In re del Valle Ruiz, Docket Nos. 18-3226 (L)

• Citation: 939 F.3d 520
• Decision Date: 07 October 2019
• Docket Number: August Term, 2018,18-3474 (Con),18-3629 (XAP),Docket Nos. 18-3226 (L)
• Parties: IN RE: Application of Antonio DEL VALLE RUIZ and others for an order to take discovery for use in foreign proceedings pursuant to 28 U.S.C. § 1782
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

939 F.3d 520

IN RE: Application of Antonio DEL VALLE RUIZ and others for an order to take discovery for use in foreign proceedings pursuant to 28 U.S.C. § 1782

Docket Nos. 18-3226 (L)

18-3474 (Con)

18-3629 (XAP)

August Term, 2018

United States Court of Appeals, Second Circuit.

Argued: March 25, 2019

Decided: October 7, 2019

Javier H. Rubinstein, P.C. (C. Harker Rhodes IV, Kirkland & Ellis LLP, Washington, DC, Lauren F. Friedman, Lucila I.M. Hemmingsen, Joseph Myer Sanderson, Kirkland & Ellis LLP, New York, NY, on the brief), Kirkland & Ellis LLP, Chicago, IL, for Petitioners–Appellants Antonio del Valle Ruiz, et al.

David Mader (Peter Evan Calamari Bento, on the brief), Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, for Petitioners–Appellants–Cross-Appellees Pacific Investment Management Company LLC and Anchorage Capital Group, LLC.

Elbert Lin (Samuel A. Danon, Hunton Andrews Kurth LLP, Miami, FL, Johnathon E. Schronce, Hunton Andrews Kurth LLP, Richmond, VA, Joseph J. Saltarelli, Hunton Andrews Kurth LLP, New York, NY, on the brief), Hunton Andrews Kurth LLP, Richmond, VA, for Respondents–Appellees Banco Santander, S.A., Santander Holdings U.S.A., Inc., and Santander Bank, N.A. and Respondent–Appellee–Cross-Appellant Santander Investment Securities Inc.

Before: Parker, Hall, and Droney, Circuit Judges.

hall, Circuit Judge:

Banco Santander S.A. ("Santander") acquired Banco Popular Español, S.A. ("BPE") after a government-forced sale. Petitioners, a group of Mexican nationals and two investment and asset-management firms, initiated or sought to intervene in various foreign proceedings contesting the legality of the acquisition. Petitioners then filed in the Southern District of New York two applications under 28 U.S.C. § 1782 seeking discovery from Santander and its New York-based affiliate, Santander Investment Securities Inc. ("SIS"), concerning the financial status of BPE. The district court (Ramos, J. ) denied the applications for the most part, concluding that it lacked personal jurisdiction over Santander. The court granted discovery against SIS and in doing so rejected Santander’s argument that § 1782 does not allow for extraterritorial discovery. These consolidated appeals follow.

We are first asked to delineate the contours of § 1782 ’s requirement that a person or entity "resides or is found" within the district in which discovery is sought. We hold that this language extends § 1782 ’s reach to the limits of personal jurisdiction consistent with due process. We nonetheless conclude that Santander’s contacts with the Southern District of New York were insufficient to subject it to the district court’s personal jurisdiction.

We are next tasked with deciding whether § 1782 may be used to reach documents located outside of the United States. We hold that there is no per se bar to the extraterritorial application of § 1782, and the district court may exercise its discretion as to whether to allow such discovery. We conclude that the district court acted well within its discretion here in allowing discovery from SIS.

Having so held, we affirm the district court’s orders.

I.

Section 1782 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." 28 U.S.C. § 1782(a). The order may prescribe the applicable practice and procedure for discovery, but "[t]o 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." Id.

A.

As of June 2017, BPE was Spain’s sixth-largest bank, with assets of approximately €147 billion. After the financial crisis of 2008, however, BPE became aware that it had many toxic and nonperforming assets ("NPAs") on its books. BPE implemented between 2012 and 2016 a variety of measures to address its exposure to NPAs and did so without any government assistance. By the end of 2016, however, business conditions began to deteriorate after Spanish governmental entities started making large withdrawals.

In May 2017, BPE, contemplating a private sale, created a virtual data room for interested buyers. Among those interested was Santander, which retained New York-based UBS and Citibank to advise on a contemplated bid. After completing its due diligence, Santander purportedly was prepared to offer to buy BPE for €3 billion with an additional capital injection of €4 billion. Meanwhile, BPE suffered an all-out run on deposits after reports that it was a bankruptcy risk and facing resolution, a form of government-forced sale.¹

On June 6, 2017, the European Central Bank informed the European Single Resolution Board that BPE was "failing or likely to fail." J. App. 115. That same day, and at the direction of the Single Resolution Board, Spain’s national banking supervisory authority ("FROB") invited several banks, including Santander, to submit bids by midnight, ostensibly pursuant to a resolution. Only Santander submitted a bid, and that bid was for one Euro (€1).² On June 7, 2017, it was publicly announced that Santander’s bid had been accepted. Apparently, another potential bidder had complained that it did not have enough time to prepare a bid. According to a news report, Santander’s CEO had stated that "Santander was able to do it because we had done due diligence 20 days earlier. Otherwise, it would have been impossible." J. App. 469.

As a result of BPE’s resolution, a group of 55 Mexican investors in BPE (the "del Valle Ruiz Petitioners"), as well as United States-based investment and asset management firms Pacific Investment Management Company LLC and Anchorage Capital Group, LLC (the "PIMCO Petitioners"), suffered significant financial losses. Both sets of petitioners brought legal challenges to the BPE resolution in the Court of Justice of the European Union, the del Valle Ruiz Petitioners brought an international arbitration proceeding against Spain, and the PIMCO Petitioners sought to intervene in Spanish criminal proceedings against BPE. Santander has sought, but at the time of argument had not yet been granted leave, to intervene in these proceedings, all of which are ongoing.³

B.

The del Valle Ruiz Petitioners filed a § 1782 application in the Southern District of New York seeking discovery from Santander and its wholly-owned subsidiaries Santander Holdings U.S.A., Inc. ("SHUSA") and Santander Bank, N.A. ("SBNA"). The del Valle Ruiz Petitioners sought documents relating to BPE’s liquidity position, both the private-sale and government-sale process, and communications with regulators concerning BPE or the BPE resolution. The PIMCO Petitioners filed a § 1782 application against Santander, SHUSA, SBNA, and SIS, seeking similar documents.⁴ Santander protested that it was not "found" in the Southern District within the meaning of § 1782, § 1782 does not apply to documents or witnesses located overseas, and discovery was otherwise unwarranted. Santander conceded that SIS "resides or is found" in the Southern District but contended that SIS was not involved with the acquisition of BPE.

C.

The district court denied the del Valle Ruiz Petitioners’ application and denied in part the PIMCO Petitioners’ application, but the court granted the PIMCO Petitioners’ request for discovery from SIS. See generally In re del Valle Ruiz , 342 F. Supp. 3d 448 (S.D.N.Y. 2018). The court first concluded that whatever the statutory meaning of "found," at a minimum § 1782 must comport with constitutional due process, i.e., the court must have personal jurisdiction. Id. at 452–53. Under Daimler AG v. Bauman , 571 U.S. 117, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014), none of the Santander entities except SIS met the requirement for general jurisdiction. In re del Valle Ruiz , 342 F. Supp. 3d at 453–57, 459. With respect to specific jurisdiction, all of Santander’s alleged New York contacts took place after the resolution had been adopted, and the litigation abroad therefore could not be said to arise out of or relate to those contacts.⁵ Id. at 453–59.

The district court concluded that SIS "resides or is found" in the Southern District of New York, the court thus had discretion to grant discovery against SIS, and discovery was warranted under Intel Corp. v. Advanced Micro Devices, Inc. , 542 U.S. 241, 124 S.Ct. 2466, 159 L.Ed.2d 355 (2004). In re del Valle Ruiz , 342 F. Supp. 3d at 459–60. In doing so, the court noted Santander was not a party to any of the foreign proceedings and, although it had been ordered to produce some discovery in the Spanish criminal proceeding, it was not "an especially active participant" in that proceeding. Id. at 549. The court rejected Santander’s extraterritoriality argument, concluding that producing documents located abroad would not be unduly burdensome or intrusive. Id. at 459–60 (citing In re Accent Delight Int’l Ltd. , Nos. 16-mc-125, 18-mc-50, 2018 WL 2849724, at *4 (S.D.N.Y. June 11, 2018), appeal docketed , No. 18-1755). The district court did not mention SIS specifically in its Intel analysis. These consolidated appeals follow.

II.

These appeals present several issues of first impression. The parties dispute the proper interpretation of § 1782 ’s requirement that a respondent "resides or is found" in the district in which the district court ordering discovery sits.⁶ Petitioners insist that § 1782 ’s use of the word "found" is coextensive with the limits of personal jurisdiction consistent with due process (and that less process is due for nonparties), whereas Santander argues that we must restrict § 1782 ’s "found" language to general "tag" jurisdiction over individuals.⁷ Santander also contends that § 1782 does not reach evidence located abroad and the district court abused its discretion by allowing discovery against SIS, both points with which Petitioners naturally...