Opinion
22-mc-195 (LAK)(KHP)
07-25-2022
IN RE APPLICATION OF CHANGPENG ZHAO FOR AN TO TAKE DISCOVERY FOR USE IN A FOREIGN PROCEEDING PURSUANT TO 28U.S.C. § 1782
OPINION AND ORDER
Katharine H. Parker United States Magistrate Judge
Changpeng Zhao (“Petitioner”), founder and Chief Executive Officer of Binance, was featured in an article published by Bloomberg Businessweek on June 23, 2022 (“Original Article”) entitled “Can Crypto's Richest Man Stand in the Cold?”. The article was later translated into the Chinese language by Modern Media Company Limited (“Modern Media”) (“Translated Article”), which has a license to publish Bloomberg's content in the Chinese edition of Bloomberg Businessweek. When the Original Article was translated, the title was changed to “ZHAO Changpeng's Ponzi Scheme” - a title that Zhao contends is defamatory. Zhao also points to a few statements in the article that he contends are defamatory and/or damaging to his reputation. Modern Media ran the article in the Chinese edition of Bloomberg Businessweek and the Translated Article also appeared on Bloomberg-controlled websites and social media accounts.
Zhao promptly attempted to mitigate damage and sought retraction, a change to the title of the Translated Article and removal of the defamatory material from social media. He also brought a defamation action in Hong Kong against Modern Media. No Bloomberg entity is a party to the Hong Kong litigation.
In aid of his Hong Kong litigation, Zhao filed the instant ex parte application pursuant to 28 U.S.C. § 1782 requesting permission to serve subpoenas for documents and deposition testimony from Bloomberg L.P. and Bloomberg Inc., both located in this District. The following paraphrases the information sought in the proposed subpoenas and deposition notices: communications between and among Modern Media entities and Bloomberg entities about the publication, promotion, recall, deletion and change of title of the Article and Translated Article; documents concerning the relationship and any contract between Modern Media Entities and Bloomberg governing the terms by which Modern Media can republish Bloomberg content, Bloomberg processes, procedures and guidelines for licensing its content, documents and communications regarding the circulation and sale of the Article and sales revenue from it, documents and communications regarding three letters exchanged between lawyers for Zhao and Modern Media.
Section 1782 empowers a United States district court to order any person residing within its jurisdiction to provide discovery for use in a foreign proceeding pursuant to the application of an interested party. 28 U.S.C. § 1782(a). Applicants for discovery under Section 1782 must meet three statutory requirements: “(1) the person from whom discovery is sought must reside or be found in the district in which the application was made, (2) the discovery must be ‘for use in a foreign proceeding before a foreign tribunal', and (3) the applicant must be either a foreign tribunal or an ‘interested person.'” In re Accent Delight Int'l Ltd., 869 F.3d 121, 128 (2d Cir. 2017) (citing Certain Funds, Accounts and/or Inv. Vehicles v. KPMG, LLP, 798 F.3d 113, 117 (2d Cir. 2015)). Provided the statutory requirements for discovery are met, the Court must then determine, in its discretion, whether the discovery should be permitted in light of the four so-called Intel factors. Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004). These factors are as follows:
• Whether the person from whom discovery is sought is a participant in the foreign proceeding;
• The nature and character of the foreign tribunal and proceedings before it, as well as the tribunal's receptivity to U.S. federal-court judicial assistance;
• Whether the discovery requested is an attempt to circumvent foreign proof-gathering restrictions or policies of a foreign country or the United States; and
• Whether the discovery is unduly intrusive or burdensome.Intel, 542 U.S. at 264-65. When evaluating these factors, the Court must be mindful of the goals of Section 1782: to provide efficient means of assistance to participants in international litigation and to encourage foreign countries by example to provide similar means of assistance to U.S. courts. Mangouras v. Squire Patton Boggs, 980 F.3d 88, 97 (2d Cir. 2020).
Upon consideration of Zhao's application and all papers submitted in support thereof, and for good cause, this Court finds that the petitioner has satisfied the requirements of the statute and that the discretionary factor set forth in Intel weigh in favor of granting the application. However, upon review of the proposed document requests and deposition topics, the Court, in its discretion, finds that they should be narrowed to an extent as set forth in the attached.
Accordingly, it is Ordered that:
a) the Petition is granted;
b) Petitioner is authorized to serve the Subpoenas annexed as
Exhibits B-C to the Tshering Declaration, filed in support of the Petition, upon Bloomberg L.P. and Bloomberg Inc. (collectively, the “Respondents”) as modified by the Court and attached to this Order;
c) Petitioner is authorized to serve the Notices of Deposition annexed as Exhibits D-E to the Tshering Declaration, filed in support of the Petition, upon the Respondents as modified by the Court and attached to this Order;
d) The Respondents are directed to respond and/or object to such subpoenas and notices pursuant to the Federal Rules of Civil Procedure and the Local Civil Rules of this Court within thirty days of receipt of service;
e) The Court retains jurisdiction to resolve any disputes over any objections raised by Bloomberg L.P. and Bloomberg Inc. to the extent they cannot be resolved through a meet and confer.
f) Petitioner shall promptly serve a copy of this Order with
Service of the discovery requests on Bloomberg L.P. and Bloomberg Inc. and shall provide a status report by no later than November 30, 2022 as to whether there are any disputes concerning the discovery and whether this action can be closed.
IT IS SO ORDERED.
(EXHIBIT B Omitted)