When the events giving rise to a type of litigation move so quickly that they conclude before the litigation can wind its way through the appellate courts, will the U.S. Supreme Court ever have a chance to resolve the significant legal issue at the heart of that litigation? This mootness issue may be squarely before the U.S. Supreme Court by the time it considers—for the first time in 17 years—the scope of discovery permitted under 28 U.S.C. § 1782.
In their latest article below, which first appeared on Law360, Litigation partner Linda Martin, special counsel Scott Eisman and associate Paige von Mehren explain why the Supreme Court should not pass up the opportunity to resolve this case, Servotronics Inc. v. Rolls Royce PLC—even if the underlying arbitration concludes while the Supreme Court case is pending—and finally resolve whether Section 1782 applies to international commercial arbitration.
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High Court Int'l Discovery Case Fits Mootness Exception
For the first time in 17 years, the U.S. Supreme Court will consider the scope of discovery permitted under Title 28 of the U.S. Code, Section 1782.
The issue before the Supreme Court is whether Section 1782 — which allows a federal court to order discovery "for use in a proceeding in a foreign or international tribunal" — extends to international commercial arbitrations.
In the case that the Supreme Court has agreed to review, Servotronics Inc., a manufacturer of valves used in airplane engines, invoked Section 1782 to request discovery for use in an international commercial arbitration with Rolls-Royce PLC taking place in London under the rules of the Chartered Institute of Arbitrators.[1]
The U.S. District Court for the Northern District of Illinois, Eastern Division, denied Servotronics' application, and the U.S. Court of Appeals for the Seventh Circuit affirmed, holding that Section 1782 does not apply to international commercial arbitrations.[2]
In so holding, the Seventh Circuit joined the U.S. Courts of Appeals for the Second and Fifth Circuits but split with the U.S. Court of Appeals for the Fourth Circuit — which had granted Section 1782 discovery in aid of the same international commercial arbitration in response to another application that Servotronics had filed[3] — and with the U.S. Court of Appeals for the Sixth Circuit, which held in Abdul Latif Jameel Transportation Co. v. FedEx Corp.[4] that Section 1782 applies to international commercial arbitration.[5]
Servotronics is the latest development in a broader trend. Parties to international disputes have increasingly relied on Section 1782 and have brought dozens of cases in courts across the country seeking discovery in aid of international commercial arbitrations. But federal courts have differed sharply over whether Section 1782 applies to commercial arbitrations.
The unpredictability caused by the stark disagreement in the federal courts over whether Section 1782 applies to the same facts has made it difficult for litigants to predict whether Section 1782 discovery will or will not be granted in any specific case. That certainty has been elusive given the lack of Supreme Court review of these divergent cases — until now.
While there are a variety of reasons why litigants in other Section 1782 cases did not seek Supreme Court review, there is one issue that poses a particular and significant obstacle to judicial review for these cases: the risk that a Section 1782 application may become moot because of the speed at which many commercial arbitrations proceed relative to federal litigation.
That point did not elude Rolls-Royce and Boeing Co. in Servotronics: They urged the justices to decline review of the Seventh Circuit's decision because the schedule of the underlying arbitration meant that the case would "likely ... become moot before the Court can decide it."[6]
Whether or not Servotronics is in fact at risk of becoming moot before the Supreme Court rules, there are compelling reasons why the appeal should not be dismissed regardless of the status of the underlying arbitral proceeding. The Supreme Court has consistently recognized an exception to mootness when a claim is "capable of repetition, yet evading review."[7]
This exception applies when (1) "there [is] a reasonable expectation that the same complaining party [will] be subject to the same action again" and (2) "the challenged action [is] in its duration too short to be fully litigated prior to cessation or expiration."[8] Both elements would be satisfied here.
First, there is — at the very least — a reasonable expectation that Servotronics will again file a Section 1782 application in aid of an international commercial arbitration.
The Supreme Court has explained that a "reasonable expectation" need not rise to the level of "demonstrably probable," and that the proper inquiry is whether "the controversy was capable of repetition and not ... whether the claimant had demonstrated that a recurrence of the dispute was more probable than not."[9]
It is common for actors in international commerce, such as Servotronics, to agree to submit disputes to international commercial arbitration.
Servotronics has also demonstrated a willingness to seek Section 1782 discovery in aid of those commercial arbitrations, having already filed three Section 1782 applications in connection with the same arbitration — the two that led to the Fourth and Seventh Circuit decisions on each side of the circuit split and a third that is pending in the U.S. District Court for the District of Minnesota.[10]
Second, international commercial arbitrations are routinely resolved too quickly for a related Section 1782 application to be fully litigated. The London Court of International Arbitration, a popular institution for international commercial arbitration, has found that the median duration of arbitrations that it administered between 2013 and 2016 was only 16 months.[11] Statistics from other frequently used institutions are similar:
- The Singapore International Arbitration Centre has reported that the median duration of its cases is 11.7 months and the average duration is 13.8 months.[12]
- The Hong Kong International Arbitration Centre found that between 2013 and 2019, the median duration of cases was 12.9 months and the average duration was 15.8 months.[13]
- In 2019, the Stockholm Chamber of Commerce reported that half of all of its cases are completed within 12 months.[14]
- Also in 2019, the International Chamber of Commerce reported that the median duration of its cases was 22 months and the average duration was 26 months.[15]
Section 1782 applications routinely take longer than that to resolve if appellate review is sought.
In the Supreme Court's sole Section 1782 case thus far, the 2004 Intel Corp. v. Advanced Micro Devices Inc.,[16] the court issued its opinion more than 2 ½ years after the Section 1782 application was filed[17] — approximately twice the amount of time it takes arbitral institutions to conclude the average commercial arbitration.
In the post-Intel cases concerning Section 1782 discovery, the appellate decisions have all been issued between 18 and 24 months — or even longer — after the underlying arbitration was filed — leaving little time for Supreme Court review.[18]
Thus, while there may be outliers, it appears that it will be the rare international commercial arbitration that would outlast the full review of all federal court levels in the U.S.
Servotronics has been set for oral argument next term, meaning that it will not be heard by the Supreme Court until, at the earliest, October 2021 — more than three years from when Servotronics first filed its Section 1782 application.
Servotronics presents an important opportunity for the Supreme Court to resolve an issue that has divided the federal courts, resulted in starkly different decisions on the same set of facts, and increased the cost and burden on both litigants and courts of resolving these contested issues without clear guidance.
The Supreme Court should not pass up the opportunity to resolve this case — which involves the "exceptional situation" in which the "capable of repetition, yet evading review criteria are met"[19] — and finally resolve the question whether Section 1782 applies to international commercial arbitration.
The authors would like to thank partners Timothy Harkness and Elliot Friedman, counsel David Y. Livshiz and associate Andrew T. Bulovsky for their assistance.
[1] See Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689 (7th Cir. 2020).
[2] See id. at 690.
[3] Servotronics, Inc. v. Boeing Co., 954 F.3d 209, 210 (4th Cir. 2019).
[4] Abdul Latif Jameel Transportation Co. v. FedEx Corp. (In re Application to Obtain Discovery for Use in Foreign Proceedings), 939 F.3d 710, 714 (6th Cir. 2019).
[5] See Servotronics, 975 F.3d at 690.
[6] Br. in Opp. at 7, Servotronics, Inc. v. Rolls-Royce PLC, No. 20-794 (Feb. 10, 2021).
[7] Kingdomware Techs., Inc. v. United States, 136 S. Ct. 1969, 1976 (2016).
[8] Id.
[9] Honig v. Doe, 484 U.S. 305, 319 n.6 (1988).
[10] See In re Appl. of Servotronics, Inc. for an Order Pursuant to 28 U.S.C. §1782 to Take Discovery for Use in a Foreign Proceeding, Case No. 0:20-mc-0081-JRT-KMM (D. Minn. Dec. 1, 2020).
[11] See "Frequently Asked Questions" London Court of International Arbitration, available at https://www.lcia.org/Frequently_Asked_Questions.aspx#24. (last visited Apr. 1, 2021).
[12] See "Frequently Asked Questions (FAQs)" Singapore International Arbitration Centre, available at https://www.siac.org.sg/faqs#faq15 (last visited Apr. 1, 2021).
[13] See "HKIAC Average Costs and Duration", Hong Kong International Arbitration Centre, available at https://www.hkiac.org/content/costs-duration (last visited Apr. 1, 2021).
[14] See "SCC Releases Statistics for 2019", Stockholm Chamber of Commerce, available at https://sccinstitute.com/about-the-scc/news/2020/scc-releases-statistics-for-2019/ (last visited Apr. 1, 2021).
[15] See "ICC Dispute Resolution 2019 Statistics" International Chamber of Commerce, available for download at https://iccwbo.org/publication/icc-dispute-resolution-statistics/ (last visited Apr. 1, 2021), p. 17.
[16] 542 U.S. 241 (2004).
[17] The Section 1782 application was filed on October 1, 2001 and the Supreme Court's decision was issued on June 21, 2004.
[18] See, e.g., Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689 (7th Cir. 2020) (issued more than two years after the underlying arbitration was filed); In re Guo, 965 F.3d 96 (2d Cir. 2020) (issued 21 months after the underlying arbitration was filed); Servotronics, Inc. v. Boeing Co., 954 F.3d 209 (4th Cir. 2020) (issued 18 months after the underlying arbitration was filed); In re Appl. to Obtain Discovery for Use in Foreign Proceedings, 939 F.3d 710 (6th Cir. 2019) (issued 18 months after the underlying arbitrations were filed, and dismissing part of application for mootness); El Paso Corp. v. La Comision Ejecutiva Hidroelectrica del Rio Lempa, 341 F. App'x 31 (5th Cir. 2009) (issued more than two years after the underlying arbitration was filed); Comisión Ejecutiva Hidroeléctrica del Río Lempa v. Nejapa Power Co. LLC, 341 F. App'x 821 (3d Cir. 2009) (issued more than two years after the underlying arbitration was filed, and dismissing for mootness).
[19] Kingdomware, 136 S. Ct. at 1976 (internal quotation marks omitted).
