Exporting U.S. Discovery Abroad
March 6, 2008
The biggest difference between the U.S. litigation system and practically every other legal system in the world is the broad pre-trial discovery procedures available to the parties in a civil litigation. In a typical U.S. civil litigation, a party can obtain nearly all documents that are arguably relevant to the litigation and take wide ranging depositions (oral testimony under oath outside of court) of the other parties as well as non-party witnesses. However, many are unaware that the U.S. federal courts are authorized to provide the same broad discovery for use in foreign proceedings (including arbitration). A U.S. statute, 28 U.S.C. ยง 1782 (Section 1782), allows a party to obtain documents and depose witnesses from entities and persons located within the United States in connection with a foreign proceeding. A recent U.S. Supreme Court decision, as discussed below, provides guidance as to the applicability of Section 1782. However, many issues relating to the boundaries of Section 1782 remain unresolved. This article provides a brief overview of Section 1782.

Section 1782

The twin aims of Section 1782 are to provide efficient assistance to participants in international litigation and encourage other countries to provide similar assistance in matters before the U.S. courts. A request under Section 1782 can be initiated by a "letter rogatory" or "by any interested person," simply making an application directly to the relevant U.S. district court. However, there is no requirement under Section 1782 that a party seeking discovery request a foreign court to issue a letter rogatory. The statute further requires that the person from whom discovery is sought "resides or is found" in the district of the district court to which the request is made and that the documents or testimony requested be "for use in a proceeding in a foreign or international tribunal" before a U.S. federal court is authorized to grant a Section 1782 request.

Despite the plain language of the statute, discovery pursuant to Section 1782 was infrequently granted in the past because the U.S. federal courts were split on its interpretation and many read into the statute implied limitations. However, in 2004, the U.S. Supreme Court confirmed the statute's broad availability by holding that the plain language of the statute controls in its Intel Corporation v. Advanced Micro Devices (Intel) decision. The Intel decision also clarified a number of issues concerning the requirements for granting a Section 1782 request and set forth guidelines for federal courts to use when evaluating such requests.

The Intel Decision

In Intel, Advanced Micro Devices, Inc. (AMD) filed an antitrust complaint against Intel Corporation (Intel) with the Directorate-General for Competition of the Commission of the European Communities (European Commission). As a result of the complaint, the European Commission started an investigation into Intel. After the European Commission had failed to pursue documents produced by Intel in the United States in a private antitrust suit, AMD petitioned the District Court for the Northern District of California under Section 1782 to issue an order directing Intel to produce those documents. The District Court refused to grant AMD's application and the Court of Appeals for the Ninth Circuit reversed.

The U.S. Supreme Court held that Section 1782 authorized the discovery AMD sought and remanded the case for further consideration by the District Court. In reaching its holding, the Court clarified certain issues concerning the requirements found in the language of the statute. First and foremost, the Court held that the plain language of the statue applied. Accordingly:

  1. "Interested persons" under Section 1782 were not limited to litigants or the foreign sovereigns in the foreign proceeding. Intel had argued that AMD could not seek discovery because it lacked formal "litigant" status in the European Commission proceedings.
  2. A foreign body acting as a "first-instance decision maker," such as the European Commission in the Intel case, fulfilled the requirements of a "tribunal" set forth in the statute. Subsequent to the Intel decision, federal courts have held that arbitral tribunals qualify as "tribunals" for purposes of Section 1782 as well.
  3. Section 1782 was not limited to "imminent" or "pending" proceedings. Instead, the Court held that Section 1782 requires only that a dispositive ruling by an adjudicative tribunal, reviewable by courts, be within reasonable contemplation. Intel had argued that AMD's complaint had not progressed beyond the investigative stage and therefore did not qualify.
  4. Finally, Section 1782 contained no implied limitations. Specifically, prior to Intel, federal courts had expressed conflicting views as to whether Section 1782 contained an implied "foreign-discoverability requirement" which did not allow discovery under Section 1782 to be granted unless the foreign tribunal itself would allow such discovery. The Court unequivocally rejected that Section 1782 contained a "foreign-discoverability requirement."
Despite holding that the statute authorized AMD's discovery requests, the Court stressed that the statute did not require that the District Court grant such assistance. To guide the lower courts, the Court outlined a number of discretionary factors beyond the requirements set forth in the statute that should be considered when evaluating a Section 1782 request. This confirmed the District Court's broad discretionary powers when considering a Section 1782 request. The factors are:

  1. Whether the person from whom discovery is sought is within the foreign tribunal's jurisdiction. If they are, the need for Section 1782 aid is generally not as apparent;
  2. The nature of the 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. judicial assistance;
  3. Whether the Section 1782 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 unduly intrusive and burdensome.
On remand, the District Court applied the discretionary factors set forth in Intel and denied AMD's Section 1782 request. In denying AMD's application, the District Court held that Intel was a party to the foreign proceeding and, therefore, the European Commission had the jurisdiction and authority to simply ask Intel for the documents. The District Court also noted that the European Commission had informed the U.S. Supreme Court that it did not need or want the assistance from the United States to obtain the documents at issue. Accordingly, AMD's request was a clear attempt to circumvent the European Commission's prior decision not to pursue these documents. Finally, the District Court held that AMD's requests was unduly intrusive and burdensome.

The Extraterritorial Scope of Section 1782

Despite the extensive guidance provided by the Intel decision on how U.S. federal courts should evaluate Section 1782 applications, the Supreme Court did not resolve all of the issues that test the boundaries of Section 1782. For example, one such unresolved issue is the extraterritorial scope of Section 1782. Put another way, does Section 1782 authorize discovery from a U.S.-based entity of documents located abroad or depositions of foreign individuals?

The statute simply states that a district court in the district where the person resides or is found may order him to give his testimony or produce documents. However, the statute is silent as to where those documents must be located. To date, only a few cases have addressed the extraterritorial scope of Section 1782. For the purpose of compelling testimony of a foreign individual, one District Court held that mere physical presence in the district, even if only temporary, is enough to satisfy the statute's requirement. Indeed, the same court held that a foreign individual served in the United States while visiting would be subject to an order compelling testimony, even if that order was granted prior to that individual's arrival in the United States.

For the purpose of producing documents located abroad, the courts have been divided. A number of courts have refused to compel U.S.-based entities to turn over documents in the possession of their non-U.S. based affiliates or parents. However, other courts have ruled that Section 1782 does not expressly prohibit the production of documents located abroad. One such decision ordered a U.S.-based consulting firm to produce documents it created and maintained in Germany. In another case, a court noted that it was authorized to compel the production of documents belonging to a non-U.S. based entity that were temporarily in the possession of the entity's U.S. attorneys before denying the request on discretionary grounds. Moreover, no court to date has addressed the boundaries of Section 1782 as they relate to electronic documents. In today's ever growing electronic world, the "location" of data and documents accessible and stored electronically is certainly a gray area. Arguably, a foreign entity with a small office located in the United States could be compelled under Section 1782 to produce its electronic data and documents from around the world that the small U.S. office has electronic access to through the Internet or otherwise under the argument that such document are in the possession and control of that U.S. office. Future court decisions addressing these specific issues regarding the extraterritorial scope, along with other unsettled boundaries of Section 1782, are likely and require close monitoring.

Conclusion

Section 1782 provides an unparalleled discovery tool for parties to take advantage of the broad U.S. discovery procedures for use in foreign proceedings. However, the applicability and boundaries of Section 1782 have not been fully established by the U.S. federal courts. Therefore, it is essential for all foreign entities to educate themselves about Section 1782 and keep themselves abreast of developments in order to take advantage of or to defend themselves against such requests.

Further Reading

For further information concerning Section 1782, the reader may wish to consult the following authorities (available publicly or upon request from the author):
  1. Intel Corporation v. Advanced Micro Devices, 542 U.S. 241 (2004); Advanced Micro Devices, Inc. v. Intel Corp., No. C 01-7033, 2004 WL 2282320 (N.D. Cal. Oct. 4, 2004); In re Matter of the Application of Oxus Gold plc, Misc. No. 06-82-GEB, 2007 WL 1037387 (D.N.J. April 2, 2007); In re Application of Roz Trading Ltd., 469 F.Supp.2d 1221 (N.D. Ga. 2006); Edelman v. Taittinger, 295 F.3d 171 (2nd Cir. 2002); Norex Petroleum Ltd. v. Chubb Ins. Co. of Canada, 384 F.Supp.2d 45 (D.C. 2005); Kestrel Coal PTY, Ltd. v. Joy Global, Inc., 362 F.3d 401 (7th Cir. 2004); In re Gemeinschaftpraxis Dr. Med. Schottdorf, No. M19-88 2006 WL 3844464 (S.D.N.Y. Dec. 29, 2006); and In re Application of Schmitz, 259 F.Supp.2d 294 (S.D.N.Y. 2003).
  2. In addition, please see the article in this issue of GLOBALitigation: USA titled "The Free Flow of Business Records and Information Between Domestic and Foreign Affiliates May Have Unexpected Consequences in the United States" by Marisa A. Lorenzo addressing related discovery issues.