695 F.3d 201 (2nd Cir. 2012), 11-4065-cv(L), EM Ltd. v. Republic of Argentina

Docket Nº:11-4065-cv(L), 11-4077-cv(CON), 11-4082-cv(CON), 10-4100-cv(CON), 11-4102-cv(CON), 11-4117-cv(CON), 11-4118-cv(CON), 11-4133-cv(CON), 11-4153-cv(CON), 11-4165-cv(CON), 11-4182-cv(CON).
Citation:695 F.3d 201
Opinion Judge:JOHN M. WALKER, JR., Circuit Judge:
Party Name:EM LTD., Plaintiff, v. REPUBLIC OF ARGENTINA, Defendant-Appellant, NML Capital, Ltd., Plaintiff-Appellee, Administracion Nacional de Seguridad Social, Union de Administradoras de Fondos de Jubilaciones y Pensiones, Arauca Bit AFJP S.A. Consolidar AFJP S.A., Futura AFJP S.A., Maxima AFJP S.A., Met AFJP S.A., Origenes AFJP S.A., Profesion Auge AFJP S
Attorney:Theodore B. Olson, Gibson, Dunn & Crutcher LLP, Washington, DC (Robert A. Cohen, Dennis H. Hranitzky, Eric C. Kirsch, Dechert LLP, New York, NY, Matthew D. McGill, Gibson, Dunn & Crutcher LLP, Washington, DC, on the brief), for Plaintiff-Appellee. Jonathan I. Blackman (Carmine D. Boccuzzi, Christ...
Judge Panel:Before: WALKER, McLAUGHLIN and CABRANES, Circuit Judges.
Case Date:August 20, 2012
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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695 F.3d 201 (2nd Cir. 2012)

EM LTD., Plaintiff,

NML Capital, Ltd., Plaintiff-Appellee,

v.

REPUBLIC OF ARGENTINA, Defendant-Appellant,

Administracion Nacional de Seguridad Social, Union de Administradoras de Fondos de Jubilaciones y Pensiones, Arauca Bit AFJP S.A. Consolidar AFJP S.A., Futura AFJP S.A., Maxima AFJP S.A., Met AFJP S.A., Origenes AFJP S.A., Profesion Auge AFJP S.A., Defendants,

Bank of America, N.A., Intervenor.

Nos. 11-4065-cv(L), 11-4077-cv(CON), 11-4082-cv(CON), 10-4100-cv(CON), 11-4102-cv(CON), 11-4117-cv(CON), 11-4118-cv(CON), 11-4133-cv(CON), 11-4153-cv(CON), 11-4165-cv(CON), 11-4182-cv(CON).

United States Court of Appeals, Second Circuit.

August 20, 2012

Argued: April 23, 2012.

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Theodore B. Olson, Gibson, Dunn & Crutcher LLP, Washington, DC (Robert A. Cohen, Dennis H. Hranitzky, Eric C. Kirsch, Dechert LLP, New York, NY, Matthew D. McGill, Gibson, Dunn & Crutcher LLP, Washington, DC, on the brief), for Plaintiff-Appellee.

Jonathan I. Blackman (Carmine D. Boccuzzi, Christopher P. Moore, on the brief), Clearly Gottlieb Steen & Hamilton LLP, New York, NY, for Defendant-Appellant.

Before: WALKER, McLAUGHLIN and CABRANES, Circuit Judges.

JOHN M. WALKER, JR., Circuit Judge:

In these consolidated appeals, we consider the scope of discovery available to a

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plaintiff in possession of a valid money judgment against a foreign sovereign. Specifically, we review an order of the District Court for the Southern District of New York (Thomas P. Griesa, Judge ) compelling two non-party banks to comply with subpoenas duces tecum seeking information about Argentina's assets located outside the United States. Argentina argues that the banks' compliance with the subpoenas would infringe on its sovereign immunity. We conclude, however, that because the district court ordered only discovery, not the attachment of sovereign property, and because that discovery is directed at third-party banks, Argentina's sovereign immunity is not affected.

BACKGROUND

In December 2001, Defendant-Appellant the Republic of Argentina defaulted on payment of its external debt. While most of Argentina's bondholders agreed to voluntary restructurings in 2005 and 2010, others, including Plaintiff-Appellee NML Capital, Ltd. (" NML" ), did not. Beginning in 2003, NML filed eleven actions in the Southern District of New York to collect on its defaulted Argentinian bonds. Jurisdiction in the district court was premised on Argentina's broad waiver of sovereign immunity in the bond indenture agreements.1 The district court has entered five money judgments in NML's favor totaling (with interest) approximately $1.6 billion. It has also granted summary judgment to NML in the remaining six actions, in which NML's claims total (with interest) more than $900 million. Argentina has not satisfied these judgments and NML has thus attempted to execute them against Argentina's property. This litigation has involved lengthy attachment proceedings before the district court and multiple appeals to this court. 2 Here we will recite only the facts relevant to the instant appeals.

NML has pursued discovery concerning Argentina's property located in the United States since 2003. In 2010, " [i]n order to locate Argentina's assets and accounts, learn how Argentina moves its assets through New York and around the world, and accurately identify the places and times when those assets might be subject to attachment and execution (whether under [U.S. law] or the law of foreign jurisdictions)," NML served the subpoenas at issue in these appeals on two non-party banks, Bank of America (" BOA" ) and Banco de la Nación Argentina (" BNA" ). NML Br. at 9. From the materials sought in these subpoenas, NML hoped to gain an understanding of Argentina's " financial circulatory system." Joint Appendix (" JA" ) 1021.

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NML served the first subpoena, directed at BOA, on March 10, 2010. The subpoena seeks documents relating to all BOA accounts maintained by or on behalf of Argentina without territorial limitation. JA 672. In particular, it requests documents sufficient to identify the opening and closing dates of Argentina's accounts, current balances, and transaction histories from 2009 through the production date. JA 667, 672. It also requests from BOA documents relating to electronic fund transfers sent through the SWIFT system.3 JA 672-73. The BOA subpoena defines " Argentina" broadly to include Argentina's " agencies, ministries, instrumentalities, political subdivisions [and] employees," as well as Argentina's current president, Cristina Fernández de Kirchner, and her late husband, former president Né stor Carlos Kirchner. JA 666, 674.

NML served the second subpoena on BNA, an Argentinian bank with a branch in New York City, on June 14, 2010. The BNA subpoena requests documents relating to any assets or accounts maintained at BNA by Argentina or for Argentina's benefit, any debts owed by BNA to Argentina, and transfers into or out of Argentina's accounts, including documents identifying the transfer counterparties. JA 908-09. Again, " Argentina" is broadly defined to include " its agencies, instrumentalities, ministries, political subdivisions, representatives, State Controlled Entities ..., and all other Persons acting or purporting to act for or on behalf of Argentina." A " State Controlled Entity" is defined to include any entity controlled or more than 25% owned by Argentina. JA 903-04.

After the subpoenas were served, Argentina, later joined by BOA, moved to quash the BOA subpoena. Both banks then set forth objections to the subpoenas, and NML moved to compel their compliance. Before the district court ruled on the objections and motions, NML agreed to modify its subpoenas, including by allowing BOA to exclude lower-level Argentinian officials from searches of SWIFT messages. NML also agreed to enter into a protective order that would permit the banks to designate documents as confidential and require that those documents receive confidential treatment by all parties. At an August 30, 2011 hearing, and in a subsequent September 2, 2011 order (the " Discovery Order" ), the district court denied the motion to quash and granted the motions to compel. JA 1881, 1900-01, 1915-16. At the hearing, the district court approved the subpoenas in principle, indicating that it had made its final determination that extraterritorial asset discovery did not infringe on Argentina's sovereign immunity, and reaffirmed that it intended to serve as a " clearinghouse for information" in NML's efforts to find and attach Argentina's assets. JA 1868, 1881. The district court stated, however, that it expected the parties to negotiate further on the specific production requests contained in the subpoenas, saying that the subpoenas must include " some reasonable definition of the information being sought." JA 1868. For example, the district court noted that " there is no use getting information about something that might lead to attachment in Argentina because that would be useless information" as no Argentinian court would allow sovereign property to be attached within the country. JA 1868. Thus, the district court, while

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open to discovery of assets abroad, sought to limit the subpoenas to discovery that was reasonably calculated to lead to attachable property.

Following the district court's ruling, NML and BOA negotiated further modifications to the subpoenas, including by designating search keywords. 4 BOA has begun producing documents pursuant to the subpoena. With respect to the BNA subpoena, NML agreed to limit the requested individuals to the current and most recent former president, and to exclude all documents relating to assets or transfers exclusively within Argentina. JA 1932...

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