Practical Considerations for Evidence Collection in the United States for Use in Foreign Litigation

This newsletter is the second issue of a two-part series about 28 U.S.C. §1782, a U.S. federal statute that allows a party to petition a federal district court to assist in the collection of evidence for use in litigation outside the United States.

With the ever-growing volume of cross-border litigation, parties are increasingly availing themselves of Section 1782 to collect evidence that might otherwise be difficult to obtain in foreign proceedings. This newsletter provides: (1) an overview of the Section 1782 process; (2) the relevant legal standards; and (3) practical considerations for parties pursuing, or responding to, a Section 1782 application.

Mechanics of a Section 1782 Petition

Under Section 1782, parties involved in litigation outside the United States may petition U.S. federal courts to compel the production of documents and testimonial evidence for use in foreign or international tribunals. This method is comparatively less time-consuming, cheaper and more effective than discovery requests made pursuant to letters rogatory or Letters of Request under the Hague Evidence Convention.

To request Section 1782 discovery, an applicant typically files a petition in the U.S. federal district where the subject from whom discovery is sought “resides or is found”. The application may be made ex parte without advance notice to the discovery target or parties in the foreign proceeding. Among other things, the application explains the discovery requested and how the statutory prerequisites are met.

The district court can rule on the application ex parte, allowing the target to respond after the application is granted. Alternatively, the court can order the petitioner to serve the application on the target first, which allows the recipient an opportunity to respond before any subpoena can be served. If the court grants the application, the petitioner is authorized to serve the subpoena. The respondent may move to quash the subpoena or for a protective order. A party against whom an adverse decision was rendered may file a motion for reconsideration or appeal to the circuit court.

Section 1782 Legal Standards

A Section 1782 applicant must meet three threshold requirements: (1) the target party resides or is found in the district where the application is filed; (2) the discovery is “for use in a proceeding in a foreign or international tribunal”; and (3) the party seeking discovery is a foreign or international tribunal or an “interested person”. Notably, applications can be made where the foreign litigation is reasonably contemplated but not yet pending.

Even if the statutory requirements are met, district courts have broad discretion to grant, deny or limit discovery. The U.S. Supreme Court has set out four discretionary factors for courts to consider: (1) whether the discovery target is a participant in the foreign proceeding; (2) whether the foreign tribunal might be receptive to U.S. federal court judicial assistance; (3) whether the request conceals “an attempt to circumvent foreign proof gathering restrictions or other policies of a foreign country or of the United States”; and (4) whether the request is “unduly intrusive or burdensome”. Intel Corp. v. Advanced Micro Devices, Inc., 542 US 241, 264-65 (2004) (“Intel”). No one factor is dispositive. Nor must the applicant establish all four factors. The respondent bears the burden to show that any one of the factors warrants denial.

Further, district courts have discretion over the manner and procedures for taking discovery. The statute authorizes courts to prescribe the procedures for the collection of evidence including the option to require adherence to the practice and procedure of the foreign country or international tribunal.

Practical Considerations for the Applicant

Prospective applicants should consider the following issues when seeking to obtain discovery using Section 1782:

File in the Appropriate Jurisdiction: Given conflicting case law, the applicant should carefully consider where to file the Section 1782 petition. Circuit courts are split as to whether a private commercial arbitration falls within Section 1782’s ambit. This issue is discussed in Part 1. Separately, some courts have ordered the production of documents held outside the United States, while others have ruled that the statute does not reach extraterritorially, even if those documents are within the respondent’s control. Federal courts also continue to differ on whether an applicant must exhaust all discovery options in the foreign proceeding before filing a Section 1782 petition.

Target All Potential Discovery Sources: An applicant should consider filing Section 1782 petitions against the various entities with potentially discoverable information relevant to the claims or defenses in the foreign proceeding. Former employees, service providers (e.g., accountants, financial institutions, internet-related service providers, etc.) and even litigants in cases involving the respondent could have discoverable information. The applicant also should consider pursuing parallel discovery proceedings in countries (especially Commonwealth nations) that have analogues to Section 1782.

Consider Approaching the Foreign or International Tribunal: An applicant should consider whether it is necessary to approach the foreign or international tribunal before filing a Section 1782 petition. Tribunal rules may require that a party seek leave before seeking interim measures from any court. Further, the fact that an applicant sought leave can show the U.S. court that: (1) the foreign tribunal is receptive to U.S. court judicial assistance; and/or (2) the Section 1782 application is not an attempt to side-step restrictive foreign discovery rules. The tribunal’s views also could serve to educate the U.S. court, which might be unfamiliar with the foreign proceeding’s discovery procedures. That said, depending on the circumstances, there may be strategic reasons to refrain from raising the issue with the tribunal.

Narrowly Tailor the Discovery Requests: The applicant should narrowly tailor the discovery requests to the claims and defenses raised in the foreign proceeding. Targeted requests are less likely to be successfully challenged as overly broad, unduly intrusive or burdensome. If a court suspects that the discovery requests are a “fishing expedition” or a vehicle for harassment, the requests or Section 1782 petition may be denied.

Practical Considerations for the Respondent

Respondents should consider the following issues when opposing or seeking to limit a subpoena issued under Section 1782:

Consider Whether Cooperation Is Warranted: The respondent should determine whether complying with the subpoena is the most prudent response. If the court grants the application, the parties typically meet and confer regarding the discovery requests. If the parties can reach a compromise on the scope of discovery sought, the respondent can avoid unnecessary motion practice and litigation costs. The respondent often has justifiable grounds for objecting to the requests, however, and moving for court relief may be strategically advantageous in certain instances.

Seek Relief from the Federal Court: The responding party should consider filing a motion to quash in the district court that issued the subpoena, arguing that the Section 1782 statutory requirements have not been met and/or that the Intel factors weigh against granting the application.
The respondent also should seek entry of a protective order to limit discovery. Because Section 1782 shields “any applicable legal privilege,” the target could invoke U.S. and foreign privileges, immunities, blocking statutes as well as privacy and secrecy laws as grounds to curtail the discovery’s scope or to justify non-production. The respondent should offer “authoritative proof”, however, that foreign law recognizes the privilege invoked and that it shields discovery. Further, since discovery obtained through the Section 1782 process can be used in other proceedings, the respondent should seek a protective order that limits the applicant’s use of the documents and/or testimony to the specific foreign proceeding for which discovery is sought.
In addition, federal courts generally protect respondents against incurring significant expense in complying with Section 1782. Courts have modified or rejected unduly intrusive or burdensome discovery requests. Moreover, courts have required applicants to bear some, or all of, respondents' discovery-related compliance costs.

Seek Relief in the Foreign Jurisdiction Where the Underlying Dispute Is Pending: The respondent should consider raising concerns with the foreign or international tribunal itself on the grounds that U.S. discovery could improperly interfere with the underlying proceeding or that it violates the foreign jurisdiction’s domestic laws and privileges. U.S. federal courts tend to be less inclined to grant Section 1782 applications where the tribunal is not receptive.
The target should consider moving for an anti-suit injunction in the foreign jurisdiction where the underlying proceeding is pending. An anti-suit injunction is an order from a court or tribunal that prevents a party from commencing or continuing proceedings in another jurisdiction or forum. Foreign tribunals have enjoined Section 1782 applications because of due process concerns or the applicant’s failure to adhere to domestic procedural rules and requirements.

Agree to Limit Section 1782’s Use: A party that “resides or is found in” the United States should consider whether to take preventative measures to limit potential discovery. For instance, limitations could be sought during contract negotiations with the counterparty. In a forum selection or arbitration clause, the parties could agree to (1) exclude the use of Section 1782; (2) select the forum’s substantive and procedural law; or (3) reject the application of U.S. discovery rules. U.S. courts consider such clauses as presumptively enforceable, which could be useful, if a dispute between the parties were to arise. Alternatively, when setting the discovery ground rules in the foreign litigation, a disputant should consider reaching an agreement with its adversary that neither party can seek Section 1782 discovery. However, whether to do so should be weighed against the likelihood that the litigant envisions filing a Section 1782 application against its adversary or a third-party.

Conclusion

With an upsurge in cross-border disputes, litigants in foreign proceedings increasingly seek discovery of testimony and documentary evidence within the United States. Section 1782 provides an invaluable tool to obtain such evidence. Given the ambiguity in Section 1782 case law, however, parties need to conduct a case-by-case analysis to maximize their chances of either successfully obtaining the discovery sought or resisting its production.

(Written by: Christopher Studebaker)

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*This column is provided for educational and informational purposes only and is not intended and should not be construed as legal advice.
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