time. Third, it is no answer to say that Texas Keystone had an opportunity to respond due to its Section 1782 application since we do not know whether the district court relied on this filing when granting the Motion to Quash. Indeed, there is no record evidence that the district court analyzed the factors for assessing whether Texas Keystone’s discovery requests were in fact unduly burdensome to Prime. Nor did the district court endeavor to modify the subpoenas. Accordingly, on the authority of Sandsend and Wiwa, we hold that the district court abused its discretion by failing to provide Texas Keystone an opportunity to respond to the Motion to Quash and by providing no reasons for its decision. We do not reach the question of how this court should modify the subpoena or otherwise address the merits of the Motion to Quash. Instead, we remand to the district court to adjudicate these issues in the first instance.6