Kiobel v. Cravath, Swaine & Moore LLP, No. 17-424 (2d Cir. 2018) [click for opinion]

Petitioner Esther Kiobel ("Kiobel") sought a subpoena against Cravath, Swaine & Moore LLP ("Cravath") under 28 U.S.C. § 1782, which permits US federal courts to assist parties in gathering evidence for use in foreign tribunals.

Kiobel had previously sued Royal Dutch Shell, Cravath's client, in US federal court, alleging that Shell and its affiliates were complicit in human rights abuses in Nigeria. Kiobel's earlier suit was consolidated with a number of other cases arising out of the same events in Nigeria. Documents were produced in those consolidated matters, subject to a stipulated confidentiality order that strictly limited use of those documents to that particular litigation.

Kiobel's initial US suit was dismissed for lack of subject-matter jurisdiction. Years later, Kiobel brought suit in the Netherlands, where she pursued the same claims against Shell. She sought to use the discovery in the US case in the Dutch litigation, but was blocked by the protective order. Kiobel therefore brought this Section 1782 action against Cravath, in an effort to secure all deposition transcripts, documents, and communications produced by Shell and the other defendants in the earlier consolidated cases.

In ruling on Kiobel's subpoena request, the Second Circuit decided two issues. First, on de novo review, the court concluded that the district court had jurisdiction over the Section 1782 petition. District courts have jurisdiction when (1) the person subject to the subpoena resides or is found in the district; (2) the discovery will be used in a foreign tribunal's proceeding; and (3) the application is brought by a foreign tribunal, international tribunal, or any interested person. Here, even though Cravath was holding documents for a foreign client, the court concluded that discovery was sought from Cravath itself, and Cravath was located in the district. While "[a] law firm's representation of a foreign client is a factor worth considering," this is a discretionary rather than jurisdictional factor. The court thus affirmed the district court's finding of jurisdiction.

Next, the Second Circuit addressed whether discovery was appropriate under Section 1782, which states that district courts "may order" discovery. On review for abuse of discretion, the Second Circuit reversed the district court's order allowing the discovery. The court applied the Supreme Court's Intel decision, which provides four non-exclusive factors to consider in Section 1782 disputes. First, Intel asks whether the person from whom discovery is sought is a participant in the foreign proceeding. If so, the need for Section 1782 assistance is less apparent. Second, Intel examines the nature of the foreign tribunal and proceedings, along with the foreign entity's receptivity to US judicial assistance. Third, it asks whether the subpoena request is an attempt to circumvent restrictions, including proof-gathering restrictions, in domestic and foreign jurisdictions. Fourth, it examines whether the discovery request is "unduly intrusive or burdensome."

The Second Circuit reasoned that, because Shell was party to the foreign proceedings, the need for Section 1782 assistance was reduced. Further, the court concluded from statements by Kiobel's counsel that the subpoena request was an attempt to dodge the Netherlands' more restrictive discovery rules. The court also expressed strong concern that, by compelling a law firm to produce client documents, "the district court's ruling would undermine confidence in protective orders." Without the benefit of Shell's participation, counting the cost of disclosure to Shell, or securing assurances that Dutch courts would safeguard the documents' confidentiality, Kiobel's subpoena request fell short of the "extraordinary circumstances or compelling need" required to alter a protective order.

Finally, the Second Circuit stressed the need for "full and frank" attorney-client communication—an interest that would be damaged by giving foreign clients reason to fear disclosing all relevant documents to US counsel. The Second Circuit also considered that, to avoid potential disclosure issues under Section 1782, US law firms may be forced to store documents and servers abroad, resulting in excessive costs to law firms and clients. Alternatively, US law firms may have to return documents to foreign clients (or destroy them) as soon as litigation concludes, contrary to the firms' interest in retaining documents to protect themselves from accusations of wrongful conduct. Foreign entities may also simply be less willing to engage with US law firms.

The Second Circuit thus reversed the district court's order, holding that the district court had abused its discretion in granting Kiobel's petition.