Olav A. Haazen - November 2020

For litigants abroad, Title 28 Section 1782 of the U.S. Code may be used to obtain documents in the United States from a person or entity that resides or is found in the federal judicial district where the Section 1782 application is made. A recent Second Circuit decision suggests that the statute has a more expansive reach, beyond simply documents or persons residing within a particular district.

U.S. Discovery from Foreign Defendants in Foreign Cases

In In re del Valle Ruiz, 939 F.3d 520 (2d Cir. 2019), the federal appeals court in Manhattan held, for the first time, that a district court may order Section 1782 discovery from companies over which the court has personal jurisdiction on whatever ground, and that documents located outside the United States may also be available under the statute. In this case, the court addressed how the statutory requirement that the producing party ‘resides or is found’ applies to a corporate respondent. The court rejected Banco Santander’s argument that a district court may only order production of documents pursuant to Section 1782 if the respondent company is within the court’s reach on the basis of what is called ‘general’ or ‘all-purpose’ jurisdiction. This usually requires that the defendant or respondent is domiciled or headquartered within the district.

In rejecting Santander’s argument, the court cited to precedent that interpreted the ‘resides or is found’ language flexibly and interpreted the legislature’s intent in making discovery available under Section 1782 broadly, finding that the ‘statutory scope of “found” extends to the limits of personal jurisdiction consistent with due process.’ This notably includes so-called ‘tag’ jurisdiction (or transient jurisdiction), based solely on service of process on a transient party with only temporary presence, however fleeting, in the United States. Citing the seminal Supreme Court case, Burnham v. Superior Court of California, 495 U.S. 604 (1990), the court recognized tag jurisdiction for Section 1782 applications, explaining that where a party is only subject to a discovery request rather than personal liability, even this thin basis for jurisdiction is consistent with due process. Accordingly, when a potential witness comes to the United States, the court explained it is neither unfair nor inappropriate for a district court to compel that person to provide discovery.

Collecting Evidence Outside the United States

Importantly, the Second Circuit also allowed for the request and production of documents found outside of the district (extraterritorially), finding that Section 1782 ‘authorizes discovery pursuant to the Federal Rules of Civil Procedure [which] in turn authorize extraterritorial discovery so long as the documents to be produced are within the subpoenaed party’s possession, custody, or control.’ Casting aside a number of lower court decisions to the contrary, the court held that, therefore, ‘a district court is not categorically barred from allowing discovery under [Section] 1782 of evidence located abroad.’ While opening the door to documents located outside the district where an application is filed, the Second Circuit did warn that ‘a court may properly, and in fact should, consider the location of documents and other evidence when deciding whether to exercise its discretion to authorize such discovery.’

As an example of the liberalizing interpretation of Section 1782 by courts, In re Valle Ruiz creates an important opening for U.S. and foreign investors to obtain evidence concerning foreign-based securities frauds by foreign defendants, even when such evidence remains outside the United States in a country where U.S.-style discovery is unavailable.