Case of the Day: Kiobel v. Cravath, Swaine & Moore

The case of the day is Kiobel v. Cravath, Swaine & Moore LLP (2d Cir. 2018). You’ll no doubt recall the name Kiobel from Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659 (2013), the case in which the Supreme Court held that the ordinary presumption against extraterritorial application of US laws applies to cases under the Alien Tort Statute. After that decision, the plaintiff, Esther Kiobel, sought to bring an action against Shell in the Netherlands. There had been significant discovery in the US proceedings in New York that preceded the Supreme Court’s decision. Shell had produced documents, and depositions had been taken. The discovery material was subject to a protective order under which the documents Shell produced were to be used solely for purposes of the Kiobel case,1 and each party was to destroy or return the discovery material thirty days after the termination of the case.

Years after the Supreme Court’s decision, Kiobel, who presumably had had to destroy the discovery she and her lawyers had obtained in her US litigation, brought a § 1782 proceeding seeking leave to take discovery from Cravath, the law firm that had represented Shell in the US litigation. She sought in particular “all deposition transcripts” from the US case, and “all discovery documents and communications produced to the plaintiffs by Shell and other defendants” in that case.

Let me pause for a moment to say that I like Kiobel’s approach and have used it myself. In a patent dispute where there were proceedings in England and the US, we successfully obtained the “production set” the adverse party’s counsel had in its files, i.e., the set of all documents it had produced in the US discovery, along with deposition transcripts. (One difference between my case and Kiobel’s is that my client, an English firm, was not a party to the US litigation). The main thing this approach had to recommend it was that the other side could not plausibly claim any undue burden in time or money, because its lawyers had already done the privilege review, the review for relevance, etc., in the US proceedings and did not need to do the work again. We did not ask for the attorneys’ work product (the coding in the document database, for example), just the documents themselves. What could be easier than that? The judge (in the Central District of California, if I recall), agreed. At the time I wasn’t aware of anyone else trying this, but clearly Kiobel’s lawyers were thinking along similar lines.

The District Court had granted Kiobel’s application, but the Second Circuit reversed, holding that it was an abuse of discretion to grant the application. In terms of Intel, it was clear that the information wouldn’t have been discoverable under Dutch law, but that wasn’t the heart of the court’s reasoning. Rather, it noted that there was no guarantee that the Dutch court would treat the documents as confidential in the Dutch proceedings, and thus that Shell might be deprived of the benefit of the protective order it had had in the US. The most fundamental basis for the decision was the court’s fear that allowing the discovery might impede the free flow of information between foreign parties and their US lawyers:

[T]he district court’s ruling would undermine confidence in protective orders. Protective orders “serve the vital function … of secur[ing] the just, speedy and inexpensive determination of civil disputes … by encouraging full disclosure of all evidence that might conceivably be relevant. This objective represents the cornerstone of our administration of civil justice.” Without protective orders, “litigants would be subject to needless annoyance, embarrassment, oppression, or undue burden or expense.” This is why there is “a strong presumption against the modification of a protective order,” and why, “absent a showing of improvidence in the grant of [the] order or some extraordinary circumstance or compelling need,” we should not countenance such modifications. The decision to alter the confidentiality order without Shell’s participation, and without considering the costs of disclosure to Shell, makes this case exceptional, and mandates reversal.

The Supreme Court has stressed the need for “full and frank communication between attorneys and their clients,” which “promote[s] broader public interests in the observance of law and administration of justice.” If foreign clients have reason to fear disclosing all pertinent documents to U.S. counsel, the likely results are bad legal advice to the client, and harm to our system of litigation.

In order to avoid potential disclosure issues under Section 1782, U.S. law firms with foreign clients may be forced to store documents and servers abroad, which would result in excessive costs to law firms and clients. Alternatively, U.S. law firms may have to return documents to foreign clients (or destroy them) as soon as litigation concludes. … Or foreign entities may simply be less willing to engage with U.S. law firms.

I think this is wrong in a lot of ways.

  • I take it the documents sought are not privileged. If they were privileged, then they would not have been produced in the US litigation. One of the justifications for the attorney/client privilege is the wish to encourage frank communications with lawyers. Clients are never required to consult with lawyers before acting, but we want them do so, so we privilege communications that seek legal advice. But no one needs or should get special incentives to produce non-privileged documents. That’s just one of the ordinary incidents of doing business.
  • A protective order doesn’t trump a subpoena. I haven’t seen the protective order in Kiobel’s case, but presumably it says something like, “the receiving party may not disclose the documents except as required by law” (I am paraphrasing of course). Forget § 1782 for a minute and imagine that Kiobel’s case was purely domestic litigation. If a third party with a similar claim served a subpoena on Cravath seeking documents it had produced in Kiobel’s case, and assuming the documents are not privileged, it seems to me the protective order would provide no reason to grant relief from the subpoena.
  • Another thing about protective orders: they may protect documents during the pretrial phase, but at trial many documents that the parties treated as confidential during discovery have to be made part of the public record. There are limited exceptions, of course, for trade secrets and the like. But given the nature of Kiobel’s case (she and the other plaintiffs claimed Shell aided the Nigerian government in serious violations of customary international law, including torture), it seems likely to me that there aren’t any real trade secrets or other documents at stake here, and that lots of the evidence would eventually be made public if there ever were a US trial. So I don’t understand why the Dutch court’s inability to guarantee the confidentiality of the material matters. There was no guarantee of confidentiality in the US, either.
  • The idea that US firms would have to store documents abroad ignores the notion, which I’ve discussed recently, that documents need not be physically located in the United States to be reachable via subpoena, whether in a domestic case or issued under § 1782, as long as they are within the possession, custody, or control of the subpoenaed party.

And I haven’t really yet considered whether Kiobel could make a showing of exceptional need. Maybe she could.

In short, I think the Second Circuit’s decision is a big mistake that rests on faulty premises. Let’s hope for a rehearing en banc, and let’s hope other circuits don’t follow the Second Circuit’s lead.

  1. And the Wiwa case, a related US litigation.

3 responses to “Case of the Day: Kiobel v. Cravath, Swaine & Moore”

  1. […] Circuit reversed, holding that the lower court had abused its discretion. As I highlighted in my prior post, the key to the Second Circuit’s decision (which I criticized) seems to be that the Dutch […]

  2. […] to produce the requested documents. That decision was later reversed by the Second Circuit (click here for an excellent report by Ted […]

  3. […] I think it is useful to consider the case alongside Kiobel v. Cravath, Swaine & Moore, in which the Second Circuit disapproved of attempts to use § 1782 to direct a subpoena to a […]

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