CMPC Celulose Riograndense LTDA.

Filing 24

MEMORANDUM AND ORDER denying 5 Motion to Quash. So Ordered by Chief Judge William E. Smith on 7/9/2019. (Jackson, Ryan)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
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CMPC CELULOSE RIOGRANDENSE LTDA., )
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For an Order Pursuant to 28 U.S.C. )
§ 1782 to Take Discovery of Factory)
Mutual Insurance Company.
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___________________________________)
In re application of

Misc. Civil No. 19-MC-00005 WES

MEMORANDUM AND ORDER
WILLIAM E. SMITH, Chief Judge.
Before the Court is Factory Mutual Insurance Company (“FM
Global”) and Mapfre Seguros Geraus S.A.’s (“Mapfre”) Motion to
Quash (ECF No. 5) a subpoena issued pursuant to this Court’s previous Order granting CMPC Celulose Riograndense LTDA’s (“CMPC”)
request for discovery pursuant to 28 U.S.C. § 1782. See 3/18/2019
Text Order. For the following reasons, the Motion to Quash is
DENIED.
I.

Background
CMPC is a Brazilian company and producer of various paper

products. See Mem. of Law in Supp. of Mot. to Quash (“Mot. to
Quash”), ECF No. 5-1. CMPC is directly insured by Mapfre, another
Brazilian company. Id. at 2. FM Global is Mapfre’s Rhode Islandbased reinsurer. Id.

In February 2017 a recovery boiler at CMPC’s industrial plant
presented a leak. Id. CMPC filed an insurance claim with Mapfre
and FM Global, but coverage was denied in October 2017. Decl. of
Tomaz de Oliveria Tavares de Lyra ¶ 3-4 (“Lyra Decl.”), ECF No. 53. In anticipation of contesting the denial in a soon to be filed
arbitration against Mapfre, CMPC asked the state court of São
Paulo, Brazil for an order to compel the disclosure of documents
exchanged between Mapfre, FM Global, and insurance adjuster Addvalora Brasil Reguladora de Sinistros Ltda. (“Addvalora”).

Id. ¶ 4.

The state court of Brazil granted CMPC’s request for technical
reports but denied CMPC access to “private data[] resulting from
relationships between third parties.” Id. ¶ 10.
On March 11, 2019 CMPC filed a civil action against Addvalora
in a Brazilian trial court. Mot. to Quash 5; Lyra Decl., ECF No.
5-3. Two days later, CMPC filed an ex parte application with this
Court pursuant to 28 U.S.C. § 1782 to obtain documents exchanged
between FM Global and Mapfre. (ECF No. 1). This Court granted the
application and CMPC served a subpoena on FM Global the next day.
Mot. to Quash 5. FM Global responded by moving to quash. Id.
In its motion, FM Global relies primarily on Republic of
Kazakhstan v. Biedermann International, 168 F.3d 880 (5th Cir.
1999) and NBC v. Bear Stearns & Co., 165 F.3d 184, 190 (2d Cir.
1999) to argue that Congress never contemplated whether international arbitral tribunals were susceptible to § 1782. Mot. to Quash
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7. FM Global alleges CMPC knew the arbitral tribunal serving as
the forum for their dispute would not satisfy 28 U.S.C. § 1782,
and that with that knowledge, CMPC initiated a sham lawsuit against
Addvalora to create a foreign tribunal suitable for obtaining discovery under the statute. Id. at 2. FM Global further alleges
CMPC’s application is an improper attempt to bypass the decision
rendered by the Brazilian State Court and that their requests are
unduly burdensome. Id.
II.

Legal Standard
A court is authorized to consider a discovery request pursuant

to 28 U.S.C. § 1782 when: (1) the person from whom discovery is
sought “resides or is found” in the district where the application
is filed; (2) the discovery sought is “for use in a proceeding”
before a “foreign or international tribunal;” (3)the application
is made by an “interested person;” and (4) the discovery sought is
not protected by any “legally applicable privilege.” 28 U.S.C. §
1782(a); see Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S.
241, 246 (2004).
If an application meets the statutory requirements under §
1782, a district court must consider whether the following discretionary factors weigh in favor of the request: (1) whether the
person from whom discovery is sought is a participant in the foreign proceeding; (2) the receptivity of the foreign tribunal to
U.S. judicial assistance; (3) whether the § 1782 application is an
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attempt to “circumvent foreign proof-gathering restrictions”; and
(4) whether the documents sought are “unduly intrusive or burdensome.” Intel, 542 U.S. at 264. While each discretionary factor
“bear[s] consideration” and is balanced against the request, no
factor is dispositive. Id.
III. Discussion
A.

“Foreign International Tribunal”

Turning to the facts here, the Court concluded that the Arbitration and Mediation Center of Brazil-Canada Chamber (“CAMCCBC”) where CMPC is involved in arbitration proceedings against
Mapfre is a “foreign or international tribunal” for purposes of 28
U.S.C. § 1782. FM Global and Mapfre rely on the Fifth Circuit’s
holding in Republic of Kazakhstan that private international arbitrations do not qualify as “foreign or international tribunals.”
168 F.3d at 882. Congress directly contradicted this holding by
broadening the language of the statute in a 1964 amendment. The
Supreme Court in Intel provides a lengthy discussion of the statute’s legislative history. 542 U.S. at 258. The Court highlighted
that in the 1964 amendment, Congress changed the statutory language
from “any judicial proceeding” to “any foreign or international
tribunal.” Id. The term “tribunal” thus broadened the statute to
include “administrative and quasi-judicial proceedings.” Id. The
Court also quoted a principal drafter of the amendment who defined
“tribunal” as including “investigating magistrates, administrative
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and arbitral bodies.” Id.; see also In re Babcock Borsig AG, 583
F. Supp. 2d 233, 239 (D. Mass. 2008) (“Although this quotation in
Intel is as a formal matter dicta, its considered inclusion offers
meaningful insight regarding the Supreme Court’s view of arbitral
bodies in the context of § 1782(a).”).
Since Intel, numerous courts in this circuit have agreed that
Congress added the term “tribunal” to broaden the scope of the
statute and that the term “is commonly used and understood to
describe arbitral bodies.” Babcock, 583 F. Supp. 2d at 238; In re
Republic of Ecuador v. Douglas, 153 F. Supp. 3d 484, 487 (D. Mass.
2015); see also Chevron Corp. v. Shefftz, 754 F. Supp. 2d 254, 260
(D. Mass. 2010)(“[I]nternational arbitral bodies operating under
UNCITRAL rules constitute 'foreign tribunals' for purposes of §
1782.”). Even if the CAM-CCBC was not a “foreign or international
tribunal,” the Addvalora litigation alone would provide a sufficient basis to grant CMPC’s § 1782 petition. Accord Gov’t of Ghana
v. ProEnergy Servs., LLC, No. 11-9002-MC-SOW, 2011 WL 2652755, at
*3 (W.D. Mo. June 6, 2011) (concluding that even if an arbitral
tribunal were not a proceeding under Section 1782, the existence
of litigation alone would provide a sufficient basis to grant the
petitioner’s Section 1782 petition). Indeed, the United States
District Court for the Western District of Louisiana held in In re
CMPC Celulose Riograndense LTDA that although the foreign arbitral
in question here is not a “foreign or international tribunal”
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according to Fifth Circuit precedent, it does not “preclude the
application of § 1782 here” because the pending civil litigation
against Addvalora is sufficient under § 1782. Mem. & Order (“Mem.
& Order”) at 7, In re CMPC Celulose Riograndense LTDA v. Boiler
Services Inspection, LLC, No. 19-0015 (W.D. La. Mar. 13, 2019),
ECF No. 20 1; see also In re Sampedro, No. 3:18-MC-47 (JBA), 2018
WL 5630586, at *2 (D. Conn. Oct. 30, 2018) (“Where a district court
authorizes Section 1782 discovery for use in one foreign proceeding, it need not analyze every foreign proceeding in which the
petitioner is involved under the [Section] 1782 and Intel framework.”).
B.

“Circumventing Foreign Proof-Gathering Restrictions”

FM Global and Mapfre’s argument as it relates to circumventing
Brazilian law is unpersuasive for two reasons. First, CMPC’s discovery request pertains to documents within the United States,
thus United States law — and not Brazilian law — governs CMPC’s
application. Second, CMPC is “not required to show that the information [it] seek[s] would be discoverable (or admissible) in

1

On March 14, 2019 the United States District Court for the
Western District of Louisiana granted CMPC’s ex parte application
pursuant to 28 U.S.C. § 1782 to obtain discovery from Boiler Service Inspections, L.L.C. (“BSI”). Mem. & Order 1. BSI was appointed
as a technical consultant to Addvalora and recommended that coverage be denied to CMPC. Id. at 2. BSI and FM Global moved to
vacate, or in the alternative, quash the subpoena issued pursuant
to § 1782. Id. at 1. The motion was denied as it related to BSI.
Id. at 14.
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the [foreign] litigation.” Minis v. Thomson, No. 14-91050-DJC,
2014 WL 1599947, at *2 (D. Mass. Apr. 18, 2014); see also Intel,
542 U.S. at 260-62. In any event, CAM-CCBC has ordered that any
documents obtained through the § 1782 process and offered as evidence will be examined to determine their admissibility. Decl. of
Rodrigo Cogo ¶ 27-28 (“Cogo Decl.”), ECF No. 1-2; CMPC Mem. of Law
in Opp’n. to Mot. to Quash 23, Ex. A ¶ 7.4.1, ECF. No. 11-1.
Consequently, there is no risk of unfairness as the documents FM
Global and Mapfre are attempting to shield may not even be used in
the arbitration “because the tribunal could always limit the admissibility of the evidence once received.” In re Chevron Corp.,
762 F. Supp. 2d 242, 251 (D. Mass. 2010).
C.

Undue Burden

A court must consider “the relevance of the documents sought,
the necessity of the documents sought, the breadth of the request,
[and] expense and inconvenience” to determine whether a subpoena
“subjects

a

person

to

undue

burden.”

Fed.

R.

Civ.

P.

45(c)(3)(A)(iv); Garcia v. E.J. Amusements of N.H., Inc., 89 F.
Supp. 3d 211, 215 (D. Mass. 2015). CMPC’s document requests are
sufficiently “relevant to [their] claim” and “proportional to the
needs of [each] case” such that they do not pose an undue burden
on FM Global. See Fed. R. Civ. P. 26(b)(1).
CMPC’s requests highlight FM Global’s active role as Mapfre’s
reinsurer both before and after the recovery boiler incident. The
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requests refer to specific meetings FM Global attended in Brazil,
conference calls between FM Global, CMPC, and Addvalora, policy
renewal and hiring decisions made by FM Global, and decisions
surrounding denied coverage to CMPC. Mot. to Quash Ex. A, ECF No.
5-2; Lyra Decl. ¶ 7, ECF. No. 5-3. Each of the connections identified between FM Global and CMPC are directly relevant to CMPC’s
insurance claims in the foreign proceedings. The relevance of the
requested documents is further reinforced by FM Global’s risk of
bearing “the greatest share of the fault” should CMPC prevail in
the arbitration against Mapfre. Cogo Decl. ¶ 47, ECF No. 1-2; CMPC
Mem. of Law in Opp’n. to Mot. to Quash 33, ECF No. 14. The burden
is on Mapfre and FM Global to show that “the subpoena imposes an
undue burden” and they “cannot rely on [their] mere assertion that
compliance would be burdensome and onerous” when CMPC seeks $277
million in the arbitration against Mapfre and $1 million in its
lawsuit against Addvalora. Saucedo v. Gardner, No. 17-CV-183-LM,
2017 WL 10109878, at *3 (D.N.H. Oct. 27, 2017); Reply Mem. in Supp.
of Mot. to Quash, ECF. No. 20. The nature of CMPC’s requests and
the magnitude of each legal proceeding, coupled with FM Global’s
significant financial interest in the outcome, outweighs the proposed burden on FM Global.

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D.

Conclusion

For the foregoing reasons, FM Global and Mapfre’s Motion
to Quash (ECF No. 5-1) is DENIED.
IT IS SO ORDERED.

William E. Smith
Chief Judge
Date: July 9, 2019

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