By: Louis M.
Tiffany (NJ) LLC, et al. v. QI
Andrew, et al., 10 Civ. 9471 (S.D.N.Y. July
2011)(Mag. J. Peck) [enhanced version available to lexis.com subscribers], addresses international discovery issues and can serve as
a refresher of several of the areas that arise frequently in international
litigation. Plaintiffs moved for an order compelling document production from
three Chinese banks (the Bank of China, the Industrial and Commercial Bank of
China, and China Merchants Bank). In denying the motion subject to future
renewal, the Magistrate Judge ruled as follows:
First, because the branches of the
banks are "branches of the same corporate entities as their counterparts in
China", the Court found that it had personal jurisdiction over the banks,
including the non-U.S. branches/offices.
Second, the Court applied the same
standard to a Rule 45 subpoena as it would to a Rule 30 document request.
Third, the banks objected to
producing documents at any branch or office outside the U.S. The Court rejected
the argument; the governing standard of possession, custody, or control could
be satisfied even though the documents reposed outside the U.S. The issue was
whether there existed a "practical ability to obtain the documents". The Court
rejected application of the "separate entity" line of cases given the facts
before it, and there was no discussion in the decision of the fact that, under
New York law, the "separate entity" rule dictates that each branch of a bank be
treated as a separate entity for attachment purposes. See our blog posting of
discussing the separate entity doctrine and Allied Maritime, Inc.
v. Descatrade, S.A., 620 F.3d 70 (2d Cir. 2010) [enhanced version / unenhanced version available from lexisONE Free Case Law] .
Fourth, the banks demonstrated that
the production was prohibited (or at least suspect) under Chinese law. On that
basis they argued that comity dictated denial of the requested discovery, at
least until more deferential routes of obtaining the information were tried.
Here the Court agreed. Specifically, the Court applied the five-part test of
the Restatement (Third) of Foreign Relations Law § 442(1)(c) that it consider:
(1) the importance of the documents
or information requested to the litigation; (2) the degree of specificity of
the request; (3) whether the information originated in the United States; (4)
the availability of alternative means of retrieving the information; and (5)
the extent to which non-compliance with the request would undermine important
interests of the United States, or compliance with the request would undermine
the important interests of the state where the information is located.
Of particular note is the fact that
the Court finds that pursuing the Hague Convention in China would not be
futile, concluding that prior cases determining that such an avenue was futile
were based on factual circumstances and on State Department views that might no
longer obtain. The Court cited Societe Nationale Industrielle Aerospatiale
v. United States District Court for the Southern District of Iowa, 482 U.S.
522 (1987) [enhanced version / unenhanced version ],
but did not discuss whether that case permitted it to ignore the Hague
Convention entirely in performing the comity analysis, as we discuss in our
Practice: Topics and Trends.
International Practice Law Blog for more analysis of international
and foreign law issues.
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