In this episode, Ed Mullins and Rebeca Mosquera explore the complexities of section 1782, a powerful tool for obtaining U.S.-based evidence for foreign proceedings. They discuss the various types of evidence that can be requested, the requirements and procedures for filing applications, and how to respond to such discovery orders for the defense. With insights from recent Supreme Court rulings, they analyze the implications for practitioners and offer practical advice on leveraging section 1782 effectively in the evolving legal landscape.
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Transcript:
Intro: Welcome to Disputes in Perspective, a Reed Smith podcast. This podcast series will discuss disputes-related trends, hot topics, and developments occurring in the global legal landscape, and hopefully provide you with some helpful insights and practical tips. If you have any questions about any of the episodes, please feel free to contact our speakers.
Rebeca: Welcome to Disputes in Perspective. I am Rebeca Mosquera, a senior associate in our New York office specializing in international arbitration and litigation. Joining me is my wonderful colleague, Ed Mullins, a partner in our Miami office. Ed and I have had the pleasure of working together on several international arbitration and cross-border disputes. Today, we're exploring a topic that regularly generates a lot of discussion, Section 1782 of the U.S. Code. So, let's dive right in. Essentially, Section 1782 is a federal statute that allows individuals involved in legal proceedings outside the United States to request assistance from U.S. Courts to obtain evidence located within the U.S. It's like a legal bridge between foreign courts and U.S.-based evidence. I want us to visualize this. So, for example, imagine that you're part of a lawsuit in, say, Brazil or Germany, and you realize that crucial evidence or testimony is sitting with a company or an individual in the U.S. So instead of jumping through international hoops and letter of rogatories, Section 1792 lets you go straight to a U.S. District court to request the evidence. It is a powerful tool that promotes international cooperation and can significantly impact the outcome of foreign disputes. When I say it promotes international cooperation, that was precisely the spirit of this statue when it was created. The U.S. created this statue in the hopes that other countries will replicate similar laws and statutes. But I don't think that's happened. But in any case, now you might be wondering about the type of evidence you can request, what are the elements, or what does your application might have to include. And for that, I would like to turn it over to Ed so he can tell us more about the requirements that we need to meet for a Section 1782 application.
Ed: Thank you. I'd really enjoy talking about 1782 because I think it's a pretty unique statute. I can find out more information about a case before it's even filed for a foreign proceeding than I can domestically. And it's a very powerful tool. You can get not just documents, but you can get deposition testimony as well. And the lawsuit that that issue doesn't even have to be filed yet. So let's talk about the statute itself. I agree with Rebecca that the idea was that we were supposed to be able to get evidence for our cases in the United States in foreign countries that hasn't really worked out. And so there is an imbalance here where you can get more evidence for a foreign proceeding than you can for a case here looking for discovery in a foreign country. So there's different ways to talk about the elements. I think the logical way you see most cases look at it, the elements are an interested person doesn't necessarily have to be a living person. It can be a corporation. The evidence needs to be for use in a foreign proceeding. And the target, often called the target, it has to be found in the district of the 11th Circuit and other circuits. So the fourth element that it has to be, you have to be looking for evidence. But since you get documents of deposition, that's not really an element that ever has to be met. So those were the three elements. And we'll start with an interested person. It's a pretty easily met standard. You typically, it often is a litigant, if you will, in the foreign proceeding. So that's easily met, but it doesn't necessarily have to be. Courts have allowed it to be a shareholder of the company that’s suing in the foreign proceeding. It could be an officer and it could be other related entities. So there is some litigation about an interested person, but it's not a particularly hard element to meet. The second element is for use in a foreign proceeding. There is more litigation on this one. One issue is that is the case that you're looking for discovery or is it over? There have been cases where the proceeding's over and it's up on appeal, had litigation over an issue as to whether or not you could bring new evidence in on appeal in the foreign proceeding. It was a battle of the experts in the court to confirm that they could not, then found that the evidence sought was not for use for a foreign proceeding. There are cases talking about whether or not you can use it to collect on a judgment. There are procedures to obviously enforce a foreign judgment. If you're not really looking for evidence for the foreign proceeding, but actually looking for evidence to find assets to collect on a judgment, the court could find that's not actually for use in a foreign proceeding. And there's been another line of cases more recently where, coming out of New York, where the courts have found that it's not really that your elements, you're not really looking for use for a foreign proceeding. What you're really looking for is to get evidence to bring in action here. And so one case recently, the judge asked the applicant, are you going to tell me you're not going to sue here in the United States? And the applicant's lawyer would not make a concession, and then the court denied the the application saying that, look, I mean, I don't believe that this is simply for use in a foreign proceeding. It looks like this is for use in domestic proceeding. Therefore, you are not properly using the statute. So I think that's part of a line of authority where the courts are kind of pushing back on the statute a little bit because it is so heavily used that, you know, It is a lot of these 1782s around the country. We have used them all over California, New Jersey, Delaware, New York, Georgia, South Carolina, many in Florida. There are cases all over the country that we've had and others have had. So the courts are starting to get used to this. And also, kids kind of swamped the boat in any event. But the last thing I want to talk about before use is, I mentioned earlier, the case does not have to be filed. All it's required is reasonably contemplated. The circuits are not necessarily consistent of what that means. There's a much more liberal standard in 11th Circuit where I am. Some courts have said it's got to be much more. You can't just be looking for evidence to determine whether or not you want to sue. But it's pretty consistent that if you're going to do this, you need to have the lawyer that's probably going to file a case say, this is what I'm going of file. These are the elements. This is why I need this discovery. But what's critical to this is, and I think this example I had used earlier. This is not something I can do generally for a domestic case. Hey, I'm thinking about a settlement. This is the evidence I need, and I want to find out about it. It's harder to do that in some courts than possible to do that for a domestic case, but you can do it for a foreign proceeding with 28 U.S.C. 1782, which makes the statute pretty powerful. And finally, found in the district, my wife and I, Professor Rima Mullins at FIU, wrote a chapter in a book about this element, part of a treatise co-edited with Lawrence Newman. And we're in a second edition if you want to read about this more. And the idea is, you know, is somebody found the district? The standard typically is, the easy one is if it's a human person that's where the person lives. That's the easy one. I think deposition found the district where the person lives. Typically, if it's a bank account you're looking for, you can use this to find bank accounts from people, et cetera. Where does the account live? You know, where is the account? And if it's a company, where is it incorporated? A principal place of business. So those are the easy ones. So again. That's the, you know, where the company is, where the person is. But the standard that the courts have also talked about is continuous and systematic. Those of you that remember the old general jurisdictions, I remember that. That's how we used to have general jurisdiction over people, personal jurisdiction. And so the courts have done a sort of a general jurisdiction, old general jurisdiction analysis that you don't necessarily have to incorporate there, but if you have to use a systematic context, that's enough. But the second circuit has even gotten broader. In that circuit, they have actually gotten broader and actually looked at a personal jurisdiction analysis of the civic jurisdiction and looking at the context of the evidence in the lawsuit and whether or not there's minimal context for 28 U.S.C. 1782. It's much broader. And I think, Rebecca, you were going to talk about the founding of a district in another way when we got you, correct?
Rebeca: Yes, I mean, definitely that element or that concept of being found, I agree with everything you've said, but some courts have been very liberal or expansive in interpreting this concept. And it was in the Second Circuit where a court found that a person was traveling through New York for a number of days. That also meant that that person was found in the district and it was served with a 1782 application. So I completely agree that there are certain courts that have been very liberal in interpreting this section in the past. And that's why it is a very powerful tool that allows litigants in foreign courts to have access to that, to U.S.-style discovery. Right. Which is very thorough and very expansive, so
Ed: The irony of that is that doesn't work for a subpoena. Is really all what it is, right? So you cannot get gotcha jurisdiction on a subpoena. You can for personal jurisdiction. So because 28 USC is a action against the discovery target, there's this pull between is it really a subpoena or is it really an action against the applicant?
Rebeca: Right. So, well, let's move on a bit about filing a Section 1782 application. And, you know, one of the things that I find really interesting, you know, when we go and talk to people about Section 1782 in other countries, is that they are very surprised that this is an ex parte application. And I don't know, Ed, if you can tell us more about the application itself. What's a high-level process of when it's filed, ex parte, you receive the order, the subpoena, and then what happens?
Ed: Yeah, so it is typically done ex parte, but what that really means is, in some ways, the model is really going to a court and asking for a subpoena. I do think that is a typical analogy. And so what the court is really doing is determining whether or not your prima facie met your elements of the 1782. And if you've done so, it will enter the order allowing the subpoena to be issued. And then the discovery target, if you will, will come in and either okay, here are your documents. And a bank might do that. We'll talk about that in a moment. Or, you know, might be more aggressive if it's related to an entity being sued in the foreign proceeding. But that's really how it goes. Recently, there have been more actions put in by us where we've actually have gone in, we've seen this thing filed, and we don't want to be facing an order by the court. Because it's one thing to say, oh, it's supposed to be de novo, it was ex parte, so now I've got to contest this. But the court's already found that the elements are met. So practically, you're trying to say, well, you're wrong. This is why you shouldn't do this. And so more and more often you're seeing targets go in before the ex parte order is entered because we see it out of a docket, you see that your company might be sued. Sometimes people give you notice. So in any event, but that's typically how it's done. But there has been some changes in that.
Rebeca: Right. And besides the elements, the statutory elements that we know, There are also some discretionary factors that were, you know, established by the 2004 Intel case. So how does an applicant go about proving those as well?
Ed: Well, I mean, I think that the bigger issue is how they discover targets, use those to fight it. I think that's really because the old times when we used to do that party, we just focus on statutory factors. More and more, the courts have tried to look at the discretionary factors that Intel came out with, but it's almost like proving a negative because the reality is there are really more defenses, if you will, to the statutory factors. In other words, you have statutory factors. That's the prima facie case for 1782. And the discretionary factors are really more of a defense to, you know, you shouldn't do this even though statutory met. So let's go through those, you know, quickly. The one is, is discovery from whom you're seeking a participant in the proceeding? And that's a pretty strong one. So if you're suing Company B in Germany, and then Company B is found in the district here in the United States, you're not supposed to be able to use a 1782 for that situation because the idea is, well, you can get that discovery, whatever you're supposed to be getting, get from B in the court proceeding, and you don't need to use 1782 for that. But one thing that's coming more and more often is, well, it may not be B, but it might be B's subsidiary. It might be B's affiliate. It might be B's parent. And then the issue is, well, are they really kind of a participant already? So that's one of the things that's being litigated more and more often. You see where the company is suing, let's say, the German affiliate in the country, in Germany. But then they want to get the American parent or American affiliate. And then you say, well, wait a minute. You're already suing us. And we've litigated those issues in various contexts. The next issue is, is the foreign tribunal receptive or hostile to the assistance of the United States court? This factor cannot be simply just general. Well, you know, we don't take depositions in Germany. We don't need a deposition here. It's got to be more specific to the lawsuit. So the easiest way for this element to be met is that you have an order from the tribunal. So, look, we do not want this stuff. And in fact there before the Supreme Court ruled on the arbitration issue there were some tribunals that were simply saying you're not going to go get 1782 discovery we're not going to look at it in fact you're prohibited from seeking it and you are going to ask for it going to come to us first and some of the respondents who are in the foreign countries that don't have the opportunity to get 1782 say look I need an order it stops us from happening so and you could probably get that in a court, but the easiest way to meet that element is the civic order from the tribunal of an issue saying, we do not want this stuff, do not do this. The third factor is the application and effort to circumvent a foreign proof gathering or other policies of a foreign country. And here, the obvious way is that there's been a ruling in the foreign country, let's say in Germany, saying you cannot get documents on this issue. And then you follow 1782 asking for the exact same thing from a related entity, even if they find that that related entity is not quoting a participant, you can still say, look, you were already told you were not allowed to get this stuff, so you're not going to come get it from me. And so that's a pretty powerful factor as well. Or, you know, foreign policy restrictions in the foreign country, you know, they're not allowed to get X, Y, and Z, and you're not trying to get it. So that's the third discretionary factor. And then the last one is essentially is an unduly intrusive or burdensome. We just had a ruling on Friday in a case where the court severely limited what they asked for. We were defending that 1782. So it is a 26 USC, a rule 26 analysis of looking just generally discovery but I do think that the courts in 1782 are more restrictive, in what they will allow because they realize that it's you're not in court in the United States the merits are not here and we're not going to basically use the same broad discovery that you might get because it's not a two-way street. It's a one-way street and we'll give you these four or a document category if you want. We're not going to give you the world. Here are these. Maybe some courts have said, maybe we'll do the documents first and maybe a deposition later. So that's another restriction you have. So those are really defenses, if you will, the 1782 that can be pretty powerful and most try to limit these if you're on the defense side. To be honest, we do both sides. We have prosecuted the 1782s around the country and we defend them around the country. So we've been on both sides.
Rebeca: You know, Ed, some of these discretionary elements, the one, you know, avoiding to, or the attempt to circumvent foreign proof gathering, it's very intriguing to me because, you know, of how it's been interpreted. And that reminded me, when you mentioned Germany, there is a case in re Kreke where the German court had not made an adverse decision concerning discovery, but the district court or the Southern District of New York reasoned that Kreke sought to justify circumventing the German court's discovery process because the reasoning was that the German court simply lacked the legal authority to order document production of the type requested in the application. So the district court of the Southern District just denied Kreke's 1782 request based on that analysis. So moving on now, I can see that this, from the case law that it's analyzed, the courts aim, the courts in the U.S., I see that they aim to strike a balance, the one to aid in international judicial cooperation, you know, without overstepping or causing undue burden on the parties involved. And I know that there is one, if you will, element of 1782, which is the free use in international proceedings or by international tribunal that has created a lot of discussion and even a recent decision of the U.S. Supreme Court. And I don't know if you can tell us more about that.
Ed: Yeah, well, so before, I guess a couple years ago, there was a lot of fight about whether or not an arbitration tribunal was basically an International Tribunal for purposes of 1782, there was somewhat a split of authority. What was interesting is that, cases were pretty consistent that a investor state arbitration didn't qualify, but there was a split avoidant of private commercial arbitration, pretty split amongst the circuits. And then in ZF Automotive, where there was two consolidated cases, ZF Automotive and Alex Partners, the Supreme Court concluded that 1782 applied only to governmental or intergovernmental judicial bodies, not private international bodies. And essentially said that they didn't apply to either one, that the investor state case was an UNSA trial rules. And so it was pretty clear after the case that a private international arbitration was not a foreign international tribunal. That's the label to a statute. But there's still a slight issue as to whether or not an ICSID arbitration might qualify. I think that some of the courts have come out of that. I think most of them have looked at it, have found that it doesn't qualify either, but that's still somewhat of an issue. But what's happened is that for people that do only international arbitration, it basically says, oh, 1782 is dead. Why are you guys talking about it? I think that that is a wrong analysis because we have found that 1782 is alive and well. And if anything, I've seen an uptick in it because there are so many more proceedings that it clearly applies to, specifically litigation. It applies to commercial litigation in a foreign country, criminal litigation in a foreign country, probate proceedings, divorce proceedings. All these things have been used. And so what happens is that you find that we have found that it's alive and well, and we have found that the Supreme Court cases have not diminished the filing of these 1782s. People are just being more creative in how they're using them.
Rebeca: Right. Yeah, because I think that there's been a misconception that based on this ruling, maybe Section 1782 was going to not be that attractive of being used often. But I've also perceived that same uptake. And it's been used more. People want to know more about it, especially in foreign countries and how to use it. And so here we are. I don't know, Ed, if you have any other thoughts on the topic, any comments that you can make from the battlefield. Tell us more.
Ed: You know, the one issue is always, you know, what do you do if you are not the target and you are, say, the respondent in the German proceeding? And you see what the heck are they doing? They're going there getting more bank records. So the easiest example of that is if you're doing a 1782 against the bank, the bank's going to treat it more or less like a subpoena. And they're going to notify the account holder and they're going to turn stuff over. Now, sometimes the account holder is a foreign proceeding entity or it might be a related entity. And that related entity may or may not want to come in and defend. And then at that point, if you are a litigant and you want to put a morale, if you will, over this discovery, you might want to intervene. Now, the issue is intervening that you now are a party to the case and you may be summoning yourself to the case here. So it could be a tough issue, but that that is what's more and more happening, especially if you're subpoenaing banks through the 1782. But, you know, other types of situations that one was kind of unique. I think we had the first case that actually came up with. And I think we're still the leading case on this. We were defending the 1782, and the applicant had a contract with us, but they didn't want to sue us. We were the manufacturer and the distributor, and they didn't want to sue us. So they said, oh, no, no, we're not suing you. We're going to want to sue, and we're not going to sue you in the foreign place. We're going to want to sue the new distributor, and we want to sue the new distributor for torsionless interference with our contract with you. So they ended up suing us in the 1782, saying, you know, we're not going to sue you in the foreign proceeding. You're not going to be a participant in the foreign proceedings, this other third party. But the contract they actually had with us had an arbitration clause. And we successfully argued that 1782 itself had to be arbitrated. And they fought that tooth and nail. You know, it must be dealing with the merits of 1782. But the reality is it was a very broad clause. And we successfully won that. And it all kind of went away. And so, you know, the other hot issue is we have cases out of Brazil. In Brazil, you can collect on a debt without actual judgment. And so we've been using 1782 because it's not violating the idea that the case is over because it's an ongoing case. In fact, the Brazilian courts say you need to have this evidence on what the assets are. We're able to use 1782 even for an ongoing case, even though you're basically collecting on a judgment or that.
Rebeca: Well, this has been very insightful. I mean, Section 1782 is a fascinating subject and a powerful discovery tool. And as Ed said, Section 1782 is alive and well. I want to thank you, Ed, for this insightful conversation and to our listeners for tuning into this episode of Disputes in Perspective. Until next time. Thank you so much.
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