In Re:Application of Consellior SAS for an Order to Take Discover Pursuant to 28 U.S.C. 1782
Filing
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OPINION & ORDER re: 5 MOTION to Quash 11/08/2016 ORDER, Docket Entry #4 of Hamilton South and John Demsey filed by Hamilton South, John Demsey; 20 MOTION to Compel Hamilton South and John Demsey to Comply with Subpoenas < i> filed by Application of Consellior SAS for an Order to Take Discover Pursuant to 28 U.S.C. 1782. For the foregoing reasons, Consellior's motion to compel is granted and South and Demsey's motion to quash is denied. The parties are directed to proceed with the depositions of South and Demsey in conformity with this Opinion and Order. The Clerk of Court is directed to close the motion pending at ECF No. 20. (Signed by Judge William H. Pauley, III on 2/2/2017) PART 1 (cla)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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IN RE APPLICATION OF CONSELLIOR :
SAS
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WILLIAM H. PAULEY III, District Judge:
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OPINION & ORDER
Petitioner Consellior SAS (“Consellior”) moves to compel Respondents Hamilton
South and John Demsey to comply with subpoenas and appear for depositions. South and
Demsey move to quash those subpoenas. For the reasons that follow, Consellior’s motion to
compel is granted and South and Demsey’s motion to quash is denied.
BACKGROUND
These motions arise out of an application to take discovery pursuant to 28 U.S.C.
§ 1782 in connection with Consellior’s participation in a criminal proceeding in the Higher
District Court of Nancy, France (the “French Proceeding”). Consellior is a privately held French
company and a minority shareholder in Baccarat SA, a French manufacturer of crystal products.
Consellior initiated the French Proceeding by submitting a complaint to the Nancy Public
Prosecutor. 1 The complaint alleges that six Baccarat directors breached their fiduciary duties by
improperly approving a licensing agreement between Baccarat and Starwood Capital Group, an
American investment-management company that owns a controlling stake in Baccarat.
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Under French law, private entities have substantial participation rights in criminal proceedings and are permitted to
call witnesses, file pleadings, and present arguments or evidence before the Magistrate Judge. (See generally
Declaration of Georges Jourde (“Jourde Decl.”), ECF No. 3 at Ex. F.)
Consellior seeks Respondents’ testimony because they are two of the
“independent” Baccarat directors—i.e. not controlled by Starwood—and are residents of New
York. Neither South nor Demsey has been named as a defendant in the French Proceeding. On
November 8, 2016, this Court granted Consellior’s discovery application and ordered South and
Demsey to sit for depositions in New York by January 5, 2017. (ECF No. 4.) When neither
Respondent complied, the parties filed these cross-motions.
LEGAL STANDARD
A district court has considerable discretion as to whether to exercise its authority
to grant a discovery application under 28 U.S.C. § 1782. See In re Application of Grupo
Qumma, No. M 8-85, 2005 WL 937486, at *1 (S.D.N.Y. April 22, 2005) (“A request for
discovery under § 1782 presents two inquiries: first, whether the district court is authorized to
grant the request; and second, if so, whether the district court should exercise its discretion to do
so.”). A court with the statutory authority to grant the application must further decide whether to
exercise its discretion “in light of the twin aims of the statute: providing efficient means of
assistance to participants in international litigation in our federal courts and encouraging foreign
countries by example to provide similar means of assistance to our courts.” Schmitz v. Bernstein
Liebhard & Lifshitz, LLP, 376 F.3d 79, 84 (2d Cir. 2004).
The Supreme Court has identified four “factors that bear consideration” in
exercising this discretion: (1) whether “the person from whom discovery is sought is a
participant in the foreign proceeding,” in which case “the need for § 1782(a) aid generally is not
as apparent”; (2) “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.
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federal-court judicial assistance”; (3) “whether the § 1782(a) request conceals an attempt to
circumvent foreign proof-gathering restrictions or other policies of a foreign country or the
United States”; and (4) whether the request is “unduly intrusive or burdensome.” Intel Corp. v.
Advanced Micro Devices, Inc., 542 U.S. 241, 264–65 (2004).
DISCUSSION
Under the circumstances, the Intel factors weigh in favor of Consellior’s
application. South and Demsey’s motion relies heavily on the argument that any testimony they
could offer would be duplicative of the evidence available to the magistrate in the French
Proceeding. Further, Respondents argue that Consellior has not yet attempted to obtain this
discovery of directors from the French court. This attempt to impose an exhaustion or necessity
requirement on Consellior’s § 1782 application is unavailing. See Mees v. Buiter 793 F.3d 291,
303 (2d Cir. 2015) (holding that there is no “necessity standard or exhaustion requirement” on
the party seeking § 1782 discovery). The focus of the first Intel factor is on “the foreign
tribunal’s ability to control evidence and order production” by ordering discovery from
individuals subject to the foreign court’s jurisdiction. In re Application of OOO Promnefstroy,
No. M 19-99, 2009 WL 335608, at *5 (S.D.N.Y. Oct. 15, 2009). It is undisputed that South and
Demsey are not parties to the French Proceeding, and that the French magistrate does not have
jurisdiction to compel their testimony. (See Oral Argument Hearing Transcript, January 25,
2017, at 3:23–25.) Accordingly, the testimony sought by Consellior is plainly not “within the
foreign tribunal’s reach, and thus accessible absent § 1782 aid.” Intel, 542 U.S. at 264.
Insofar as Consellior’s application seeks testimony regarding the amendment to
the 2015 licensing agreement and the Baccarat board meeting approving the agreement, the
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application is neither intrusive nor unduly burdensome. This factor simply requires that “the
subject matter of the request[] [be] reasonably tailored to speak to the claims and defenses raised
in the proceedings at issue.” In re Veiga, 746 F. Supp. 2d 8, 25 (D.D.C. 2010); cf. OOO
Promnefstroy, 2009 WL 3335608, at *9 (finding petitioner’s requests unduly burdensome where
the “application extend[ed] to a wide array of documents related to tens of business entities and
to all of their affairs . . . [as well as] all of [Respondent’s] computers since 2005”). Moreover, if
a judge determines that a request is unduly burdensome, it is “far preferable” to remedy that
problem “by issuing a closely tailored discovery order rather than by simply denying relief
outright.” Euromepa S.A. v. R. Esmerian, Inc., 51 F.3d 1095, 1101 (2d Cir. 1995).
In the interests of obviating further discovery disputes and resolving the current
one, Consellior’s depositions shall conform to the following restrictions:
1. The depositions of Mr. South and Mr. Dempsey shall be limited in duration to a
maximum of two hours each, excluding breaks.
2. The depositions shall be scheduled on dates mutually convenient to all parties and
their counsel.
3. The deposition testimony shall be subject to a mutually acceptable confidentiality
agreement.
4. The depositions shall be confined to the following topics: (1) the 2015 Amendment,
and (2) the discussion and approval of the 2015 Amendment at the January 28, 2015
Baccarat board meeting.
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CONCLUSION
For the foregoing reasons, Consellior’s motion to compel is granted and South
and Demsey’s motion to quash is denied. The parties are directed to proceed with the
depositions of South and Demsey in conformity with this Opinion and Order. The Clerk of
Court is directed to close the motion pending at ECF No. 20.
Dated: February 2, 2017
New York, New York
SO ORDERED:
_____________________________
WILLIAM H. PAULEY III
U.S.D.J.
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