In re Application of Monika Niedbalski, For an Order Pursuant to 28 U.S.C. § 1782 to Conduct Discovery for Use in Foreign Proceedings
Filing
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MEMORANDUM OPINION AND ORDER for 28 Report and Recommendations. The Court has considered all the arguments of the parties. To the extent not specifically addressed above, the arguments are either moot or without merit. For the foregoing reasons, the objections to the Report and Recommendation are overruled. The Court adopts the Report and Recommendation issued by Magistrate Judge Moses. Walton's motion to intervene is granted, and its motion to reconsider and vacate the October 15 Order is denied. The Clerk is directed to close all pending motions and to close this case. SO ORDERED. (Signed by Judge John G. Koeltl on 7/7/2023) (jca) Modified on 7/7/2023 (jca).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE APPLICATION OF MONIKA
NIEDBALSKI, FOR AN ORDER PURSUANT
TO 28 U.S.C. § 1782 TO CONDUCT
DISCOVERY FOR USE IN FOREIGN
PROCEEDINGS
21-mc-747 (JGK)
MEMORANDUM OPINION
AND ORDER
JOHN G. KOELTL, District Judge:
The applicant, Monika Niedbalski, brought this action
pursuant to 28 U.S.C. § 1782 to compel various banks to produce
records for use in a foreign proceeding in Alberta, Canada (the
"Alberta Action"). On October 15, 2021, Magistrate Judge Moses
granted the Section 1782 application. ECF No. 7 ("October 15
Order"). On November 9, 2021, Walton International Group, Inc.
("Walton")
filed a motion to intervene in the action as an
interested party in the Alberta Action and a motion for
reconsideration of Magistrate Judge Moses's October 15 Order. On
May 8, 2023, Magistrate Judge Moses issued a Report and
Recommendation recommending that Walton's motion to intervene be
granted, but that Walton's motion to reconsider and vacate the
October 15 Order be denied, and reaffirming that the Section
1782 application be granted. ECF No. 28 at 16.
Walton has now filed objections to Magistrate Judge Moses'
Report and Recommendation. For the following reasons, the
objections are overruled, and the Court adopts the Report and
Recommendation.
I.
"Although a magistrate may hear dispositive pretrial
motions,
[s]he may only submit proposed findings of fact and
recommendations for disposition of the matter." Thomas E. Hoar,
Inc. v. Sara Lee Corp., 900 F.2d 522, 525 (2d Cir. 1990). A
district judge reviews de novo a Magistrate Judge's Report and
Recommendation, and must "arrive at its own, independent
conclusion about those portions of the magistrate's report to
which objection is made." Nelson v. Smith, 618 F. Supp. 1186,
1189-90 (S.D.N.Y. 1985) . 1
For "nondispositive pretrial matters,
. the magistrate
may issue orders." In re Hulley Enters. Ltd., 400 F. Supp. 3d 62
69 (S.D.N.Y. 2019). "A district judge may only set aside or
modify a portion of a Magistrate Judge's ruling on a nondispositive pretrial matter if [it] can be shown that the
magistrate's order is clearly erroneous or contrary to law."
Fed. Republic of Nigeria v. VR Advisory Servs., Ltd., No. 21-mc7, 2023 WL 2477889, at *1 (S.D.N.Y. Mar. 13, 2023). Rulings on
Unless otherwise noted, this Memorandum Opinion and Order
omits all alterations, citations, footnotes, and internal
quotation marks in quoted text.
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pretrial matters, including discovery, "generally are considered
'nondispositive.'" Thomas E. Hoar, Inc., 900 F.2d at 525.
The proper standard of review to be applied to orders
granting Section 1782 applications is unsettled in this Circuit.
In a recent unreported order, the Court of Appeals for the
Second Circuit remanded a Magistrate Judge's order denying a
Section 1782 application to the district court to be "treated as
a report and recommendation" for which "appropriate proceedings
can be held." Associacao dos Profissionais dos Correios v. Bank
of N.Y. Mellon Corp., No. 22-2865, 2023 WL 3166357, at *l (2d
Cir. Mar. 28, 2023). However, the Court of Appeals' decision in
that case was non-precedential, and prior to that decision, "the
majority of [district] courts [found] that rulings on§ 1782
applications are not dispositive." In re Hulley Enters., 400 F.
Supp. 3d at 71 (collecting cases). Moreover, while an "order
denying discovery in a Section 1782 application" would be
dispositive because denying a Section 1782 application
"dismiss[es] the .
. application" and "wholly dispose[s]" of
it, Fed. Republic of Nigeria, 2023 WL 2477889, at *l, an order
granting a Section 1782 application leaves open the possibility
that a district court may order further discovery and does not
"necessarily dispose[] of the ultimate relief sought in the
federal case," cf. CPC Patent Techs. Pty Ltd. v. Apple, Inc., 34
F.4th 801, 808
(9th Cir. 2022). In this case, the Magistrate
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Judge's order granted the application, and the appropriate
standard of review to be applied to the order is unclear. To
relieve this uncertainty, the Magistrate Judge issued a Report
and Recommendation, taking the conservative view that a decision
granting a Section 1782 application may be dispositive. ECF No.
28 at 1 n.l.
Even applying the de novo standard of review, the Report
and Recommendation should be adopted. Walton does not challenge
the portion of the Magistrate Judge's Report and Recommendation
allowing it to intervene and does not challenge the legal
principles applied by the Magistrate Judge in her analysis of
the motion for reconsideration. The Magistrate Judge correctly
applied the relevant statutory requirements for a Section 1782
application, see ECF No. 28 at 7-8, and also analyzed thoroughly
the discretionary factors provided by Intel Corp. v. Advanced
Micro Devices, Inc., 542 U.S. 241, 264-66 (2004). See ECF No. 28
at 10-15. Because the statutory criteria were satisfied and
because the discretionary Intel factors "all weigh[ed] in favorn
of the applicant, Magistrate Judge Moses concluded that the
application should be granted. Id. at 16.
Walton argues that the applicant does not actually seek the
documents for use in the Alberta Action. This argument was not
made on the motion for reconsideration and would therefore be an
improper basis to reject the Report and Recommendation. See
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Piligian v. Icahn Sch. Of Med. at Mount Sinai, 490 F. Supp. 3d
707, 716 (S.D.N.Y 2020)
("(N]ew arguments and factual assertions
cannot properly be raised for the first time in objections to
the report and recommendation, and indeed may not be deemed
objections at all.n); United States v. Gladden, 394 F. Supp. 3d
465, 480
(S.D.N.Y. 2019)
("[Al district judge will not consider
new arguments raised in objections to a magistrate judge's
report and recommendation that could have been raised before the
magistrate but were not.n).
In any event, Walton's argument is conclusory and
unsupported. Walton cites cases for the proposition that a
Section 1782 application should be denied if there is evidence
that the discovery sought is not truly for use in a foreign
proceeding, but those cases are inapposite because there is no
evidence in this case that the applicant does not intend to use
the produced discovery in the Alberta Action. See, e.g., In re
Postalis, No. 18-mc-497, 2018 WL 6725406, at *3 (Dec. 20, 2018)
In Postalis, the applicant "admitted that the purpose of [the]
discovery application is for [the applicant] to obtain discovery
that [the applicant] can use to plead a new action against [the
opposing party] in the United States,n "has publicly stated its
hope to bring a lawsuit against [the discovery target],n and
"has affirmed that the present discovery application will assist
. in bringing such a lawsuit.n Id. In this case, Walton
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concedes that there is no such smoking gun evidence. See
Objection, ECF No. 29, at 4-5 ("Applicant has made no statements
to contradict her assertion that the discovery of [Walton's]
bank records was for use in the Alberta Action."). Instead,
Walton speculates that the applicant does not intend to use the
documents in the Alberta Action because the applicant has moved
that action along slowly and did not serve the Statement of
Claim on Walton before Walton filed its defense in that action.
Without more, the slow progression of the Alberta Action
does not indicate bad faith on the part of applicant. The
applicant represents that "the Statement of Claim was initially
filed in order to 'stay' the 'Limitations Period' and thereby
afford the Plaintiffs the necessary time to complete their
investigation prior to serving [Walton] with the Statement of
Claim." Niedbalski Deel., ECF No. 31, I 4. There is no evidence
that contradicts this representation, and it is plausible that
the applicant needs more information, including through the
discovery of certain materials through this Section 1782
application, to proceed with the Alberta Action. Because there
is no evidence that the applicant intends to use the discovery
to pursue goals unrelated to the Alberta Action, this case is
unlike the cases cited by Walton where "public statements" by
the applicant rendered the "assertions that the requested
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discovery is for use in the [foreign] proceedings .
. not
credible." In re Postalis, 2018 WL 6725406, at *4.
The statutory requirement of 28 U.S.C. § 1782 that the
requested discovery be "for use in a proceeding in a foreign or
international tribunal" means that the discovery "will be
employed with some advantage or serve some use in the
proceeding." Mees v. Buiter, 793 F.3d 291, 298-99 (2d Cir.
2015). The applicant represents that "the majority of the
relevant transactions [in this case] were transacted by United
States intermediary banks." Niedbalski Deel. ! 12. These
intermediary banks are the target of this Section 1782
application, and the applicant represents that the documents
produced are needed to "successfully prosecute [the applicant's]
claims in the Alberta Action." Id. ! 15. Based on these
representations, it is plain that the discovery sought "will be
employed with some advantage or serve some use" in the Alberta
Action. Mees, 793 F.3d at 298. In any event, on the motion for
reconsideration, Walton did not argue that the applicant did not
intend to use the discovery in a foreign proceeding, and
"concede[d] by its silence that the Application satisfies the
statutory requirements." ECF No. 28 at 8.
Accordingly, the objections filed by Walton are
unpersuasive and unsupported by any evidence, and are overruled.
The Court finds that the Report and Recommendation issued by
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Magistrate Judge Moses is well-reasoned and correct, and
therefore the Court adopts the Report and Recommendation.
CONCLUSION
The Court has considered all the arguments of the parties.
To the extent not specifically addressed above, the arguments
are either moot or without merit. For the foregoing reasons, the
objections to the Report and Recommendation are overruled.
The Court adopts the Report and Recommendation issued by
Magistrate Judge Moses. Walton's motion to intervene is granted,
and its motion to reconsider and vacate the October 15 Order is
denied. The Clerk is directed to close all pending motions and
to close this case.
SO ORDERED.
Dated:
New York, New York
July 7, 2023
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John G. Keel tl
United States District Judge
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