1782 Discovery Applications Now Permitted In A ‘Reasonably Contemplated’ Foreign Judicial Proceeding

The U.S. Court of Appeals for the Eleventh Circuit recently affirmed a decision by the Southern District of Florida that substantially expanded a litigant's ability to obtain discovery in aid of a foreign proceeding. The court's decision affirmed the grant of a party's application pursuant to Section 1782 of Title 28 of the United States Code to obtain discovery in aid of a proceeding that was not ongoing, but rather "within reasonable contemplation." Clients should be aware of the broadened scope of § 1782, as requests that were once outside of the statute's scope are now permissible.

Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS Forwarding (USA), Inc., 2014 U.S. App. LEXIS 531; 2014 WL 104132 (11th Cir. 2014) arose out of a foreign shipping contract billing dispute between Consorcio Ecuatoriano de Telecomunicaciones S.A. (CONECEL) and Jet Air Service Equador S.A. (JASE). CONECEL filed an application in the Southern District of Florida pursuant to Section 1782 of Title 28 of the United States Code (USC) to obtain discovery for use in a foreign proceeding in Ecuador. The application sought discovery from JASE's U.S. counterpart, JAS Forwarding (USA), Inc. (JAS USA). The district court granted the application and permitted CONECEL to issue a subpoena.

CONECEL's claims included allegations that JASE improperly overbilled CONECEL by millions of dollars. Specifically, CONECEL alleged that an internal investigation revealed that two of its employees colluded with JASE by processing invoices that were artificially inflated. CONECEL believed JASE's inclusion of an "extra-contractual multiplication factor" into the billing equation inflated the prices charged to CONECEL. JASE counterclaimed, alleging that CONECEL failed to pay several invoices.

CONECEL sought to file a claim for collusion in the civil-mercantile court in Quito, Ecuador. Furthermore, if CONECEL succeeded in the civil proceeding, it could then bring a private criminal action against its former employees. As a civil law country, Ecuador requires litigants to attach to the complaint all evidence necessary to support their claims. Therefore, CONECEL sought § 1782 discovery before commencing suit in Ecuador. The district court granted the application, and JASE appealed on the grounds that: 1) § 1782 could not be used to obtain discovery for a proceeding that was not pending and 2) CONECEL's subpoena request was unduly intrusive and burdensome, as it sought confidential...