Litigants try to use 28 U.S.C. § 1782 applications to get tactical advantages in transnational litigation all the time. After all, the statute allows parties to foreign proceedings to get U.S.-style discovery by petitioning courts in the United States. A recent decision by the Ninth Circuit might well open the Section 1782 floodgates even wider. According to this new decision, Section 1782 can be used expansively in foreign proceedings not identified in the Section 1782 petition. Anyone facing Section 1782 discovery in the Ninth Circuit should be aware of this recent development and the steps they can take to limit further disclosure of their confidential information.
In Novalpina Capital Partners I GP S.A.R.L. v. Read, the Ninth Circuit ruled that neither the text of Section 1782, nor the Federal Rules of Civil Procedure, “restrict discovery obtained from a defendant in one case from being used in a wholly separate lawsuit.” The Ninth Circuit, therefore, joined the Second and Eleventh Circuits and held that documents produced pursuant to Section 1782 may be used in other proceedings, absent a court order to the contrary.
The Ninth Circuit’s Expansive Ruling
Under Section 1782, U.S. courts may grant discovery for use in foreign litigation. Parties seeking such discovery typically identify in their petition the foreign proceeding(s) in which the discovery will be used. Novalpina addresses whether documents produced “for use” in specific foreign proceedings under Section 1782 may be used in other litigation not identified in the original petition. The panel in Novalpina, aligning with the Second and Eleventh Circuits, held that Section 1782 does not restrict the use of lawfully obtained discovery to only the proceedings named in the petition. The panel reasoned that the text of Section 1782 is silent on post-production use of discovery and that the statute’s legislative history provides no guidance, supporting broad judicial discretion. Analogizing to domestic discovery under the Federal Rules of Civil Procedure, the panel also noted that protective orders—not statutory limitations—are the appropriate mechanism for controlling how discovery is used. District courts, thus, retain discretion to impose limits on the use of Section 1782 discovery through protective orders “if warranted.”
Importantly, the panel observed that the district court in Novalpina did enter a protective order, which expressly allowed for the discovery to be used beyond the cases identified in the petition. The protective order was negotiated by the parties and “stated that protected material could be used or disclosed in ‘litigation relating to the events described in the [Section 1782 petition].’ The original language of the draft order read ‘litigation relating to this Petition,’ but Novalpina changed the language to … a change” to which the appellants consented. The panel found this consent to be critical, observing that if the appellants “really relied on Novalpina’s representations that the documents would not be used in other litigation, they ‘would not have stipulated to a protective order that plainly allows for the use of materials beyond’ those two proceedings.” Accordingly, there was no reason to presume that the discovery materials should only be used in the cases identified in the petition.
Implications: Broad Use of Section 1782 Discovery
The Ninth Circuit’s holding has significant implications for parties engaged in multi-jurisdictional disputes. Allowing for discovery obtained through Section 1782 to be used in other proceedings may significantly expand the utility of Section 1782 petitions. Subjects of Section 1782 discovery should be aware of the potential implications of producing documents without a carefully negotiated protective order that clearly defines permissible uses of Section 1782 discovery.
Courts in the Ninth Circuit also may see an uptick in Section 1782 petitions by litigious plaintiffs in foreign proceedings as a result of the decision. The subjects of such petitions should consult counsel before responding to ensure adequate protections are obtained in advance of any document production. In short, for parties navigating complex cross-border litigation, the Ninth Circuit’s ruling demands a thoughtful and cautious response.
