Second Circuit Court of Appeals Affirms Denial of U.S. Discovery Assistance to Captain and Owner of Prestige
In a Summary Order dated July 30, 2014, the Second Circuit Court of Appeals has a affirmed a decision from the Southern District of New York denying U.S. discovery assistance to Mare Shipping, Inc. and Apostolos Mangouras, the Owner and former Captain of the M/V Prestige, respectively, sought pursuant to 28 U.S.C. § 1782. Mare Shipping Inc. v. Squire Sanders LLP, 13-4425-cv (2d Cir. July 30, 2014).
In November 2002, the Prestige sank off the coast of Spain, resulting in the release of nearly 77,000 metric tons of oil into the coastline waters; a ten (10) year investigation in Spain; and a nine (9) month trial in Spain in which Mangouras was exonerated of all charges except one (1) charge for "serious disobedience to authority" during the events in question (the "Spanish action"). The Prestige disaster also led to the commencement of an action in the Southern District of New York by the Kingdom of Spain against the American Bureau of Shipping (the "ABS action"). During the course of the ABS action, Spain's counsel prepared various witness declarations, which the Appellants later claimed to have learned were "false or based on false premises" following such witnesses' inconsistent (and more favorable to Mangouras) testimony in the Spanish action. Upon learning of the "false nature of the declarations", Mare Shipping and Mangouras commenced an action in the Southern District of New York seeking, pursuant to 28 U.S.C. § 1782, to compel the respondents' compliance with a subpoena seeking evidence related to the preparation of the witness declarations by Spain's New York counsel for potential use in the Spanish action; in a forthcoming private criminal proceeding in Spain; and in an action in the European Court of Human rights.
In denying the discovery request, the District Court first rejected the respondents' argument that the Court lacked subject matter jurisdiction to enforce the subpoenas because the subject of the subpoena was the Kingdom of Spain. The Court concluded that a New York based law firm serving as counsel for a foreign state is not an "agent or instrumentality" of the foreign state within the Foreign Sovereign Immunities Act's definition of the phrase. The District Court next considered whether the request for discovery was appropriate under § 1782. The Court first addressed the statute's "mandatory" factors and determined that all three (3) were met, as (1) the targets of the subpoenas, Spain's New York counsel, resided in the Southern District of New York where the application was made; (2) the applicants had sufficiently alleged that it was "within reasonable contemplation" that the evidence would be used in a foreign proceeding; and (3) the applicants were "interested persons" because they were defendants in the Spanish action. Having concluded that the statutory requirements were met, the District Court next addressed the discretionary factors set forth by the United States Supreme Court in Intel Corp. v. Advanced Micro Devices, Inc. for consideration in ruling on a § 1782 request; (1) whether the person from whom discovery is sought is a participant in the foreign proceeding; (2) the nature of the foreign tribunal, character of the proceedings abroad, and the receptivity of the foreign government or court to judicial assistance from U.S. federal courts; and (3) whether the § 1782 request conceals an attempt to circumvent foreign proof-gathering restrictions. A court may also deny the request if it is unduly burdensome. Applying the discretionary factors, the District Court concluded that all three (3) weighed in favor of denying the application. Specifically, the District Court concluded that Spain (i.e. – the respondents' client) was a participant in the foreign proceeding and all documents in its counsel's possession were deemed to be within Spain's possession; that there had been ample opportunity to cross-examine the witnesses in question or to seek testimony from the individual respondent during the Spanish action; and that the § 1782 request appeared to attempt to circumvent Spanish proof-gathering restrictions since the documents and deposition testimony were sought in the U.S. and not in Spain.
On appeal, the Second Circuit affirmed both the District Court's Intel analysis and the District Court's conclusion that a foreign sovereign's U.S. counsel is excluded from immunity by the plain text of the Foreign Sovereign Immunities Act. Notwithstanding, the Second Circuit recognized that the potential foreign actions for which the discovery could be required "are continually in flux", and clarified that the District Court's judgment should not be interpreted to bar Mare Shipping and Mangouras from bringing a renewed application in the future should appropriate circumstances arise. Accordingly, the Court ordered the respondents to refrain from destroying any records, documents, or materials "that may be reasonably considered to be subject to discovery under the § 1782 request denied by the District Court" for a period of five (5) years from the date of the Order.
To read a copy of the Second Circuit's Summary Order, click here.
For more information about this decision or § 1782 generally, please do not hesitate to call on us at firstname.lastname@example.org.