In Re The Application of Kate v. , 646 F. App'x 263 ( 2016 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 15-3129
_____________
IN RE: THE APPLICATION OF KATE O'KEEFFE FOR ASSISTANCE BEFORE A
FOREIGN TRIBUNAL
Las Vegas Sands Corp. and Sheldon G. Adelson,
Appellants
__________________________
Appeal from the United States District Court
for the District of New Jersey
(No. 2-14-cv-05835)
District Judge: Honorable William J. Martini
Argued: March 14, 2016
Before: FUENTES, CHAGARES and RESTREPO, Circuit Judges.
(Filed: April 12, 2016)
Robert L. Byer, Esq. [ARGUED]
Duane Morris
600 Grant Street
Pittsburgh, PA 15219
Brian J. Slipakoff, Esq.
Duane Morris
30 South 17th Street
Philadelphia, PA 19103
Attorneys for Appellants
Laura R. Handman, Esq. [ARGUED]
Constance M. Pendleton, Esq.
Davis Wright & Tremaine
1919 Pennsylvania Street, N.W.
Washington, DC 20006
Attorneys for Appellee
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OPINION*
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CHAGARES, Circuit Judge.
Sheldon Adelson and Las Vegas Sands Corporation (“LVSC”) appeal the District
Court’s denial of their motion to quash the subpoena served by appellee Kate O’Keeffe
upon Kirk Thorell of PricewaterhouseCoopers (“PwC”). For the reasons that follow, we
will affirm.
I.
We write solely for the parties and therefore recite only the facts necessary to our
disposition. O’Keeffe is a Hong Kong-based reporter who is employed by Dow Jones &
Company, Inc. to write for some of its publications, including the Wall Street Journal, the
Wall Street Journal Asia, and the Wall Street Journal Europe. She is currently the sole
defendant in a civil defamation action filed by Adelson in a Hong Kong court. Adelson’s
defamation claim there involves an article O’Keeffe coauthored for the Wall Street
Journal Asia, which described Adelson as “foul-mouthed.”1 O’Keeffe’s defense in that
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
1
The article reported on a wrongful termination lawsuit filed by Steven Jacobs against
LVSC and its Macau, China subsidiary, Sands China Ltd. The sentence in the article that
2
lawsuit is based, in part, on the argument that the statement is “true in substance and
fact.” App. 66.
As part of this defense, O’Keeffe filed an ex parte application with the District
Court for an order to issue a subpoena to Kirk Thorell, pursuant to 28 U.S.C. § 1782.2Thorell is a partner with PwC, which served as LVSC’s auditor from 1988 to 2013. PwC
resigned as LVSC’s auditor in 2013, and O’Keeffe has suggested that the resignation was
“reportedly due, at least in part, to ‘personal tension’ between Adelson and PwC and
Adelson’s ‘challenging demeanor and demands on the auditors.’” O’Keeffe Br. 3. The
subpoena requests the production of documents “referencing, describing or reflecting
Adelson’s use of foul or otherwise offensive language,” App. 40, and includes a list of
words to be used as search terms. The subpoena also seeks deposition testimony on
“[a]ny instances in which Adelson used foul or otherwise offensive language” and
“Adelson’s demeanor.” App. 37.
On September 30, 2014, the Magistrate Judge conditionally granted the ex parte
application, but allowed Thorell and any party opposing O’Keeffe in the foreign
is at issue is: “In some ways, Mr. Jacobs, a 6-foot-5-inch tall Ivy League graduate who
colleagues say rarely curses, couldn’t be more different from Mr. Adelson — a scrappy,
foul-mouthed billionaire from working-class Dorchester, Mass.” Appendix (“App.”) 47.
2
Section 1782 provides that 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. . . . The order
may be made pursuant to a letter rogatory issued, or request made, by a foreign or
international tribunal or 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.”
3
proceeding to seek relevant relief from the court. After the subpoena was served,
Adelson and LVSC moved to quash. Both sides briefed the motion, and submitted
conflicting declarations on the admissibility of the sought-after discovery in the Hong
Kong litigation.3 Neither Thorell nor PwC have challenged the subpoena.
On February 10, 2015, after briefing and oral argument, the Magistrate Judge
denied Adelson and LVSC’s motion to quash. Adelson and LVSC timely appealed to the
District Court. On August 26, 2015, the District Court affirmed the Magistrate Judge’s
opinion and order. Adelson and LVSC timely appealed to our Court.
II.
The District Court had jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1782, and
we have jurisdiction pursuant to 28 U.S.C. § 1291 to review a final decision of a district
court. We review a District Court’s denial of a discovery request under 28 U.S.C. § 1782for an abuse of discretion. See In re Bayer AG, 146 F.3d 188, 191 (3d Cir. 1998). “An
abuse of discretion arises when the district court’s decision rests upon a clearly erroneous
finding of fact, an errant conclusion of law or an improper application of law to fact.”
NLRB v. Frazier, 966 F.2d 812, 815 (3d Cir. 1992) (quotation marks omitted).
III.
3
The declaration submitted by Adelson and LVSC is of Malcolm Bernard Kemp, a Hong
Kong-based solicitor uninvolved in the Hong Kong litigation. O’Keeffe offered the
declaration of Kathryn Sara Hippolyte Sanger, a consultant for the law firm representing
O’Keeffe in the Hong Kong litigation.
4
A court deciding a section 1782 application must first determine whether certain
statutory requirements are met,4 and if those requirements are satisfied, the Court may
then consider other factors to determine whether to exercise its discretion to grant the
application. Here the parties agree that O’Keeffe met the statutory requirements for
discovery, but dispute whether the District Court properly exercised its discretion in
granting the application and denying the motion to quash.
The Supreme Court has identified four factors that are relevant to this
discretionary determination under section 1782: (1) whether the evidence sought is
within the foreign tribunal’s jurisdictional reach, and thus accessible absent section 1782
aid; (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 request conceals an attempt to
circumvent foreign proof gathering restrictions or other policies of a foreign country or
the United States; (4) whether the subpoena contains unduly intrusive or burdensome
requests. See Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264-65 (2004).
Both the Magistrate Judge and District Court found that all of the Intel factors favored
O’Keeffe in granting her application.
4
The fundamental statutory requirements for a discovery subpoena under section 1782
are: (1) the person from whom discovery is sought resides in the district; (2) the request
seeks the “testimony or statement” of a person or the production of a “document or other
thing”; (3) the discovery is for use in proceedings before a foreign or international
tribunal; and (4) the application is made by either a “foreign or international tribunal” or
by an “interested party.” 28 U.S.C. § 1782. O’Keeffe’s application meets these statutory
requirements.
5
A.
The first Intel factor is not in dispute by the parties, and weighs in O’Keeffe’s
favor. Thorell is not a participant in the foreign litigation and is outside the foreign
tribunal’s jurisdictional reach. See Adelson Br. 14; O’Keeffe Br. 12. Accordingly, the
District Court did not abuse its discretion in finding the first Intel factor favors O’Keeffe.
B.
The second Intel factor instructs courts to consider 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. As to this determination, the District Court indicated that the party moving to
quash “must present authoritative proof that the foreign court would reject the evidence
obtained with the aid of Section 1782.” App. 9. Citing to Second Circuit case law, the
District Court noted that examples of such authoritative proof include “‘a forum
country’s judicial, executive or legislative declarations that specifically address the use of
evidence gathered under foreign procedures.’” Id. (quoting Euromepa S.A. v. R.
Esmerian, Inc., 51 F.3d 1095, 1100 (2d Cir. 1995)).5 The District Court found that “the
5
The parties do not dispute whether this is the correct legal standard. Indeed, the District
Court’s statement of law does comport with what we have previously indicated in In re
Bayer AG: “Consistent with the statute’s modest prima facie elements and Congress’s
goal of providing equitable and efficacious discovery procedures, district courts should
treat relevant discovery materials sought pursuant to § 1782 as discoverable unless the
party opposing the application can demonstrate facts sufficient to justify the denial of the
application. In determining whether the foreign tribunal would take offense, the district
court would be free, in the exercise of its discretion to consider any materials, typically
statutes or case law from the foreign jurisdiction, that may be presented by the parties.”
146 F.3d at 195.
6
record contains no authoritative proof that the Hong Kong court would be unreceptive to
the District of New Jersey’s assistance.” App. 9. The District Court noted that “the
record merely contains two differing interpretations of Hong Kong law from the parties’
respective experts,” that “district courts are discouraged from engaging in the
interpretation of foreign law when conducting a Section 1782 analysis,” and that “the
Hague Evidence Convention is in effect between the United States and Hong Kong,
which indicates that Hong Kong’s courts are receptive to American judicial assistance.”
Id.Adelson argues on appeal that the District Court erred in its analysis of this second
factor because the “expert” testimony from O’Keeffe was supplied by her own attorney,
and thus should have been “steeply discounted.” Adelson Br. 15. However, as the
Magistrate Judge noted, the conflicting declarations suggest that looking at either
declaration would result in “an exercise in analyzing complex and ambiguous aspects of
foreign law and deciding what might be admissible in a Hong Kong court, something that
courts have repeatedly found inappropriate.” App. 18.
Even if the District Court only considered the declaration submitted by Adelson
and LVSC, the declaration is qualitatively different than the type of “authoritative proof”
that a statute or regulation might provide. We cannot say that the Hong Kong statutes
and regulations referred to in the declaration are clear regarding the particular evidence
sought here. The submitted declaration simply provides one interpretation of the
admissibility of the types of documents and testimony sought by O’Keeffe. As the Court
of Appeals for the Second Circuit noted in Euromepa:
7
We think that it is unwise — as well as in tension with the aims of
section 1782 — for district judges to try to glean the accepted practices and
attitudes of other nations from what are likely to be conflicting and,
perhaps, biased interpretations of foreign law. Although “[a] grant of
discovery that trenched upon the clearly established procedures of a foreign
tribunal would not be within section 1782,” John Deere Ltd. [v. Sperry
Corp., 754 F.2d 132, 136 (3d Cir. 1985)] (emphasis added), we do not read
the statute to condone speculative forays into legal territories unfamiliar to
federal judges. Such a costly, time-consuming, and inherently unreliable
method of deciding section 1782 requests cannot possibly promote the
“twin aims” of the statute.
51 F.3d at 1099-1100.
We have never required district courts to determine whether particular evidence
would be admissible in a foreign court. Instead, Intel suggests the inquiry is more
generally the receptivity to “U.S. federal-court judicial assistance.” 542 U.S. at 264.
Here, the District Court noted that Hong Kong is a signatory to the Hague Evidence
Convention, and thus the Hong Kong court is likely “receptive to American judicial
assistance.” App. 9. See also In re Servicio Pan Americano de Proteccion, 354 F. Supp.
2d 269, 274 (S.D.N.Y. 2004) (“Venezuela has indicated its receptivity to federal judicial
assistance by its signature of treaties facilitating such cooperation.”). This result is also
in line with the purposes of section 1782. We have previously noted that “Congress
enacted section 1782 to further the following goals: ‘facilitating the conduct of litigation
in foreign tribunals, improving international cooperation in litigation, and putting the
United States into the leadership position among world nations.’” Bayer AG v.
Betachem, Inc., 173 F.3d 188, 191 (3d Cir. 1999) (citation and alterations omitted). By
granting O’Keeffe’s application, after having noted Hong Kong’s status with respect to
the Hague Evidence Convention, the District Court acted in such a way as to facilitate
8
litigation in the foreign tribunal and improve cooperation between the United States and
Hong Kong. Therefore, the District Court did not abuse its discretion in finding the
second Intel factor favors O’Keeffe.
C.
The third Intel factor is whether the subpoena request conceals an attempt to
circumvent foreign proof-gathering restrictions. As to this factor, Adelson and LVSC
claim that O’Keeffe did not apply for a letter rogatory in Hong Kong because such relief
would likely have been denied. On this point, the District Court held that “Section 1782
applicants are not required to apply for letters rogatory through the forum nation before
making a Section 1782 application.” App. 10.
We agree. We have never held that an applicant must seek discovery relief in the
foreign forum first. For example, in In re Bayer AG, we rejected the argument that an
application should be denied when the applicant could have gone to the foreign court to
seek production of the materials before coming to the United States and invoking section
1782. See 146 F.3d at 195-96. See also John Deere, 754 F.2d at 136 (“We do not believe
that Congress intended litigants interested in foreign proceedings to resort to section 1782
only upon an adequate showing that they could obtain letters rogatory from the foreign
forum. Such a reading would virtually nullify the statutory provision that ‘interested
persons’ may apply for discovery orders.”). Indeed, the statutory language of section
1782 provides that an application could be granted “pursuant to a letter rogatory issued,
or request made, by a foreign or international tribunal or upon the application of any
interested person. . . .” 28 U.S.C. § 1782(a) (emphasis added). Requiring district courts
9
to consider whether the relief could have been achieved through a letter rogatory would
not be in line with the statutory text clearly providing that, as an alternate to a letter
rogatory, “any interested person” could apply for such relief from a district court.
Therefore, we hold that the District Court did not abuse its discretion in finding that the
third Intel factor favors O’Keeffe.
D.
The fourth Intel factor is whether the application contains unduly intrusive or
burdensome requests. Adelson and LVSC argue that the subpoena contains both. The
District Court, however, found nothing in the record indicating the request was either
unduly burdensome or intrusive. App. 10. Additionally, the District Court indicated that
Adelson and LVSC would not have standing to challenge the request as burdensome,
noting that the burden falls on Thorell (or PwC) — who has not challenged the subpoena.
Id. As to whether the request is unduly intrusive, the District Court noted that there is no
accountant-client privilege under federal law, see, e.g., Couch v. United States, 409 U.S.
322, 335 (1973), and that “any concerns about the potential disclosure of confidential
information can be alleviated through protective orders.” App. 10.
The District Court did not abuse its discretion in its consideration of this factor.
The District Court rightfully noted that Thorell has not challenged the subpoena, which
bears on whether it might be unduly burdensome. And as to whether the subpoena would
be unduly intrusive, the District Court acted within its discretion in finding that
confidentiality concerns could be adequately addressed by protective orders or
redactions.
10
E.
Adelson and LVSC also argue that O’Keeffe’s application for a subpoena is not
relevant to the Hong Kong litigation and is an improper “fishing expedition” as
demonstrated by the “poor, unexplained fit between the subject of the Hong Kong
litigation and the proffered basis for the Subpoena.” Adelson Br. 26-27. Addressing this
argument, the Magistrate Judge found: “While Movants refer to the discovery requests as
a fishing expedition, it seems clear that the discovery sought could bear on the question
of whether Mr. Adelson is ‘foul-mouthed’ for purposes of the Hong Kong lawsuit. In
other words, at least under the Federal Rules of Civil Procedure, if the information sought
exists, and is within Mr. Thorell’s possession, it would be relevant. See Fed. R. Civ. P.
26(b).” App. 22.
Adelson and LVSC point to In Matter of Application of O’Keeffe, No. 15-mc-
80651, 2015 WL 5092806 (S.D. Fl. Aug. 27, 2015), in support of their argument. In
O’Keeffe, a magistrate judge granted Adelson and LVSC’s motion to quash a separate
subpoena application by O’Keeffe. Although the magistrate judge explicitly found that
all the Intel factors favored O’Keeffe, he held that the application was not relevant under
the Federal Rules of Evidence (as it was essentially “ancient discovery” regarding a
short-lived professional relationship from 1989 or 1990), that it was an “improper fishing
expedition” (because there was “no real proof that any fish are present” with only a
chance she may uncover “outdated and ancient information”), that it was a “vehicle for
harassment” (because the search terms would reveal “inflammatory, racist, and wholly
11
irrelevant requests”), and that the request was cumulative (because of the similar requests
in Nevada and New Jersey courts). Id. at *8-10.
The facts before that court can be distinguished from those here.6 The Florida
case involved a subpoena application for discovery regarding a short-lived contractual
dispute that occurred in 1989 and 1990. Here, on the other hand, the subpoena
application seeks more recent communications regarding a long-standing business
relationship. O’Keeffe has also indicated the basis for her belief that such language
might be found through discovery — a Wall Street Journal news article reporting on the
termination of the professional relationship between PwC and Adelson. Nor is
O’Keeffe’s application here a vehicle for harassment because it includes search terms that
are “inflammatory” or “racist.” See Adelson Reply Br. 16. The nature of the search
terms is precisely why they are relevant for her defense: they directly touch on whether
someone might be considered “foul-mouthed” for purposes of the Hong Kong litigation.
Accordingly, we disagree with Adelson and LVSC’s arguments regarding relevance and
whether the application for a subpoena constitutes an improper fishing expedition.
IV.
For the foregoing reasons, we will affirm the District Court’s order denying
Adelson and LVSC’s motion to quash the subpoena.
6
Also of note, the parties have represented to the Court that O’Keeffe is challenging the
magistrate judge’s decision in O’Keeffe.
12