Case of the Day: Lantheus Medical Imaging v. Zurich American Insurance Co.

Chalk River LaboratoriesLet me start by saying that today’s case of the day is highly recommended reading. Way to go, Magistrate Judge Cott!

Back in August 2011, we looked at an Ontario case, Lantheus Medical Imaging v. Atomic Energy of Canada, which involved a US letter rogatory to take testimony and documents from Atomic Energy of Canada, Ltd., a Crown agent of the Government of Canada, in an insurance dispute in New York arising out of an extended shutdown of the Chalk River Laboratories nuclear reactor in Canada, which supplied raw materials to Lantheus Medical Imaging, a manufacturer of radiopharmaceutical products. In the Ontario case, the court refused to execute the US court’s request for judicial assistance, on the grounds that § 60 of the Ontario Evidence Act permitted the court to grant assistance only if the US court was a court of competent jurisdiction, and that since AECL was a Crown agent, it was likely immune from jurisdiction in the US under the Foreign Sovereign Immunities Act; thus the US court was not a court of competent jurisdiction. But the Ontario court noted that its ruling on that question was not final and that the US court should have an opportunity to weigh in. I commented at the time that I thought the decision strange:

It’s unclear whether the US court’s inability to subpoena AECL played a real role in the Ontario court’s analysis: one the one hand, the court noted that it was clear that “the U.S. Court did not have jurisdiction to issue a subpoena against AECL if it had been in its jurisdiction.” This suggests that the court understood that because AECL was located in Canada, the power or lack of power to issue a subpoena was not really in play. On the other hand, though, the court noted the lack of jurisdiction to issue a subpoena as one of the two bases for its decision. There is no question but that the US court lacked jurisdiction to issue a subpoena to AECL to compel AECL’s testimony. But this is trivial: the US court lacks jurisdiction to issue a subpoena to anyone outside of its territorial jurisdiction (there are minor exceptions to this rule, e.g., the 100-mile “bulge jurisdiction” of Fed. R. Civ. P. 45(b)(2)(C), or service on a national or resident of the United States abroad under 28 U.S.C. § 1783). Parties that direct letters rogatory to Canada do so precisely because the subpoena power of the US courts does not extend to Canada. So the court’s lack of jurisdiction to issue a subpoena proves too much, and the Ontario court was unwise, in my view, to treat it as a fact of significance.

I don’t feel competent to comment on the proper interpretation of the Ontario Evidence Act, but I wonder whether “court of competent jurisdiction” should be read so as to focus the inquiry on whether the US court had jurisdiction to adjudicate the dispute before it, not whether the US court had jurisdiction to issue the letter rogatory to AECL.

In today’s case of the day, Lantheus Medical Imaging , Inc. v. Zurich American Insurance Co. (S.D.N.Y. 2012), Lantheus sought issuance of an amended letter rogatory from the court in New York. AECL filed a brief as an amicus curiae opposing the motion. The basic positions were simple. Lantheus asserted that a letter rogatory was not an exercise of jurisdiction over AECL, but rather a request to a Canadian court to exercise jurisdiction over AECL. AECL, on the other hand, asserted that because it was immune from jurisdiction in the US, allowing issuance of the letter rogatory would permit Lantheus to circumvent the Foreign Sovereign Immunities Act.

The magistrate judge sided, correctly, with Lantheus. He began with the definition of a letter rogatory: a “document issued by one court to a foreign court,” or more specifically, “a formal request from a court in which an action is pending, to a foreign court to perform some judicial act.” The foreign court enforces the letter rogatory “pursuant to [its own] domestic statute or common law, or through bilateral treaties with the United States.” Issuance and enforcement of letters rogatory rest “entirely upon the comity of courts toward each other, and customarily embody a promise of reciprocity.” Requests are “usually granted, by reason of the comity existing between nations in ordinary peaceful times.” So far so good! (Except for the bit about requests being usually granted. One of the recurring themes at Letters Blogatory is that US judicial assistance to foreign courts—I’m not discussing Canada in particular now—is more liberal than foreign courts’ assistance to US courts).

The judge then turned to the FSIA. As we have had many occasions to observe, the Act makes foreign states and their agencies and instrumentalities immune from the jurisdiction of courts in the United States, with specified exceptions. But the FSIA does not “address[] the issue of discovery against foreign states.” There is, however, very little precedent on whether foreign sovereigns may be compelled to provide discovery when they are non-parties. The only case the judge could cite on that issue was Peninsula Asset Mgmt. (Cayman) Ltd. v. Hankook Tire Co., 476 F.3d 140 (2d Cir. 2007), in which the court denied a motion to hold an agency of the Republic of Korea in contempt because it was immune from the court’s subpoena jurisdiction.

But despite this lack of authority on the interplay between the FSIA and non-party discovery, the judge found in favor of Lantheus, because of the distinction between a subpoena and a letter rogatory. If I may paraphrase: a subpoena is a command of the US court requiring the person to whom it is directed to appear at a certain place and testify, or to produce documents. A letter rogatory is a request to a foreign court that does not require anyone to do anything and is hardly an exercise of jurisdiction over a foreign sovereign that could run afoul of the FSIA.

For dessert, the judge went on to hold that even if the FSIA did somehow apply, the commercial activity exception to the Act would also apply. But as I say, this is dessert. The main course is the judge’s excellent discussion of what, exactly, a letter rogatory is and what it does.

Photo credit: Padraic Ryan

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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