Case of the Day: CEEG (Shanghai) Solar v. LUMOS LLC

The case of the day is CEEG (Shanghai) Solar Science & Technology Co. v. LUMOS LLC (10th Cir. 2016). CEEG was a Chinese solar panel manufacturer. LUMOS was a solar energy company in Colorado. The parties had a co-branding agreement under which LUMOS agreed to purchase at least a minimum number of solar panels from CEEG over three years and CEEG warranted that the goods would conform to the contract specification. The agreement provided: “all documentation, notices, judicial proceedings, and dispute resolution and arbitration entered into, given, instituted pursuant to, or relating to, this Agreement be drawn up in the English language.” And it provided for arbitration before CIETAC. On the other hand, it provided that each order for goods would be subject to subsequent purchase contracts. The parties did enter into a subsequent contract, which again provided for CIETAC arbitration but did not provide for the use of English. The CIETAC Rules provide that if

the parties have agreed on the language of arbitration, their agreement shall prevail. In the absence of such agreement, the language of arbitration … shall be Chinese or any other language designated by CIETAC having regard to the circumstances of the case.

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Case of the Day: Republic of Ecuador v. Bjorkman

The case of the day is Republic of Ecuador v. Bjorkman (10th Cir. 2013). When I wrote about the case in August 2011, the issue was whether the court should grant Ecuador leave to serve a subpoena on Bjorn Bjorkman, one of Chevron’s environmental experts. I was mainly concerned with an interesting issue of statutory construction. Section 1782 provides that “interested persons” may obtain discovery from “persons” found in the United States in aid of foreign or international proceedings. There is precedent for the proposition that a foreign state is not a “person” from whom discovery can be taken under the statute. So can a foreign state be an “interested person” entitled to seek discovery under the statute? Or are we to give the word “person” two different meanings in the statute?

The issues now are different. Chevron withheld thousands of documents under the work-product doctrine. In particular, Chevron withheld documents containing communications between Bjorkman and persons other than Chevron’s lawyers and other documents in Bjorkman’s possession other than drafts of his report and other documents that are within the express scope of the work-product rule. In January 2012, the magistrate judge granted in part Ecuador’s motion to compel. In October 2012, the court affirmed and adopted the magistrate judge’s decision, and Chevron and Bjorkman appealed.

After the notice of appeal was filed, Chevron unsuccessfully sought a stay pending appeal. The parties entered into a stipulation permitting Ecuador to use the documents produced only for the purpose of “conducting the Bilateral Investment Treaty Arbitration.” Ecuador filed additional motions to compel, arguing, successfully, to the magistrate judge that Chevron had continued to withhold documents required to be produced. But Chevron never objected to the magistrate judge’s findings and the court never adopted them.

On appeal, the court raised, sua sponte, a jurisdictional issue. Ordinarily, a decision granting a § 1782 application is considered a final decision on the merits, from which an appeal lies. Here, though, there were discovery proceedings ongoing after the notice of appeal; did they render the court’s § 1782 decision non-final and thus non-appealable? No, the court held. The district court’s last order was the October 2012 order granting the motion to compel. The magistrate judge’s later decisions on the post-appeal motions to compel had never been adopted by the district court and thus were not final orders appealable on their own.

With jurisdiction out of the way, the court proceeded to the main question, which was the proper construction of FRCP 26(b)(3)(A). The rule provides:

Ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (including the other party’s attorney, consultant, surety, indemnitor, insurer, or agent).

According to Chevron, FRCP 26(b)(3)(A), which was significantly amended in 2010, provided protection to trial preparation materials prepared by a testifying expert. The court disagreed. It reviewed the history of the common-law work-product doctrine and the amendments to Rule 26 and concluded, for reasons that I am not going to review in detail, that the purpose of the rule, with regard to testifying experts, was simply to protect drafts of expert reports, not to give expert witnesses the same sort of protection attorneys have under the work-product doctrine.

Some pro-Ecuador press has trumpeted the Tenth Circuit’s decision as substantively significant for the BIT arbitration, but of course, we can’t really judge as we don’t have access to the documents produced.

Case of the Day: In re Michael Wilson & Partners, Ltd.

The case of the day is In re Michael Wilson & Partners, Ltd. (10th Cir. 2013). We first encountered this case in June 2012. Here was my description of the case:

Back in 2006, Michael Wilson & Partners, a British Virgin Islands company providing consultancy services in Kazakhstan among other places in Eastern Europe and Asia, applied for leave [under § 1782] to serve subpoenas on Sokol Holdings, Inc., Frontier Mining, Ltd., and their principals, Thomas Sinclair and Brian C. Savage, both Australians. According to Wilson, its former director, John Forster Emmott, an Englishman, and its former employees, Robert Colin Nicholls and David Ross Slater, had wrongfully deprived Wilson of corporate opportunities by doing business with Sokol and Frontier, and Sokol, Frontier, and their principals were likely to have information relevant to Wilson’s claims against Emmott, Nicholls, and Slater, which were pending before the High Court in England and the Supreme Court of New South Wales. The judge granted the ex parte application, and after much further wrangling, Sokol, Frontier, et al. produced documents responsive to the subpoenas and provided testimony under FRCP 30(b)(6). In 2011—nearly five years after Wilson’s application—Sokol, Frontier, et al. moved for reimbursement of costs and fees incurred in responding to the subpoenas. In total, they sought $2.15 million, of which nearly $1.6 million was costs and approximately $550,000 was fees. There were 325,000 documents reviewed and 15,000 ultimately produced.

The district court found that Sokol, Frontier, Sinclair, and Savage were entitled to half of the allowed costs (the magistrate judge allowed $427,172, so the court awarded $213,586) but not to attorney’s fees. Sokol, Frontier, Sinclair and Savage appealed.

The court affirmed. The analysis is not particularly interesting or illuminating. But it’s worth reminding ourselves of what can happen when lawyers let discovery costs get out of hand.