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International Law

Having Granted Section 1782 Discovery Request Ex Parte, Court Now Concludes that Intervenors Asserting Objections…

...Must, But Do Not; Satisfy the Heightened Rule 60(b) Standards for Vacating the Discovery Order

By:  Louis M. Solomon


In re Application of Dr. Alfonso Henrique Alves Braga, in his capacity as Judicial Administrator of Petroforte Brasilerio de Petroleo Ltda, et al. pursuant to 28 U.S.C. § 1782 For Judicial Assistance in Obtaining Evidence Located in the Southern District of Florida, Case No. 10-23973-MC-King/Goodman (S.D.N.Y Mar. 2011) [enhanced version available to subscribers ], deserves another brief look, since it addresses a timely area of international litigation practice:  discovery in the U.S. for use abroad (see the discussion of this potent discovery device for use in non-U.S. proceedings in our e-book, International Practice:  Topics and Trends. Given the recent Court of Appeals authority suggesting that, perhaps, as a blog title of ours suggested, there may be limits to § 1782 discovery after all, the question arises how can those limits be found, and who has the right to assert them.

Petroforte involves the efforts by a judicial administrator of a Brazilian bankrupt entity to secure discovery in the U.S. for use in the Brazilian proceedings. In an earlier ruling the Court granted the § 1782 discovery request based on an ex parte motion. The current decision addresses whether intervenors, including Rural International Bank Ltd., made the requisite showing to open the prior order. The District Court here holds that intervenors have not made the requisite showing under Fed. R. Civ. P. 60 to vacate the prior § 1782 Order. Key to the motion to vacate is the argument there is no relationship between the parties in Brazil and the parties as to whom discovery is being sought. Intervenors also claim that disclosure of the information sought would require disclosure of privileged and confidential business information "in conflict with both U.S. and Cayman Islands law".

In the decision, the District Court acknowledges that § 1782 applications are "typically and routinely" made on an ex parte basis in the Southern District of Florida. Yet the Court applied the stricter Rule 60(b) standards for vacating the order, even though granted ex parte; the grounds for vacateur under Rule 60(b) include "unexpected and unfair surprise", misrepresentations, and other extraordinary reasons. The District Court did not address the question whether someone at some point in the process should be able to assert non-extraordinary objections to a § 1782 application. Indeed, the combination of ex parte motion practice going in coupled with the heighted standard under Rule 60(b) to vacate such an order would appear to mean that at no point is there a level playing field between the forces seeking and opposing § 1782 discovery. The District Court was unwilling to decide the hotly disputed non-U.S. law issue and, as a result, used the standard of good faith on the part of the appicant to support the grant of § 1782 discovery.

In a footnote, the District Court states that its conclusion that no grounds exist to vacate the earlier order did not foreclose the possibility of the privilege objection being raised as a "valid objection to the requested discovery". The Court did not explain when that objection might be asserted, who may assert it (e.g., the intervenors?), or how or on what standard the Court would adjudicate that in the context of what is intended to a streamlined § 1782 procedure.

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