NML Capital, Ltd. v. The Republic of Argentina

Filing 24

ORDER DENYING OBJECTION TO DISCOVERY ORDER. Signed by Judge Jeffrey S. White on 11/13/12. (jjoS, COURT STAFF) (Filed on 11/13/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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NML CAPITAL, LTD.,

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Plaintiff,

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For the Northern District of California

United States District Court

No. CV 12-80185-MISC JSW

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ORDER DENYING OBJECTION
TO DISCOVERY ORDER

v.
THE REPUBLIC OF ARGENTINA,

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Defendant.
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Now before the Court are the objections filed Defendant the Republic of Argentina (the

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“Republic”) to Magistrate Judge James’ Order regarding their motion to quash (the “Order”).

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Having carefully reviewed the objections, and considered the Republic’s arguments and the

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relevant legal authority, the Court hereby DENIES the Republic’s objections and AFFIRMS the

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Order.

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The District Court may modify or set aside any portion of a magistrate’s ruling on non-

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dispositive pre-trial motions found to be “clearly erroneous or contrary to law.” Fed. R. Civ. P.

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72(a); see also, e.g., Grimes v. City and County of San Francisco, 951 F.2d 236, 241 (9th Cir.

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1991). A ruling is clearly erroneous if the reviewing court, after considering the evidence, is

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left with the “definite and firm conviction that a mistake has been committed.” United States v.

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U.S. Gypsum Co., 333 U.S. 364, 395 (1948).

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After a careful review of the Order, this Court finds that Judge James’ ruling was not

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clearly erroneous or contrary to law. The Republic argues that the subpoena issued to non-party

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Chevron Corporation (“Chevron”) is impermissible under the Foreign Sovereign Immunities

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Act, 28 U.S.C. §§ 1330, et seq. (“FSIA”). In rejecting the Republic’s argument Judge James

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relied on a recent order by the Second Circuit, EM LTD. v. Republic of Argentia, 695 F.3d 201

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(2nd Cir. 2012).

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In EM, the Second Circuit similarly upheld a subpoena issued to a non-party, non-

held that “because the district court ordered only discovery, not the attachment of sovereign

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property, and because that discovery is directed at third-party banks, Argentina’s sovereign

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immunity is not affected.” Id. at 203. The court reasoned that the discovery order did not

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implicate the Republic’s immunity from attachment: “It does not allow [the plaintiff] to attach

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Argentina’s property, or indeed have any legal effect on Argentina’s property at all; it simply

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For the Northern District of California

sovereign entity, despite objections by the Republic pursuant to the FSIA. The Second Circuit

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United States District Court

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mandantes [the non-party bank]’s compliance with subpoenas duces tecum.” Id. at 208.

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Additionally, the court reasoned that the subpoenas “were directed ... at commercial banks that

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have no claim to sovereign immunity... . Thus, the banks’ compliance with subpoenas will

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cause Argentina no burden and no expense.” Id. at 210. The Court finds the reasoning in EM

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persuasive.

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The Republic argues that the Second Circuit was mistaken and relies heavily on the

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Seventh Circuit’s opinion in Rubin v. The Islamic Republic of Iran, 637 F.3d 783 (7th Cir.

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2011). The court in Rubin does address the impact of FSIA on discovery requests. However,

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significantly, the requests at issue in Rubin were propounded directly on Iran at the Islamic

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Republic of Iran, and not a third party non-sovereign entity. Therefore, responding to the

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discovery requests would have burdened and required the Islamic Republic of Iran to incur

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expenses, a burden from which FSIA protects foreign sovereigns. Id. at 795 (noting that “it is

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widely recognized that the FSIA’s immunity provisions aim to protect foreign sovereigns from

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the burdens of litigation, including the costs and aggravations of discovery”). Here, the

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Republic does not explain how it, as opposed to Chevron, would be burdened by responding to

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the subpoenas. Accordingly, the Court DENIES the Republic’s objections and AFFIRMS the

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Order regarding the Republic’s motion to quash.

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IT IS SO ORDERED.

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Dated: November 13, 2012
JEFFREY S. WHITE
UNITED STATES DISTRICT JUDGE

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For the Northern District of California

United States District Court

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