Case of the Day: SerVaas Inc. v. Republic of Iraq
Posted on July 12, 2013
The case of the day is SerVaas Inc. v. Republic of Iraq (S.D.N.Y. 2013). The underlying case was for recognition and enforcement of a judgment of the Paris Commercial Court. We covered the decision on the merits in February 2012. In short, SerVass won. It then sought to take post-judgment discovery.
In today’s decision, SerVass sought a certification of the facts in support of its position that Iraq was in contempt of court for failing to obey the magistrate judge’s discovery orders, and Iraq sought a stay of post-judgment discovery pending its appeals.1
The magistrate judge agreed with SerVaas that Iraq had not complied with his discovery orders. However, a finding of contempt also requires a finding that the party had not diligently attempted to comply in a reasonable manner. The judge went through a long recitation of the facts leading to the delays, including illness of counsel, meeting cancellations caused by Hurricane Sandy, and Iraq’s efforts to obtain decisions from the appropriate ministries of its own government about whether it could legally comply with the discovery orders. In short, given the reasonableness of Iraq’s course of conduct, no finding of contempt could be warranted.
The magistrate judge ruled in favor of SerVaas, however, in denying Iraq’s motion to stay discovery pending appeal. The discovery order was not an immediately appealable order, because, the judge reasoned, under EM v. Republic of Argentina, it addressed only discovery, not the immunity of Iraq’s assets under the FSIA.2 Determinations under FSIA can be appealed immediately, but the way to appeal other discovery orders is to disobey them and then obtain a ruling in contempt proceedings.
- I won’t dwell on the procedural intricacies of SerVaas’s motion. Suffice it to say that under 28 U.S.C. § 636(e)(6)(B)(iii), a magistrate judge cannot directly find a party in contempt of court, but must instead certify facts to the district judge, who has the power to hold a hearing and make a decision about the contempt. But if the magistrate judge refuses to certify facts, then the district court cannot hold the supposed contemnor in contempt, if the supposed contempt occurred before the magistrate judge.
- Note that the rule is different in the Seventh Circuit under the Rubin case, and that the Supreme Court may take up a petition for certiorari seeking to resolve the circuit split this term.