GREENBERG, Circuit Judge.
This matter comes on before this Court on appeal from a District Court's order entered June 15, 2010, granting Chevron Corporation the opportunity to engage in discovery pursuant to its application under 28 U.S.C. § 1782. Section 1782(a) provides in material part that "[t]he district court of the district in which a person resides or is found may order him 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[.]" Section 1782(a), however, includes the limitation that "[a] person may not be compelled to give his testimony or statement or to produce a document or other thing in violation of any legally applicable privilege." The District Court, following a hearing that consisted of arguments of counsel, found that it was appropriate for it to grant a portion of Chevron's section 1782 application. In reaching its result
We now hold that the District Court applied the appropriate standards in considering Chevron's section 1782 application and correctly determined that the provision of documents to an Ecuadorian court-appointed expert to assess damages resulted in a waiver of any work-product protections and attorney-client privileges that might otherwise have precluded discovery of those documents. We limit our opinion, however, because we also hold that the District Court's ruling that the crime-fraud exception to the attorney-client privilege was applicable, to the extent that the privilege was not waived, was too sweeping and has the potential to pierce the attorney-client privilege for documents that were not created or used in furtherance of the alleged fraud and thus are not subject to disclosure through the application of the exception. We therefore will vacate the District Court's determination with respect to the crime-fraud exception to the attorney-client privilege and will remand the case to the District Court so that it can conduct an in camera review of the relevant documents and determine whether the crime-fraud exception to the attorney-client privilege is applicable to any of the documents and, if so, which ones.
It is helpful in this case, arising out of 17 years of still ongoing litigation spanning across two continents, to provide background information to place this case in its proper perspective. In 1993, certain communities in the Amazon River area of Ecuador
Promptly after the dismissal, the Ecuadorian plaintiffs refiled the case in a court in Lago Agrio, Ecuador, against Chevron (the Lago Agrio litigation).
Early in the Lago Agrio litigation, both sides employed experts who submitted reports concerning the contamination at former TexPet well sites. In October 2003, the Ecuadorian plaintiffs petitioned the Lago Agrio Court to appoint an expert to conduct a global damages assessment of the contamination that TexPet allegedly caused. At that time Chevron did not file a similar petition, but in 2007 it petitioned for appointment of a global damages assessment expert, a request that the court denied as untimely. Consequently, the Lago Agrio Court determined that it would appoint a single global damages expert, with the Ecuadorian plaintiffs and Chevron each nominating a candidate for the position. Ultimately, however, the Lago Agrio Court did not appoint either candidate and instead appointed Richard Stalin Cabrera Vega (Cabrera), an Ecuadorian environmental engineer and geologist who had served as a court-appointed expert earlier in the case, as the global
Cabrera accepted the appointment, and he and his team conducted numerous field inspections of the contamination sites, with the parties being given notice of the date and location of those inspections and being allowed to participate in the inspection process. Moreover, Cabrera, from time to time, requested that the parties submit materials to him. In response to Cabrera's requests, the Ecuadorian plaintiffs submitted documents to him in support of their claims, but Chevron did not submit any documentation in support of its position to him. The process of this document submission has given rise to one of the primary issues in dispute between the parties because they are at odds on the question of whether they were permitted to submit documents on an ex parte basis to Cabrera for his consideration in drafting his report. Indeed, Chevron regards the suggestion that the Lago Agrio Court permitted the submission of documents on an ex parte basis as "absurd." Appellee's br. at 17. On the other hand, the Ecuadorian plaintiffs contend that the submissions were authorized and that the Lago Agrio Court actually "encouraged" the parties to provide documents in support of their positions to Cabrera. Appellants' br. at 44.
Cabrera's final assessment calculated the global damages at $27.3 billion. Chevron reacted to that assessment by filing a motion with the Lago Agrio Court seeking to have it strike the global damages assessment from evidence and declare that Cabrera's appointment as global damages assessment expert was null and void. Though the Lago Agrio Court did not give Chevron the relief it sought when it filed its motion, the court indicated that it understood that Chevron was dissatisfied with Cabrera and his final report, and reiterated that "the court is not required to abide by the opinion of the experts."
Chevron's responses to what it plainly regarded as unpalatable proceedings in Ecuador did not stop with it taking steps in that country, as it obviously, and ironically in view of its contentions on its forum non conveniens application that resulted in the dismissal of the Southern District of New York litigation, had lost faith in the Ecuadorian courts. Thus, in an out-of-Ecuador response, Chevron filed a notice of arbitration under the United Nations Commission on International Trade Law (UNCITRAL) pursuant to the United States-Ecuador Bilateral Investment Treaty (BIT) on November 23, 2009, challenging the Ecuadorian proceedings in an attempt to obtain an award that would preclude international recognition of the judgment that the Lago Agrio Court will
In addition to having instituted the BIT arbitration in reaction to the Ecuadorian proceedings, Chevron has brought an extraordinary series of at least 25 requests to obtain discovery from at least 30 different parties pursuant to section 1782 in United States District Courts throughout the United States. These requests, which include the proceedings before us now, seek evidence to support Chevron's claim that the Ecuadorian plaintiffs committed fraud in the prosecution of the Lago Agrio litigation. Chevron's overarching contention in seeking the section 1782 discovery is that the judicial process in Ecuador is corrupt and that the Ecuadorian plaintiffs and their associates have fraudulently conspired with Cabrera to produce a skewed damages report that the Ecuadorian plaintiffs ghost-wrote. Chevron seeks to use the discovery it obtains pursuant to its section 1782 requests in the Lago Agrio litigation and the BIT arbitration to support this contention.
In the section 1782 case now before us, Chevron filed its suit in the District of New Jersey, contending that UBR, the New Jersey-based environmental consulting firm that the Ecuadorian plaintiffs engaged, employed Juan Cristóbal Villao Yepez (Villao), one of the 14 technical experts participating in the preparation of Cabrera's global damages report. Chevron contends that the appearance of materials in Cabrera's final global damages assessment report with UBR's logo demonstrates that Cabrera's report was not impartial and that Cabrera improperly conspired with the Ecuadorian plaintiffs and UBR in drafting his report.
Appellants, on the other hand, express no surprise that Cabrera's report incorporates documents that they provided to him, including documents that UBR prepared, for they maintain that, as we pointed out above, the Lago Agrio Court sanctioned their providing Cabrera with the documents. Appellants further contend that Cabrera was free to accept or reject the Ecuadorian plaintiffs' submissions and consequently was free to incorporate the submissions into his report so long as he found them to be credible. Nevertheless, in light of Villao's dual employment and
The District Court heard oral argument on Chevron's application on June 11, 2010, and issued a decision from the bench on that day granting Chevron's section 1782 discovery request as to UBR.
Following the District Court's issuance of its order on June 15, 2010, appellants appealed to this Court and simultaneously filed a motion for a stay pending appeal. The District Court denied appellants' application for a stay pending appeal, but issued a temporary stay pending appellants' application for a stay to this Court. We subsequently granted appellants a stay pending appeal on July 6, 2010, and also ordered that the appeal be expedited.
The District Court had jurisdiction under 28 U.S.C. § 1782 and we have jurisdiction pursuant to 28 U.S.C. § 1291.
Appellants first claim that Chevron's discovery request was not proper under section 1782 because Chevron sought discovery not intended "for use in a proceeding in a foreign or international tribunal." See 28 U.S.C. § 1782(a). Appellants argue that as a matter of statutory interpretation "[d]iscovery is not `for use in a proceeding before a foreign tribunal' where its purpose is to attack the tribunal itself." Appellants' br. at 22 (emphasis in original). The initial problem with appellants' contention is that Chevron intends to use the evidence that it uncovers in an attempt to show the Lago Agrio Court that the Ecuadorian plaintiffs have engaged in fraud in the proceedings before that court. Furthermore, use of the evidence uncovered in a section 1782 application in the BIT arbitration to "attack" the Lago Agrio Court unquestionably would be "for a use in a proceeding in a foreign or international tribunal." The possibility that the evidence may be utilized to cast doubts on the impartiality of the Lago Agrio Court does not mean that Chevron's request for the evidence runs afoul of section 1782 and that Chevron therefore may not obtain the evidence.
Appellants next contend that the District Court abused its discretion when it granted Chevron's section 1782 discovery request. The seminal case exploring the parameters of section 1782 is Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 124 S.Ct. 2466, 159 L.Ed.2d 355 (2004), in which the Supreme Court explained that section 1782 "is the product of congressional efforts, over the span of nearly 150 years, to provide federal-court assistance in gathering evidence for use in foreign tribunals." Id. at 247, 124 S.Ct. at 2473. In Intel, the Court rejected the "suggestion that a § 1782(a) applicant must show that United States law would allow discovery in domestic litigation analogous to the foreign proceeding." Id. at 263, 124 S.Ct. at 2482. The Court also held that section 1782 does not contain a "threshold requirement that evidence sought from a federal district court would be discoverable under the law governing the foreign proceeding." Id. at 247, 124 S.Ct. at 2473. The Court reasoned that "[b]eyond shielding material safeguarded by an applicable privilege . . . nothing in the text of § 1782 limits a district court's production-order authority. . . ." Id. at 260, 124 S.Ct. at 2480.
The Supreme Court cautioned, however, that "comity and parity concerns may be important as touchstones for a district court's exercise of discretion in particular cases[.]" Id. at 261, 124 S.Ct. at 2481. To that end, the Court discussed factors that a district court should consider when ruling on a section 1782(a) request:
Id. at 264-65, 124 S.Ct. at 2483 (citations omitted). Inasmuch as relevant evidence is presumptively discoverable, "[t]he party opposing discovery [under section 1782(a)] has the `burden of demonstrating offense to the foreign jurisdiction, or any other facts warranting the denial of a particular application.'" Bayer AG v. Betachem, Inc., 173 F.3d 188, 190 (3d Cir.1999) (quoting In re Bayer AG, 146 F.3d at 196).
The first Intel factor favors allowing Chevron to obtain the discovery it seeks because UBR is not a participant in the Lago Agrio litigation and, so far as we can determine from the record before us, is not subject to the jurisdiction of the Lago Agrio Court.
Appellants claim, with respect to the second Intel factor, that the Lago Agrio Court is not receptive to the documents Chevron is seeking in its section 1782 request. We regard this claim as naked because appellants do not present adequate evidence to support this contention and, as they are the parties opposing discovery under section 1782, they bear the "burden of demonstrating offense to the foreign jurisdiction." Bayer AG, 173 F.3d at 190 (internal quotation marks and citation omitted). We recognize that, according to appellants, the Lago Agrio Court has denied Chevron's requests for many of these same documents, and we are aware
In any event, regardless of the Lago Agrio Court's disposition of Chevron's request for the documents, it is plain that appellants' argument conflates the question of whether a foreign court would allow analogous discovery leading to the production of documents with the question of whether that court would consider evidence revealed in a section 1782 proceeding. We have no reason to believe that the answers to those two questions necessarily are in harmony inasmuch as a court might offer limited discovery opportunities yet accept relevant evidence tendered to it if procured without its assistance. Furthermore, appellants' argument overlooks the circumstance that Chevron seeks the section 1782 discovery for use in both the Lago Agrio litigation and the BIT arbitration. In this regard, we point out that while appellants suggest that the BIT arbitral panel would not be receptive to the evidence, so far as we can ascertain they base this suggestion on pure speculation. In these circumstances, appellants' argument is insufficient given that they bear the burden of proof on the receptiveness issue as they are the parties opposing discovery under section 1782.
Appellants also contend that, under the third Intel factor, Chevron's section 1782 discovery request is nothing more than a concealed attempt to circumvent Ecuadorian proof-gathering restrictions or other Ecuadorian policies. Again, appellants base their argument on the proposition that the Lago Agrio Court has denied Chevron's requests for these same documents, but, as we have discussed already, the parties disagree about the status of Chevron's requests to the Lago Agrio Court and we are uncertain as to that status. Without a definitive determination that the Lago Agrio Court has denied Chevron access to the same documents that Chevron seeks in its section 1782 discovery application, an issue on which appellants bear the burden of proof as the parties opposing discovery, it cannot be said that Chevron's section 1782 application is "an attempt to circumvent foreign proof-gathering restrictions." Intel, 542 U.S. at 265, 124 S.Ct. at 2483. Moreover, as we indicated above, the Lago Agrio Court might be receptive to section 1782 evidence and, if so, regardless of that court's rulings on Chevron's request for documents, it would be a stretch to conclude that the section 1782 proceeding was an attempt to circumvent Ecuadorian restrictions that somehow was offensive to the Lago Agrio Court.
We also point out that, as the Court made clear in Intel, there is no requirement that the material be discoverable in the foreign country for it to be discoverable pursuant to a section 1782 request in the United States. See id. at 247, 124 S.Ct. at 2473. Moreover, appellants' argument once again minimizes the fact that Chevron's section 1782 discovery request seeks the documents for use in the BIT arbitration. Furthermore, we have no basis on which we could hold that the section 1782 request is an attempt to circumvent proof-gathering restrictions or other policies of the BIT arbitral panel. Overall, we are satisfied that none of the first three Intel factors caution against discovery.
In addition to the factors that the Supreme Court elucidated in Intel to establish when, as a positive matter, a court could grant a section 1782 application, section 1782 provides that "[a] person may not be compelled to give his testimony or statement or to produce a document or other thing in violation of any legally applicable privilege."
Though they both operate to protect information from discovery, the work-product doctrine and the attorney-client privilege serve different purposes. The purpose behind the attorney-client privilege is "`to encourage clients to make full disclosure of facts to counsel so that he may properly, competently, and ethically carry out his representation. The ultimate aim is to promote the proper administration of justice.'" In re Impounded, 241 F.3d at 316 (quoting In re Grand Jury Proceedings, 604 F.2d 798, 802 (3d Cir. 1979)). The work-product doctrine, by contrast, "promotes the adversary system directly by protecting the confidentiality of papers prepared by or on behalf of attorneys in anticipation of litigation. Protecting attorneys' work product promotes the adversary system by enabling attorneys to prepare cases without fear that their work product will be used against their clients." Westinghouse Elec. Corp. v. Republic of the Phil., 951 F.2d 1414, 1428 (3d Cir.1991) (citations omitted).
Though evidentiary privileges have important purposes, their recognition may result in the withholding of relevant
On the other hand, the work-product doctrine protects an attorney's work from falling into the hands of an adversary, and so "disclosure to a third party does not necessarily waive the protection of the work-product doctrine." Id. Rather, the purpose behind the work-product doctrine "requires [a court] to distinguish between disclosures to adversaries and disclosures to non-adversaries[,]" id., and it is only in cases in which the material is disclosed in a manner inconsistent with keeping it from an adversary that the work-product doctrine is waived. See id.
Appellants argue that work-product and attorney-client protections should apply in this case and UBR's submission of documents to Cabrera did not waive the protections. In furtherance of this argument, appellants contend that the submission of documents to Cabrera was not inconsistent with the holders of the privileges having the intention of keeping the materials from Chevron. Appellants predicate this argument on their contention that the parties to the Lago Agrio litigation could submit documents to Cabrera on an ex parte basis, with the understanding that the documents would remain confidential. We find that argument to be at odds with the record inasmuch as the lead attorney for the Ecuadorian plaintiffs acknowledged in an affidavit that "to the extent that Mr. Cabrera put into his report any of the information that I supplied to him, it would be viewable by Chevron or any other member of the public that viewed Mr. Cabrera's report." App. at 1453.
In fact, even if we disregarded the attorney's affidavit, something we will not do, we can discern no reason for appellants' submission of the documents to Cabrera other than for him to consider those documents to advance appellants' hope that Cabrera's final global damages assessment report would reflect the materials and conclusions in the documents. Indeed, it is quite clear that appellants intended that by submitting the documents to Cabrera they would place him in a position to serve as a conduit to transmit the documents to Chevron because they hoped that Cabrera would agree with the documents' assessment of damages and thus would incorporate the documents, or at least the conclusions in them, into his report. Consequently, we are satisfied that the documents were submitted to Cabrera in a manner inconsistent with keeping them from Chevron, and therefore the work-product doctrine and the attorney-client privilege were waived as to the documents submitted to Cabrera. We therefore will affirm the District Court's order that all
The District Court also ruled that the crime-fraud exception operated to pierce the attorney-client privilege for all communications between Villao and Cabrera and between Villao and anyone affiliated with counsel for the Ecuadorian plaintiffs. As we have discussed, the attorney-client privilege promotes the attorney-client relationship and, in turn, furthers the administration of justice by protecting communications between attorneys and their clients. See In re Impounded, 241 F.3d at 316. That purpose "would be frustrated if the client used the lawyer's services to further a continuing or future crime or tort." Id. (quoting In re Grand Jury Proceedings, 604 F.2d at 802) (internal quotation marks omitted). Therefore, in situations where the client consults the attorney for the purpose of committing a future crime or fraud, the crime-fraud exception to the attorney-client privilege applies and communications made in furtherance of the anticipated crime or fraud are not protected from disclosure as recognition of "the privilege is no longer defensible." Id. at 317 (quoting In re Grand Jury Proceedings, 604 F.2d at 802) (internal quotation marks omitted); see also United States v. Zolin, 491 U.S. 554, 563, 109 S.Ct. 2619, 2626, 105 L.Ed.2d 469 (1989) ("It is the purpose of the crime-fraud exception to the attorney-client privilege to assure that the seal of secrecy between lawyer and client does not extend to communications made for the purpose of getting advice for the commission of a fraud or crime." (Internal quotation marks and citations omitted)).
A party seeking to invoke the crime-fraud exception to the attorney-client privilege bears the burden of demonstrating that the exception is applicable. In re Grand Jury Investigation, 445 F.3d 266, 274 (3d Cir.2006). Specifically, before the crime-fraud exception can be invoked successfully, the party contending that it applies
Id. (quoting In re Grand Jury Subpoena, 223 F.3d 213, 217 (3d Cir.2000) (internal quotation marks omitted)).
Appellants admit that UBR employed Villao when he was also an expert on Cabrera's staff. Though we recognize that the Lago Agrio Court may view what seems to us to be a conflict of interest differently than we do, we believe that this showing of Villao's dual employment is sufficient to make a prima facie showing of a fraud that satisfies the first element of the showing necessary to apply the crime-fraud exception to the attorney-client privilege. Thus, we agree with the District Court's conclusion that the first element of the crime-fraud exception to the attorney-client privilege applied on the basis of the alleged fraud predicated on the presence of the conflict of interest attributable to Villao's dual and, at least to us, inconsistent employment.
Yet evidence of a crime or fraud, no matter how compelling, does not by itself satisfy both elements of the crime-fraud exception to the attorney-client privilege because to establish the second element of the exception the party seeking to circumvent the privilege by invoking the exception
However, even if the party seeking to invoke the crime-fraud exception to the attorney-client privilege cannot make out a prima facie case sufficient to overcome the privilege, it still may be entitled to have a court make an in camera review of the documents in issue to determine if those documents and the evidence placing the documents in context establish the applicability of the crime-fraud exception to the privilege. See generally Zolin, 491 U.S. at 570-72, 109 S.Ct. at 2630-31 (holding that in camera review of privileged documents to determine if those documents establish that crime-fraud exception applies is proper as long as party seeking to invoke crime-fraud exception makes threshold showing). Because "in camera inspection . . . is a smaller intrusion upon the confidentiality of the attorney-client relationship than is public disclosure[,]" it follows "that a lesser evidentiary showing is needed to trigger in camera review than is required ultimately to overcome the privilege." Id. at 572, 109 S.Ct. at 2630-31 (quotation marks and citations omitted). Thus, "[b]efore engaging in [an] in camera review to determine the applicability of the crime-fraud exception, the judge should require a showing of a factual basis adequate to support a good faith belief by a reasonable person . . . that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies." Id. at 572, 109 S.Ct. at 2631 (internal citation and quotation marks omitted).
We are satisfied that Chevron has made "a showing of a factual basis adequate to support a good faith belief by a reasonable person . . . that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies." See id. Thus, although we will vacate the District Court's ruling to the extent that it determined that the crime-fraud exception to the attorney-client privilege is applicable, our ruling is by no means the last word with respect to the applicability of the exception. Quite to the contrary, we will remand the case to the District Court to conduct an in camera review of the documents in issue to determine whether they were created or used in furtherance of a fraud and thus whether the crime-fraud exception to the attorney-client privilege is applicable to some or all of the documents the Court reviews.
To summarize, we will affirm the District Court's order of June 15, 2010, requiring UBR to turn over to Chevron documents that it submitted to Cabrera because the transmission of those documents to Cabrera waived any work-product protection and the attorney-client privilege with respect to those documents. UBR should begin producing those documents immediately in accordance with the District Court's order and to the extent that our stay permitted UBR to delay producing those documents, we vacate it.
We also will vacate the District Court's ruling that the crime-fraud exception operates to pierce the attorney-client privilege for all communications between Villao and Cabrera and between Villao and anyone affiliated with counsel for the Ecuadorian plaintiffs, and will remand the case to the District Court so that it may conduct an in camera review of the documents in issue. Predicated on that review and on what other evidence is developed on the remand, the District Court should determine whether any of the documents and, if so, which ones, were created or used in furtherance of a fraud, as it is only as to documents created or used in furtherance of a fraud that the crime-fraud exception to the attorney-client privilege is applicable. Finally, we express the hope that even though our remand requires the District Court to examine individual documents, a task that we recognize likely will be formidable, the parties will cooperate in applying the directions in this opinion to the documents to be examined so that the burden on the District Court to resolve disputes is lessened. The parties will bear their own costs on this appeal.
We do not suggest that in camera review is necessary in every case in which the crime-fraud exception is invoked, as a party may be able to satisfy both elements of the crime-fraud exception without resort to the privileged documents themselves. We simply hold that in this case, based on the evidence before the District Court, Chevron has not met its burden regarding the second element of the crime-fraud exception, but has made the requisite showing necessary for the District Court to conduct an in camera review of the documents in issue in order to determine if the second element of the crime-fraud exception is satisfied here.