173 F.R.D. 190 (S.D.Tex. 1995), C. A. 94-MC-235, In re Application of Sarrio S.A. for Assistance Before Foreign Tribunals

Docket NºCivil Action 94-MC-235.
Citation173 F.R.D. 190
Opinion JudgeRAINEY, District Judge.
Party NameIn re Application of SARRIO S.A. FOR ASSISTANCE BEFORE FOREIGN TRIBUNALS.
AttorneyGraham Kerin Blair, Verner LiipfertBernhard Mcpherson and Hand, Houston, TX, for Sarrio S.A. Ralph Edward Ishmael, Baker & McKenzie, Dallas, TX, for Kuwait Inv. Authority.
Case DateJuly 28, 1995
CourtUnited States District Courts, 5th Circuit, Southern District of Texas

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173 F.R.D. 190 (S.D.Tex. 1995)

In re Application of SARRIO S.A. FOR ASSISTANCE BEFORE FOREIGN TRIBUNALS.

Civil Action No. 94-MC-235.

United States District Court, S.D. Texas, Houston Division.

July 28, 1995

Spanish corporation filed application to conduct discovery in United States for use in English and Spanish litigation. The District Court, Rainey, J., held that: (1) under statute giving district court discretion to grant foreign litigant's request to conduct discovery in United States for use in foreign proceeding, evidence need not be discoverable in foreign jurisdiction before court can grant discovery request; (2) granting discovery in United States for use in English litigation would not offend English tribunal; (3) whether Spanish tribunal would be offended if discovery were permitted in United States for use in Spanish litigation was issue for consideration by Spanish tribunal; and (4) discovery of information from limited partnership and partnership's employees for use in English and Spanish litigation was not unduly burdensome.

Application granted.

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Graham Kerin Blair, Verner LiipfertBernhard Mcpherson and Hand, Houston, TX, for Sarrio S.A.

Ralph Edward Ishmael, Baker & McKenzie, Dallas, TX, for Kuwait Inv. Authority.

ORDER

RAINEY, District Judge.

Pending before the Court is the Second Application for Order to Take Discovery Pursuant to 28 U.S.C. § 1782 (" § 1782" ) (Docket Entry # 5) filed by Sarrio S.A. (" Sarrio" ). After considering this application, Hines Group's Opposition to Sarrio's Second Application for Order to Take Discovery Pursuant to § 1782 (Dkt.# 6), Kuwait Investment Authority's (" KIA" ) Objections to Sarrio's Second Application for Order to Take Discovery (Dkt. # 7), Hines Group's Supplemental Opposition to Sarrio's Second Application for Order to Take Discovery Pursuant to § 1782 (Dkt.# 8), Response of Sarrio to Hines Group's and KIA's Oppositeness to Sarrio's Second Application for Order to Take Discovery (Dkt.# 9), Hines Group's Reply to Sarrio's Response to Opposition to Sarrio's Second Application for Order to Take Discovery Pursuant to § 1782 (Dkt.# 11), Sur-Reply of Sarrio (Dkt.# 13), the complete record, and the applicable law, the Court finds that Sarrio's application should be GRANTED.

I. BACKGROUND

In February 1993, Sarrio, a Spanish corporation, commenced civil litigation in Spain against KIA,1 the Kuwait Investment Office (" KIO" ),2 and several Spanish subsidiaries of KIA: Grupo Torras S.A. (" Grupo Torras" ), 3 Torraspapel S.A. (" Torraspapel" ), and Sarriopapel y Cellulosa (" Sarriopapel" ).4 The dispute arose from a 1991 contract (the " 1991 Contract" ) for the purchase by Grupo Torras and Torraspapel of certain Sarrio assets. In the Spanish litigation, Sarrio seeks to apply the Spanish version of the legal doctrine of

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" piercing the corporate veil" in order to collect damages from KIA and KIO for Grupo Torras's alleged breach of its obligations to Sarrio.

In February 1994, Sarrio also commenced civil litigation against KIA/KIO in England. This matter also arose from the 1991 Contract. In the English action, Sarrio is seeking damages for alleged misrepresentations made to Sarrio by KIA/KIO in the course of negotiations leading up to the 1991 Contract.

This Court became involved in the above proceedings on June 13, 1994 when Sarrio applied for an Order to Take Discovery Pursuant to § 1782.5 This Court granted the application on June 15, 1994. In accordance with the order, Sarrio issued subpoenas commanding Gerald D. Hines (" Hines" ) 6 to produce documents and give testimony in the Southern District of Texas in support of the pending proceedings in England and Spain. Although Hines is not a party in the foreign proceedings, Sarrio contended that due to his previous position as a shareholder in Prima Inmobiliaria S.A. (" Prima" ), 7 Hines had information relevant to (1) the KIA-KIO/Grupo Torras family of companies that would further Sarrio's attempts to " lift the corporate veil" in the Spanish proceedings and (2) the alleged misrepresentations made to Sarrio regarding Hines' status as a committed, long term investor in Prima for use in the English proceedings.8

Hines complied with the subpoenas without objection. In addition to testifying for approximately three hours at a deposition on October 26, 1994, Hines also presented several hundred pages of documents to Sarrio on both October 7, 1994 and January 16, 1995. The documentation indicated that two employees of Gerald D. Hines Interests, Howard H. Callaway, Jr. (" Callaway" ) 9 and Louis S. Sklar (" Sklar" ), conducted, or were otherwise involved in, the negotiations on the terms of Hines' 1990 investment in Prima.

Sarrio now applies to this Court a second time for permission under section 1782 to conduct discovery in the Southern District of Texas for use in the English and Spanish proceedings. Specifically, Sarrio claims that the documents that Hines has produced indicate that Callaway and Sklar will likely be able to provide many of the specific facts surrounding Hines' investment in Prima that Hines did not have knowledge of, or was unable to recall, during his deposition. Therefore, Sarrio wishes to issue subpoenas compelling Callaway and Sklar to attend depositions and produce documents in the hopes that these persons can supply information that will shed additional light on Hines' 1990 investment in Prima.

Sklar, Callaway, Hines, and Hines Interests Limited Partnership (" HILP" ) (collectively the " Hines Group" ) oppose Sarrio's second application to take discovery pursuant to section 1782. The Hines Group objects to

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Sarrio's application on four different grounds: (1) that it impermissibly conflicts with pre-trial discovery rules in English and Spanish courts, (2) that it would offend the English and Spanish courts, (3) that it seeks to circumvent, in contravention of federal case law, the discovery stay entered by the Spanish court, and (4) that it seeks discovery that imposes unreasonable expense and is unduly burdensome on HILP and its present and former employees.10

II. ANALYSIS

A. DISCOVERABILITY REQUIREMENT

Hines Group argues that a district court must first inquire into whether the evidence sought under section 1782 would be properly obtainable in the foreign jurisdiction before the court may grant an applicant's discovery request pursuant to that statute. Hines Group further contends that the discovery sought in the instant case would not be permitted under either Spanish or English law.

1. Introduction

Under section 1782, a district court has broad discretion to grant a foreign litigant's request to conduct discovery in the United States for use in foreign proceedings. S.Rep. No. 1580, 88th Cong., 2d Sess. (1964), reprinted in 1964 U.S. C.C.A.N. 3782, 3788 (hereinafter " Senate Report" ); see, e.g., Lo Ka Chun v. Lo To, 858 F.2d 1564, 1565 (11th Cir.1988). The Circuits are in clear disagreement, however, about what a proper exercise of that discretion entails. The discord centers on whether evidence sought in the United States must be discoverable under the laws of the foreign jurisdiction before a court may grant a foreign litigant's discovery application. An examination of the purposes behind section 1782, its language, and the most recent case law addressing this issue leads this Court to conclude that evidence need not be discoverable in a foreign jurisdiction before a court can grant a discovery request pursuant to section 1782.

The history of section 1782 indicates that Congress intended federal courts to provide broad assistance to foreign litigants who request permission to conduct discovery in the United States. See, e.g., In re Request for Assistance from Ministry of Legal Affairs of Trinidad and Tobago, 848 F.2d 1151, 1152-54 (11th Cir.1988) (discussing the evolvement of section 1782); see also Walter B. Stahr, Discovery Under 28 U.S.C. § 1782 for Foreign and International Proceedings, 30 Va. J. Int'l L. WL at *4 (1990) (explaining that the ratifiers of the 1964 amendments to section 1782 " hoped to make United States discovery assistance for foreign cases simple, generous and fair" ). Whereas early versions of section 1782 provided only limited assistance to foreign tribunals pursuant exclusively to letters rogatory,11 the statute was amended in 1964 to effectuate two purposes. First, Congress intended to " clarif[y] and liberalize ... existing U.S. procedures for assisting foreign and international tribunals and litigants in obtaining oral and documentary evidence in the United States ..." Senate Report at 3788 (emphasis added). Second, by expanding the opportunities for foreign litigants and courts to access potentially probative evidence in the United States, the amendments were meant to " encourag[e] foreign countries by example to provide similar means of assistance to our courts." In re Application of Silvia Gianoli, 3 F.3d 54, 58 (2d Cir.1993),

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cert. denied, 510 U.S. 965, 114 S.Ct. 443, 126 L.Ed.2d 376 (1993). Courts disagree, however, on whether these purposes necessitate the reading of a discoverability requirement into section 1782.

2. Analysis

Courts are divided as to whether section 1782 contains an implicit requirement that the requested discovery be properly obtainable in the foreign proceeding.

The First and Eleventh Circuits have expressly found that discovery...

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1 practice notes
  • In re Solines, 043018 LAEDC, 18-3680
    • United States
    • Federal Cases United States District Courts 5th Circuit United States District Court (Eastern District of Louisiana)
    • April 30, 2018
    ...permission to conduct discovery in the United States.” Application of Sarrio S.A. for Assistance Before Foreign Tribunals, 173 F.R.D. 190, 193 (S.D. Tex. 1995). Such discovery “promote[s] international dispute resolution and comity.” Republic of Ecuador v. Connor, 7......
1 cases
  • In re Solines, 043018 LAEDC, 18-3680
    • United States
    • Federal Cases United States District Courts 5th Circuit United States District Court (Eastern District of Louisiana)
    • April 30, 2018
    ...permission to conduct discovery in the United States.” Application of Sarrio S.A. for Assistance Before Foreign Tribunals, 173 F.R.D. 190, 193 (S.D. Tex. 1995). Such discovery “promote[s] international dispute resolution and comity.” Republic of Ecuador v. Connor, 7......