In re Gorsoan Ltd.

• Decision Date: 24 January 2020
• Docket Number: No. 18-MC-431 (RA),18-MC-431 (RA)
• Parties: IN RE Application of GORSOAN LIMITED for an Order Pursuant to 28 U.S.C. § 1782 to Conduct Discovery for Use in a Foreign Proceeding, Petitioner.
• Court: U.S. District Court — Southern District of New York

435 F.Supp.3d 589

IN RE Application of GORSOAN LIMITED for an Order Pursuant to 28 U.S.C. § 1782 to Conduct Discovery for Use in a Foreign Proceeding, Petitioner.

No. 18-MC-431 (RA)

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

Signed January 24, 2020

Caroline Stoker Donovan, Kenneth Scott Leonetti, Foley Hoag LLP, Boston, MA, for Petitioner.

OPINION & ORDER

RONNIE ABRAMS, United States District Judge:

On October 15, 2018, Judge Sullivan, to whom this matter was previously assigned, issued an ex parte order granting discovery to Petitioner Gorsoan Limited pursuant to 28 U.S.C. § 1782 and authorizing subpoenas to be served on Respondents Zoe Bullock Remmel ("Bullock Remmel"), Eugenia Bullock ("E. Bullock"), Zoya Kuznetsova, and Stuart Sundlun (collectively, "Respondents"). On May 13, 2019, Gorsoan filed a motion to compel Respondents to respond to those subpoenas. Respondents oppose Gorsoan's motion on several grounds. Also currently before the Court is intervenor Janna Bullock's ("Bullock") motion to vacate the October 2018 discovery order and quash the subpoenas served on Respondents. For the reasons stated below, the Court grants Gorsoan's motion to compel, but refers this action to a magistrate judge to modify the scope of discovery. Bullock's motion is denied.

BACKGROUND

I. Relevant History

This matter has a long and complicated history, with which the Court assumes the parties' familiarity. See Gorsoan Ltd. v. Bullock , 652 F. App'x 7 (2d Cir. 2016) ; In re Application of Gorsoan Ltd. & Gazprombank OJSC , No. 13-mc-397 (PGG), 2014 WL 7232262 (S.D.N.Y. Dec. 10, 2014). The Court briefly addresses only what is relevant to the two motions now before it.

Gorsoan, a Cyprus limited liability company, and Gazprombank, a Russian bank, filed a civil suit against thirty defendants, including intervenor Bullock, in the District Court of Limassol in 2012 (the "Cyprus action"). Gorsoan alleged that Bullock and the other defendants engaged in fraud resulting in approximately $25 million in damages to Gorsoan. As part of that litigation, the Cyprus court issued an order, freezing assets exceeding the value of €10,000 anywhere in the world belonging to certain defendants, including Bullock, and requiring that those defendants disclose those assets (the "Asset Freeze and Disclosure Order"). To date, Bullock has not complied with that order.

In November 2013, Gorsoan submitted an ex parte application in this district for an order pursuant to § 1782 to obtain documents and testimony from Bullock for use in the Cyprus action.¹ The court granted Gorsoan's application, and later denied Bullock's motion to vacate that order and quash the subpoenas. See In re Application of Gorsoan Ltd. , 2014 WL 7232262, at *12. The Second Circuit affirmed. See Gorsoan Ltd. , 652 F. App'x at 10.

Nonetheless, Bullock did not produce much, if any, discovery. On February 6, 2018, for instance, Gorsoan suspended a deposition of Bullock "after [she] repeatedly failed to provide good-faith answers to the questions asked and it became clear that she was not providing truthful testimony." Dkt. 2 at 3 (Pet.'s § 1782 App. ).² At the deposition, Bullock claimed that she did not own any assets exceeding the value of €10,000. More specifically, she testified that she did not own any property and had no bank or investment accounts. See In re Application of Gorsoan Ltd. & Gazprombank Bank OSJC , No. 17-CV-5912 (RJS), Dkt. 32, Tr. 113:20-117:20 (S.D.N.Y. Apr. 17, 2018) (Transcript of Bullock's Deposition). Rather, she testified that she relied on her mother and daughters for financial support, although she claimed that she knew nothing about their financial assets. See id. Bullock did, however, acknowledge that trusts, for which Sundlun was a trustee, had been set up for the benefit of her two daughters. See id. at Dkt. 32, Tr. 188:3-190:13.

In May 2018, Gorsoan raised the issue of Bullock's compliance with Judge Sullivan. See id. at Dkt. 37. Finding it "pretty clear" that Bullock "lied under oath at a deposition," id. at Dkt. 37, Tr. 47:17-23, Judge Sullivan ordered Bullock's deposition to continue under judicial supervision, id. at Dkt 44. At that deposition in August 2018, Bullock invoked her Fifth Amendment right. See Dkt. 3, Ex. B.

II. The Instant § 1782 App lication

As a result of Bullock's noncompliance with the first § 1782 order, Gorsoan filed a second ex parte application for discovery pursuant to § 1782 on September 13, 2018.³ This time Gorsoan sought discovery from Bullock's two daughters, Bullock Remmel and E. Bullock; Bullock's mother, Kuznetsova; and Sundlun. Dkt. 1. Judge Sullivan granted Gorsoan's ex parte application on October 15, 2018. Dkt. 9. The subpoenas were then served on Respondents, who objected in December 2018. See Dkt. 15, Ex. 1, 2. Around that time, Bullock's counsel notified Gorsoan that Bullock intended to intervene in this action to request that this discovery order be vacated. Although the parties met and conferred in early 2019, nothing was filed with the Court, to whom this case was re-assigned in November 2018, for several months.

On May 13, 2019, Gorsoan filed a letter motion to compel Respondents to comply with the previously-authorized subpoenas. Respondents filed opposition papers.⁴ At this time, the Court also granted Bullock's request to intervene, Dkt. 22, after which Bullock filed a motion to vacate the October 2018 order and quash the subpoenas, Dkt. 23. On November 19, the Court held oral argument on these two motions.

As such, presently before this Court are (1) Gorsoan's motion to compel discovery pursuant to the October 2018 order, and (2) intervenor Bullock's motion to vacate that order and quash the subpoenas.

LEGAL STANDARD

28 U.S.C. § 1782(a) permits a district court to "order [a person] to give his testimony or statement or to produce a document or other thing for use in a foreign or international tribunal." A district court has jurisdiction to order discovery upon finding three statutory requirements satisfied: "(1) the person from whom discovery is sought resides (or is found) in the district of the district court to which the application is made, (2) the discovery is for use in a foreign proceeding before a foreign tribunal, and (3) the application is made by a foreign or international tribunal or any interested person." Brandi-Dohrn v. IKB Deutsche Industriebank AG , 673 F.3d 76, 80 (2d Cir. 2012). The party seeking discovery bears the burden of proving the statutory requirements. See Certain Funds, Accounts and/or Inv. Vehicles v. KPMG, LLP , 798 F.3d 113, 120 (2d Cir. 2015).

"[O]nce the statutory requirements are met, a district court is free to grant discovery in its discretion," Schmitz v. Bernstein Liebhard & Lifshitz, LLP , 376 F.3d 79, 83-84 (2d Cir. 2004), while keeping in mind the statute's "twin aims": "providing efficient means of assistance to participants in international litigation in our federal courts and encouraging foreign countries by example to provide such assistance to our courts," Mees v. Buiter , 793 F.3d 291, 297-98 (2d Cir. 2015). A district court's "discretion, however, is not boundless." Schmitz , 376 F.3d at 84. The Supreme Court has thus provided four factors to guide this determination: (1) whether "the person from whom discovery is sought is a participant in the foreign proceeding" and as such the foreign tribunal could itself order the requested discovery; (2) "the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign ... court ... to U.S. federal-court judicial assistance"; (3) if this request appears to be "an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States"; and (4) whether the discovery requests are "unduly intrusive or burdensome." Intel Corp. v. Advanced Micro Devices, Inc. , 542 U.S. 241, 264-65, 124 S.Ct. 2466, 159 L.Ed.2d 355 (2004).

DISCUSSION

Respondents oppose Gorsoan's request that the Court compel them "to produce the documents commanded by the subpoenas [issued on October 15, 2018] and appear for depositions" on several grounds. Pet.'s Mot. to Compel at 1. First, Respondents argue that the court lacks jurisdiction to permit discovery under § 1782 because the statutory requirement that the discovery be "for use in a foreign proceeding" is not met. Second, even if that statutory requirement is satisfied, they argue that the discretionary factors weigh against exercising judicial discretion to grant this discovery. Respondents also contend that the Court cannot compel this discovery because they have each invoked their Fifth Amendment right against self-incrimination. With the exception of asserting the Fifth Amendment, Bullock's motion presents identical arguments. The Court thus addresses these arguments in turn.

I. Section 1782's Statutory Requirements

Respondents and Bullock contend that the Court lacks jurisdiction to permit discovery because Gorsoan has failed to establish the second statutory requirement that the discovery be "for use in a foreign proceeding before a foreign ... tribunal."⁵ 28 U.S.C. § 1782(a). They argue that Gorsoan's request for "asset discovery" to determine Bullock's compliance with the Asset Freeze and Disclosure Order is impermissible under § 1782 because it does not serve a purpose for an "adjudicative proceeding" in the Cyprus court. Bullock Memo. at 14-19. Although a difficult question, the Court concludes that the breadth of the statute's "for use" requirement encompasses the facts presented here.

In determining whether the "for use" statutory requirement is met, the "focus[ ] [is] on two questions: (1) whether a foreign proceeding is adjudicative in nature; and (2) when there is actually a foreign proceeding." Euromepa, S.A. v. R. Esmerian, Inc. , 154 F.3d 24, 27 (2d Cir. 1998).⁶ The "for use" requirement must be analyzed "according to the particular facts of each case." In re Accent Delight Int'l Ltd....