HT S.R.L. v. Luis Alejandro Velasco, No. 15-mc-00177 (D.D.C. Aug. 28, 2015) [click for opinion]

Petitioner, an Italian LLC providing consultancy and management services for information technology security, entered into a consultant agreement with Respondent, a resident of Maryland.  The agreement contained a non-compete clause, a choice of law provision mandating that Italian law govern the agreement, and a choice of forum clause giving the Court of Milan exclusive jurisdiction over any disputes that may arise.  In March 2015, Petitioner brought a civil suit in the Court of Milan for Respondent’s alleged violation of the non-compete clause. 

On April 20, 2015, Petitioner issued a U.S. subpoena, which was served on Respondent on April 23 and required Respondent to testify and produce documents at a deposition.  In the ensuing days, Respondent’s counsel and Petitioner exchanged communications in which Respondent raised objections to discovery.  Respondent did not ultimately appear for the deposition, nor did he produce the requested documents.  Petitioner then moved to compel compliance with the subpoena and Respondent sought to quash the subpoena.

Under 28 U.S.C. § 1782(a) (“Section 1782”), a district court may “order [a person residing in its district] 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 statute gives district courts discretion over whether to grant a Section 1782 application, without mandating it. 

In evaluating Petitioner’s motion to compel, the court found that it had authority to grant issuance of the subpoena pursuant to Section 1782 because “(1) the person from whom discovery is sought resides or is found within the district of the court in which the request is made, (2) the discovery is for use in a proceeding before an international or foreign tribunal, and (3) the application is made by a foreign or international tribunal or any interested person.”

The court then considered several factors—advanced by the Supreme Court in its Intel decision—designed to determine whether “permitting discovery furthers the ‘twin aims’ of § 1782: ‘providing efficient assistance to participants in international litigation and encouraging foreign countries by example to provide similar assistance to our courts.’”  

Under the first factor—the “party from whom discovery is sought”—a request that seeks discovery from a participant in the foreign proceeding weighs against allowing discovery.  Simply put, a foreign tribunal has jurisdiction over those appearing before it, and can itself order them to produce evidence.  Here, Respondent was a participant in the Italian litigation, and this factor weighed against enforcing the subpoena.

Under the second factor—the “nature of the foreign tribunal”—the court considers whether the party seeking the discovery had options in selecting the forum for the foreign proceeding.  Here, because the contract included a forum selection clause, Petitioner had no choice.  Thus, the court was not as concerned with the possibility of interfering with bargained-for expectations about the dispute resolution process.  This factor weighed in Petitioner’s favor.

Under the third factor—the “character of the foreign proceedings”—courts are reluctant to allow a party to “jump the gun” on discovery in a foreign suit, or to make up for a party’s having delayed on discovery.  But in this case, the court found that “Petitioner [was] proactively and efficiently using its time to seek discovery.”

Under the fourth factor—the “receptivity of the foreign government or court to U.S. judicial assistance”—the more receptive a foreign tribunal is to Section 1782’s provision of judicial assistance, the more likely a district court is to allow discovery.  Respondent did not contest the statement of Petitioner’s Italian lawyer that the court in Milan was receptive to discovery being sought in America and, therefore, the court held that this factor favored the application.

Under the fifth factor—whether the “request conceals an attempt to circumvent foreign proof-gathering restrictions”—the court disregarded the parties’ conflicting claims about whether the Court of Milan permitted the type of deposition testimony or document requests that Petitioner sought.  The court noted that that Section 1782 allows discovery of a type otherwise impermissible in a foreign tribunal.  Thus, because Petitioner did not appear to be required to first seek discovery from the Court of Milan, the court held that the subpoena was not an attempt to circumvent that court’s restrictions and procedures. 

Finally, a court must consider the specifics of the request.  Though Respondent objected to the subpoena as being overly broad and burdensome, the court found that the requested documents were relevant, though it limited their scope to the duration of time when Petitioner was precluded from competition.

For these reasons, and because Respondent had initially agreed to appear and then wasted Petitioner’s time and resources by failing to do so, the court granted the motion to compel and denied the motion to quash.

Juliet Hatchett of the New York office contributed to this summary.