Court Opinion

ID: 4147830
Source: CourtListenerOpinion
Date Created: 2017-02-23 16:00:58.143883+00
Date Added: 2024-06-11T07:46:09.501831
License: Public Domain

16-2653-cv
In re Catalyst Managerial Servs., DMCC

                                 UNITED STATES COURT OF APPEALS
                                     FOR THE SECOND CIRCUIT

                                         SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

       At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 23rd day of February, two thousand seventeen.

PRESENT: BARRINGTON D. PARKER,
                 REENA RAGGI,
                 CHRISTOPHER F. DRONEY,
                                 Circuit Judges.
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IN RE: CATALYST MANAGERIAL SERVICES,
DMCC.
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CATALYST MANAGERIAL SERVICES, DMCC,
                                          Appellee,

                               v.                                         No. 16-2653-cv

LIBYA AFRICA INVESTMENT PORTFOLIO,
                        Intervenor-Appellant,

CITIBANK, N.A.,
                                          Respondent.
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APPEARING FOR APPELLANT:                          CHARLENE C. SUN (James E. Berger, on the
                                                  brief), King & Spalding LLP, New York,
                                                  New York.

APPEARING FOR APPELLEE:                          NAZY MODIRI, Kellner Herlihy Getty &
                                                 Friedman LLP, New York, New York.

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       Appeal from a final order of the United States District Court for the Southern

District of New York (Lorna G. Schofield, Judge).

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the order entered on July 27, 2016, is AFFIRMED.

       Intervenor Libya Africa Investment Portfolio (“LAP”) appeals from the district

court’s grant of Catalyst Management Services, DMCC’s (“CMS”) petition for judicial

assistance pursuant to 28 U.S.C. § 1782(a), authorizing CMS to compel document

discovery from sixteen banks for use in a wrongful-contract-termination proceeding

brought by CMS against LAP in the United Kingdom.              Because the district court

determined, and the parties do not dispute, that the statutory requirements for § 1782

relief were met, we review the district court’s decision for abuse of discretion, see

Brandi-Dohrn v. IKB Deutsche Industriebank AG, 673 F.3d 76, 79–80 (2d Cir. 2012),

which we will identify only if it “based its ruling on an erroneous view of the law or on a

clearly erroneous assessment of the evidence, or rendered a decision that cannot be

located within the range of permissible decisions,” id. (internal quotation marks omitted).

In so doing, we assume the parties’ familiarity with the facts and record of prior

proceedings, which we reference only as necessary to explain our decision to affirm.

       A district court’s discovery discretion under § 1782 “must be exercised 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.” Mees v. Buiter, 793 F.3d
291, 297–98 (2d Cir. 2015) (internal quotation marks omitted). The Supreme Court has

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identified the following factors as relevant to a § 1782(a) ruling: (1) whether “the person

from whom discovery is sought is a participant in the foreign proceeding,” in which case

“the need for § 1782(a) aid generally is not as apparent”; (2) “the nature of the foreign

tribunal, the character of the proceedings underway abroad, and the receptivity of the

foreign . . . court or agency abroad to U.S. federal-court judicial assistance”; (3) “whether

the § 1782(a) request conceals an attempt to circumvent foreign proof-gathering

restrictions”; and (4) whether the request is “unduly intrusive or burdensome.” Intel

Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264–65 (2004). LAP concedes

that the second factor likely weighs in favor of granting the requested discovery, but

contends that the other three factors weigh so strongly against discovery as to manifest

abuse of the district court’s discretion. We address these three factors in turn, beginning

with the fourth because it is the issue on which the parties’ arguments principally focus.

1.     Fourth Intel Factor

       LAP faults the district court’s conclusion that CMS’s discovery request is not

unduly burdensome, contending that (1) the discovery was not relevant because CMS

could not articulate how it would be used in the UK proceeding, and (2) the district court

failed to perform the proportionality analysis required by § 1782’s incorporation of Fed.

R. Civ. P. 26(b)(1).1 See Mees v. Buiter, 793 F.3d at 302 (stating that district court

1
  In its opening brief, LAP argues without development that “the District Court failed to
address whether the discovery was ‘unduly intrusive’ to LAP—the party whose bank
records (and those of its affiliates) were to be effectively made public, creating a detailed
blueprint of its finances and commercial relationships.” Appellant’s Br. 23. Even if this
argument were properly before us, see Bishop v. Wells Fargo & Co., 823 F.3d 35, 50 (2d
Cir. 2016) (stating that issues insufficiently argued in briefs are considered waived and

                                             3
should assess whether discovery sought is overbroad or unduly burdensome by applying

familiar standards of Rule 26).

       We conclude that the district court acted within its discretion in determining that

the fourth Intel factor weighed in favor of discovery because CMS had sufficiently shown

that the documents were necessary to support its lost-profits-damages claim in the UK

proceeding.    LAP’s two aforementioned arguments fold into one because any

proportionality analysis depends upon the relevance of the information sought—and, in

the case of a § 1782 petition, relevance is assessed with regard to the foreign proceeding.

LAP does not dispute that at least a portion of the profits CMS expected to earn pursuant

to the contract were tied to LAP’s revenues. Accordingly, it was not outside of the range

of permissible decisions for the district court to conclude that documents showing the

wire transfers made by and to LAP and its affiliates through U.S. banks could be used to

establish the extent of CMS’s lost profits following termination of the contract. This is

particularly so where, as the district court found, a question has been raised as to whether

the financial statements produced by LAP in the UK proceeding are accurate or complete.

No different conclusion is compelled by the inability of CMS’s counsel to articulate

precisely how a forensic accountant would extrapolate lost profits from the requested

records.

       In urging otherwise, LAP contends that CMS’s professed intent to use the

requested discovery to support its lost-profits claim in the UK proceeding is a pretext for

normally will not be addressed on appeal), the argument fails because the district court
entered a protective order for information produced by the discovery targets.

                                             4
a fishing expedition to identify potential targets for enforcement actions if CMS were to

obtain a judgment against LAP. LAP cites Euromepa, S.A. v. R. Esmerian, Inc., 154 F.3d
24 (2d Cir. 1998), to argue that § 1782 cannot be used to obtain discovery in aid of

enforcing a foreign judgment. But the discovery request in Euromepa pertained to a

foreign dispute that had already been adjudicated. See id. at 28. In that context, we

concluded that the § 1782 petition necessarily failed the statutory requirement that the

discovery be for use in a pending foreign proceeding. See id. at 29. Euromepa does not

control here, where the dispute between CMS and LAP is still being adjudicated in the

UK. LAP points to no authority prohibiting the grant of a § 1782 petition where, as here,

a party presents a colorable claim of being able to use the discovery in an ongoing foreign

proceeding simply because the same discovery might be used to enforce a subsequent

judgment.

       LAP argues that the plain language of Fed. R. Civ. P. 26(b)(1) requires

proportionality analysis to grant § 1782 discovery, which the district court failed to

conduct here. See Fed. R. Civ. P. 26(b)(1) (“Parties may obtain discovery regarding any

nonprivileged matter that is relevant to any party’s claim or defense and proportional to

the needs of the case . . . .” (emphasis added)). The record, however, is to the contrary.

The district court explicitly stated, inter alia, that it was “trying to figure out why [the

requested § 1782] information helps [CMS] figure out [its] damages.” S.P.A. 6. It asked

“how . . . actual profits of LAP tell [CMS’s counsel] what the theoretical lost profits of

[her] client are,” id. at 10, and requested responses referencing exhibits submitted by

CMS. Counsel’s responses and the records submitted allowed the district court to satisfy

                                             5
itself that any relevance and proportionality thresholds were met, determinations that we

conclude were well within the realm of permissible decisions.

       Finally, LAP contends that proper proportionality review would have revealed that

§ 1782 discovery was unnecessary because LAP had and would continue to provide CMS

with financial statements as part of the ongoing UK proceeding. The district court,

however, noted record representations (including by the UK court and by LAP itself)

calling into question the completeness and accuracy of those statements. This prompted

it to conclude that § 1782 discovery could be used, at the very least, to check the

accuracy of LAP’s UK productions. While LAP here disputes the facts underlying this

conclusion, the mere existence of the record representations identified by the district

court was sufficient to support its decision.

       Further, we have held that a district court may not deny § 1782 discovery solely

because the foreign court did not have the opportunity to consider it first. See In re

Malev Hungarian Airlines, 964 F.2d 97, 100 (2d Cir. 1992) (stating that “requiring an

interested person first to seek discovery from the foreign or international tribunal is at

odds with the twin purposes of 28 U.S.C. § 1782”).

       Accordingly, the district court did not abuse its discretion in concluding that the

requested discovery was not unduly burdensome and complied with Fed. R. Civ. P. 26.

2.     First Intel Factor

       LAP argues that the first Intel factor, which asks whether the party from whom

discovery is sought is a participant in the foreign proceeding, should be construed to ask

whether the requested documents are within the jurisdictional reach of the foreign court.

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It contends that the documents here requested are in the UK court’s reach by virtue of its

ability to order LAP to access them from third parties and produce them. The cases cited

by LAP do not support its reading of this factor. In re Elvis Presley Enterprises LLC, No.

15-mc-386 (DLC), 2016 WL 843380 (S.D.N.Y. Mar. 1, 2016), denied a request to take

discovery from a company whose subsidiary was a party to the foreign proceeding. In re

OOO Promnefstroy, Misc. No. M 19-99 (RJS), 2009 WL 3335608 (S.D.N.Y. Oct. 15,

2009), denied a request to take discovery of documents that were actually in the

possession of parties to the foreign proceeding.          Even accepting, however, that the

documents requested are accessible to LAP, the district court did not abuse its discretion

in relying on evidence that questions had been raised about LAP’s productions in the UK

proceeding to conclude that it should allow the discovery to go forward as a means of

checking the accuracy of those productions. Moreover, we have rejected the requirement

that an applicant must first seek discovery abroad before bringing a § 1782 petition. See

In re Malev Hungarian Airlines, 964 F.2d at 100; see also In re Gianoli Aldunate, 3 F.3d
54, 62 (2d Cir. 1993) (holding that finding as to availability under foreign law of

discovery of information sought by § 1782 petition is unnecessary where district court

relied on statute’s “twin purposes” to grant petition).

3.     Third Intel Factor

       Finally, LAP argues that CMS filed its § 1782 petition to circumvent foreign

proof-gathering restrictions. LAP points to CMS’s stated intent to use the discovery, in

part, to discredit a witness statement submitted by LAP in support of a motion to stay

execution pending appeal of a since-vacated judgment in the UK proceeding. CMS

                                              7
sought to challenge the statement through cross-examination and its own witness

testimony, which the UK court rejected because the validity of the statement was moot in

light of the fact that LAP subsequently secured the stay by posting security.       The

argument fails because the UK court rejected CMS’s attempt to impeach only in the

context of the stay litigation. It did not rule that CMS was precluded from doing so in

any later context, specifically, the merits proceeding.2   Indeed, LAP’s argument is

inconsistent with its concession that “there is no evidence that the UK judge would be

hostile towards receiving this assistance from this court.” S.P.A. 13. Accordingly, the

district court did not abuse its discretion in concluding that the requested documents

would “supplement and not circumvent discovery in the UK.” Id. at 24.

4.    Conclusion

      We have considered LAP’s remaining arguments and conclude that they are

without merit. Accordingly, we AFFIRM the order of the district court.

                                        FOR THE COURT:
                                        Catherine O’Hagan Wolfe, Clerk of Court

2
  LAP effectively concedes the point by not rebutting CMS’s presentation of this
argument about the third Intel factor in its reply brief.

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