In Re:Application of RSM production Corporation and Jack J. Grynberg
OPINION AND ORDER....The application to take discovery pursuant to 28 U.S.C. § 1782 is denied. The Clerk of Court shall close this case. (Signed by Judge Denise L. Cote on 3/9/2018) (gr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE APPLICATION OF RSM PRODUCTION
CORPORATION AND JACK J. GRYNBERG FOR
AN ORDER TO TAKE DISCOVERY PURSUANT TO :
28 U.S.C. § 1782
OPINION AND ORDER
For the applicants:
Jae Y. Kim
Law Offices of Jae Y. Kim, LLC
One University Plaza
Hackensack, New Jersey 07601
For the respondent:
Joseph Serino, Jr.
Latham & Watkins LLP
885 Third Avenue
New York, New York 10005
Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005
DENISE COTE, District Judge:
RSM Production Corporation (“RSM”) and Jack J. Grynberg
(“Grynberg”) have applied to this New York federal court to take
discovery pursuant to 28 U.S.C. § 1782 from Yitzhak Tshuva
(“Tshuva”), an Israeli citizen and resident, for use in litigation
Tshuva has opposed the application.
was not “found” in this district, the application is denied.
would in any event be denied as a matter of this Court’s
The following facts are drawn from the affidavits submitted
in support of the applicants’ motion.
Grynberg contends that RSM
is a Colorado corporation that engages in exploring and drilling
for hydrocarbons worldwide.
Grynberg alleges that he and RSM
obtained proprietary seismological information concerning the
geology of the ocean floor in the Eastern Mediterranean Sea, in
Israel’s Exclusive Economic Zone (“EEZ”).
In early 2000, RSM
submitted an application with the Israeli Ministry of Energy and
Infrastructure seeking permission to search for hydrocarbons in
According to Grynberg, however, RSM’s application was
In 2004, RSM submitted another application,
which was denied.
RSM then challenged the denial in the Israeli
Ultimately, RSM was offered a license on what it
contends were commercially unreasonable terms.
Grynberg claims to have learned recently that around the same
time that RSM was offered a license, the Energy Ministry issued
permits and licenses to companies controlled by Tshuva on more
Grynberg believes that companies owned,
controlled, or in association with Tshuva, among other companies,
bribed the Israeli Energy Ministry, the Controller of Petroleum
Affairs, and the Petroleum Advisory Council to keep RSM and
Grynberg out of the EEZ.
Based on the allegations of bribery and
corruption, RSM and Grynberg commenced a litigation in Israel
against the three Israeli governmental entities (the “Israeli
Respondent Tshuva is an Israeli business person, domiciled in
Israel, and not a party to the Israeli Proceeding.
apparently controls or has an interest in various companies that
engaged in some of the transactions underlying the Israeli
His only current connection to New York appears to be
his interest and role in the real estate company El Ad Group, Ltd.
(“El Ad”), which is located and controls various properties in New
It is apparently undisputed that Tshuva travels to New
York somewhat frequently for business reasons in connection with
On June 22, 2017, applicants commenced this proceeding
seeking discovery from Tshuva in connection with the Israeli
After an initial conference and briefing on
applicants’ motion, the motion to take discovery was fully
submitted on November 10, 2017.
Grynberg seeks discovery from Tshuva in aid of the Israeli
Tshuva objects to the discovery on the ground that
there is no personal jurisdiction over him in New York, that he
was not “found” in this district for purposes of § 1782, and that
the court’s discretion should not be exercised to require Tshuva
to provide the discovery sought in this application.
Tshuva has not been “found in” the Southern District of New York
under § 1782, the application must be denied on statutory grounds.
Even if Tshuva were eventually to be found in the Southern
District, such an application would be unlikely to succeed as a
Section 1782 Statutory Requirements and Discretionary
28 U.S.C. § 1782 provides, in pertinent part: “The district
court of the district in which a person resides or is found may
order him to . . . produce a document . . . for use in a
proceeding in a foreign or international tribunal . . . upon the
application of any interested person.”
The Second Circuit has
summarized the statute as setting forth three
requirements: that ‘(1) the person from whom
discovery is sought resides (or is found) in the
district of the district court to which the
application is made, (2) the discovery be for use
in a proceeding before a foreign tribunal, and (3)
the application be made by a foreign or
international tribunal or any interested person.’
Certain Funds, Accounts, and And/Or Inv. Vehicles v. KPMG LLP, 798
F.3d 113, 117 (2d Cir. 2015) (quoting Brandi-Dohrn v. IKB Deutsche
Industriebank AG, 673 F.3d 76, 80 (2d Cir. 2012)).
Once the statutory requirements are met, the
district court may order discovery under § 1782 in
its discretion, taking into consideration the “twin
aims” of the statute, namely, “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.”
Id. (quoting In re Metallgesellschaft, 121 F.3d 77, 79 (2d Cir.
The Supreme Court outlined in Intel Corp. v. Advanced
Micro Devices, Inc., 542 U.S. 241 (2004), a number of factors that
a district court should consider in deciding how to exercise this
The discretionary factors are:
First, when the person from whom discovery is
sought is a participant in the foreign proceeding
the need for § 1782(a) aid generally is not as
apparent as it ordinarily is when evidence is
sought from a nonparticipant in the matter arising
abroad. A foreign tribunal has jurisdiction over
those appearing before it, and can itself order
them to produce evidence.
Second, a court presented with a § 1782(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-court judicial assistance.
Third, a district court could consider 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.
Finally, unduly intrusive or burdensome requests
may be rejected or trimmed.
Brandi-Dohrn v. IKB Deutsche Industriebank AG, 674 F.3d at 80-81.
Tshuva has not been “found” in the Southern District of New
The Second Circuit’s leading case on the “is found” prong of
28 U.S.C. § 1782 is In re Edelman, 295 F.3d 171 (2d Cir. 2002).1
It is undisputed that Grynberg and RSM satisfy the second and
third statutory factors, namely that the material is for use in
the Israeli proceeding, and that Grynberg and RSM are interested
Edelman involved the question of whether an individual who lived
and worked abroad could be subject to a deposition in the United
States pursuant to § 1782.
Id. at 173.
After the individual was
served in a judicial district of the United States, he sought to
quash the subpoena because he was not “found” in that district.
Id. at 174.
On appeal, the Second Circuit held that “the question
of what it means to be found in a particular locale is already the
subject of well-settled case law on territorial jurisdiction.”
Id. at 179.
After engaging in extensive analysis of the text and
history of the statute, the court held that “the phrase ‘or is
found’ in § 1782 [has] the same breadth as that accorded it in
Burnham v. Superior Court of California, 495 U.S. 604 (1990).”
re Edelman, 295 F.3d at 179.
To be “found” in a place under
Burnham, and thus under § 1782, requires a person to be physically
present in the jurisdiction while served with process.
Burnham, 495 U.S. at 619 (plurality opinion).
There is no allegation that Tshuva was served with process in
this proceeding while physically present in the Southern District
of New York.
RSM and Grynberg apparently left the service papers
with an individual at El Ad, but this did not constitute the
personal service contemplated by Burnham and § 1782.
Nor does any
party contend that Tshuva “resides” in the Southern District of
parties to that proceeding.
Accordingly, the application to take discovery does not
meet the first statutory requirement, and must be denied on that
RSM and Grynberg contend that because Tshuva has an interest
in El Ad, he is “found” in the Southern District of New York under
the authority of In re Republic of Kazakhstan, 110 F. Supp. 3d 512
That case, however, involved a § 1782
application directed to an entity -– a Limited Liability
Partnership -- as to which the statutory requirement of being
“found” in a place requires application of different principles
developed regarding corporate presence.
The application here, by
contrast, is directed to Tshuva individually, not El Ad.
individual’s ownership interest in a corporation does not make
that individual a resident of the place where that corporation is
located, much less render that person physically present there.
As Edelman holds, an individual is found in a place when they are
served when physically present in that place, and that has not
III. The Application Would Be Denied As a Matter of Discretion.
Even if Tshuva were eventually to be “found” in the Southern
District of New York, such that the statutory requirements were
met, the application would likely be denied as a matter of
The fourth Intel factor permits the denial of a
§ 1782 application that is vexatious and made in bad faith.
generally In re WinNet R CJSC, 2017 WL 1373918, at *9 (S.D.N.Y.
Apr. 13, 2017), recon. denied, 2017 WL 2728436 (S.D.N.Y. June 23,
2017), appeal withdrawn sub nom. WinNet R CJSC v. Siguler Guff &
Co., LP, No. 17-2247 (2d Cir. Oct. 24, 2017).
That factor applies
to this application.
Grynberg and his related entities are serial litigants in
this Court and courts across the country, and have been repeatedly
sanctioned for bad faith litigation.
See In re Nat. Gas.
Royalties Qui Tam Litig., 2011 WL 12854134, at *13 (D. Wyo. July
22, 2011); Grynberg v. Total Compagnie Francaise Des Petroles, 891
F. Supp. 2d 663, 686 n.14 (D. Del. 2012) (collecting sanctions
cases), vacated in part on reargument, 2013 WL 5459913 (D. Del.
Sep. 30, 2013); see also In re Natural Gas Royalties Qui Tam
Litig., 845 F.3d 1010, 1024 (10th Cir. 2017); In re Grynberg, 223
F. Supp. 3d 197, 202 (S.D.N.Y. 2017) (criticizing litigation
They have already sought documents regarding the same
set of transactions underlying the Israeli Proceeding from
companies related to Tshuva in a § 1782 application brought in the
Southern District of Texas.
See In re RSM Prod. Corp., 195 F.
Supp. 3d 899 (S.D. Tex. 2016).
As counsel for applicants has
admitted, Tshuva’s companies, such as those involved in the
Southern District of Texas proceeding, as opposed to Tshuva
personally, would be the ones likely to be involved in any of the
These same companies would therefore almost
certainly be in possession, custody, or control of any relevant
Production of documents was made in that case, and
although the applicants are apparently dissatisfied with that
production, that is not a basis to file a new proceeding in
another court against a related party.
This proceeding appears to
be duplicative, vexatious, and brought in bad faith.
The application would also likely be denied as an end-run
around Israeli discovery procedures.
Tshuva is an Israeli
resident, and is subject to the jurisdiction of the Israeli
Intel counsels against permitting discovery of
participants to a foreign proceeding, and although Tshuva is not a
participant in the foreign proceeding, it would be a poor exercise
of discretion in these circumstances to assist an Israeli court by
providing discovery from an Israeli resident whose documents are
within the Israeli court’s jurisdiction.
Cf. Intel, 542 U.S. at
264 (2004) (noting that nonparticipants to the foreign proceeding
may be outside the foreign tribunal’s jurisdictional reach, thus
necessitating the use of § 1782).
This would be an independent
and strong basis on which to deny the application.
The application to take discovery pursuant to 28 U.S.C. §
1782 is denied.
The Clerk of Court shall close this case.
New York, New York
March 9, 2018
United States District Judge
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