IN RE: THE APPLICATION OF: ELI SABAG, FOR AN ORDER PURSUANT TO 28 U.S.C.§ 1782 TO CONDUCT DISCOVERY FOR USE IN FOREIGN PROCEEDINGS
Filing
69
ORDER denying 66 Windhorst's Motion for a hearing and granting 24 Windhort's Motion to Vacate the Court's order granting Sabag's application. Accordingly, the Court's order 13 is vacated and Sabag's application is denied. Signed by Magistrate Judge Tim A. Baker on 8/18/2020. (CBU)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
In Re:
APPLICATION OF ELI SABAG, FOR AN
ORDER PURSUANT TO 28 U.S.C. § 1782 TO
CONDUCT DISCOVERY FOR USE IN
FOREIGN PROCEEDINGS
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No. 1:19-mc-00084-JPH-TAB
ORDER ON MOTION TO VACATE
ORDER PERMITTING DISCOVERY PURSUANT TO 28 U.S.C. § 1782
AND MOTION TO QUASH SUBPOENAS
I.
Introduction
This matter is before the Court on intervenor Lars Windhorst's motion [Filing No. 24] to
vacate the Court's order permitting applicant Eli Sabag to conduct discovery pursuant to 28
U.S.C. § 1782. The Court initially granted Sabag's ex parte application. However, upon further
review of additional facts and case law that have since been provided, the Court now finds that
Sabag's application did not set forth a sufficient factual basis objectively indicating that a foreign
proceeding was within reasonable contemplation at the time he filed his application. Thus, he
failed to satisfy the statutory requirements of an application under 28 U.S.C. § 1782, and his
application should have been denied. Accordingly, Windhorst's motion to vacate [Filing No. 24]
is granted, the Court's earlier order granting the application [Filing No. 13] is vacated, and
Sabag's application for an order pursuant to 28 U.S.C. § 1782 [Filing No. 1] is now denied.
II.
Background
On December 31, 2019, Sabag submitted his ex parte application with this Court for an
order pursuant to 28 U.S.C. § 1782, seeking leave to obtain "targeted discovery from Marion
County Community Corrections ('MCCC') and various employees of MCCC and Marion County
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for use in an anticipated criminal investigation conducted before formal accusation in a foreign
court." [Filing No. 1, at ECF p. 1.] In his memorandum supporting the application, Sabag
claimed that he "intends to file a criminal complaint" against Windhorst and others in the United
Kingdom with "various British government offices[,]" including the U.K. Financial Conduct
Authority (FCA), U.K. Serious Fraud Office (SFO), U.K. federal police (U.K. police), U.K.
National Crime Agency (NCA). [Filing No. 9, at ECF p. 8.] Sabag also provided a sworn
declaration in the form of an affidavit with this Court to confirm his intent to file such a criminal
complaint against Windhorst with the FCA, NCA, SFO, and U.K. police. [Filing No. 6-41, at
ECF p. 1-2.]
On January 31, 2020, after reviewing Sabag's application and supporting materials, the
Court granted Sabag's ex parte application and gave Sabag leave to issue subpoenas to MCCC,
John Deiter (former employee of MCCC), and David Condon (employee of Marion County).
[Filing No. 13.] On February 11, 2020, the Court unsealed this case at the request of Sabag's
counsel and lifted the ex parte designation from each filing. [Filing No. 15.] In March 2020,
Lars Windhorst [Filing No. 20] and Track Group, Inc. [Filing No. 33] filed separate motions to
intervene in this matter, which the Court granted.1 [Filing No. 54.] On March 18, 2020,
Windhorst filed his motion to vacate the Court's earlier order granting Sabag's application to
conduct discovery pursuant to 28 U.S.C. § 1782 and to quash the subpoenas, which now pends.
[Filing No. 24.] Sabag opposes the motion. [Filing No. 56.]2
1
Sabag subsequently filed a motion seeking reconsideration of the Court's order granting the
motion to intervene [Filing No. 55], but the Court denied his request [Filing No. 68].
Windhorst also filed a motion requesting a hearing on the motion to vacate [Filing No. 66],
which Sabag opposes [Filing No. 67]. The Court is able to fully address Windhorst's motion
without need for a hearing. Accordingly, Windhorst's request for a hearing [Filing No. 66] is
denied.
2
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III.
Discussion
Windhorst argues that the Court should vacate its order permitting discovery pursuant to
28 U.S.C. § 1782. [Filing No. 25, at ECF p. 17.] He contends that Sabag's application does not
satisfy any of the statutory requirements of a Section 1782 application or various discretionary
factors that courts also consider when deciding whether to grant an application. [Filing No. 25,
at ECF p. 18, 25.] As explained in more detail below, the Court agrees that its earlier order
granting Sabag's application should be vacated in light of the additional factual background and
briefing that the Court has now had the benefit of reviewing.
A.
Statutory requirements
While Windhorst raises various arguments as to why the Court should vacate its order
permitting discovery, the Court begins its analysis with the statutory requirements of 28 U.S.C. §
1782. Title 28 U.S.C. § 1782(a) states 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, including criminal
investigations conducted before formal accusation." In addition, the statute sets forth that the
request for such order may be made "by a foreign or international tribunal or upon the
application of any interested person[.]" Id.
Thus, Section 1782 sets forth the following statutory requirements that must be met
before a district court may grant an application for discovery:
(1) the request must be made "by a foreign or international tribunal" or "upon the
application of any interested person"; (2) the request must seek evidence in the
form of "testimony or statement" of a person or production of "a document or
other thing"; (3) the evidence must be "for use in a proceeding in a foreign or
international tribunal, including criminal investigations conducted before formal
accusation"; and (4) the person from whom discovery is sought must either reside
or be found in the district of the district court ruling on the application.
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See id.; In re Medytox, Inc., No. 1:18-mc-00046-TWP-DLP, 2019 WL 3162174, at *4 (S.D. Ind.
July 16, 2019), report and recommendation adopted, 2019 WL 3556930 (S.D. Ind. Aug. 5,
2019). While Windhorst argues that Sabag's application does not satisfy any of the statutory
requirements of 28 U.S.C. § 1782, the crux of this case lies in the requirement that the evidence
sought must be "for use in a proceeding in a foreign or international tribunal, including criminal
investigations conducted before formal accusation." 28 U.S.C. § 1782(a).
In 2004, the Supreme Court analyzed these statutory requirements in Intel Corp. v.
Advanced Micro Devices, Inc., 542 U.S. 241, 255, 124 S. Ct. 2466, 2478 (2004) ("Intel"), before
concluding that 28 U.S.C. § 1782 "authorizes, but does not require, a federal district court to
provide assistance to a complainant in a European Commission proceeding that leads to a
dispositive ruling[.]" Intel clarified the requirement that the discovery must be for use in a
proceeding in a foreign or international tribunal, noting the legislative history of Section 1782
and the addition in 1996 of the words "including criminal investigations conducted before formal
accusation" to this requirement. Id. at 249, 124 S. Ct. at 2474. The Supreme Court succinctly
stated in Intel that "Section 1782(a) does not limit the provision of judicial assistance to 'pending'
adjudicative proceedings." Id. at 258, 124 S. Ct. at 2479. Rather, the Supreme Court held that
the statute "requires only that a dispositive ruling by the Commission, reviewable by the
European courts, be within reasonable contemplation." Id. at 259, 124 S. Ct. at 2480 (emphasis
added).
Thus, the issue in this case is whether, at the time Sabag filed his application with this
Court, there was a sufficient factual basis to support a finding that a proceeding before a foreign
or international tribunal was within reasonable contemplation. Windhorst argues that Sabag's
application should have been denied because he has not sought discovery for use in a reasonably
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contemplated proceeding in a foreign or international tribunal as required by Intel. [Filing No.
25, at ECF p. 19-20.] He contends that a proceeding, or even a criminal investigation prior to a
proceeding, is speculative at best, and argues that the most Sabag seeks to do is "buttress an
application to a number of U.K. agencies in hopes that they will initiate criminal proceedings
against Mr. Windhorst." [Filing No. 25, at ECF p. 20.] Windhorst also accuses Sabag of
attempting a "second bite of the apple for the exact same discovery that has already been denied
to him" in an earlier Indiana state court action. [Filing No. 25, at ECF p. 22.]
Sabag disagrees with Windhorst's characterization of his application and argues that a
proceeding in a foreign or international tribunal was in reasonable contemplation at the time he
filed his application. [Filing No. 56, at ECF p. 16.] He reiterates in his response that he is
gathering evidence to supplement the compelling evidence that he already
presented to this Court to be used in a reasonably contemplated criminal U.K.
prosecution of Mr. Windhorst. Mr. Sabag has filed an affidavit with this Court
under penalty of perjury to state that he intends to pursue criminal action against
Mr. Windhorst in the United Kingdom.
[Filing No. 56, at ECF p. 17.] Sabag contends that he is "entitled to use Section 1782 as it is
written to initiate his criminal filings against Mr. Windhorst in the U.K. based on his own
'reasonably contemplated' timeframe, rather than the accelerated timeframe that Mr. Windhorst
argues is a prerequisite to trigger the application of Section 1782." [Filing No. 56, at ECF p. 1718.] Sabag also alleges that he would be entitled, under U.K. law, to seek judicial review of the
decision of a public prosecutor or agency and "force" prosecution of Windhorst. [Filing No. 56,
at ECF p. 18.] Sabag filed an affidavit contemporaneously with his Section 1782 application
asserting these same claims. [Filing No. 6-41.] Sabag also filed a declaration from U.K. counsel
with his application, which summarized the alleged events between Sabag and Windhorst and
reiterated Sabag's contention that he may make a criminal complaint to UK authorities, who
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would then "consider whether to launch a formal investigation using statutory powers of
investigation[.]" [Filing No. 6-1, at ECF p. 24.] In addition, counsel noted that Sabag may also,
"should he so choose, launch his own private prosecution[.]" [Filing No. 6-1, at ECF p. 25.]
The Supreme Court clearly held in Intel that 28 U.S.C. § 1782 does not require that
proceedings in a foreign or international proceeding must have already commenced or that such
proceedings must be pending or imminent. Intel, 542 U.S. at 259, 124 S. Ct. at 2480. Rather, as
noted above, the 28 U.S.C. § 1782 requirement of a foreign proceeding is met so long as such
proceeding was "within reasonable contemplation" at the time the application was filed. Id.
Sabag claims that the fact that he has "attested by affidavit that he reasonably contemplates
initiating foreign criminal proceedings against Mr. Windhorst" is "the beginning and end of the
analysis." [Filing No. 56, at ECF p. 13.]
However, "within reasonable contemplation" requires more than speculation or
conjecture. See, e.g., Certain Funds, Accounts &/or Inv. Vehicles v. KPMG, L.L.P., 798 F.3d
113, 123-24 (2d Cir. 2015) ("[T]he Supreme Court's inclusion of the word 'reasonable' in the
'within reasonable contemplation' formulation indicates that the proceedings cannot be merely
speculative. At a minimum, a § 1782 applicant must present to the district court some concrete
basis from which it can determine that the contemplated proceeding is more than just a twinkle in
counsel's eye."); Application of Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS
Forwarding (USA), Inc., 747 F.3d 1262, 1270 (11th Cir. 2014) ("The future proceedings must be
more than speculative, however, and a district court must insist on reliable indications of the
likelihood that proceedings will be instituted within a reasonable time." (Internal citation and
quotation marks omitted)). For instance, the Second Circuit concluded in Certain Funds that
"the applicant must have more than a subjective intent to undertake some legal action, and
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instead must provide some objective indicium that the action is being contemplated." Certain
Funds, 798 F.3d at 123. Here, as in Certain Funds, there is no objective indication that a
proceeding in a foreign or international tribunal was within reasonable contemplation at the time
of Sabag's application. Sabag's subjective desire, alone, is not enough. While Sabag articulated
his rights and options under U.K. law, he has not used those rights or options yet.
In Certain Funds, the Second Circuit additionally noted that "the relevant question is
whether at the time the evidence is sought, the evidence is eventually to be used in a foreign
proceeding. In other words, we assess the indicia of whether the contemplated proceedings were
within reasonable contemplation at the time the § 1782 application was filed." Id at 124 (internal
citation, quotation marks, and ellipses omitted). The Second Circuit found that at the time the
applicant filed its application, the only facts alleged were that they had retained counsel and were
discussing the "possibility of initiating litigation." Id. (emphasis omitted). Thus, the Second
Circuit concluded that "at the time the evidence was sought in this case, [the applicant] had done
little to make an objective showing that the planned proceedings were within reasonable
contemplation." Id. See also Fagan v. J.P. Morgan Chase Bank, No. SA-19-MC-00111-FB,
2019 WL 984281, at *2 (W.D. Tex. Feb. 28, 2019) (report and recommendation) (Fagan's
supplemental declaration indicating foreign investigatory authorities in South Africa were doing
due diligence to determine whether Fagan's complaint had any merit fell short of providing
indication that proceedings were within reasonable contemplation at time application made.). Cf.
Consorcio, 747 F.3d at 1271 (contemplated proceedings satisfied 28 U.S.C. § 1782 where
applicant provided "facially legitimate and detailed explanation of its ongoing investigation, its
intent to commence a civil action against its former employees, and . . . valid reasons . . . to
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obtain the requested discovery under the instant section 1782 application before commencing
suit[.]").
Again, Sabag's application also falls short of demonstrating that an actual foreign
criminal investigation or proceeding was within reasonable contemplation at the time he filed the
application. Putting aside the fact that so much time has passed and still no investigation has
been initiated, what is relevant is that in December 2019, when Sabag filed his application, the
only indication Sabag provided to the Court of a potential foreign investigation was Sabag's
purported subjective intention to attempt to have a criminal investigation launched sometime in
the future, and a declaration from U.K. counsel generally summarizing the procedural
background of such investigations in the United Kingdom. This is far too speculative to meet the
"within reasonable contemplation" requirement.
Sabag also argues that the Seventh Circuit has advocated for a liberal reading of 28
U.S.C. § 1782, citing Heraeus Kulzer, GmbH v. Biomet, Inc., 633 F.3d 591, 597 (7th Cir. 2011).
In Heraeus Kulzer, the Seventh Circuit reversed the district court after it denied all requested
discovery under 28 U.S.C. § 1782 for being unduly intrusive or burdensome, rather than simply
looking to limit its scope. Id. But the cited portion of that Seventh Circuit decision addressed
the discretionary component of Section 1782 application requests, not the statutory requirements.
Id. As noted below, the Court need not analyze those discretionary factors in this case, since
Sabag failed to meet the statutory factors.
Thus, after reviewing the additional facts and case law provided, the Court concludes that
it was premature to grant Sabag's application, as no proceeding before a foreign or international
tribunal was within reasonable contemplation at the time Sabag filed his application. Therefore,
Windhorst's motion to vacate the Court's earlier order is granted.
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B.
Discretionary factors
Once a district court determines it has authority to grant an application pursuant to 28
U.S.C. § 1782, it then must continue its analysis to determine whether and to what extent the
request is appropriate in light of four discretionary factors the Supreme Court has set forth. See
Intel, 542 U.S. at 264, 124 S. Ct. at 2483. In this case, however, the Court has determined that
Sabag failed to meet one of the statutory requirements of 28 U.S.C. § 1782. Thus, while
Windhorst raises numerous additional arguments in his memorandum in support of his motion as
to why Sabag's application fell short and the Court's order allowing discovery should be vacated,
[Filing No. 25, at ECF p. 11-32], the Court need not address these remaining arguments since it
has already concluded that Sabag's application should not have been granted.3
IV.
Conclusion
For reasons explained above, Windhorst's motion for a hearing [Filing No. 66] on the
motion to vacate is denied. However, Windhorst's motion to vacate [Filing No. 24] the Court's
order granting Sabag's application to conduct discovery pursuant to 28 U.S.C. § 1782 is granted.
Accordingly, the Court's order [Filing No. 13] granting the application is vacated, and Sabag's
application [Filing No. 1] is denied.
Date: 8/18/2020
_______________________________
Tim A. Baker
United States Magistrate Judge
Southern District of Indiana
3
For instance, in his reply brief, Windhorst asserts that Sabag has an ulterior motive for
requesting this discovery, ultimately planning to use it not in any foreign or international
tribunal, but rather in a New York arbitration proceeding currently pending that Sabag brought
against Windhorst, Track Group, and others. [Filing No. 65, at ECF p. 17.] While the Court
shares Windhorst's concerns that Sabag's ultimate use for the discovery sought through his
Section 1782 application seems to only relate to the New York proceeding—the only proceeding
within reasonable contemplation at the time Sabag filed his application, since Sabag's application
has now been denied, the Court need not address these concerns further.
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