United States District Court, D. Massachusetts
ORDER ON PETITIONER'S MOTION FOR ISSUANCE OF
LETTERS ROGATORY UNDER 28 U.S.C. § 1782
DONALD
L. CABELL, U.S.M.J.
I.
Introduction
The
petitioner, Sandra Holding Ltd. (Sandra Holding), seeks
permission to obtain discovery in the United States for use
in a foreign proceeding pursuant to 28 U.S.C. § 1782.
(Dkt. 1). In this case the petitioner seeks discovery from
Fawzi Musaed Al Saleh (Fawzi), Fawzi's son Ahmad Fawzi Al
Saleh (Ahmad), Quabbin Capital Inc. (Quabbin Capital), and
John I. Snow, III (Snow) (collectively, respondents), for use
in a proceeding before the Grand Court of the Cayman
Islands.[1] The respondents oppose this motion,
arguing that Sandra Holding has not satisfied the statutory
requirements under 28 U.S.C. § 1782. (Dkt. 18). The
respondents argue that the court should exercise its
discretion to deny the motion even if Sandra Holding has
satisfied these requirements. (Id.). The motion has
been referred to this court for resolution. (Dkt. 21). For
the reasons set forth below, the petitioner's motion is
granted in part with respect to Quabbin Capital and Snow and
denied with respect to Fawzi.
II.
Relevant Background
During
the 1980s, a group of brothers from Kuwait began investing in
the United States through an offshore special purpose Cayman
Islands company called Universal Enterprises, Ltd.
(“Universal”). Each brother created an offshore
trust company in the Cayman Islands to own his respective
shares in Universal. The petitioner is owned by Nuri Musaed
Al Saleh (“Nuri”) and holds legal title to
Nuri's shares in Universal. Yasmine Holding Ltd. is owned
by Fawzi and/or his children and holds legal title to
Fawzi's shares in Universal. Fawzi is the founding and
sole director of Universal, though he may soon resign the
position due to his age and poor health.[2]
The
petitioner claims that since the creation of Universal, Fawzi
has “failed and refused to disclose material
information about Universal's finances and business
activity to Sandra Holding.” (Dkt. 2, at 2). Upon
information and belief and based upon a review of certain
company documents, the petitioner claims that Fawzi and/or
his son Ahmad “orchestrated” a substantial sale
of Universal's assets to a trust company controlled by
Fawzi and Ahmad that was not an arms-length transaction in or
around 2014. Sandra Holding alleges that it never received a
distribution from this sale.
Pursuant
to Universal's Articles of Association, if Sandra Holding
were to bring an action against Universal and Fawzi, it must
be filed in the Grand Court of the Cayman Islands. The
petitioner has not yet filed an action in the Grand Court but
contends that it reasonably anticipates doing so and has
retained Cayman counsel to that effect. Through the present
application, the petitioner seeks information it conceivably
might use to prosecute that action, including what amounts to
nearly all of Universal's corporate documents for the
last thirty years. Specifically, the petitioner seeks to
depose, and request documents from Fawzi, Quabbin Capital (an
investment management firm the petitioner believes acted as a
financial advisor to Fawzi and was a subsidiary of
Universal), and Snow (President and Managing Director of
Quabbin Capital).
III.
Legal Standard
A court
may allow discovery to be sought in the United States for use
in a foreign proceeding through an application pursuant to 28
U.S.C. § 1782. Section 1782 sets out four statutory
requirements that a petitioner must satisfy as a threshold
matter. Specifically, the petitioner must show that the
request for discovery is: (1) directed to a person who
“resides in or is found” in the district where
the court sits; (2) for documents or testimony for use in a
foreign proceeding; (3) made by a tribunal or upon the
application of an interested party; and (4) not seeking
material protected by “any legally applicable
privilege.” See § 1782(a); In re
Schlich, 893 F.3d 40, 46 (1st Cir. 2018).
“If
all of these statutory requirements are met, the district
court is authorized, but not required, to provide
judicial assistance by permitting discovery.” In re
Schlich, 893 F.3d at 46 (citing Intel Corp. v.
Advanced Micro Devices, Inc., 542 U.S. 241, 247 (2004))
(emphasis added). The Supreme Court identified four factors
to be considered when exercising discretion on a § 1782
application in Intel: (1) whether the person from
whom discovery is sought is a party to the foreign
proceeding; (2) the nature of the foreign tribunal, the
character of the foreign proceeding, and the receptivity of
the foreign tribunal to the court's assistance; (3)
whether the applicant is attempting to circumvent the
proof-gathering restrictions or policies of the foreign
tribunal; and (4) whether the discovery requested is unduly
intrusive or burdensome. Intel, 542 U.S. at 264-65;
Minis v. Thompson, No. 14-91050-DJC, 2014 WL
1599947, at *3 (D. Mass. Apr. 18, 2014).
IV.
Discussion
A.
Statutory Requirements
In this
court's view, the petitioner has satisfied all four
statutory requirements set out in § 1782. First, the
respondents were either found in or reside in the District of
Massachusetts. “[I]f a person is served . . . while
physically present in the district of the court that issued
the discovery order, then for the purposes of § 1782(a),
he is ‘found' in that district.” In re
Edelman, 295 F.3d 171, 180 (2d Cir. 2002). While Fawzi
resides in Kuwait, he was personally served with this
application while on Cape Cod. Therefore, Fawzi was
“found in” this district. Quabbin Capital's
principal place of business is in Boston, Massachusetts, and
Snow resides in Winchester, Massachusetts. Therefore, Quabbin
Capital and Snow “reside in” this district.
As to
the second requirement, if the foreign proceeding is not
already in progress, it must at least be “within
reasonable contemplation, ” though it need not be
“pending” or “imminent.”
Intel, 542 U.S. at 259. The circuit courts have
grappled with the definition of “within reasonable
contemplation” in this context. The Eleventh Circuit
has upheld a § 1782 discovery order where the petitioner
had conducted an extensive internal audit related to the
contemplated action, provided a facially legitimate and
thorough explanation of this ongoing investigation, stated
its intent both to commence a civil action and continue a
related pending arbitration, and detailed how the discovery
sought would be applied in its pleading before a foreign
tribunal. Application of Consorcio Ecuatoriano de
Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc.,
747 F.3d 1262, 1269 (11th Cir. 2014). The Second Circuit has
upheld the denial of a § 1782 application where the
petitioner alleged only “that they had retained counsel
and were discussing the possibility of initiating
litigation, ” despite having five years and ample
opportunity in which to commence investigations or initiate
litigation. Certain Funds, Accounts &/or Inv.
Vehicles v. KPMG, LLP, 798 F.3d 113, 124 (2d Cir. 2015)
(emphasis in original). In both cases, ...