In re Godfrey, M-19-99.

• Decision Date: 30 November 2007
• Docket Number: No. M-19-99.,M-19-99.
• Citation: 526 F.Supp.2d 417
• Parties: In re Application of David GODFREY and Bruce Misamore for an order to conduct discovery for use in a foreign proceeding.
• Court: U.S. District Court — Southern District of New York

526 F.Supp.2d 417

In re Application of David GODFREY and Bruce Misamore for an order to conduct discovery for use in a foreign proceeding.

No. M-19-99.

United States District Court, S.D. New York.

November 30, 2007.

OPINION AND ORDER

JED S. RAKOFF, District Judge.

On October 1, 2007, petitioners David Godfrey and Bruce Misamore filed, ex parte, an Application for Discovery in Aid of a Foreign Proceeding under 28 U.S.C. § 1782(a). Specifically, they requested (1) leave to serve subpoenas duces tecum on respondents VR Capital Group ("VR Capital"), Renaissance Capital LLC-Financial Consultant ("Renaissance Capital"), Robert Dietz, Richard Foresman, and Stephen Patrick Lynch; (2) leave to serve subpoenas ad testificandum on same; (3) a court order requiring VR Capital and Renaissance Capital to provide a representative designated to testify to matters known to the organizations and requiring Richard Dietz, Robert Foresman, and Stephen Patrick Lynch to be deposed within 21 days; and (4) leave to serve subpoenas for depositions at future dates on knowledgeable individuals and entities without further application to the Court. The ex parte application was granted by Judge Victor Marrero, then sitting as judge in the Miscellaneous Part of the Court ("Part I"), and the subpoenas then issued.

On October 15, 2007, all five respondents-Foresman, Lynch, Deitz, Renaissance Capital and VR Capital-filed a motion to quash the subpoenas as improperly issued. Petitioners filed a memorandum of law in opposition to the motion to quash on October 17, 2007, and the undersigned, sitting as Part I Judge, heard oral argument on the matter on October 23, 2007. For the reasons explained below, the motion to quash the subpoenas is hereby granted.

28 U.S.C. § 1782(a) provides: "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." There are thus three threshold requirements for compelling discovery under § 1782:(1) the person from whom discovery is sought must "reside" or be "found" in the district; (2) the discovery must be for use in a proceeding in a foreign tribunal; and (3) the applicant must be an "interested person." See In re Edelman, 295 F.3d 171, 175-76 (2d Cir.2002). If all three requirements are met, the decision to grant the request then rests within the discretion of the district court. Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 260, 124 S.Ct. 2466, 159 L.Ed.2d 355 (2004). In exercising such discretion, courts should consider, inter affix, "(1) Whether the documents or testimony sought are within the foreign tribunal's jurisdictional reach, and thus accessible absent § 1782 aid; (2) The nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federalcourt judicial assistance; (3) Whether the § 1782 request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States; and (4) Whether the subpoena contains unduly intrusive or burdensome requests." In re Microsoft Corp., 428 F.Supp.2d 188, 192-93 (S.D.N.Y.2006).

In their initial ex parte application to Judge Marrero, petitioners claimed that the first threshold requirement for discovery under § 1782(a) was met because all respondents were "found" in this district. According to the declaration submitted by petitioner's counsel, Robert F. Serio, Esq., VR Capital had an office at 136 Madison Avenue, Renaissance Capital had an office at 780 Third Avenue and was registered to do business in New York, Richard Deitz was an executive with VR Capital and was found in this district from time to time, Robert Foresman was an executive with Renaissance Capital and was "regularly in the Southern District of New York," and Stephen Patrick Lynch listed an address in the Southern District in the underlying Dutch proceeding and was "from time to time, found in the Southern District of New York (including as recently as the weekend of September 1, 2007)." See Declaration of Robert F. Serio ("Serio Decl.") dated October 1, 2007, ¶ 3.

However, now that respondents have had an opportunity to be heard, it is clear that petitioners, who have the burden of proof, have not in fact adequately shown that any respondent except Richard Deitz is "found" within this, district within the meaning of § 1782(a), or that any respondent at all "resides" here. See In re Kolomoisky, 2006 WL 2404332 (S.D.N.Y.2006) at *3 (burden of proof on petitioner). Specifically, as to each respondent except Dietz, respondents have provided specific facts that cast in grave doubt petitioners' prior assertions that all respondents are "found" here and that render those assertions insufficient to meet petitioners' burden.

Thus, respondent Lynch avers that he has resided in Moscow since 1999, see Declaration of Stephen Patrick Lynch in Support of Respondents' Motion to Quash Subpoenas ("Lynch Decl.") dated October 11, 2007, Exhibit 2 to Declaration of Robert H. Pees in Support of Respondents' Motion to Quash Subpoenas ("Pees Decl.") dated October 15, 2007; and that prior to that time he lived in Philadelphia, Pennsylvania, Almaty, Kazakhstan, and Nizhny Novogorod, Russia. Id. ¶ 2. In the past year, he has visited New York just three times and for personal reasons. Id. ¶ 3. The subpoena at issue in this case was delivered, to Lynch's mother's address and left with her. Id. ¶ 7. But while it is true that Lynch's mother lives in North Salem, New York (i.e., within this district) and that, "given the unreliability of the Russian postal system," id. ¶ 6, Lynch has, at times, including in the Dutch proceeding relevant to this application, listed his mother's address as his mailing address, id. ¶¶ 5-6, Lynch himself has not lived in North Salem since high school. Id. ¶ 5.

Similarly, respondent Foresman avers that he has resided in Moscow for the past eight years. Declaration of Robert Foresman in Support of Respondents' Motion to Quash Subpoenas ("Foresman Decl.") dated October 12, 2007, Exhibit 1 to Pees Decl., ¶ 2. Prior to that time, he lived in Kiev and Washington, D.C. Id. He owns real property in Auburn, New York, which is not part of the Southern District. Id. ¶ 3. Foresman spent only one day in Manhattan in 2007. Id. ¶ 4.

Subpoenas directed at Foresman, as well as at respondent Renaissance Capital, a Russian investment bank, were delivered to the offices of RenCap Securities, Inc. ("RenCap Securities"), where an office manager purportedly stated that he had authority to accept subpoenas on behalf of both Renaissance Capital and Robert Foresman. See Affidavits of Service, Exhibits H and I to Declaration of Anne M. Coyle ("Coyle Decl.") dated October 19, 2007. Both Foresman and Renaissance Capital aver, however, that this statement, if made, was patently beyond the office manager's authority. Supplemental Declaration of Robert Foresman in Further Support of Respondents' Motion to Quash Subpoenas ("Supplemental Foresman Decl.") dated October 22, 2007, Exhibit 2 to Supplemental Declaration of Robert H. Pees ("Supplemental Pees Decl.") dated October 22, 2007, ¶ 7. RenCap Securities is a Delaware corporation registered to conduct business in the State of New York. Declaration of Gretchen King ("King Decl.") dated October 18, 2007, Exhibit D to Coyle Decl., ¶¶ 3-4. While RenCap Securities and Renaissance Capital are affiliated, they are separate legal entities with separate employees and separate functions. Supplemental Foresman Decl. ¶ 2. RenCap Securities is neither a department nor a division of Respondent Renaissance Capital. Id. It is not financially dependent on Renaissance Capital and there is no overlap of corporate personnel. Id. In addition, because of a so-called "Chinese Wall" between sales and trading operations and investment banking operations, RenCap Securities employees do not have physical or electronic access to the documents that are the subject of the subpoenas (and that are themselves located in Russia). Id. ¶¶ 4-6. Robert Foresman is an officer of Renaissance Capital but not of RenCap Securities. Foresman Decl. ¶ 1; Supplemental Foresman Decl. ¶ 2.

Respondent VR Capital Group ("VR Capital") is an investment management firm based in Moscow, with additional offices in Dubai and. Buenos Aires. See Declaration of Richard Deitz in Support of Respondent's Motion to Quash Subpoenas ("Deitz Decl.") dated October 11, 2007, Exhibit 3 to Pees Decl., ¶¶ 1-2. With the exception of Gustavo Palazzi, an Argentine national who works for VR Capital's Buenos Aires office and has temporarily relocated to Westchester County to be near his wife for medical reasons, VR Capital and its affiliates have no personnel in the Southern District. Id. ¶ 4; Supplemental Declaration of Richard Deitz in Further Support of Respondents' Motion to Quash Subpoenas ("Supplemental Deitz Decl.") dated October 22, 2007, Exhibit 1 to Supplemental Pees Decl., ¶ 18. Respondent Richard Deitz, the president of VR Capital, is friends with the managing directors of a company called Aristeia Capital LLC ("Aristeia"), which has offices at 136 Madison Avenue, where the subpoenas for Dietz and VR Capital were served. The directors occasionally allow Deitz to borrow an office when he is in New York, and they allow him to use their office as a mailing address "in light of the vagaries of the Russian postal system," but that is all. Deitz Decl. ¶ 5. Therefore, 136 Madison Avenue is listed as an address in Deitz's email signature line and his name is included in the Aristeia telephone directory. Aristeia then regularly forwards mail to VR Capital in Moscow. Supplemental Deitz Decl. ¶ 15. VR Capital does not itself own or lease the premises at 136 Madison Avenue or any other location in New York....