Eleventh Circuit Affirms Extraterritorial Application of 28 USC § 1782 to Aid Asset Recovery in Case of First Impression
In an issue of first impression in the Circuit, the Eleventh Circuit upheld extraterritorial discovery pursuant to 28 USC § 1782 to support an asset recovery case.
Following marital dissolution proceedings in Russia, a former wife undertook efforts to discover concealed marital assets in multiple jurisdictions including Cyprus, Latvia, Switzerland, the BVI and the Bahamas. She ultimately sought discovery in the United States to support her claim before a presiding Moscow court adjudicating the division of marital assets. The application sought information from third party Trident Atlanta and its employee regarding information related to the former husband’s beneficial ownership of a Bahamian company.
The Court first set forth the prima facie requirements to obtain relief pursuant to 28 USC §1782: “(1) the request must be made “by a foreign or international tribunal,” or by “any interested person”; (2) the request must seek evidence, whether it be the “testimony or statement” of a person or the production of “a document or other thing”; (3) the evidence must be “for use in a proceeding in a foreign or international tribunal”; and (4) the person from whom discovery is sought must reside or be found in the district of the district court ruling on the application for assistance.” (citations omitted).
After determining that the predicate factors were met, the Court addressed the discretionary factors as set forth by the United States Supreme Court (the “Intelfactors”): “(a) whether aid is sought to obtain discovery from a participant in the foreign proceeding (“First Factor”); (b) “the nature 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. federal-court judicial assistance” (“Second Factor”); (c) whether the applicant is attempting to use § 1782 to “circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States” (“Third Factor”); and (d) whether the discovery requests are “unduly intrusive or burdensome” (“Fourth Factor”).” (citations omitted).
Trident Atlanta took issue with the third factor arguing that Section 1782 does not apply to reach documents located in foreign countries (the “Extraterritoriality Argument”). The Court examined Section 1782 and held that it plainly provides for production consistent with the Federal Rules of Civil Procedure. Because Rule 45 calls for broad production of (non-privileged) documents, including those located outside of the U.S., the Court determined the only limitation imposed by the rules related to the “location for the act of production” not the location of the underlying documents. Therefore, documents subject to the subpoenaed party’s control were subject to production.
Trident Atlanta then argued that it lacked legal control over non-U.S. affiliates in order to obtain the subpoenaed information. Again, the Court rejected the argument and determined that a legal right to obtain information from an affiliated or related business entity with access to the information was sufficient. Notably, the Court also affirmed a monetary contempt sanction in excess of $200,000 imposed by the district court on Trident Atlanta for failing to establish a good-faith attempt to comply with the subpoena.
The case is notable because it granted extraterritorial application of 28 USC § 1782 and required production of accessible information in the hands of an affiliate or member of a group of companies. The case is Sergeeva v. Tripleton Int’l Ltd. et al., Nos. 15-13008 & 15-15066 (11th Cir. August 23, 2016). The opinion is here.
Ava Borrasso is the Principal of Ava J Borrasso, P.A., a Miami-based law firm that concentrates on business and international arbitration and litigation.