17-658-cv In re Application of Hornbeam Corp.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ASUMMARY ORDER@). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 16th day of January, two thousand eighteen.
PRESENT: JOHN M. WALKER, JR., REENA RAGGI, RAYMOND J. LOHIER, JR., Circuit Judges.
IN RE APPLICATION OF HORNBEAM CORPORATION,
PANIKOS SYMEOU, Intervenor-Appellant,
v. No. 17-658-cv
HORNBEAM CORPORATION, Appellee.
APPEARING FOR APPELLANT: BRUCE MARKS, Marks & Sokolov LLC, Philadelphia, Pennsylvania (Steven Cooper, Samuel Kadosh, Reed Smith LLP, New York, New York, on the brief).
1 APPEARING FOR APPELLEE: DENNIS H. TRACEY, III (David R. Michaeli, on the brief), Hogan Lovells US LLP, New York, New York.
Appeal from a final order of the United States District Court for the Southern
District of New York (Vernon S. Broderick, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the orders entered on September 17, 2015, and February 17, 2017,
are AFFIRMED.
Intervenor Panikos Symeou appeals from denials of his motions (1) to vacate an ex
parte order authorizing Appellee Hornbeam Corporation (“Hornbeam”) to compel
document discovery from banks and other entities within the Southern District of New
York for use in an anticipated action in the British Virgin Islands (“BVI”) against
Halliwel Assets Inc. (“Halliwel”) and its related persons and entities, see 28 U.S.C.
§ 1782; and (2) for relief from that order, see Fed. R. Civ. P. 60(b). We assume the
parties’ familiarity with the underlying facts and record of prior proceedings, which we
reference only as necessary to explain our decision to affirm.
A district court is authorized to grant a § 1782 application if (1) “the person from
whom discovery is sought resides (or is found)” within the court’s district, (2) “the
discovery is for use in a foreign proceeding before a foreign tribunal,” and (3) “the
application is made by a[n] . . . interested person.” Brandi-Dohrn v. IKB Deutsche
Industriebank AG, 673 F.3d 76, 80 (2d Cir. 2012). If the statutory requirements are met,
the court is free to grant discovery, and we will review its decision only for abuse of
discretion. See id.
2 Symeou argues that the district court erred in concluding that the second
requirement was satisfied because no foreign proceeding was then pending or
contemplated. Precedent does not demand that the foreign proceeding be “pending” or
“imminent”; rather, a § 1782 applicant “must present to the district court some concrete
basis from which it can determine that the contemplated proceeding is more than just a
twinkle in counsel’s eye.” Certain Funds, Accounts and/or Inv. Vehicles v. KPMG,
L.L.P., 798 F.3d 113, 123–24 (2d Cir. 2015).
The district court concluded that a foreign proceeding was within reasonable
contemplation at the time of Hornbeam’s § 1782 application, and we agree. As the
district court observed in its December 24, 2014 authorization order, Hornbeam
previously brought two related actions in the BVI against Halliwel and represented that it
intended to initiate further litigation once it obtained additional information. This
provides a sufficiently “concrete basis” for a “contemplated [foreign] proceeding.” Id. at
124.
In urging otherwise, Symeou observes that Hornbeam was subject to an $846,526
judgment in the BVI as a result of the prior actions and that Hornbeam could not proceed
on any new claims in the BVI until it satisfied that judgment. Neither the outstanding
judgment, nor Hornbeam’s delay in satisfying it, however, brings a foreign proceeding
outside of reasonable contemplation, particularly where Hornbeam stated its intent to
return to the BVI, articulated a theory on which it intended to litigate, and had the
financial ability to pay the judgment. See In re Application of Bracha Found., 663 F.
App’x 755, 763–64 (11th Cir. 2016) (concluding foreign proceeding “within reasonable
3 contemplation” for purposes of Hornbeam’s § 1782 application in Northern District of
Alabama).1
Symeou further relies on the fact that Vadim Shulman—the individual for whom
Hornbeam holds in trust shares of Halliwel common stock—subsequently brought suit in
England to argue that Hornbeam did not, in fact, contemplate further proceedings in the
BVI. That fact is not properly considered on appeal, however, because we must “assess
the indicia of whether the contemplated proceedings were within reasonable
contemplation at the time the § 1782 application was filed.” Certain Funds, Accounts
and/or Inv. Vehicles v. KPMG, L.L.P., 798 F.3d at 124 (emphasis added) (considering
“the facts as they were presented to the district court” and declining to consider import of
later-filed action). Accordingly, we identify no error in the district court’s determination
that Hornbeam satisfied the § 1782 statutory requirements.
A district court’s discretion under § 1782 “must be exercised in light of the twin
aims of the statute: providing efficient means of assistance to participants in international
litigation in our federal courts and encouraging foreign countries by example to provide
similar means of assistance to our courts.” Mees v. Buiter, 793 F.3d 291, 297–98 (2d Cir.
2015) (internal quotation marks omitted). The Supreme Court has identified certain
factors as relevant to a § 1782 ruling, two of which are disputed here: (1) the “receptivity
of the foreign government or the court or agency abroad to U.S. federal-court judicial
1 The BVI Commercial Court imposed the judgment on December 10, 2014. Hornbeam filed its ex parte § 1782 application in the Southern District of New York on December 19, 2014. Due to “highly contested proceedings” in the BVI, Hornbeam did not pay the full amount of the judgment against it until November 14, 2016.
4 assistance,” and (2) whether the discovery request “conceals an attempt to circumvent
foreign proof-gathering restrictions or other policies of a foreign country.” Intel Corp. v.
Advanced Micro Devices, Inc., 542 U.S. 241, 264–65 (2004). Symeou argues that
Hornbeam’s obligation to satisfy the outstanding BVI judgment before commencing
another suit there provides “a clear statement that BVI courts would not receive any
evidence from the United States.” Intervenor Br. at 46. We are not persuaded because
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17-658-cv In re Application of Hornbeam Corp.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ASUMMARY ORDER@). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 16th day of January, two thousand eighteen.
PRESENT: JOHN M. WALKER, JR., REENA RAGGI, RAYMOND J. LOHIER, JR., Circuit Judges.
IN RE APPLICATION OF HORNBEAM CORPORATION,
PANIKOS SYMEOU, Intervenor-Appellant,
v. No. 17-658-cv
HORNBEAM CORPORATION, Appellee.
APPEARING FOR APPELLANT: BRUCE MARKS, Marks & Sokolov LLC, Philadelphia, Pennsylvania (Steven Cooper, Samuel Kadosh, Reed Smith LLP, New York, New York, on the brief).
1 APPEARING FOR APPELLEE: DENNIS H. TRACEY, III (David R. Michaeli, on the brief), Hogan Lovells US LLP, New York, New York.
Appeal from a final order of the United States District Court for the Southern
District of New York (Vernon S. Broderick, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the orders entered on September 17, 2015, and February 17, 2017,
are AFFIRMED.
Intervenor Panikos Symeou appeals from denials of his motions (1) to vacate an ex
parte order authorizing Appellee Hornbeam Corporation (“Hornbeam”) to compel
document discovery from banks and other entities within the Southern District of New
York for use in an anticipated action in the British Virgin Islands (“BVI”) against
Halliwel Assets Inc. (“Halliwel”) and its related persons and entities, see 28 U.S.C.
§ 1782; and (2) for relief from that order, see Fed. R. Civ. P. 60(b). We assume the
parties’ familiarity with the underlying facts and record of prior proceedings, which we
reference only as necessary to explain our decision to affirm.
A district court is authorized to grant a § 1782 application if (1) “the person from
whom discovery is sought resides (or is found)” within the court’s district, (2) “the
discovery is for use in a foreign proceeding before a foreign tribunal,” and (3) “the
application is made by a[n] . . . interested person.” Brandi-Dohrn v. IKB Deutsche
Industriebank AG, 673 F.3d 76, 80 (2d Cir. 2012). If the statutory requirements are met,
the court is free to grant discovery, and we will review its decision only for abuse of
discretion. See id.
2 Symeou argues that the district court erred in concluding that the second
requirement was satisfied because no foreign proceeding was then pending or
contemplated. Precedent does not demand that the foreign proceeding be “pending” or
“imminent”; rather, a § 1782 applicant “must present to the district court some concrete
basis from which it can determine that the contemplated proceeding is more than just a
twinkle in counsel’s eye.” Certain Funds, Accounts and/or Inv. Vehicles v. KPMG,
L.L.P., 798 F.3d 113, 123–24 (2d Cir. 2015).
The district court concluded that a foreign proceeding was within reasonable
contemplation at the time of Hornbeam’s § 1782 application, and we agree. As the
district court observed in its December 24, 2014 authorization order, Hornbeam
previously brought two related actions in the BVI against Halliwel and represented that it
intended to initiate further litigation once it obtained additional information. This
provides a sufficiently “concrete basis” for a “contemplated [foreign] proceeding.” Id. at
124.
In urging otherwise, Symeou observes that Hornbeam was subject to an $846,526
judgment in the BVI as a result of the prior actions and that Hornbeam could not proceed
on any new claims in the BVI until it satisfied that judgment. Neither the outstanding
judgment, nor Hornbeam’s delay in satisfying it, however, brings a foreign proceeding
outside of reasonable contemplation, particularly where Hornbeam stated its intent to
return to the BVI, articulated a theory on which it intended to litigate, and had the
financial ability to pay the judgment. See In re Application of Bracha Found., 663 F.
App’x 755, 763–64 (11th Cir. 2016) (concluding foreign proceeding “within reasonable
3 contemplation” for purposes of Hornbeam’s § 1782 application in Northern District of
Alabama).1
Symeou further relies on the fact that Vadim Shulman—the individual for whom
Hornbeam holds in trust shares of Halliwel common stock—subsequently brought suit in
England to argue that Hornbeam did not, in fact, contemplate further proceedings in the
BVI. That fact is not properly considered on appeal, however, because we must “assess
the indicia of whether the contemplated proceedings were within reasonable
contemplation at the time the § 1782 application was filed.” Certain Funds, Accounts
and/or Inv. Vehicles v. KPMG, L.L.P., 798 F.3d at 124 (emphasis added) (considering
“the facts as they were presented to the district court” and declining to consider import of
later-filed action). Accordingly, we identify no error in the district court’s determination
that Hornbeam satisfied the § 1782 statutory requirements.
A district court’s discretion under § 1782 “must be exercised in light of the twin
aims of the statute: providing efficient means of assistance to participants in international
litigation in our federal courts and encouraging foreign countries by example to provide
similar means of assistance to our courts.” Mees v. Buiter, 793 F.3d 291, 297–98 (2d Cir.
2015) (internal quotation marks omitted). The Supreme Court has identified certain
factors as relevant to a § 1782 ruling, two of which are disputed here: (1) the “receptivity
of the foreign government or the court or agency abroad to U.S. federal-court judicial
1 The BVI Commercial Court imposed the judgment on December 10, 2014. Hornbeam filed its ex parte § 1782 application in the Southern District of New York on December 19, 2014. Due to “highly contested proceedings” in the BVI, Hornbeam did not pay the full amount of the judgment against it until November 14, 2016.
4 assistance,” and (2) whether the discovery request “conceals an attempt to circumvent
foreign proof-gathering restrictions or other policies of a foreign country.” Intel Corp. v.
Advanced Micro Devices, Inc., 542 U.S. 241, 264–65 (2004). Symeou argues that
Hornbeam’s obligation to satisfy the outstanding BVI judgment before commencing
another suit there provides “a clear statement that BVI courts would not receive any
evidence from the United States.” Intervenor Br. at 46. We are not persuaded because
the BVI judgment only imposed a filing prerequisite and does not speak to the foreign
jurisdiction’s receptiveness to the specific discovery sought in Hornbeam’s § 1782
application. Accordingly, we conclude that the district court—once authorized—did not
abuse its discretion in granting discovery under § 1782.
Symeou contends that, even if § 1782 discovery was properly granted, the district
court nonetheless erred in denying his motions to vacate and to reconsider. These
challenges are meritless.
Although Symeou argues that the district court improperly granted Hornbeam’s
§ 1782 application ex parte, this court has decided appeals from motions to quash ex
parte § 1782 subpoenas without identifying any impropriety in the ex parte nature of the
§ 1782 application. See Brandi-Dohrn v. IKB Deutsche Industriebank AG, 673 F.3d at
78, 84; Nat’l Broad. Co. v. Bear Stearns & Co., 165 F.3d 184, 186–91 (2d Cir. 1999); see
also Gushlak v. Gushlak, 486 F. App’x 215, 217 (2d Cir. 2012) (“[I]t is neither
uncommon nor improper for district courts to grant applications made pursuant to § 1782
ex parte.”). In any event, Symeou has identified no prejudice stemming from the ex parte
nature of the proceedings. The district court permitted Symeou to intervene, considered
5 Symeou’s motion to vacate the § 1782 discovery order, and entered a protective order
governing the materials Hornbeam obtained as a result of that order.
As for the district court’s refusal to sanction Hornbeam by vacating the § 1782
authorization order and quashing any ensuing subpoenas, we review only for abuse of
discretion, and identify no such abuse here. See Southern New Eng. Tel. Co. v. Glob.
NAPs Inc., 624 F.3d 123, 143 (2d Cir. 2010) (sanctions); In re Fitch, Inc., 330 F.3d 104,
108 (2d Cir. 2003) (motion to quash); see also Arista Records, LLC v. Doe 3, 604 F.3d
110, 117 (2d Cir. 2010) (“A court abuses its discretion when its decision rests on an error
of law or on a clearly erroneous factual finding or [when] its decision—though not
necessarily the product of a legal error or a clearly erroneous factual finding—cannot be
located within the range of permissible decisions.” (internal citations and quotation marks
omitted)).
Symeou sought sanctions against Hornbeam on two grounds: (1) its failure to
disclose certain information in its ex parte § 1782 application, and (2) its failure to
provide prior notice of subpoenas issued under the § 1782 authorization order, in
violation of Fed. R. Civ. P. 45(a)(4). In rejecting the first argument, the district court
concluded that, even assuming an ethical violation occurred, the court would not vacate
its § 1782 order as a sanction because the newly presented facts did not alter its initial
discovery ruling. Such a decision was well within the district court’s discretion. As for
the notice failure, the district court found Hornbeam not to have complied with Rule
45(a)(4). See 28 U.S.C. § 1782(a) (stating that, unless authorization order provides
otherwise, subpoenaed documents shall be produced in accordance with Federal Rules of
6 Civil Procedure); Fed. R. Civ. P. 45(a)(4) (requiring that notice and copy of subpoena
commanding production of documents must be served on each party before it is served on
person to whom it is directed). Nevertheless, it declined to vacate or quash, finding that
Symeou did not establish prejudice from the lack of notice. Instead, the district court
directed Hornbeam to provide Symeou with copies of all previously issued subpoenas
and to allow Symeou to inspect all materials produced in response. Having reviewed the
record, we identify no abuse of discretion on the part of the district court.
Finally, Symeou argues that the district court improperly afforded Hornbeam
overbroad discovery and failed to direct Hornbeam to destroy unrelated records
containing confidential information. “A district court has broad latitude to determine the
scope of discovery and to manage the discovery process.” EM Ltd. v. Republic of
Argentina, 695 F.3d 201, 207 (2d Cir. 2012). The record shows that the district court
carefully considered Hornbeam’s discovery request and gave proper attention to its
scope, narrowing the range of documents initially sought in the § 1782 application and
later entering a protective order covering certain responsive materials. We conclude that
the district court’s discovery orders and these subsequent actions manifest no abuse of
discretion.
We have considered Symeou’s remaining arguments and conclude that they are
without merit. For the reasons stated, the district court’s orders are AFFIRMED.
FOR THE COURT: CATHERINE O’HAGAN WOLFE, Clerk of Court