In re Edelman
| Decision Date | 01 July 2002 |
| Docket Number | Docket No. 01-7257. |
| Parties | In re Application of Asher B. EDELMAN, Museum Partners, Musee Partners, Edelman Value Partners, L.P., Edelman Value Fund and Wimbledon Edelman Select Opportunities Hedge Fund for an Order to conduct discovery for use in a foreign proceeding. Asher B. Edelman, Museum Partners, Musee Partners, Edelman Value Partners, L.P., Edelman Value Fund And Wimbledon Edelman Select Opportunities Hedge Fund, Petitioners-Appellants, v. Claude Taittinger, Respondent-Appellee. |
| Court | U.S. Court of Appeals — Second Circuit |
Mark S. Cohen, New York, NY, (Stanley S. Arkin, Steven K. Barentzen, Arkin Kaplan & Cohen, LLP, New York, NY; Tracy E. Makow, Stewart Occhipinti & Makow, LLP, New York, NY, of counsel), for Petitioners-Appellants.
James V. Masella, III, New York, NY, (D. Stuart Meiklejohn, Sullivan & Cromwell, New York, NY, of counsel), for Respondent-Appellee.
Before FEINBERG, CARDAMONE, and POOLER, Circuit Judges.
Congress enacted a statute to provide equitable and efficacious discovery for use in foreign and international proceedings. The statute, 28 U.S.C. § 1782, aimed to make discovery of evidence for use in foreign litigation simple and fair. This appeal focuses on whether a foreign national temporarily in the United States is subject to being subpoenaed and deposed here as an aid to ongoing litigation in France. As the reader will see — and to paraphrase the Bible — many, subject to being subpoenaed, may be found; but few will be deposed.
This is an appeal from a district court order quashing a subpoena for the deposition of a witness in the United States for use in securities litigation in France. At issue is the scope of 28 U.S.C. § 1782(a), which allows interested persons access to discovery orders to gain evidence for use in foreign litigation. In the instant case, one party to the French action has already availed itself of the § 1782(a) discovery mechanism, and now the other party is trying to do the same. Our task is to identify the required nexus between the district in which the discovery order is sought and the prospective deponent. Specifically, we must decide whether an individual, who lives and works abroad, may be subject to being subpoenaed for deposition pursuant to § 1782(a) while traveling in the United States. The district court held that § 1782(a) does not allow the taking of a deposition under these circumstances. Because we think that holding unduly restricts the statute, we vacate the order that quashed the subpoena and remand the case.
Petitioners who seek discovery pursuant to § 1782(a) are Asher B. Edelman and five investment funds controlled by him (collectively, Edelman or petitioner). They are minority shareholders in a French corporation, Société du Louvre (Société or French company), whose shares are traded on the Paris Stock Exchange. Between 1997 and 1999 Edelman made three separate offers to buy Société, all of which were turned down. He had directed his offers to the chairwoman of Société's Board of Directors, but respondent Claude Taittinger (Taittinger or respondent), who is a member of the Board of Directors of the French company, wrote Edelman a letter in each case rejecting his offer. Taittinger is also the head of Taittinger, S.A., another French company, which is Société's controlling shareholder, and a company famous to the champagne cognoscenti.
Société has sued Edelman in France alleging wrongful manipulation of the market for Société securities on the grounds that Edelman never intended to follow through on his offers to buy the French company. Edelman has filed a counterclaim in the French action asserting that Taittinger, S.A. mismanaged Société for the benefit of the Taittinger family and to the detriment of Société and its minority shareholders.
Société sought and obtained orders for the issuance of several subpoenas from a federal court in the United States, pursuant to 28 U.S.C. § 1782(a), to gain information for use in the French litigation. The French company subsequently secured documentary evidence from Edelman and some of his companies, including one which is not a party to the French litigation or to the present action.
In response, Edelman sought his own order for the issuance of subpoenas under the authority of § 1782(a). U.S. District Court Judge Barbara S. Jones, sitting in the Southern District of New York, issued an order on October 20, 2000 authorizing subpoenas duces tecum to be issued to several named individuals and entities. According to the application for the order, research revealed that each of the named individuals and entities resides or may be found in the Southern District of New York. Respondent Taittinger's name did not appear in this application for subpoenas. But the order submitted by Edelman and signed by the district court judge also included a blanket authorization for the issuance of subpoenas for deposition testimony to any "additional individuals and entities with knowledge and information."
When the October 20, 2000 order was issued by Judge Jones, Taittinger was neither present in the Southern District nor named in the order. Three days later, while at the Gagosian Art Gallery in New York City, Taittinger was served with a subpoena for his deposition testimony and, in addition, directed by the subpoena to produce documentary evidence pursuant to the order's blanket authorization.1 Edelman avers that Taittinger was in New York on business at the time of service, a statement Taittinger denies. No one disputes, however, that Taittinger has knowledge relevant to the French litigation.
After being served with the subpoena, Taittinger, a French citizen, returned to France where he heads a substantial business and maintains his primary residence. On December 15, 2000 he moved to quash the subpoena, contending that § 1782(a) did not authorize it. He also insisted that since he was not a party to or an officer of a party to the French litigation, he could not be compelled to travel more than 100 miles from his residence to be deposed. See Fed.R.Civ.P. 45. Agreeing with respondent that, as a matter of law, the subpoena was improper, District Court Judge Lawrence M. McKenna, before whom the motion to quash was heard, granted the motion. Judge McKenna reasoned that inasmuch as the testimony and documents sought were located in France, it was not proper to provide discovery consisting of evidence maintained in a foreign jurisdiction. Having quashed the subpoena on those grounds, Judge McKenna did not address the Rule 45 issue.
Meanwhile, U.S. District Court Judge Alvin K. Hellerstein, also sitting in the Southern District, was assigned to hear motions to quash two other subpoenas that had been issued by petitioner to individuals who had been named in the October 20th discovery order. Judge Hellerstein quashed one of the subpoenas because it had not been served properly, and denied the other motion to quash, thereby permitting the deposition of that French resident to proceed in the Southern District. It is in this setting that Edelman appeals the order quashing the subpoena served on Taittinger.
Review of a decision regarding a § 1782(a) order proceeds in two steps: first, we construe de novo the language of the statute; and, then, if necessary, we decide whether the district court abused its discretion in deciding the case. See Esses v. Hanania (In re Esses), 101 F.3d 873, 875 (2d Cir.1996) (per curiam). That is, where we think the requirements of § 1782 have been properly construed, we turn to the district court's decision in the case before it and review that decision only for an abuse of discretion. Lancaster Factoring Co. v. Mangone, 90 F.3d 38, 42 (2d Cir.1996).
Typically, we review the issuing court's exercise of discretion at the second step of the review process. See, e.g., Euromepa S.A. v. R. Esmerian, Inc., 51 F.3d 1095, 1097 (2d Cir.1995) (Euromepa I). Here, Judge Jones never considered the specific question of whether Taittinger (who was not named in the discovery order the judge signed) should be deposed, and in effect gave petitioner unfettered discretion to subpoena any "additional individuals and entities with knowledge and information." Taittinger, as noted, was subpoenaed pursuant to that blanket authorization. Hence, it was at the hearing on the motion to quash the subpoena that the district court first had an opportunity to exercise its discretion with respect to the proposed deposition of Taittinger. Due to the procedural posture of this case, we will, in the second step of our review, address the quashing court's exercise of discretion. We turn now to the first step, which is an analysis of the statute.
Section 1782(a) of Title 28 provides that
[t]he district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal.... To the extent that the order does not prescribe otherwise, the testimony or statement shall be taken, and the document or other thing produced, in accordance with the Federal Rules of Civil Procedure.
At bottom, this statute affords access to discovery of evidence in the United States for use in foreign proceedings. Breaking down § 1782(a) into its constituent elements, we have identified the following requirements
(1) that the person from whom discovery is sought reside (or be found) in the district of the district court to which the application is made, (2) that the discovery be for use in a proceeding before a foreign tribunal, and (3) that the application be made by a foreign or international tribunal or "any interested person."
Esses, 101 F.3d at 875 (emphasis added).
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