Reed Smith Client Alerts

A recent decision from the U.S. District Court for the Southern District of New York in In re Application of Gorsoan Limited for an Order Pursuant to 28 U.S.C. section 1782 to Conduct Discovery for Use in a Foreign Proceeding, No. 18-MC-431 (RA), (S.D.N.Y. Jan. 24, 2020) held that Section 1782 does not categorically bar asset discovery. The decision represents a departure from a line of cases that had interpreted the Second Circuit’s decision in Euromepa, S.A. v. R. Esmerian, Inc., 154 F.3d 24 (2d. Cir. 1998) as standing for the proposition that asset discovery does not satisfy Section 1782’s “for use” requirement because neither pre judgment attachment nor post-judgment enforcement proceedings are adjudicative in nature.

Auteurs: Steven Cooper Ed Mullins James P. Duffy IV

Background

In In re Gorsoan, petitioner Gorsoan Limited (Gorsoan) had filed a civil suit in Cyprus in 2012 against thirty defendants, including Janna Bullock (Bullock), alleging that they engaged in fraud between 2005 and 2008 that resulted in approximately $25 million in damages. As part of that litigation, Gorsoan obtained an order from the Cyprus court in August 2012 freezing assets exceeding the value of € 10,000 anywhere in the world belonging to certain defendants, including Bullock, and requiring those defendants to disclose those assets.

In November 2013, Gorsoan filed an ex parte application in the Southern District of New York for an order pursuant to Section 1782 to obtain discovery from Bullock for use in Cyprus. After extensive litigation, the application was granted and that decision was affirmed by the Second Circuit. However, Bullock did not produce much, if any, discovery.

In September 2018, Gorsoan filed a second ex parte application for an order pursuant to Section 1782 to obtain discovery from Bullock’s mother, her two daughters, and one of her associates (Respondents). After an order was issued granting the application and the subpoenas were served, Gorsoan moved to compel compliance while Respondents and intervenor Bullock moved to vacate the order and quash the subpoenas.