Evidence 'For Use' in Foreign Trial Defined Broadly

Legal finger-pointing for subprime mortgage securities fraud isn't exclusive to U.S. courts, but plaintiffs pursuing litigation in foreign courts sometimes need assistance from U.S. courts to find evidence about the extent of the fraud.

This week, the Second Circuit Court of Appeals clarified the scope of when district courts can subpoena witnesses within their jurisdictions to give testimony for a foreign proceeding.

Anselm Brandi-Dohrn is a shareholder of IKB Deutsche Industriebank AG (IKB), which is located in Germany. In 2008, Brandi-Dohrn sued IKB in Germany for securities fraud, alleging that IKB misled him into purchasing its shares by failing to disclose its significant exposure to collateralized debt obligations backed by U.S. subprime mortgages.

In 2011, while dismissal of his case was pending appeal in Germany, Brandi-Dohrn filed an ex parte application in a New York district court to serve subpoenas for documents and depositions of three non-parties for use in the German action. The district court granted the application, and Brandi-Dohrn served the subpoenas.

IKB, in response, challenged the subpoenas, leading to a debate over whether the German appellate court would even admit the new evidence. The district court subsequently granted IKB's motion to quash the subpoenas, noting that it was unlikely the evidence would be used in the German proceeding because Brandi-Dohrn failed to demonstrate that the German appellate court would admit the evidence. The court indicated that it suspected the subpoenaed evidence was actually for use in other securities fraud cases.

According to the Second Circuit Court of Appeals, none of that matters.

The applicable law, 28 U.S.C. §1782, states, "The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation."

The district court quashed the subpoenas in this case, reasoning that 28 U.S.C. §1782 didn't cover Brandi-Dohrn's request because the evidence wouldn't be "for use" in a foreign proceeding if it wasn't admitted. The Second Circuit reversed the lower court's order to quash, finding that 28 U.S.C. § 1782 does not require that evidence be admissible in order to be considered "for use" in the foreign proceeding.

The Second Circuit extended the Supreme Court's reasoning from Intel Corp. v. Advanced Micro Devices, Inc to Brandi-Dohrn's case. In Intel Corp, the Supreme Court ruled that §1782 does not bar a district court from ordering production of documents that would not be discoverable in a foreign court. The appellate court reasoned that admissibility was analogous to discoverability, and concluded that a district court should not consider the admissibility of evidence in a foreign proceeding when ruling on a 28 U.S.C. §1782 application.

Related Resources:

• Brandi-Dohrn v. IKB Deutsche Industriebank AG (FindLaw's CaseLaw)
• Circuit Blocks Double Recovery Setoff Under Foreign Judgment (FindLaw's Third Circuit Blog)
• First Circuit Says Grand Jury Can Subpoena Documents from Lawyer (FindLaw's First Circuit Blog)