Federal Courts Follow the Second Circuit on the Extraterritorial Application of 28 U.S.C. § 1782

At the end of 2019, the Second Circuit weighed in on an issue that has divided federal courts considering applications for discovery pursuant to 28 U.S.C. § 1782, through which a litigant can obtain an order from a federal court for discovery to be used in a foreign proceeding. The Second Circuit joined the Eleventh Circuit in holding that Section 1782 permits discovery of documents held outside the United States and that are within the control of a US individual or entity. (You can read more about the Second Circuit’s decisions here, and about Section 1782 here and here.) Now, several federal courts from outside the Second and Eleventh Circuits have followed suit.

On February 19, 2020, the United States District Court for the Northern District of California granted a request for Section 1782 discovery in connection with patent infringement proceedings in Germany, Switzerland, Turkey, and Denmark.[1] The targets of the discovery opposed the application on the argument that, among other things, certain of the documents requested were being held, outside the United States, by European subsidiaries of the targets. The court “decline[d] to limit production to documents physically located within the United States.”[2] The court noted that the Ninth Circuit Court of Appeals “has not ruled on” the exterritorial application of Section 1782, and so instead followed the decisions by the Second and Eleventh Circuits that Section 1782 permits the discovery of documents held abroad.[3] Accordingly, the court directed the targets of the discovery requests to produce the documents being held in Europe to the extent those documents were in the targets’ “possession, custody, or control”.

The targets also opposed the request insofar as it sought deposition testimony on “the sales or financial information of [their] European affiliates.”[4] The court rejected this objection as well, holding that the targets possessed this information and could designate a witness to testify about it, even if the witness could not verify the accuracy of the information.[5]

On March 12, 2020, the United States District Court for the Southern District of Ohio granted an application for Section 1782 discovery for use in estate asset valuation proceedings in Saudi Arabia.[6] The discovery target objected to attempts to seek documents from a Swiss affiliate. The court acknowledged that “there is a split of authority” regarding the extraterritorial application of Section 1782, and that at least one other court in the Southern District of Ohio has held that Section 1782 discovery does not apply to documents held abroad.[7] The court declined to follow that earlier Ohio decision, however, and instead found that the recent reasoning of the Second and Eleventh Circuits was persuasive.[8] The court noted that it did not want to become a “clearing house” for documents held abroad, but stated that concerns about any burdens arising from the production of overseas documents could be addressed by the parties, with the help of a magistrate judge if needed.[9]

These decisions indicate that federal courts may be moving to resolve the earlier split regarding the extraterritorial application of Section 1782 in favor of allowing litigants to seek Section 1782 discovery of documents held abroad from individuals or entities in the United States, as long as those individuals or entities have possession, custody, or control over the foreign documents. The Northern District of California’s decision in Illumina Cambridge also suggests that courts may be willing to extend the extraterritorial application of Section 1782 to deposition testimony, which poses unique challenges addressed here.

In any event, as discussed in our prior updates, courts may nonetheless balk at providing discovery where, among other things, the law of the foreign country in which the documents are maintained bars their disclosure. As a federal court in New York recently explained, although Section 1782 may permit discovery of documents held outside the United States, “[t]he Court must ... still consider the appropriateness of the subpoena’s request for [such] documents.”[10]

In short, recent federal court decisions show a continuing tendency by courts to broaden the scope of Section 1782 discovery. But those decisions make clear that the location of the documents or witnesses sought is only one factor, and not the deciding factor, in an analysis as to whether discovery materials held abroad are available under Section 1782.

 

[1] Illumina Cambridge Ltd. v. Complete Genomics, Inc., 2020 U.S. Dist. LEXIS 29201 (N.D. Cal. Feb. 19, 2020).

[2] Id. at *31 (citing In re del Valle Ruiz, 939 F.3d 520 (2d Cir. 2019) and Sergeeva v. Tripleton Int’l Ltd., 834 F.3d 1194 (11th Cir. 2016)).

[3] Id. at *31 n.2.

[4] Id. at *32.

[5] Id. at *33.

[6] In the Matter of Application of De Leon, 2020 U.S. Dist. LEXIS 42968 (S.D. Oh. Mar. 12, 2020).

[7] Id. at *22-23 & n.12 (citing In re Application Pursuant to 28 U.S.C. Sec. 1782, 2014 U.S. Dist. LEXIS 117191 (S.D. Oh. Aug. 21, 2014).

[8] Id. at *23.

[9] Id.

[10] Union Fenosa Gas, S.A. v. Depository Trust Co., 2020 U.S. Dist. LEXIS 94910, at *22-23 (S.D.N.Y. May 29, 2020).