Commercial Litigation and Arbitration

28 U.S.C. § 1782 — Statutory & Discretionary Factors — International (UNCITRAL) Arbitration Is a “Foreign Proceeding” for Which Discovery May Be Ordered under § 1782

In re Application of Republic of Ecuador, 2015 U.S. Dist. LEXIS 169500 (D. Mass. Dec. 18, 2015):

The Republic of Ecuador and its civil attorney general, Dr. Diego García Carrión (collectively, the "Republic") submitted an application under 28 U.S.C. § 1782(a) for an order allowing them to serve a subpoena on Dr. Gregory S. Douglas. They seek to require Dr. Douglas to produce documents for use in Chevron Corporation and Texaco Petroleum Corporation v. The Republic of Ecuador, PCA Case No. 2009-23, a foreign Bilateral Investment Treaty arbitration. Dr. Douglas [*2]  and Chevron Corporation, as intervenor, have moved for a protective order, which the Republic opposed, modifying the scope of the Republic's requested discovery. For the reasons stated below, I will grant the Republic's motion for a substitute subpoena and grant the motion of Dr. Douglas and Chevron for a protective order but only to the extent of providing protection from production to draft reports and specified attorney-client communications.


In 1993, indigenous Ecuadorians brought an environmental suit in the Southern District of New York against Texaco Inc., and its subsidiary Texaco Petroleum Corporation, for polluting the Oriente region of the Amazon rain forest while operating oil wells there from 1964-1992. The plaintiffs contended that operations resulted in the illness and death of numerous people. The case was dismissed in the district court on forum non conveniens grounds, Aguinda v. Texaco, Inc., 945 F. Supp. 625, 627 (S.D.N.Y. 1996). The Second Circuit vacated and remanded to consider dismissal upon the condition that Texaco consent to Ecuadorian jurisdiction, Jota v. Texaco, Inc., 157 F.3d 153, 155 (2d Cir. 1998). On remand, the case was again dismissed by the district court, Aguinda v. Texaco, Inc., 142 F. Supp. 2d 534, 536 (S.D.N.Y. 2001), on the conditions identified by the Second Circuit, which thereafter affirmed. Aguinda v. Texaco, Inc., 303 F.3d 470, 473 (2d Cir. 2002).

In 2003, some [*3]  of the Ecuadorian plaintiffs re-filed their suit in Ecuador's Lago Agrio Court against Chevron. Republic of Ecuador v. Chevron Corp., 638 F.3d 384, 390 n.5 (2d Cir. 2011). As the Third Circuit put it, "[i]t is an understatement to characterize the Lago Agrio litigation as contentious, as both sides of the litigation vigorously have opposed nearly every move by the other, and have accused the other side of criminal or fraudulent conduct in the course of the litigation." In re Chevron Corp., 633 F.3d 153, 157 (3d Cir. 2011). On February 14, 2011, the Lago Agrio court entered judgment for the Ecuadorian plaintiffs in the amount of $18 billion.

In 2009, while the Lago Agrio litigation was still pending, Chevron commenced arbitration under the United Nations Commission on International Trade Law (UNCITRAL). Chevron Corp. And Texaco Petroleum Corp. v. The Republic of Ecuador, PCA Case No. 2009-23. Chevron alleged that the Lago Agrio litigation was unfair and denied it due process as required under the U.S.-Ecuador Bilateral Investment Treaty. Specifically, Chevron alleged that the Lago Agrio court was corrupt, was not independent or impartial, acted in collusion with the plaintiffs, and unjustifiably denied Chevron's defense that Ecuador had released Chevron from liability, all in violation of Chevron's due process rights. [*4]  Chevron sought to obtain a judgment from the Arbitration panel that would preclude international enforcement of what became the $18 billion award by the Lago Agrio court. See In re Chevron Corp., 633 F.3d at 158-59 (giving factual history of this dispute in addressing an application by Chevron for a subpoena to conduct discovery using 28 U.S.C. § 1782(a) for the Arbitration).

Unlike the Lago Agrio litigation, the Republic of Ecuador, not the Ecuadorian plaintiffs, is opposing party to Arbitration with Chevron. As preparation for the Arbitration, Chevron brought "an extraordinary series of at least 25 requests to obtain discovery from at least 30 different parties" under 28 U.S.C. § 1782(a) in district courts throughout the United States. Id. at 159.

In response, the Republic has filed at least nine applications for discovery pursuant to the same statutory authority. This is one of those applications. Here, to defend against Chevron's claims in the Arbitration, the Republic seeks discovery from Dr. Gregory S. Douglas, a resident of Rockland, Massachusetts with twenty-five years of experience in environmental labs analyzing crude oil samples from water, waste, and biota. Dr. Douglas submitted a number of expert reports on Chevron's behalf rebutting both court-appointed experts [*5]  and experts for the Ecuadorian plaintiffs in the Lago Agrio litigation. He also submitted an expert report in support of Chevron's merits brief to the Arbital Tribunal. The Republic seeks broad discovery of the bases of Dr. Douglas's reports and expert opinions.

Chevron moved for a protective order, arguing that the Republic's application was unduly burdensome, overbroad, and beyond the scope of Federal Rule of Civil Procedure 26. The Republic opposed Chevron's motion, claiming that it was an attempt to "close the shades on this case denying to the Republic . . . the sunlight [Chevron] has enjoyed."

At a hearing held on January 3, 2012, I provided guidance on how the Republic of Ecuador was to limit its subpoena to appropriate bounds. Subsequently, the parties made substantial progress in resolving their discovery disputes. On May 9, 2012, the Republic filed a motion to substitute its subpoena. The proposed subpoena was much narrower, requesting fewer categories of document and better shaping the bounds of those categories. Protected categories of documents, such as draft reports or attorney-client communications, are no longer sought. The proposed substitute subpoena addresses the concerns this Court raised in the hearing. [*6]  Although the parties are now closer to agreement on the proper scope of remaining discovery, a number of disputes endure.


A. Statutory Requirements

The threshold issue is a narrow one: whether compelled discovery process is appropriate in this jurisdiction for use in a foreign proceeding. Under section 1782, "[t]he 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 . . . . upon the application of any interested person." 28 U.S.C. § 1782(a). The statute establishes requirements before a district court may grant an application under section 1782. First, the person from whom discovery is sought must be found in the district. Second, the proceeding for which his discovery is being sought must be "a foreign or international tribunal." Finally, the party applying for the discovery must be an "interested person."

Here, the Republic's application meets all of the statutory requirements. Dr. Douglas, according to an expert report he filed for Chevron in the Lago Agrio litigation, works in Rockland, Massachusetts. Thus, he can be "found" in the District of Massachusetts. [*7]

Second, neither party disputes that the Arbitration is a "foreign or international tribunal." See Chevron Corp. v. Shefftz, 754 F. Supp. 2d 254, 260 (D. Mass. 2010) (noting that "international arbitral bodies operating under UNCITRAL rules constitute 'foreign tribunals' for purposes of § 1782."). Moreover, the third track of the Arbitration, which the tribunal plans to hold in order to quantify any liability and in which the Republic seeks to use these materials, is "within reasonable contemplation." Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 259 (2004).

Finally, the Republic is an "interested person" because it is the respondent in the Arbitration. See, e.g., Intel Corp. 542 U.S. at 256 (2004) ("No doubt litigants are included among, and may be the most common example of, the 'interested person[s]' who may invoke § 1782.").

B. Intel Discretionary Factors

Once these statutory requirements are met, as they are here, a court may, but is not required to, grant the application. Id. at 264. The Supreme Court has provided four concerns for district courts to consider in determining whether to grant an application that meets the statutory requirements of § 1782. First, there is less of a need for § 1782(a) aid where "the person from whom discovery is sought is a participant in the foreign proceedings." Id. Second, a district court should consider the nature and character of the foreign proceedings, [*8]  and the receptivity of the foreign body involved to U.S. judicial assistance. Id. Third, a district court should deny a section 1782 application if it "conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States." Id. at 265. Finally, a district court can reject or modify "unduly intrusive or burdensome requests." Id.

The first Intel factor weighs in favor of granting the Republic's application. Dr. Douglas is not a party to the Arbitration. UNCITRAL Rules make no provision for requiring production of documents from non-parties, as opposed to parties. UNCITRAL Arbitration Rules Art. 24.3 (1976) ("At any time during the arbitral proceedings the arbitral tribunal may require the parties to produce documents, exhibits or other evidence . . . ."), International Bar Association Rules on the Taking of Evidence in International Arbitration, Art. 3.9 ("If a Party wishes to obtain the production of Documents from a person or organisation [sic] who is not a Party to the arbitration and from whom the Party cannot obtain the Documents on its own, the Party may, within the time ordered by the Arbitral Tribunal, ask it to take whatever steps are legally [*9]  available to obtain the requested Documents, or seek leave from the Arbitral Tribunal to take such steps itself."); see also In re Application of Republic of Ecuador, 2011 WL 4434816, at *3 (N.D. Cal. Sept. 23, 2011). Because the foreign tribunal cannot order the discovery sought by the Republic, the first factor weighs in favor of granting the Republic's application. See Shefftz, 754 F. Supp. 2d at 261.

The second factor is neutral, because neither party provides convincing evidence regarding whether the Arbitral Tribunal would be receptive to this Court's assistance. There are, however, no allegations that the application is being used to circumvent the Arbitration's evidence-gathering restrictions, so the third factor weighs in the Republic's favor.

Instead, Dr. Douglas and Chevron argue that the Republic's request for discovery is overbroad, and compliance with it would be unnecessarily costly and unduly burdensome. Thus, they request a protective order from this court modifying the terms of the proposed subpoena and oppose the motion to substitute the subpoena. Under Rule 26(c), a protective order may issue upon a showing of good cause "to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense." Fed. R. Civ. P. 26(c)(1).

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