Orders Authorizing Subpoenas and Other Discovery under 28 U.S.C. § 1782 Are Properly Issued Ex Parte

In re Ex Parte Application of Société d'Etude De Réalisation et d'Exploitation pour le Traitement du Mais, ,2013 U.S. Dist. LEXIS 167219 (E.D. Pa. Nov. 22, 2013):

On November 20, 2013, Société d'Etude de Réalisation et d'Exploitation pour le Traitement du Mais ("SERETRAM") applied for an order for leave to file a subpoena on 1&1 Mail & Media Inc., formerly known as GMX Internet Services Inc. ("GMX"), pursuant to 28 U.S.C. § 1782(a), to obtain discovery here in the United States for use in an ongoing criminal proceeding in France, as well as an expected criminal proceeding in the United Kingdom, against a fraudster who allegedly used a GMX-hosted email address in furtherance of a successful scheme to abscond with €17 million of SERETRAM's funds.

In brief, according to its application: SERETRAM, a French food processing company owned 50% by General Mills Corporation, had €19 million in capital before a fraudster impersonated its Financial Director, André Yvin, in an email sent from a fraudulent address, which the fraudster claimed was Mr. Yvin's personal email address. From this fraudulent address, the fraudster emailed a SERETRAM accountant, Annie Larrouture, and instructed her that a takeover bid would soon precipitate but that it was "highly confidential" such that she should communicate about it to no one else. In a statement of particular relevance to the instant application, the fraudster directed Ms. Larrouture to contact "our legal firm" at cabinet.laborde-finance@gmx.com--as evident from the address, a GMX-hosted account. In emails that followed, the fraudster directed her to transfer, in four installments, approximately€17 million of SERETRAM's funds to a bank account. Only when another SERETRAM employee attempted to shift funds from another of SERETRAM's accounts after the fraudulent transfers overdrew the transferor account did a bank inform that SERETRAM employee of its concern that the transfers might be fraudulent, thereby opening SERETRAM's proverbial eyes to what had really occurred.  ***

SERETRAM, applying ex parte to this Court, now seeks discovery from GMX regarding the allegedly fraudulent GMX account, which the fraudster used to cast an aura of authenticity over its deception. SERETRAM wants information about the identity of the owner of the account, his or her location, and any other information that will assist in pursuing redress against or punishment of those responsible for the fraud. For the reasons that follow, SERETRAM's application will be granted as outlined below and specified in the accompanying Order. ***

The Supreme Court has interpreted § 1782 but once, in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241,   but that decision provides most of the guideposts needed here.   The core of § 1782(a) consists of two components: (1) mandatory requirements that the applicant must meet to trigger (2) the district court's weighing of discretionary factors regarding whether to grant the application, because "[t]he statute authorizes, but does not require, a federal district court to provide assistance to a complainant . . . ." Intel, 542 U.S. at 255. So long as the district court correctly applies the law, its analysis in the discretionary second stage is reviewed for abuse of discretion. In re Chevron Corp., 633 F.3d 153, 161 (3d Cir. 2011).

Footnote 1.     The main issue that Intel does not touch upon is the propriety of the district court's proceeding on an ex parte basis. Any fair interpretation of § 1782(a)'s plain language, however, especially when made in conjunction with the purposes of the statute as discussed by the Supreme Court in Intel, should read it to encompass ex parte proceedings.   In particular, the statute provides, "The order may prescribe the practice and procedure, which may be in whole or part the practice and procedure of the foreign country or the international tribunal, for taking the testimony or statement or producing the document or other thing." 28 U.S.C. § 1782. And even if this language is not operative, there is no reason to suspect that proceeding on an ex parte basis is improper, because GMX will have an opportunity to move to quash should it so desire. See, e.g., Gushlak v. Gushlak, 486 F. App'x 215, 217 (2d Cir. 2012) ( "[I]t is neither uncommon nor improper for district courts to grant applications made pursuant to § 1782 ex parte. The respondent's due process rights are not violated because he can later challenge any discovery request by moving to quash pursuant to Federal Rule of Civil Procedure 45(c)(3)."); In re Letters Rogatory from Tokyo Dist., Tokyo, Japan, 539 F.2d 1216, 1219 (9th Cir. 1976) ("Letters Rogatory are customarily received and appropriate action taken with respect thereto ex parte. The witnesses can and have raised objections and exercised their due process rights by motions to quash the subpoenas."); In re Ex Parte Application of Nokia Corp., No. 13-mc-80217, 2013 WL 6073457, at *2 (N.D. Cal. Nov. 8, 2013) ("It is common for parties to request and obtain orders authorizing discovery ex parte."); In re Letter of Request from Supreme Court of Hong Kong, 138 F.R.D. 27, 32 n.6 (S.D.N.Y. 1991) ("[S]uch ex parte applications are typically justified by the fact that the parties will be given adequate notice of any discovery taken pursuant to the request and will then have the opportunity to move to quash the discovery or to participate in it.").

 

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