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In re application of CMPC Celulose Riograndense LTDA.

United States District Court, D. Rhode Island

July 9, 2019

In re application of CMPC CELULOSE RIOGRANDENSE LTDA., For an Pursuant to 28 U.S.C. § 1782 to Take Discovery of Factory Mutual Insurance Company.



         Before the Court is Factory Mutual Insurance Company (“FM Global”) and Mapfre Seguros Geraus S.A.'s (“Mapfre”) Motion to Quash (ECF No. 5) a subpoena issued pursuant to this Court's previous Order granting CMPC Celulose Riograndense LTDA's (“CMPC”) request for discovery pursuant to 28 U.S.C. § 1782. See 3/18/2019 Text Order. For the following reasons, the Motion to Quash is DENIED.

         I. Background

         CMPC is a Brazilian company and producer of various paper products. See Mem. of Law in Supp. of Mot. to Quash (“Mot. to Quash”), ECF No. 5-1. CMPC is directly insured by Mapfre, another Brazilian company. Id. at 2. FM Global is Mapfre's Rhode Island-based reinsurer. Id.

         In February 2017 a recovery boiler at CMPC's industrial plant presented a leak. Id. CMPC filed an insurance claim with Mapfre and FM Global, but coverage was denied in October 2017. Decl. of Tomaz de Oliveria Tavares de Lyra ¶ 3-4 (“Lyra Decl.”), ECF No. 5-3. In anticipation of contesting the denial in a soon to be filed arbitration against Mapfre, CMPC asked the state court of São Paulo, Brazil for an order to compel the disclosure of documents exchanged between Mapfre, FM Global, and insurance adjuster Addva-lora Brasil Reguladora de Sinistros Ltda. (“Addvalora”). Id. ¶ 4. The state court of Brazil granted CMPC's request for technical reports but denied CMPC access to “private data[] resulting from relationships between third parties.” Id. ¶ 10.

         On March 11, 2019 CMPC filed a civil action against Addvalora in a Brazilian trial court. Mot. to Quash 5; Lyra Decl., ECF No. 5-3. Two days later, CMPC filed an ex parte application with this Court pursuant to 28 U.S.C. § 1782 to obtain documents exchanged between FM Global and Mapfre. (ECF No. 1). This Court granted the application and CMPC served a subpoena on FM Global the next day. Mot. to Quash 5. FM Global responded by moving to quash. Id.

         In its motion, FM Global relies primarily on Republic of Kazakhstan v. Biedermann International, 168 F.3d 880 (5th Cir. 1999) and NBC v. Bear Stearns & Co., 165 F.3d 184, 190 (2d Cir. 1999) to argue that Congress never contemplated whether international arbitral tribunals were susceptible to § 1782. Mot. to Quash 7. FM Global alleges CMPC knew the arbitral tribunal serving as the forum for their dispute would not satisfy 28 U.S.C. § 1782, and that with that knowledge, CMPC initiated a sham lawsuit against Addvalora to create a foreign tribunal suitable for obtaining discovery under the statute. Id. at 2. FM Global further alleges CMPC's application is an improper attempt to bypass the decision rendered by the Brazilian State Court and that their requests are unduly burdensome. Id.

         II. Legal Standard

         A court is authorized to consider a discovery request pursuant to 28 U.S.C. § 1782 when: (1) the person from whom discovery is sought “resides or is found” in the district where the application is filed; (2) the discovery sought is “for use in a proceeding” before a “foreign or international tribunal;” (3)the application is made by an “interested person;” and (4) the discovery sought is not protected by any “legally applicable privilege.” 28 U.S.C. § 1782(a); see Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 246 (2004).

         If an application meets the statutory requirements under § 1782, a district court must consider whether the following discretionary factors weigh in favor of the request: (1) whether the person from whom discovery is sought is a participant in the foreign proceeding; (2) the receptivity of the foreign tribunal to U.S. judicial assistance; (3) whether the § 1782 application is an attempt to “circumvent foreign proof-gathering restrictions”; and (4) whether the documents sought are “unduly intrusive or burdensome.” Intel, 542 U.S. at 264. While each discretionary factor “bear[s] consideration” and is balanced against the request, no factor is dispositive. Id.

         III. Discussion

         A. “Foreign International Tribunal”

         Turning to the facts here, the Court concluded that the Arbitration and Mediation Center of Brazil-Canada Chamber (“CAM-CCBC”) where CMPC is involved in arbitration proceedings against Mapfre is a “foreign or international tribunal” for purposes of 28 U.S.C. § 1782. FM Global and Mapfre rely on the Fifth Circuit's holding in Republic of Kazakhstan that private international arbitrations do not qualify as “foreign or international tribunals.” 168 F.3d at 882. Congress directly contradicted this holding by broadening the language of the statute in a 1964 amendment. The Supreme Court in Intel provides a lengthy discussion of the statute's legislative history. 542 U.S. at 258. The Court highlighted that in the 1964 amendment, Congress changed the statutory language from “any judicial proceeding” to “any foreign or international tribunal.” Id. The term “tribunal” thus broadened the statute to include “administrative and quasi-judicial proceedings.” Id. The Court also quoted a principal drafter of the amendment who defined “tribunal” as including “investigating magistrates, administrative and arbitral bodies.” Id.; see also In re Babcock Borsig AG, 583 F.Supp.2d 233, 239 (D. Mass. 2008) (“Although this quotation in Intel is as a formal matter dicta, its considered inclusion offers meaningful insight regarding the Supreme Court's view of arbitral bodies in the context of § 1782(a).”).

         Since Intel, numerous courts in this circuit have agreed that Congress added the term “tribunal” to broaden the scope of the statute and that the term “is commonly used and understood to describe arbitral bodies.” Babcock, 583 F.Supp.2d at 238; In re Republic of Ecuador v. Douglas, 153 F.Supp.3d 484, 487 (D. Mass. 2015); see also Chevron Corp. v. Shefftz, 754 F.Supp.2d 254, 260 (D. Mass. 2010)(“[I]nternational arbitral bodies operating under UNCITRAL rules constitute 'foreign tribunals' for purposes of § 1782.”). Even if the CAM-CCBC was not a “foreign or international tribunal, ” the Addvalora litigation alone would provide a sufficient basis to grant CMPC's § 1782 petition. Accord Gov't of Ghana v. ProEnergy Servs., LLC, No. 11-9002-MC-SOW, 2011 WL 2652755, at *3 (W.D. Mo. June 6, 2011) (concluding that even if an arbitral tribunal were not a proceeding under Section 1782, the existence of litigation alone would provide a sufficient basis to grant the petitioner's Section 1782 petition). Indeed, the United States District Court for the Western District of Louisiana held in In re CMPC Celulose Riograndense LTDA that although the foreign arbitral in question here is not a “foreign or international tribunal” according to Fifth Circuit precedent, it does not “preclude the application of § 1782 here” because the pending civil litigation against Addvalora is sufficient under § 1782. Mem. & Order (“Mem. & Order”) at 7, In re CMPC Celulose Riograndense LTDA v. Boiler ...

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