On August 23, 2016, the Eleventh Circuit Court of Appeals issued an opinion allowing a Russian citizen to compel – according to US laws – an Atlanta corporation to produce documents concerning a foreign sister company.
After dissolving their sixteen-year marriage in the Russian Federation the former spouses commenced a distinct proceeding in Moscow for division of marital assets (“Russian Dispute”). In the Russian Dispute, Ex-Wife claimed that Ex-Husband was concealing and dissipating marital assets through and with the assistance of “offshore companies” around the world, including in the U.S.
Ex-Wife sought evidence to support her claim and initiated a § 1782 action before the federal district court in Atlanta to obtain evidence to be used in the Russian Dispute.
The Magistrate Judge granted Ex-Wife’s ex parte application and authorized service of two subpoenas, one of which was issued to a company located in Atlanta (Atlanta Trident). This subpoena referenced several corporations (including some in Bahamas) and “Trust” entities located in Cyprus and Switzerland. The subpoena demanded production of documents possessed by these entities located outside the United States and instructed Atlanta Trident to furnish all responsive documents in its “possession, custody, or control, regardless of whether such documents or materials are possessed directly” or not. Atlanta Trident only produced the documents of its Atlanta office and then without success, opposed the subpoenas and moved to vacate the order arguing that § 1782 could not have an extra territorial reach. Atlanta Trident also appeal the district court decision.
The Eleventh Circuit affirmed the district court order, holding that “the location of responsive documents and electronically stored information in foreign countries – to the extent a physical location can be discerned in this digital age – does not establish a per se bar to discovery under § 1782”. Furthermore, since the US entity had control over the requested documents and could obtain them upon demand, it had to comply with the subpoena. Finally, the Eleventh Circuit affirmed the district court order imposing contempt sanctions regarding the lack of cooperation with the subpoena. According to the opinion, there was evidence of “discovery-avoidance efforts”.
Sergeeva v. Tripleton Int’l Ltd., 2016 WL 4435616 (11th Cir. August 23, 2016) is available at http://media.ca11.uscourts.gov…
Open pdf: Sergeeva
Originally published on www.cgcfirm.com on November 2016