Case of the Day: In re Catalyst Managerial Services

The case of the day is In re Catalyst Managerial Services, DMCC (2d Cir. 2017). The district court had granted Catalyst’s application to take discovery from several banks for use in a breach of contract action that Catalyst had brought against Libya Africa Investment Portfolio in the UK. LAIP’s main argument was that the discovery sought was unduly burdensome, because while Catalyst made a showing that the evidence it sought was related to its claim for lost profits in the UK, Catalyst’s real motive was to obtain evidence it could use to enforce an eventual judgment in the UK case.

It’s true that under Second Circuit precedent you can’t take discovery for the purpose of seeking to enforce a foreign proceeding. But that principle doesn’t really apply here, because Catalyst did have a legitimate reason for seeking the discovery, and the possibility of another purpose that would be impermissible on its own doesn’t bar the discovery.

LAIP also argued that the UK court could provide the discovery sought, because it could have ordered LAIP to obtain them from third parties and produce them. But the adequacy of LAIP’s disclosures in the UK were in question, and in any case there is no requirement to seek discovery in the foreign proceeding before making use of § 1782.

Last, LAIP argued that Catalyst was trying to evade foreign proof-gathering restrictions, because the purpose of the evidence was to discredit one of LAIP’s witnesses in the UK proceeding, but the UK court had refused to allow Catalyst to discredit his testimony by cross-examination in the context of stay litigation. But there was no indication, according to the court, that the UK would forbid attempts to discredit the LAIP witness statement in another context.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. Folkman also serves as an arbitrator and is a member of the Commercial and Consumer Panels of the American Arbitration Association. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's treatise on International Aspects of US Litigation (J. Berger, ed. 2017), 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 and 2014 - 2016.

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