Gaining The Upper Hand In Litigation Abroad Using 28 U.S.C. ' 1782

• Published date: 18 February 2022
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Trials & Appeals & Compensation, Securities, Shareholders
• Law Firm: Olshan
• Author: Ms Lori Marks-Esterman and Theodore J. Hawkins

Deal-making is often a global affair. When an international transaction becomes the subject of a dispute, significant evidence is often in the hands of nonparties in the United States'such as investment banks, accounting firms, executives and board members. To bolster their strategic positions, parties to offshore commercial disputes are increasingly turning to 28 U.S.C. ' 1782 ("Section 1782") to gather documents and testimony in the United States that might not otherwise be discoverable.

Olshan recently obtained victories in the District Court for the Northern District of California and the District of Delaware that underscore the broad reach of Section 1782.¹ In these parallel proceedings, two federal courts issued orders granting access to crucial discovery for use in an appraisal action pending in Japan. In Delaware, the Court ordered Bank of America Corporation to produce documents held by its Japanese subsidiary that served as an advisor in the going-private transaction at issue in the Japanese appraisal proceeding. And in California, the Court held that a U.S.-based director who served on the Japanese company's Special Committee was required to produce evidence concerning the transaction in his possession.

The opinions are important because, in each instance, many of the corporate records that the Courts ordered the targets to produce were held abroad in Japan. In this regard, the decisions confirm that Section 1782 discovery extends to evidence located extraterritorially. These decisions further reflect the increasingly expansive interpretation that courts have been applying to Section 1782, and foretell a likely increase in the role Section 1782 proceedings will play in major international financial disputes moving forward.

What is Section 1782?

28 U.S.C. ' 1782 is a federal statute that allows U.S. district courts to compel a person or entity "found" in the United States to produce documents and testimony in connection with a pending or "reasonably contempla[ted]" foreign proceeding.² Section 1782 was substantially amended in 1964 to allow U.S. courts to order the production of both documents and testimony with the stated goal of encouraging international cooperation in litigation.³

A court analyzes a Section 1782 application in two phases. An applicant must first satisfy three statutory prerequisites: (1) the discovery must be sought from a person or entity residing in the district of the federal district court to which the application is...