Ativos Especiais II - Fundo de Investimento em Direitos Creditrios NP et al v. The Clearing House Payments Company LLC et al

Filing 29

OPINION AND ORDER re: 17 MOTION to Vacate 7 Order on Motion for Discovery,,,,,,, and quash associated subpoenas. filed by Silvana Malandrini Mazza, Francisco Malandrini Mazza, Stelvio Malandrini Mazza. The motion to vac ate and quash subpoenas is GRANTED as to the subpoena against Morgan Stanley and DENIED as to the subpoena against the Clearing House. The Clerk of Court is respectfully directed to close Dkt. No. 17. SO ORDERED. (Signed by Judge Lewis J. Liman on 9/12/2024) (ks)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
In re Ex Parte Application of Ativos Especiais II - Fundo :
de Investimento em Direitos Creditórios - NP and Ativos :
Especiais III - Fundo de Investimento em Direitos
:
Creditórios - NP,
:
:
Applicants.
:
:
:
---------------------------------------------------------------------- X

09/12/2024

24-mc-119 (LJL)
OPINION AND ORDER

LEWIS J. LIMAN, United States District Judge:
Intervenors Silvana Malandrini Mazza (“Malandrini Mazza”), and her two adult sons,
Francisco Malandrini Mazza (“Francisco”) and Stelvio Malandrini Mazza (“Stelvio” and with
Malandrini Mazza and Francisco, “Intervenors” or the “Mazza Group”) move for an order
vacating this Court’s March 18, 2024, order granting an application for discovery under 28
U.S.C. § 1782. Dkt. No. 17. The Court heard oral argument on this motion on September 9,
2024. The motion is granted in part and denied in part.
BACKGROUND
I.

The Relationship of the Parties
Applicants Ativos Especiais II – Fundo de Investimento em Direitos Creditorios – NP

(“Ativos Especiais II”) and Ativos Especiais III – Fundo de Investimento em Direitos Creditorios
– NP (“Ativos Especiais III” and together with Ativos Especiais II, “Applicants”) are holders of
debentures issued by HB Participacoes S.A (the “Issuer”), the parent company of Starbucks
Brasil Comercio de Cafes Ltda (the “Company”), which operates Starbucks stores in Brazil.
Dkt. No. 4 ¶¶ 8, 14, 16; Dkt. No. 19 ¶ 6. Intervenor Silvana Malandrini Mazza is party to an
Equity Commitment Letter (the “Contract”) which was executed in conjunction with the issuance
of the debentures. Dkt. No. 4 ¶ 17; Dkt. No. 19 ¶ 8.

Under the Contract, Malandrini Mazza committed to make one or more capital
contributions in cash to the Issuer or the Company, as relevant, upon the occurrence of certain
Trigger Events. Dkt. No. 4 ¶ 17. One Trigger Event is a Failure to Pay Trigger Event, which
occurs if the Issuer fails to pay any amount due to a Debenture Holder under the Indenture. Id. ¶
18; Dkt. No. 19 ¶ 11. Another Trigger Event is a Net Debt to EBITDA Ratio Trigger Event,
which occurs if, as of the last day of any fiscal year of the Company, the Net Debt to EBITDA
Ratio of the Company is greater than 2.5:1.0. Dkt. No. 4 ¶ 19; Dkt. No. 19 ¶ 12.
Applicants claim that both of these Trigger Events have occurred. Dkt. No. 4 ¶ 20. On
July 21, 2023, Applicants served notice on Malandrini Mazza that the Net Debt to EBITDA
Ratio Trigger Event had occurred, giving rise to an obligation on the part of Malandrini Mazza to
make an Equity Contribution to the Company in an amount that, had it consisted of cash or cash
equivalents on the last day of the fiscal year, would have resulted in a Net Debt to EBITDA
Ratio of equal to or less than 2.5:1.0. Dkt. No. 4 ¶¶ 21–22. When Malandrini Mazza did not do
so, Applicants served a second notice on her that the Net Debt to EBITDA Ratio Trigger Event
had occurred. Id. ¶ 24.
On October 10, 2023, the Issuer was required to make a payment to Debenture Holders in
connection with the second installment of the second issuance under the Indenture, but it did not
do so within two business days as required under the Indenture. Id. ¶ 26. On October 12, 2023.
Applicants served notice on Malandrini Mazza that the Failure to Pay Trigger Event had
occurred. Id. ¶ 27. At this time, Malandrini Mazza has not made the contributions required
under the Contract upon the occurrence of the Net Debt to EBITDA Ratio Trigger Event or
Failure to Pay Trigger Event. Id. ¶¶ 25, 28.

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II.

The Foreign Proceedings
Applicants have initiated several proceedings in Brazil related to Malandrini Mazza’s

obligations under the Contract. Dkt. No. 4 ¶ 30; Dkt. No. 19 ¶ 15. On October 9, 2023, in the
41st Civil Court of the Central State Forum of the City of Sao Paulo in Brazil, Applicants
initiated a protesto contra alienação de bens (“protesto”) under Brazilian law against Malandrini
Mazza, Francisco, and Stelvio. Dkt. No. 4 ¶ 33. A protesto is a proceeding brought with the
purpose of disclosing to the public the existence of a legal claim against someone, putting third
parties on notice that transactions with the defendant may be revoked if the defendant does not
have sufficient assets to comply with the claim if it ripens into an obligation. Id.; Dkt. No. 19 ¶
17. Applicants brought the protesto to help them eventually collect if they obtain a future
judgment against Malandrini Mazza, Francisco, or Stelvio. Dkt. No. 4 ¶ 34. In the proceeding,
Applicants desire to be made public that they claim: (i) that Malandrini Mazza failed to fulfill an
obligation established by the Contract; and (ii) that Francisco and Stelvio are responsible for
fulfilling the obligations assumed by their mother in the Contract. Dkt. No. 19 ¶ 22.
On January 29, 2024, Applicants initiated an execução de obrigacao de fazer
(“execução”) proceeding in the 4th Civil Court of the Central State Forum of the City of Sao
Paulo in Brazil. Dkt. No. 4 ¶ 31. An execução is a proceeding brought to compel someone to
fulfill a contractual duty. Id.; Dkt. No. 19 ¶ 50. In this second proceeding, Applicants seek to
compel Malandrini Mazza to make cash capital contributions due under the Contract. Dkt. No. 4
¶ 31.
Applicants make reference to a further Brazilian proceeding in which the documents they
request may be used: an incidente de desconsideração da personalidade jurídica (“incidente”),
Id. ¶¶ 32, 43. An incidente de desconsideração da personalidade jurídica, or “request for the
disregard of the legal entity,” is a proceeding pursuant to which parties can ask the court to
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pierce the corporate veil and use the assets of one party to satisfy the liabilities of another. Id. ¶
32. Applicants state that they anticipate bringing an incidente to compel Francisco and Stelvio to
use their assets to satisfy a judgment, if they obtain one, against Malandrini Mazza in the
execução. Id. ¶ 43.
These three proceedings are defined as the Brazilian Proceedings.
Intervenors identify a fourth proceeding, which was initiated by Applicants, a produção
antecipada de prova (“produção”). Dkt. No. 19 ¶¶ 29-49. A produção is a proceeding seeking
early production of evidence. Id. ¶ 30. In the produção proceeding, Applicants sought early
production of evidence related to alleged asset concealment by Malandrini Mazza, Francisco,
Stelvio, and a related company. Dkt. No. 19-5 ¶ 3. The alleged transactions occurred in 2007.
Id. ¶¶ 3, 6. Specifically, Applicants sought evaluations related to properties contributed to the
company by Francisco and Stelvio in 2007, a forensic accounting examination of the company,
and income tax declarations of each individual since 2007. Id. ¶ 3.
On May 24, 2024, the Brazilian court denied Applicants’ request for early production of
evidence. Id. The court stated that there were “several grounds justifying the immediate
dismissal” of the case, including lack of standing, absence of a valid reason for legal action,
failure to provide a clear and specific basis for the claim, and jurisdictional incompetence. Id. ¶
5. Specifically, the court found there were “significant doubts” as to whether the sons could be
held liable for the mother’s debts and that “considering that the transactions between the
defendants took place in 2007 and [Malandrini Mazza’s] investment commitment to the plaintiffs
occurred in 2021, approximately fifteen years later, it seems highly improbable that the
defendants’ actions were aimed at concealing [Malandrini Mazza’s] assets, purely based on the
timeline.” Id. ¶ 6. It added: “It’s difficult to conceive how actions taken nearly two decades

4

before [Malandrini Mazza’s] capital commitment to the plaintiffs could constitute commingling
of assets or abuse towards the plaintiffs . . . because at the time of those actions, there was no
contractual relationship with the plaintiffs.” Id. 1 The Court held that there was currently “no
legal basis” for Applicants’ “ill-fated attempt to retrospectively investigate the financial history
of the defendant,” which it characterized as a “fishing expedition.” Id. ¶ 10.
Applicants did not seek any evidence in the produção beyond the evidence related to the
2007 transaction. See id. ¶ 3. Applicants’ Brazilian lawyer states in this proceeding that
Applicants have gathered evidence of “an unlawful scheme to hide Malandrini Mazza’s assets to
prevent them from being attached by creditors,” including evidence of “a capital contribution to
a family corporate vehicle based on suspicious real estate property valuations; unjustified capital
dilutions by Malandrini Mazza; and evidence that despite the dilutions, Malandrini Mazza never
stopped being the controller of the family business, among others.” Dkt. No. 24 ¶ 17. It is not
clear from Applicants’ submission that the evidence to which they refer is anything different
from the 2007 transactions referenced in the produção, or that “creditors” refers to Applicants
themselves. Tellingly, Applicants do not provide the date of such evidence or any details
regarding the evidence. At oral argument on Intervenors’ motion, Applicants were not able to
provide any additional detail. Oral Argument Tr. 9, 13-14, 37–38.
III.

The 1782 Request
On March 13, 2024, Applicants made an ex parte application for an order pursuant to 28

U.S.C. § 1782 permitting them to obtain discovery from The Clearing House Payments
Company LLC (the “Clearing House”) and Morgan Stanley & Co. LLC (“Morgan Stanley”) for
use in the Brazilian Proceedings. Dkt. No. 1. The time period for the records requested in this

1

The Brazilian court referred to Malandrini Mazza by her first name, Silvana.
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proceeding differs from the time period for the records requested in the produção. Applicants
sought leave to serve a subpoena on the Clearing House for copies of all wire transfers and
payment messages processed through the Clearing House during the period July 8, 2021, to
present involving Malandrini Mazza, Francisco, Stelvio, or various entities affiliated with
Malandrini Mazza (the “Corporate Entities”). Dkt. No. 2-1 at 2–10. 2 Applicants further sought
leave to serve on Morgan Stanley a subpoena calling for account records and account statements
from July 8, 2021, to present relating to the Malandrini Mazza Accounts, defined to include
accounts held in the name of Malandrini Mazza, Francisco, Stelvio, or the Corporate Entities.
Dkt. No. 2-1 at 11–19. Specifically, the subpoena requested:
1. All account records and account statements relating to the Malandrini Mazza
Accounts, such as detailed checking account information (account number, account
balance, date of opening and closure of account); detailed investment account
information (account number, date of opening and closure of account); custodian
account information (including for cash and commodities); audited and/or
unaudited financial statements; equity and/or bond certificates; trade confirmation
statements; and monthly portfolio reports;
2. All transaction histories for the Malandrini Mazza Accounts; and
3. Documents sufficient to show all transfers in and out of the Malandrini Mazza
Accounts, including withdrawals, deposits, transfers of money, or any activity in
the Malandrini Mazza Accounts.
Id. at 18–19.
On March 18, 2024, the Court issued an order granting the ex parte application “without
prejudice to a challenge to the subpoenas, including their scope, and potential reconsideration of
the application of the § 1782 factors.” Dkt. No. 7.
On May 9, 2024, Intervenors filed a motion to intervene. Dkt. No. 8. Applicants did not
oppose the motion. Dkt. No. 13. On May 15, 2024, the Court granted the motion to intervene.

2

References to this document use ECF pagination.
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Dkt. No. 14.
Intervenors filed this motion to vacate, along with a memorandum of law and a
declaration on June 21, 2024. Dkt. Nos. 17–19. Applicants filed a memorandum of law in
opposition to the motion to vacate and two declarations on July 22, 2024. Dkt. Nos. 23–25. On
August 5, 2024, Intervenors filed a reply memorandum of law in further support of their motion
to vacate, along with a declaration in support of that motion. Dkt. Nos. 26–27.
DISCUSSION
To be entitled to relief under Section 1782, applicants “must meet several statutory
requirements, including 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 is for use in
a foreign proceeding before a foreign [or international] tribunal, and (3) the application is made
by a foreign or international tribunal or any interested person.’” Mangouras v. Squire Patton
Boggs, 980 F.3d 88, 97 (2d Cir. 2020) (quoting Mees v. Buiter, 793 F.3d 291, 297 (2d Cir.
2015)); see In Re BonSens.org, 95 F.4th 75, 79 (2d Cir. 2024). 3
“Once the statutory requirements are met, a 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.’”
3

Additionally, the statute requires that the discovery not be “in violation of any legally
applicable privilege.” 28 U.S.C. § 1782(a); see In re Guo, 965 F.3d 96, 102 n.3 (2d Cir. 2020)
(“While our case law has often focused on these three elements, the statute also imposes other
requirements, including that the discovery not be in violation of any legally applicable
privilege.” (citation omitted)). Here, Intervenors have argued that the production of documents
would be contrary to “the constitutional and legal protection of banking secrecy” under Brazilian
law. Dkt. No. 18 at 18; see Dkt. No. 19 ¶ 80–85. However, they have not argued that this
constitutes a “privilege” under Brazilian law or that Brazilian privilege law would be applicable
to the discovery sought here. See Mangouras v. Squire Patton Boggs, 980 F.3d 88, 99 (2d Cir.
2020).
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Certain Funds, Accounts &/or Inv. Vehicles v. KPMG, L.L.P., 798 F.3d 113, 117 (2d Cir. 2015)
(quoting In re Metallgesellschaft, 121 F.3d 77, 79 (2d Cir. 1997)); see In re Pub. Joint-Stock Co.
Bank Otkritie Fin. Corp., 2023 WL 4928227, at *2 (S.D.N.Y. Aug. 2, 2023).
The Supreme Court has set forth four factors for the Court to consider in the exercise of
its discretion:
(1) whether “the person from whom discovery is sought is a participant in the
foreign proceeding,” (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. 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 requested discovery is “unduly intrusive or burdensome.”
BonSens, 95 F.4th at 80 (quoting Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241,
264-65 (2004)).
Intervenors argue that the subpoenas should be quashed and the order authorizing their
issuance vacated because (1) the discovery sought does not satisfy the test that it must be “for
use” in a foreign proceeding; and (2) the discretionary factors weigh against granting the
application.
I.

“For Use”
Intervenors argue that Applicants have not demonstrated that the requested documents

are “for use” in any of the Brazilian Proceedings, either because the proceedings are not
adjudicative, the documents requested are not relevant, or the planned proceedings are not within
reasonable contemplation. Dkt. Nos. 18, 26. Applicants respond that the proceedings are
adjudicative, the requested asset discovery is relevant to the merits of their protesto claims and
enforcement of an eventual judgment in the execução, and the incidente proceeding is within
reasonable contemplation. Dkt. No. 23 at 7–11.

8

“The ‘for use’ statutory prerequisite assesses ‘the practical ability of an applicant to place
a beneficial document—or the information it contains—before a foreign tribunal.’” BonSens, 95
F.4th at 80 (quoting In re Accent Delight Int’l Ltd., 869 F.3d 121, 131 (2d Cir. 2017)). If a
§ 1782 applicant is not a participant in a foreign proceeding and is not in a position to have a
foreign tribunal consider the requested evidence, see Accent Delight, 869 F.3d at 131, or if the
sought-after information would be of no use in the foreign proceeding, see Mees, 793 F.3d at
298, there would be no need in the interests of comity for a United States court to lend its hand to
an applicant to obtain evidence in the United States.
As a threshold requirement, to “serve as a proper predicate for a § 1782 petition” the
proceeding for which the discovery is sought must be “adjudicative in nature.” Euromepa, S.A.
v. R. Esmerian, Inc., 154 F.3d 24, 27 (2d Cir. 1998). Assuming this requirement is met, the
applicant bears the burden to show that the requested discovery will “be employed with some
advantage or serve some use in the proceeding.” Accent Delight, 869 F.3d at 132 (quoting Mees,
793 F.3d at 298). The applicant need not have a claim for relief in the foreign proceeding, nor
must the information sought be necessary to the applicant’s case. Accent Delight, 869 F.3d at
131–133. However, the applicant must demonstrate that the information is “minimally relevant
to the foreign proceeding.” BonSens, 95 F.4th at 80. In addition, there must be a “procedural
mechanism by which the [applicant] may inject the discovery it seeks.” IJK Palm LLC v. Anholt
Servs. USA, Inc., 33 F.4th 669, 680 (2d Cir. 2022).
The prospective use of the evidence need not be imminent, but it cannot be “merely
speculative.” BonSens, 95 F.4th at 80–81 (quoting Mangouras, 980 F.3d at 101). If there is no
pending proceeding in which the evidence can be used, the applicant must “make an objective
showing that the planned proceedings were within reasonable contemplation.” Certain Funds,

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798 F.3d at 124. This may include laying out the legal theory supporting the planned
proceedings, the content of the planned claims, or a “sufficiently concrete” factual basis for the
claims. Mangouras, 980 F.3d at 101. However, “[m]erely retaining counsel and sketching a
vague outline of a proposed suit does not meet that requirement.” IJK Palm, 33 F.4th at 681.
Similarly, courts have denied applications where the applicant sought materials in order to
“investigate whether litigation is possible in the first place, putting the cart before the horse.” In
re Certain Funds, Accts., &/or Inv. Vehicles Managed by Affiliates of Fortress Inv. Grp. LLC,
2014 WL 3404955, at *6 (S.D.N.Y. July 9, 2014), aff'd, 798 F.3d 113; see In re China Constr.
Bank (Asia) Corp. Ltd., 2023 WL 3791711, at *2 (S.D.N.Y. June 2, 2023) (“[C]ourts in this
District have rejected Section 1782 applications when the petitioner sought discovery to
determine whether to initiate a collection proceeding.”); Jiangsu Steamship Co. v. Success
Superior Ltd., 2015 WL 3439220, at *5 (S.D.N.Y. Feb. 5, 2015).
“If an applicant's ability to initiate a proceeding in which the requested discovery may be
used ‘depends on some intervening event or decision,’ the applicant must ‘provide an objective
basis on which to conclude that the event will occur or the requisite decision will be favorable.’”
BonSens, 95 F.4th at 80–81 (quoting IJK Palm, 33 F.4th at 680). When an applicant must clear
“a series of procedural hurdles” in order for the discovery to be usable, and the applicant has not
provided an objective basis on which to believe it will do so, “it has not carried its burden to
show that the suit is within reasonable contemplation.” IJK Palm, 33 F.4th at 680. If the
applicant has not made a sufficient showing that the requested evidence would be “of use” at the
time the application is made and adjudicated, a party may file a new application once
circumstances change. See Mangouras, 980 F.3d at 93; In re MT Baltic Soul

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Produktentankschiff-Ahrtsgesellschaft mgH & Co. KG, 2015 WL 5824505, at *2 (S.D.N.Y. Oct.
6, 2015). 4
On their face, the subpoenas seek discovery of extensive financial information regarding
Malandrini Mazza, her two sons, and five corporate entities. Dkt. No. 2-1 at 9–10, 14–15.
However, Applicants barely address the corporate entities in their response to the motion to
quash, suggesting that they “only seek records about asset transfers by the Mazza Group,” which
is defined as “Malandrini Mazza and her sons.” Dkt. No. 23 at 20; id. at 2. At argument,
Applicants conceded that they are not seeking documents from the corporate entities beyond
those that reference transactions with Malandrini Mazza or her sons. Oral Argument Tr. 7. Even
on Applicants’ account, financial information about the corporate entities other than transfers to
or from Malandrini Mazza or her sons would not be “minimally relevant” to any of the Brazilian
Proceedings. BonSens, 95 F.4th at 80. Therefore, the motion is granted and the subpoena to
Morgan Stanley is quashed to the extent it seeks information about the corporate entities other
than information about asset transfers to and from Malandrini Mazza or her sons.

4

In Certain Funds, the Second Circuit stated that “we assess the indicia of whether the
contemplated proceedings were within reasonable contemplation at the time the § 1782
application was filed.” 298 F.3d at 124. However, from context, it is apparent that the
distinction the court was drawing was between “the facts as they were presented to the district
court” and additional facts arising after the district court made its decision. Id. at 124–125.
Indeed, in Mangouras, the Second Circuit situated its analysis at the time the § 1782 application
was filed “and briefed before the district court,” and appeared to place weight on the filing of
applicant’s foreign proceeding after his application but “prior to the district court’s ruling on the
application.” 980 F. 3d at 100–101. Therefore, as in virtually every other type of litigation, a
district court may take account of developments in the foreign proceedings during the pendency
of the application, rather than relying solely on the facts as they stood at the time of the
application.
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The remaining subpoena requests are for information about Malandrini Mazza, her sons,
and their asset transfers. Whether this information is “for use” must be analyzed with respect to
each of the three proceedings.
A.

Protesto

Applicants argue that the protesto is not an adjudicative proceeding because it “neither
adds nor diminishes rights” and “the court simply acts as a communication mediator.” Dkt. No.
18 at 10 (quoting Dkt. No. 19 ¶¶ 18–19). Courts have found proceedings to be nonadjudicative
when the form of the proceeding is “inconsistent with the concept of impartial adjudication.”
Fonseca v. Blumenthal, 620 F.2d 322, 324 (2d Cir. 1980); see In re Letters Rogatory Issued by
Dir. of Inspection of Gov’t of India, 385 F.2d 1017, 1021 (2d Cir. 1967) (Friendly, J.) (stating
that the concept of adjudication “is not so broad as to include all the plethora of administrators
whose decisions affect private parties and who are not entitled to act arbitrarily, and one useful
guideline is the absence of any degree of separation between the prosecutorial and adjudicative
functions”). But when a proceeding involves a judge deciding contested legal or factual issues, it
is generally understood to be adjudicative. See Fed. Republic of Nigeria v. VR Advisory Servs.,
Ltd., 27 F.4th 136, 158 (2d Cir. 2022) (“determin[ing] the merits of a contention that an arbitral
award should be vacated as fraudulently obtained, a recognized judicial function in this country
as well as in the United Kingdom,” is adjudicative); In re YS GM Marfin II LLC, 2022 WL
624291, at *6 (S.D.N.Y. Mar. 2, 2022) (“[T]he contemplated proceedings . . . will not be merely
‘administrative,’ as they will involve a court hearing or judicial review of a TPDO application.”);
China Constr. Bank, 2023 WL 3791711, at *1 (“the debtor examination will involve judicial
factfinding,” and is therefore adjudicative).
In the protesto, Applicants seek an announcement from a court that they have claims
against Malandrini Mazza and her sons. Dkt. No. 24 ¶ 15; Dkt. No. 19 ¶ 22. In this proceeding,
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the court does not act administratively or in a one-sided manner by simply granting any request
submitted. Rather, for the protesto to be granted, Applicants must show a “legitimate interest”
and non-harmfulness of the request. Dkt. No. 19 ¶ 21–23; Dkt. No. 24 ¶ 16. As the documents
submitted by Intervenors demonstrate, this is a legal standard which requires judicial analysis
and which many requests fail to meet. Dkt. Nos. 19-1, 19-2, 19-3, 19-4. Although the judicial
relief sought in a protesto may be weak compared to, for example, an attachment proceeding,
Intervenors’ own submission rebuts the claim that the court merely “acts as a communication
mediator.” Dkt. No. 18 at 10. Determining a party’s entitlement to relief based on a legal
standard is a quintessentially adjudicative task.
The requirement of “legitimate interest” also suggests that information about asset
transfers between Malandrini Mazza and her sons is at least minimally relevant to the protesto
proceeding. To support Applicants’ announcement that they have claims against both
Malandrini Mazza and her sons, applicants must show that they have a “legitimate interest” in
holding the sons accountable for their mother’s obligations. Dkt. No. 19 ¶ 21–23; Dkt. No. 24 ¶
16. Intervenors have argued in the protesto that Applicants have not met their burden of proof
because they have offered no evidence of collusion or unlawful acts. Dkt. No. 24 ¶ 19. 5 The
protesto court has asked Applicants to respond to this argument. Id.
Documents regarding asset transfers between the mother and sons could “serve some
use” on this point, because, on the assumption that they show collusion or some unlawful act,
they could support Applicants’ underlying alter ego theory. BonSens, 95 F.4th at 80.

5

Although the declaration of Applicants’ Brazilian counsel cites to an exhibit that purports to
further support this point, it is an untranslated document in Portuguese and therefore not properly
before the court. See Heredia v. Americare, Inc., 2020 WL 3961618, at *5 (S.D.N.Y. July 13,
2020).
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Intervenors dispute that they engaged in unlawful acts and argue that the sought-after records
would be insufficient to meet the standard for “legitimate interest.” Dkt. No. 19 ¶ 26. However,
the “for use” standard does not require that the information be decisive or that the Applicant have
“a viable cause of action.” Accent Delight, 869 F.3d at 131–133. Because Applicants have been
asked to justify their claim against the sons in the protesto, and information about asset transfers
between mother and sons speaks to the viability of that claim, the information is at least
minimally relevant to that proceeding. See Mees, 793 F.3d at 298 (rejecting a standard that
“would entail a painstaking analysis not only of the evidence already available to the applicant,
but also of the amount of evidence required to prevail in the foreign proceeding”).
Intervenors cast doubt on Applicants’ arguments by noting that “[a]pplicants already
have represented to the Brazilian court that they do not intend to submit further evidence in the
protesto proceeding.” Dkt. No. 26 at 3–4. This assertion is based on a letter Applicants filed
with the Brazilian tribunal during the pendency of this application, which stated that “there is no
need to talk about the production of additional evidence beyond that already attached . . . which
is sufficient to grant the requests made” and asked the tribunal to grant its request on the basis of
the paper submissions already made to that tribunal. Dkt. No. 27-1. However, this letter does
not show that Applicants lack the “practical ability . . . to place a beneficial document—or the
information it contains—before a foreign tribunal.” BonSens, 95 F.4th at 80. As Applicants
explained without contradiction at oral argument, the letter merely asked the court to issue a
ruling in its favor without receiving evidence. Oral Argument Tr. 4–7. The Brazilian court
already asked for evidence and Applicants did not forego or waive their right to present evidence
if the court adhered to that position. Id. at 5. At oral argument, Intervenors merely stated that
Applicants would need to make a special application to present evidence. Id. at 24. Such an

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application would be a “procedural mechanism” to inject the discovery, and does not preclude
use of the discovery in the foreign proceeding. IJK Palm, 33 F.4th at 680.
Applicants’ letter casts doubt on whether Applicants in fact seek the information with the
intent to use it in the protesto, as opposed to for some other reason. However, that doubt is
relevant to the discretionary analysis, not to whether the information is “for use” as a matter of
law. Cf. In re Harbour Victoria Inv. Holdings Ltd., 2015 WL 4040420, at *5 (S.D.N.Y. June 29,
2015) (denying petition for discretionary reasons when Petitioner advanced “at least a plausible
theory for how the discovery sought could be used in a foreign proceeding,” but the record
“strongly suggest[ed]” that Petitioner in fact sought to use the discovery in an ongoing United
States proceeding).
Because Applicants still have the ability to place the documents before the foreign
tribunal, and the subpoenas ask for documents that fall into the category of those that would be
minimally relevant to their claim, the “for use” requirement is satisfied with respect to the
protesto.
B.

Execução

Applicants state that information about Malandrini Mazza’s assets and asset transfers
“would help identify assets that could be used to enforce any judgment they may receive” in the
execução. Dkt. No. 23 at 9–10. Intervenors argue that this information is irrelevant to
adjudication of the claims and defenses in the execução proceeding, and that discovery aimed at
enforcement should not be granted in the absence of a judgment or motion for pre-judgment
attachment. Dkt. No. 18 at 10–11; Dkt. No. at 4–5.
The Second Circuit has not decided whether a Section 1782 application can be granted
merely to discover assets to satisfy a judgment. See In re Gorsoan Ltd. for an Ord. Pursuant to
28 U.S.C. 1782 to Conduct Discovery for Use in a Foreign Proceeding, 843 F. App’x 352 (2d
15

Cir. 2021) (assuming, but not deciding, that Ҥ 1782 reaches discovery sought only to identify
assets”) (summary order). However, the Court need not decide this question here because in any
case, Applicants have not shown that the particular proceeding for which they would use the
evidence is “within reasonable contemplation.” Certain Funds, 798 F.3d at 123.
Applicants do not contend that the asset information can “be employed with some
advantage” in proving their claims in the execução. Accent Delight, 869 F.3d at 132. The
execução seeks to hold Malandrini Mazza to her obligations under the Contract, which do not
depend on the extent or location of her assets. Information about her assets is only relevant to
the enforcement of a potential judgment.
However, Applicants do not currently have an enforceable judgment for damages, nor do
they have a pending pre-judgment attachment proceeding. This distinguishes this case from
many in which asset discovery was permitted, including the cases cited by Applicants. See In re
Arida, LLC, 2020 WL 7496355, at *4 (S.D.N.Y. Dec. 21, 2020) (“[R]elief may properly be
granted to take discovery of assets in order to enforce an existing judgment, provided that the
applicant has adequately identified the proceeding and demonstrated that the materials sought
could be employed to some advantage in the proceeding.”); Union Fenosa Gas, S.A. v.
Depository Tr. Co., 2020 WL 2793055, at *1–4 (S.D.N.Y. May 29, 2020) (granting asset
discovery in aid of attachment to enforce an arbitral award which the movant “refused to comply
with . . . voluntarily” ); In re JSC BTA Bank, 577 F. Supp. 3d 262, 267 (S.D.N.Y. 2021) (granting
asset discovery aimed at amending existing freezing orders, as well as gathering evidence to
support several merits arguments); In re Batbold, 2021 WL 4596536, at *1–3 (S.D.N.Y. Oct. 6,
2021) (granting asset discovery in support of multiple prejudgment attachment applications
already filed), aff'd, WL 2088524 (S.D.N.Y. Feb. 17, 2023); In re Habib, 2022 WL 1173364, at

16

*3 (S.D.N.Y. Apr. 20, 2022) (granting discovery “for use in an ongoing enforcement
proceeding”). Full asset discovery of every defendant cannot be “for use” upon the filing of a
complaint in a foreign tribunal simply because the plaintiff might win a judgment, which the
defendant might then fail to satisfy, which the plaintiff might then enforce via asset attachment.
Such use is “merely speculative.” BonSens, 95 F.4th at 80–81.
Since there is no pending attachment or enforcement proceeding, Applicants must show
that an enforcement proceeding for which the discovery would be minimally relevant is “within
reasonable contemplation.” Certain Funds, 798 F.3d at 124. Applicants have not shown this.
Rather, the parties’ descriptions of the progress of the execução suggest that there several
“procedural hurdles” still to come under Brazilian law before enforcement can occur. IJK Palm,
33 F.4th at 680. Applicants submit that the execução court ordered Malandrini Mazza to make
required contributions by May 25, 2024, and that Malandrini Mazza did not comply with that
order. Dkt. No. 24 ¶ 5–6. Based on Malandrini Mazza’s failure to perform her obligation,
Applicants have sought conversion of the proceeding to an execução por quantia certa,
essentially a proceeding for money damages rather than specific performance. Dkt. No. 24 ¶ 7.
That application is pending. Id. ¶ 8. Intervenors state that Malandrini Mazza has sought a stay
and litigated the necessity of compliance, and that conversion to an execução por quantia certa
would require a liquidation proceeding to determine the amount of damages. Dkt. No. 27 ¶ 10–
12.
If Applicants had a judgment for damages against Malandrini Mazza and Malandrini
Mazza had refused to pay, an attachment proceeding might well be “within reasonable
contemplation.” See Union Fenosa Gas, 2020 WL 2793055, at *1–4. But right now, an
application for discovery to be used in a post-judgment attachment proceeding is premature.

17

This use of the discovery “depends on . . . intervening event[s] or decision[s],” specifically the
Brazilian court’s decisions on the conversion to an action for damages and on the defenses raised
by Malandrini Mazza. IJK Palm, 33 F.4th at 680. Granting asset discovery for post-judgment
enforcement when the merits of the proceeding remain uncertain would allow any plaintiff to
investigate the finances of any defendant based simply on the fact that he has brought a case. 6
Applicants have also not shown that a pre-judgment attachment proceeding is “within
reasonable contemplation” at this time. Applicants suggest generally in the papers
accompanying their original application that they could “seek a prejudgment attachment,” Dkt.
No. 2 at 9, and in opposing the motion to quash they cite cases in which discovery was granted
for this purpose, see Dkt. No. 23 at 10. However, they do not explicitly state an intent to seek a
pre-judgment attachment in the execução, nor do they demonstrate that there is a legal
mechanism for them to do so. 7 Applicants’ passing statements or implications that they could
seek pre-judgment attachment suggest the “possibility of initiating” such a claim, but do not
constitute an “objective showing” that they plan to do so. Certain Funds, 798 F.3d at 124
(emphasis in original); see Gorsoan, 843 F. App’x at 354–355 (denying application when
discovery was not relevant to the merits of the case, and future enforcement action was a mere
“possibility”) (summary order).

6

Applicants argue that “it does not matter whether the execução proceeding will result in an
order [to Malandrini Mazza] to pay,” and that they can use the discovery “to identify the Mazza
Group’s assets, whether or not they can receive any particular form of relief.” Dkt. No. 23 at 10
(internal quotation marks omitted). However, if the execução proceeding does not result in an
order in favor of Applicants, given that Applicants only seek discovery in aid of enforcement it is
not clear how Applicants will have “the practical ability to inject the requested information into
[the] foreign proceeding . . . ‘with some advantage.’” Accent Delight, 869 F.3d at 132 (quoting
Mees, 793 F.3d at 298).
7
Although the parties have not fully explained Brazilian law on this issue, Intervenors suggest
that attachment of assets may only be possible after the proceeding is converted to an execução
por quantia certa. See Dkt. No. 26 at 5; Dkt. No. 19 ¶¶ 9–11; Dkt. No. 24 ¶¶ 7–9.
18

Applicants have not satisfied their burden to show the requested asset discovery is “for
use” in the execução proceeding.
C.

Incidente

Applicants finally argue that information about Malandrini Mazza and her sons is for use
in a planned incidente proceeding, where it will be used to “establish that any transferees of
Malandrini Mazza’s assets are . . . Malandrini Mazza’s alter egos.” Dkt. No. 23 at 11. This
proceeding has not yet been brought, and Applicants therefore bear the burden of making an
objective showing that it is “within reasonable contemplation.” Certain Funds, 798 F.3d at 124.
Applicants have not done so.
Applicants state that they have “retained counsel in Brazil and announced their intent to
initiate the incidente.” Dkt. No. 23 at 12. However, these steps alone are not sufficient. See IJK
Palm, 33 F.4th at 681. Applicants additionally state that they have a legal theory, essentially
“U.S. alter-ego liability.” Dkt. No. 23 at 12. This may be true, but it also is not sufficient. Any
applicant may retain counsel, identify a claim, and state that it wants to pursue a defendant on
that claim. However, identifying a claim a party wants to pursue is different from a proceeding
on that basis being within reasonable contemplation. It is easy for a litigant to state that it would
like to sue an adversary on some hypothetical claim. Section 1782 requires more. “Courts must
embrace Congress's desire that broad discovery be available for parties involved in international
litigation while also guarding against the potential that parties may use § 1782 to investigate
whether litigation is possible in the first place.” Certain Funds, 2014 WL 3404955, at *6. The
applicant thus must provide some basis for the court to believe that the foreign claim can or will
realistically be brought on the proposed theory. See Harbour Victoria Holdings, 2015 WL
4040420, at *8 (holding that request was an impermissible fishing expedition where “[i]f the
discovery Petitioner seeks confirms the existence of these bank accounts, it appears that
19

Petitioner will then commence confirmation proceedings. . . [and] [i]f the discovery does not
confirm the existence of these bank accounts, it appears that Petitioner will not commence such
proceedings.”). In other words, Applicants must show that there is a “concrete” or “objective”
basis to believe that such a proceeding will be brought, rather than a subjective hope that the
request will uncover the right evidence. Certain Funds, 798 F.3d at 124; see Mangouras, 980
F.3d at 101 (proceeding for giving false testimony not within reasonable contemplation when
applicant provided no basis to believe that the witnesses gave false testimony); Jiangsu
Steamship Co., 2015 WL 3439220, at *5 (attachment proceeding not within reasonable
contemplation when applicant admitted it did not know where the target’s assets were located).
Here, Applicants have shown no more than the information about asset transfers can help
them decide “whether to initiate” an incidente proceeding, not that such a proceeding is currently
within reasonable contemplation. China Constr. Bank, 2023 WL 3791711, at *2. Applicants
state that they have “gathered evidence” supporting the incidente. Dkt. No. 23 at 12. They
describe this evidence as “a capital contribution to a family corporate vehicle based on
suspicious real estate property valuations, unjustified capital dilutions by Malandrini Mazza; and
evidence that despite the dilutions, Malandrini Mazza never stopped being the controller of the
family business,” Dkt. No. 24 ¶ 17; see also Dkt. No. 4 ¶ 29 (“There are strong elements that
indicate that the asset transfers [between Malandrini Mazza and her sons] were made without
receiving equivalent value in return.”). However, this is merely a list of financial transactions
described in pejorative language. Applicants do not provide evidence of when the transactions
occurred or what, if anything, made them problematic. The Brazilian court in the produção
suggested that evidence of such transactions from the 2007 timeframe would not support a claim
that Defendants intended to conceal Malandrini Mazza’s assets in the period from 2021 forward.

20

Dkt. No. 19-5 ¶ 6. Applicants offer no reason to believe that what they have or hope to find is
any better than what the Brazilian court indicated was insufficient.
Applicants thus have not demonstrated that their alter ego claims are anything more than
“speculative.” Mangouras, 980 F.3d at 101. Applicants in fact concede that the current
evidence “may not suffice for the disregard of the legal entity that could be sought in an
incidente proceeding,” and that applicants are therefore “seeking other evidence that could
substantiate an incidente claim.” Dkt. No. 24 ¶ 18. The showing is no better than that which the
court found insufficient in Harbour Victoria Holdings. See 2015 WL 4040420, at *6–8. The
evidence demonstrates that Applicants wish to “investigate whether litigation is possible in the
first place,” not that such litigation is within reasonable contemplation. Certain Funds, 2014 WL
3404955, at *6.
II.

Discretionary Factors
Based on the analysis above, the financial records of Malandrini Mazza and her sons are

not “for use” in the execução or incidente. However, the request could still be granted “for use”
in the protesto on the theory that the requested records, if they show what Applicants hope they
show, would be minimally relevant to the issue in that proceeding. Whether to grant discovery
for this purpose depends on the Court’s weighing of the discretionary factors. See BonSens, 95
F.4th at 80.
Intervenors argue that the discretionary factors weigh against granting the application
because Applicants can seek the relevant financial information from the Brazilian courts and
only seek it here in order to circumvent strict Brazilian evidentiary requirements. Dkt. No. 18 at
13–18. Applicants contend that a United State subpoena is necessary to produce the requested
evidence and that the Application “does not circumvent any evidence-gathering restriction under
Brazilian law.” Dkt. No. 23 at 14–17 (quoting Dkt. No. 4 ¶ 47).
21

A.

Whether the Person from Whom Discovery is Sought is a Participant

The Supreme Court has stated that “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,”
because “[a] foreign tribunal has jurisdiction over those appearing before it, and can itself order
them to produce evidence.” Intel 542 U.S. at 264.
Applicants argue that this factor weighs in their favor because “the Clearing House and
Morgan Stanley are not participants to the Foreign Proceedings.” Dkt. No. 23 at 14. Intervenors
contend that because the documents sought are “the personal banking records of the Mazza
Group members,” which are within the control of the participants in the Brazilian Proceedings,
the Brazilian courts would have the power to order the evidence to be produced and that, as a
result, this Court in its discretion should not order the production of the records. Dkt. No. 18 at
13–15.
The Second Circuit has held that in evaluating this factor, the issue is not the formal
respondent but “the real party from whom the documents are sought.” Kiobel by Samkalden v.
Cravath, Swaine & Moore LLP, 895 F.3d 238, 245 (2d Cir. 2018). The factor looks to substance
and not form. A Section 1782 applicant does not strengthen its application when it seeks
documents nominally from a third party when those documents are, in fact, under the control of a
party. Therefore, the court has held that when a subpoena seeks documents from United States
counsel of a party in the foreign proceeding, the factor weighs against the applicant because she
is “for all intents and purposes” seeking discovery from her opponent in the litigation. Schmitz v.
Bernstein Liebhard & Lifshitz, LLP., 376 F.3d 79, 85 (2d Cir. 2004); see Kiobel, 895 F.3d at 245;
see also In re Microsoft Corp., 428 F. Supp. 2d 188, 194 (S.D.N.Y. 2006) (suggesting that the
relevant question is whether the documents are “within the . . . reach” of the foreign tribunal);
22

Frasers Grp. PLC v. Stanley, 95 F.4th 54, 58 (2d Cir. 2024) (focusing on the fact that the
applicant “could obtain these documents in the English Proceedings”).
Here, the parties seek discovery not from Intervenors’ United States counsel but, in the
case of Morgan Stanley, from Intervenors’ United States bank. Intervenors argue the same logic
applies, relying heavily on Judge Engelmayer’s decision in In re Saul Klein, 2023 WL 8827847
(S.D.N.Y. Dec. 21, 2023). Saul Klein held that the first Intel factor weighs against granting a
subpoena against a United States bank seeking the records of participants in the foreign
proceeding. Id. As noted in that decision, the participants in the foreign proceeding would
presumably have access to their own bank records. Id. at *11. Therefore, these records are
within the reach of the foreign tribunal and are not “unobtainable absent § 1782(a) aid.” Intel,
542 U.S. at 264. Like litigation records, bank account records are held by a separate entity but
also belong to and are under the control of the client. Therefore, Saul Klein held that the
principle stated by the Second Circuit in Kiobel applies equally to bank records and weighs
against granting the subpoena. 895 F.3d at 245.
Applicants argue that Saul Klein is contrary to the weight of authority in this district.
Dkt. No. 23 at 15–16 & n.6. Some cases cited by applicants simply state without analysis that
the bank is not a party to the foreign proceeding. See In re Ernesto Andrade Grp., 2024 WL
195568 at *2 (S.D.N.Y. Jan. 18, 2024); In re Inv. Bank PSC, 567 F. Supp. 3d 449, 451 (S.D.N.Y.
2021). Other cases suggest that Kiobel may not apply because parties “may not have the same
records—or the same quality of records—as the Banks,” In re Furstenberg Fin. SAS, 2018 WL
3392882, at *6 (S.D.N.Y. July 12, 2018); see In re Iraq Telecom Ltd., No., 2019 WL 3798059, at
*4 (S.D.N.Y. Aug. 13, 2019). Those decisions do not undermine the central insight of Saul
Klein—that there is no reason to privilege documents held by a United States law firm over

23

documents held by a United States bank. In both cases, everything else being equal, if the
applicant can obtain the records from the party to the foreign proceeding, it should obtain them
from that party.
Applicants argue that Kiobel should be limited to “the particularly sensitive context of
subpoenas to a party’s attorneys.” Dkt. No. 23 at 1; accord In re Application of Lake Holding &
Fin. S.A., 2021 WL 2581427, at *17 (S.D.N.Y. June 23, 2021). The Second Circuit has rejected
that proposition. In Frasers Group, the court held that the first Intel factor weighed against a
Section 1782 request to a United States resident who was a bank executive where the same
documents would be in possession of the bank which was a party to the foreign proceeding. 95
F.4th at 58–59. The court noted that it had “on multiple occasions found that the first Intel factor
weighed against relief even where the discovery target was not a party to the foreign
proceeding.” Id. at 59. It held that the bank was the “real party from whom documents [were]
sought,” and that because there was no indication that the documents are “unobtainable absent §
1782 aid,” the first Intel factor weighed against the Section 1782 request. Id. at 59 (quoting
Kiobel, 895 F.3d at 245 and Intel, 542 U.S. at 264). 8
Here, Applicants do not dispute that the vast majority of the information sought from
Morgan Stanley is the same as could be obtained from Malandrini Mazza and her sons in

8

At argument, Applicants also suggested that In re del Valle Ruiz, 939 F.3d 520 (2d Cir. 2019),
may cast doubt on the logic of Saul Klein. In holding that the district court did not abuse its
discretion in its application of the Intel factors, the del Valle Ruiz court did state that the first
factor weighed in favor of discovery because the discovery target “is not a party to any of the
foreign proceedings.” Id. at 534. But the court did not address the question whether the first
Intel factor would be satisfied if the real target of discovery was a party and the requested
documents were within the jurisdiction of the foreign court. The Second Circuit’s subsequent
decision in Frasers Group makes clear that in evaluating the first Intel factor the district court is
not to consider only the nominal target of discovery, but also the real party from whom
documents are sought.
24

Brazilian court. The subpoena requests items such as “account records and account statements,”
“detailed checking account information (account number, account balance, date of opening and
closure of account),” “financial statements,” and “transaction histories,” all of which can be
accessed by the average individual through an online banking account. Dkt. No. 2-1 at 18–19.
Even assuming, speculatively, that Malandrini Mazza and sons will produce lower-quality
records than Morgan Stanley, this goes to their compliance with discovery not whether a
Brazilian court may order them to produce the materials. 9 The logic of Kiobel, Frasers Group,
and Intel strongly suggests that as to the banking records, Malandrini Mazza and her sons should
be regarded as “the real part[ies] from whom the documents are sought.” Kiobel, 895 F.3d at
245; see Intel, 542 U.S. at 264.
The first factor weighs in favor of Intervenors, at least as to the records held by Morgan
Stanley.
B.

Receptivity of the Foreign Tribunal

The second discretionary factor is “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.” Intel, 542 U.S. at 264. As noted by
Applicants, there is no indication Brazilian courts are generally unreceptive to Section 1782
discovery. See In re Banco Santander (Brasil) S.A., 2022 WL 1546663, *2 (S.D.N.Y. Apr. 6,

9

Applicants are correct that a party need not seek discovery in the foreign proceeding before
requesting it pursuant to Section 1782. Dkt. No. 23 at 15; see Metallgesellschaft, 121 F.3d at 79.
However, this is a separate issue from whether, in exercising its discretion, the Court should
consider the Applicants’ ability to obtain the documents from the parties in the foreign
proceeding. See Frasers Grp., 95 F.4th at 58 (“Contrary to Frasers's assertions, the district court
did not impose an exhaustion requirement on Frasers. Although the district court considered the
availability of the documents in the English Proceedings, it did not treat Frasers's failure to first
pursue discovery of these documents in the English Proceedings as a categorical bar.”).
25

2022); In re Atvos Agroindustrial Investimentos S.A., 481 F. Supp. 3d 166, 177 (S.D.N.Y. 2020);
Dkt. No. 4 ¶ 48.
Intervenors argue that a Brazilian court will not be receptive to the requested information
because the decision in the produção denied a similar request. Dkt. No. 18 at 16; Dkt. No. 19-5.
That decision does not necessarily demonstrate that the Brazilian court would be unreceptive to
documents produced pursuant to the Section 1782 request. “A foreign nation may limit
discovery within its domain for reasons peculiar to its own legal practices, culture, or
traditions—reasons that do not necessarily signal objection to aid from United States federal
courts.” Intel, 542 U.S. at 261. Intervenors have not produced any “authoritative declaration”
suggesting the information sought here would not be welcome in the Brazilian Proceedings.
Euromepa, 51 F.3d at 1101; cf. Schmitz, 376 F.3d at 84 (denying discovery when the court was
“faced with specific requests from the German Ministry of Justice and the Bonn Prosecutor to
deny petitioners the discovery they sought”).
At the same time, Applicants produce no particular evidence showing the discovery
would be welcomed. Cf. In re Application for an Ord. Pursuant to 28 U.S.C. 1782 to Conduct
Discovery for Use in Foreign Proc., 773 F.3d 456, 461 (2d Cir. 2014) (granting discovery when
Swiss magistrate stated in a letter that the documents would be “of great usefulness” to his
inquiry); In re Banco Sistema S.A., 2023 WL 5210973, at *2 (S.D.N.Y. Aug. 14, 2023) (granting
discovery when a Brazilian court order suggested that applicants should “pursue seizure of
[f]oreign [d]efendants’ assets abroad”). Applicants’ counsel states that while in his experience
“Brazilian courts have permitted the introduction of evidence gathered through § 1782
applications,” Brazilian courts may reject such evidence if its introduction is perceived as
“oppressive or abusive.” Dkt. No. 4 ¶ 48.

26

The second Intel factor weighs mildly in favor of Applicants.
C.

Circumvention of Foreign Proof-Gathering Restrictions

The third factor is “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.”
Intel, 542 U.S. at 265.
Although Section 1782 “does not ‘authorize denial of discovery pursuant to § 1782 solely
because such discovery is unavailable in the foreign court,’” it does “allow consideration of
foreign discoverability (along with many other factors) when it might otherwise be relevant to
the § 1782 application.” Mees, 793 F.3d at 303 (quoting Metallgesellschaft, 121 F.3d at 79).
Thus, the discovery policies of the foreign forum may be considered in the discretionary
analysis, though they “should not be afforded undue weight.” Id. In particular, the Second
Circuit distinguishes between rules of the foreign jurisdiction that “prohibit the acquisition or use
of certain materials,” and rules that merely “fail to facilitate investigation of claims.” Id. at 303
n.20. The United States is unusual in the breadth of pretrial discovery permitted. See Heraeus
Kulzer, GmbH v. Biomet, Inc., 633 F.3d 591, 594 (7th Cir. 2011) (“Discovery in the federal court
system is far broader than in most (maybe all) foreign countries.”). “Most civil-law systems lack
procedures analogous to the pretrial discovery regime operative under the Federal Rules of Civil
Procedure.” Intel, 542 U.S. at 261 n.12. That alone does not “signal objection to aid from U.S.
federal courts.” Id. at 261. However, where the rules of a foreign jurisdiction prohibit the
acquisition or use of a certain type of material, the interests of comity that Section 1782 is
intended to serve suggest that the United States court as well should honor those prohibitions and
decline to order discovery.
Here, Intervenors argue that the request is an attempt to circumvent the Brazilian ruling
in the produção, Brazilian constitutional and statutory law protecting banking secrecy, and the
27

forum-selection clause in the contract between the parties. Dkt. No. 18 at 16–18. Applicants
argue that Section 1782 is generally consistent with Brazilian discovery requirements, that the
produção ruled on a materially different issue, and that the forum-selection clause has “little to
no weight.” Dkt. No. 23 at 17–19.
The court’s ruling in the produção does not directly support Intervenors’ argument with
respect to the third Intel factor. The request made by Applicants in the produção focused on
transactions around 2007 between Malandrini Mazza, her sons, and a company not named in this
litigation. Dkt. No. 19-5 ¶¶ 3, 6. In addition, the legal standard for the produção requires a party
to prove the need for early production of evidence, suggesting that it may be a higher or different
standard than the standard applicable to normal discovery. Dkt. No. 19 ¶ 19–31; Dkt. No. 19-5 ¶
9 (analyzing, among other factors, whether the discovery is necessary because “the verification
of certain facts may become impossible or very difficult during the course of the action”).
Applicants frame their requests here based on transactions from July 2021 forward. The
produção decision alone does not support that granting the request here would permit Applicants
impermissibly to circumvent foreign proof-gathering restrictions.
However, Intervenors offer the unrebutted evidence that Brazilian constitutional and
statutory law establishes a right to the privacy of banking documents, and Brazilian courts
generally do not order the release of such documents except on a showing of crime or fraud.
Dkt. No. 19 ¶¶ 80–85; Dkt. Nos. 19-10, 19-11; see Dkt. No. 23 at 19–20. As described by
Intervenors, the Brazilian rules are akin to rules that prohibit the acquisition or use of certain
materials. In form, they are similar to the protections that the United States accords to
information such as tax return information, see Sec. & Exch. Comm'n v. Rayat, 2023 WL
1861498, at *3 (S.D.N.Y. Feb. 9, 2023), and attorney work product, see Upjohn Co. v. United

28

States, 449 U.S. 383, 299–401 (1981). A heightened need must be shown for the production of
such records.
This factor weighs slightly in favor of Intervenors with respect to the Morgan Stanley
documents. 10
D.

Unduly Intrusive or Burdensome

The fourth Intel factor is whether the request is “unduly intrusive or burdensome.” Intel,
542 U.S. at 265. “[A] district court evaluating a § 1782 discovery request should assess whether
the discovery sought is overbroad or unduly burdensome by applying the familiar standards of
Rule 26 of the Federal Rules of Civil Procedure.” Mees, 793 F.3d at 302. Rule 26 states that
material should be “proportional to the needs of the case, considering the importance of the
issues at stake in the action, the amount in controversy, the parties’ relative access to relevant
information, the parties’ resources, the importance of the discovery in resolving the issues, and
whether the burden or expense of the proposed discovery outweighs its likely benefit.”
A court has a “responsibility to consider the proportionality of discovery” under Rule 26.
Helena Agri-Enterprises, LLC v. Great Lakes Grain, LLC, 988 F.3d 260, 274 (6th Cir. 2021)
(quoting Fed. R. Civ. P. 26(b), Advisory Committee Note to 2015 amendment); see Barbara v.

10

The Court places no weight on the forum-selection clause in the Contract in reaching this
conclusion. Some courts in this District have recognized that a forum-selection clause “can
weigh against the granting of an application brought under section 1782.” In re Alghanim, WL
1423088, at *4 (S.D.N.Y. May 5, 2022) (collecting cases). However, one of the aspects of the
law chosen by the parties may be its receptivity to the use of foreign discovery. See In re BM
Brazil 1 Fundo de Investimento em Participacoes Multistrategia, 2024 WL 555780, at *13
(S.D.N.Y. Jan. 18, 2024) (“Thus, assuming that [the parties] “signed up” for English rules
governing discovery, part of what they “signed up” for was their own—and their adversary's—
ability to seek discovery from nonparty U.S. witnesses pursuant to Section 1782.”) report and
recommendation adopted, 2024 WL 554302 (S.D.N.Y. Feb. 12, 2024). Here, the forum
selection clause in the Contract states that any disputes arising from “this commitment” shall be
governed by Brazilian law. Dkt. No. 24-4 ¶ 10; Dkt. No. 24 ¶ 24. The language of this clause
does not clearly speak to discovery or show intent to be bound only by Brazilian evidentiary law.
29

CVS Albany L.L.C., 2024 WL 3581237, at *2 (E.D.N.Y. July 30, 2024) (“Proportionality goes
hand-in-hand with relevance. That is, the more relevant the information sought is, the less likely
the Court would find the subject discovery disproportionate.” (internal citations and quotation
marks omitted)).
Relatedly, a court under Section 1782 may consider whether a request is properly
characterized as a “fishing expedition.” See Certain Funds, 2014 WL 3404955, at *6; China
Constr. Bank, 2023 WL 3791711, at *2; Jiangsu Steamship, 2015 WL 3439220, at *5; Harbour
Victoria, 2015 WL 4040420, at *8. 11 A request to search through a variety of private documents
without reason to believe that many or any of them will turn up relevant material is likely to be
overbroad and disproportionate to the needs of the case, and presents “concern for abuse” of the
discovery process. Harbour Victoria, 2015 WL 4040420, at *7.
The evidence before the Court suggests that Applicants are engaged in a fishing
expedition. The court in Brazil rejected Applicants’ request for discovery in the produção. It
did so on the basis that Applicants were engaged in a fishing expedition and that any evidence
that Applicants obtained would not be likely to be relevant. Dkt. No. 19-5 ¶¶ 5–10. Although

11

These decisions consider the speculative nature of a party’s request at different places in the
Intel analysis. In some instances, the characterization of a party’s demand as a “fishing
expedition” may speak to whether there is a proceeding within reasonable contemplation. See
Certain Funds, 2014 WL 3404955, at *6; Jiangsu Steamship, 2015 WL 3439220, at *5. In
others, an applicant may be seeking to circumvent other applicable proof-gathering restrictions
by fishing for evidence via Section 1782. See Harbour Victoria, 2015 WL 4040420, at *8.
Here, the fact that defendants request intrusive discovery without a basis to believe it will
uncover relevant information could be considered a circumvention of Brazilian discovery rules
which weigh against such discovery, discussed supra. However, it is also true that regardless of
Brazilian discovery rules, considerations of proportionality and prevention of abuse embodied in
Rule 26 would weigh against granting the request. Given that “the Intel factors are not to be
applied mechanically,” and “a district court should also take into account any other pertinent
issues arising from the facts of the particular dispute,” the general relevance of this consideration
to the discretionary analysis is more important than its precise categorization. Kiobel, 895 F.3d
at 245.
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Applicants seek in the protesto what is, in essence, a declaration putting others on notice that the
sons would be responsible for any debts that Malandrini Mazza has to them if those debts are
reduced to a judgment, they have not provided any evidence or coherent reasoning suggesting
Malandrini Mazza and her sons engaged in asset concealment between 2021 and the present—
the dates covered by the subpoena. Thus, while Applicants’ request technically satisfies the “for
use” standard in that the request would result in the production of documents that—if they
exist—would be minimally relevant to the question presented in the protesto, they have provided
no basis, beyond conclusory assertions, to believe this evidence exists or can be found in the
requested records. Cf. China Constr. Bank, 2023 WL 3791711, at *2 (no fishing expedition
when applicant “provided a solid factual basis for its belief that Zhang has significant assets in
Italy”).
At the same time, even narrowed to transactions just between Malandrini Mazza and her
sons, the request is remarkably overbroad and intrusive on the privacy interests of the
Intervenors. As framed, the request calls for a vast amount of information about Malandrini
Mazza and her sons that has no apparent relevance to the protesto, including information about
all of her banking activities and transfers in and out of her accounts. Because Applicants are
unable to provide any detail regarding what suspicious activity they believe has occurred, there is
also no way for the court to tailor the overbroad request.
The request, if granted, would lead to abuse, contrary to the comity interests Section 1782
was intended to serve. As presented to the Court, the protesto is a mere preliminary proceeding
to the actual liability determination in the execução and incidente. No showing need be made
that the subject of the protesto has done any wrong to the plaintiffs or that the third parties
named in the protesto have, in fact, engaged in financial transactions with the subject. Thus,

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Applicants are seeking evidence in a proceeding for which they have no evidence, and on the
basis that they have no evidence, and are doing so against the backdrop of a letter they submitted
in which they claim that they need no evidence. Although Applicants here happen to be seeking
information from Malandrini Mazza’s adult sons, the argument that Applicants make in support
of their Section 1782 application is not susceptible to any limiting principle based on family
relationship. At argument, the Court inquired whether Applicants’ argument would permit a
Brazilian plaintiff to name in the protesto anyone about whom it wanted financial information
without any supporting evidence and then to use the protesto and the absence of evidence that it
had to support the protesto to make a broad-ranging request for discovery in the United States..
Oral Argument Tr. 17–18. Applicants were not able to provide a satisfactory answer.
When discovery is nominally for use in one proceeding but evidence suggests it is in fact
for use in another proceeding for which it should not be granted under Section 1782, this can
weigh against granting the petition. Harbour Victoria, 2015 WL 4040420, at *8; see Accent
Delight, 869 F.3d at 135; cf. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 353 (1978) (“In
deciding whether a request comes within the discovery rules, a court is not required to blind
itself to the purpose for which a party seeks information. Thus, when the purpose of a discovery
request is to gather information for use in proceedings other than the pending suit, discovery
properly is denied.”)
Here, the minimal relevance of the evidence to the protesto is outweighed by the
intrusive nature of the evidence and the appearance that its proposed use in the protesto is cover
for a fishing expedition to investigate other possible or speculative uses of the discovery. See
Harbour Victoria, 2015 WL 4040420, at *8; Jiangsu Steamship, 2015 WL 3439220, at *5.

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E.

Summary

Taken together, the discretionary factors counsel in favor of granting Intervenors’ motion
to vacate the subpoena issued to Morgan Stanley. The information Applicants seek regarding
Malandrini Mazza and her sons’ financial transactions is within the control of the parties in the
Brazilian Proceedings. Applicants’ decision to seek the information here rather than in those
proceedings appears to be an attempt to circumvent Brazilian laws restricting access to banking
information and an unfavorable discovery ruling in Brazilian court. As with the request in
Brazilian court, this request appears designed primarily as a fishing expedition to acquire
sensitive information for proceedings where its use is only speculative at this time. Applicants
may file a new application seeking information from Morgan Stanley if circumstances change.
See MT Baltic Soul, 2015 WL 5824505, at *2.
III.

Clearing House Documents
Applicants state that Clearing House produced the responsive documents on June 7,

2024, and therefore argue that the motion to quash is moot as to Clearing House. Dkt. No. 25 ¶
10; Dkt. No. 23 at 21–22. However, “subpoena compliance does not necessarily moot an appeal
of an order enforcing a subpoena.” Exxon Mobil Corp. v. Healey, 28 F.4th 383, 393 (2d Cir.
2022). When movants “have and maintain a privacy interest in the documents that they
produced,” they are “entitled to the return of those documents if successful” on a motion to
quash. Washington Nat’l Ins. Co. v. OBEX Grp. LLC, 958 F.3d 126, 133 (2d Cir. 2020); see
KGK Jewelry LLC v. ESDNetwork, 2014 WL 1199326, at *3 (S.D.N.Y. Mar. 21, 2014)
(“Information regarding a party’s financial records may give rise to a privacy interest.”). In that
instance, the violation of which the movant complains is continuing and the Court “is positioned
to grant meaningful relief by ordering that the documents be returned or destroyed.” Mangouras,
980 F.3d at 96.
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Here, though Intervenors note that the motion is not moot as to the Clearing House, they
do not identify a privacy interest in the Clearing House documents. See Dkt. No. 26 at 14.
When given an opportunity to do so at oral argument, Intervenors suggested generally that
financial records can reveal sensitive information. Oral Argument Tr. 33–34. However, it is not
obvious that the Clearing House documents, which are simple records of wire transfers, are
private or sensitive. Cf. GEOMC Co. v. Calmare Therapeutics, Inc., 2020 WL 6375562, at *6
(D. Conn. Oct. 30, 2020) (noting that not all financial documents “expressly implicate” privacy
concerns). Intervenors are unable to articulate any particularized privacy interest in these
documents, as opposed to in financial documents generally. This is true even though Intervenors
possess the documents, as stated by Applicants and not disputed by Intervenors at oral argument.
Oral Argument Tr. 34. Therefore, the Court declines to order the return or destruction of the
Clearing House documents.
CONCLUSION
The motion to vacate and quash subpoenas is GRANTED as to the subpoena against
Morgan Stanley and DENIED as to the subpoena against the Clearing House.
The Clerk of Court is respectfully directed to close Dkt. No. 17.

SO ORDERED.
Dated: September 12, 2024
New York, New York

__________________________________
LEWIS J. LIMAN
United States District Judge

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