Consider Using U.S. Discovery Statute To Aid Overseas Litigation, Attorneys Say

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By Yin Wilczek

Jan. 29 — Multinational corporations embroiled in litigation overseas may want to take note of a little-used discovery statute to obtain the evidence they need to defend or press their cases, Gibson Dunn & Crutcher LLP attorneys say.

The statute—28 U.S.C. § 1782—allows a U.S. district court to order the production of evidence in the U.S. such as testimony, documents or some “other thing” for “use in a proceeding in a foreign or international tribunal.”

Until very recently, the statute was infrequently used, said Avi Weitzman, a partner in Gibson Dunn's New York office, during a Jan. 28 webcast sponsored by the firm. Indeed, it was “only in the most recent decade”—after Chevron Corp. used it successfully to beat back a $9.5 billion judgment imposed by Ecuador's high court—that it became a popular tool” for transnational litigation, he said.

Gibson Dunn attorneys were among others representing Chevron in the litigation.

Rainforest Plaintiffs 

In lawsuits in Argentina, Brazil and Canada, a group of fishermen and farmers from Ecuador's Lago Agrio region alleged that Chevron should be liable for Texaco Inc.'s pollution of the Amazon rainforest from the 1960s through the early 1990s. Chevron bought Texaco in 2001.

Ultimately, in 2013 the Ecuador National Court of Justice ordered the company to pay $9.5 billion to the plaintiffs.

In March 2014, Chevron obtained an order from the U.S. District Court for the Southern District of New York barring the plaintiffs from enforcing the judgment in the U.S. Judge Lewis Kaplan concluded that the Ecuadorian case was marred by fraud and corruption, and that the judgment was secured by bribing a judge and ghostwriting court documents.

Kaplan's decision is on appeal to the U.S. Court of Appeals for the Second Circuit.

During the webcast, Scott Edelman, a partner in Gibson Dunn's Los Angeles office, noted that Chevron used § 1782 to obtain, among other evidence, 600 feet of film “outtakes” in which Steven Donziger—the U.S. attorney representing the Ecuadorian plaintiffs—made damning statements to a documentary filmmaker about the case. Chevron also managed to obtain Donziger's hard drive, and correspondence and internal documents from the plaintiffs' experts and consultants. The evidence helped Chevron to entirely change the narrative in the case, Edelman said.

Since 2010, the Chevron litigation has generated more than 50 orders and opinions involving § 1782, the Gibson Dunn attorneys said. They also noted that parties in foreign litigations increasingly are using the provision.

Broad Discovery Authority 

One of the advantages of using the statute is that U.S. federal courts have broad discovery authority that may not exist in other jurisdictions. In addition, U.S. courts have broadened the scope of § 1782 over the years.

For example, a foreign tribunal or “any interested person” can make an application under the statute. In Intel Corp. v. Advanced Micro Devices Inc., 542 U.S. 241 (2004), the U.S. Supreme Court held that an “interested person” may include “those with a reasonable interest in judicial assistance.” The high court also held that the foreign proceeding need only be “within reasonable contemplation” and need not be ongoing.

In addition, the federal courts have ruled that a § 1782 applicant has a de minimis burden in showing that the information it seeks relates to a foreign proceeding.

However, there also are some open questions in the use of the statute, including what constitutes a foreign “tribunal,” the Gibson Dunn attorneys said. Although courts have interpreted the word to include investor-state arbitration bodies—tribunals overseeing arbitrations arising from treaty obligations in bilateral or multilateral investment treaties—the courts are divided as to whether private commercial arbitration bodies are “tribunals” for purposes of the statute.

Moreover, there is no clear-cut rule as to whether documents located outside the U.S. may be obtained under the statute, said Claudia Barrett, an associate in Gibson Dunn's Washington office.

Colin Fraser, an associate in Gibson Dunn's Los Angeles office, warned that “discovery can be controversial” in certain jurisdictions, and companies should heed foreign blocking, privacy or secrecy laws.

Section 1782 explicitly bars disclosure in violation of any “legally applicable privilege,” including foreign privilege. It also gives the U.S. court discretion to deny “unduly intrusive or burdensome requests,” or any requests that try to circumvent foreign evidence-gathering restrictions.

In some best-practice recommendations, the Gibson Dunn attorneys suggested that companies:

• consider how the foreign jurisdiction may react to companies going to other forums to gather evidence,

• try obtaining the foreign jurisdiction's views on its § 1782 discovery requests,

• narrowly tailor any § 1782 application and

• consider all possible sources that may have discoverable information.

 

To contact the reporter on this story: Yin Wilczek in Washington at ywilczek@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com