28 U.S.C. § 1782 ("Section 1782") is a powerful tool that allows litigants to obtain broad, US discovery to gather evidence for use in proceedings before non-US or international tribunals.1 On July 10, 2018, the Second Circuit issued an opinion that struck a blow against abusive use of Section 1782. Reversing in relevant part the decision of the trial court, the Second Circuit, in Kiobel v. Cravath, Swaine & Moore LLP, No. 17-424, held that plaintiffs' lawyers could not use Section 1782 to obtain discovery of documents for use in a Dutch action for several reasons, including that plaintiffs' lawyers were: (1) attempting an end run around limitations on discovery in the Netherlands, (2) seeking documents directly from counsel (rather than from the party), and (3) seeking documents that were subject to a confidentiality order issued in a prior US litigation. The case offers comfort to those who share non-US documents with their US lawyers and to those who produce documents subject to a confidentiality order and underscores the importance of obtaining such orders.
Background
In 2002, in Kiobel v. Royal Dutch Petroleum ("Kiobel"), Esther Kiobel and 11 other Nigerian plaintiffs filed a lawsuit in the Southern District of New York against four defendants affiliated with Royal Dutch Shell ("Shell"), alleging that Shell aided and abetted violations of international law committed by the Nigerian government.2 Pursuant to a stipulated confidentiality order, most of the documents Shell produced were to be used "solely for the purposes" of Kiobel (or other related actions). Ultimately Kiobel was dismissed, a decision affirmed by the Supreme Court pursuant to a presumption against extraterritoriality.3
Years later, Ms. Kiobel prepared to file suit against Shell once again, this time in the Netherlands. In October 2016, plaintiffs' lawyer representing Ms. Kiobel filed a Section 1782(a) petition, seeking authorization to serve a subpoena on Cravath, Swaine & Moore, which represented Shell in Kiobel. The subpoena would request the documents that Shell produced to the plaintiffs in Kiobel (and related cases).
The district court granted the Section 1782 petition, holding that Ms. Kiobel needed the documents to file suit in the Netherlands; not all of the documents she sought were likely to be still in Shell's possession over a decade after litigation began in the United States; and the production would be minimally burdensome for Cravath. The district court directed the parties to sign a new stipulation governing the terms for which Cravath would produce the documents to Ms. Kiobel.
The Second Circuit's Decision
On appeal, the Second Circuit held that the district court had abused its discretion in granting Ms. Kiobel's petition. The factors relevant to a court's exercise of discretion are set forth in the Supreme Court's decision in Intel.4 One Intel factor is whether the person from whom discovery is sought is a participant in a foreign proceeding, in which event the need for a § 1782(a) aid is not as apparent. The Second Circuit held that the real party from whom Ms. Kiobel sought the documents is Shell, a party to foreign proceedings, and thus, this factor weighed against granting the Section 1782 petition. Another Intel factor is whether the § 1782(a) request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country. In considering this factor, the Second Circuit noted that in a declaration, Ms. Kiobel's counsel stated that "it is hardly possible for a party to obtain evidence from another party pre-trial" in the Netherlands. Based on this, the Second Circuit concluded that Ms. Kiobel's lawyers were trying to evade the Netherlands' more restrictive discovery practices.
The importance of not permitting litigants to circumvent non-US proof-gathering restrictions was particularly acute in this context, where the documents at issue were being sought from US lawyers. The Second Circuit emphasized that attorney-client communications and relations would be chilled if documents unreachable in a foreign country were to become discoverable once a litigant sends them to a US lawyer.
Importantly, the Second Circuit differentiated this case from another, where the US counsel had voluntarily disclosed documents to the Securities and Exchange Commission, thereby subjecting the documents to a Section 1782 petition.5 Although Shell had produced the documents at issue to its adversaries in the prior litigation, Shell produced the documents pursuant to a confidentiality order that expressly barred Ms. Kiobel from using the documents in any other litigation. The Second Circuit warned that to modify that confidentiality order now "would be perilous for multiple reasons."6 For one, providing Ms. Kiobel with access to the Shell documents held by Cravath would undermine confidence in confidentiality orders. For another, modifying the order would deny Shell its day in court: "[t]he decision to alter the confidentiality order without Shell's participation, and without considering the costs of disclosure to Shell, makes this case exceptional, and mandates reversal."7
Conclusion
Although the Kiobel decision is welcome news for US law firms and their clients abroad, its potential impact may be limited by certain factors. For instance, the Second Circuit considered Kiobel's attempt to modify its confidentiality order post-hoc to be an "extraordinary, possibly unique" feature of the case. The facts of the case are even more "exceptional" due to the district court's decision to modify the confidentiality order without the consent of one of the parties to that order. That said, this case underscores the importance of entering into confidentiality stipulations and of carefully weighing the implications of complying with subpoenas or other discovery requests from US regulatory agencies and other third parties.
Moreover, despite the ruling here, US law firms and their foreign clients should be aware that documents in the possession of US entities, especially those documents that are not protected by confidentiality orders, could remain susceptible to future Section 1782 petitions. Firms and their clients should, therefore, discuss how long it is necessary for the firm to retain documents in the United States following the completion of a case.
Footnotes
1 Section 1782 "provide[s] federal-court assistance in gathering evidence for use in foreign tribunals." Opinion, Kiobel v. Cravath, Swaine & Moore LLP, No. 17-424 (2d. Cir. July 10, 2018), ECF No. 148 at 5 (quoting Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 247 (2004)). The statute provides, in relevant part: "The 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, including criminal investigations conducted before formal accusation. The order may be made . . . upon the application of any interested person . . . . 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." 28 U.S.C. § 1782(a).
2 See Kiobel v. Royal Dutch Petroleum Co., 456 F. Supp. 2d 457 (S.D.N.Y. 2006), aff'd in part, rev'd in part, 621 F.3d 111 (2d Cir. 2010), aff'd, 569 U.S. 108 (2013).
4 Intel Corp., 542 U.S. at 244-45.
5 See Ratliff v. Davis Polk & Wardwell, 354 F.3d 165, 167 (2d Cir. 2003).
6 Kiobel, No. 17-424, ECF No. 148 at 13.
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