In Banca Pueyo SA v. Lone Star Fund IX (US), No. 20-10049 (5th Cir. Oct. 27, 2020), the Fifth Circuit holds that it lacked jurisdiction to hear an ongoing dispute about the scope of discovery in a proceeding under 28 U.S.C. § 1782.
“Section 1782 is the most recent version of statutes that for more than 150 years have ‘provide[d] federal-court assistance in gathering evidence for use in foreign tribunals’ …. On receiving a section 1782 application, the district court first decides whether the petitioner meets the statutory requirements …. If so, then the court may but need not order the discovery.” The decision to allow or deny discovery is a discretionary call by the district court.
“Banca Pueyo and other parties invoked section 1782 to obtain discovery from three Texas-based entities for use in Portuguese proceedings. After the district court authorized the requested subpoenas and denied a first motion to quash, the respondents appealed. But the respondents’ second motion to quash the subpoenas remained pending.” Indeed, while the appeal was pending, one week before oral argument, “the magistrate judge entered a 52-page ruling” that “granted in part and denied in part the motion to quash.” This time, the petitioners were “unhappy with parts of the recent ruling” and “filed a motion for reconsideration as well as objections with the district court.”
The Fifth Circuit holds that in this procedural setting, there could be no appellate jurisdiction to review the order granting discovery. [Just speaking as the blogger here, the optics do look really bad.]
“Finality” for purposes of 28 U.S.C. § 1291 is ordinarily accomplished in section 1782 proceedings when “the appealed orders ‘effectively resolve the case or controversy.’” The panel notes that “[m]ost circuits use this framework, recognizing that a section 1782 proceeding is a stand-alone case with discovery as the end goal and thus unlike a discovery dispute that arises as one piece of a domestic lawsuit that will end with a merits ruling.”
Here, though, the case could not meet the “effectively resolved” standard. “The district court had a lot left to do, enough that the magistrate just issued a 52-page decision that is generating additional motions practice in the district court. No court has exercised appellate jurisdiction over a section 1782 case when a motion to quash that might limit the scope of discovery remained pending in the trial court.”
The petitioners only hope lay in a unique Fifth Circuit rule that allows review of interlocutory section 1782 decisions under the collateral order doctrine. The panel notes, with an eyebrow figuratively raised, that “[w]e appear to be the only circuit that applies the collateral order doctrine in this context. Under the rule of orderliness, we must apply that framework regardless of our outlier status.”
Nevertheless, “respondents come up short even under the collateral order doctrine,” owing to the tentative nature of the order appealed. “The recent ruling on the second motion to quash, which curtails discovery in significant respects, drives home the point that the orders before us are preliminary. That decision also highlights the problem with appellate review of decisions that are not conclusive. One of the main issues respondents want us to tackle is whether section 1782 subpoenas can require U.S.-based parties to produce discovery their affiliates possess in other countries. Although the two courts of appeals to consider the issue have rejected an absolute bar on extraterritorial discovery, some district courts have applied one …. Assuming last month’s ruling that it is too burdensome for respondents to produce documents located in Europe sticks, the difficult legal question about extraterritoriality will be moot. Had we addressed the question in reviewing a preliminary district court ruling, our decision would have turned out to be advisory.”
Moreover, the panel finds, there is no sign that the orders will not be effectively reviewable at a later time. “All the issues respondents raise, including the ex parte nature of the initial ruling, whether petitioners meet the statutory requirements, and evaluation of the discretionary … factors, will be reviewable in an appeal after the district court conclusively determines the scope of any discovery.”
The panel concludes with a practical tip: that when “the district court fully resolves the second motion to quash, the scope of section 1782 discovery should be definitively resolved” and “an appeal would be appropriate.”