Ex Parte Application of Godfrey, 2018 U.S. Dist. LEXIS 29794 (S.D. Fla. Feb. 22, 2018):

  REPORT AND RECOMMENDATIONS ON RESPONDENT'S MOTION TO QUASH SUBPOENA AND PETITIONERS' MOTION TO COMPEL COMPLIANCE WITH SUBPOENA

Respondent Stephen P. Lynch moves to quash the subpoena that Petitioners David A. Godfrey and Yukos Finance B.V. obtained, on an ex parte and emergency basis, under 28 U.S.C. § 1782. [ECF Nos. 8; 11-12]. In support of his motion, Lynch also filed a declaration with several exhibits. [ECF No. 13]. Petitioners filed an opposition response, which incorporated a motion to compel compliance with the subpoena and included a supplemental declaration and materials. [ECF No. 18].

Lynch filed an opposition response to Petitioners' motion to compel compliance, as well as a supplemental declaration, which attached more exhibits. [ECF Nos. 25-26]. Petitioners then filed [*2]  a reply in support of their motion to compel, along with two supporting affidavits. [ECF Nos. 31-33]. Lynch later filed a second supplemental declaration in further support of his motion to quash subpoena, which included more exhibits. [ECF No. 34].

United States District Court Judge Marcia G. Cooke referred this matter to the Undersigned for a ruling on all pre-trial, non-dispositive matters and for a Report and Recommendations on any dispositive matters. [ECF No. 20]. As explained later, the Undersigned is opting to prepare a Report (as opposed to an Order) in this matter.

For the reasons set forth below, the Undersigned respectfully recommends that the District Court deny in large part and grant in small part the motion to quash subpoena, and grant in large part and deny in small part the motion to compel compliance with the subpoena. The Undersigned also respectfully recommends the following:

First, the relevant time period for the subpoenas should be limited to the period of January 1, 2007 to one year after the allegedly-rigged auction at issue took place. Lynch must produce relevant, non-privileged documents within 30 days of the District Court's order affirming this Report.¹

Second, [*3]  as to the logistics of production, the parties should meet and confer on a production method and location that are acceptable to all. Absent an agreement, however, Lynch's document-production location should be the Moscow law office that Petitioners propose. [ECF No. 18, p. 25].

Third, the parties should also meet and confer on a deposition location that will be mutually acceptable to all. But absent an agreement, Lynch's deposition should take place at the Moscow law office that Petitioners propose. [ECF No. 18, p. 25]. Moreover, the Undersigned recommends that the deposition occur within 30 days of the District Court's order affirming this Report.

I. Background

In May 2017, Petitioners filed an ex parte, emergency application for discovery in aid of a foreign proceeding, seeking to take the deposition of and obtain documents from Lynch, to aid them in an action pending in London, England titled Yukos Finance B.V., et al. v. Lynch, et al., case number CL-2015-000829. [ECF No. 1, p. 5]. In support of the application, Petitioners filed a declaration from Bernard O'Sullivan, a solicitor of England and Wales who represents the claimants in the English case, and a declaration of Robert F. [*4]  Serio, a New York attorney who represents Petitioners here. [ECF Nos. 4-5].

According to Petitioners, Lynch was a central figure in a series of rigged auctions designed to transfer Yukos Finance and related assets to Russian-controlled entities. After the Russian Federation expropriated a Russian oil company named Yukos Oil, a consortium of companies participated in a rigged auction for Yukos Oil's assets. The auctioned assets included Yukos Oil's Dutch subsidiary, Petitioner Yukos Finance.

One company within that consortium was Monte-Valle, a real estate agency founded and managed by Lynch. Lynch's real estate agency acquired an approved bidder, a company named Promneftstroy. That bidder then won the auction for a preagreed price, buying Yukos Oil's assets at far less than fair market value.

Yuko Finances and its affiliates filed a lawsuit in the Netherlands, challenging the auction. In a separate case before the Southern District of Florida, In re Ex Parte Application of Godfrey, No. 15-24604, (S.D. Fla. Dec. 17, 2015), Petitioners obtained an order under § 1782, authorizing them to serve subpoenas on Lynch and to compel him to attend a deposition. But Petitioners were unable to obtain discovery [*5]  because Lynch evaded service.

In their application, Petitioners claim that because Lynch was the general director of Promneftstroy and participated in the rigged auction, he has "critical personal knowledge" about the auction, how the pre-determined bid price was fixed, Promneftstroy's ownership claims over Yukos Finance, and the role of other parties in the auction, among other related issues. [ECF No. 1, pp. 7, 10-11]. In short, Petitioners want discovery to prove that the Yukos Oil auction was rigged. Petitioners maintain that this discovery is relevant to the "dispute at the heart" of the English proceedings. [ECF No. 1, p. 7].

Petitioners also alleged that, although Lynch is a party to the English proceedings, he has "actively avoided participation in those proceedings." [ECF No. 1, p. 10]. They explain that Lynch was served with documents from the English proceedings while he was in an airport in Beirut, Lebanon but left the documents at the check-in counter. [ECF No. 1, p. 10]. Three different attempts were then made to serve Lynch in Moscow, Russia, but Lynch continued to avoid service, at times actually running away from the process server. [ECF No. 1, p. 10].

Because of these [*6]  service problems, the English court entered an order deeming the service on Lynch in Lebanon to be valid service. [ECF No. 1, p. 10]. Lynch then filed an acknowledgment of service stating that he was going to challenge the English court's jurisdiction. [ECF No. 1, p. 10]. Petitioners established these service issues here through the declaration of their English solicitor, O'Sullivan, and a witness statement from the person charged with serving Lynch in Moscow. [ECF Nos. 4; 4-3].

O'Sullivan also explained the discovery process in the English courts. [ECF No. 4]. He averred that, although Lynch is a party to the English proceedings and has been validly served, "the procedure in the courts of England and Wales may not result in [] Lynch providing witness testimony." [ECF No. 4, p. 6]. Specifically, regarding depositions, the English Commercial Courts cannot require a party to submit a witness statement and cannot compel the party to give live testimony if he resides outside the jurisdiction. [ECF No. 4, p. 6]. In addition, English law does not allow regular depositions. [ECF No. 4, p. 6]. Instead, a party must apply for a pretrial "cross examination," which is "not wholly analogous to [*7]  a deposition," "not available as of right," allowed only for "urgent concerns about narrow matters," and is "seldom made and infrequently granted." [ECF No. 4, p. 6].

O'Sullivan, however, does recognize that Lynch may face adverse consequences by ignoring proceedings (default) or failing to give evidence (adverse inferences). [ECF No. 4, pp. 5-6]. But, in O'Sullivan's view, an adverse inference would still be undesirable because the case would continue against other parties without the benefit of Lynch's testimony. [ECF No. 4, p. 6].

Concerning documents, O'Sullivan explains that the English court is, by contrast, expected to compel Lynch to produce relevant documents in a disclosure order. [ECF No. 4, p. 7]. O'Sullivan described the process as "akin to discovery" in the U.S. [ECF No. 4, p. 7]. Although this order is not automatically entered, O'Sullivan testified that he expected the English court to issue such an order in that case. [ECF No. 4, p. 7].

Regarding evidence obtained under § 1782, O'Sullivan averred that the English court may decide not to rely on that evidence. [ECF No. 4, p. 7]. But where the evidence is "probative of the issues in English proceedings," O'Sullivan continued, [*8]  the English court is "highly likely to find that it is admissible." [ECF No. 4, p. 7]. He concludes by saying, "the English Court likely would be receptive to material obtained through the U.S. Federal Court's assistance, and I, therefore, believe that any material received as a result of this Application will be admitted into evidence in the English Proceedings." [ECF No. 4, p. 7].

Returning to Petitioners' application, they alleged that Lynch was found or resides in the Southern District of Florida by virtue of a property he bought in 2014 in Miami Beach. [ECF No. 1, p. 7]. Petitioners rely on Serio's declaration, which attaches a report from the Office of the Property Appraiser of Miami-Dade County, Florida. [ECF No. 5-6]. The Report was generated in October 2015, and it shows that Lynch is the owner of a residential condominium on Collins Avenue. [ECF No. 5-6, p. 2]. His mailing address is listed as being in Russia, however. [ECF No. 5-6, p. 2].

Serio's declaration attached the proposed subpoenas. [ECF Nos. 5-1; 5-2]. Petitioners sought to take Lynch's deposition on May 17, 2017, at a law firm in Miami, Florida. [ECF No. 5-1]. Petitioners also sought document production within a [*9]  relevant time period of more than 10 years, from January 1, 2007 to the present. [ECF No. 5-2]. There are 16 document requests for documents and communications concerning the allegedly rigged auction, its players, and its financing. [ECF No. 5-2, pp. 11-12].

Petitioners' application also included authorities and arguments concerning the other statutory requirements of § 1782 and the discretionary factors in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004). [ECF No. 1, pp. 13-18]. These issues will be discussed in the analysis section.

The District Court granted Petitioners' ex parte, emergency application. [ECF No. 8]. The District Court ordered Lynch to produce the requested documents by May 17, 2017. [ECF No. 8, p. 1]. It also required Lynch to appear for deposition on that same date or on a date mutually convenient for the parties. [ECF No. 8, p. 1].

The day before he had to produce documents and sit at a deposition, Lynch filed his motion to quash. [ECF Nos. 11-12]. The motion raises four main arguments.

First, Lynch argues that under the doctrines of res judicata (claim preclusion) and collateral estoppel (issue preclusion), a 2007 Southern District of New York case titled In re Godfrey, 526 F. Supp. 2d 417 (S.D.N.Y. 2007) ("Godfrey I"), allegedly involving the same parties and issues [*10]  as here, precludes the discovery Petitioners seek in this case. Second, Lynch argues that Petitioners have not met the statutory factors under § 1782. Third, Lynch argues that the Intel discretionary factors actually weigh in his favor, and not Petitioners'. Fourth, Lynch argues that the subpoenas violated Federal Rule of Civil Procedure 45.

Concerning his residency, Lynch states in his supporting declaration that he has resided in Moscow, Russia for nearly two decades. [ECF No. 13, p. 3]. He is not a resident of Florida and does not maintain a residence in Florida or any other U.S. state. [ECF No. 13, p. 3]. He also avers that he does not own property in Florida "directly or indirectly through corporate ownership." [ECF No. 13, p. 3].

Addressing the Miami Beach condominium that Petitioners claim is his, Lynch states that on July 3, 2015, a British Virgin Islands company named RE SB Capital Limited acquired the condominium unit from Lynch by assuming the full value of the mortgage. [ECF No. 13, p. 3]. Lynch attaches to his declaration a printout from the Office of the Property Appraiser of Miami-Dade County, Florida, showing that RE SB Capital is indeed listed as the owner of the condominium in question. [ECF No. 13-6]. Lynch [*11]  denies that he is, or has ever been, the owner of RE SB Capital. [ECF No. 13, p. 3].

Lynch also attached to his declaration a witness statement given by O'Sullivan in the English proceedings, dated March 23, 2016, in which O'Sullivan acknowledged that RE SB Capital is the listed owner of the condominium. [ECF No. 13-5, p. 4]. But O'Sullivan's witness statement also says that the English claimants believe that Lynch remains associated with the condominium. [ECF No. 13-5, p. 4]. O'Sullivan states that the BVI Register of Companies shows that RE SB Capital was incorporated in 2015 by Orbis Services Limited, a company known to form and administer offshore companies. [ECF No. 13-5, p. 4].

Lynch further states in his declaration that from 2016 to 2017, he was in the U.S. only twice, on vacations, for a total of 27 days. [ECF No. 13, p. 3]. One vacation was for six days in Miami Beach, Florida. [ECF No. 13, p. 3]. And apart from childhood trips to Disney World, Lynch claims to have "no connection whatsoever" to Florida. [ECF No. 13, p. 3].

Lastly, Lynch states that on May 3, 2017, while boarding a flight to Moscow at Miami International Airport, an unknown man approached him, "flashed a badge," [*12]  and handed him "two large packages of documents." [ECF No. 13, p. 3]. This "unknown man" was actually Petitioners' private process server, who served Lynch with various documents on May 3, 2017, at Miami International Airport. [ECF No. 18-3; 18-4]. Lynch also says that he does not have or control documents or electronically stored information in the U.S. [ECF No. 13, p. 3].

In their dual-purpose opposition response/motion to compel, Petitioners challenge Lynch's contention that the 2007 Southern District of New York case precludes their request for discovery here. Among other arguments, they claim that "various intervening factual and legal changes" undermine Lynch's preclusion argument. [ECF No. 18, p. 9].

In addition, Petitioners claim that Lynch is seeking to "deceive the Court" when trying to distance himself from RE SB Capital and the Miami Beach condominium. [ECF No. 18, p. 9]. They describe RE SB Capital as a "shell company" controlled by Lynch "in an attempt to disguise his sustained ownership" of the Miami Beach unit. [ECF No. 18, p. 9]. In support of this argument, Petitioners present a supplemental declaration from Serio, their New York lawyer, who states that "since 2014, [*13]  Lynch has continuously maintained a residence in Miami Beach, Florida with his long-time domestic partner, Oleg Vasilyev." [ECF No. 18-1, pp. 2-3].

Serio testifies that Lynch acquired the condo on November 14, 2014, for $2.04 million. [ECF No. 18-8]. To buy the condominium, Lynch had secured a $1.938 million mortgage from a BVI company named e+ Capital Ltd. [ECF Nos. 18-1, pp. 2, 4; 18-8; 18-9; 18-10]. According to Serio, Lynch controls e+ Capital, and Vasilyev manages and receives communications from that company. [ECF No. 18-1, pp. 2-3]. Serio points to e+ Capital's web domain, which lists for technical support a person with a "@montevalle. sg" email extension. [ECF No. 18-1, p. 3; 18-11]. Lynch's company, Monte-Valle, owns that email extension -- and that is the same company Petitioners say participated in the rigged auction. [ECF Nos. 1, p. 5; 18-1, p. 3]. Lynch also has a "@monte-valle.sg" email extension. [ECF No. 18-1, p. 3]. Moreover, the same Moscow-based information technology firm manages both e+ Capital's and Monte-Valle's domains. [ECF No. 18-1, p. 3; 18-12].

Serio continues by saying that on July 3, 2015, approximately 8 months after he acquired the condominium, Lynch transferred [*14]  it to a different BVI company, RE SB Capital, at a $62,900 loss. [ECF No. 18-1, p. 3; 18-13]. That company was incorporated in the British Virgin Islands on June 4, 2015, one month before the transaction. [ECF No. 18-1, p. 4; 18-14]. Lynch took a loss despite the fact that the condominium is located in a highly sought-after property in Miami Beach. [ECF No. 18-1, pp. 3-4].

Serio then avers that e+ Capital and RE SB Capital are themselves connected. [ECF No. 18-1, p. 4]. Serio explains that both companies were incorporated by Orbis Services Limited, which also acts as their registered agent. [ECF No. 18-1, p. 4]. In addition, Serio claims that "a recent Orbis invoice to RE SB was paid for by e+ Capital" [ECF No. 18-1, p. 4], although he attaches no proof of this.

Petitioners also provide the affidavit of a private investigator they hired to watch the condominium. [ECF No. 18-15]. The investigator states under oath that he witnessed Vasilyev (Lynch's domestic partner) staying at the condominium in September 2016. [ECF No. 18-15, p. 2]. The investigator observed Vasilyev enter and exit the building through an entrance and elevator reserved for residents. [ECF No. 18-15, pp. 2-3]. Moreover, [*15]  two days later, the condominium appeared occupied by three individuals (although he does not identify them). [ECF No. 18-15, p. 3].

In their opposition/motion, Petitioners also make a concession regarding their desired location for Lynch's deposition and production of documents. [ECF No. 18, pp. 24-25]. They would be "amenable to conducting Respondent's deposition in a location more convenient to him, including in Moscow, where Respondent also resides." [ECF No. 18, p. 25]. Thus, Petitioners say that they "would be satisfied with an order from this Court requiring Respondent's deposition and document production at the Moscow office of Mr. O'Sullivan's law firm[.]" [ECF No. 18, p. 25].

In his opposition response to the motion to compel, Lynch "maintains that he is neither [a] legal nor equitable owner of the Miami Apartment, RE SB Capital Ltd. or e+ Capital Ltd." [ECF No. 25, p. 18]. Lynch also states that "Petitioners show no evidence of Respondent's legal or equitable ownership of either [the] Miami Apartment, RE SB Capital Ltd. or e+ Capital Ltd." [ECF No. 25, p. 18]. Lynch, however, does not directly address the factual allegations in Serio's declaration.

Lynch then objects to producing [*16]  documents or attending a deposition at the Moscow office of O'Sullivan's firm, leveling several serious allegations against Petitioners and their counsel. [ECF Nos. 25, p. 24; 26, p. 2]. Lynch accuses Petitioners of using "illegal and nearly violent methods to pursue and harass" him. [ECF No. 26, p. 2]. He also claims that Petitioners, though a Moscow law firm known to O'Sullivan, engaged Russian police officers to illegally obtain documents from Lynch, and that Petitioners illegally tracked Lynch within the U.S. [ECF No. 26, p. 2].

In response to Lynch's accusations, Petitioners filed another declaration from O'Sullivan. [ECF No. 32]. O'Sullivan characterizes Lynch's harassment allegations as "wild and false" and "preposterous." [ECF No. 32, p. 1]. He claims that Petitioners have simply tried to serve Lynch in Russia with legal papers, an effort that Lynch has purposely avoided several times. [ECF No. 32, pp. 2-3]. O'Sullivan attaches to his declaration the English court order that deemed Lynch validly served in Lebanon due to his avoidance of service. In that order, Justice Andrew Baker states: "the evidence makes it perfectly clear that Mr. Lynch is not merely awkward to serve with [*17]  court process but specifically and actively seeking to avoid it being said that he has been served with this particular set of proceedings for reasons which are at the moment his to know." [ECF No. 32, p. 28]. O'Sullivan also avers that Petitioners have no knowledge regarding the rest of Lynch's allegations, but they nonetheless "vehemently deny any and all allegations to the extent they suggest that Petitioners have behaved improperly or illegally in any way." [ECF No. 32, p. 4].

Lastly, Lynch filed a second supplemental declaration, disclosing the results of his jurisdictional challenge in the English proceedings. [ECF No. 34]. Specifically, in July 2017, the English court dismissed Lynch's application and required him to file an acknowledgment of service. [ECF No. 34-1]. Lynch filed the acknowledgment in August 2017. [ECF No. 34-2].

II. Magistrate Judge Jurisdiction

There is no clear guidance from the U.S. Supreme Court or the Eleventh Circuit Court of Appeals regarding whether a federal magistrate judge has authority, absent consent from the parties, to enter an order on a motion to quash or motion to compel subpoenas issued under § 1782, or whether the magistrate judge must instead enter [*18]  a report and recommendations. On the one hand, the Eleventh Circuit has held that it reviews orders from § 1782 proceedings using a "deferential standard [that] is identical to the one [it] use[s] when reviewing a district court's ordinary discovery rulings." Application of Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 747 F.3d 1262, 1268 (11th Cir. 2014). That would normally signal that such an order is non-dispositive, just like standard, garden-variety discovery orders, which magistrate judges routinely issue.

But on the other hand, § 1782 proceedings concern only discovery. Discovery disputes are not simply non-dispositive matters within a larger case; discovery disputes are the case in a § 1782 proceeding. Thus, the Eleventh Circuit has recently held that "an order denying a motion to quash a subpoena is a final, appealable order in proceedings brought under § 1782." Application of Furstenberg Fin. SAS v. Litai Assets LLC, 877 F.3d 1031, 1033 (11th Cir. 2017). So an order denying a motion to quash would seem essentially case dispositive, at least for purposes of appeal.

The Eleventh Circuit could have decided the issue in Weber v. Finker, 554 F.3d 1379 (11th Cir. 2009), but declined to do so. In the underlying proceedings, the district court judge held that the magistrate judge had the authority to issue an order on a motion to compel discovery sought under § 1782. Weber v. Finker, No. 307-MC-27-J-32MCR, 2008 WL 2157034, at *1 (M.D. Fla. May 20, 2008) (citing In re Duizendstraal, No. 3:95-MC-150- [*19] X, 1997 WL 195443, at *1 (N.D. Tex. Apr. 16, 1997)). The Eleventh Circuit affirmed the order's substantive rulings but avoided the jurisdictional issue, reasoning that the objecting party waived their jurisdictional objection by failing to raise it early enough. Weber, 554 F.3d at 1385.

Judges within the Eleventh Circuit have issued both orders and reports and recommendations concerning § 1782 rulings. Compare In re Application of N. Am. Potash, Inc., No. 12-20637, 2013 WL 12113190 (S.D. Fla. Mar. 13, 2013) (report and recommendations); with In re Sergeeva, No. 1:13-CV-3437-LMM-RGV, 2015 WL 12866970, at *1 (N.D. Ga. Feb. 6, 2015) (order). And other Circuit Courts are split on the issue. Compare Phillips v. Beierwaltes, 466 F.3d 1217, 1222 (10th Cir. 2006) (questioning whether a magistrate judge can issue a final order to compel discovery in a § 1782 case); with Four Pillars Enters. Co. v. Avery Dennison Corp., 308 F.3d 1075, 1080 (9th Cir. 2002) (affirming orders by magistrate judge in § 1782 case without questioning jurisdiction).

In light of this uncertainty and the litigious nature of the parties, the Undersigned will take the conservative approach and issue a Report and Recommendations. See In re Application of Republic of Ecuador, No. 4:11MC73-RH/WCS, 2011 WL 10618727, at *1 (N.D. Fla. Aug. 24, 2011) (issuing a report in a § 1782 case in an abundance of caution during an "especially contentious litigation" where "the parties have shown that no stone will be left unturned to delay or advance its progress").

III. Standard

"Section 1782 is the product of congressional efforts, over [a] span of nearly 150 years, to provide federal-court assistance [*20]  in gathering evidence for use in foreign tribunals." Sergeeva v. Tripleton Int'l Ltd., 834 F.3d 1194, 1198 (11th Cir. 2016). It authorizes, but does not require, district courts to assist applicants. Id. Whether to grant relief under the statute is up to the court's discretion. Application of Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 747 F.3d 1262, 1271 (11th Cir. 2014).

Section 1782 provides as follows:

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, including criminal investigations conducted before formal accusation. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or 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. By virtue of his appointment, the person appointed has power to administer any necessary oath and take the testimony or statement. 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 [*21]  thing. 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.

§ 1782.

The Eleventh Circuit has distilled this statute to include four statutory requirements:

(1) the request must be made "by a foreign or international tribunal," or by "any interested person"; (2) the request must seek evidence, whether it be the "testimony or statement" of a person or the production of "a document or other thing"; (3) the evidence must be "for use in a proceeding in a foreign or international tribunal"; and (4) the person from whom discovery is sought must reside it be found in the district of the district court ruling on the application for assistance.

Sergeeva, 834 F.3d at 1198-99.

But apart from these requirements, the court must also apply the four discretionary factors established by the Supreme Court in Intel. Application of Consorcio Ecuatoriano de Telecomunicaciones, 747 F.3d at 1271. A panel of the Eleventh Circuit has spelled out those factors as follows:

(1) whether "the person from whom discovery is sought is a participant in the foreign proceeding," because "the need for § 1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant"; [*22]  (2) "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"; (3) "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 (4) whether the request is otherwise "unduly intrusive or burdensome." The Supreme Court in Intel added that "unduly intrusive or burdensome requests may be rejected or trimmed."

Id. at 1272 (11th Cir. 2014) (quoting In re Clerici, 481 F.3d 1324, 1334 (11th Cir. 2007)).

IV. Analysis

A. Section 1782's Statutory Requirements

Although Lynch's introductory premise is that Petitioners have not met the statutory requirements of § 1782, he addresses only the fourth: that "the person from whom discovery is sought must reside or be found in the district of the district court ruling on the application for assistance." Sergeeva, 834 F.3d at 1198-99 (emphasis added). The parties hotly contest the facts underlying Lynch's residency. Lynch claims that he has no connection at all with Florida and that, although he once owned a condominium in Miami Beach, he has since transferred it to a BVI company. Petitioners call that transaction a sham, pointing to several [*23]  compelling facts suggesting that Lynch and his domestic partner control that BVI company and still use the condominium.

The Undersigned, however, does not need to decide the troublesome residency question because § 1782's fourth requirement is written in the disjunctive, referencing a person who either "resides or is found" in a particular district. Relying on the Second Circuit decision in In re Edelman, 295 F.3d 171 (2d Cir. 2002), Godfrey I itself explained that "if a person is personally served with a subpoena while physically present in the district of the court ordering discovery (otherwise known as 'tag' jurisdiction), that person is 'found' within the district for purposes of § 1782(a)." Godfrey I, 526 F. Supp. 2d at 422 (holding that one of the respondents was "found" in the Southern District of New York because he was personally served there); accord In re Application of Inversiones y Gasolinera Petroleos Vanezuela, S. de R.L., No. 08-20378-MC, 2011 WL 181311, at *8 (S.D. Fla. Jan. 19, 2011) (relying on Godfrey I and Edelman); see also BTG Patent Holdings, LLC v. Bag2Go, GmbH, 193 F. Supp. 3d 1310, 1320 (S.D. Fla. 2016) (recognizing the doctrine of "tag jurisdiction").

Here, there is no dispute that Lynch was personally served (i.e., tagged) at the Miami International Airport, which is within the Southern District of Florida. Therefore, he was "found" in Florida within the meaning of § 1782. And given that Lynch challenges no other § 1782 requirement, the Undersigned [*24]  finds that Petitioners have satisfied the statute's prima facie requirements.

B. Intel Discretionary Factors

i. First Factor: Participation in a Foreign Proceeding

The Undersigned finds that the first Intel discretionary factor favors Petitioners. It is true that Lynch is a party to the English proceedings, which would normally weigh in his favor. In re Clerici, 481 F.3d at 1334. But "participation in the foreign proceedings does not automatically foreclose § 1782 aid" where there has been noncompliance with discovery obligations. Gorsoan Ltd. v. Bullock, 652 F. App'x 7, 9 (2d Cir. 2016) (affirming district court's decision to weigh first Intel factor against the party that did not comply with foreign discovery applications). In this case, Lynch's efforts to avoid participating in the English proceedings are well documented. [ECF No. 32, p. 28]. Such pervasive past gamesmanship does not inspire confidence that Lynch will provide the necessary disclosures in the English court.

To be sure, the Undersigned is not faulting Lynch for simply moving to challenge the English court's jurisdiction, which Lynch argues he had a right to do. [ECF No. 25, p. 12]. Rather, the Undersigned is weighing against him the self-made circumstances that precipitated his application: his running away from [*25]  process servers, which eventually led the English court to deem effective the service on him in Lebanon. Based on that history, there is every indication that Lynch will also "run away" from his discovery duties if the opportunity presents itself.

The Undersigned also finds persuasive O'Sullivan's explanations, as an expert in English law, concerning the limits of English disclosure rules. See Vergara Hermosilla v. The Coca-Cola Co., 717 F. Supp. 2d 1297, 1302 (S.D. Fla. 2010) ("When analyzing foreign law, district courts may rely on affidavits of foreign attorneys."). For instance, oral discovery and testimony may be entirely unavailable to Petitioners due to the general unavailability of depositions under English law and the inability of English courts to compel nonresidents to give live testimony. [ECF No. 4, p. 6]. Lynch himself recognizes in his papers that English disclosure rules have limits. [ECF No. 25, p. 17].

Other courts have also noted limits in English disclosure rules when weighing the first Intel factor in favor of discovery. See LEG Q LLC v. RSR Corp., No. 3:17-CV-1559-N-BN, 2017 WL 3780213, at *8 (N.D. Tex. Aug. 31, 2017) (weighing first Intel factor in petitioner's favor based, in part, on the limits of English disclosure rules); see also In re Ex Parte Application of Glob. Energy Horizons Corp., No. [*26]  5:15-MC-80078-PSG, 2015 WL 1325758, at *2 (N.D. Cal. Mar. 24, 2015) (weighing first Intel factor in petitioner's favor in part because respondent company was "not a company resident in the United Kingdom, and the requested information therefore does not appear to be within the immediate reach of the English High Court of Justice.").

Accordingly, the Undersigned finds that the first Intel factor weighs in Petitioners' favor.

ii. Second Factor: Receptivity of Discovery by the Foreign Tribunal

The Undersigned finds that the second Intel discretionary factor also favors Petitioners. "Another nation's limit on discovery 'within its domain for reasons peculiar to its own legal practices, culture, or traditions . . . do[es] not necessarily signal objection to aid from United States federal courts.'" In re MTS Bank, No. 17-21545-MC, 2017 WL 3155362, at *6 (S.D. Fla. July 25, 2017) (quoting Intel, 542 U.S. at 261). "Instead, courts look for authoritative proof that a foreign tribunal would reject evidence obtained with the aid of § 1782." Id. (internal quotation omitted) (allowing § 1782 discovery due to "lack of authoritative evidence that Russian courts are not receptive to American judicial assistance.").

In this case, Lynch has provided no authoritative proof that the English court would reject this discovery. At bottom, Lynch simply points to the English [*27]  court's peculiar limits on discovery, which is not enough. See In re MTS Bank, 2017 WL 3155362, at *6; see also In re Imanagement Servs., Ltd., No. MISC 0589FB, 2005 WL 1959702, at *4 (E.D.N.Y. Aug. 16, 2005) ("expert affidavit addressing the admissibility of witness testimony under Russian rules of procedure is insufficient to constitute 'authoritative proof' that a Russian court would reject the evidence sought by Imanagement if gathered pursuant to § 1782.").

In addition, the Undersigned again finds persuasive O'Sullivan's explanations that the English court would be receptive to the discovery sought here. See In re Departments of Antioquia, Caldas, Cundinamarca, & Valle del Cauca for Judicial Assistance in Obtaining Evidence in this Dist. under 28 U.S.C. §1782, No. 16-20335-CIV, 2017 WL 6557417, at *3 (S.D. Fla. Oct. 27, 2017) (relying on declaration of a Colombian attorney to allow discovery, who opined that "the evidence collected in the U.S. through the American courts could be added to the record and be taken into consideration by the Colombian judges" and that "the evidence obtained in the U.S. would be well received by the Colombian judges to support the eventual proceedings in Colombia."). O'Sullivan similarly explained that "the English Court likely would be receptive to material obtained through the U.S. Federal Court's assistance" [*28]  and that "any material received as a result of this Application will be admitted into evidence in the English Proceedings." [ECF No. 4, p. 7].

Some U.S. district courts have also recognized that English courts are generally receptive to § 1782 discovery. See Matter of Simetra Glob. Assets Ltd. & Richcroft Investments Ltd., No. CV162389JLLJAD, 2016 WL 3018692, at *4 (D.N.J. May 25, 2016) ("there is no indication that the English Court would reject the evidence that Petitioners seek to elicit[.]"); In re Ex Parte Application of Glob. Energy Horizons, 2015 WL 1325758, at *2 ("There is no authority suggesting the English government would be hostile to or otherwise reject discovery obtained through a Section 1782 subpoena."); Application of Sarrio S.A. for Assistance Before Foreign Tribunals, 173 F.R.D. 190, 197 (S.D. Tex. 1995) (finding that respondent "presented no authoritative proof that granting [§ 1782] application would offend the English tribunal involved in the underlying litigation," and explaining that "a decision of England's highest judicial body[] expressly approved a private litigant's use of section 1782 to gather evidence in the United States for use in English proceedings.").

Therefore, the Undersigned finds that the second Intel factor also weighs in Petitioners' favor.

iii. Third Factor: Circumvention of Foreign Proof-Gathering Restrictions

The Undersigned finds that the third Intel discretionary factor also weighs in Petitioners' [*29]  favor. Plainly stated, Lynch argues that the Petitioners should seek discovery in the English court first, adhering to its particular limits and disclosure requirements, which differ from those in the U.S. [ECF No. 25, pp. 15-17]. But that argument falls off the mark.

"[E]ven when the requested documents may be available in the foreign jurisdiction, there is no requirement to first seek discovery from the non-US tribunal or exhaust other options before applying to a district court for § 1782 discovery." In re: Application of Bracha Found., 663 F. App'x 755, 765 (11th Cir. 2016). Moreover, the fact that the same type of discovery may not be available in an English court does not necessarily equate to bad faith in seeking that discovery here. See LEG Q, 2017 WL 3780213, at *10 (when weighing third Intel factor, agreeing with petitioner's argument that "[t]he mere fact that the discovery sought . . . might not be obtainable under English law does not, by itself, suggest that [the] Section 1782 application is an attempt to circumvent foreign proof-gathering restrictions."). In short, there is no evidence that Petitioners seek discovery here in bad faith.

Accordingly, the Undersigned finds that the third Intel factor also weighs in Petitioners' favor.

iv. Fourth Factor: Unduly Burdensome Discovery

Lastly, the Undersigned [*30]  finds that the fourth Intel discretionary factor also weighs in Petitioners' favor. In this case, the document requests all concern communications and documents relevant to the allegedly rigged auction, its players, and its financing. [ECF No. 5-2, pp. 11-12]. Moreover, subject to one caveat that will be discussed soon, the time period falls within the time of the subject auction, making it at least partly reasonable. See In re NRC Holding, Ltd., No. 14-MC-61962, 2015 WL 541770, at *3 (S.D. Fla. Feb. 10, 2015) (allowing § 1782 discovery where "[t]he scope of the subpoena appears to be limited to the specific aircraft [at issue] and is further limited to the relevant time period"). In addition, Petitioners request just one deposition, and Lynch does not argue how sitting for one deposition would be unduly burdensome.

Furthermore, the Undersigned is unconvinced by Lynch's generalized complaints about the burden of production. Lynch does not specify what this burden will be or how the requests can be narrowed. See LEG Q, 2017 WL 3780213, at *12 (rejecting unduly-burdensome arguments because "Respondents do not specify and quantify the burden that they assert and do not suggest how the requests should be narrowed other than to complain about the use of 'all documents' [*31]  and the time frame for each document request."). The Eleventh Circuit does not typically react favorably to such "all-or-nothing discovery challenges" in the context of § 1782 applications. See Application of Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 747 F.3d 1262, 1273 (11th Cir. 2014) (affirming district court's weighing of fourth Intel factor in favor of discovery where objecting party "does not appear to have taken any steps to meet [requesting party] somewhere in the middle or to narrow the discovery request in any particular way; rather, it has taken an all-or-nothing approach [concerning] the burden of having to produce any documents or deposition testimony, even those that seem unambiguously relevant").

Nonetheless, the Undersigned does agree that the requests are overbroad in the relevant time period. Petitioners do not explain why documents postdating the auction at issue by several years (assuming such documents exist) would be relevant. Accordingly, the relevant time period for the subpoenas should be limited to the period of January 1, 2007 to one year after the allegedly-rigged auction at issue took place.²

C. Federal Rule of Civil Procedure 45

Besides other limitations, Rule 45 limits where a subpoena may command a person to attend a deposition to "within 100 miles of where the person resides, is employed, [*32]  or regularly transacts business in person," and limits the "production of documents, electronically stored information, or tangible things at a place within 100 miles of where the person resides, is employed, or regularly transacts business in person." Fed. R. Civ. P. 45(c)(1)(A), (2)(A). The Eleventh Circuit has held "that the location of responsive documents and electronically stored information—to the extent a physical location can be discerned in this digital age—does not establish a per se bar to discovery under § 1782." Sergeeva, 834 F.3d at 1200. It is thus well established in this Circuit that § 1782 has "extraterritorial reach." Fuhr v. Credit Suisse AG, 687 F. App'x 810, 816 n.8 (11th Cir. 2017) (rejecting argument "that the district court lacked the power to compel production of the documents that [applicant] sought because the documents were located abroad, and § 1782 does not have extraterritorial reach.").

Although the parties disagree regarding Lynch's connections with Florida, all can agree that he does reside in Moscow, Russia. Petitioners, therefore, hedge their position by conceding that they are willing to accept the production of documents and to take Lynch's deposition in the Moscow location of O'Sullivan's law firm. [ECF No. 18, pp. 24-25]. That would satisfy Lynch's Rule 45 concerns.

Lynch, however, objects to [*33]  this accommodation, accusing Petitioners and their law firm of engaging in illegal activity. [ECF No. 26, p. 2]. But the only proof of this is Lynch's word, as set forth in a declaration. [ECF No. 26]. The Undersigned has seen no independent, corroborating evidence that Petitioners and their counsel have engaged in any illegal activity, let alone such that reaches the egregious level that Lynch alleges. And Petitioners flatly deny the accusations, which O'Sullivan calls "wild and false" and "preposterous." [ECF No. 32, p. 1].

Lynch's deposition must take place, and the relevant documents he has must be produced, somewhere. In a similar scenario, the Undersigned would resolve these sticky issues by proposing a neutral location, sometimes even in the jury deliberation room next to my chambers. But given Lynch's Russian residency, I cannot do that.

Therefore, I recommend that the District Court order the parties to meet and confer on a production method and location, and deposition location, which is acceptable to all. It does not have to be in Russia. It may be in England. It may be in the U.S. It may be in another foreign city. It may be wherever they choose. The parties should be able [*34]  to resolve that issue on their own.

If they cannot agree, however, then I recommend that the District Court order the place of Lynch's deposition and the place of production to be the Moscow law office that Petitioners propose. [ECF No. 18, p. 25]. If Lynch's concerns about that location are genuine, then he should take advantage of the meet and confer and agree to a different location. Petitioners' papers suggest that they would be flexible.

D. Res Judicata and Collateral Estoppel

One exception to res judicata and collateral estoppel is dispositive here: intervening change in the law. Lynch recognizes that the exception generally applies to collateral estoppel (although he contends that it does not apply in this case), but argues, without any authority, that the exception does not apply to res judicata. [ECF No. 25, p. 10]. That is incorrect -- "res judicata is inapplicable when between the first and second suits, there has been an intervening change in the law or modification of significant facts creating new legal conditions." Howard v. Gee, 297 F. App'x 939, 940 (11th Cir. 2008) (internal quotations omitted).

Moving on to the substance of the exception, in Godfrey I, the Southern District of New York held that even though one of the [*35]  respondents was served with a subpoena in that district -- and was therefore "found" in that district -- the subpoena was "nonetheless inappropriate [] because the documents petitioners seek are located in Russia." Godfrey I, 526 F. Supp. 2d at 423. The Godfrey I court explained that "[t]he bulk of authority in this Circuit, with which this Court agrees, holds that, for purposes of § 1782(a), a witness cannot be compelled to produce documents located outside of the United States.").

Godfrey I fell on one side of a split of authority, where some courts found that § 1782 had extraterritorial reach, and others did not. See In re Sergeeva, 2013 WL 12169388, at *5. The District Court in Sergeeva disagreed with Godfrey I's camp, and the Eleventh Circuit went on to affirm and adopt that position. Sergeeva, 834 F.3d at 1200. The Eleventh Circuit "agree[d] with the District Court that the location of responsive documents and electronically stored information—to the extent a physical location can be discerned in this digital age—does not establish a per se bar to discovery under § 1782." Id. The Eleventh Circuit reasoned: "To hold otherwise would categorically restrict the discretion Congress afforded federal courts to allow discovery under § 1782 'in accordance with the Federal Rules of Civil Procedure.' This, we [*36]  cannot do." Sergeeva, 834 F.3d at 1200 (internal citation omitted).

The Undersigned, therefore, will not give preclusive effect to a Southern District of New York decision that hinges on a rule of law that the Eleventh Circuit does not adopt. Based on the analysis that preceded this section, Petitioners' requested discovery is otherwise well taken, because it satisfies § 1782, the Intel discretionary factors, and Rule 45. Therefore, Godfrey I has no preclusive effect here.

V. Conclusion

The Undersigned respectfully recommends that the District Court deny in large part and grant in small part the motion to quash and grant in large part and deny in small part the motion to compel compliance with the subpoena. Those caveats are as follows:

First, the relevant time period for the subpoenas should be limited to the period of January 1, 2007 to one year after the allegedly-rigged auction took place. Lynch must produce relevant, non-privileged documents within 30 days of the District Court's order affirming this Report.

Second, as to the location of production, the Undersigned recommends that the District Court order the parties to meet and confer on a production method and location that is acceptable to all. Absent an agreement, however, [*37]  the Undersigned recommends that Lynch's document-production location should be the Moscow law office that Petitioners' propose. [ECF No. 18, p. 25].

Third, the Undersigned recommends that the District Court order the parties to meet and confer on a deposition location that will be mutually acceptable to all. Absent an agreement, however, the Undersigned recommends that Lynch's deposition take place at the Moscow law office that Petitioners' submit. [ECF No. 18, p. 25]. Moreover, the Undersigned recommends that the deposition occur within 30 days of the District Court's order affirming this Report.³

VI. Objections

The parties will have seven days from the date of this Report and Recommendations within which to file written objections, if any, with the District Judge. Each party may file a response to the other party's objection within seven days of the objection.⁴ Failure to file objections timely shall bar the parties from a de novo determination by the District Judge of an issue covered in the Report and shall bar the parties from attacking on appeal unobjected-to factual and legal conclusions contained in the Report except upon grounds of plain error if necessary in the interests of justice. [*38]  See 29 U.S.C. s. 636(b)(1); Thomas v. Arn, 474 U.S. 140, 149 (1985); Henley v. Johnson, 885 F.2d 790, 794 (1989); 11th Cir. R. 3-1 (2016).

RESPECTFULLY RECOMMENDED in Chambers, at Miami, Florida, February 22, 2018.

/s/ Jonathan Goodman

Jonathan Goodman

UNITED STATES MAGISTRATE JUDGE

 

 

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¹ This assumes, of course, that Judge Cooke does in fact affirm the recommendation. The Undersigned is not making any predictions about whether any objections to this Report will be filed or how Judge Cooke will ultimately rule. The reference to a possible affirmance is for scheduling purposes only.

² The ruling as to the fourth Intel factor applies with equal force to Lynch's similar arguments under Rule 45.

³ Given these rulings, and the time that has passed since the subpoenas first issued, the Undersigned finds that Lynch's objection to the subpoenas as not providing sufficient time to comply is now a moot issue.

⁴ The objection and response time is being shortened because the parties have already extensively briefed the issues.