Opinion
21-MC-00747 (JGK) (BCM)
05-08-2023
In re Application of MONIKA NIEDBALSKI, Applicant, For an Order Pursuant to 28 U.S.C. § 1782 Granting Leave to Obtain Discovery for Use in a Foreign Proceeding.
REPORT AND RECOMMENDATION TO THE HON. JOHN G. KOELTL
BARBARA MOSES, UNITED STATES MAGISTRATE JUDGE
By Order dated October 15, 2021 (the Order) (Dkt. 7), I granted Monika Niedbalski's application, made pursuant to 28 U.S.C. § 1782, for leave to take discovery in this District for use in a Canadian civil proceeding (the Alberta Proceeding) pending in what was then called the Alberta Court of Queen's Bench (the Alberta Court) against Walton International Group Inc. (WIGI) and numerous related entities and persons (the Walton Group). Thereafter, WIGI filed a motion (Dkt. 13) seeking an order (i) permitting it to intervene in this proceeding pursuant to Fed.R.Civ.P. 24, and (ii) reconsidering and vacating the Order. For the reasons that follow, I recommend that the motion to intervene be granted, that the motion for reconsideration and vacatur be denied, and that the Order be reconfirmed.
Acting on a referral pursuant to 28 U.S.C. § 636(b)(1) (Dkt. 5), I treated Niedbalski's original application as a non-dispositive motion that I was authorized to hear and determine pursuant to § 636(b)(1)(A) and Fed. R. Civ. P.72(a). This approach was consistent with the consensus view in this District, at that time, that "rulings on § 1782 applications are not dispositive," and therefore that such an application could be granted by a Magistrate Judge, subject to "clear error" review by the District Judge in the event of an objection. In re Hulley Enterprises Ltd., 400 F.Supp.3d 62, 71 (S.D.N.Y. 2019) (collecting cases). That view was most recently endorsed in Fed. Republic of Nigeria v. VR Advisory Servs., Ltd., 2023 WL 2477889, at *1 (S.D.N.Y. Mar. 13, 2023) (Koeltl, J.) (overruling objections to Magistrate Judge's order granting § 1782 application pursuant to the "clearly erroneous" standard set out in 28 U.S.C. § 626(b)(a)(A) because the case presented "a traditional discovery dispute that should be decided with the deference that is usually accorded to Magistrate Judges in deciding discovery dispute"). Since then, however, in an unreported order in Associacao dos Profissionais dos Correios v. Bank of New York Mellon, No. 22-2865 (2d Cir. Mar. 29, 2023) a panel of the Second Circuit concluded that the appellate court lacked jurisdiction over a Magistrate Judge's order denying a § 1782 application, and remanded the matter so that the order could be "treated as a report and recommendation and appropriate proceedings can be held." 2023 WL 3166357 at *1. Although the Second Circuit has never so held in a precedential decision - and although a distinction could be drawn between an order denying a § 1782 application, which "wholly dispose[s]" of the application, and an order granting the requested discovery, which may require further proceedings, see Fed. Republic of Nigeria, 2023 WL 2477889, at *1 - caution compels me to present my analysis in the form of a report and recommendation.
I. BACKGROUND
Niedbalski is one of many plaintiffs in the Alberta Proceeding, brought against the Walton Group for fraud and related torts. In their Statement of Claim, filed in the Alberta Court on May 27, 2021, plaintiffs alleged that they invested and lost over $13 million (CAD) in syndicated land development projects promoted by the Walton Group by means of false representations and material omissions. See Declaration of Jonathan P. Rossall, Q.C. (Rossall Decl.) (Dkt. 2), Ex. 1 (Dkt. 2-1) (St. of Claim) ¶¶ 99(f), 102, 142-44. The Alberta plaintiffs further allege that the Walton Group "diverted" the funds they invested to purchase different properties, "while syphoning of management and commission fees . . . to pay for the extravagant lifestyles" of various individual defendants. St. of Claim ¶ 108.
In this Court, Niedbalski filed an ex parte application (the Application) (Dkt. 1) on September 10, 2021, to obtain documents pursuant to 28 U.S.C. § 1782 from various financial institutions (the Respondents) located in this District. She explained that the Respondents all served as "correspondent or intermediary banks for U.S. dollar-denominated wire transfers passing from domestic banks to international banks, and vice versa" and that the evidence sought was "evidence of U.S. dollar denominated wire transfers involving the individuals and entities listed in the Statement of Claim." App. at 3. According to Niedbalski's Canadian counsel, this evidence is "critical" to her claims in the Alberta Proceeding, including her claim that WIGI "dissipated and misappropriated assets" that should have been used to repay Neidbalski and other investors. Rossall Decl. ¶¶ 8-9, 19.
The Respondents are HSBC Bank USA, N.A.; JPMorgan Chase Bank, N.A.; Bank of America, N.A.; City National Bank; Deutsche Bank Trust Co. Americas; Wells Fargo Bank, N.A.; UBS AG; Standard Chartered Bank; Commerzbank AG; and The Clearing House Payments Company LLC. Rossall Decl. ¶ 17.
On October 15, 2021, I granted the Application and issued the Order, permitting Niedbalski to serve subpoenas on the Respondents. Order ¶ 3. Although I did not require Niedbalski to serve the Application upon WIGI before acting on it, I noted that the subpoenas themselves were "governed by . . . Fed. R Civ. P. 45(a)(4)" and specifically directed her to serve the Order "on the Respondents and the Discovery Targets along with the subpoenas." Id. ¶¶ 2, 8.
The Discovery Targets - that is, the entities whose wire transfer records are sought - are WIGI and 28 other "individuals and companies associated with 'WIGI,'" Rossall Decl. ¶ 8, 29 in all, of of which are also named as defendants in the Alberta Proceeding. Compare Rossall Decl. ¶ 18 to St. of Claim, Sched. A.
Two weeks later, on October 28, 2021, WIGI filed a letter seeking leave to move for reconsideration, an extension of time within which to do so, and a stay of the Order pending its reconsideration motion. WIGI Ltr. (Dkt. 8) at 1. WIGI asserted, among other things, that although the Statement of Claim in the Alberta Proceeding was filed on May 27, 2021, "neither [WIGI] nor any of the other Defendants [in the Alberta Proceeding] were served with the Statement of Claim or were even aware that there was an Alberta Proceeding." Id. On October 29, 2021, the parties stipulated (and I so-ordered) that Niedbalski "will not oppose any motion to intervene [WIGI] may file," that WIGI's deadline to move for reconsideration would be extended to November 9, 2021, and that Niedbalski "will not serve any subpoenas issued pursuant to the Order pending a decision on Walton's motion for reconsideration." See Stip. & Order (Dkt. 11) ¶¶ 1-2, 4.
On November 9, 2021, WIGI filed its motion to intervene, which is unopposed, combined with its motion for reconsideration of the Order, supported by a memorandum of law (WIGI Mem.) (Dkt. 16) and the declarations of Kate Kaminski, Chief Operating Officer for the Walton Group of Companies (Dkt. 14) and Neil Wittmann, Q.C. (Wittmann Decl.) (Dkt. 15). On November 16, 2021, Niedbalski filed a memorandum in opposition to the reconsideration motion (Opp. Mem.) (Dkt. 18), supported by the declarations of attorney Rossall, her counsel in the Alberta Proceeding (Second Rossall Decl.) (Dkt. 19), John J. Lee, an investigator (Dkt. 20), and David Snow, another investigator (Dkt. 21). On November 19, 2021, WIGI (by then known as WIGI Restructured Bond Corporation) filed a reply memorandum (WIGI Reply Mem.) (Dkt. 22).
On September 9, 2022, at my request (see Dkt. 25), Niedbalski submitted a copy of the docket in the Alberta Proceeding (Dkt. 26), showing that WIGI and its co-defendants filed their Statement of Defence on December 21, 2021, along with a Counterclaim. (Dkt. 26-1 at ECF pp. 30-98.) On October 6, 2022, WIGI updated the record with a copy of an order issued by the Alberta Court on September 9, 2022, directing plaintiffs to serve their "individual Affidavits of Records no later than November 1, 2022," or risk having their claim "struck without further notice." (Dkt. 27-1.) As of that date, it appears that Niedbalski and her co-plaintiffs in the Albert Proceeding had made no effort to take party or non-party discovery in Canada.
11. THE MOTION TO INTERVENE
WIGI moves to intervene pursuant to Federal Rule of Civil Procedure 24(a)(2) or, in the alternative, 24(b)(1)(B). See WIGI Mem. at 4. As noted above, the motion is unopposed.
A. Legal Standards
Fed. R. Civ. P. 24(a)(2) requires a court to allow the intervention of a party that "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." Fed.R.Civ.P. 24(b)(1)(B) permits a court to allow the intervention of a party that "has a claim or defense that shares with the main action a common question of law or fact," so long as intervention will not "unduly delay or prejudice the adjudication of the original parties' rights." Under either branch of the rule, the 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." Floyd v. City of New York, 770 F.3d 1051, 1057 (2d Cir. 2014) (quoting "R" Best Produce, Inc. v. Shulman-Rabin Mktg. Corp., 467 F.3d 238, 240 (2d Cir. 2006)).
B. Discussion
The Second Circuit has repeatedly recognized that, in § 1782 actions, "the ultimate targets of a § 1782 discovery order issued to third parties 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). Thus, courts routinely grant timely intervention motions by those "ultimate targets." See, e.g., In re Costa Pinto, 2022 WL 4088012, at *3-4 (S.D.N.Y. Sept. 6, 2022) (granting motion for intervention as of right pursuant to Rule 24(a)(2)); In re Hornbeam Corp., 2015 WL 13647606, at *2-3 (S.D.N.Y. Sept. 17, 2015) (granting motion for permissive intervention pursuant to Rule 24(b)(2)), aff'd, 722 Fed.Appx. 7 (2d Cir. 2018).
In some cases, the court presiding over the § 1782 action does not even require an intervention motion before hearing the merits of a challenge brought by the "targets." See, e.g., Matter of Upper Brook Companies, 2022 WL 18046694, at *3 (S.D.N.Y. Dec. 29, 2022) (reasoning that "the party against whom the requested discovery would be used had standing to challenge the issuance of section 1782 subpoenas and that it was therefore unnecessary for the court to determine whether the party satisfied the requirements for intervention under Rule 24" before proceeding to the merits of its motion to quash the subpoenas and vacate the underlying § 1782 order).
In this case, timeliness is not an issue, as WIGI first sought intervention two days after it learned of the Order, see WIGI Ltr. at 1, and filed its motion before any subpoenas were served on the Respondents.
As for the remaining intervention elements, WIGI asserts that it has an interest in this action, which may be impaired by its disposition and is not adequately protected by Niedbalski or the Respondents, because WIGI "has very substantial ongoing business with the discovery targets [i.e., the Respondents], and is concerned that service of the subpoenas might interfere with that business." WIGI Mem. at 4.
Standing alone, this vague and conclusory assertion might not satisfy the second prong of the intervention test. See United Parcel Serv. of Am., Inc. v. Net, Inc., 225 F.R.D. 416, 421 (E.D.N.Y. 2005) ("In considering a motion to intervene, the court must accept as true [the] non-conclusory allegations of the motion.") (emphasis added); accord Costa Pinto, 2022 WL 4088012, at *3. It is well-settled, however, that intervention is appropriate where the § 1782 applicant seeks banking records to use against the proposed intervenor - as Niedbalski clearly does here - from third-party financial institutions that are unaffiliated with the intervenor and thus are unlikely to adequately protect its interests. See Costa Pinto, 2022 WL 4088012, at *4 (granting motion by targets of § 1782 discovery order to intervene as of right where the wire transfer records sought by the applicant would be "use[d] against them in Brazilian legal proceedings"); Hornbeam, 2015 WL 13647606, at *3 (granting motion by Symeou to intervene for the purpose of moving to vacate ex parte order permitting Hornbeam to subpoena Symeou's wire transfer records because "neither Symeou nor I am required to accept at face value Hornbeam's assertion that it 'is not going to use the requested information against Symeou'"). Moreover, as in Hornbeam, no party to this action has "identified any prejudice it would suffer from permitting [WIGI] to intervene." Id.
Consequently, WIGI's unopposed motion to intervene should be granted pursuant to Fed.R.Civ.P. 24(a)(2), or, in the alternative, pursuant to 24(b)(1)(B).
III. THE MOTION FOR RECONSIDERATION AND VACATUR
A. Legal Standards
28 U.S.C. § 1782(a) permits a federal district court to order any person who "resides or is found" in that 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." The applicant must establish that (1) "the person from whom discovery is sought reside[s] (or is found) in the district of the district court to which the application is made"; (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." Schmitz v. Bernstein Liebhard & Lifshitz, LLP, 376 F.3d 79, 83 (2d Cir. 2004) (quotation marks and citations omitted).
Once the statutory factors are satisfied, the district court "is free to grant discovery in its discretion." Schmitz, 376 F.3d at 83-84 (quoting In re Metallgesellschaft AG, 121 F.3d 77, 78 (2d Cir. 1997)). Although the district court's 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.'" In re Metallgesellschaft, 121 F.3d at 79 (quoting In re Malev, 964 F.2d 97, 100 (2d Cir. 1992)). In particular, the district court should consider the factors articulated in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004):
(1) whether "the person from whom discovery is sought is a participant in the foreign proceeding," in which event "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"; (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 assistance"; (3) "whether the § 1782(a)
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."In re del Valle Ruiz, 939 F.3d 520, 533-34 (2d Cir. 2019) (quoting Intel, 542 U.S. at 264-65).
B. The Parties' Contentions
WIGI concedes by its silence that the Application satisfies the statutory requirements, and it makes no effort to challenge this Court's findings as to two of the four Intel factors: that "the Respondents are not expected to become parties to the Alberta Proceeding, thus, the need for this discovery is more apparent," and that "the Application seeks discovery that is not unduly intrusive or burdensome, as the Application requests evidence of the type normally produced by financial institutions as third parties in litigation." Order ¶ F. Instead, WIGI focuses on the second and third Intel factors, arguing that this Court should vacate the Order because "the Alberta Court would not be receptive to an ex parte application or U.S. federal-court judicial assistance by way of an ex parte application," WIGI Mem. at 5, and the Application seeks to "circumvent discovery restrictions and procedures under Alberta law." Id. at 7.
Relying primarily on the Wittmann Declaration,WIGI explains that, although Rule 5.13 of the Alberta Rules of Court "permits parties to obtain records from non-parties," the rule "has a narrow purpose" and "can only be used if the relevance and materiality of the records at issue is shown." WIGI Mem. at 7; see also Wittmann Decl. ¶¶ 32 (Rule 5.13 "must be used carefully, and the applying party must show the Court evidence that the non-party actually possesses (or controls) the records, and that they are probably relevant to specific matters pleaded in the action"). In WIGI's view, the Application failed to meet this standard, and therefore would likely have been denied by an Alberta Court, which would "almost certainly have required some evidence before issuing such an intrusive order which could affect [WIGI's] ongoing relationship with its bankers." WIGI Mem. at 8-9.
Wittmann is presented as an expert on Alberta law. He has a distinguished background as a practicing Alberta attorney and was appointed to the Court of Appeal of Alberta in 1999. Wittmann Decl. ¶ 2. From 2005 to 2017 he sat on the Court of Queen's Bench of Alberta, serving as its Chief Justice from 2009 to 2017. Id.
Moreover, WIGI asserts, "the standard is even higher for ex parte discovery applications." Wittmann Decl. ¶ 26. Before an Alberta court will grant an application for ex parte discovery, there must be "convincing evidence the documents demanded will contain incriminating evidence, and that there is a real possibility that any such evidence may be destroyed before the discovery process can do its work." Id. ¶ 41; see also WIGI Mem. at 6 ("To obtain such ex parte relief [in Alberta], the applicant would have to demonstrate the 'emergency' basis of the application to the Alberta Court, and to demonstrate with some reasonable and credible evidence that the records in question were likely to be destroyed if the affected parties received notice of the application.") Moreover, "an Alberta lawyer" seeking an ex parte order must "outline the potential defences to such an application," Wittmann Decl., ¶ 58, which attorney Rossall failed to do when the Application was presented to this Court. WIGI Mem. at 9. In short, WIGI contends that the Alberta Court "would have rejected the [A]pplication," had it been filed in that forum, and on that basis urges this Court to "exercise its discretion to do the same." Id. at 6.
In particular, WIGI argues, Rossall failed to discuss the various defenses to liability available to the Walton Group in the Alberta Proceeding, including "limitation defences, releases and laches, multiplicity of proceedings, and abuse of process." Wittmann Decl. ¶ 58; see also WIGI Mem. at 10-11 (summarizing same defenses, which Niedbalski's Application in this Court "failed to mention").
In response, Niedbalski argues that "procedural requirements under Canadian law are irrelevant to this Court's determination of 28 U.S.C. § 1782 applications." Opp. Mem. at 3. According to Niedbalski, the second Intel factor does not militate against the relief it seeks here because WIGI has not provided any proof (much less "authoritative proof," as required by U.S. law) that the Alberta Court "would reject the evidence" that she seeks to gather pursuant to § 1782. Id. at 8, 9-10. Similarly, Niedbalski argues, nothing in attorney Wittmann's "primer on Alberta civil procedure" satisfies the third Intel factor, because WIGI has not shown that Canadian law "prohibits" the use of § 1782 to obtain extra-territorial discovery. Id. at 10-11. "The fact that Alberta has its own procedure to obtain discovery does not mean that it prohibits other avenues to obtain discovery abroad for use in its Courts[.]" Id. at 10. Finally, Niedbalski points out that WIGI has suffered no prejudice from "this partial ex parte proceeding" because it will be "served with the subpoenas at the same time as the Respondent" and furthermore "will be permitted to adjudicate the admissibility of any discovery received by Applicant in this action in the Alberta proceedings at the appropriate time." Id. at 11.
C. Discussion
Niedbalski has the better end of the dispute. At bottom, WIGI's argument rests on (i) its contention that the Alberta Court "likely" would not have granted the Application, had it been presented in that forum, WIGI Mem. at 2; see also id. at 6 (WIGI "believes the Alberta Court would have rejected the [A]pplication"); and (ii) its assumption that this is grounds for denial of the Application by this Court under 28 U.S.C. § 1782. However, the Supreme Court has expressly rejected the "insertion of a generally applicable foreign-discoverability rule into the text of § 1782(a)." Intel, 542 U.S. at 261. To the contrary:
[T]hrough § 1782 Congress has seen fit to authorize discovery which, in some cases, would not be available in foreign jurisdictions, as a means of improving assistance by our courts to participants in international litigation and encouraging foreign countries by example to provide similar means of assistance to our courts. If district courts were free to refuse discovery based upon its unavailability in a foreign court . . ., § 1782 would be irrelevant to much international litigation, frustrating its underlying purposes.Metallgesellschaft, 121 F.3d at 80; accord Mees v. Buiter, 793 F.3d 291, 303 (2d Cir. 2015) ("Again, § 1782 contains no foreign-discoverability requirement.").
Similarly, as Niedbalski points out, see Opp. Mem. at 9, the courts have declined to read any "'quasi-exhaustion' requirement" into § 1782. Mees, 793 F.3d at 303; Metallgesellschaft, 121 F.3d at 79 (such a requirement "is not supported by the statute's text and "runs counter to its express purposes"). Since an applicant need not "tr[y] and fail[] to obtain the discovery" in the foreign tribunal before filing a §1782 application in the United States, id. (citing Metallgesellschaft, 121 F.3d at 79), WIGI's request that this Court require Niedbalski to first seek any necessary discovery "through appropriate procedures in the Alberta [Proceeding]," WIGI Mem. at 11, misapprehends the function of § 1782.
1. Second Factor
To be sure, Canadian law is relevant to the second and third Intel factors. See Mees, 793 F.3d at 303. However, under the second factor (the "receptivity of the . . . court or agency abroad to U.S. federal-court assistance," Intel, 542 U.S. at 265), the applicant need not produce an "overt expression from the foreign court that it wants or needs" the specific information sought under § 1782. Mees, 793 F.3d at 303-04. Rather, the party objecting to the application must present "proof that [the] tribunal would reject evidence obtained with the aid of § 1782." In re Accent Delight Int'l Ltd., 2018 WL 2849724, at *4 (S.D.N.Y. June 11, 2018) (quoting Mees, 793 F.3d at 303 n.20) (emphasis added), aff'd, 791 Fed.Appx. 247 (2d Cir. 2019). Moreover, that proof must be "authoritative." See Application of Esses, 101 F.3d 873, 876 (2d Cir. 1996) (affirming grant of § 1782 application where party resisting discovery offered no "authoritative evidence that the Hong Kong court . . . would reject the evidence" obtained in the United States); Euromepa S.A. v. R. Esmerian, Inc., 51 F.3d 1095, 1100 (2d Cir. 1995) ("[A] district court's inquiry into the discoverability of requested materials should consider only authoritative proof that a foreign tribunal would reject evidence obtained with the aid of section 1782[.]"); Ex parte Abdalla, 2023 WL 2911047, at *4 (S.D.N.Y. Apr. 12, 2023) (granting application where there was "no 'authoritative proof' that . . . the Brazilian court would reject evidence obtained pursuant to section 1782").
Here, as in Esses and Abdalla, WIGI provides no proof (much less "authoritative proof") that the Alberta Court would reject evidence because it was obtained in the United States pursuant to § 1782. In fact, WIGI acknowledges that Alberta law permits parties to seek - and permits the Alberta Court to issue - "letters rogatory seeking the assistance of [a] foreign court to compel production from third parties as contemplated by 28 U.SC. § 1782." WIGI Mem. at 7-8; see also Wittmann Decl. ¶¶ 27-28 (describing process under Rule 6.22(4) of the Alberta Rules of Court, which "permits a party litigant to apply to the Court to obtain a judicial request from the Alberta Court to the Court of another jurisdiction to seek enforcement of an order with respect to the examination of a person outside of Alberta, and/or to seek the enforcement of an order for preservation or inspection of property or records"). As Niedbalski point out, the existence of this mechanism suggests that "Alberta courts are in fact receptive to evidence that was gathered pursuant to foreign orders." Opp. Mem. at 7.
It is true, of course, that Niedebalski applied directly to this Court, rather that ask the Alberta Court to order the discovery and then issue letters rogatory to enforce its orders. In WIGI's view, this was an "effort to bypass the ordinary discovery procedures applicable in the Alberta Court, which "raises a red flag," because "[t]his Court, unlike the Alberta Court, is in no position to evaluate Applicant's allegations of misconduct - which are inaccurate and disputed by WIGI." WIGI Reply Mem. at 3-4. But Niedbalski is concededly an "interested party," and therefore had an express right, under § 1782(a), to apply directly for an order authorizing the discovery she seeks. See Mees, 793 F.3d at 304 ("The text of the statute authorizes the district court to order discovery not only upon 'request . . . by a foreign tribunal' but also 'upon the application of any interested person,' which [Niedbalski] indisputably is."). WIGI's suggestion that it is somehow underhanded for an interested person to avail herself of that right finds no support in the text of the statute or the case law interpreting it. See In re O'Keeffe, 646 Fed.Appx. 263, 268 (3d Cir. 2016) (summary order) (agreeing with district court that interested persons "are not required to apply for letters rogatory through the forum nation before making a Section 1782 application"); John Deere Ltd. v. Sperry Corp., 754 F.2d 132, 136 (3d Cir. 1985) ("We do not believe that Congress intended litigants interested in foreign proceedings to resort to section 1782 only upon an adequate showing that they could obtain letters rogatory from the foreign forum. Such a reading would virtually nullify the statutory provision that 'interested persons' may apply for discovery orders.").
Moreover, the propriety of an application under § 1782 does not turn on "the merits of the proposed claim" in the foreign court. IJK Palm LLC v. Anholt Servs. USA, Inc., 33 F.4th 669, 680 (2d Cir. 2022); see also In re Zouzar Bouka; Vision Indian Ocean S.A., 2022 WL 15527657, at *4 (S.D.N.Y. Oct. 28, 2022) (rejecting respondents' "numerous arguments as to why the [foreign] proceeding is flawed on the merits," because "[w]hat matters is whether the proceeding was in fact instituted and whether it is in fact receptive to evidence"), modified on reconsideration, on other grounds, sub nom. In re Bouka, 2023 WL 1490378 (S.D.N.Y. Feb. 3, 2023). Thus, the fact that this Court is in a poor position to evaluate the merits of the Alberta Proceeding neither distinguishes this case from other § 1782 proceedings nor furnishes discretionary grounds for denying the Application.
2. Third Factor
The third Intel factor asks "whether the § 1782(a) request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States." Intel, 542 U.S. at 265. In WIGI's view, that question should be answered in the affirmative, because the Application likely would not satisfy the requirements of Alberta law for obtaining third-party discovery - particularly on an ex parte basis. See WIGI Mem. at 7-9. The Second Circuit has made it clear, however, that "there is no requirement under § 1782 that the type of discovery sought be available in the relevant foreign jurisdiction[.]" Schmitz, 376 F.3d at 84. "[T]here is a difference between a § 1782(a) request that seeks documents that cannot be obtained in a foreign proceeding because the foreign jurisdiction does not provide a mechanism for such discovery, and one that seeks documents that cannot be obtained because the foreign jurisdiction prohibits the discovery of those documents." In re Accent Delight Int'l Ltd., 791 Fed.Appx. 247, 251 (2d Cir. 2019) (summary order); see also Mees, 793 F.3d at 303 n.20 (the fact "[t]hat a country does not enable broad discovery within a litigation does not mean that it has a policy that restricts parties from obtaining evidence through other lawful means").
WIGI makes much of the fact that the Application was filed and granted ex parte, using that phrase 26 times in its 12-page opposition brief. The Order did not, however, allow Niedbalski to obtain discovery secretly, without WIGI's knowledge. To the contrary: § 1782 "incorporates the Federal Rules of Civil procedure by reference," including the requirement of Fed.R.Civ.P. 45(a)(4) that "[i]f a subpoena commands the production of documents . . . before trial, then before it is served on the person to whom it is directed, a notice and a copy of the subpoena must be served on each party." In re Postalis, 2018 WL 6725406, at *6 (S.D.N.Y. Dec. 20, 2018). The Order noted the applicability of Rule 45(a)(4). Order ¶ 2. It also directed Niedbalski to "serve this Order on the Discovery Targets [that is, WIGI and its co-defendants] along with the subpoenas." Id. ¶ 4. Thus, had Niedbalski served the subpoenas on the Respondents, WIGI "would have been served with the subpoenas at the same time," Opp. Mem. at 1, and could have challenged them "by moving to quash pursuant to Federal Rule of Civil Procedure 45(c)(3)." Gushlak v. Gushlak, 486 Fed.Appx. 215, 217 (2d Cir. 2012) (summary order).
To show that Niedbalski attempted to "circumvent foreign proof-gathering restrictions," therefore, WIGI must demonstrate that the Alberta Court has relevant "proof-gathering restrictions" in place; that is, "rules akin to privileges that prohibit the acquisition or use of certain materials, rather than . . . rules that fail to facilitate investigation of claims by empowering parties to requires their adversarial and non-party witnesses to provide information." Mees, 793 F.3d at 303 n.20 (emphases in the original). Again, "authoritative proof" of this point is required. See Esses, 101 F.3d at 877 (affirming § 1782 order where appellant "has not presented us or the district court with any pronouncement from the Hong Kong court in this cause that would lead us to question whether the district court's discovery order trenches upon foreign law or is otherwise interfering with the Hong Kong proceedings"); Euromepa, 51 F.3d at 1101 ("Since no authoritative declarations by French judicial, executive or legislative bodies objecting to foreign discovery assistance appear in the record, we are unable to accept the district court's conclusion that granting MEPA's discovery request will in fact offend the people of France.").
Cf. Schmitz, 376 F.3d at 84-85 (upholding district court's denial of § 1782 application where German Ministry of Justice filed an amicus brief stating that the discovery sought could "jeopardize the ongoing German criminal investigation" and "German sovereign rights"); In re Microsoft Corp., 428 F.Supp.2d 188, 194 (S.D.N.Y. 2006) (denying § 1782 application after the European Commission filed a letter stating that the requested disclosure was "apt to seriously harm the Commission's investigation process and circumvent the European rules on access to file").
Here, as in Accent Delight, WIGI has shown, at best, that the discovery sought pursuant to § 1792 might not be available from the foreign court. It has not provided "any showing that the policy or restrictions of [the] relevant foreign jurisdiction prohibit the discovery sought by [Niedbalski]." 791 Fed.Appx. at 251 (emphasis in original). Consequently, the third Intel factor furnishes no basis upon which to deny the Application.
IV. CONCLUSION
Nothing in WIGI's motion papers undermines the findings made in the Order: that the requirements of 28 U.S.C. § 1782 are met and that the discretionary Intel factors all weigh in favor of granting Niedbalski's Application. Moreover, although WIGI argues that Niedbalski's showing did not meet the heightened Canadian standards for ex parte third party discovery, see Wittmann Decl. ¶¶ 56, 64, it does not dispute the relevance and materiality of the records at issue. Consequently, I recommend, respectfully, that WIGI's motion to intervene be GRANTED, but that its motion to reconsider and vacate the October 15, 2021 Order be DENIED. I further recommend, in light of Associacao dos Profissionais dos Correios, that the Application once again be GRANTED.
NOTICE OF PROCEDURE FOR FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have 14 days from this date to file written objections to this Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1) and Fed.R.Civ.P. 72(b). See also Fed.R.Civ.P. 6(a) and (d). Any such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the Hon. John G. Koeltl at 500 Pearl Street, New York, New York 10007. Any request for an extension of time to file objections must be directed to Judge Koeltl. Failure to file timely objections will result in a waiver of such objections and will preclude appellate review. See Thomas v. Arn, 474 U.S. 140, 155 (1985); Frydman v. Experian Info. Sols., Inc., 743 F. App'x, 486, 487 (2d Cir. 2018) (summary order); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).