28 USC § 1782

I have a new article, written with my Silicon Valley colleague Tamara Fraizer, live now on IP360 (IP360 subscription required): http://www.law360.com/articles/270953/navigating-between-german-and-us-discovery-provisions

The case involves the adequacy of Chevron’s privilege log. The magistrate judge reviewed the supposedly privileged documents at issue in camera.

The case illustrates the (unfortunately common) misuse of claims of privilege in US civil litigation.

The Michael Wilson law firm had litigation underway in England and Australia against several of its former members or employees who allegedly breached their contractual and fiduciary duties to the firm when they left and took with them clients of the firm involved in mineral, oil and gas, and precious metal mining investment projects in Kazakhstan. Two of the clients were companies with headquarters in an office in Denver.

In order to obtain discovery of documents from the two companies in Colorado, the Wilson law firm applied for an Order of Judicial Assistance under 28 U.S.C.S. § 1782

The Wilson law firm's application (a copy is available here) was successful, but with one caveat. The court upheld a $500,000 cost bond imposed on the firm due to the cost of the discovery being sought, an earlier order for cost-sharing, and the freezing of certain assets of the firm. The Wilson firm argued that imposition of a pre-judgment cost bond as a condition for Section 1782 discovery was unprecedented, but the court held that a proceeding under Section 1782 was governed by Fed. R. Civ. P. 26, which vested the court "with considerable discretion to specify conditions and limits for discovery, particularly electronic discovery."

In Re Chevron Corp., No. 10-2815 (3d Cir. Feb. 2011), involves a review by the United States Court of Appeals for the Third Circuit of a District Court’s order granting Chevron discovery under 28 U.S.C. § 1782 (see the discussion the use of U.S. discovery in international proceedings in our e-book, International Practice: Topics and Trends).

Caratube involved a § 1782 petition by the oil company directed at persons and entities in the U.S., which Caratube claimed had information helpful to its prosecution of an international arbitration before ICSID (the International Centre for Settlement of Investment Disputes).  The ICSID tribunal declined to ask Caratube to cease and desist the § 1782 discovery requests.  It did say that it didn’t want the U.S. discovery petition to interfere with the arbitration, and the tribunal reserved on the question whether to admit documents obtained through the § 1782 petition.

In the § 1782 proceeding, the District Court exercised its discretion to deny the § 1782 request.

the District Court relied on several of the considerations articulated in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004).

Applications of Heraeus Kulzer, GmbH, for Orders Compelling Discovery for Use in a Foreign Proceeding v. Biomet, Inc., (7th Cir. Jan. 24, 2011)

While the court in Chevron said little else about the applicability of § 1782, an opinion issued by a federal magistrate judge in the Southern District of Florida one week before, in In re Winning (HK) Shipping Co. Ltd., offered a detailed approach to determining whether a private international arbitral tribunal is a foreign tribunal that qualifies for judicial assistance under § 1782. Specifically, the court in Winning discussed a functional test for determining whether an international arbitral tribunal qualifies as a foreign tribunal under § 1782.

The Winning opinion is yet another addition to the growing body of conflicting case law on whether, and if so when, judicial assistance under § 1782 is available to parties in international arbitral proceedings – a body of conflicting case law that ultimately will need to be clarified by the federal appellate courts and possibly by the U.S. Supreme Court.

should analyze, among other things, whether the tribunal: (1) has the ability to gather evidence; (2) is obligated to apply the law to the facts in an impartial manner; (3) has the authority to issue a binding decision; (4) will issue opinions that are judicially reviewable; and (5) is state-sponsored or purely private.