Commercial Litigation and Arbitration

§1782 Application Denied Where It Sought (1) Discovery Available from Party to Foreign Litigation, (2) to Circumvent Restrictive Foreign Discovery Practices & (3) Evidence from Foreign Subsidiary of Subpoenaed U.S. Entity

Effecten-Spiegel AG v. Merrill Lynch, Pierce, Fenner & Smith Inc., 2019 U.S. App. LEXIS 17061, 2019 WL 2354776 (2d Cir. June 4, 2019) (unpublished):


Effecten-Spiegel AG and ARFB Anlegerschutz UG appeal the order of the District Court (Cote, J.), denying their application to seek discovery from Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPFS") and Merrill Lynch & Co., Inc. ("MLC") under 28 U.S.C. § 1782. On appeal, they argue that the District Court erred in applying the discretionary factors in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 124 S. Ct. 2466, 159 L. Ed. 2d 355 (2004), that it improperly concluded that § 1782 does not authorize the discovery of documents located outside the United States, and that it erred in concluding that [*2]  MLPFS and MLC did not possess relevant information. We assume the parties' familiarity with the underlying facts and the record of prior proceedings, to which we refer only as necessary to explain our decision to affirm.

We review de novo the District Court's conclusions of whether the statutory requirements of § 1782 are met. Euromepa, S.A. v. R. Esmerian, Inc., 154 F.3d 24, 27 (2d Cir. 1998). If we agree that these requirements are met, the District Court's "decision on whether to grant discovery [is reviewed] for abuse of discretion." Id. However, we also review de novo "the question of whether [§ 1782] imposes any particular limitations on the exercise of that discretion." Id.

The District Court did not err in its application of the Intel factors. These factors "are not to be applied mechanically," and "[a] district court should also take into account any other pertinent issues arising from the facts of the particular dispute." Kiobel v. Cravath, Swaine & Moore LLP, 895 F.3d 238, 245 (2d Cir. 2018). With respect to the first and second Intel factors, the District Court was entitled to consider the possibility that much of the requested discovery could be obtained from Porsche, a party to the German litigation. See Mees v. Buiter, 793 F.3d 291, 303 (2d Cir. 2015); Schmitz v. Bernstein Liebhard & Lifshitz, LLP, 376 F.3d 79, 84-85 (2d Cir. 2004). The District Court also properly considered the second Intel factor. See Mees, 793 F.3d at 297-98. And with respect to the third factor, [*3]  the District Court properly considered whether the petition was an attempt to "circumvent [a jurisdiction's] more restrictive discovery practices." Kiobel, 895 F.3d at 245. Contrary to the Appellants' suggestion, the District Court did not impose a categorial bar on extraterritorial discovery.

Nor did it determine that MLPFS and MLC had no relevant information. Instead, the District Court declined to grant the petition for two reasons. First, it viewed the petition as an attempt to use MLPFS and MLC to obtain discovery from a separately incorporated foreign subsidiary. Second, it concluded that Petitioners had not shown that either MLPFS or MLC were involved in the underlying conduct that is the subject of the German litigation. The District Court acted within its "considerable discretion" in reaching these conclusions. Schmitz, 376 F.3d at 84; see Chase Manhattan Corp. v. Sarrio S.A. (In re Sarrio), 119 F.3d 143, 147 (2d Cir. 1997).

We have considered Appellants' remaining arguments and conclude that they are without merit. For the foregoing reasons, the order of the District Court is AFFIRMED.


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