Here are my two favorite sentences from the answer:

[T]he Department admits that it has interacted several times with Plaintiff but has not to date produced any records responsive to Plaintiff’s FOIA request, demonstrated that responsive records are exempt from disclosure requirements, notified Plaintiff of any determination regarding his FOIA request, or provided Plaintiff with a written notice under 5 U.S.C. § 552(a)(6)(B) extending the time for its response and providing a date on which a determination is expected to be made.

Remember, I submitted my FOIA request in August 2011! What have you been doing, State Department?

The FOIA request that is the subject of this action may implicate information that is protected from disclosure by one or more statutory exemptions.

That’s it? It’s true that the Department is not required to identify the exemptions on which it is relying in its answer. But after nearly two years it would be nice to know if the government has an actual basis for refusing to produce the documents or whether it is just really, really behind in its paperwork.

Original article: Letters Blogatory’s FOIA Case: The Government’s Answer. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

Now before anyone gets too excited, let’s bear in mind that Judge Zambrano lives and works in Ecuador, and as far as I can tell from Roger’s reporting, he was not under any compulsory process (I don’t know the Peruvian equivalent of a subpoena) to appear. Let’s think about how this would play out in a simpler lawsuit here in the United States. Suppose I sue you in the federal court in Boston, and in opposition to my motion for summary judgment you submit a declaration by a witness who lives and works in California. If I want to take the deposition of the declarant, and if the declarant isn’t someone you control (e.g., your employee or your agent), I am going to have to go to California. You, I, and the declarant could negotiate some other arrangement—we could meet in St. Louis—but the basic rule is that a non-party declarant can’t be compelled to travel to suit the convenience of the parties. If you are interested in the details of this, take a look at FRCP 45(b)(2), which spells out the rule and which states the handful of exceptions, e.g., the 100-mile “bulge jurisdiction” that comes in handy in my neck of the woods pretty often, given that bits of all of the New England states are within 100 miles of Boston. Sure, the case in Judge Kaplan’s court is complex and sprawling and difficult to get your arms around, but it’s governed by the same rules of civil procedure that govern all proceedings in the District Court, and the rule is that you can’t compel the attendance of a non-party at a deposition, with very limited exceptions, absent a subpoena, full stop.

So in an ordinary case, it seems to me that Judge Zambrano would be entirely within his rights to refuse to travel to Peru to testify, and indeed, to refuse to testify without compulsion even in Ecuador, if he chose. Let Chevron obtain a letter rogatory requesting judicial assistance in Ecuador. The twist in this case is that Judge Kaplan has ordered the depositions of Ecuadoran witnesses to take place in Peru because Chevron has asserted that its lawyers “would face reprisals and possible criminal prosecution if they set foot in Ecuador,” according to Roger’s report. Let’s assume that that’s so: I don’t see how it changes the obligations of Judge Zambrano.

Original article: The Zambrano Deposition: Failure To Launch. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

Wye Oak sued Iraq in 2009. It attempted service by mail under 28 USC § 1608(a)(3) by sending the summons and complaint to the Iraqi embassy in Washington by FedEx. When that method failed, Wye Oak served the summons and complaint through the diplomatic channel under § 1608(a)(4).

Iraq moved to dismiss on the grounds that the attempt at service by mail did not comply with § 1608(a)(3), because Wye Oak had addressed the documents to the embassy rather than to the appropriate Iraqi official in Iraq. Since § 1608(a)(4) is inapplicable unless the plaintiff has first properly attempted service under § 1608(a)(3), Wye Oak argued, service was improper. The judge rejected Iraq’s argument, reasoning that “Wye Oak was not serving the Embassy itself or personnel within the Embassy, but rather attempting to use the Embassy as a conduit,” that “Wye Oak reasonably believed that the insecurity in Iraq rendered service of a government official there impossible,” and that “§ 1608(a)(3) does not prohibit this method of delivery.”

Iraq then sought reconsideration. The judge summarily denied the motion. Even if the service was technically improper, the judge held, there was no prejudice sufficient to make reconsideration appropriate, as there was no dispute that Iraq had received the documents through the diplomatic channel.

Original article: Case of the Day: Wye Oak Technology v. Iraq. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

In 2006, Daniel Wultz was killed, and Yekutiel Wultz injured, in a suicide bombing in Tel Aviv. Members of the Wultz family sued the Bank of China, alleging that the bank had violated the Antiterrorism Act, 18 USC § 2333, and that it was guilty of negligence etc.

In the earlier decision, the judge ordered the bank to produce documents under the FRCP rather than requiring resort to the Hague Evidence Convention, notwithstanding the bank’s invocation of China’s bank secrecy laws. The only exception the judge established was for “confidential regulatory documents created by the Chinese government whose production is clearly prohibited under Chinese law.” The judge’s order, however, “had little effect.” As the judge noted, “it eventually became clear that BOC was refusing to produce the requested Chinese documents not only based on the bank secrecy laws … but also based on other laws, including laws primarily concerned with combating money laundering and other illegal financial transactions.”

The judge conducted another hearing and issued another order finding that the bank would not be required to produce communications from the bank to the Chinese government “whose disclosure is specifically and categorically prohibited under” Chinese anti-money laundering laws and similar laws. But she invited further briefing.

The Bank offered expert opinion testimony to prove that under China’s state secrets law and its anti-money laundering legislation, it was forbidden to disclose the documents. The judge had concerns about the testimony on the grounds that it was “for the most part not based on empirical evidence of how the laws he discusses have (or have not) been implemented,” but instead “on interpretations of the general, abstract language of Chinese laws and regulations, supplemented by his own considerations of policy.” Nevertheless, the judge found that on balance, it was more likely than not that Chinese law did forbid the Bank from producing the documents, pointing in particular to Article 15(2) of the anti-money laundering law, which provides:

Financial institutions and their staff shall keep confidential … suspicious transaction reports, their cooperation with the PBOC in the investigation of suspicious transactions[,] and other information related to anti-money laundering activities, which shall not be provided to clients or others in violation of regulations.

Thus the question was whether, under Aérospatiale, production of the documents should be compelled even though it would be illegal under Chinese law. The judge considered that if the documents are not produced, there might be no other way for the plaintiffs to prove that the BOC had notice that some of its accounts were being used to fund the terrorist organizations that were responsible for the terrorist attack. On the other hand, China has an interest in enforcement of its anti-money laundering laws, which are aimed in part at depriving terrorist organizations of funding. And requiring production of documents that China considers to be state secrets could offend China’s sovereignty. The judge also considered that the BOC had tried to avoid its discovery obligations in bad faith, since it had failed to comply with earlier discovery orders and taken bad-faith interpretations of those earlier orders.

Weighing the factors, and “recogniz[ing] the seriousness” of her decision, the judge granted the motion to compel in part. In particular, it compelled production of communications from the Chinese government to the BOC relating to the accounts and the account-holder in question, and it compelled production of documents concerning anti-money laundering problems at the Bank’s Guangdong branch and at the head office for a certain period of time.

The judge went out of her way to indicate that the result would have been the same wherever in the world the bank was located, and that in similar circumstances foreign courts could expect the aid of US courts in obtaining such records from US banks. It remains to be seen whether China will be mollified by such sentiments.

Original article: Case of the Day: Wultz v. Bank of China. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

I have to say I think Chevron may have jumped the shark with this latest claim. I don’t want to go through the details of the counterclaim’s allegations, but let’s just take a look at the three counts.

Count one is a count for fraud. This is yet another example of a fraud claim that lacks any allegation that the party making the claim relied on the supposed truth of a misstatement of fact made by the party it’s suing. As I noted in the earlier post, Judge Kaplan has held that New York law permits such claims, and maybe it does. I don’t think much of this theory. If this is what New York law provides, then it’s clearly an outlier, and I see no real policy behind permitting a recovery for fraud in the absence of reliance.

Count two is a count for deceit under §487 of the New York Judiciary Law. This seems to me to be potentially the strongest of Chevron’s three claims, because unlike the fraud claim, § 487 seems squarely aimed at the kind of misconduct of which Chevron is accusing Patton Boggs. (I qualify that remark by reminding readers that I’m not a New York lawyer and am not really familiar with the precedents under § 487). Some of the factual allegations are difficult to understand. For example, in ¶ 75, Chevron accused Patton Boggs of “actively conceal[ing] its representation of the LAPs before the Southern District of New York.” Aside from the question of damages—how did this harm Chevron?—the very same paragraph alleges that another lawyer “revealed to the court” at the outset of the case that Patton Boggs was involved. Similarly, Chevron accuses Patton Boggs of arranging for litigation funding and taking a contingent interest in the outcome of the case, but so what? That’s how every big contingent fee case works. Chevron accuses Patton Boggs of seeking a continuance of the trial date for Chevron’s injunction claim on untrue grounds, but again, so what? Chevron, as we now know, wasn’t entitled to the injunction in the first place. And Chevron accuses Patton Boggs of misstating the evidence in oral argument at the Second Circuit; again, couldn’t Chevron have brought the misrepresentation to the Court’s attention? I’m not condoning misstatements to the courts, ever. I’m simply suggesting that maybe a complaint to the New York equivalent of the Board of Bar Overseers rather than a lawsuit is the appropriate remedy.

The only really serious allegations in count two, it seems to me, ¹ are that Patton Boggs misstated to the court the truth about the Cabrera report. But Chevron doesn’t seem to be saying that Patton Boggs itself was involved in the ghostwriting of the Cabrera report. Take a look at ¶¶ 88 and 89, which seem to distinguish very carefully between “the LAPs’ attorneys”—a general term—and Patton Boggs specifically. In short, this is the closest Chevron comes—it may be enough, though we will need to wait for the evidence.

Count three is a count for malicious prosecution. Patton Boggs has sued Chevron three times—twice seeking a declaration that its acquisition of the Breaux Lott Group, a lobbying firm that had previously represented Chevron, did not create an impermissible conflict of interest that would bar it from representing the LAPs, and once seeking a remedy under the bond Chevron had posted when it obtained the worldwide anti-suit injunction from Judge Kaplan that the Second Circuit later struck down. It seems to me that the second suit seeking a declaratory judgment pretty plainly lacked merit from the outset for the reasons I gave in a prior post (I also covered the DC Circuit’s decision affirming dismissal of the two declaratory judgment actions). But the first declaratory judgment suit and the claim on the bond, while ultimately lacking merit, hardly seem so beyond the pale as to justify a malicious prosecution claim. Frankly, I would say the same of the second declaratory judgment suit. Patton Boggs’s argument against giving the first decision preclusive effect was weak, but at least it had an argument. If lawyers went around suing their adversaries every time they made meritless claims, then I suppose Chevron might well be on the hook for seeking to attach Steven Donziger’s assets without any proof of damages, twice.

In short, I am not a fan of these claims.

Original article: Lago Agrio: Chevron Seeks Leave To Sue Patton Boggs. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

The statutory background for the authority of magistrate judges

By way of background for non-US readers: under Article III, § 1 of the Constitution, the judicial power of the United States is vested in the Supreme Court and in inferior courts created by Congress, and the judges of those courts “shall hold their offices during good behaviour.” In other words, judges are appointed for life and may be removed from office only by impeachment and conviction. Under 28 U.S.C. § 631(a), the judges of each district court “shall appoint United States magistrate judges in such numbers and to serve as such locations within the judicial districts as the Judicial Conference may determine ….” A magistrate judge is not a judge for constitutional purposes because, under § 631(e), the term of office for a magistrate judge is eight years.

Under § 636(b)(1)(A), a judge may designate a magistrate judge to hear and determine “any pretrial matter pending before the court,” with exceptions for dispositive motions (for example, motions for summary judgment or for judgment on the pleadings, or motions to dismiss). When the judge makes such a designation, the statute gives the judge the power to reconsider the magistrate judge’s decision “where it has been shown that the magistrate judge’s order is clearly erroneous or contrary to law.” Under FRCP 72(a), the judge may review the magistrate judge’s decision only on written objection by a dissatisfied party.

On the other hand, under § 636(b), a judge may also designate a magistrate judge to hear and determine dispositive motions. But in that case, the magistrate judge does not actually decide the motion. Instead, he or she submits “proposed findings of fact and recommendations for the disposition, by a judge of the court,” of the motion. Under the statute, the judge reviews the proposed findings and recommendations de novo if any party objects. That is, the magistrate judge’s decision gets much less deference if the matter at issue is a dispositive motion rather than another pretrial matter.

There is another statutory mechanism, § 636(c), which permits a magistrate judge to decide cases in their entirety as though he or she were a judge, but only with the consent of the parties. This mechanism is obviously not applicable in the usual § 1782 case, which is heard and decided ex parte.

The Question

Today’s case of the day illustrates the question I want to consider perfectly. Magistrate Judge Waldor decided the § 1782 application outright, rather than making a report and recommendation to the judge. If her handling of the case is correct, then if the the target of the subpoena wants to challenge her decision, it is entitled to relief only if her decision was clearly erroneous—a standard of review that is pretty deferential to the magistrate judge. But if if the magistrate judge got it wrong, then the target would be entitled to relief if the magistrate judge erred, whether or not the decision was clearly erroneous. This issue is of constitutional dimensions because the target has a right to have dispositive issues adjudicated by a judge.

There is relatively little precedent on this question. The best summary of the split of authority on the question seems to be from Judge Gonzalez’s decision in In re Application of Chevron Corp., 2010 WL 3584520 (S.D. Cal. 2010):

Courts disagree over whether a motion under 28 U.S.C. § 1782 is a dispositive matter requiring the magistrate judge to issue a report and recommendation. See Four Pillars Enterprises Co., Ltd. v. Avery Dennison Corp., 308 F.3d 1075, 1078 (9th Cir. 2002) (Taiwanese company’s application for assistance in conducting discovery in a foreign proceeding under § 1782 was referred to a magistrate judge as a non-case-dispositive discovery matter, and the appellate court reviewed the magistrate judge’s rulings under abuse of discretion standard without discussing issue of magistrate judge’s authority); In re Clerici, 481 F.3d 1324, 1331 (11th Cir. 2007) (standard of review for discovery ordered under § 1782 “is identical to that used in reviewing the district court’s ordinary discovery rulings”); but see Phillips v. Beierwaltes, 466 F.3d 1217, 1221–22 (10th Cir. 2006) (questioning whether motions for discovery in aid of foreign litigation under § 1782 could be characterized as non-dispositive matters); Wright & Miller, 12 Fed. Prac. & Proc. Civ. § 3068.3 (2d ed.) (noting that although discovery disputes generally are viewed as non-dispositive, motions under § 1782 are dispositive matters).

Preliminary Thoughts

Professor Strong seems inclined to the view that a § 1782 application is a dispositive matter that a magistrate judge lacks the power to decide:

Indeed, there are serious questions about whether and to what extent magistrate judges can or should be involved in decisions (such as Section 1782 determinations) that have the potential to affect foreign affairs. Given that “legal inconsistencies in the area of investment arbitration affect foreign investment decisions, economic development, and foreign relations,” U.S. district judges should be hesitant about allowing Section 1782 requests to be heard by magistrate judges.

As an empirical matter, I am not sure if there is reason to think that magistrate judges are more likely than judges to get these decisions wrong, so I am not sure that I agree that there is a real-world difference that justifies Strong’s view. The alienage jurisdiction provided in the Constitution and by statute (the federal courts have jurisdiction of claims brought by or against an alien provided the amount at stake is large enough, and provided certain technical requirements are met) is said to be justified on grounds of the Framers’ distrust of the state courts as forums where foreigners would get a fair shake; but is there a similar problem when we are comparing Article III judges with magistrate judges?

But I also wonder about the notion that there really are foreign relations concerns at stake in § 1782 cases that should give us pause. It seems to me that the really dicey foreign relations issues arise in US litigation when a party seeks to compel discovery from a foreign party under the FRCP rather than via the Hague Evidence Convention or a traditional letter rogatory. In those cases, it seems to me there is no question about a magistrate judge’s authority, for example, to issue an order that applies the Aerospatiale test and compels discovery from a foreign party, and such an order would receive only clear error review. Why, then, should we think that special considerations apply in § 1782 cases, where the US courts are not doing any of the things that get foreign states riled up (exercising extraterritorial jurisdiction, ignoring blocking statutes and data protection laws, etc.), but rather trying to aid proceedings taking place abroad? ³ A foreign sovereign could reasonably argue that forcing it to respond to a discovery request, or forcing a person in its territory to respond to discovery, would offend its sovereignty. But is it reasonable for a foreign sovereign to argue that forcing a person in the United States to provide discovery offends its sovereignty, merely because it is a party to the litigation (as in an investment treaty arbitration), or merely because the underlying arbitration has its seat in the foreign sovereign’s territory? Moreover, if the foreign or international tribunal does not want the parties before it to seek discovery in the US, it can issue appropriate orders, and in the face of such an order it seems highly unlikely that under Intel a US court, whether a judge or a magistrate judge is presiding, would grant a § 1782 application.

On the other hand, there are some formal reasons for viewing a decision on a § 1782 application as dispositive. Unlike cases where courts undertake an Aerospatiale analysis, in § 1782 cases the decision on discovery is the entirety of the US proceeding. I can’t say I’ve really studied the precedents on this nationwide, but at least here in Massachusetts there are decisions holding, in the domestic context (e.g., a proceeding to enforce a subpoena) that the issue is dispositive because it is the only issue before the court, and therefore that a magistrate must make a report and recommendation subject to de novo review. See In re Dept. of Justice Subpoenas to ABC, 263 F.R.D. 66 (D. Mass. 2009); In re Administrative Subpoena to Blue Cross Blue Shield of Massachusetts, Inc., 400 F. Supp. 2d 386 (D. Mass. 2005).

I am not suggesting an answer to this interesting question, but I’m certainly going to keep my eyes open for it.

Original article: In re Application of Mesa Power Group, LLC: Is It Constitutional for a Magistrate Judge To Decide A Section 1782 Application?. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

In 2011, Marker Völkl terminated the license agreement and demanded payment of unpaid royalties. Epic and Capstone refused to pay, and Marker Völkl initiated an arbitration in Switzerland. Epic counterclaimed in the arbitration and filed an action in the New York Supreme Court, alleging that after Marker Völkl terminated the agreement, it misappropriated Epic’s intellectual property by continuing to sell tennis racquets manufactured from molds created by Epic. Epic later withdrew its counterclaims in the arbitration.

The arbitrator found in favor of Marker Völkl and awarded € 300,000 in damages. The New York court dismissed Epic’s action for lack of personal jurisdiction and insufficient service of process. Marker Völkl then petitioned for confirmation of the award. Epic reasserted its counterclaims and sought to stay confirmation pending resolution of the counterclaims. The court confirmed the award. Epic had not shown any of the exceptions to confirmation permitted by Article V of the New York Convention. The counterclaims were not related to any of the NYC exceptions and were irrelevant.

The decision is straightforward and seems plainly correct. Easy case.

Original article: Case of the Day: Marker Völkl (International) GmbH v. Epic Sports International, Inc.. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

Second Renaissance entered into a sublicense agreement with Magi under which Magi would have the right to produce “candles, chocolates, confections, flowers, stamps, wrapping paper/gift bags, and fundraising materials, which would bear the name, logo, and seal of the Vatican Library.” Both the master license agreement and the sublicense agreement had a forum selection clause. The master license agreement required all disputes between the Vatican Office of Publications and Second Renaissance to be resolved in the Vatican courts and governed by Vatican law. The sublicense agreement required all disputes between Second Renaissance and Magi to be resolved in the Vatican courts and governed by Vatican law.

In 2007, Magi sued the Vatican City State. The claim was that Second Renaissance had made misrepresentations to Magi in connection with the negotiation of the sublicense agreement, ¹ and that the Vatican knew of the misrepresentations when made, and Second Renaissance was acting as the Vatican’s agent. The Vatican moved to dismiss on grounds of improper venue. The judge granted the motion, and Magi appealed. The Second Circuit affirmed.

The trick in the case is that while the Vatican/Second Renaissance agreement had a forum selection clause, and while the Second Renaissance/Magi agreement had a forum selection clause, there was no agreement between the Vatican and Magi. The Second Circuit held that the Vatican was entitled to enforce the forum selection clause in the Second Renaissance/Magi agreement because it was “closely related” to Second Renaissance, which had signed the agreement, and it was foreseeable to Magi that the Vatican would be entitled to enforce the clause.

Photo credit: Hans-Gerd Maus-Trauden

Original article: Case of the Day: Magi XXI, Inc. v. Vatican City State. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

A big development in the Lago Agrio case yesterday … Magistrate Judge James C. Francis IV has approved the Lago Agrio plaintiffs’ bid to take the depositions of Chevron’s chairman and CEO, John S. Watson, of Chevron’s VP and General Counsel of the Global Upstream and Gas Group, Edward B. Scott II, and of Kroll, Inc., a firm that Chevron hired in connection with the litigation and that the LAPs claim led a dirty tricks campaign of bribery and surveillance in Ecuador. The Watson and Scott depositions are so-called “apex depositions” of very high-ranking Chevron officials. Apex depositions are relatively rare, and they usually require a fairly detailed showing of necessity. Here, the magistrate judge applied a relatively relaxed standard in light of the short time remaining in discovery:

Under other circumstances, it might be prudent to defer Mr. Watson’s deposition until it could be determined whether his testimony would likely be redundant to that of other witnesses. Here, however, we do not have that luxury, as discovery is to be completed by the end of this month. Finally, this is far from a trivial case. Enough is at stake to justify the deposition of an apex witness like Mr. Watson.

The deposition of Kroll is particularly interesting. The main issue seems to be privilege and work product, and the judge refused to find a blanket privilege that would justify blocking the deposition altogether. It will be interesting what hay the LAPs can make with Kroll. The LAPs believe that Kroll was involved in an effort to bribe former Ecuadorian Judge Alberto Guerra, who gave a devastating declaration claiming that the Ecuadoran judgment was the product of fraud and corruption. I noted in my earlier post that in light of the serious reasons to doubt Guerra’s credibility, his declaration should not be accepted without corroboration. The flip side of corroboration is impeachment, and we will have to see whether Kroll’s testimony leads to effective impeachment of Guerra’s testimony.

Under FRCP 72(a), Chevron has a right to object to the magistrate judge’s order and seek a decision from Judge Kaplan. Will anyone be surprised if Chevron raises objections? And one more question: in light of the proposed withdrawal of counsel for Donziger and the LAPs, who will take these depositions, if they go forward?

Original article: Lago Agrio: Magistrate Judge Allows High-Level Chevron Depositions To Proceed. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.

The judge denied the motion. Service in the UK is permissible under Article 10(c) of the Convention, which provides that the Convention does not interfere with “the freedom of any person interested in a judicial proceeding to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination.”

The judge’s discussion could have been more fulsome. Ordinarily, in my experience anyway, service under Article 10(c) in England is generally handled by a solicitor. The UK’s declarations concerning the Convention make it clear that service by solicitor is permissible. It is not clear from the return of service or from the judge’s decision whether the process server was a solicitor or not. The judge simply says that he was a “competent person of the State of destination” because he was over 21 years of age and was hired by a process-serving firm. It’s not clear to me that this is correct: under what provision of the applicable UK or English law is a private process server permitted to serve case-initiating documents? I welcome the comments of UK readers on this question.

Original article: Case of the Day: St. Ventures v. KBA Assets & Acquisitions. Letters Blogatory © 2013 Theodore J. Folkman and contributors. Some rights reserved.