Sandra Holding Ltd. v. Al Saleh et al

Filing 34

Magistrate Judge Donald L. Cabell: ORDER entered granting in part and denying in part 1 Motion for Issuance of Letters Rogatory. (DLC, law1)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

SANDRA HOLDING LTD.,
Petitioner,
v.
No. 18-mc-91406-PBS
FAWZI MUSAED AL SALEH, AHMAD
FAWZI AL SALEH, QUABBIN
CAPITAL INC., AND JOHN I.
SNOW III,
Respondents.

ORDER ON PETITIONER’S MOTION FOR ISSUANCE OF
LETTERS ROGATORY UNDER 28 U.S.C. § 1782
CABELL, U.S.M.J.

I.

INTRODUCTION
The petitioner, Sandra Holding Ltd. (Sandra Holding), seeks

permission to obtain discovery in the United States for use in a
foreign proceeding pursuant to 28 U.S.C. § 1782.

(Dkt. 1).

In

this case the petitioner seeks discovery from Fawzi Musaed Al Saleh
(Fawzi), Fawzi’s son Ahmad Fawzi Al Saleh (Ahmad), Quabbin Capital
Inc. (Quabbin Capital), and John I. Snow, III (Snow) (collectively,
respondents), for use in a proceeding before the Grand Court of
the Cayman Islands. 1

The respondents oppose this motion, arguing

that Sandra Holding has not satisfied the statutory requirements

1

The petitioner subsequently withdrew its request with respect to Ahmad
because it was unable to serve him in Massachusetts. (Dkt. 27). The court
thus addresses only arguments related to Fawzi, Quabbin Capital, and Snow.

under 28 U.S.C. § 1782.

(Dkt. 18).

The respondents argue that

the court should exercise its discretion to deny the motion even
if Sandra Holding has satisfied these requirements.
motion has been referred to this court for resolution.

(Id.).

The

(Dkt. 21).

For the reasons set forth below, the petitioner’s motion is granted
in part with respect to Quabbin Capital and Snow and denied with
respect to Fawzi.

II. RELEVANT BACKGROUND
During the 1980s, a group of brothers from Kuwait began
investing in the United States through an offshore special purpose
Cayman

Islands

(“Universal”).

company

called

Universal

Enterprises,

Ltd.

Each brother created an offshore trust company in

the Cayman Islands to own his respective shares in Universal.

The

petitioner is owned by Nuri Musaed Al Saleh (“Nuri”) and holds
legal title to Nuri’s shares in Universal.

Yasmine Holding Ltd.

is owned by Fawzi and/or his children and holds legal title to
Fawzi’s shares in Universal.

Fawzi is the founding and sole

director of Universal, though he may soon resign the position due
to his age and poor health. 2
The petitioner claims that since the creation of Universal,
Fawzi has “failed and refused to disclose material information
about

Universal’s

finances

and

2

business

activity

to

Sandra

Fawzi was 79 years old at the time this matter was initiated, suffers from
ALS, and is dependent upon a ventilator to breathe.

2

Holding.”

(Dkt. 2, at 2).

Upon information and belief and based

upon a review of certain company documents, the petitioner claims
that Fawzi and/or his son Ahmad “orchestrated” a substantial sale
of Universal’s assets to a trust company controlled by Fawzi and
Ahmad that was not an arms-length transaction in or around 2014.
Sandra Holding alleges that it never received a distribution from
this sale.
Pursuant to Universal’s Articles of Association, if Sandra
Holding were to bring an action against Universal and Fawzi, it
must be filed in the Grand Court of the Cayman Islands.

The

petitioner has not yet filed an action in the Grand Court but
contends that it reasonably anticipates doing so and has retained
Cayman counsel to that effect.

Through the present application,

the petitioner seeks information it conceivably might use to
prosecute that action, including what amounts to nearly all of
Universal’s

corporate

Specifically,

the

documents

petitioner

for

seeks

the
to

last

thirty

depose,

and

years.
request

documents from Fawzi, Quabbin Capital (an investment management
firm the petitioner believes acted as a financial advisor to Fawzi
and

was

a

subsidiary

of

Universal),

and

Snow

(President

and

Managing Director of Quabbin Capital).

III. LEGAL STANDARD
A court may allow discovery to be sought in the United States
for use in a foreign proceeding through an application pursuant to
3

28

U.S.C.

§

1782.

Section

1782

sets

out

four

statutory

requirements that a petitioner must satisfy as a threshold matter.
Specifically,
discovery is:

the

petitioner

must

show

that

the

request

for

(1) directed to a person who “resides in or is

found” in the district where the court sits; (2) for documents or
testimony for use in a foreign proceeding; (3) made by a tribunal
or upon the application of an interested party; and (4) not seeking
material protected by “any legally applicable privilege.”

See §

1782(a); In re Schlich, 893 F.3d 40, 46 (1st Cir. 2018).
“If all of these statutory requirements are met, the district
court

is

authorized,

but

not

required,

assistance by permitting discovery.”

to

provide

judicial

In re Schlich, 893 F.3d at

46 (citing Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S.
241, 247 (2004)) (emphasis added).

The Supreme Court identified

four factors to be considered when exercising discretion on a §
1782 application in Intel:

(1) whether the person from whom

discovery is sought is a party to the foreign proceeding; (2) the
nature of the foreign tribunal, the character of the foreign
proceeding, and the receptivity of the foreign tribunal to the
court’s assistance; (3) whether the applicant is attempting to
circumvent the proof-gathering restrictions or policies of the
foreign tribunal; and (4) whether the discovery requested is unduly
intrusive or burdensome.

Intel, 542 U.S. at 264-65; Minis v.

4

Thompson, No. 14-91050-DJC, 2014 WL 1599947, at *3 (D. Mass. Apr.
18, 2014).

IV. DISCUSSION
A.

Statutory Requirements

In this court’s view, the petitioner has satisfied all four
statutory requirements set out in § 1782.

First, the respondents

were either found in or reside in the District of Massachusetts.
“[I]f a person is served . . . while physically present in the
district of the court that issued the discovery order, then for
the purposes of § 1782(a), he is ‘found’ in that district.”
Edelman, 295 F.3d 171, 180 (2d Cir. 2002).

In re

While Fawzi resides in

Kuwait, he was personally served with this application while on
Cape Cod.

Therefore, Fawzi was “found in” this district.

Quabbin

Capital’s principal place of business is in Boston, Massachusetts,
and Snow resides in Winchester, Massachusetts.

Therefore, Quabbin

Capital and Snow “reside in” this district.
As to the second requirement, if the foreign proceeding is
not already in progress, it must at least be “within reasonable
contemplation,” though it need not be “pending” or “imminent.”
Intel, 542 U.S. at 259.

The circuit courts have grappled with the

definition of “within reasonable contemplation” in this context.
The Eleventh Circuit has upheld a § 1782 discovery order where the
petitioner had conducted an extensive internal audit related to
the

contemplated

action,

provided
5

a

facially

legitimate

and

thorough explanation of this ongoing investigation, stated its
intent both to commence a civil action and continue a related
pending arbitration, and detailed how the discovery sought would
be applied in its pleading before a foreign tribunal.
of

Consorcio

Ecuatoriano

de

Telecomunicaciones

Application

S.A.

v.

JAS

Forwarding (USA), Inc., 747 F.3d 1262, 1269 (11th Cir. 2014).

The

Second Circuit has upheld the denial of a § 1782 application where
the petitioner alleged only “that they had retained counsel and
were discussing the possibility of initiating litigation,” despite
having five years and ample opportunity in which to commence
investigations or initiate litigation.

Certain Funds, Accounts

&/or Inv. Vehicles v. KPMG, LLP, 798 F.3d 113, 124 (2d Cir. 2015)
(emphasis in original). In both cases, however, the courts caution
that § 1782 should not be used to enable a fishing expedition,
whereby the petitioner uses the discovery process in a blind effort
to find damaging evidence to be used against an adversary without
any specific underlying legal claims or theory of liability.

See

JAS Forwarding, 747 F.3d at 1274; KPMG, 798 F.3d at 124.
This court is persuaded that Sandra Holding has “reasonably
contemplated”
petitioner

commencing

has

retained

initiating that action.

an

action

Cayman

in

the

counsel

Grand

for

the

Court.
purpose

The
of

Though the retention of foreign counsel

alone was not sufficient to obtain discovery in KPMG, there are
additional factors present in this case.
6

Sandra Holding has

reviewed certain company documents concerning the 2014 sale of
Universal’s assets.

While this review appears less substantial

than the extensive internal audit that occurred in JAS Forwarding,
it is nonetheless indicative of a reasonably contemplated foreign
proceeding.
The respondents argue that the petitioner has not yet stated
an exact claim or shown evidence of a ripe dispute (such as a
demand letter), but Sandra Holding has stated with some specificity
a basic theory of liability and the type of suit it plans to
initiate, to wit: a derivative shareholder lawsuit in the Cayman
Islands against Universal and Fawzi based on fraud.

(Dkt. 4, 29).

Similar to JAS Forwarding, the petitioner has stated its intent to
pursue a legal action and articulated a facially legitimate reason
for

pursuing

this

discovery.

Further,

the

petitioner

has

persuasively explained how the discovery sought might be applied
in its pleading before the Grand Court. Finally, Nuri has recently
filed three lawsuits against Fawzi and his related entities in
Kuwait, suggesting that the petitioner’s principal is already
committed to pursuing legal disputes regarding Fawzi. 3

3

In sum,

Although the court is not compelled to take notice of these other
proceedings, they may well indicate that a future lawsuit is likely. See In
re Hornbeam Corp., 722 F. App'x 7, 9 (2d Cir. 2018) (where petitioner
“previously brought two related actions” in a foreign tribunal against a
respondent, “and represented that it intended to initiate further
litigation,” there was “a sufficiently concrete basis for a contemplated
[foreign] proceeding”) (internal quotations omitted).

7

the record shows that the petitioner is indeed seeking discovery
for use in a reasonably contemplated foreign proceeding.
Lastly, the respondents do not dispute that the applicant is
an interested person or that the application seeks disclosure of
non-privileged
otherwise.

materials,

and

the

record

does

not

indicate

The court finds from the foregoing that the petitioner

has satisfied all four statutory requirements necessary for a court
to allow discovery under § 1782.
B.

Discretionary Factors
1.

Fawzi

Based on a review of the discretionary factors, this court
finds that allowing discovery from Fawzi would be inappropriate.
To begin, Fawzi is likely to be a party in the foreign proceeding.
The necessity for § 1782 discovery is decreased for parties of the
foreign proceeding because the foreign tribunal presumably has the
authority to obtain such discovery but may not be able to do the
same for nonparties.
1599947, at *3.

Intel, 542 U.S. at 264; Minis, 2014 WL

Here, when the petitioner commences its suit in

the Cayman Islands and names Fawzi as defendant, it will be able
to seek discovery from him through the Grand Court’s procedures.
While the petitioner asserts in its reply memorandum that Fawzi
“will

not

lawsuit,”

necessarily
this

be

directly

a

defendant

contradicts

in
the

the

Cayman

petitioner’s

Islands
stated

intention in its first memorandum and in the affidavit of its
8

foreign counsel to sue Fawzi.

More importantly, it seems both

improbable and illogical that Sandra Holding would commence a suit
over an alleged inappropriate transaction that it believes Fawzi
may have orchestrated without naming Fawzi in the suit.

While the

petitioner is correct in its assertion that one factor should not
control the discretionary analysis, the factors collectively weigh
against allowing discovery from Fawzi.
As to the second factor (nature and receptivity of the foreign
tribunal to the requested materials), both sides make compelling
arguments,

each

citing

reputable

attorneys

practicing

in

the

Cayman Islands. Several courts that have rejected a § 1782 request
based on this factor have done so at the express request of the
foreign tribunal.

See, e.g., Schmitz v. Bernstein Liebhard &

Lifshitz, LLP, 376 F.3d 79, 84 (2d Cir. 2004); In re Ex Parte
Application of Qualcomm Inc., 162 F. Supp. 3d 1029, 1040 (N.D.
Cal. 2016); In re Microsoft Corp., 428 F. Supp. 2d 188, 194
(S.D.N.Y. 2006).
1782

On one occasion, this district has denied a §

application

until

the

foreign

tribunal

in

question

“provide[d] some affirmative indication of its receptivity to the
requested materials.”

In re Babcock Borsig AG, 583 F. Supp. 2d

233, 241 (D. Mass. 2008) (emphasis added).

Here, the petitioner

claims

discovery

that

it

must

obtain

the

desired

prior

to

commencing an action so it may meet the strict pleading standards
of the Grand Court.

The petitioner further asserts that the Grand
9

Court will be receptive to this court’s assistance, largely because
it has accepted discovery obtained pursuant to § 1782 once in the
past, but also because it is a signatory to the Hague Evidence
Convention. Lyxor Asset Management S.A. v. Phoenix Meridian Equity
Limited, 2009 CILR 553 (Sep. 24, 2009).

The respondents argue,

inter alia, that Grand Court policies generally prohibit pre-suit
discovery and the taking of deposition testimony, and that the
pleading standards in the Cayman Islands are not as stringent as
the petitioner contends.

However, the respondents cite no Grand

Court case rejecting discovery obtained under § 1782, nor has the
Grand Court requested that this particular application be denied.
While the petitioner and the respondents both put forth strong
arguments, the court finds that this factor weighs slightly in
favor of discovery; the Grand Court appears to be marginally more
receptive than it is unreceptive to the type of discovery the
petitioner seeks.
The third factor is also adeptly argued by both sides.

The

respondents allege that the petitioner is using this application
to circumvent what they view as the Grand Court policy against
depositions.
§

1782

does

However, the Supreme Court has explicitly ruled that
not

limit

“a

district

court's

production-order

authority to materials discoverable in the foreign jurisdiction if
located there.”

Intel, 542 U.S. at 243.

The petitioner denies

attempting to circumvent Grand Court policies and argues that the
10

Grand Court could deny admission of depositions that violate its
evidentiary laws.

This district has approved a § 1782 application

stemming from a Grand Court proceeding in the past.

In re Penner,

No. 17-CV-12136-IT, 2017 WL 5632658, at *3 (D. Mass. Nov. 22,
2017).
court’s

Though that proceeding was in progress at the time of the
ruling

and

the

Grand

Court

had

already

approved

a

deposition of the respondent, In re Penner—together with the Grand
Court’s

acceptance

suggests

that

of

discovery

§

1782
may

discovery

in

allowed

under

be

Lyxor—nonetheless
§

1782

without

offending the proof-gathering restrictions or policies of the
Grand Court. The court finds that the petitioner is not attempting
to circumvent the proof-gathering restrictions or policies of the
Grand Court.
Finally, the fourth factor weighs heavily against allowing
discovery

from

burdensome.

Fawzi,

as

it

would

be

unduly

intrusive

and

Section 1782 requires discovery orders to be “in

accordance with the Federal Rules of Civil Procedure” unless the
court should order otherwise.
U.S. at 260.
the

scope

of

28 U.S.C. § 1782(a); see Intel, 542

In turn, the Federal Rules of Civil Procedure limit
discovery

to

“any

nonprivileged

matter

that

is

relevant to any party's claim or defense and proportional to the
needs of the case, considering . . . whether the burden or expense
of the proposed discovery outweighs its likely benefit.”
Civ. P. 26(b)(1).

Fed. R.

In the § 1782 context, “[r]equests are unduly
11

intrusive and burdensome where they are not narrowly tailored,
request confidential information and appear to be a broad ‘fishing
expedition’

for

irrelevant

information.”

In

re

Ex

Parte

Application of Qualcomm Inc., 162 F. Supp. 3d at 1043.
Here, the petitioner seeks a court order compelling Fawzi to
produce a wide range of documents relating to Universal and five
other companies (including Quabbin Capital and Sandra Holding)
covering

a

time

period

from

January

1,

Universal’s formation), to the present day.
seeks to depose Fawzi.

1987

(shortly

after

Sandra Holding also

The burden of obtaining discovery from

Fawzi far outweighs its potential benefits.

As noted above, Fawzi

is extremely ill, to the point that sitting for a deposition—
whether in the United States or Kuwait—would likely be physically
demanding, or even a potential risk to his well-being. 4

While the

petitioner asserts that this “makes it all the more important that
he be deposed as soon as possible,” this argument does not make
Fawzi any less sick, nor does it make the process of deposing him
any less taxing on his health.

Even if discovery were granted as

to Fawzi, it seems unlikely that his health would enable him to
substantially comply with the petitioner’s requests, thus limiting
the likely benefit of the discovery.

4

Overall, the burden that

The petitioner, presumably aware of Fawzi’s medical condition, nonetheless
failed to mention it in its initial memorandum in support of its application.

12

would be imposed on Fawzi by granting the proposed discovery order,
even in a limited form, outweighs its potential benefit.
In sum, the second and third discretionary factors weigh
slightly in favor of ordering discovery from Fawzi but the first
and fourth factors weigh strongly against such an order.

As Fawzi

is likely to be a party to the Cayman Islands suit regardless of
this court’s actions, and as no discovery order could be tailored
to avoid placing an undue burden on Fawzi, the petitioner’s motion
is denied as it relates to Fawzi.
2.

Quabbin Capital & Snow

The first factor weighs in favor of granting discovery as to
Quabbin Capital and Snow because neither respondent is likely to
be a party in the foreign proceeding.

Neither party has suggested

that Quabbin Capital or Snow would be named in a future suit in
the Cayman Islands, and the record does not suggest otherwise.
Thus, the Grand Court may lack the authority to obtain discovery
from Quabbin Capital and Snow without assistance from this court,
despite their alleged relevance to the matter at hand.

See

Intel542 U.S. at 264; Minis, 2014 WL 1599947, at *3.
For the same reasons discussed above, the second and third
factors also weigh slightly in favor of discovery from Quabbin
Capital and Snow. The fourth factor also weighs in favor of
allowing discovery from Quabbin Capital and Snow, though it also

13

compels this court to limit the scope of such discovery. 5
petitioner

seeks

discovery

from

these

respondents

that

virtually identical to the discovery it seeks from Fawzi.
the

petitioner

speculates

about

alleged

wrongdoing

The
is

While
by

the

respondents over the past few decades, it has only shown specific
suspicion of one particular wrongful act, that being a relatedparty transaction in 2014 involving the sale of Universal’s assets.
This discovery would cover 30 years and six companies, three of
which the relationship to the matter at hand is not evident.

Much

of the requested discovery would not be “relevant to any party's
claim or defense and proportional to the needs of the case,” as
the underlying claim in this case likely centers on one alleged
transaction roughly five years ago.

Fed. R. Civ. P. 26(b)(1).

This court finds that the proposed discovery is disproportionate
to the needs of the case.

However, a discovery order may be

crafted that is in line with § 1782’s “twin aims of providing
efficient assistance to participants in international litigation

5

It is well within the court’s authority to issue a limited or modified
discovery order. 28 U.S.C. § 1782(a) (discovery “order may prescribe the
practice and procedure . . . for taking the testimony or statement or
producing the document or other thing”); Fed. R. Civ. P. 26 (court may “limit
the frequency or extent of discovery . . . if it determines that: (i) the
discovery sought is unreasonably cumulative or duplicative . . . [or] (iii)
the proposed discovery is outside the scope permitted”); Intel, 542 U.S. at
265 (“unduly intrusive or burdensome requests may be rejected or trimmed”);
Euromepa S.A. v. R. Esmerian, Inc., 51 F.3d 1095, 1101 (2d Cir. 1995) (“it is
far preferable for a district court to reconcile whatever misgivings it may
have about the impact of its participation in the foreign litigation by
issuing a closely tailored discovery order rather than by simply denying
relief outright”).

14

and encouraging foreign countries by example to provide similar
assistance to our courts” without imposing an unreasonable or
burden on the respondents.

Intel, 542 U.S. at 252.

If limited in scope to information regarding the alleged
related-party

transaction

in

or

around

2014,

the

discovery

requests should not be unduly intrusive or burdensome for Quabbin
Capital or Snow.

Complying with a limited request like this will

likely not require the respondents to scour the entirety (or even
the majority) of their business and financial records.

V.

CONCLUSION
For the foregoing reasons, the petitioner is permitted to

seek discovery from Quabbin Capital and Snow, but only pertaining
to

the

sale

of

petitioner

is

Therefore,

the

Universal’s

not

permitted

petitioner’s

assets
to

in

seek

Motion

for

or

around

discovery
Issuance

2014.
from
of

The
Fawzi.

Letters

Rogatory Under 28 U.S.C. § 1782 is GRANTED in part and DENIED in
part.

SO ORDERED.
/s/ Donald L. Cabell
DONALD L. CABELL, U.S.M.J.

DATED:

July 15, 2019

15