A disturbing trend in private arbitrations is the use of 28 U.S.C. § 1782 to compel discovery through federal court subpoenas. The statute has been invoked to probe litigants and even third parties with invasive document requests and deposition testimony when discovery would be otherwise unavailable, and many law firms are counseling clients to surrender to this tactic. There is, however, another side to the story. Subpoenaed companies and individuals have ample defenses to protect against such costly, intrusive, and often untoward schemes.
I. The statute as applied.
Section 1782 provides in pertinent 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[.]
Historically, the federal courts applied the statute to foster disclosure of evidence when requested for use in government-related proceedings. Consistent with that use (and supported by compelling statutory analysis), the Second Circuit and Fifth Circuit both rejected the use of § 1782 as a means to compel discovery in private arbitration proceedings. Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880 (5th Cir. 1999); Nat’l Broadcasting Co. v. Bear Stearns & Co., 165 F.3d 184 (2d Cir. 1999).
The Supreme Court effectively confirmed prior appellate precedents by instructing federal courts on the appropriate circumstances in which to condone § 1782 discovery. Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004). Intel, which dealt with an arbitration before the European Union’s anti-trust enforcement agency, directs courts to consider both foreign country policies and “the receptivity of the foreign government or the court or agency abroad” to federal court discovery assistance. Id. at 264-65. Neither of these mandated considerations could have anything to do with a private arbitration.
The law remained fairly uniform until In re Roz Trading Ltd., 469 F. Supp. 2d 1221 (N.D. Ga. 2006) rejected the circuit court holdings. The Roz court curiously read Intel to have changed the landscape, even though the Supreme Court’s decision did not and had no reason to consider § 1782’s use in private arbitrations. Even more surprising is that other courts have embraced the Roz rationale over the well-reasoned holdings of the Second and Fifth Circuits.
II. Defenses to § 1782 subpoenas.
A § 1782 target’s first defense should be the NBC and Biedermann precedents, which remain good law. If the subpoena is for a private arbitration, there is no reason to think that other federal appellate courts would create a conflict with their sister circuits by allowing such discovery (especially when § 1782’s scope remains unchanged since NBC and Biedermann). If anything, the Supreme Court’s statutory analysis bolstered the tying of § 1782 demands to foreign-government-related proceedings.
Additionally, there are serious constitutional problems with § 1782. Article III to the Constitution strictly limits federal court jurisdiction to legal disputes either “arising under” federal law, based upon certain party characteristics (e.g., diversity of citizenship), or turning upon maritime or admiralty causes of action. With § 1782, however, the statute purports to grant jurisdiction regardless of Article III considerations, and instead depends merely on whether a “foreign or international tribunal” is in the background of the application for discovery assistance. Although the federal courts have not yet spoken on this defense, it is apparent that § 1782 jurisdiction lacks a solid constitutional basis.
Finally, § 1782 applications are granted as a matter of judicial discretion. Intel, 542 U.S. at 264-66. Depending upon the circumstances of a § 1782 application, a federal court may be disinclined to grant the request. This is especially true given the increasing tendency to use § 1782 as a discovery ticket to fishing expeditions.
In sum, there is no reason to surrender to a § 1782 discovery request. When cause exists to resist such tactics there are several grounds upon which to do so to avoid unnecessary discovery costs and prevent important documents and testimony from falling into the wrong hands.