EM Ltd. v. Republic of Argentina

• Decision Date: 20 August 2012
• Docket Number: Docket No. 11–4165–cv(CON).,Docket No. 11–4077–cv(CON).,Docket No. 11–4153–cv(CON).,Docket No. 11–4118–cv(CON).,Docket No. 11–4065–cv(L).,Docket No. 10–4100–cv(CON).,Docket No. 11–4082–cv(CON).,Docket No. 11–4117–cv(CON).,Docket No. 11–4182–cv(CON).,Docket No. 11–4102–cv(CON).,Docket No. 11–4133–cv(CON).
• Citation: 695 F.3d 201
• Parties: 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.
• Court: U.S. Court of Appeals — Second Circuit

695 F.3d 201

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.

Docket 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.

Argued: April 23, 2012.

Decided: Aug. 20, 2012.

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 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.

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 Néstor 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 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, 1940. According to NML, BNA neither engaged in negotiations nor complied with the subpoena. On December 14, 2011, the district court ordered BNA's compliance with the modified subpoena by January 6, 2012. See Order, NML Capital, Ltd. v. Republic of Argentina, No. 03–cv–8845 (S.D.N.Y. Dec. 14, 2011), ECF No. 452.

Argentina, but not the banks, appealed the district court's September 2, 2011 Discovery Order.

DISCUSSION

Argentina challenges the Discovery Order's legal premise that compliance with the subpoenas does not infringe on Argentina's sovereign immunity. It argues that the Discovery Order, by compelling disclosure about Argentinian assets abroad, violates the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602 et seq., which provides the sole source of federal court jurisdiction over foreign nations, see Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434–35, 109 S.Ct. 683, 102 L.Ed.2d 818 (1989). We hold that because the Discovery Order involves discovery, not attachment of sovereign property, and because it is directed at third-party banks, not at Argentina itself, Argentina's sovereign immunity is not infringed. The district court therefore did not abuse its discretion in ordering BOA and BNA to comply with NML's subpoenas.

I. Jurisdiction

Before turning to the merits, we first address NML's contention that we lack subject matter jurisdiction to consider these appeals because the Discovery Order is not a “final decision” under 28 U.S.C. § 1291. The issue arises here in the context of supplemental post-judgment proceedings instituted by NML to facilitate the execution of its judgments against Argentina. SeeFed.R.Civ.P. 69(a). In post-judgment litigation, the “final decision” is not the underlying judgment that the plaintiff is attempting to enforce, but the subsequent judgment that concludes the collection proceedings. See In re Joint E. & S. Dists. Asbestos Litig., 22 F.3d 755, 760 (7th Cir.1994). The Discovery Order is not a “final decision” in this sense because it does not terminate NML's collection proceedings against Argentina. Under the collateral order doctrine, however, a decision is “final” if it (1) conclusively determines a disputed question; (2) resolves an important issue...