In re Kidd

• Decision Date: 18 September 2020
• Docket Number: No. 3:20-cv-00800 (KAD),3:20-cv-00800 (KAD)
• Parties: In Re Application of Robert Gordon Kidd for an Order Pursuant to 28 U.S.C. § 1782 to Take Discovery from John Thomas Reynolds and Mark McCall
• Court: U.S. District Court — District of Connecticut

In Re Application of Robert Gordon Kidd for an Order Pursuant to 28 U.S.C. § 1782 to Take Discovery from John Thomas Reynolds and Mark McCall

No. 3:20-cv-00800 (KAD)

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

September 18, 2020

MEMORANDUM OF DECISION RE: RESPONDENTS' OBJECTIONS TO ORDER DENYING RESPONDENTS' MOTION TO QUASH (ECF NO. 35)

Kari A. Dooley, United States District Judge:

Pending before the Court are the objections of Respondents John Thomas Reynolds ("Reynolds") and Mark McCall ("McCall" and, collectively, the "Respondents") to Magistrate Judge Farrish's May 12, 2020 order (the "Ruling," ECF No. 18) denying Respondents' motion to quash the subpoenas duces tecum served on Respondents by Petitioner Robert Gordon Kidd ("Kidd," or the "Petitioner"). The subpoenas, served pursuant to 28 U.S.C. § 1782, ordered Respondents to produce documents and appear for depositions, which Petitioner seeks to use in connection with an action currently pending before the Scotland Court of Session (the "Scottish proceeding"). The Scottish proceeding arises out of Kidd's sale of his minority interest in an industrial services company to a private equity fund called Lime Rock V Partners, LP ("Lime Rock V"), referred to herein as the "Transaction." Kidd alleges that the Transaction was tainted by a conflict of interest affecting Kidd's counsel, Paull & Williamsons LLP ("P&W"), which was also unofficially advising Lime Rock V in connection with the sale. (See Pet'r's Mem. in Support of Ex Parte App. ¶¶ 2-4, ECF No. 1-1, hereafter "App.".) The Court assumes the parties' familiarity with the underlying facts and procedural history of the case, as set forth in its previous memorandum of decision granting the Respondents' motion to stay compliance with the subpoenas pending the Court's ruling on Respondents' objections (ECF No. 44) and as articulated in Judge Farrish's decision. The Court has considered Respondents' objections ("Resp's' Br.," ECF No. 35) and supporting materials, Petitioner's response to the objections ("Pet'r's Br.," ECF No. 51) and supporting materials, and Respondents' reply brief ("Resp's' Reply," ECF No. 52) and has reviewed the briefs and materials that were before Judge Farrish in denying the motion to quash. Oral argument was held on August 19, 2020. (ECF No. 55.) For the reasons that follow, Respondents' objections are OVERRULED in part and SUSTAINED in part.

Standard of Review

Preliminarily, the parties disagree as to the correct standard for reviewing Judge Farrish's decision. "Under Federal Rule of Civil Procedure 72, a district judge reviews a 'pretrial matter not dispositive of a party's claim or defense' under the 'clearly erroneous or . . . contrary to law' standard." Royal Park Investments SA/NV v. U.S. Bank Nat'l Ass'n, 285 F. Supp. 3d 648, 652 (S.D.N.Y. 2018) (quoting Fed. R. Civ. P. 72(a)); see also 28 U.S.C. § 636(b)(1)(A). "A ruling is 'clearly erroneous' if the reviewing court is 'left with the definite and firm conviction that a mistake has been committed.'" Ungar v. City of New York, 329 F.R.D. 8, 11 (E.D.N.Y. 2018) (quoting Easley v. Cromartie, 532 U.S. 234, 242 (2001)). "Similarly, under the 'contrary to law' standard of review, a district court may reverse a finding only if it finds that the magistrate failed to apply or misapplied relevant statutes, case law or rules of procedure." Garcia v. Benjamin Grp. Enter. Inc., 800 F. Supp. 2d 399, 403 (E.D.N.Y. 2011) (quotation marks, alterations, and citation omitted). "Pursuant to this highly deferential standard of review, magistrates are afforded broad discretion in resolving discovery disputes and reversal is appropriate only if their discretion isabused." Ungar, 329 F.R.D. at 11 (citations omitted); see also Khaldei v. Kaspiev, 961 F. Supp. 2d 572, 575 (S.D.N.Y. 2013) ("This is a highly deferential standard, and the objector thus carries a heavy burden").

"However, a pretrial matter that is 'dispositive of a claim or defense' is reviewed de novo." Royal Park Investments, 285 F. Supp. 3d at 652 (quoting Fed. R. Civ. P. 72(b)). "A ruling is 'dispositive' if it resolves substantive claims for relief rather than mere issues in the litigation." In re Hulley Enterprises Ltd., 400 F. Supp. 3d 62, 71 (S.D.N.Y. 2019) (quotation marks and citation omitted). "Discovery orders generally are non-dispositive." On-Line Techs., Inc. v. Perkin-Elmer Corp., 428 F. Supp. 2d 76, 80 (D. Conn. 2006). While the Second Circuit has not addressed whether a Magistrate Judge's ruling on a Section 1782 application is dispositive within the meaning of Rule 72, "[m]ost lower courts[] . . . have found that such rulings are not dispositive and are therefore subject to review only for clear error."¹ In re Hulley, 400 F. Supp. 3d at 71 (citing cases). This is because the grant of a Section 1782 petition "is ancillary by nature, and a ruling on such a motion is procedural and fails to address any substantive issues"; nor does it "dispose of the underlying claims or defenses pending in the foreign or international tribunal." Id. (quotation marks and citation omitted); see also In re Vale S.A., No. 20-MC-199 (JGK) (OTW), 2020 WL 4048669, at *3 n.3 (S.D.N.Y. July 20, 2020) ("A motion seeking discovery under § 1782 is a non-dispositive motion under Federal Rule of Civil Procedure 72(b)"); In re Iraq Telecom Ltd., No. 18-MISC-458 (LGS) (OTW), 2020 WL 1047036, at *1 (S.D.N.Y. Mar. 4, 2020) ("A deferential standard of review applies because the matter is nondispositive"); In re Application of Shervin Pishevar for an Order to take Discovery for use in Foreign Proceedings Pursuant to28 U.S.C. § 1782, No. 119-MC-00503 (JGK) (SDA), 2020 WL 769445, at *6 (S.D.N.Y. Feb. 18, 2020), adhered to on reconsideration sub nom. In re Pishevar, 2020 WL 1862586 (S.D.N.Y. Apr. 14, 2020) ("Since the Court's decision on a Section 1782 application is non-dispositive, it may be decided by a magistrate judge by opinion and order, rather than a report and recommendation to the district court"). As indicated at oral argument, the Court finds this line of cases persuasive and accordingly reviews Judge Farrish's ruling under the clearly erroneous standard.²

Discussion

Section 1782 provides in relevant part:

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, including criminal investigations conducted before formal accusation. The order may be made . . . upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court. . . . To 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.

28 U.S.C. § 1782(a). To obtain discovery pursuant to the statute, three requirements must therefore be met: "(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 or international tribunal, and (3) the application is made by a foreign orinternational tribunal or any interested person." Sampedro, 958 F.3d at 143 (quoting Mees v. Buiter, 793 F.3d 291, 297 (2d Cir. 2015)).

Respondents do not object to Judge Farrish's conclusion that Petitioner has satisfied these statutory requirements. Instead, they dispute his determinations with respect to each of the discretionary "Intel" factors, which ask:

(1) whether "the person from whom discovery is sought is a participant in the foreign proceeding," in which event "the need for § 1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant in the matter arising abroad";

(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. federal-court judicial assistance";

(3) "whether the § 1782(a) 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 request is "unduly intrusive or burdensome."

Kiobel by Samkalden v. Cravath, Swaine & Moore LLP, 895 F.3d 238, 244 (2d Cir. 2018), cert. denied sub nom. Kiobel ex rel. Samkalden v. Cravath, Swaine & Moore LLP, 139 S. Ct. 852 (2019) (quoting Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264-65 (2004)).

The Second Circuit has cautioned that '"[t]he Intel factors are not to be applied mechanically,' and 'a district court should also take into account any other pertinent issues arising from the facts of the particular dispute.'" In re del Valle Ruiz, 939 F.3d 520, 533 (2d Cir. 2019) (quoting Kiobel, 895 F.3d at 245) (brackets omitted). These factors are "to be considered in light of the 'twin aims' of Section 1782: 'providing efficient means of assistance to participants in international litigation in our federal courts and encouraging foreign countries by example to provide similar means of assistance to our courts.'" Kiobel, 895 F.3d at 244 (quoting In re Application for an Order Permitting Metallgesellschaft AG to take Discovery, 121 F.3d 77, 79 (2dCir. 1997)). The Court addresses Judge Farrish's ruling with respect to each of the Intel factors in turn.

Whether Respondents Are Participants in the Scottish Proceeding

As noted above the first Intel factor asks whether "the person from whom discovery is sought is a participant in the foreign proceeding," as "the need for § 1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant in the matter arising abroad." 542 U.S. at 264. This is because "[a] foreign tribunal has jurisdiction over those...