STRAUB, Circuit Judge:
Petitioner-Appellant Anselm Brandi-Dohrn appeals from an Order dated November 16, 2011 by the United States District Court for the Southern District of New York (Alvin K. Hellerstein, Judge) granting Respondent-Appellee IKB Deutsche Industriebank AG's motion to quash subpoenas issued pursuant to 28 U.S.C. § 1782. Under section 1782, a district court is permitted to order a person within its jurisdiction 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." 28 U.S.C. § 1782(a). Brandi-Dohrn sought assistance from the District Court to order discovery from three non-parties for use in a securities fraud action he filed in Germany. On July 27, 2011, the District Court (Paul A. Crotty, Judge) allowed the discovery and the relevant subpoenas were issued. However, before any discovery was produced, Respondent-Appellee moved to vacate the July 27, 2011 Order and quash the subpoenas. The District Court granted the motion and ruled that the requested discovery could not be "for use" in the German tribunal because it was unlikely to be admitted in the foreign jurisdiction. We
Brandi-Dohrn is a shareholder of Appellee IKB Deutsche Industriebank AG ("IKB"), a bank located in Germany. In July 2008, Brandi-Dohrn filed an action in Germany against IKB to seek recovery for securities fraud. He alleges that IKB misled him into purchasing its shares by failing to disclose its significant exposure to collateralized debt obligations ("CDOs") backed by United States based subprime mortgages. He also alleges that IKB issued a press release that falsely downplayed the impact that the ratings agencies' downgrading of the CDOs would have on the Bank's operations.
In August 2010, the German trial court (the "Landgericht") dismissed the case and, in November 2010, Brandi-Dohrn appealed the action to the German intermediate appellate court (the "Oberlandesgericht"). The German appellate court was expected to hear the appeal in February 2012.
Brandi-Dohrn filed an ex parte application in the United States District Court for the Southern District of New York to serve subpoenas for documents and depositions of three non-parties—IKB Capital Corporation, Lord Securities Corporation, and William O'Brien—for use in the German action. The discovery relates to the issue of whether IKB was aware that its substantial exposure to subprime mortgage-backed CDOs created material risks that should have been disclosed to its investors. Brandi-Dohrn intends to use any relevant material he is able to obtain through this proceeding to convince the Oberlandesgericht to overturn the Landgericht. Brandi-Dohrn's American counsel avers that the discovery will be used in Brandi-Dohrn's pending action, but also acknowledges that Brandi-Dohrn's German counsel plans to use this discovery on behalf of other clients who have similar claims pending against IKB in Germany.
The District Court granted the application on July 27, 2011. Brandi-Dohrn issued the subpoenas shortly thereafter, but before any discovery was produced, IKB filed a motion to vacate the July 27, 2011 Order or, in the alternative, to quash the subpoenas. In support of their respective briefs, the parties submitted legal opinions of foreign counsel discussing whether the German appellate court would admit the new evidence.
On November 16, 2011, the District Court granted IKB's motion to quash the subpoenas. The District Court found troubling that Brandi-Dohrn sought this evidence in November 2011—more than a year after the German trial court dismissed the case in August 2010.
(Conference Transcript, November 9, 2011 ("Nov. 9, 2011 Conf. Tr."), at 15.)
Although the District Court did not suspect bad faith, it did suspect that the evidence sought was actually for use in German counsel's other securities fraud cases.
(Id. at 12.)
Furthermore, the District Court found that the evidence would likely not be used in the would admit the evidence:
(Id. at 15.)
Finally, after looking to German law, the District Court granted IKB's motion to quash the subpoenas:
(Id. at 16-18.)
Based on the above reasoning, the District Court issued a Summary Order dated November 16, 2011, granting IKB's motion and quashing the subpoenas. This appeal followed. After oral argument on January 25, 2012, we issued an Order reversing the District Court's November 16, 2011 Order and reinstating the District Court's July 27, 2011 Order. In view of the imminence of the foreign proceeding, we directed that the mandate should issue forthwith and noted that this Opinion would follow.
Brandi-Dohrn appeals the District Court's Order quashing the subpoenas, arguing that the District Court misconstrued the relevant statutory language and improperly attempted to predict the Oberlandesgericht's outlook towards the admissibility of the evidence. We agree.
Our review of the District Court's decision is two-fold: (1) as a matter of law, whether the District Court erred in its interpretation of the language of the statute; and (2) if not, whether the District Court's decision to grant discovery on the facts before it was in excess of its discretion. See Euromepa, S.A. v. R. Esmerian, Inc., 154 F.3d 24, 27 (2d Cir.1998) ("Euromepa II").
"A district court's ruling on a motion to quash a subpoena is reviewable for abuse of discretion." Arista Records, LLC v. Doe 3, 604 F.3d 110, 117 (2d Cir. 2010) "A district court has abused its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence, or rendered a decision that cannot be located
Title 28 United States Code section 1782 reads, in part, as follows:
28 U.S.C. § 1782(a).
The goals of the statute are to provide "equitable and efficacious" discovery procedures in United States courts "for the benefit of tribunals and litigants involved in litigation with international aspects," S.Rep. No. 88-1580 (1964), reprinted in 1964 U.S.C.C.A.N. 3782, 3783, 20 and to "encourag[e] foreign countries by example to provide similar means of assistance to our courts," In re Malev Hungarian Airlines, 964 F.2d 97, 100 (2d Cir.), cert. denied, 506 U.S. 861, 113 S.Ct. 179, 121 L.Ed.2d 125 (1992). In pursuit of these twin goals, the statute has, over the years, been given "increasingly broad applicability." In re Gianoli Aldunate, 3 F.3d 54, 57 (2d Cir.), cert. denied, 510 U.S. 965, 114 S.Ct. 443, 126 L.Ed.2d 376 (1993).
In ruling on an application made pursuant to section 1782, a district court must first consider the statutory requirements and then use its discretion in balancing a number of factors. We have held that a district court is authorized to grant a § 1782 request where:
See Schmitz v. Bernstein Liebhard & Lifshitz LLP, 376 F.3d 79, 83 (2d Cir. 2004); see also Euromepa II, 154 F.3d at 27. It is the second issue—the "for use" requirement—that is disputed here.
"Once the statutory requirements are met, a district court is free to grant discovery in its discretion," and we will review its decision for abuse thereof. Schmitz, 376 F.3d at 83-84 (brackets and internal quotation marks omitted). The Supreme Court has outlined a number of factors that "bear consideration in ruling on a § 1782(a) request":
Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264-65, 124 S.Ct. 2466, 159 L.Ed.2d 355 (2004) (internal quotations omitted and formatting added).
Our cases acknowledge that a district court may deny the section 1782 application where it suspects that the discovery is being sought for the purposes of harassment. See Euromepa S.A. v. R. Esmerian, Inc., 51 F.3d 1095, 1101 n. 6 (2d Cir.1995) ("Euromepa I") ("[I]f the district court determines that a party's discovery application under section 1782 is made in bad faith, for the purpose of harassment, or unreasonably seeks cumulative or irrelevant materials, the court is free to deny the application in toto, just as it can if discovery was sought in bad faith in domestic litigation."). There are limitations on a district court's discretion, however. "[D]istrict courts must exercise their discretion under § 1782 in light of the twin aims of the statute: `providing efficient means of assistance to participants in international litigation in our federal courts and encouraging foreign countries by example to provide similar means of assistance to our courts.'" In re Metallgesellschaft, 121 F.3d 77, 79 (2d Cir. 1997) (quoting Malev, 964 F.2d at 100). "We have thus held, for example, that although there is no requirement under § 1782 that the type of discovery sought be available in the relevant foreign jurisdiction, a court may look to the nature, attitude and procedures of that jurisdiction as `useful tool[s]' to inform its discretion." Schmitz, 376 F.3d at 84 (quoting Metallgesellschaft, 121 F.3d at 79-80).
Brandi-Dohrn contends that the District Court erred because it misconstrued the "for use" element of section 1782 as requiring him to demonstrate that the discovery he seeks will be admitted in the Oberlandesgericht. We agree and conclude that the District Court "based its ruling on an erroneous view of the law," Sims, 534 F.3d at 132, when it held that the "for use" requirement of § 1782 was not satisfied because Brandi-Dohrn had not shown that the discovery he sought was likely to be admitted in the foreign proceeding. The District Court concluded that the evidence could not be "for use" in the Oberlandesgericht because, in its view, it was unlikely that the German court would admit the sought-after evidence.
In Intel Corp. v. Advanced Micro Devices, Inc., the Supreme Court rejected the so-called foreign-discoverability rule and held that § 1782(a) does not "categorically bar a district court from ordering production of documents when the foreign tribunal or the `interested person' would not be able to obtain the documents if they were located in the foreign jurisdiction." Intel, 542 U.S. at 259-60, 266, 124 S.Ct. 2466; see also Gianoli Aldunate, 3 F.3d at 57, 59 ("We ... hold[ ] that section 1782 does not require the district court to make a finding of discoverability under the laws of the foreign jurisdiction.... If Congress had intended to impose such a sweeping restriction on the district court's discretion, at a time when it was enacting liberalizing amendments to the statute, it would have included the statutory language to that effect.").
Although the District Court recognized this authority, it nevertheless appeared concerned with the likelihood that the discovery would be admitted in the German court:
(Nov. 9, 2011 Conf. Tr. 12, 15 (emphases added).) The District Court then concluded that the evidence could not be "for use" in the Oberlandesgericht because it would not be admissible there.
While Intel concerned the discoverability of evidence in the foreign proceeding, we see no reason why it should not extend to the admissibility of evidence in the foreign proceeding. As in Intel, there is no statutory basis for any admissibility requirement. "If Congress had intended to impose such a sweeping restriction on the district court's discretion, at a time when it was enacting liberalizing amendments to the statute, it would have included statutory language to that effect." See Intel, 542 U.S. at 260, 124 S.Ct. 2466 (internal quotations marks omitted). A foreign admissibility rule would also serve "only to thwart § 1782(a)'s objective to assist foreign tribunals in obtaining relevant information that the tribunals may find useful but, for reasons having no bearing on international comity, they cannot obtain under their own laws." Id. at 262, 124 S.Ct. 2466. Furthermore, we need not be concerned with issues of parity because the ultimate admissibility of the evidence is determined by the foreign tribunal. See id. ("Concerns about maintaining parity among adversaries in litigation likewise do not provide a sound basis for a cross-the-board foreign-discoverability rule.... [T]he foreign tribunal can place conditions on its acceptance of the information to maintain whatever measure of parity it concludes is appropriate."). Here, the Oberlandesgericht is free to exclude the evidence or place conditions on its admission. Finally, requiring a district court to apply the admissibility laws of the foreign jurisdiction would require interpretation and analysis of foreign law and such "[c]omparisons of that order can be fraught with danger." Id. at 263, 124 S.Ct. 2466.
Accordingly, as a district court should not consider the discoverability of the evidence in the foreign proceeding, it should not consider the admissibility of evidence in the foreign proceeding in ruling on a section 1782 application. We join our sister Circuits in coming to this conclusion. See In re Asta Medica, S.A., 981 F.2d 1, 7 n. 6 (1st Cir.1992) ("The district court need not explore whether the information the applicants seek is admissible in the foreign jurisdiction or other issues of foreign law."), abrogated on other grounds by Intel, 542 U.S. 241, 124 S.Ct. 2466; John Deere Ltd. v. Sperry Corp., 754 F.2d 132, 138 (3d Cir.1985) ("Nor can concern for the ultimate admissibility of the discovered material be argued as a limit on section 1782 orders."); In re Request for Judicial Assistance from the Seoul Dist. Criminal Court, 555 F.2d 720, 723 (9th Cir.1977) ("[F]ederal courts, in responding to [§ 1782] requests, should not feel obliged to involve themselves in technical questions of foreign law relating to ... the admissibility before such tribunals of the testimony or material sought.").
IKB contends that, although there is no foreign admissibility requirement, the receptivity of the foreign court to the evidence sought is a relevant consideration when a district court decides how to exercise its discretion. Accordingly, IKB argues that the District Court properly concluded that, since the evidence would likely not be admitted in the proceeding before the German appellate court, it was being sought for purposes of harassment because it would be used in other cases brought by Brandi-Dohrn's German counsel.
We recognize that section 1782(a) gives discretion to the District Court, as it "`authorizes, but does not require, a federal district court to provide judicial assistance to foreign or international tribunals or to "interested person[s]" in proceedings abroad.'" See Schmitz, 376 F.3d at 84 (quoting Intel, 542 U.S. at 247, 124 S.Ct. 2466) (emphases added by Schmitz). Indeed, we have affirmed denials of section 1782 applications where, although the statutory requirements of section 1782 were met, the twin goals of the statute were not. See Schmitz, 376 F.3d at 81 ("In denying the application, the district court explained that although petitioners had met the statutory requirements of § 1782, granting discovery in this case would run counter to the statute's aims of assisting foreign courts and litigants and encouraging foreign jurisdictions to provide reciprocal assistance
Here, however, we must reverse the District Court because it underpinned its conclusion on—and erroneously applied— the statutory "for use" requirement:
(Nov. 9, 2011 Conf. Tr. 18 (emphasis added).)
Accordingly, for the reasons stated above, the District Court exceeded its allowable discretion by "bas[ing] its ruling on an erroneous view" of § 1782's "for use" requirement. See Sims, 534 F.3d at 132. We therefore reverse.
The District Court's November 16, 2011 Order quashing subpoenas made pursuant to 28 U.S.C. § 1782 is
