The U.S. offers a very powerful litigation tool for participants in German legal proceedings to obtain bank records, documents and witness testimony from sources within the U.S., even if such evidence is unobtainable through German court procedures. This procedure, authorized under 28 U.S.C. §1782, is a relatively quick and efficient method for obtaining crucial information to win a case. There is no need to obtain Letters Rogatory or pursue discovery through the Hague Evidence Convention.
What Information Can Be Obtained?
Documents and witness testimony can be obtained, including:
- International Wire Transaction Records (U.S. Dollar wires typically transit the U.S.)
- Emails, Correspondence, Phone and Travel Records
- Banking, Credit Card and Business Transaction Records
- Corporate Documents including Shareholder and Board Meeting Records
- Accounting, Employment and Intellectual Property Records
- Property and Real Estate Transaction Records
- Attorney Records (that are not subject to attorney-client privilege)
- Medical and Educational Records
- Deposition testimony of individuals, employees and corporate officers
U.S. Courts Frequently Allow Discovery For Use In German Legal Proceedings
Discovery has frequently been authorized for use in German commercial disputes, criminal prosecutions and bankruptcy proceedings. For example:
- In Pfaff v. Deutsche Bank AG, 2020 U.S. Dist. LEXIS 124194, *1 (S.D.N.Y. July 15, 2020), the U.S. court authorized, for use in a case pending in Germany, discovery to be taken in New York from Deutsche Bank, DZ Bank AG and Commodity Exchange, Inc. regarding silver and silver derivative transactions executed in New York. The requested discovery was allowed even though Deutsche Bank’s traders worked in London and Singapore, not in New York. In permitting discovery for use in foreign proceedings, U.S. courts have found no per se bar to the extraterritorial reach of §1782. What this means is that a person or company with a presence in the U.S. can be compelled to produce documents located abroad if that person or company has sufficient control over the documents.
- In In re Bayerische Motoren Werke AG, 2019 U.S. Dist. LEXIS 197076, *1-2 (N.D. Cal. Nov. 13, 2019), applicants Bayerische Motoren Werke AG and BMW Bank GmbH were, for use in connection with patent litigation proceedings in Germany, authorized in California to obtain document discovery and depositions from: (1) Broadcom Corporation, (2) Broadcom Inc., (3) Broadcom Technologies Inc., and (4) Avago Technologies Ltd.
- In Metallgesellschaft v. Hodapp, 121 F.3d 77, 78 (2d Cir. 1997), a German industrial and trading company was allowed to take discovery in New York from the former president of its principal subsidiary in the U.S., in order to use the discovery to defend an employment dispute being heard before the Labor Court (“Arbeitsgericht”) in Frankfurt, Germany.
The Process For Obtaining Discovery In The U.S. For Use In Germany Is Not Complicated
The United States Supreme Court has stated that the “twin aims” of 28 U.S.C. §1782 discovery are “providing efficient assistance to participants in international litigation and encouraging foreign countries by example to provide similar assistance to our courts.” A German litigant can readily utilize this law and the procedures for obtaining U.S. discovery are not complicated.
First, the German litigant should determine what information located in the U.S. it wants to obtain – accounting and banking records, emails, corporate resolutions, etc. Then the litigant should determine what person or entity possesses the information and where in the U.S. they are located. This is important, because this determines in which U.S. federal judicial district the discovery application should be filed.
Second, the “Application” is prepared and filed by U.S. counsel and typically requests authorization to issue a subpoena, or subpoenas, for the production of documents or for a witness to appear for deposition. In order for the court to grant the Application, certain statutory considerations must be satisfied. The Application should set forth the following: (1) the person from whom discovery is sought resides or can found within the district of the federal court, for example, if wire transfer records are being sought, the proper forum for filing the Application is the United States District Court for the Southern District of New York, through which international wires typical;;y transit; (2) the information is “for use in a proceeding in a foreign or international tribunal”; and (3) explaining how the discovery sought can be utilized to some advantage or serve some use in the German proceeding – there is no requirement that the discovery be admissible or discoverable in the German proceeding. The court will consider additional discretionary factors, but these can usually can satisfied with a well crafted Application addressing whether the discovery target is a party to the German proceedings or subject to the jurisdiction of the German court, the nature of the German proceedings and/or addressing any relevant German and U.S. public policy interests.
Third, if the Application is granted, subpoenas are served upon the discovery targets for the production of documents or appearance of witnesses. Often, notice is given to the opposing party in the German litigation. In some cases, the discovery targets will simply comply with the subpoena and produce documents or appear for deposition. In other cases, the discovery target may file a motion with the court opposing or seeking to narrow the scope of discovery. In other cases, the opposing party in the German litigation may “intervene” and seek to vacate or otherwise oppose the order granting discovery, including seeking a protective order limiting use of the discovery to just the German litigation. The discovery Applicant will have the opportunity to respond, and the American court will rule, more often than not, in favor of the discovery Applicant, in accordance with the “twin aims” of 28 U.S.C. §1782, and require the discovery targets to comply with the subpoenas.
Thomas C. Sullivan is an attorney in the Philadelphia office of Marks & Sokolov LLC. Mr. Sullivan represents Western, Russian and Ukrainian clients in complex commercial disputes including civil RICO, securities fraud, Foreign Corrupt Practices Act, Convention on the International Sale of Goods and ICC Arbitration matters. He has litigated numerous Section 1782 discovery matters throughout the United States and was recently published in Obtaining U.S. Discovery For Use In Non-U.S. Tribunals Pursuant To 28 U.S.C. § 1782 (Chapter 7), Juris Publishing, LLC, 2020.
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