In re Application of TJAC Waterloo, LLC, No. 3:16-mc-9-CAN (N.D. Ind. Apr. 26, 2016) [click for opinion]

Petitioner, TJAC Waterloo LLC ("TJAC"), successfully obtained an ex parte order from the District Court for the Northern District of Indiana for discovery in aid of an English Expert Determination proceeding pursuant to 28 U.S.C. § 1782, authorizing TJAC to issue a subpoena to an individual, Amy Coughlin, for document production and a deposition. Coughlin and The University of Notre Dame (USA) in England ("UND") moved to vacate the order and quash the subpoena.

The Expert Determination proceeding pending in London arose out of a 2010 contract for UND to purchase a historic building in London from TJAC, a real estate developer, after ZVI Construction Co., LLC ("ZVI") completed renovations to facilitate the building's use as student housing. Amy Coughlin was a UND employee directly involved with managing the construction project until her departure from UND in February 2013. After ZVI and TJAC failed to correct defects in the renovations, causing UND to expend millions in remediation and repair costs beginning in late 2013, UND invoked the contract's dispute resolution provision, which required referral to an English Expert for a final and binding decision.

The Expert Determination proceeding was divided into liability and quantum phases. Neither TJAC nor ZVI sought documents, discovery, or witness testimony from Coughlin during the liability phase. In July 2015, the Expert issued a determination finding TJAC and ZVI liable to UND. The parties then proceeded to the quantum phase, with UND serving its opening brief and evidence on damages, and TJAC and ZVI serving an answering brief and supporting evidence, including expert and witness statements. Again, TJAC and ZVI did not seek evidence from Coughlin.

After serving its brief in the quantum phase but before the hearing on quantum, TJAC sought discovery from Coughlin for the first time through the ex parte Section 1782 application to the district court. Considering the motion to vacate the discovery order and quash the subpoena, the court first ruled on the threshold issue of jurisdiction.

The relevant statute, 28 U.S.C. § 1782(a), provides that "[t]he 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 . . . ." The district court found that it lacked jurisdiction because the English Expert Determination proceeding did not constitute a "foreign or international tribunal" under Section 1782.

Noting that the parties agreed that the proceeding was akin to an arbitration, the court considered conflicting case law on whether foreign arbitral tribunals constituted a Section 1782 tribunal. Relying on Seventh Circuit case law, the court concluded that the Expert Determination proceeding did not qualify as a Section 1782 tribunal because it was before a private, rather than a state-sponsored, body, and the scope of judicial review was narrow, being "limited to procedural matters such as enforcement of the Expert's decision or consideration of whether the Expert's determination was the result of fraud, collusion, impartiality, or other excessive conduct."

Even without the jurisdictional bar, however, the court made clear that the discovery order would still be vacated under the normal Fed. R. Civ. P. 26(b) discovery management standards, due to the untimeliness and irrelevance of TJAC's application. The court found that additional discovery from Coughlin after the Expert's determination on liability and the parties' substantive submissions on quantum would be unduly prejudicial to UND. Moreover, TJAC did not meet its burden to show that the discovery from Coughlin was relevant to the quantum phase or otherwise unobtainable. Finally, Coughlin's information concerning the pre-purchase condition of the building would be unnecessarily duplicative of the existing testimony and would go to the existence of a defect, an issue determined in the liability phase, rather than to the amount of damages.

Accordingly, the court granted UND's and Coughlin's motion and vacated the Section 1782 discovery order and quashed the subpoena issued to Coughlin.