Opinion
23 Misc. 208 (JGLC) (GS)
01-18-2024
IN RE APPLICATION OF BM BRAZIL 1 FUNDO DE INVESTIMENTO EM PARTICIPAÇÕES MULTISTRATÉGIA, BM BRAZIL 2 FUNDO DE INVESTIMENTO EM PARTICIPAÇÕES MULTISTRATÉGIA, AND ANRH COOPERATIEF U.A. FOR AN ORDER SEEKING DISCOVERY PURSUANT TO 28 U.S.C § 1782
REPORT AND RECOMMENDATION
GARY STEIN, UNITED STATES MAGISTRATE JUDGE
Applicants, who are special purpose entities associated with Appian Capital Advisory LLP (“Appian”), initiated this case seeking a court order to authorize discovery pursuant to 28 U.S.C. § 1782. (Dkt. Nos. 1-5). Applicants seek to take this discovery from a U.S.-based investment bank, Moelis & Company LLC (“Moelis & Co.”), and two of its employees in connection with a lawsuit in the United Kingdom brought by Applicants against Sibanye-Stillwater Limited (“SSL”) and its Brazilian subsidiary Sibanye BM Brazil (Pty) Ltd. (“SBB” and, together with SSL, “Sibanye”). The Honorable Jessica G. L. Clarke granted their application, ex parte, on June 29, 2023 (the “Order”). (Dkt. No. 10).
Now before the Court are multiple motions filed after Judge Clarke's Order. First, Moelis & Co. and its two employees (collectively, “Moelis” or “Respondents”) seek to (1) vacate the Order and quash the subpoenas Appian served on Respondents pursuant thereto (the “Subpoenas”), or, in the alternative, (2) stay the instant case. Second, Sibanye moves to intervene in this action and to vacate the Order and quash the Subpoenas. Third, Appian has cross-moved to compel Moelis's compliance with the Subpoenas.
For the reasons set forth below, the undersigned respectfully recommends that (1) Sibanye's motion to intervene be GRANTED; (2) Sibanye and Moelis's motions to vacate the Order be DENIED; (3) Sibanye and Moelis's motions to quash the Subpoenas be GRANTED IN PART and DENIED IN PART; (4) Moelis's alternative motion for a stay be DENIED; and (5) Appian's cross-motion to compel be DENIED.
Most of the relevant facts are taken from (1) the June 23, 2023 Declaration of Kevin D. Benish (“First Benish Decl.”) and exhibits thereto (Dkt. No. 4); (2) the September 1, 2023 Declaration of Kevin D. Benish (“Second Benish Decl.”) and exhibits thereto (Dkt. No. 32); (3) the August 18, 2023 Declaration of Alan J. Brudner (“Brudner Decl.”) and exhibits thereto (Dkt. No. 23); and (4) the August 18, 2023 Declaration of Luke Tolaini (“Tolaini Decl.”) and exhibits thereto (Dkt. No. 24). Mr. Benish is an attorney for Appian; Mr. Brudner is an attorney for Moelis; and Mr. Tolaini is an attorney for Sibanye.
A. The Underlying Dispute
Applicants are BM Brazil 1 Fundo de Investimento em Participações Multistratégia (“FIP1”), BM Brazil 2 Fundo de Investimento em Participações Multistratégia (“FIP2”), and ANRH Cooperatief U.A. (“ANRH” and, together with FIP1 and FIP2, “Appian” or “Applicants”). (First Benish Decl. ¶ 1; Second Benish Decl. ¶ 1). Applicants are Appian-affiliated entities. (Tolaini Decl. ¶¶ 2, 4). Through layers of indirect ownership, including of the Applicants, Appian owns and controls Serrote da Laje, a copper and gold mine (the “Serrote Mine”), as well as Santa Rita, a nickel mine (the “Santa Rita Mine” and, together with the Serrote Mine, the “Mines”), both located in Brazil. (Dkt. No. 3 at 3).
On October 26, 2021, Applicants entered into two Share Purchase Agreements (the “SPAs”) with Sibanye, under which Appian agreed to sell its interests in the Mines to SBB under a guarantee from SSL for valuable consideration of $1.2 billion. (First Benish Decl. ¶ 3). Moelis & Co., an investment bank based in New York, served as Sibanye's financial advisor in this transaction (the “Transaction”). (Id. ¶ 12).
The SPAs contain several provisions relevant to the instant motions. First, the SPAs gave Sibanye the right to terminate the SPAs if a “‘Material Adverse Effect' occurred” between October 26, 2021, and the deal's extended closing date of January 14, 2022. (Id. ¶¶ 4, 7). Further, the SPAs provide for “exclusive remedies in the case of breach, unless the breach was caused by ‘willful misconduct' of the breaching party.” (Id. ¶ 4; see also Tolaini Decl. Exh. 1 § 11.9 & Exh. 2 § 11.9). Additionally, both SPAs are governed by English law (Tolaini Decl. Exh. 1 § 11.13 & Exh. 2 § 11.14) and, in Section 11.11, contain nearly identical forum selection clauses, which provide as follows:
Under both SPAs, a Material Adverse Effect is defined as “any change, event or effect that individually or in the aggregate is or would reasonably be expected to be material and adverse to the business, financial condition, results of operations, the properties, assets, liabilities or operation” of entities controlling the Mines. (Tolaini Decl. Exhs. 1 § 1.1 & 2 § 1.1).
(1) The courts of England have exclusive jurisdiction to decide any dispute arising from or connected with this Agreement (a “Dispute”) (including a dispute regarding the existence, validity or termination of this Agreement or relating to any non-contractual or other obligation arising out of or in connection with this Agreement) or the consequences of its nullity.
(2) The Parties agree that the courts of England are the most appropriate and convenient courts to decide any
Dispute and, accordingly, that they will not argue to the contrary.
(3) .... This Section 11.11 applies to all Legal Proceedings wherever started.(Tolaini Decl. Exh. 1 § 11.11; see id. Exh. 2 § 11.11 (identical clause with carve-out for a certain type of claim not relevant here)).
The Transaction never closed. As described by Appian, “a geotechnical event allegedly occurred at the Santa Rita Mine” on November 9, 2021 (the “Geotechnical Event”). (First Benish Decl. ¶ 5). In Appian's telling, it promptly informed SBB of the Geotechnical Event, and SBB experts visited the Santa Rita Mine to inspect the site. (Id. ¶ 6). Appian claims it continued to perform all of its pre-closure obligations under the SPAs following the Geotechnical Event, but Sibanye did not do the same following SBB's inspection. (Id. ¶ 7).
More than two months after the Geotechnical Event, Sibanye sent letters to Applicants purporting to terminate the SPAs on January 24 and 27, 2022. (First Benish Decl. ¶ 8; Brudner Decl. ¶ 8 & Exh. 6; Tolaini Decl. Exh. 13 ¶¶ 52, 55). In its termination notices, Sibanye claimed that the Geotechnical Event constituted a “Material Adverse Effect” (“MAE”) under the SPAs. (See id.). Sibanye's termination of the SPAs was the precursor to contentious litigation in the United Kingdom and, now, this Court.
As described by Sibanye, the Geotechnical Event involved “a large body of rock detaching from the higher part” of an open pit mine wall. (Tolaini Decl. Exh. 3 ¶ 19.2).
B. The English Case
Applicants sued both SBB and SSL in the High Court of Justice of England and Wales (the “English Court”) for breach of contract under the SPAs on May 27, 2022 (the “English Case”). (First Benish Decl. ¶ 2 & Exh. 1). In plain terms, Appian has brought its case on a theory of buyer's remorse. (See id. ¶¶ 9-10). More specifically, “Applicants assert that [Sibanye's] breach was the result of their willful misconduct because . . . [Sibanye] lacked any reasonable basis to believe the Geotechnical Event was a Material Adverse Effect [under the SPAs].” (Id. ¶ 9). Instead, Applicants contend, Sibanye “used the Geotechnical Event as [a] pretext to terminate the SPAs in circumstances where they wished to do so for unrelated reasons.” (Id. ¶ 10).
The English Case is captioned BM Brazil 1 Fundo de Investimento EM et al. v. Sibanye BM Brazil (Pty) Ltd., CL 2022-000264 in the Business and Property Courts of England and Wales. (Tolaini Decl. ¶ 1).
The parties have engaged in substantial document discovery in the English Case. As relevant to the instant motions, the English Court held a Case Management Conference (“CMC”) on November 11, 2022. (See Tolaini Decl. ¶ 8). Prior thereto, the parties were required to inform the English Court of (1) agreed-upon topics for disclosure; (2) the party responsible for producing relevant documentation on each topic for disclosure; and (3) any ongoing disputes on the former two issues for the Court's resolution. (See id. ¶¶ 7-10).
As part of the agreed-upon disclosure topics, Sibanye agreed to produce documents related to its reasons for terminating the SPAs, including whether it genuinely or reasonably believed that the Geotechnical Event was an MAE or instead decided not to proceed with the Transaction for unrelated reasons. (Tolaini Decl. ¶¶ 11-12 & n.4). This agreement encompassed Moelis-related materials and required Sibanye to identify custodians likely to have interacted with Moelis on the transactions and to use Moelis-specific search terms. (Id. ¶ 12). Subsequently, Sibanye produced thousands of documents on these and other topics, including hundreds of documents involving Moelis. (Id. ¶¶ 18-19).
The parties disagreed, however, over Appian's request, in aid of quantifying its alleged damages, for Sibanye to disclose “all financial models and any correspondence, internally and with third-parties, in relation to the valuation of the [Mines].” (Id. ¶ 15 & n.10 and Exhs. 4 at p. 15 and 6 §§ 35-40) (emphasis omitted). Sibanye objected to this request as overly broad and calling for documents irrelevant to calculating damages. (Id. ¶ 16). During the CMC, the English Court ruled that Sibanye would only be required to disclose documents concerning board of director “acts” and “minutes . . . that have bearing on the issue of value of the [Mines]” throughout 2021 up until termination of the SPAs. (Id. ¶ 17 & Exh. 7 at 44-45). If the disclosure of these materials led Appian to seek further discovery, and Sibanye refused to provide it, the English Court invited Appian to return to it at a later date to resolve the matter. (Id.).
The scheduling order entered after the CMC states that trial of the case “is scheduled to begin no earlier than June 2024.” (Id. ¶ 22 & Exh. 8 § 13).
C. Proceedings in this District
Applicants commenced proceedings in this District on June 23, 2023. (Dkt. No. 1). The application sought permission to serve a Fed.R.Civ.P. 30(b)(6) deposition and document subpoena on Moelis & Co. (See First Benish Decl. Exh. 3). The application also sought permission to serve substantially similar subpoenas seeking deposition testimony as well as documents from Moelis & Co. employees Patrick Loftus-Hills (“Loftus-Hills”) and Ashley Chen (“Chen”). (See id. Exhs. 4 & 5). Applicants describe Loftus-Hills and Chen as “senior members” of the bank's six-employee Sibanye deal team who specialize in “commercial and institutional banking with respect to the mining sector” and “accounting and auditing,” respectively. (Id. ¶ 12).
Applicants also aver that Loftus-Hills was the “main point of contact” with Sibanye's “leadership” and that Chen “communicated with members of [Sibanye] regarding the transaction and closing.” (Id.).
The Subpoenas seek documents on seven topics, including but not limited to documents and communications concerning the Transaction, Moelis's role as financial advisor to Sibanye, the valuation of the Mines, the Geotechnical Event, Sibanye's termination of the SPAs, and the reasons behind Sibanye's termination of the SPAs. (Id. Exhs. 3, 4, & 5 at Schedule A).
The requested depositions cover ten interrelated topics. (Id. at Schedule B). These include but are not limited to the deponents' roles in advising Sibanye, Moelis's financial projections and plans for the Mines, and the deponents' understanding of the Geotechnical Event's effect on Moelis's financial analysis, Sibanye's belief as to whether the Geotechnical Event constituted an MAE, and Sibanye's reasons for terminating the SPAs. (Id.). Viewed more broadly, the Subpoenas seek both internal communications and documents among Moelis & Co. employees, as well as external communications with Sibanye and others.
Upon review of the Subpoenas, Judge Clarke granted Appian's ex parte application on June 29, 2023. (Dkt. No. 10, reported at In re Multistrategia, No. 23 Misc. 208 (JGLC), 2023 U.S. Dist. LEXIS 112819 (S.D.N.Y. June 29, 2023)). Judge Clarke found that “Section 1782's statutory requirements are met” and “the Intel factors favor granting the application.” (Id. at 1). However, this authorization was “without prejudice to the timely filing of a motion to quash,” in which event the findings in the Order would be “subject to reconsideration.” (Id.). The Order also set a briefing schedule for a motion to quash, requiring Moelis to file the motion by July 28, 2023. (Id. at 2).
The Subpoenas were served on Moelis on July 3, 2023. (Second Benish Decl. ¶ 3). In compliance with Judge Clarke's briefing schedule, Moelis moved to vacate the Order and quash the Subpoenas issued pursuant thereto, or in the alternative, to stay these proceedings. (Dkt. Nos. 20 & 21 (“Resp. Br.”)). In conjunction with Moelis's motion, Sibanye filed its own motion to intervene, vacate the Order, and quash the Subpoenas on the same day. (Dkt. Nos. 22 & 29 (“Sib. Br.”)). Along with its opposition to both motions, Appian also moved to compel Moelis's compliance with the Subpoenas. (Dkt. Nos. 30 & 31 (“App. Br.”)). Thereafter, the parties submitted all relevant oppositions and replies to the foregoing motions, as well as supplemental letter briefing. (See Dkt. Nos. 37 (“Resp. Reply”), 39 (“Sib. Reply”), 40 (“App. Reply”), 41 (“Ltr.”), & 43).
Although Moelis's brief only addresses the Subpoenas' purported burden and a potential stay (Resp. Br. at 8-11), Moelis also joins Sibanye's motion in full. (Id. at 3).
LEGAL STANDARDS
A. Motion to Intervene
Intervention is governed by Rule 24 of the Federal Rules of Civil Procedure. As relevant here, under Rule 24, the court “must permit” intervention when a party “claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest.” Fed.R.Civ.P. 24(a)(2) (emphasis added). Alternatively, the court “may permit [a party] to intervene” when that party “has a claim or defense that shares with the main action a common question of law or fact.” Fed.R.Civ.P. 24(b)(1)(B) (emphasis added).
“To prevail on a motion for intervention as of right, a movant must (1) timely file an application, (2) show an interest in the action, (3) demonstrate that the interest may be impaired by the disposition of the action, and (4) show that the interest is not protected adequately by the parties to the action.” In re N.Y.C. Policing During Summer 2020 Demonstrations, 27 F.4th 792, 799 (2d Cir. 2022) (cleaned up).
When exercising its “broad discretion to determine whether an applicant is entitled to permissive intervention under Rule 24(b), a district court considers the same factors [outlined above], as well as whether the proposed intervention will unduly delay or prejudice the adjudication of the [original] parties' rights.” In re Telegraph Media Grp. Ltd., No. 23 Misc. 215 (JGLC), 2023 WL 5770115, at *2 (S.D.N.Y. Sep. 6, 2023) (citations omitted). However, because “the principal guide in deciding whether to grant permissive intervention is whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties,” Olin Corp v. Lamorak Ins. Co., 325 F.R.D. 85, 87 (S.D.N.Y. 2018) (cleaned up), “district courts in the Second Circuit have recognized that the [preceding] four factors should be considered as a whole, rather than focusing narrowly on any one of the criteria.” Bldg. & Realty Inst. of Westchester v. N.Y., No. 19 Civ. 11285 (KMK), 2020 WL 5658703, at *5 (S.D.N.Y. Sep. 23, 2020) (cleaned up).
Finally, when “evaluating whether the requirements for [mandatory or permissive] intervention are met, courts accept as true the non-conclusory allegations of the motion.” Telegraph Media, 2023 WL 5770115, at *2 (cleaned up). B. Applications Under 28 U.S.C. § 1782
Under 28 U.S.C. § 1782,
[t]he 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 . . . 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.
As a threshold matter, a district court may not grant an application pursuant to Section 1782 unless three statutory requirements are met: “(1) the person from whom discovery is sought resides or is found within the district; (2) the discovery is for use in a proceeding before a foreign tribunal; and (3) the application is made by a foreign or international tribunal or any interested person.” Kiobel ex rel. Samkalden v. Cravath, Swaine & Moore, LLP, 895 F.3d 238, 243 (2d Cir. 2018) (cleaned up); accord, e.g., Fed. Republic of Nigeria v. VR Advisory Servs., 27 F.4th 136, 148 (2d Cir. 2022); Mees v. Buiter, 793 F.3d 291, 297 (2d Cir. 2015).
If the requisite statutory requirements are met, district courts will then exercise their discretion to determine whether the sought-after discovery should be permitted. In re Ulmans, No. 23 Misc. 23 (GHW) (VF), 2023 WL 3853703, at *3 (S.D.N.Y. Apr. 20, 2023), report and recommendation adopted by 2023 WL 3412769 (S.D.N.Y. May 12, 2023) (citations omitted). In Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), the Supreme Court identified four factors for district courts to consider in conducting this analysis. These factors, known as the Intel factors, are: “(1) whether the person from whom the discovery is sought is a participant in the foreign proceeding; (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 Section 1782 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 Section 1782 application contains unduly intrusive or burdensome discovery requests.” Ulmans, 2023 WL 3853703, at *3 (citing Intel, 542 U.S. at 264-65).
Although district courts should consider the Intel factors as a “useful guide,” courts in this Circuit have clarified that they are neither exhaustive nor dispositive. In re CBRE Glob. Invs. (NL) B.V., No. 20 Misc. 315 (VEC), 2021 WL 2894721, at *9 (S.D.N.Y. July 9, 2021) (“no single Intel factor is alone dispositive” and “the Intel factors are not to be applied mechanically . . . [a] district court should also take into account any other pertinent issues arising from the facts of the particular dispute”) (cleaned up); see also, e.g., Frasers Grp. PLC v. Gorman, No. 23 Misc. 348 (PAE), 2023 WL 6938284, at *3-4 (S.D.N.Y. Oct. 19, 2023) (relying on the “apex witness doctrine” to deny a Section 1782 application in addition to considering the Intel factors). District courts should also exercise their discretion in light of Section 1782's “twin aims,” which are: (1) “providing efficient assistance to participants in international litigation” and (2) “encouraging foreign countries by example to provide similar means of assistance to our courts.” Intel, 542 U.S. at 252.
In considering a request for discovery under Section 1782, the court also is guided by Rules 26 and 45 of the Federal Rules of Civil Procedure. In re Operacion y Supervision de Hoteles, S.A. de C.V., No. 14 Misc. 82 (PGG), 2015 WL 82007, at *4 (S.D.N.Y. Jan. 6, 2015) (citations omitted). As such, “a court must quash or modify a subpoena that subjects a person to undue burden.” Id. (cleaned up).
DISCUSSION
A. Sibanye's Intervention Is Warranted Under Rule 24(b)
Although Appian does not oppose Sibanye's motion to intervene (App. Br. at 1 n.1), the Court still analyzes whether Rule 24's dictates are satisfied. See, e.g., In re Niedbalski, No. 21 Misc. 747 (JGK) (BCM), 2023 WL 5016458, at *3-4 (S.D.N.Y. May 8, 2023) (analyzing and granting unopposed motion to intervene in the context of Section 1782 application), report and recommendation adopted by 2023 WL 4399003 (S.D.N.Y. July 7, 2023). Here, Sibanye has satisfied Rule 24's requirements for permissive intervention.
“[T]he ultimate targets of a § 1782 discovery order issued to third parties”- i.e., the “parties against whom the requested information will be used”-“have standing to challenge the district court's power to issue a subpoena under the terms of an authorizing statute.” In re Application of Sarrio, S.A., 119 F.3d 143, 148 (2d Cir. 1997) (cleaned up). It is natural, then, that “courts routinely grant timely intervention motions by those ‘ultimate targets.'” Niedbalski, 2023 WL 5016458, at *3 (collecting cases). Indeed, referencing this case law, Judge Clarke's Order required Appian to provide notice and courtesy copies of the Subpoenas and its application papers to “the party or parties against whom the requested discovery is likely to be used.” (Dkt. No. 10 at 2 (citing Sarrio, 119 F.3d at 148)).
Turning to the relevant factors in this Circuit for intervention as of right, as to the first factor, there is no question that Sibanye's motion is timely. It was filed on the same day that Moelis filed its motion to vacate and quash in accordance with the briefing schedule set forth in Judge Clarke's Order. (See Dkt Nos. 10, 19, 22 & 29).
Regarding the remaining factors concerning intervention as of right, the Court concludes that the second and third factors-Sibanye's interest in this action, and whether Sibanye's interest may be impaired by its disposition-are met. Sibanye asserts that it “clearly” has an interest in this action because Appian seeks discovery from Moelis, its “trusted financial advisor,” and that this interest would be impaired should the court allow Appian to marshal evidence for use in the English Case. (Sib. Br. at 13). See Telegraph Media, 2023 WL 5770115, at *4 (finding that ultimate target's “interests may be impaired by the disposition of this action, given that he is the party against whom the requested information may be used”) (cleaned up).
In support of satisfying the fourth factor-that its interest is not otherwise adequately protected-Sibanye contends only that “Moelis, as a non-party, is not well-placed to protect [Sibanye's] interests.” (Sib. Br. at 13; citation omitted). By itself, this “vague and conclusory” assertion falls short of showing that Moelis would not adequately protect Sibanye's interest, see Niedbalski, 2023 WL 5016458, at *4, especially since counsel for Moelis and Sibanye appear to have coordinated their litigation strategies following the Order and Sibanye describes Moelis as a “trusted financial advisor.” (Sib. Br. at 13).
Sibanye's self-described relationship with Moelis stands in contrast to cases where a Section 1782 applicant “seeks banking records . . . from third-party financial institutions that are unaffiliated with the intervenor and thus are unlikely to adequately protect its interests.” Niedbalski, 2023 WL 5016458, at *4 (citing In re Costa Pinto, No. 21 Misc. 663 (VEC), 2022 WL 4088012, at *4 (S.D.N.Y. Sept. 6, 2022), and In re Hornbeam Corp., No. 14 Misc. 424 (Part I), 2015 WL 13647606, at *3 (S.D.N.Y. Sept. 17, 2015)).
The Court need not decide whether Sibanye has met the standard for mandatory intervention under Rule 24(a), however, because permissive intervention is warranted under Rule 24(b). Since this Court's main consideration when deciding permissive intervention “is whether the intervention will unduly delay or prejudice” adjudication of the rights of the initial parties, Olin, 325 F.R.D. at 87 (cleaned up), a failure to demonstrate inadequate representation is not fatal in the Rule 24(b) analysis. See Bldg. & Realty Inst. of Westchester, 2020 WL 5658703, at *5 (citations omitted); see also, e.g., N.Y. v. U.S. Dep't of Health & Hum. Servs., No. 19 Civ. 4676 (AJH), 2019 WL 3531960, at *6 (S.D.N.Y. Aug. 2, 2019) (“[T]o grant permissive intervention, Rule 24(b) does not require a finding that party representation be inadequate.”) (citation omitted).
Sibanye has made a sufficient showing on three of the four Second Circuit factors and asserts that there is a “lack of prejudice to Appian.” (Sib. Br. at 13 n.10). This factor militates in favor of permissive intervention when evaluated alongside Appian's lack of opposition to Sibanye's motion. See Telegraph Media, 2023 WL 5770115, at *4 (allowing permissive intervention for purpose of opposing Section 1782 application where, inter alia, “neither [the applicant] nor [the respondent] object to [the] motion to intervene, and the proposed intervention will not unduly delay or prejudice adjudication of the parties' rights”); Niedbalski, 2023 WL 5016458, at *4 (“no party to this action has ‘identified any prejudice it would suffer from permitting'” intervention) (quoting In re Hornbeam Corp., No. 14 Misc. 424 (Part I), 2015 WL 13647606, at *3 (S.D.N.Y. Sept. 17, 2015)).
In sum, having found that the balance of the relevant permissive intervention factors favors intervention, the Court recommends granting Sibanye's motion to intervene under Rule 24(b). See Telegraph Media, 2023 WL 5770115, at *4 (“Because the Court grants [intervenor's] motion for permissive intervention, it need not reach the question of intervention as of right.”) (citation omitted).
B. The Requested Section 1782 Discovery Satisfies Both the Statutory and Discretionary Factors
1. Statutory Factors
Judge Clarke's Order provisionally found that “Section 1782's statutory requirements are met.” (Dkt. No. 10 at 1). Neither Moelis nor Sibanye contends otherwise in moving to quash. (See Resp. Br. at 6 (“Respondents concede that these [statutory] factors are satisfied here”); Sib. Br. at 13-14). Nevertheless, for the sake of completeness, the Court has conducted its own analysis and agrees that Appian has satisfied each statutory factor under Section 1782.
First, Appian has previously provided supporting documentation demonstrating that all three of the subpoena targets are found within this District. (First Benish Decl. ¶¶ 20-27 & Exhs. 6-13). The first factor is thus satisfied.
The second statutory factor requires the discovery sought to be “for use” in a foreign proceeding. See Mees, 793 F.3d at 298-301. Appian and Sibanye are in active, ongoing litigation in England concerning Sibanye's decision to terminate the SPAs. (First Benish Decl. ¶¶ 2-10). Thus, Appian clearly meets the “for use” requirement.
As for the third statutory requirement, Applicants are undoubtedly “interested person[s]” for purposes of Section 1782 due to their status as claimants in the English Case. See Intel, 542 U.S. at 256 (there is “[n]o doubt litigants are included among . . . the ‘interested person[s]' who may invoke § 1782”). The last statutory factor is therefore satisfied.
2. Discretionary Factors
The parties agree that once an applicant has satisfied Section 1782's statutory requirements, the court has discretion as to whether to grant the requested discovery. (Resp. Br. at 6; Sib. Br. at 13-14; App. Br. at 8-9; see also Schmitz v. Bernstein Liebhard & Lifshitz, LLP, 376 F.3d 79, 83-84 (2d Cir. 2004) (“Once the statutory requirements are met, a district court is free to grant discovery in its discretion.”) (cleaned up)).
However, unlike the statutory factors, the parties vigorously dispute how the Court should exercise its discretion under the Intel factors. As detailed below, having carefully considered the parties' arguments, the Court finds that the balance of the Intel factors favors Appian. In the main, therefore, the motions to quash should be denied, with certain modifications to limit the scope of the Subpoenas to the extent they conflict with restrictions on the scope of discovery in the English Case.
a. First Intel Factor
Under the first Intel factor, courts consider whether the target of an applicant's discovery request is a participant in the relevant foreign proceeding. “[W]hen the person from whom discovery is sought is a participant . . . the need for § 1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant in the matter arising abroad.” Intel, 542 U.S. at 264. Conversely, “nonparticipants in the foreign proceeding may be outside the foreign tribunal's jurisdictional reach” and, hence, their evidence “may be unobtainable absent § 1782's aid.” Id.
Indisputably, Moelis is not a party to or participant in the English Case. There is no indication that Moelis has any office or presence in the United Kingdom such that it would be within the jurisdictional reach of the English Court. Under such circumstances, the first Intel factor normally would weigh in Applicants' favor. See, e.g., In re Fed. Republic of Nigeria, 21 Misc. 7 (JGK) (VF), 2022 WL 4234556, at *5 (S.D.N.Y. Sept. 14, 2022) (“Here, Respondents are not parties to the English Proceeding.... The first factor thus weighs in favor of granting the application.”).
Sibanye nonetheless claims that the first factor weighs against Appian, because (1) Moelis “has agreed to abide by” a future ruling of the English Court “with respect to the requested discovery” and (2) certain discovery materials sought by Appian-namely, communications between Sibanye and Moelis-are in Sibanye's possession and thus “already within the reach of the English Court.” (Sib. Br. 17-18). Sibanye thus contends that Appian should be required to forgo or defer its Section 1782 application and bring its discovery request before the English Court, and that Appian's refusal to agree to do so means it cannot benefit from the first Intel factor. (Id.)
The Court disagrees. As Appian correctly notes (App. Br. at 10), Sibanye's proposal would effectively impose an exhaustion requirement on Appian by forcing it to first seek discovery from the English Court. The Second Circuit, however, has long rejected any such requirement. See, e.g., In re Accent Delight Int'l Ltd., 869 F.3d 121, 134 (2d Cir. 2017) (“Section 1782 does not require applicants first to seek discovery in the foreign tribunal before applying in this country.”) (citation omitted); Euromepa S.A. v. R. Esmerian, Inc., 51 F.3d 1095, 1098 (2d Cir. 1995) (“this Court has . . . refused to engraft a quasi-exhaustion requirement onto section 1782 that would force litigants to seek information through the foreign or international tribunal before requesting discovery from the district court”) (citation omitted).
As Appian also correctly notes (App. Br. at 10 & n.4), any purported agreement by Moelis to comply with an English Court's discovery ruling still would not bring Moelis within the jurisdictional reach of the English Court. In their reply papers, Sibanye and Moelis sought to cure this obvious flaw through additional representations from Moelis that it is “willing to make a limited appearance in the [English Case] for purposes of discovery” and “remain under the jurisdiction of this Court [i.e., the Southern District of New York] to provide Applicants with assurances of compliance.” (Resp. Reply at 2, 4; see Sib. Reply at 1, 5).
This offer is both too late, see, e.g., Solomon v. Sprint Corp., No. 19 Civ. 5272 (MKV), 2022 WL 889897, at *4 n.2 (S.D.N.Y. Mar. 25, 2022) (“ordinarily the Court does not consider matters addressed for the first time in a reply brief”), and too little. It is not at all clear what Moelis's representations mean and neither Sibanye nor Moelis has provided an opinion from UK counsel or any other explanation as to how their proposal would result in an enforceable order by the English Court. For its part, Appian has submitted an unrebutted Declaration from its UK counsel opining that the English Court would not be willing to order Moelis to provide discovery if enforcement of any such order were left to a U.S. court, as Sibanye's proposal appears to contemplate. (Dkt. No. 33 (Declaration of Lord David Wolfson, Baron of Tredegar, KC (“Second Wolfson Decl.”)) ¶¶ 18-21).
Section 1782 gives a litigant to a foreign proceeding the right in appropriate circumstances to compel discovery from a U.S. witness, on pain of sanctions from a U.S. court if the witness fails to comply. See, e.g., In re Gushlak, No. 11 Misc. 218 (NGG) (JO), 2012 WL 2564466 (E.D.N.Y. Jan. 30, 2012) (imposing coercive contempt sanctions based on witness' failure to comply with § 1782 discovery order), report and recommendation adopted by 2012 WL 1514824 (E.D.N.Y. Apr. 30, 2012). According to Sibanye, however, such a litigant may be barred from exercising its rights under Section 1782, and forced to seek discovery in the foreign proceeding instead, based on the U.S. witness's promise to abide by the rulings of the foreign tribunal, which may have no practical ability to enforce those rulings against the U.S. witness. Nothing in the text of Section 1782, Intel, or Second Circuit case law supports this position.
In support of its argument, Sibanye relies on In re Elvis Presley Enterprises LLC, No. 15 Misc. 386 (DLC), 2016 WL 843380 (S.D.N.Y. Mar. 1, 2016), and In re OOO Promnefstroy, Misc. No. M 19-99 (RJS), 2009 WL 3335608 (S.D.N.Y. Oct. 15, 2009), but those cases are readily distinguishable. In Elvis Presley, the target of the discovery was the parent corporation (SME) of a party to the foreign proceeding (Arista). The court found that, “[a]s such, Arista has access to the documents and information held by SME” and thus “a German court could require Arista to produce the very information that [applicant] seeks through this § 1782 application.” Elvis Presley, 2016 WL 843380, at *3. No such intra-corporate relationship between Moelis and Sibanye exists here, nor does Sibanye contend that it has access to Moelis's documents or could be ordered to produce them.
Appian contends that the Second Circuit “expressly rejected both” Elvis Presley and OOO Promnefstroy in its summary order in In re Catalyst Managerial Services, DMCC, 680 Fed.Appx. 37 (2d Cir. 2017). (App. Br. at 11). Appian is wrong. Aside from the fact that In re Catalyst does not have precedential effect, the Second Circuit in that case did not “reject” Elvis Presley and OOO Promnefstroy, but distinguished them on the same grounds described here, as well as another ground not applicable here. See Catalyst, 680 Fed.Appx. at 40-41.
Sibanye cites a footnote in Elvis Presley in which the court noted that “SME has represented that if the German court were to order it to produce more materials it would comply with that order.” Id. at 4 n.3. But that footnote had nothing to do with the court's analysis of the first Intel factor. Rather, it was part of the court's analysis of the second Intel factor and related to a prior order issued by the German court requiring Arista to turn over certain information, much of which Arista obtained from SME, its corporate parent. Id. at *4.
In OOO Promnefstroy, the target of the discovery was an individual New York resident who served in various capacities for the Yukos Oil group, and the applicant's document requests “focus[ed] almost exclusively” on corporate records of Yukos entities that were parties to the foreign proceeding. OOO Promnefstroy, 2009 WL 3335608, at *4. Judge Sullivan found that the first Intel factor weighed against the applicant because the “vast majority” of the documents sought were within the jurisdictional reach of the Dutch courts, as the records “are also in the possession of parties to the foreign proceeding.” Id. at *5, *7. Here, by contrast, Appian seeks Moelis's own business records, not records of Sibanye that are also in Moelis's possession.
Granted, a subset of the records sought, i.e., communications between Sibanye and Moelis, may be in Sibanye's possession as well. But as part of discovery in the English Case, Sibanye has already produced its communications between it and Moelis. (Tolaini Decl. ¶ 18). Moelis's version of those same communications obviously are not the object of the Subpoenas here. To the extent Moelis has communications with Sibanye that were not produced by Sibanye itself because Sibanye did not retain those communications, it cannot be said that those documents are within the jurisdictional reach of the English Court. And even if the Subpoenas embrace a smattering of communications in Sibanye's possession that were not previously produced by Sibanye, that is no reason to condemn Appian's entire request as improper. See In re Batbold, No. 21 Misc. 218 (RA) (OTW), 2023 WL 2088524, at *5 (S.D.N.Y. Feb. 17, 2023) (where discovery target has “no presence [in the foreign jurisdiction] and could not be compelled to provide discovery” and “at least some of the discovery” sought is “not obtainable in the foreign proceeding[],” first Intel factor weighs in favor of applicants).
Thus, this case bears no real resemblance to those involving Section 1782 discovery requests which, while directed to a third party in the U.S., are in substance a backdoor means of obtaining the documents of the adverse party in the foreign proceeding. In such a circumstance, the Second Circuit has instructed district courts to focus on the “real party from whom documents are sought.” Kiobel, 895 F.3d at 245 (subpoena was directed at American law firm of applicant's foreign adversary); see also In re Ex Parte App. of Saul Klein, 23 Misc. 211 (PAE), 2023 WL 8827847, at *10-11 (S.D.N.Y. Dec. 21, 2023) (although subpoenas were directed to nonparty financial institutions, “in substance, [applicant] seeks records of the parties” that those parties “have access to and could access” if ordered to do so by foreign tribunal) (emphasis in original). But that is not the case here. Moelis is a legitimate third-party witness outside the jurisdictional reach of the English Court who has potentially relevant evidence of its own, to which Sibanye has no access. That Appian seeks such evidence for use against Sibanye (which is true of any nonparty discovery request) does not make Sibanye the “real party from whom documents are sought.” Kiobel, 895 F.3d at 245 (emphasis added).
Thus, the first Intel factor weighs in Appian's favor.
b. Second Intel Factor
“The second Intel factor instructs district courts to consider ‘the nature of the foreign tribunal, the character of the proceeding underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance.'” In re CI Invs., 23 Misc. 434 (GHW) (GS), 2023 WL 8643965, at *5 (S.D.N.Y. Dec. 14, 2023) (quoting Intel, 542 U.S. at 264). “‘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 a 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, 51 F.3d at 1100-02). “Such authoritative proof may only be found ‘in a forum country's judicial, executive or legislative declarations that specifically address the use of evidence gathered under foreign procedures.'” In re Majed Amir Al-Attabi, No. 21 Misc. 207 (VSB) (RWL), 2022 WL 229784, at *8 (S.D.N.Y. Jan. 26, 2022) (quoting Euromepa, 51 F.3d at 1100), appeal dismissed sub nom., Al-Attabi v. Bank Audi S.A.L., 2022 WL 2116043 (2d Cir. May 9, 2022).
Courts in this District applying the second Intel factor routinely find that “‘courts in the United Kingdom . . . are [] receptive to Section 1782 discovery.'” Telegraph Media, 2023 WL 5770115, at *8 (quoting Batbold, 2021 WL 4596536, at *4); see also, e.g., Azima v. Citibank N.A., No. 22 Misc. 72 (KPF), 2022 WL 1287938, at *3 (S.D.N.Y. Apr. 29, 2022); In re JSC BTA Bank, 577 F.Supp.3d 262, 267 (S.D.N.Y. 2021). Further, Appian's UK counsel has submitted a declaration citing English legal authorities, including a 1987 House of Lords decision cited in Intel, approving of litigants' efforts to utilize Section 1782 to obtain evidence for use in UK legal proceedings. (Dkt. No. 5 (Declaration of Lord David Wolfson, Baron of Tredegar, KC (“First Wolfson Decl.”)) ¶¶ 16-21); see Intel 542 U.S. at 262.
Sibanye nonetheless argues “[t]he second Intel factor . . . should be treated, as, at most, neutral.” (Sib. Br. at 18). While acknowledging that “English courts are generally receptive to Section 1782 discovery,” Sibanye faults Appian for “offer[ing] no evidence” that the English Court would take that view “where the parties have a broad forum selection clause” and “the English Court already has rejected Appian's request for broad discovery.” (Id. at 18-19). For example, Sibanye notes that the House of Lords decision relied on by Appian made “no mention of a forum selection clause.” (Id. at 19 (citation omitted)).
This argument is without merit. As Appian correctly points out, Sibanye has flipped the Second Circuit's framework for analyzing the second Intel factor on its head. (App. Br. at 12). Under Second Circuit precedent, it is Sibanye or Moelis that bears the burden of offering “authoritative proof” showing that the English Court would not be receptive to the Section 1782 discovery sought by Appian. See Euromepa, 51 F.3d at 1100-01; In re Hansainvest Hanseatische Invs.-GmbH, 364 F.Supp.3d 243, 251 (S.D.N.Y. 2018) (“The burden [on the second Intel factor] is on Respondents.... Here, Respondents offer no evidence to suggest that a German court would be unreceptive to Section 1782 assistance”); In re App. of AutoGuadeloupe Inv. S.A., No. 12 Misc. 221 (RPP), 2012 WL 4841945, at *6 (S.D.N.Y. Oct. 10, 2012) (“Second Circuit case law places the burden on the party opposing discovery to show that a foreign court would not be receptive to this assistance”) (emphasis in original) (citation omitted).
Here, Sibanye offers no authoritative proof or specific directions from the English Court indicating a lack of receptivity to Section 1782 discovery. To be sure, Sibanye's arguments about the SPAs' forum selection clauses and the English Court's handling of discovery merit serious consideration in the Intel analysis. But they are appropriately considered under the third factor (see infra, Section B.2.c), not the second. To satisfy the second factor, a Section 1782 applicant need not make a showing that the foreign tribunal will be receptive to the specific evidence sought under the particular facts and circumstances of the case. See In re Kingstown Partners Master Ltd., No. 21 Misc. 691 (LTS), 2022 WL 1081333, at *5 (S.D.N.Y. Apr. 8, 2022) (“most courts frame the second Intel factor's inquiry as focused on the receptivity to U.S. federal-court judicial assistance more generally, not whether the specific court would admit each specific piece of evidence sought, since such an analysis would involve domestic courts in narrow questions of foreign law better suited to their foreign counterparts”) (cleaned up).
Therefore, this factor also favors Appian.
c. Third Intel Factor
“The third Intel factor seeks to flush out ‘attempt[s] to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States.'” In re CI Invs., 2023 WL 8643965, at *5 (quoting Intel, 542 U.S. at 265). “This does not require the applicant to have first sought the requested discovery in the foreign tribunal; ‘[c]ourts may grant [Section] 1782 applications even where the applicant did not first seek discovery in the foreign tribunal . . . or where the information sought was not discoverable under the laws of the foreign country at issue in the foreign proceeding.'” Id. (quoting In re Paribas Jersey Tr. Corp., No. 18 Misc. 47 (PAC), 2018 WL 895675, at *3 (S.D.N.Y. Feb. 14, 2018)); see also Batbold, 2021 WL 4596536, at *4 (“Instead of focusing on whether a petitioner first sought discovery in the foreign tribunal, a court's analysis of this factor hinges on whether a petitioner is pursing discovery in bad faith”).
Sibanye argues that the third factor “weighs strongly against Appian,” for two reasons. (Sib. Br. at 19-20). First, Sibanye argues that the SPAs' forum selection clauses “provide[] for exclusive jurisdiction in England over any Dispute” and that Appian is circumventing these provisions by seeking discovery in this Court. (Id.). Second, Sibanye argues that Appian is circumventing limitations on discovery imposed by the English Court and improperly using Section 1782 “as a vehicle to avoid an unfavorable discovery decision.” (Id. at 20 (citation omitted)). The Court considers each argument in turn.
i. Effect of the SPAs' Forum Selection Clauses
In Sibanye's view, the allegedly sweeping language of the SPAs' forum selection clauses is enough to stop Appian in its tracks: this entire proceeding, Sibanye claims, qualifies as a “Dispute” over which the English Court has exclusive jurisdiction. (Sib. Br. 14-16). In support, Sibanye cites cases in this District which have denied Section 1782 discovery in reliance on a forum selection clause referring disputes to the foreign tribunal. (Id. at 15 (citing In re Alghanim, No. 21 Misc. 167 (LTS), 2022 WL 1423088, at *4 (S.D.N.Y. May 5, 2022); In re Kreke Immobilien KG, No. 13 Misc. 110 (NRB), 2013 WL 5966916, at *7 (S.D.N.Y. Nov. 8, 2013); Aventis Pharma v. Wyeth, No. M-19-70 (DAB), 2009 WL 3754191, at *1-2 (S.D.N.Y. Nov. 9, 2009)). Sibanye also urges the Court to follow the Seventh Circuit's recent decision in Venequip S.A. v. Caterpillar, Inc., 83 F.4th 1048 (7th Cir. 2023), which affirmed a district judge's reliance on a forum selection clause to deny a Section 1782 application. (See Ltr. at 1-2).
On the other hand, Appian counters that Sibayne fails to offer “authoritative proof” of how an English court would interpret the forum selection clauses in relation to a Section 1782 request and, further, cites several out-of-Circuit district court cases for the proposition that “forum-selection clauses are frequently deemed irrelevant in determining whether Section 1782 discovery should be permitted.” (App. Br. at 13-15 (citing In re Polymer Sols. Int'l, Inc., Civil Action No. DKC 181864, 2019 WL 1239778, at *4 (D. Md. Mar. 18, 2019); In re Cal. State Teachers' Ret. Sys., Civil Action No. 16-4251 (SRC), 2017 WL 1246349, at *4 & n.5 (D.N.J. Apr. 3, 2017); Nat'l Union Fire Ins. Co. of Pittsburgh v. Kozeny, 115 F.Supp.2d 1243, 1244, 1249 (D. Colo. 2000)).
The Court rejects both of these positions: the SPA forum selection clauses are neither dispositive nor irrelevant. They are, instead, one relevant factor that bears on the Intel analysis. See Alghanim, 2022 WL 1423088, at *4 (“Courts in this District have determined that the petitioner's decision to enter into a forumselection clause is a factor than can weigh against the granting of an application brought under section 1782.”). What bearing a forum selection clause has in a given Section 1782 case is a fact-specific inquiry that depends upon (among other possibly relevant facts) the language and scope of the clause, the relationship between the subpoenaed party and the parties to the clause, the nature of the discovery sought, and the proof-gathering restrictions of the foreign country in question.
Here, although the language of the forum selection clauses is undeniably broad, covering “any dispute arising from or connected with” the SPAs (Tolaini Decl. Exh. 1 § 11.11), Sibanye's argument that the instant Section 1782 application is a “Dispute” between Sibanye and Appian governed by the clauses is unconvincing. The application is directed at Moelis, not Sibanye, and seeks relief solely from Moelis. As described above, Moelis, not Sibanye, is the real party in interest-the application is not a backdoor attempt to obtain Sibanye documents in Moelis's possession. Further, the application involves the rights and obligations of Appian and Moelis under Section 1782, not any rights or obligations arising out of or connected to the SPAs.
This does not appear to be a “Dispute” between Appian and Sibanye within the meaning of the forum selection clauses. Reinforcing that reading, Appian's UK counsel has submitted a Declaration expressing his opinion that, applying English law, an English Court would construe the language of the forum selection clauses as “prohibiting the bringing of substantive disputes in foreign jurisdictions” and “would not construe that language as prohibiting applications seeking evidence in support of substantive proceedings brought in the courts of England.” (Second Wolfson Decl. ¶ 10 (emphasis in original); see also id. ¶ 16). Sibanye has submitted no evidence to the contrary.
Moreover, Moelis is not a signatory to the SPAs. Under Second Circuit law, a non-signatory to a contract containing a forum selection clause may enforce the clause against a signatory “when the non-signatory is closely related to another signatory.” Magi XXI, Inc. v. Stato della Citta del Vaticano, 714 F.3d 714, 723 (2d Cir. 2013) (cleaned up). But neither Moelis nor Sibanye contends that English law has such a doctrine or that Moelis can invoke the SPA forum selection clauses on this (or any other) basis. Appian's UK counsel confirms that, under English law, Moelis “has no standing to enforce the forum selection clause.” (Second Wolfson Decl. ¶ 6). Nor do the forum selection clauses themselves limit the parties' ability to obtain discovery or pursue Section 1782 applications in any manner.
Thus, the forum selection clauses do not, of their own force, require Appian to seek nonparty discovery from Moelis in the courts of England. That does not, however, necessarily mean that the clauses are irrelevant to the third Intel factor. Sibanye also argues that the forum selection clauses show that in agreeing to the SPAs, Appian “signed up for . . . English procedural restrictions,” and that under English rules, Appian would not be permitted to take the discovery it seeks of Moelis. (Sib. Br. at 19-20).
This more limited argument also does not withstand scrutiny. While it is fair to say that in agreeing to litigate any Dispute in England, the parties also anticipated and agreed that they would do so against the backdrop of English procedural rules, this only begs the question of what those rules are and whether Appian's Section 1782 application runs afoul of them. As noted above, English courts are generally receptive to Section 1782 discovery applications. And Appian's UK counsel has opined that English courts do not restrict litigants from obtaining discovery from nonparty witnesses in the U.S. pursuant to Section 1782, even in the face of an exclusive jurisdiction clause. (First Wolfson Decl. ¶¶ 16-21; Second Wolfson Decl. ¶¶ 7-17). Again, Sibanye submits no contrary evidence. Thus, assuming that Appian-and Sibanye-“signed up” for English rules governing discovery, part of what they “signed up” for was their own-and their adversary's- ability to seek discovery from nonparty U.S. witnesses pursuant to Section 1782.
The specific “English procedural restrictions” upon which Sibanye relies do not alter this conclusion. Sibanye contends that an English court would not approve of document demands for broad classes or categories of documents (such as are contained in Appian's Subpoenas) and, further, that English procedure does not provide for evidence by deposition. (Sib. Br. at 19-20). But that does not mean that such discovery requests are improper under Section 1782. In In re Accent Delight Int'l Ltd., No. 16 Misc. 125 (JMF), 2018 WL 2849724 (S.D.N.Y. June 11, 2018), for instance, objectors similarly argued that a Section 1782 application sought broader discovery than would be available under rules in Switzerland and the UK imposing “restrictions on the availability and timing of depositions and on broad requests for ‘all' documents and communications.” Id. at *4. Rejecting that argument, Judge Furman held that such rules “are nothing more than limits on the scope of discovery in those fora, not ‘proof-gathering restrictions' within the meaning of Intel.” Id.; see also Gorsoan Ltd. v. Bullock, 652 Fed.Appx. 7, 9 (2d Cir. 2016) (rejecting argument that application “sought to circumvent Cypriot proof-gathering restrictions because it sought” discovery “beyond the scope of discovery authorized under Cyprus law”).
The cases cited by Sibanye are distinguishable. In Alghanim, the applicant sought discovery from its foreign adversary's U.S.-based counsel, 2022 WL 1423088, at *1; in Kreke, the applicant sought discovery from the parent corporation of its adversary, 2013 WL 5966916, at *1. In both cases, the court concluded that the first Intel factor weighed against the applicant because the documents could have been obtained directly from the party to the foreign proceeding, who was the real party in interest from whom discovery was sought. Alghanim, 2022 WL 1423088, at *3 (noting that applicant “can apply to the foreign tribunal to compel [the defendant] to order its U.S. lawyers to produce the materials”) (cleaned up); Kreke, 2013 WL 5966916, at *5 (“there is no allegation that any document requested here is beyond the reach of German jurisdiction”). In that context, where-unlike here- the applicant was effectively seeking discovery from the party to the foreign proceeding, who was also the party to the relevant contract with the applicant, the courts viewed the forum selection clause as militating against enforcement under the third Intel factor as well. Alghanim, 2022 WL 1423088, at *4; Kreke, 2013 WL 5966916, at *7 & n.5. Aventis Pharma is even further afield: there, the applicant sought discovery directly from the party it was litigating against abroad. 2009 WL 3754191, at *1.
The Seventh Circuit's decision in Venequip is likewise distinguishable. As in Kreke, the applicant there (Venequip) sought discovery from the parent company (Caterpillar) of the subsidiary (CAT Sarl) that it was suing in Switzerland. Venequip, 83 F.4th at 1051; see Kreke, 2013 WL 5966916, at *7 & n.5 (viewing the parent and subsidiary as “the same for all intents and purposes” in the context of § 1782 application). Without first seeking any discovery from CAT Sarl in the Swiss court, Venequip filed a Section 1782 application seeking “wide-ranging discovery” from Caterpillar via a series of broad requests for all documents related to “various aspects of the business dealings between Venequip and CAT [Sarl] for the better part of two decades.” Venequip, 83 F.4th at 1051, 1053. The district judge also found that “there are good reasons to be cautious about the Swiss court's receptivity to American-style discovery.” Id. at 1058. Considering all these “case-specific inputs,” including the forum selection clause as one factor, the district judge adopted a “careful wait-and-see approach” that required Venequip to first seek discovery from CAT Sarl in the Swiss court, recognizing that Caterpillar had agreed to provide CAT Sarl with any documents the Swiss court ordered CAT Sarl to produce. Id.; see also id. at 1057 (noting that “the judge did not give dispositive weight to the forum-selection clause”) (emphasis omitted).
That approach is not a viable option in this case, as Appian is seeking discovery from Moelis, and the English Court is unable to order Sibanye to produce documents in Moelis's possession. Moreover, Appian has already sought and obtained discovery from Sibanye and is legitimately seeking additional records and information from Moelis as a nonparty witness. There is no indication that the English Court would not be receptive to such discovery. Under all the case-specific circumstances here, the SPA forum selection clauses do not evince an improper attempt by Appian to circumvent proof-gathering restrictions under English law.
ii. English Court's Discovery Ruling
Sibanye argues that at the CMC in November 2022, the English Court “rejected Appian's efforts to obtain broad discovery of ‘all' documents concerning the sales process and correspondence with third parties” and that in seeking such discovery from Moelis here, Appian is trying to take “‘a second bite of the apple.'” (Sib. Br. at 20 & n.16 (quoting In re Lloreda, 323 F.Supp.3d 552, 560 (S.D.N.Y. 2018)). Appian counters, inter alia, that the discovery it was blocked from taking in the English Case covered a different topic-damages-while here, Appian seeks “evidence as to why Sibanye backed out of the deal.” (App. Br. at 18).
The Court finds merit in both parties' positions. To the extent Appian seeks evidence relating to the reasons why Sibanye terminated the SPAs, the Court agrees that this is a legitimate area of inquiry that was not limited by the English Court at the November 2022 CMC. (See, e.g., First Benish Decl. Exh. 3, Document Requests 4, 6, & 7 (seeking documents and communications concerning the Geotechnical Event, Sibanye's termination of the SPAs, and the circumstances or reasons behind Sibanye's termination)). Indeed, the discovery plan adopted at the CMC included discovery from Sibanye on this very topic-which, after all, is what the English Case is all about-including Sibanye's communications with Moelis. There is every reason to believe that Moelis may have probative information on this subject, either in the form of documents in its own files or in the form of deposition testimony from relevant Moelis witnesses. In seeking such discovery, Appian is not circumventing any proof-gathering restrictions imposed by the English Court.
On the other hand, to the extent Appian's Subpoenas encompass the same information that Appian unsuccessfully sought to obtain in the English Case, the Court agrees with Sibanye that allowing such discovery would undermine the English Court's ruling. For example, the Subpoenas seek all documents and communications “concerning the valuation of the Santa Rita Mine and Serrote Mine, including without limitation all financing modeling [and] valuation reports,” among other things. (Id. Document Request 3). This request mirrors the damages-related discovery request Appian made in the English Case for “all workbooks, memoranda, reports, notes and comparable documents . . . which . . . relate to the valuation of the [Mines] and the Defendants' bids for the same, including all financial models,” which the English Court barred Appian from obtaining, at least at this stage of the case. (Tolaini Decl. ¶¶ 15-17) (emphasis omitted). Having been blocked from obtaining such discovery from Sibanye, Appian cannot use Section 1782 to obtain the same information from Sibanye's financial advisor. See In re Microsoft Corp., 428 F.Supp.2d 188, 196 (S.D.N.Y. 2006) (“[Section] 1782 was not intended[] and . . . cannot [be] invoke[d] as a vehicle to avoid or appeal an unfavorable discovery decision by” a foreign court).
Appian notes that its Section 1782 request covers a narrower time frame than its request in the English Case. (App. Br. at 18). But the English Court did not allow Appian to obtain these types of documents from Sibanye during any time period. And while the English Court left open the possibility that Appian could renew its request for these documents, Appian has not done so. Thus, the restriction on disclosure of these documents in the English Case remains in place, despite Appian's claim that “there are no restrictions.” (Id. at 18-19).
In short, the Court finds that the third Intel factor favors Appian in certain respects and also favors Sibanye and Moelis in others.
d. Fourth Intel Factor
Under the fourth Intel factor, district courts consider whether discovery request are “unduly intrusive or burdensome.” Intel, 542 U.S. at 245, 265. A “court evaluating a [Section] 1782 discovery request should assess whether the discovery sought is overbroad or unduly burdensome by applying the familiar standards of Rule 26 of the Federal Rules of Civil Procedure.” Mees, 793 F.3d at 302. Under Rule 26, the party seeking discovery should “tailor[]” its requests “to seek information relevant to the parties' claims and defenses and proportional to the needs of the case.” Athene Holding Ltd. v. Dang, No. 23 Misc. 171 (JHR) (SLC), 2023 WL 5348950, at *3 (S.D.N.Y. Aug. 21, 2023) (citation omitted). To determine whether a request is proportional, a court must evaluate “the relevance of the information sought-and, in the case of a § 1782 petition, relevance is assessed with regard to the foreign proceeding.” Id. (citation omitted).
Most of Sibanye's and Moelis's objections to the Subpoenas under the fourth Intel factor are unpersuasive. Moelis claims that the “only plainly relevant materials at issue”-which it contends are its communications with Sibanye and the financial analyses it provided to Sibanye-“have already been produced by [Sibanye] in the [English Case].” (Resp. Br. at 8). Sibanye similarly claims that Appian should be content with the Moelis-related documents Sibanye has already produced and that any internal Moelis documents not shared with Sibanye are “unlikely to be relevant to [Sibanye's] subjective reason for terminating the SPAs.” (Sib. Br. at 23; see also Sib. Reply at 4).
These claims are devoid of merit. In a high-stakes commercial litigation of this nature, which challenges the bona fides of a party's termination of contracts worth over $1 billion, it is more than plausible that the written communications between Sibanye and Moelis do not tell the full story, and that the internal records of Moelis, Sibanye's “trusted financial advisor” (Sib. Br. at 13), would contain additional, probative evidence as to the reasons why Sibanye terminated the SPAs. Appian's requests for such documents easily meet Rule 26's test for relevance and proportionality. See, e.g., In re Evenstar Master Fund SPC, 20 Misc. 418 (CS) (JCM), 2021 WL 3829991, at *7 (S.D.N.Y. Aug. 27, 2021) (noting, in context of § 1782 discovery, that “[r]elevance is construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any party's claim or defense”) (cleaned up).
Sibanye argues that Appian's request for documents relating to the Geotechnical Event is disproportionate because “the parties have agreed to address that issue solely through expert evidence based on data provided by Appian.” (Sib. Br. at 23; see also Sib. Reply at 4). But that is not so. According to Sibanye, what the parties agreed would be the subject of expert evidence is the issue of whether the Geotechnical Event constituted an MAE. (Tolaini Decl. ¶ 13). Appian's discovery request goes to the issue of whether Sibanye genuinely or reasonably believed the Geotechnical Event constituted an MAE-a central issue and one that Sibanye acknowledged in the English Case is fair ground for disclosure. (Id. ¶ 12 n.4).
Sibanye further contends that to the extent Appian seeks communications between Sibanye and Moelis, it “should obtain them directly from” Sibanye in the first instance. (Sib. Br. at 22). But Appian already obtained such communications from Sibanye in the course of discovery in the English Case. (Tolaini Decl. ¶ 18). Under Rule 26 and Rule 45 principles, Appian is entitled to ask Moelis for its version of those communications. Moelis may have communications that Sibanye did not retain or, for whatever reason, did not produce.
Moreover, the fact that Moelis may have to produce some of the same communications that Appian has already received from Sibanye does not render Appian's request “unreasonably duplicative,” as Sibanye incorrectly contends (Sib. Br. at 22). See, e.g., Kingsway Fin. Servs., Inc. v. Pricewaterhouse-Coopers LLP, No. 03 Civ. 5560 (RMB) (HBP), 2008 WL 4452134, at *5 (S.D.N.Y. Oct. 2, 2008) (“While [the subpoenaed nonparty's] files for this period may not contain anything that is not already in [the requesting party's] files, this fact alone is an insufficient ground on which to quash the subpoena.”); accord, e.g., Certain Underwriters at Lloyd's v. Nat'l R.R. Passenger Corp., No. 16 Misc. 2778 (FB), 2016 WL 6902140, at *4 (E.D.N.Y. Nov. 23, 2016). This is especially true given the potential probative value of the Sibanye-Moelis communications and the fact that, based on Sibanye's own search, there are not that many of them. (See Tolaini Decl. ¶ 18 (stating that Sibanye produced 166 communications involving Moelis comprising 268 documents)).
In addition, both Moelis and Sibanye contend that depositions of Moelis witnesses are unnecessary and burdensome, with Moelis adding that its witnesses' written communications and valuation analyses are “self-explanatory.” (Resp. Br. at 10; Sib. Br. at 24). But as Appian notes, the depositions are designed to yield evidence not available in any document: namely, the witnesses' recollection of their oral conversations with Sibanye. (App. Br. at 22). Furthermore, it is unusual for any party (or nonparty's) documents to be truly “self-explanatory,” particularly in a commercial litigation challenging a party's stated reason for a business decision as pretextual. See, e.g., In re Namenda Direct Purchaser Antitrust Litig., 15 Civ. 7488 (CM) (JCF), 2017 WL 3822883, at *9 (S.D.N.Y. Aug. 30, 2017) (rejecting argument that deposition would impose undue burden because “the information sought can be gleaned from documents or declarations”).
The lone case cited by Moelis and Sibanye, Union Fenosa Gas, S.A. v. Depository Tr. Co., No. 20 Misc. 188 (PAE), 2020 WL 2793055 (S.D.N.Y. May 29, 2020), does not support their position. There, the court quashed a subpoena for live testimony because, after the respondent moved to quash, the applicant “did not respond in any way in its opposition.” Id. at *9.
Moelis's burden argument in relation to Appian's document requests is equally unavailing. It is Moelis who “carries the burden of proving that the subpoena imposes an undue burden on it as a non-party.” In re Kleimar N.V., 220 F.Supp.3d 517, 522 (S.D.N.Y. 2016) (cleaned up); see also In re Operacion, 2015 WL 82007, at *4. Moelis merely asserts in cursory fashion that it would have to engage in a “labor-intensive” search of “thousands” of documents, some of which may have to be redacted, and complains that it is unfair for it to do so because it “did not receive any fee for [its] work” on the Appian-Sibanye Transaction. (Resp. Br. at 4, 6; Resp. Reply at 2-4).
These assertions do not come close to meeting Moelis's burden. Appian's document requests are narrowly tailored in terms of subject matter and date range: the requests are limited to the Appian-Sibanye Transaction and the five-month period from September 26, 2021 to February 28, 2022. (First Benish Decl. Exhs. 3, 4, & 5 at Instruction 16). Moelis, an investment bank which earns hundreds of millions of dollars in profits (see App. Br. at 21 & n.10), has failed to show how any burden in complying with these requests would be undue. See, e.g., In re YS GM Marfin II LLC, No. 20 Misc. 182 (PGG), 2022 WL 624291, at *11 (S.D.N.Y. Mar. 2, 2022) (rejecting a claim of undue burden where § 1782 witness failed to search for responsive documents prior to its motion to quash or estimate costs of compliance); In re Vale S.A., No. 20 Misc. 199 (JGK) (OTW), 2021 WL 311236, at *4 (S.D.N.Y. Jan. 29, 2021) (objection that compliance “would involve the production of thousands of documents,” which “is undoubtedly the case in many § 1782 applications,” fell short of carrying respondent's burden); In re Bloomfield Inv. Res. Corp., 315 F.R.D. 165, 168 (S.D.N.Y. 2016) (rejecting burden claim where § 1782 witness failed to present “particularized evidence” that production “would be unduly burdensome or costly”).
In three respects, however, Sibanye and Moelis have raised valid objections to the relevance, proportionality, and breadth of the Subpoenas. First, Sibanye and Moelis correctly contend that Request 2 in the Subpoenas, for “[a]ll Documents and Communications concerning the Transaction” (e.g., First Benish Decl. Exh. 3), exceeds the scope of relevant discovery as determined in the English Case. See Athene Holding, 2023 WL 5348950, at *3 (“in the case of a § 1782 petition, relevance is assessed with regard to the foreign proceeding”) (citation omitted). As far as the record reveals, the parties' discovery plan in the English Case did not require Sibanye itself to produce “all” documents and communications concerning the Transaction. (See Tolaini Decl. ¶¶ 15-17 & Exh. 7 at pp. 36-39, 44-45). There is no apparent reason why Moelis, as a nonparty, should be required to do so.
Sibanye also objects to the use of the word “[a]ll” in Request 1 of the Subpoenas, which seeks all documents and communications concerning Moelis's “role as financial advisor to [Sibanye] for the Transaction.” (Sib. Br. at 24). While this language is undoubtedly broad, any practical issues regarding its scope should first be the subject of the parties' meet-and-confer discussions. See, e.g., Hedgeye Risk Mgmt. LLC v. Dale, No. 21 Civ. 3687 (ALC) (RWL), 2023 WL 4353076, at *2 (S.D.N.Y. July 5, 2023) (criticizing subpoena for “[a]ll” documents and communications language while ordering the parties to meet and confer to narrow its scope). The Court assumes that Request 1 is intended to capture documents explaining or describing Moelis's responsibilities as Sibanye's financial advisor for the Transaction (such as the engagement letter between the two firms), and not everything that Moelis did in that role. If the latter, Request 1 would be essentially just as broad, and equally as impermissible, as Request 2.
Second, as noted above in the discussion of the third Intel factor, Request 3 broadly seeks “[a]ll Documents and Communications concerning the valuation of the [Mines]” (e.g., First Benish Decl. Exh. 3), even though the English Court sharply circumscribed Appian's request for valuation-related documents from Sibanye. To be sure, that dispute and the English Court's ruling played out in the context of the damages part of the case. Sibanye's and Moelis's assessment of how the Geotechnical Event did-or did not-affect their valuation of the Mines would appear to be directly relevant to Appian's liability claim, i.e., that Sibanye terminated the SPAs for reasons unrelated to the Geotechnical Event. But documents reflecting whether changes in Sibanye and Moelis's valuation of the Mines, due to the Geotechnical Event or otherwise, led to the termination would be responsive to other of Appian's document requests (see id. Requests 4-7). Appian's broader stand-alone request for all documents relating to valuation is overbroad and exceeds the boundaries of relevance established in the English Case.
Third, the date range for Appian's document requests (September 26, 2021 to February 28, 2022) is broader than the date range for Sibanye's own production in the English Case (October 26, 2021 to January 31, 2022). (Compare First Benish Decl. Exh. 3, with Tolaini Decl. ¶ 12; see also Sib. Br. at 24 n.20). Again, there is no apparent reason why Moelis, a nonparty, should be required to produce documents for a more expansive period.
Indeed, Appian seems to concede the appropriateness of using a start date of October 26, 2021 rather September 26, 2021. (See App. Br. at 24 n.20). Although Appian objects to moving up the end date, its arguments on that score do not justify departing from the end date established in the English Case for Sibanye's own document production. (See id.).
In sum, with some exceptions, Appian's Subpoenas generally seek relevant and proportionate discovery and are not unduly intrusive or burdensome. The Second Circuit has instructed that if a district court has misgivings about the scope of a Section 1782 application, “it is far preferable [to] . . . issu[e] a closely tailored discovery order rather than simply deny[] it outright.” Mees, 793 F.3d at 302 (citation omitted); see also Intel, 542 U.S. at 265 (“unduly intrusive or burdensome requests may be rejected or trimmed”). The Court exercises its discretion to do so here, and finds that the fourth Intel factor, on balance, weighs in Appian's favor.
***
In summary, the Court finds that, considered in their totality, the Intel factors clearly weigh in favor of permitting Appian's requested discovery, with certain modifications as described above. Thus, Sibanye's and Moelis's motions to vacate Judge Clarke's Order are denied and their motions to quash the Subpoenas are denied in part and granted in part.
C. The Motions to Stay Should Be Denied
Moelis argues that, “[a]s an alternative to quashing or vacating the subpoenas,” this Court should stay the current proceedings “pending resolution” of the discovery issues raised herein by the English Court. (Resp. Br. at 10-11). In support, Moelis contends that the English Court is “the most appropriate forum” to resolve these issues and cites Moelis's offer “to abide by the discovery rulings of the English Court.” (Id.; see also Sib. Reply at 6).
This alternative argument fails for the same reasons that the underlying contentions on which it is based were rejected when put forward in support of Sibanye's and Moelis's motions to quash. (See supra, Section B.2). As noted above, “Section 1782 does not require applicants first to seek discovery in the foreign tribunal before applying in this country.” Accent Delight, 869 F.3d at 134. Moelis cites no authority suggesting a stay would be appropriate here. Hence, its motion for a stay is denied.
The two cases relied upon by Moelis are both inapposite. Judge Furman ordered a stay in In re Accent Delight Int'l Ltd. because an appeal was pending before the Second Circuit. No. 16 Misc. 125 (JMF), 2018 WL 7473109, at *2 (S.D.N.Y. June 27, 2018). Further, In re Kidd involved the issuance of a stay pending a district judge's review of respondent's objections to a magistrate judge's report and recommendation. 3:20-MC-00016 (KAD), 2020 WL 3035960, at *1 (D. Conn. June 5, 2020). Thus, Moelis has not cited to any authority in this Circuit, or elsewhere, where a district court has granted a stay pending resolution of a discovery dispute in the foreign proceeding relevant to a Section 1782 application.
D. Appian's Motion to Compel Should Be Denied
Finally, Appian has moved to compel Moelis's compliance with the Subpoenas and asks the Court to order Moelis to produce documents within 14 days and to make its deponents available promptly thereafter. (App. Br. at 25). This motion is unnecessary and, as such, denied. Judge Clarke's Order already directs compliance with the Subpoenas, subject to a motion to quash, and to the extent Moelis's and Sibanye's motions have been unsuccessful, “an order compelling compliance is essentially redundant-it does nothing to change the rights or responsibilities of any person.” Martin v. Neil, No. 08 Civ. 1311 (NG) (GO), 2009 WL 1161009, at *1 n.1 (E.D.N.Y. Apr. 28, 2009). “As a result, a motion to compel compliance with a subpoena is usually moot by definition.” Id.
As part of its motion to compel, Appian asserts that Sibanye and Moelis have waived any other potential objections to the Subpoenas, including on grounds of privilege and confidentiality, for failure to serve objections thereto within 14 days pursuant to Fed.R.Civ.P. 45(d)(2)(B). (App. Br. at 25). In support, Appian relies on a single case which did not involve a Section 1782 application or Rule 45 objections. (See id. (citing Fischer v. Forrest, No. 14 Civ. 1304 (PAE) (AJP), 2017 WL 773694, at *3 (S.D.N.Y. Feb. 28, 2017)). In addition, Appian claims that any future objections lodged by Moelis or Sibanye after the Court's decision would be part of a pattern of delay tactics. (App. Reply at 10).
Conversely, Moelis argues that it has preserved any privilege and confidentiality objections by timely filing its motion to quash and that “no party can credibly argue that they would be prejudiced in any way by the assertion of Moelis's objections following this Court's ruling.” (Resp. Reply at 6). Sibanye advances substantially similar arguments. (Sib. Reply at 9-10). Alternatively, both Moelis and Sibanye argue that, even if they should have served objections, no waiver should be found considering “the nature of the violation, its willfulness or cavalier disregard for the rule's requirements, and the harm which results to other parties.” (Sib. Reply at 10 n.18 (quoting In re N.Y.C. Policing During Summer 2020 Demonstrations, 563 F.Supp.3d 84, 88 (S.D.N.Y. 2021)).
The Court declines to find a waiver here. Moelis and Sibanye both filed timely motions to vacate and quash in compliance with the schedule in Judge Clarke's Order. These motions raised threshold issues concerning whether the Subpoenas should have been issued at all, and referenced concerns regarding privilege and confidentiality. (See, e.g., Resp. Br. at 8; Sib. Br. at 24 n.20). While no specific objection has been teed up in a sufficiently concrete manner for the Court to resolve at this juncture, there has been no waiver. The Court expects that, during the meet-and-confer process that will follow, the parties will negotiate in good faith to resolve any legitimate objections Moelis and/or Sibanye may assert as to documents or deposition testimony.
CONCLUSION
For the reasons stated, the undersigned respectfully recommends that Sibanye's motion to intervene be GRANTED, that Sibanye and Moelis's motions to vacate the Court's June 29, 2023 Order be DENIED, that Sibanye and Moelis's motions to quash the Subpoenas be GRANTED IN PART and DENIED IN PART, that Moelis's alternative motion for a stay be DENIED, and that Appian's motion to compel be DENIED.
Specifically, the Court recommends that the document requests in the Subpoenas each be modified to: (1) delete Request 2; (2) delete Request 3; and (3) limit the date range in Instruction 16 to October 26, 2021 through January 31, 2022. Deposition testimony should also be limited in accordance herewith. Respondents otherwise should be required to comply with the Subpoenas.
The Court further recommends that, should Judge Clarke adopt this Report and Recommendation, the parties be directed to immediately meet and confer to discuss a schedule for the production of documents and the taking of depositions and submit a status report to the undersigned no later than 14 days after Judge Clarke's Order.
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. Section 636(b)(1) and Fed.R.Civ.P. 72(b), the parties shall have fourteen days, inclusive of weekends and holidays, from the date of this Report and Recommendation to file written objections thereto. See also Fed. R. Civ. 6(a), (b), and (d). Any such objections shall be filed with the Clerk of Court. Any request for an extension of time to file objections must be directed to Judge Clarke. A failure to file timely objections will preclude appellate review. See Thomas v. Arn, 474 U.S. 140 (1985); Wagner v. Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).