Norex Petroleum Ltd. v. Chubb Ins. Co. of Canada

• Decision Date: 23 May 2005
• Docket Number: No. 04-0281(CKK).,04-0281(CKK).
• Citation: 384 F.Supp.2d 45
• Parties: NOREX PETROLEUM LTD, Petitioner, v. CHUBB INSURANCE CO. OF CANADA, et al., Respondent.
• Court: U.S. District Court — District of Columbia

384 F.Supp.2d 45

NOREX PETROLEUM LTD, Petitioner, v. CHUBB INSURANCE CO. OF CANADA, et al., Respondent.

No. 04-0281(CKK).

United States District Court, District of Columbia.

May 23, 2005.

Charles J. Cooper, Cooper & Kirk, PLLC, Washington, DC, Bruce S. Marks, Marks & Sokolov, LLC, Philadelphia, PA, for Petitioner.

Daryl Andrew Libow, Joseph J. Reilly, Sullivan & Cromwell, LLP, Washington, DC, for Non-Party BP America Inc.

MEMORANDUM OPINION

KOLLAR-KOTELLY, District Judge.

This action concerns the ability of a party engaged in foreign litigation to obtain discovery from a domestic non-party where the documents at issue are held in a foreign country by the non-party's foreign parent corporation. At issue is the proper interpretation of 28 U.S.C. § 1782, which establishes a mechanism by which United States district courts may provide discovery assistance to litigants in foreign proceedings. Petitioner Norex Petroleum Limited ("Norex") has claims pending in a Canadian court against several insurance companies, and pursuant to 28 U.S.C. § 1782, seeks documentary evidence from BP America Inc. ("BP America"), a non-party to the Canadian litigation. Although BP America has provided records held in the United States, it maintains that 28 U.S.C. § 1782 does not permit Norex to seek production of documents held outside the United States by BP America's parent corporation. This Court originally referred this issue to a magistrate judge for resolution, who granted Norex's motion to compel production of all documents sought, both foreign and domestic. BP America has now filed a Motion for Partial Reconsideration of the magistrate judge's order with respect to those documents held outside the United States. Norex has filed a Cross-Motion to Compel these documents.

After careful consideration of the parties' briefs, the statute and the relevant law, as well as the original memorandum opinion and order of the magistrate judge, the Court finds that it would be inappropriate to grant Norex discovery of the disputed documents. Accordingly, the Court shall grant BP America's Motion for Partial Reconsideration and deny Norex's Motion to Compel.¹

I. BACKGROUND

A. Factual and Procedural Framework

The instant action arises against the backdrop of a suit pending before the Queen's Bench of Alberta, Canada. In that case, Norex Petroleum filed claims against Chubb Insurance Company, Ingosstrakh Insurance Company Ltd., and Great Northern Insurance Company for insurance coverage and losses related to oilfield equipment owned by Yugraneft, a Russian oil company of which Norex was the controlling shareholder. Norex Mot. to Compel ("Mot. to Compel") at 1. By Norex's account, Tyumen Oil Company ("TNK"), a business enterprise with a "scheme to take over a substantial part of the Russian oil industry through corruption of the Russian courts and government officials," illegally took control of Norex's interest in Yugraneft by corrupting Russian bankruptcy and court proceedings and affecting an armed seizure of the Yugraneft oilfield equipment in 2001. Id. at 1-2 Ex. C (Statement of Claim in Canadian Suit).

Norex filed suit against Chubb, Ingosstrakh and Great Northern in the Canadian court on July 17, 2002, seeking payment of insurance claims. As part of the Canadian litigation, Ingosstrakh filed a motion to dismiss for forum non conveniens, arguing that a Russian court would serve as an adequate alternative forum. Id. at 3-4. The Canadian litigation remains ongoing.²

Again by Norex's account, "BP was a victim of the same corrupted Russian bankruptcy and amassed substantial evidence of TNK's bribery and corruption." Id. at 2. Norex states that in "1999, through corrupted Russian proceedings, TNK took control of the assets of Chernogorneft, a subsidiary of Sidanco, a Russian oil company partially owned and managed by BP, through bribery of officials and corrupted court proceedings in Russia." Id. at 4. Although "[u]ltimately, TNK and BP settled their differences," Norex states that "[s]ome of this evidence was presented to U.S. government officials as part of BP's successful effort to block a U.S. Export-Import Bank loan guarantee in favor of TNK until assets in which BP had an interest were returned." Id. at 2.

The Court notes that, although throughout its filings Norex refers generally to "BP," its action in this Court is addressed to BP America. See id. at 1. In its Opposition to Norex's Motion to Compel and Cross-Motion to Quash ("Opposition and Motion to Quash"), BP America states that the events in Russia with respect to Chernogorneft involved BP p.l.c., BP America's U.K.-based parent. Opp. and Mot. to Quash at 2.

B. Norex's Discovery Request Under 28 U.S.C. § 1782

On May 27, 2004, Norex filed its Petition for Discovery in Aid of a Foreign Proceeding Pursuant to 28 U.S.C. § 1782. This Court granted Norex's petition, noting that 28 U.S.C. § 1782 did not preclude BP America from filing a motion to quash in response to the discovery requests. Norex v. Chubb, Misc. No. 04-281 (D.D.C. Aug. 24, 2004) (order granting Petition for Discovery). On November 18, 2004, Norex filed its Motion to Compel, seeking documents from BP America that BP America had failed to produce in response to Norex's subpoena. BP America opposed Norex's Motion to Compel, and filed its own Cross-Motion to Quash the subpoena.

C. The Magistrate Judge's Ruling

On February 14, 2005, the Court referred this dispute to Magistrate Judge Alan Kay for a ruling pursuant to Local Civil Rule 72.2. On March 9, 2005, Magistrate Judge Kay ruled in favor of Norex, granting Norex's Motion to Compel, and denying BP America's Motion to Quash. See Norex, Misc. No. 04-281 (D.D.C. March 9, 2005) (order granting Motion to Compel, denying Motion to Quash). In discussing the question of Norex's request for an order compelling the production of documents that are located outside of the United States, Magistrate Judge Kay found that 28 U.S.C. § 1782 permits the discovery of documents outside the United States, so long as the party that is the target of the subpoena is within the jurisdiction of the Court. See id. at 5. Magistrate Judge Kay, relying to some degree on language from the Second Circuit's decision in Edelman v. Taittinger, 295 F.3d 171 (2d Cir.2002), wrote that "[t]he statute requires merely that the target of the subpoena have within their possession, custody or control the documents sought." Id. at 5-6. Remarking that "the location of the subpoena, not the location of the documents, is the determinant under the statute," Judge Kay found that "[t]here is no dispute that [BP America] is in possession, custody or control of the requested documents." Id. at 6. Accordingly, he granted Norex's request for discovery from BP America of documents held outside the United States.

D. Motion for Partial Reconsideration

Displeased with Magistrate Judge Kay's ruling, BP America filed its Motion for Partial Reconsideration on March 25, 2005. Norex opposed this motion, and filed its own Cross-Motion to Compel the Production of all Remaining Responsive Documents. The parties fully briefed these motions. In its Motion for Partial Reconsideration, BP America challenges only "the March 9 Order's unprecedented — and BP America submits, incorrect — ruling that § 1782 allows U.S. courts to compel the production of documents held outside the United States by a foreign parent and other foreign affiliates of the subpoenaed U.S. entity." Mot. for Partial Recons. ("Mot. for Recons.") at 1. BP America contends that the caselaw surrounding 28 U.S.C. § 1782 requires the Court to find that the ruling of the magistrate judge was in error, and that Norex cannot discover documents held abroad

II. LEGAL STANDARD

This matter was referred to Magistrate Judge Kay under Local Civil Rule 72.2, which permits referral of certain matters to magistrate judges for determination. See L. Civ. R. 72.2(a). That Rule provides that "[a]ny party may request the judge to reconsider a magistrate judge's ruling under paragraph (a) by filing a motion to reconsider ...." L. Civ. R. 72.2(b). The Rule further provides that "[u]pon a motion for reconsideration or sua sponte, a judge may modify or set aside any portion of a magistrate judge's order under this Rule found to be clearly erroneous or contrary to law." L. Civ. R. 72.2(c).

III. DISCUSSION

A. Standards for Considering Discovery Requests Pursuant to 28 U.S.C. § 1782

Section 1782 of Title 28 of the United States Code, entitled "Assistance to foreign and international tribunals and to litigants before such tribunals," provides in relevant part 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 statute further provides that, "[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. The "twin aims" of § 1782(a) are "providing efficient assistance to participants in international litigation and encouraging foreign countries by example to provide similar assistance to our courts." Intel, 124 S.Ct. at 2476 (citation omitted).

The Court finds that, in light of the complexity of the issue that has arisen on BP America's Motion for Partial Reconsideration, a more fulsome discussion of the caselaw surrounding § 1782 than is available in the magistrate judge's order is warranted. At the outset, a request for discovery made under § 1782 presents two primary inquiries. A district court considers first, whether it is authorized to grant the request, and second, whether it should exercise its discretion to do so. See Intel Corp. v. Advanced Micro Devices, 542 U.S. 241, 124 S.Ct. 2466, 2482, 159 L.Ed.2d 355 (2004) ("a ...