Opinion
Civil Action 24-MC-0023 (JGK) (RFT)
07-26-2024
IN RE EX PARTE APPLICATION OF EDUARDO COHEN WATKINS, Petitioner, for an Pursuant to 28 U.S.C. § 1782 To Take Discovery for Use in Foreign Proceedings.
REPORT AND RECOMMENDATION
ROBYN F. TARNOFSKY UNITED STATES MAGISTRATE JUDGE
TO THE HONORABLE JOHN G. KOELTL, UNITED STATES DISTRICT JUDGE
On January 16, 2024, Eduardo Cohen Watkins (“Petitioner”) submitted an ex parte Application and Petition (the “Ellesse Application”) pursuant to 28 U.S.C. § 1782 for an order authorizing Petitioner to serve subpoenas on Ellesse L.L.C. (“Ellesse”) and Stephen Lamb (“Lamb”) (together “Respondents”) to obtain discovery for use in two pending lawsuits in the Canton of Geneva, Switzerland (the “Swiss Actions”). (See ECF 1, Petition; ECF 5, Motion.) Having reviewed Petitioner's and Respondents' submissions, for the reasons set forth below, I respectfully recommend that the Ellesse Application be GRANTED, with the caveats noted in the conclusion below.
“Until recently, the consensus view in this District was that ‘rulings on § 1782 applications are not dispositive,' and therefore that such an application could be disposed by order of the Magistrate Judge to whom it was referred ....” In re Libyan Asset Recovery and Mgmt. Office, No. 21 Misc. 0852 (JGK) (BCM), 2023 WL 8445811, at *1 n.1 (S.D.N.Y. Nov. 16, 2023) (quoting In re Hulley Enter. Ltd., 400 F.Supp.3d 62, 71 (S.D.N.Y. 2019)). However, in Associacao dos Profissionais dos Correios v. Bank of N.Y. Mellon. Corp., No. 22-2865, 2023 WL 3166357 (2d Cir. Mar. 28, 2023), a panel of the Second Circuit decided that it lacked jurisdiction to review the order issued by a Magistrate Judge denying an application under Section 1782 and remanded so that the order could be “treated as a report and recommendation.” 2023 WL 3166357, at *1. While the Second Circuit did not explain its reasoning, the theory would be that the entire purpose of a Section 1782 petition is to seek discovery, so that any decision regarding whether discovery may proceed is dispositive. I therefore make a Report and Recommendation on the Application rather than issuing an Opinion and Order.
BACKGROUND
I. Factual Background
Lily Safra (“Safra”) died in July 2022 in Geneva, Switzerland. (See ECF 8, Declaration of David Wallace Wilson (“Wilson Decl.”) ¶ 12.) Safra was Petitioner's mother. (See id. ¶ 9.) Safra's 2013 will elected Brazilian inheritance law. (See ECF 23-1, Declaration of Dr. Francois Bohnet in Support (“Bohnet Decl.”) ¶ 51.) Under Brazilian trusts and estates law, a portion of an estate is reserved for certain heirs, to be divided among them; this portion is called the forced share. (See id. ¶ 35.) The same is true under Swiss trusts and estates law, although the size of the portion differs. (See id.)
Under Swiss law: an heir whose forced share has been infringed is entitled to file a reduction action, to reduce the decedent's other bequests and thus restore his forced share (see id. ¶ 36); if a will does not meet the requirements for validity, it is voidable through a nullity action, which may be brought by any heir (see id. ¶ 40); and a claimant must, prior to bringing a reduction action or a nullity action, must first participate in a conciliation proceeding, which is essentially a settlement conference in front of a judge (see id. ¶ 43).
Petitioner commenced a conciliation proceeding in anticipation of bringing an action in the Court of First Instance of the Canton of Geneva to, among other things, (1) find that Safra's 2013 will is null and void, or, alternatively, that its choice of Brazilian inheritance law and certain bequests are void and (2) decide a reduction claim in his favor (the “Nullity Action”). (See id. ¶ 50.) Carlos Monteverde, who claims to have been adopted by Safra (see ECF 8, Wilson Decl. ¶ 13), separately began a conciliation proceeding in anticipation of a reduction action in the same court; Monteverde seeks a declaration that he is an heir to Safra's estate who is entitled to a forced share (the “Reduction Action”). (See ECF 23-1, Bohnet Decl.) ¶ 48.) Both conciliation proceedings were unsuccessful, and the claimants are authorized to formally begin the Nullity Action and the Reduction Action in August 2024. (See id. ¶ 47.)
Petitioner alleges that Ellesse and Lamb possess documents relating to Safra's estate, and in particular documents reflecting the location and value of assets belonging to Safra's estate, which documents Petitioner asserts are relevant to the Swiss Actions. (See ECF 8, Wilson Decl. ¶ 17.) Ellesse is a private foundation and trust registered in Delaware with its principal place of business in New York. Lamb, who resides in New York, is a former employee of Safra who handled her affairs relating to assets in New York. (See id. ¶ 10.) Lamb manages Ellesse, and Safra used Ellesse as an operations and expenses account related to certain New York affairs. (See id. ¶ 11.)
II. Procedural History
On January 12, 2024, Petitioner submitted the Ellesse Application and supporting papers for an order authorizing him to serve subpoenas on Ellesse and Lamb to obtain discovery for use in the Swiss Actions. (See ECF 1, Petition; ECF 2, Declaration of Jordan Alston (“Alston Decl.”); ECF 3, Wilson Decl.) On January 16, 2024, Petitioner filed additional materials in support of the Ellesse Application and refiled some of his original filings. (See ECF 5, Motion; ECF 6, Mem.; ECF 7, Alston Decl.; ECF 8, Wilson Decl.) On February 2, 2024, this matter was accepted as related to another petition under Section 1782, 24-MC-0022 (the “Rothberg Application”). The Rothberg Application was referred to me on May 15, 2024 (see 24-MC-0022, ECF 27, Order of Reference), and the Ellesse Application was referred to me on July 1, 2024. (See ECF 24, Order of Reference.)
On February 5, 2024, Your Honor issued an order directing Petitioner to serve a copy of the Ellesse Application on Ellesse and Lamb. See 24-MC-0022, ECF 9, Order. On the same date, Your Honor issued an order directing Petitioner to serve a copy of the Rothberg Application on the respondents in that matter. See 24-MC-0022, ECF 10, Order. Petitioner complied with those orders. (See ECF 10, Letter.) On February 21, 2024, Petitioner, Ellesse, Lamb, and Rothberg asked the Court to hold the petitions in abeyance for 30 days to facilitate negotiations among the parties to the Swiss Actions. (See id.; ECF 11, Proposed Stipulation and Order.) Your Honor granted the request to hold the petitions in abeyance. (See ECF 12, Endorsed Stipulation and Order.)
On April 22, 2024, Ellesse and Lamb filed their opposition to the Ellesse Application. (See ECF 17, Opp.; ECF 18, Declaration of Dr. Nicolas Jeandin (“Jeandin Decl.”).) On June 21, 2024, Petitioner filed his reply memorandum in further support of the Ellesse Application, with exhibits that included two additional declarations. (See ECF 23, Reply Mem.; ECF 23-1, Bohnet Decl.; ECF 23-2, Second Declaration of David Wallace Wilson (“Second Wilson Decl.”).) On July 8, 2024, Ellesse and Lamb filed a sur-reply in further opposition to the Ellesse Application. (See ECF 25, Respondents' Sur-Reply; ECF 26, Declaration of Stephen Lamb in Opposition (“Lamb Decl.”); ECF 27, Second Declaration of Dr. Nicolas Jeandin (“Second Jeandin Decl.”).) I requested additional submissions on certain issues (see ECF 28), which were timely filed by the parties. (See ECF 31, Respondents' Letter; ECF 33, Petitioner's Letter.) I held oral argument on July 24, 2024.
On May 10, 2024, Rothberg moved to stay proceedings on the Rothberg Application pending a decision on the Ellesse Application. (See 24-MC-0022, ECF 19, Motion To Stay.) On May 14, 2024, Petitioner filed a letter opposing the stay and taking the position that Rothberg had waived his right to oppose the Rothberg Application. (See id., ECF 25, Opp. Letter.) Rothberg filed a letter requesting that the Court, among other relief, rule that Rothberg had not waived his right to oppose the Rothberg Application. (See id., ECF 26, Letter.) I set a briefing schedule for Rothberg to respond to the Rothberg Application on the merits. (See 24-MC-0022, ECF 31, Order.) I later directed the parties to file additional submissions. (See 24-MC-0022, ECF 37, Order.) The parties in that matter jointly requested a stay while they attempt to reach a negotiated resolution (see 24-MC-0022, ECF 43, Letter).
III. The Ellesse Application
Petitioner seeks discovery of the following categories of documents from Respondents: (1) materials related to Safra's estate; (2) materials related to any assets that were at any time part of the Safra's estate, including the location and value of such assets; (3) materials related to any trusts or entities that contained assets that belonged to Safra; and (4) materials related to any assets that were at any time part of any trusts or entities that contained assets that belonged to Safra, including the location and value of such assets. (See ECF 7, Alston Decl. Ex. B (Proposed Lamb Document Subpoena); id. Ex. C (Proposed Ellesse Document Subpoena).) Petitioner also seeks a deposition of Lamb. (See id. Ex. B (Proposed Lamb Deposition Subpoena).)
DISCUSSION
I. Legal Standard
Under 28 U.S.C. § 1782(a), a federal district court may order any person who “resides or is found” in the district “to produce a document or other thing for use in a proceeding in a foreign or international tribunal . . . upon the application of any interested person.” Under the statute, the party making the application must show that: “(1) the person from whom discovery is sought resides (or is found) in the district of the district court to which the application is made, (2) the discovery is for use in a foreign proceeding before a foreign or international tribunal, and (3) the application is made by a foreign or international tribunal or any interested person.” In re Guo, 965 F.3d 96, 102 (2d Cir. 2020) (quoting Mees v. Buiter, 793 F.3d 291, 297 (2d Cir. 2015) (alterations and internal quotation marks omitted)).
When the statutory requirements are met, the court is “free to grant discovery in its discretion.” In re Optimal Invs. Servs., S.A., 773 F.3d 456, 460 (2d Cir. 2014). Although that discretion is broad, it “must be exercised in light of the twin aims of the statute: providing efficient means of assistance to participants in international litigation in our federal courts and encouraging foreign countries by example to provide similar means of assistance to our courts.” Mangouras v. Boggs, 980 F.3d 88, 97 (2d Cir. 2020) (internal citations and quotation marks omitted).
The Supreme Court has identified four discretionary factors (the “Intel Factors”) that a court considers when ruling on a Section 1782 application: “(1) whether the person from whom discovery is sought is a participant in the foreign proceeding, in which case the need for § 1782(a) aid generally is not as apparent; (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; and (4) whether the request is unduly intrusive or burdensome.” Id. at 9798 (citing Mees, 793 F.3d at 297 and Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264-65 (2004)).
The fourth Intel Factor - whether the request is “unduly intrusive or burdensome” - is measured by the standards of Rule 26 of the Federal Rules of Civil Procedure. In reXPO Logistics, Inc., No. 15 Misc. 205 (LGS), 2017 WL 6343689, at *4 (S.D.N.Y. Dec. 11, 2017) (citing Mees, 793 F.3d at 302 and Intel, 542 U.S. at 264-65). As applied to Section 1782 applications, Rule 26 “contemplate[s] that discovery requests be tailored to seek information relevant to the parties' claims and defenses and proportional to the needs of the case.” Associacao dos Profissionais dos Correios v. Bank of N.Y. Mellon. Corp., No. 22-MC-0132 (RA) (KHP) (“Correios”), 2022 WL 4955312, at *8 (S.D.N.Y. Oct. 4, 2022), remanded on other grounds, 2023 WL 3166357 (2d Cir. Mar. 28, 2023). The “proportionality analysis depends on the relevance of the information sought - and, in the case of a § 1782 petition, relevance is assessed with regard to the foreign proceeding.” In re Catalyst ManagerialServs., DMCC, 680 Fed.Appx. 37, 39 (2d Cir. 2017).
The Second Circuit has instructed that “it is far preferable for a district court to reconcile whatever misgivings it may have about the impact of its participation in the foreign litigation by issuing a closely tailored discovery order rather than by simply denying relief outright.” Mees, 793 F.3d at 302 (internal quotation marks and citation omitted). Thus, where the Court finds that discovery sought under Section 1782 is overbroad, “before denying the application it should ordinarily consider whether that defect could be cured through a limited grant of discovery.” Id.; see also In re Fed. Republic of Nigeria, No. 21-MC-0007 (JGK) (VF), 2022 WL 4234556, at *6 (S.D.N.Y. Sept. 14, 2022).
II. Analysis
A. The Statutory Requirements Are Met
Petitioner argues that he has met the Section 1782 statutory requirements. (See ECF 6, Mem. at 2-3.) Ellesse and Lamb contend that the Ellesse Application fails to meet the requirement that any discovery sought pursuant to Section 1782 must be “for use” in a foreign proceeding. (See ECF 17, Opp. at 5-13.) For the reasons set forth below, I agree with Petitioner that the statutory requirements are met.
1. Respondents Are Found in this District
Respondents both reside in this District. (See ECF 8, Wilson Decl. ¶¶ 10-11.) Respondents does not appear to dispute this prong of the statutory test.
2. The Discovery Sought Is for Use in a Foreign Proceeding
Petitioner states that it seeks the contemplated discovery for use in the Swiss Actions. (See ECF 6, Mem. at 8-9.) Petitioner argues that Swiss Actions are the types of proceedings contemplated by Section 1782 - a point that Ellesse and Lamb do not appear to contest - and that the discovery sought is relevant to those actions. (See id.)
Ellesse and Lamb argue that the discovery sought does not satisfy the requirement of being “for use” in a foreign proceeding, because Petitioner has not demonstrated that the discovery sought is relevant to the subject matter of the Swiss Actions. Specifically, Respondents argue that the potentially relevant documents identified by Petitioner are testamentary documents and documents about Safra's nationality and her relationship with Monteverde, but Respondents contend that the proposed subpoenas do not actually seek such documents; Respondents take the position that the proposed subpoenas are an impermissible “fishing expedition.” (See ECF 17, Opp. at 1, 11-13; ECF 25, Respondents' Sur-Reply at 5 n.2.) Relying on a Swiss law professor, Respondents also argue that the documents sought relating to the value of the assets of the Safra estate are not relevant to the Swiss Actions (see ECF 17, Opp. at 7-10; ECF 18, Jeandin Decl. ¶¶ 78-82, 85-86); and that the Ellesse Application is premature (see ECF 17, Opp. at 10; ECF 18, Jeandin Decl. ¶ 90).
Petitioner, relying on a Swiss law professor's declaration, responds that the discovery he seeks is necessary for the Swiss court to render its decisions in the Swiss Actions and that the evidence must be collected now so that it can be presented at the outset of the case, as required under Swiss procedural law. (See ECF 23-1, Bohnet Decl. ¶¶ 49-52.) Respondents, relying on their Swiss law expert, counter that “Petitioner will have the ability at various points to identify and introduce evidence in the Swiss Actions.” (ECF 31, Respondents' Letter (citing Supplemental Declaration of Nicolas Jeandin ¶ 13).) Respondents point out that “Petitioner's own expert admits that additional evidence can be introduced via second exchange of written submissions.” (ECF 31, Respondents' Letter (citing ECF 23-1, Bohnet Decl. ¶ 14).)
a. The Swiss Actions Are Foreign Proceedings
In analyzing whether discovery being sought under Section 1782 is “for use in a proceeding before a foreign tribunal,” courts look to whether an “identifiable foreign proceeding [is] reasonably contemplated,” Jiangsu Steamship Co. v. Success Superior Ltd., No. 14 Civ. 9997(CM), 2015 WL 3439220, at *4 (S.D.N.Y Feb 5, 2015) (citing Intel, 542 U.S. 241 at 259) as well as “whether [the] foreign proceeding is adjudicative in nature.” Euromepa, S.A. v. R. Esmerian, Inc., 154 F.3d 24, 27 (2d Cir. 1998). The conciliation portions of the Swiss Actions are complete and litigation is scheduled to begin in August 2024 (see ECF 23-1, Bohnet Decl. ¶ 47), which satisfies the requirement that the proceeding be reasonably contemplated. The Swiss Actions therefore are appropriate predicates for a grant of discovery under Section 1782.
Moreover, the Swiss Actions are adjudicative in nature, in that they ask the Swiss to decide, among other issues, the validity of Safra's will, whether Monteverde is an heir to her estate, and the amount of the heirs' forced shares. (See id. ¶¶ 49, 51.) Accordingly, Petitioner has demonstrated that the Swiss Actions qualify as foreign proceedings for purposes of Section 1782.
b. Discovery “for Use" in a Foreign Proceeding
The statutory “for use” factor requires a showing that the requested discovery is “relevant to the subject matter of the [foreign] proceeding, and the evidence would ‘increase the applicant's chances of success' in the proceeding.” In re Asia Mar. Pac., Ltd., 253 F.Supp.3d 701, 706 (S.D.N.Y. Aug. 26, 2015) (quoting Mees, 793 F.3d at 299).
i. Whether the Proposed Subpoenas Seek Testamentary Documents, Documents About Safra's Citizenship, or Documents About Her Relationship with Monteverde
As to Respondents' argument that the proposed subpoenas do not actually seek testamentary documents, documents about Safra's citizenship, or documents about her relationship with Monteverde and others, which they appear to concede could be relevant to the Swiss Actions (see ECF 17, Opp. at 6-7; ECF 24, Respondents' Sur-Reply at 1-2), I am unpersuaded. The proposed subpoenas call for all documents related to the Safra Estate (see, e.g., ECF 7-2, Proposed Lamb Document Subpoena), which would include testamentary documents, documents about the citizenship of the decedent, and documents about her relationship with a possible heir.
Respondents state that Petitioner asserts for the first time in his reply brief that he is seeking testamentary documents and in the first time in his reply that he is seeking documents about Safra's citizenship and her relationship with Monteverde and others; they urge me not to consider these assertions on the theory that they are untimely. (See ECF 25, Respondents' Sur- Reply at 1-2.) It is true that a Court should not consider arguments made for the first time on reply, see In re Postalis, No. 18-MC-0497 (JGK), 2018 WL 6725406, at *4 n.6 (S.D.N.Y. Dec. 20, 2018), but that general rule is inapplicable when the new theory is responsive to a point made for the first time in the opposing party's papers. See Bravia Capital Partners, Inc. v. Fike, 296 F.R.D. 136, 144 (S.D.N.Y. 2013). Such is the case here, where Petitioner's explanation of the documents he seeks directly responds to Respondents' contention that the proposed subpoenas seek materials that are irrelevant to the Swiss Action. Moreover, Respondents have had an opportunity to respond to the newly raised points in their Sur-Reply. See Sacchi v. Verizon Online LLC, No. 14-CV-0423 (RA), 2015 WL 1729796 at *4 n.2 (S.D.N.Y. Apr. 14, 2015) (holding that, since the defendant “was afforded the opportunity to file a sur-reply in response to Plaintiffs,” the Court would consider Plaintiffs' request raised for the first time in their reply.)
Respondents counter that they are unlikely to have any testamentary documents. (See ECF 25, Respondents' Sur-Reply at 2-3.) While that may be the case, that is not a basis for saying that any such documents would be relevant to the Swiss Actions. Whether Respondents are likely to have relevant documents goes to the question of the burden the proposed subpoenas would impose, which I discuss in connection with the fourth Intel factor below.
ii. Relevance of Documents About the Value of the Estate's Assets and Whether the Proposed Discovery Is Premature
Ellesse and Lamb also argue that the discovery sought by Petitioner does not meet the statutory “for use” requirement because the proposed subpoenas seek information about the location and value of assets that are or were part of Safra's estate, which is not relevant to the questions before the Swiss courts - whether Safra's 2013 will is valid. (See ECF 17, Opp. at 7-10; ECF 18, Jeandin Decl. ¶¶ 78-82, 85-86.) Respondents' Swiss law expert explains that the primary relief sought by Petitioner in the Nullity Action is the invalidation of the 2013 will (see ECF 18, Jeandin Decl. ¶ 78) and that information about the value of the Safra estate's assets would only become relevant after the Swiss court decides the validity of the 2013 will and the choice of law issue (see id. ¶¶ 80-83). Respondents' Swiss law expert opines that it is “highly likely” that the judge will limit the proceedings to deciding in the first instance the validity or not of the 2013 will and the choice of law issues. (Id. ¶ 83.) He further opines that “since dismissal . . . would revert the matter back to the executors of the Will, the Court may very well never have to deal with the question of the composition, value, location etc. of the estate and its assets. (Id.) He therefore concludes that the proposed subpoenas are at best premature. (See id. ¶¶ 87-92.)
Petitioner responds that, even looking only at the question of the validity of the 2013 will, the Ellesse Application seeks documents bearing on that issue, including: 1) documents reflecting that Safra was subject to undue influence, 2) documents reflecting Safra's citizenship, and 3) documents reflecting Safra's relationship with Monteverde. (See ECF 23, Petitioner's Reply at 7-8.) And Petitioner rejects the contention that documents reflecting the value of the Safra estate are irrelevant to the Swiss Actions. Specifically, Petitioner's Swiss law expert explains that, to decide a reduction claim, the Swiss court must: (1) declare the total value of the estate; (2) based on the value, the governing law, and the number of heirs, declare the value of each heir's forced share; (3) determine the value of the bequests that the heirs have received; and (4) if the value of the bequests to an heir is less than his forced share, reduce the decedent's other bequests until the each heir's forced share reaches the proper level. (See ECF 23-1, Bohnet Decl. ¶¶ 38-39, 48-51.)
With regard to Respondents' assertion that the proposed discovery is premature because the Swiss court may never reach the question of the value of the Safra estate (see ECF 17, Opp. at 9-10), Petitioner's Swiss law expert opines that this position is simply incorrect: whichever will is determined to be the operative one, Petitioner is seeking a declaration of the value of his forced share (a reduction claim). (See ECF 23, Reply at 9-10; ECF 23-1, Bohnet Decl. ¶¶ 48-49.) As a result, the Swiss court will have to determine the contents and value of Safra's estate, which will be a necessary precursor to determining the size of each heir's forced share. (See; ECF 23-1, Bohnet Decl. ¶¶ 46, 59.) Additionally, under Swiss procedural law, Petitioner must identify at the outset of the case all evidence he may use at any point to support his claims or defenses. (See id. ¶¶ 9-18.)
Respondents counter that “Petitioner does not contend with the fact that the Swiss Court will never have to decide the value or composition of the estate if Petitioner loses his claim in the Nullity Action (i.e., the Will is held to be valid) and if Mr. Monteverde was not found an heir in the Reduction Action.” (ECF 25, Respondents' Sur-Reply at 3.)
Respondents' position fails to take into account that meeting the “for use” requirement does not require that the discovery sought will definitely be used in the foreign proceeding. The “for use” requirement is met if “there are circumstances under which” the foreign tribunal “could hear” the evidence - “regardless of how narrow those circumstances might be.” Brandi-Dohrn v. IKB Deutsche Industriebank AG, 673 F.3d 76, 83 (2d Cir. 2012). Indeed, the Second Circuit held that a district court “should not consider the admissibility of evidence in the foreign proceeding in ruling on a section 1782 application,” id. at 82, suggesting that discovery could be for use in a foreign proceeding even if it is not clear that the resulting evidence would be admissible.
iii. Whether the Proposed Subpoenas Are a Fishing Expedition
With regard to the argument that the proposed subpoenas are an impermissible fishing expedition (see ECF 17, Opp. at 11-13), I agree with Petitioner that this issue is not relevant to the statutory question whether discovery is for use under Section 1782, but rather relates to the fourth Intel discretionary factor. See In re Caterpillar Creditor, Sociedad Anonima de Capital Variable, Sociedad Financiera de Objeto Multiple, Entidad Regulada, No. 22 Misc. 273 (JGK), 2023 WL 6938264, at *3 (S.D.N.Y. Oct. 20, 2023) (explaining that the “for use” requirement does not “demand a showing of proportionality”). Accordingly, I address that argument when I discuss the fourth Intel factor below.
3. The Ellesse Application Is Brought by Interested Parties
The Ellesse Application is brought by Petitioner, who currently is an interested party in both of the Swiss Actions: he is a plaintiff in one and a defendant in the other. (See ECF 8, Wilson Decl. ¶¶ 20-21.) Ellesse and Lamb do not appear to challenge that Petitioner meets this requirement.
***
Having been persuaded that the Ellesse Application meets the statutory requirements of Section 1782, I turn to the discretionary factors set forth in Intel.
B. The Discretionary Factors Favor Granting the Ellesse Application
Petitioner argues that each of the four Intel Factors weighs in favor of granting the discovery requested by the proposed subpoenas: (1) Ellesse and Lamb are not parties to the Swiss Actions; (2) there is no indication that the Swiss courts would reject the requested discovery; (3) the Ellesse Application does not reflect an effort to circumvent foreign restrictions on discovery; and (4) the Ellesse Application is narrowly tailored to include only relevant and readily identifiable information and documents and avoid any undue burden on Rothberg. (See ECF 6, Mem. at 9-11.)
Respondents argue that (1) the evidence sought is available in Switzerland; (2) the evidence sought is irrelevant to the Swiss Actions; (3) the proposed subpoenas circumvent foreign proof-gathering restrictions because the discovery sought is premature; and (4) the proposed discovery is overbroad and unduly burdensome. (See ECF 17, Opp. at 13-22; ECF 25, Respondents' Sur-Reply at 3-6.)
For the reasons set forth below, I agree with Petitioner that the discretionary factors on balance favor granting the Ellesse Application.
1. The First Intel Factor
The first Intel Factor examines whether “the person [or entity] from whom discovery is sought is a participant in the foreign proceeding, in which case the need for Section 1782(a) aid generally is not as apparent.” Mangouras, 980 F.3d at 97 (internal quotation marks omitted). Petitioner demonstrates that Respondents are not parties to the Swiss Actions. (See ECF 8, Wilson Decl. ¶¶ 27-28.) Respondents assert that the “critical inquiry for the first Intel factor is whether the foreign tribunal has the ‘ability to control the evidence sought and order production, not whether the tribunal has control over the party targeted by the Section 1782 application.'” (See ECF 25, Respondents' Sur-Reply at 4 (quoting In re Porsche Automobil Holding SE, 15-MC-417 (LAK), 2016 WL 702327, *7 (S.D.N.Y. Feb. 18, 2016)). Respondents conclude that the first Intel factor cuts against granting the requested discovery, because they believe the evidence sought is available in Switzerland and “Petitioner has already obtained evidence in Switzerland related to the Estate.” (See ECF 25, Respondents' Sur-Reply at 4.)
Respondents' position would impose on petitioners in Section 1782 actions the obligation to exhaust the processes for obtaining discovery in a foreign jurisdiction before bringing a Section 1782 petition. The Second Circuit has rejected any suggestion that a Petitioner must use any other discovery procedures before turning to Section 1782. See, e.g., Mees, 793 F.3d at 303 (“We have rejected such a ‘quasi-exhaustion requirement' . . . ."); Euromepa, 51 F.3d at 1098 (same). Respondents' reliance on Porsche is misplaced. Even though the inquiry is whether the foreign court can control the evidence sought, the court in Porsche found “unpersuasive" the argument that discovery should be denied because the evidence sought was within the control of the foreign court because, as here, the respondent offered no evidence that the evidence that could be obtained through the foreign court “would be sufficiently broad to give [the applicant]" the information sought in the Section 1782 application. In re Porsche, 2016 WL 702327, at *8. I conclude that the first Intel factor supports granting the petition.
2. The Second Intel Factor
The second Intel Factor concerns “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." Mangouras, 980 F.3d at 97-98 (internal quotation marks omitted). “Absent specific directions to the contrary from a foreign forum, the statute's underlying policy should generally prompt district courts to provide some form of discovery assistance[,]" and a court “should deny discovery on the basis of lack of receptiveness only where it is provided with ‘authoritative proof that [the] foreign tribunal would reject evidence obtained with the aid of section 1782.'” In re Atvos Agroindustrial Investimentos S.A., 481 F.Supp.3d 166, 176-77 (S.D.N.Y. 2020) (quoting Euromepa S.A., 51 F.3d at 1100-02); see also In re Safra, No 21-MC-0640 (GHW) (JLC), 2022 WL 3584541, at *5 (S.D.N.Y. Aug. 22, 2022) (noting that “objection to U.S. federal-court judicial assistance would have to come from an official source, such as an agent of the [foreign] government”); Schmitz v. Bernstein Leibhard & Lifshitz, LLP, 376 F.3d 79, 84 (2d Cir. 2004) (denying the discovery request where the German Ministry of Justice and local German prosecutor asked the district court to do so).
This factor weighs in Petitioner's favor because Petitioner's Swiss law expert states that Swiss courts are receptive to evidence obtained through the use of Section 1782. (See ECF 23-1, Bohnet Decl. ¶ 34.) Indeed, Respondents also “do not dispute that Swiss courts are generally receptive to § 1782 discovery.” (ECF 17, Opp. at 15.) Respondents have proffered no “‘authoritative proof that [the] foreign tribunal would reject evidence obtained with the aid of section 1782.'”Atvos Agroindustrial, 481 F.Supp.3d at 176-77 (quoting Euromepa S.A., 51 F.3d at 1100-02). Accordingly, I believe that the second Intel factor supports granting the requested discovery.
3. The Third Intel Factor
The third Intel Factor asks “whether the . . . request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States,” Mangouras, 980 F.3d at 98, which occurs if the application is an attempt to evade discovery procedures in the foreign jurisdiction, or if the application is otherwise a “bad faith endeavor to misuse Section 1782.” In re Bouka, 637 F.Supp.3d 74, 90 (S.D.N.Y. 2022); see In re Hansainvestment Hanseatische Inv.-GmbH, 364 F.Supp.3d 243, 251 (S.D.N.Y. 2018) (holding that the third Intel Factor weighed in the applicant's favor because “the Court is not persuaded that Applicants have engaged in any improper or bad faith evasion of German procedures”).
Petitioner's Swiss law expert opines that the Ellesse Application does not seek to avoid any foreign restrictions on gathering evidence. (See ECF 23-1, Bohnet Decl. ¶ 26.) Respondents do not dispute that proposition. Instead, they generally cite to and rely on In re BonSens.org, 95 F.4th 75 (2d Cir. 2024) to argue that the third Intel factor cuts against granting the requested discovery because it would be premature and would only become relevant if the Swiss court nullified the 2013 will or found that Monteverde was entitled to a forced share. (See ECF 25, Respondents' Sur-Reply at 3-6.) But BonSens provides Respondents no comfort. In BonSens the Second Circuit, focusing only on the “for use” statutory prerequisite, determined that the discovery sought under Section 1782 was irrelevant because it was speculative whether the foreign court would consider factual discovery in relation to the petitioner's jurisdictional appeal. BonSens, 95 F.4th at 80. To satisfy Section 1782's “for use” requirement, an applicant need only show that “the evidence is minimally relevant to the foreign proceeding,” and for the reasons set forth in Section II(A)(2)(b) above, Petitioner has satisfied that requirement. I conclude that the third Intel factor supports granting the discovery requested.
4. The Fourth Intel Factor
The fourth Intel Factor looks at “whether the request is ‘unduly intrusive or burdensome,'” Mangouras, 980 F.3d at 98, which is measured by the standards of Rule 26 of the Federal Rules of Civil Procedure. See In re XPO Logistics, Inc., 2017 WL 6343689, at *4 (citing Mees, 793 F.3d at 302). In this context, Rule 26 “contemplate[s] that discovery requests be tailored to seek information relevant to the parties' claims and defenses and proportional to the needs of the case.” Correios, 2022 WL 4955312, at *8. The “proportionality analysis depends on the relevance of the information sought”; in the case of a Section 1782 petition, “relevance is assessed with regard to the foreign proceeding.” In re Catalyst Managerial Servs., 680 Fed.Appx. at 39.
a. Materials Sought
The proposed subpoenas seek: (1) materials related to Safra's estate; (2) materials related to any assets that were at any time part of the Safra's estate, including the location and value of such assets; (3) materials related to any trusts or entities that contained assets that belonged to Safra; and (4) materials related to any assets that were at any time part of any trusts or entities that contained assets that belonged to Safra, including the location and value of such assets. (See ECF 7, Alston Decl. Ex. B (Proposed Lamb Document Subpoena); id. Ex. C (Proposed Ellesse Document Subpoena).) Petitioner also seeks a deposition of Lamb. (See id. Ex. B (Proposed Lamb Deposition Subpoena).)
b. The Parties' Positions
Petitioner argues that production of the discovery sought would not create an undue burden, because while the scope of his requests is broad, “[t]hat broad scope makes sense, given the documents' clear relevance.” (ECF 23, Reply Mem. at 10.)
Respondents point out that “Petitioner seeks a lifetime's worth of information related to one of the world's wealthiest individuals” (ECF 25, Respondents' Sur-Reply at 5), complaining that the proposed subpoenas have no limitations as to time period, seek “all documents,” and therefore are “lazy and overly broad.” (Id. at 6.)
Petitioner counters that Respondents fail to provide any specifics about the burdens associated with production, such as an estimate of the number of documents involved. (See ECF 23, Reply Mem. at 15.)
Respondents explain that,“[w]ith the breadth of Petitioner's request, it is unclear what search terms Respondents could even run, that would satisfy Petitioner, as he seeks to capture all movement of assets - including cash - over the lifetime of Ms. Safra.” Respondents also note that they are not well situated to determine “the parameters of Ms. Safra's estate,” which is an issue before the Swiss court, in particular because “Respondents do not manage Ms. Safra's trusts,” leaving them “ill-suited to determining which assets belong to the Estate, the Safra Trusts, or neither.” (ECF 25, Respondents' Sur-Reply at 6.)
Petitioner responds that Respondents do not “‘discuss in specific terms the anticipated difficulties'” they will face, as required by my Order (ECF 28) and “the case law in this circuit”: Petitioner says that Respondents do not set out “‘the overall volume of the documents to be searched, where they are located, or in what form,' Loc. 3621, EMS Officers Union v. City of New York, 18-CV-4476, 2020 WL 1166047, at *1 (S.D.N.Y. Mar. 11, 2020),” and that Respondents “‘provide[] no information regarding the process to be employed, nor any rigorous estimate of the time required.'” (ECF 33, Petitioner's Letter at 3 (quoting Fritz v. LVNV Funding, LLC, 587 F.Supp.3d 1, 5 (E.D.N.Y. 2022).) Petitioner contends that Respondents' failure to provide Petitioner and the Court with any information about their files supports rejecting Respondents' claim of burden. (See ECF 33, Petitioner's Letter at 3.)
c. Analysis
As to burden, Rule 26 requires that the requests “be tailored to seek information relevant to the parties' claims and defenses and proportional to the needs of the case.” Correios, 2022 WL 4955312, at *8. Here, for the reasons set forth in Section II(A)(2)(b) above, I believe that Petitioner has demonstrated that the requested discovery, while broad, is relevant to the issues to be litigated in the Swiss Actions. Given my view on relevance, as well as the substantial amount of money at stake, I reject Respondents' argument that Petitioner is asking for authorization to go on a fishing expedition, and I believe that imposing even a significant burden on Respondents in connection with providing discovery could be proportional to the needs of the case.
Nevertheless, Respondents make some fair points about the difficulties they will face identifying responsive documents, especially considering the role each Respondent has played in managing Safra's assets in New York. I therefore asked Respondents to address the issue of whether narrowing the proposed subpoenas to seek only “documents sufficient to show” the requested information rather than “all documents” relating to that information would alleviate the burden of compliance. (See ECF 30, Order.)
In addressing that question, Respondents argue that the change from “all documents” to “documents sufficient to show” would not make compliance with the proposed subpoenas manageable. (See ECF 31, Respondents' Letter.) Respondents raise four issues: 1) the difficulty of defining what assets belong to Safra's estate, a task they say is the responsibility of the Swiss court; 2) the difficulty of identifying what assets belong to the Safra Trusts, which are not entities into which they have visibility; 3) the remaining breadth of the requests, particularly as to timeframe, and particularly as to Requests 2 and 4, which target any assets that are or ever were part of, respectively, Safra's estate and the Safra Trusts; and 4) a concern that the proposed subpoenas would require them to act as detectives to trace assets and as executors to value those assets. (See id.)
However, as Petitioner notes, even after I issued an order giving Respondents the opportunity to elaborate on their argument that providing the requested discovery would cause an undue burden, Respondents failed to provide specific estimates of the volume of documents to be searched or the amount of time the process would be likely to take (see ECF 33, Petitioner's Letter at 3). And while Respondents did say they would have difficulties identifying search terms (see ECF 31, Respondents' Letter at 2), Petitioner addressed that issue by providing more specificity about exactly what documents he is seeking (see ECF 33, Petitioner's Letter at 4):
As to Request 1 (materials related to Safra's estate), Petitioner identified as relevant a few categories of documents: testamentary documents; documents relating to Safra's relationships with Monteverde, two other individuals (Max Coslov and Ezra Marcos), and her “relatives”; documents relating to her citizenship and residency; and previously unknown documents. Petitioner provides no explanation of the relevance of the final category, but the other categories appear relevant.
Accordingly, as to Request 1, Respondents should be required to produce all nonprivileged documents falling within those categories that are located after a reasonable search. I do not believe that requiring such a production would place an undue burden on Respondents. While the reference to “relatives” is vague, there is no reason Respondents cannot search for responsive documents if Petitioner provides a list of name of the relatives of interest to him.
As to Request 2 (materials related to any assets that were at any time part of Safra's estate, including the location and value of such assets), while Respondents may not know what assets the Swiss court will say are part of Safra's estate, they should have a significant amount of readily accessible information at Ellesse on Safra's assets. When I asked Respondents' counsel at oral argument about the types of records his clients kept reflecting Safra's assets, he said he would need to consult with his client. I believe that Respondents should be required to produce documents sufficient to identify Safra's assets at some discrete points in time, including the location and value of any such assets if known by Respondents. I recommend requiring the parties to meet and confer about the appropriate contours of such a production. To be clear, as Petitioner points out, Respondents would have no obligation to produce documents outside their possession, custody, or control or to create new documents. See, e.g., In re Nonparty Subpoenas Duces Tecum, No. 18-MC-0468 (GBD) (KNF), 2019 WL 2122898, at *5-6 (S.D.N.Y. May 15, 2019) (observing that Rule 45 “does not contemplate or authorize commanding the subpoenaed person to create documents, including a ‘simple listing'”).
As to Request 3 (materials related to any trusts or entities that contained assets that belonged to Safra), Petitioner has specified that he is seeking (1) communications with Coslov or Marcos, the family office, or the Lily Safra or Lily Safra Hope Foundations about “the estate, trusts, or foundations”; (2) documents relating to transactions that Coslov or Marcos caused the family office, trusts, or foundations to make; (3) communications with Stephen Gardner or Richard Rothberg, or “with any other trustee or protector of another trust of Lily Safra”; and (4) documents relating to the establishment or dissolution of trusts or distributions therefrom. The first and second categories are sufficiently specific that searching for such documents should not be unduly burdensome; the same is true of the third category if limited to Gardner, Rothberg, and any other trustees whose names are provided by Petitioner to Respondents. And the fourth category seems reasonable if limited to trusts for which the names are provided by Petitioner to Respondents.
As to Request 4, Respondents' point about not having insight into what assets are part of the Safra Trusts is well taken, and so I conclude that it would be unduly burdensome for Respondents to be required to search for documents relating to the assets in those trusts. However, some of the information sought by this request should be included in Respondents' production in response to Request 2, as narrowed.
Respondents could come back to the Court if they determined, after undertaking a production with the parameters set forth herein, that the number of potentially responsive documents was extremely high, if Respondents identify other concrete and heavy burdens associated with such a production, or if the parties have any other disputes about the appropriate scope of production (after meeting and conferring in good faith).
I also do not believe it would be unduly burdensome for Lamb to sit for a deposition.
d. Proposed Protective Order
Respondents also argue that if the Court is inclined to grant the Ellesse Application, it should only do so if Petitioner agrees to sign a proposed protective order limiting his use of the documents produced in response to the proposed subpoenas to the Swiss Actions only. (See ECF 17, Opp. at 22 n.10; ECF 25, Respondents' Sur-Reply at 3.) Respondents point out that there is a possibility of future litigation over Safra's estate in the United States and that Section 1782 petitions should not be used as a back door means of obtaining discovery for use in a case in this country. (See ECF 17, Opp. at 22 n.10; ECF 25, Respondents' Sur-Reply at 3.) I agree that conditioning the grant of the Ellesse Application of Petitioner's agreement to a proposed protective order limiting the use of the discovery to the Swiss Actions would be appropriate. See In re Accent Delight International Ltd., 869 F.3d 121, 135 (2d. Cir. 2017) (“[I[n domestic civil litigation, courts may issue protective orders that restrain parties from using the discovery for other purposes, including as evidence in other litigations. So too may district courts in Section 1782 cases, as indeed they often do and as the district court did in this case.”). Petitioner could seek relief of the Court from the protective order if necessary in the future.
I believe that the fourth Intel Factor weighs in favor of granting the Ellesse Application, with the subpoenas modified as set forth herein, so long as Petitioner agrees to sign a suitable proposed protective order.
***
For the reasons set forth above, I conclude that all four of the Intel factors support granting the Ellesse Application, with the subpoenas modified as set forth above and contingent on Petitioner's signing a proposed protective limiting his use of the discovery to the Swiss Actions.
CONCLUSION
For the foregoing reasons, I respectfully recommend that the Ellesse Application be GRANTED and that Petitioner be authorized to serve on Respondents the subpoenas attached as Exhibits B and C to the Alston Declaration, but modified in accordance with the discussion herein and contingent on Petitioner's signing of a proposed protective order limiting his use of the resulting discovery to the Swiss Actions.
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO REPORT AND RECOMMENDATION
The parties shall have fourteen days (including weekends and holidays) from service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure to this Report and Recommendation. A party may respond to another party's objections within fourteen days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections, and any response to objections, shall be filed with the Clerk of the Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Koeltl.
THE FAILURE TO OBJECT WITHIN FOURTEEN DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); Thomas v. Arn, 474 U.S. 140 (1985).