Mare Shipping Inc. et al

Filing 41

MEMORANDUM AND ORDER denying 1 Motion for to Compel. For the reasons stated above, the Applicants' motion to compel is DENIED. (Signed by Judge P. Kevin Castel, Part I on 10/22/2013) (mro)

USDSSDNY
DOCUMENT
ELECTRONICALLY FILED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

DOC #: _-----;;-:--;--;;-DATE FILED: 10 -J,~'I)

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IN RE APPLICATION OF MARE SHIPPING
INC. and APOSTOLOS MANGOURAS, for an
Order Pursuant to 28 U.S.C. § 1782 to Conduct
Discovery for Use in Foreign Proceedings

13 Misc. 238
Palt I
MEMORANDUM
AND ORDER

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CASTEL, District Judge:
Mare Shipping Inc. and Apostolos Mangouras (collectively, the "Applicants")
move to compel compliance with a subpoena directed to the law firm Squire Sanders LLP and
one of its partners, Brian Starer (collectively, the "Respondents"). The subpoena seeks
documents and deposition testimony related to Respondents' service as counsel for the Kingdom
of Spain in a prior action in this district. The documents and testimony are said to relate to a
proceeding pending in the Kingdom of Spain and are sought pursuant to 28 U.S.c. § 1782.
Respondents oppose the motion. For reasons that will be explained below, the Applicants'
motion is denied.
BACKGROUND
In November 2002, the Prestige, a Bahamian-flagged oil tanker, sank offthe coast
of Spain. In 2003, the Kingdom of Spain commenced an action against the American Bureau of
Shipping and other associated entities in this district. Reino De Espana v. American Bureau of
Shipping. 03 Civ. 3573 (LTS). That action and the related appeals were resolved in favor of the
defendants on August 29,2012. (03 Civ. 3573 Dkt. 303.)
Separately, Spanish state attorneys brought an action against Captain Apostolos
Mangouras and Mare Shipping Inc. in the Provincial Comt of La Coruna, Spain. A public
hearing began on October 16, 2012 and concluded on July 10, 2013. (Waters Aff. Ex. B. ~ 5.)

On July 8, 2013, Applicants sought an order pursuant to 28 U.S.C. § 1782 to
conduct discovery for use in foreign proceeding. (Dkt. 1.) Applicants allege that the testimony
of three witnesses at the Spanish trial requires discovery from the law firm and one of its
pattners. They contend that: (1) the declaration of Captain Efstratios Kostazos in the New York
action was false and contrary to his testimony in the Spanish trial; (2) Respondents coerced
George Alevizos to serve as a paid expert in the New York action by threatening him with
prosecution in Spain; and (3) the declaration of Jens Jorgen Thuesen in the New York action was
based on misleading documents provided to him by Respondents. (Dkt. 2, Mem. in Supp. 1121.) Respondents refute these allegations. Applicants admit that the allegedly false declarations
were available to the Applicants' Spanish lawyers, who were able to use, and in Captain
Kostazos' case, did use, the declarations to cross examine the witnesses during the Spanish trial.
(Dkt. 20, Tr. 5.5-6.7 July 22,2013.)
Subpoenas were authorized by the Judge presiding in Palt I on July 10, 2013, and
were served on Respondents and Holland & Knight LLP on July 12,2013. (Dkt. 9-11; 16-18.)
The subpoenas sought depositions of Respondents and production of documents relating to the
Respondents' representation of Spain in the New York and Spanish actions, including internal
firm records, memoranda, correspondence, and bills regarding the representation. (Dkt. 9-11,
Ex. A) Respondents filed objections to the subpoenas. (Dkt. 7, 8.) Holland & Knight LLP
initially objected to the subpoena, but on July 19, 2013, its counsel filed a letter reporting that the
firm had reached an agreement with Applicants. (Dkt. 12, 19.) Thereafter, the parties appeared
before the undersigned on Applicants' motion to compel.

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DISCUSSION

1.

Subject Matter Jurisdiction
Respondents contend that this Court lacks subject matter jurisdiction to enforce

the subpoenas because the subject of the subpoena is the Kingdom of Spain, for which they acted
as counsel, and which enjoys foreign sovereign immunity. Subject to treaty and statutory
exceptions, foreign states are immune from the jurisdiction ofthe courts ofthe United States
under the Foreign Sovereign Immunities Act ("FSIA"). 28 U.S.C. § 1604. "FSIA immunity is
immunity not only from liability, but also fi'om the costs, in time and expense, and other
dislUptions attendant to litigation." EM Ltd. v. Republic of Argentina, 473 F.3d 463, 486 (2d
Cir. 2007) (quoting Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841, 849 (5th Cir.
2000».
The FSIA's definition of a foreign state includes "agencies and instlUmentalities"
of a foreign state. 28 U.S.C. § 1603(a). "An 'agency or instlUmentality of a foreign state' means
any entity - (1) which is a separate legal person, corporate or othelwise, and (2) which is an
organ of a foreign state or political subdivision thereof, or a majority of whose shares or other
ownership interest is owned by a foreign state or political subdivision thereof, and (3) which is
neither a citizen of a State of the United States ... nor created under the laws of any third
counlty." 28 U.S.C. § 1603(b). The subpoena was directed to Respondents, a New York based
law finn and one of its lawyers, who do not qualify as "an agency or instlUmentality" of the
Kingdom of Spain. Although they are separate legal persons from the Kingdom of Spain, they
are not an organ of the Kingdom of Spain, nor are they majority owned by the Kingdom of Spain
or any political subdivision of the Kingdom of Spain. Accordingly, they are not entitled to asselt
Spain's immunity.

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Respondents argue that courts have quashed subpoenas served on counsel to
Native American tribes on the grounds of tribal sovereign immunity. See Catskill Development,
L.L.C. v. Park Place Entm't Corp., 206 F.R.D. 78, 91 (S.D.N.Y. 2002) (affirming magistrate
judge's quashing of subpoenas served on tribal counsel, who were not members of the tribe).
However, this ruling is inapplicable here, because the FSIA, which governs the immunity of
foreign sovereigns, does not govern tribal sovereign immunity. "After the enactment of the
FSIA, the Act-and not the pre-existing common law-indisputably governs the determination
of whether a foreign state is entitled to sovereign immunity." Samantarv. Yousuf, 560 U.S. 305,
130 S.Ct. 2278, 2285 (2010). Because section 1603(b) of the FSIA defines an "agency or
instrumentality of a foreign state" and Respondents do not meet that definition, Respondents do
not enjoy foreign sovereign immunity. Thus, the Court has subject matter jurisdiction to compel
compliance with the subpoenas.
II. 28 U.S.C. § 1782(a)
a. Authorization to Grant Request
"[A1district court is authorized to grant a § 1782 request where (1) ... the person
from whom discovery is sought resider s1(or [is1found) in the district of the district court to
which the application is made, (2) ... the discovery [is1for use in a proceeding before a foreign
tribunal, and (3) ... the application is made by a foreign or international tribunal or any
interested person." Schmitz v. Bernstein Liebhard & Lifshitz, LLP, 376 F.3d 79, 83 (2d Cir.
2004) (quotation marks and citations omitted).
i. Person Residing in the District
The Respondents contend that the Kingdom of Spain is the real subject ofthe
subpoena and it does not reside in New York. They do not argue that the two Respondents do

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not reside in New York. Courts in this district have found that for purposes of a section 1782
claim, it is sufficient that a respondent law firm resides in this district, even if the real party in
interest, the client, resides elsewhere.
Cravath argues that the first requirement-that the person fi·om
whom discovery is sought be found in the Southern District of
New York-is not satisfied since the documents are only in
Cravath's "temporary custody ... solely for the purposes of the
U.S. Litigation." ... That argument is creative, but sails far wide
of the mark. Application of section 1782 does not involve an
analysis of the duration ofresidency of the documents or even why
a respondent has the documents. It is sufficient that Respondents
reside in this district, as they concededly do.

In re Schmitz, 259 F. Supp. 2d 294, 296 (S.D.N.Y. 2003) (Stein, J.) affd sub nom Schmitz v.
Bernstein Liebhard & Lifshitz, LLP, 376 F.3d 79 (2d Cir. 2004). Here, the "person[s]" fi·om
whom testimony and documents are sought indisputably "reside (or [are] found) in the district."
Thus, the first prong of Section 1782(a) is satisfied.
ii. Use in a Proceeding before a Foreign Tribunal
The application for discovery stated that the request was "for use in the
proceedings in the Audiencia Provincial Court in La Coruna, Spain and in higher courts." (Mem.
in Supp. Dkt. 2 at I.) The proceedings before the Audiencia Provincial Court in La Coruna
concluded on July 10, 2013. Applicants contend that they may attempt to enter the evidence on
appeal, in the European Court of Human Rights or in alternative actions under Spanish law.
Respondents argue that any evidence that was neither included in the trial nor sought to be
included at trial would not be admissible on appeal or in the European Comt of Human Rights.
"[Section]1782(a) requires only that a dispositive ruling ... be within reasonable
contemplation." Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 259 (2004). The
Second Circuit has stated that "it is unwise-as well as in tension with the aims of section

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1782-for district judges to try to glean the accepted practices and attitudes of other nations from
what are likely to be conflicting and, perhaps, biased interpretations offoreign law." In re
Euromepa S.A., 51 F.3d 1095, 1099 (2d Cir. 1995) (holding that a district cout1 should not
engage in an extensive analysis of foreign discoverability when lUling on a section 1782
application). At this stage, Applicants have sufficiently alleged that it is within reasonable
contemplation that the evidence will be used in a foreign proceeding.
iii. Interested Person
Applicants are defendants in the action in Spain, and are thus interested persons
under the statute. See Intel, 542 U.S. at 256 ("The text of § 1782(a), 'upon the application of any
interested person,' plainly reaches beyond the universe of persons designated 'litigant.' No
doubt litigants are included among, and may be the most common example of, the 'interested
person[s)' who may invoke § 1782; we read § 1782's caption to convey no more."). The third
prong is satisfied.
b. Discretionary Factors
"Once the statutory requirements are met, a district court is free to grant discovery
in its discretion." Schmitz v. Bernstein Liebhard & Lifshitz, LLP, 376 F.3d at 83-84 (internal
quotations and alterations omitted). "[D]istrict cout1s must exercise their discretion under § 1782
in light of the twin aims of the statute: providing efficient means of assistance to pat1icipants in
international litigation in our federal courts and encouraging foreign countries by example to
provide similar means of assistance to our courts." Id. at 84 (internal quotation marks omitted).
In Intel Corp. v. Advanced Micro Devices, Inc., the Supreme Court outlined
discretionary factors for district courts to consider when lUling on a 1782(a) request. "First,
when the person from whom discovery is sought is a pat1icipant in the foreign proceeding ... the

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need for § l782(a) aid generally is not as apparent as it ordinarily is when evidence is sought
from a nonparticipant in the matter arising abroad." Intel, 542 U.S. at 264. "Second ... a court
presented with a § l782(a) request may take into account the nature of the foreign tribunal, the
character of the proceedings underway abroad, and the receptivity of the foreign government or
the court or agency abroad to U.S. federal-comt judicial assistance." Id. Third, "a district court
could consider whether the § l782(a) request conceals an attempt to circumvent foreign proofgathering restrictions or other policies ofa foreign country or the United States." Id. at 265.
"Unduly burdensome requests may be rejected or trimmed." Id.
The first factor (whether the person from whom discovery is sought is a party to
the foreign action) does not weigh in favor of granting the application. Although the named
Respondents are not party to a foreign action, Spain, respondent's client, is a participant in the
foreign proceeding. The Second Circuit has affirmed a denial of a section 1782 request when the
respondent New York law firm possessed evidence that belonged to a client, who was a pmty to
the foreign proceeding: "Although technically the respondent in the district comt was Cravath,
for all intents and purposes petitioners are seeking discovery from DT, their opponent in the
German litigation." Schmitz, 376 F.3d at 85. Just as petitioners in Schmitz sought discovery
from the New York law firm's client, in this case, Applicants, for all intents and purposes, seek
discovery from Spain. "[D]ocuments in the possession of a party's attomey are deemed to be
within the patty's possession, custody, or control because the party has the legal right to obtain
the documents on demand." In re Bank of Cyprus Pub. Co. Ltd., 10 Misc. 23 (JFK), 2011 WL
223168, at *3n.1 (S.D.N.Y. Jan. 21, 2011). "There is no real dispute that the 'persons' from
whom discovery is sought [is] ... the part[y] who brought the lawsuit(] in this District." Id. at

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*2. See also Sage Realty Com. v. Proskauer Rose Goetz & Mendelsohn, 91 N.Y.2d 30, 36
(1997) (holding that a client has a property interest in an attorney's file).
Because Spain is the opposing party in the Spanish action, Applicants' need for
section 1782 discovery is less apparent, as Applicants can apply to the foreign tribunal to compel
Spain to order its U.S. lawyers to produce the materials. Intel, 542 U.S. at 264 ("A foreign
tribunal has jurisdiction over those appearing before it, and can itself order them to produce
evidence."); see also Schmitz, 376 F.3d at 85.
The second factor (evaluation of the nature of the tribunal, character of the
proceedings underway abroad, and the receptivity of the foreign government to judicial
assistance) and the third factor (considerations of whether the request is an attempt to circumvent
foreign proof-gathering restrictions) do not favor granting the application. The Applicants had
the opportunity to cross-examine the witnesses in question with the allegedly false declarations
during the trial held in Spain, which has since concluded. Additionally, the Applicants did not
seek the now-sought evidence from the Spanish COUtt in the evidence-gathering period or during
the course of the trial. Applicants argue that their attorneys did not request this evidence because
ofthe "certain outcome of such a request," as prior requests for evidence and documents from
the New York action were denied by the Spanish court. (Rep. Mem. 14; Ruiz Soroa Supp. Decl.
~

5.) Respondent Starer, who is a pmtner in Respondent Squire Sanders LLP, was physically

present in the Spanish courtroom and Applicants did not seek Mr. Starer's testimony in Spain.
COUtts in this district have previously denied section 1782 requests when a pmty had not first
sought production in the foreign forum. Aventis Pharma v. Wyeth, M-19-70 (DAB), 2009 WL
3754191, at *1 (S.D.N.Y. Nov. 9,2009) ("[I]n five years, Aventis has never sought the subject §
1782 documents in the French Tribunal. Regardless of whether Aventis could have gotten the

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French Courts to compel production of the documents now sought, Aventis' motion is clearly an
attempt to circumvent foreign proof gathering restrictions .... "). The Applicants similarly
appear to attempt to circumvent Spanish proof-gathering restrictions by seeking documents and
deposition testimony here, rather than in Spain.
Considering that, "for all intents and purposes," Schmitz, 376 F.3d at 85, the real
subject ofthe subpoena is Applicants' opponent in the foreign proceeding and the failure of
Applicants to seek the requested material through Spanish proof-mechanisms, the COUIt denies
Applicants' motion.
CONCLUSION
For the reasons stated above, the Applicants' motion to compel is DENIED.

L:e

SO ORDERED.

United States District Judge
Part I

Dated: New York, New York
October 22,2013

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