Consorcio Ecuatoriano De Telecomunicaciones S.A. v. Jas Forwarding (USA), Inc.

• Decision Date: 25 June 2012
• Docket Number: No. 11–12897.,11–12897.
• Citation: 82 Fed.R.Serv.3d 1235,23 Fla. L. Weekly Fed. C 1217,685 F.3d 987
• Parties: Application of CONSORCIO ECUATORIANO DE TELECOMUNICACIONES S.A., Pursuant to 28 USC 1782 for Judicial Assistance in Obtaining Evidence From JAS Forwarding (USA), Inc., For Use In a Foreign Tribunal, Plaintiff–Appellee, v. JAS FORWARDING (USA), INC., Defendant, Jet Air Service Equador S.A., Intervenor–Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

685 F.3d 987

82 Fed.R.Serv.3d 1235

23 Fla. L. Weekly Fed. C 1217

Application of CONSORCIO ECUATORIANO DE TELECOMUNICACIONES S.A., Pursuant to 28 USC 1782 for Judicial Assistance in Obtaining Evidence From JAS Forwarding (USA), Inc., For Use In a Foreign Tribunal, Plaintiff–Appellee,

v. JAS FORWARDING (USA), INC., Defendant,Jet Air Service Equador S.A., Intervenor–Appellant.

No. 11–12897.

United States Court of Appeals, Eleventh Circuit.

June 25, 2012.

Jose I. Astigarraga, Arnoldo B. Lacayo, Edward M. Mullins, Annette C. Escobar, Astigarraga, Davis, Mullins & Grossman, PA, Miami, FL, for Plaintiff–Appellee.

Andrew Robert Spector, Arnall, Golden & Gregory, LLP, Robert Mark Borak, Marc Alan Rubin, Hyman Spector & Mars, LLP, Miami, FL, for Intervenor–Appellant.

Appeal from the United States District Court for the Southern District of Florida.

Before MARCUS and BLACK, Circuit Judges, and HODGES,^* District Judge.

MARCUS, Circuit Judge:

This appeal arises out of a foreign shipping contract billing dispute between Consorcio Ecuatoriano de Telecomunicaciones S.A. (“CONECEL”) and Jet Air Service Equador S.A. (“JASE”). CONECEL filed an application in the Southern District of Florida under 28 U.S.C. § 1782 to obtain discovery for use in foreign proceedings in Ecuador. According to CONECEL, the foreign proceedings include both a pending arbitration brought by JASE against CONECEL for non-payment under the contract, and contemplated civil and private criminal suits CONECEL might bring against two of its former employees who, CONECEL claims, may have violated Ecuador's collusion laws in connection with processing and approving JASE's allegedly inflated invoices. CONECEL's application seeks discovery from JASE's United States counterpart, JAS Forwarding (USA), Inc. (“JAS USA”), which does business in Miami and was involved in the invoicing operations at issue in the dispute. The district court granted the application and authorized CONECEL to issue a subpoena. Thereafter, JASE intervened and moved to quash the subpoena and vacate the order granting the application. The district court denied the motion, as well as a subsequent motion for reconsideration. JASE now appeals the denial of both.

After thorough review and having had the benefit of oral argument, we affirm the orders of the district court. We hold that the arbitral tribunal before which JASE and CONECEL's dispute is now pending is a foreign tribunal for purposes of the statute. The arbitral panel acts as a first-instance decisionmaker; it permits the gathering and submission of evidence; it resolves the dispute; it issues a binding order; and its order is subject to judicial review. The discovery statute requires nothing more. We also hold that the district court did not abuse its considerable discretion in granting the section 1782 discovery application over JASE's objections that it would be forced to produce proprietary and confidential information. The application was narrowly tailored and primarily requested information concerning JASE's billing of CONECEL, which is undeniably at issue in the current dispute between the parties. Finally, the district court did not abuse its discretion in denying JASE's motion for reconsideration.

I.

CONECEL and JASE have had a lengthy contractual relationship that reaches back at least a decade.¹ JASE agreed to provide transportation logistics services in connection with the international transportation of cell phones and accessories for CONECEL. The contracts between the parties contain descriptions of the potential services to be provided by JASE and detailed terms pertaining to the rate to be charged per applicable unit of weight transported. According to CONECEL, between 2002 and 2007 JASE invoiced, and CONECEL paid, more than $88 million for services rendered under the contracts. The relationship between the parties soured in 2008, and CONECEL contends that an internal investigation and audit “using the limited documentation in its possession” revealed that CONECEL had been improperly overbilled by millions of dollars.

CONECEL says that the agreements between the parties provided that CONECEL would pay the rate specified by the agreements (in terms of dollars per unit of weight) multiplied by the weight of the shipment. CONECEL contends that JASE introduced an “extra-contractual multiplication factor” into the equation, which “varied from shipment to shipment based on factors that are not known to CONECEL.”² CONECEL also claims that the calculation of the “chargeable weight” of the shipments was erroneous.

CONECEL reports that an internal investigation and audit has led it to believe that two of its former employees, Lucy Egas Ribadeneira (“Egas”) and Germania Narváez (“Narváez”), had a hand in the overbilling scheme. The two former employees allegedly “participated in the processing and approval of JAS Ecuador's invoices during the relevant period and ... there are indications that Ribadeneira and Narváez may be liable to CONECEL for its damages.” CONECEL adds that its contemplated civil action for collusion would be filed in the civil-mercantile court of competent jurisdiction in Quito, Ecuador, and that under the applicable procedural rules, CONECEL must present all of the evidence necessary to support its claims at the moment it files the action. Then, if successful in a civil action, CONECEL could, under Ecuadorian law, pursue a private criminal action against its former employees. Since a party must present its evidence up front along with the pleadings, CONECEL seeks the discovery specified in section 1782 before commencing suit in Ecuador.

Not surprisingly, JASE tells a wholly different story. It claims that in 2008 CONECEL failed to pay several invoices. Pursuant to the contractual agreements between the parties, JASE has pursued arbitration in Ecuador before the Center for Arbitration and Conciliation of the Guayaquil Chamber of Commerce. CONECEL's primary defense in the pending arbitration proceeding is that the invoices do not correspond to the parties' agreed-upon price.

II.

On July 14, 2010, CONECEL filed an ex parte application for judicial assistance in the Southern District of Florida in order to obtain evidence pursuant to 28 U.S.C. § 1782. Section 1782 provides in relevant part:

The 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, including criminal investigations conducted before formal accusation. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court .... 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.

28 U.S.C. § 1782(a).

CONECEL's detailed application, accompanied by two declarations and a memorandum of law, sought evidence from JAS USA relating primarily to the invoicing and calculation of rates charged to CONECEL.³ The application was also accompaniedby a sample air waybill purporting to show that JAS USA's Miami office was involved in the provision and invoicing of transport services to CONECEL.

On July 20, 2010, the district court granted the ex parte application and authorized CONECEL to issue and serve a subpoena on JAS USA seeking the discovery outlined in CONECEL's application. JASE moved to intervene to vacate the order granting the application. After full briefing, the district court permitted the intervention but denied the motion to vacate.

The district court began its analysis by addressing the “primary disputed issue” of “whether the subpoenaed documents will be used in a proceeding [in] a foreign or international tribunal.” The court observed that, as interpreted by the Supreme Court, section 1782 does not require that the foreign proceeding be pending or imminent, but rather only that the proceeding “be within reasonable contemplation.” Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 259, 124 S.Ct. 2466, 159 L.Ed.2d 355 (2004). The district court determined that CONECEL had “established that the civil and criminal actions are within reasonable contemplation.” Having concluded that CONECEL's civil and criminal suits against its two former employees were within reasonable contemplation, the district court did not have to reach the question of whether the pending arbitration between JASE and CONECEL was a proceeding in a foreign tribunal under the statute. The court did observe, however, that “upon a review of the case law, the Court finds that the arbitral tribunal, in this action, is likely within the purview of section 1782.”

Finally, as for JASE's argument that the application should have been denied anyway because CONECEL sought confidential materials, the district court rejected the claim this way:

JAS Ecuador's primary discretionary argument is that the subpoena requests confidential materials. The Court disagrees. The subpoena simply requests information as it relates to how JAS Ecuador billed or invoiced CONECEL. It does not request information on how JAS Ecuador bills other clients. Indeed, it relates directly to the contract at issue—the same contract JAS Ecuador uses to assert confidentiality. Accordingly, the Court finds this argument without merit.

... [T]he Court does not find that JAS Ecuador is embarking on a “fishing expedition.” The Court finds the Subpoena narrowly tailored and not unduly intrusive or burdensome. Accordingly, the motion to quash must be denied.

JASE moved for reconsideration; the district court denied the motion, concluding that it appeared to be nothing more...