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Anselm Brandi-Dohrn v. Ikb Deutsche Industriebank Ag

March 6, 2012

ANSELM BRANDI-DOHRN, PETITIONER-APPELLANT,
v.
IKB DEUTSCHE INDUSTRIEBANK AG, RESPONDENT-APPELLEE.



On appeal from an Order dated November 16, 2011 by the United States District Court for the Southern District of New York (Alvin K. Hellerstein, Judge) granting Respondent- Appellee's motion to quash subpoenas issued pursuant to 28 U.S.C. § 1782. Under section 1782, a district court is permitted to order a person within its jurisdiction to "give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign . . . tribunal." 28 U.S.C. § 1782. The District Court ruled that the requested discovery could not be "for use" in the foreign tribunal because it was unlikely to be admitted in the foreign jurisdiction.

The opinion of the court was delivered by: Straub, Circuit Judge:

11-4851-cv

Brandi-Dohrn v. IKB Deutsche Industriebank

(Argued: January 25, 2012

Before: KEARSE, CABRANES, STRAUB, Circuit Judges.

34 Petitioner-Appellant argues that the District Court misconstrued the relevant statutory language 35 and improperly attempted to predict the foreign court's outlook towards the admissibility of the 36 evidence. After oral argument on January 25, 2012, we issued an Order reversing the District 37 Court's November 16, 2011 Order. In view of the imminence of the foreign proceeding, we 38 directed that the mandate should issue forthwith and noted that this Opinion would follow. We 39 now hold that 28 U.S.C. § 1782 does not require that evidence be admissible in order to be 1 considered "for use" in the foreign proceeding. Accordingly, we REVERSE the District Court's 2 November 16, 2011 Order.

13 Petitioner-Appellant Anselm Brandi-Dohrn appeals from an Order dated November 16, 14 2011 by the United States District Court for the Southern District of New York (Alvin K. 15 Hellerstein, Judge) granting Respondent-Appellee IKB Deutsche Industriebank AG's motion to 16 quash subpoenas issued pursuant to 28 U.S.C. § 1782. Under section 1782, a district court is 17 permitted to order a person within its jurisdiction to "give his testimony or statement or to 18 produce a document or other thing for use in a proceeding in a foreign or international tribunal." 19 28 U.S.C. § 1782(a). Brandi-Dohrn sought assistance from the District Court to order discovery 20 from three non-parties for use in a securities fraud action he filed in Germany. On July 27, 2011, 21 the District Court (Paul A. Crotty, Judge) allowed the discovery and the relevant subpoenas were 22 issued. However, before any discovery was produced, Respondent-Appellee moved to vacate 23 the July 27, 2011 Order and quash the subpoenas. The District Court granted the motion and 24 ruled that the requested discovery could not be "for use" in the German tribunal because it was 25 unlikely to be admitted in the foreign jurisdiction. We REVERSE the District Court's 26 November 16, 2011 Order because we conclude that the "for use" requirement is not limited to 27 the actual receipt of materials into evidence in the foreign proceeding. Section 1782(a) contains 1 no requirement that particular evidence be admissible in a foreign proceeding to be considered 2 "for use in a proceeding in a foreign or international tribunal."

BACKGROUND

I. THE FOREIGN PROCEEDING

6 Brandi-Dohrn is a shareholder of Appellee IKB Deutsche Industriebank AG ("IKB"), a 7 bank located in Germany. In July 2008, Brandi-Dohrn filed an action in Germany against IKB to 8 seek recovery for securities fraud. He alleges that IKB misled him into purchasing its shares by 9 failing to disclose its significant exposure to collateralized debt obligations ("CDOs") backed by 10 United States based subprime mortgages. He also alleges that IKB issued a press release that 11 falsely downplayed the impact that the ratings agencies' downgrading of the CDOs would have 12 on the Bank's operations.

13 In August 2010, the German trial court (the "Landgericht") dismissed the case and, in 14 November 2010, Brandi-Dohrn appealed the action to the German intermediate appellate court 15 (the "Oberlandesgericht"). The German appellate court was expected to hear the appeal in 16 February 2012.

II. PROCEEDINGS BEFORE THE UNITED STATES DISTRICT COURT

19 Brandi-Dohrn filed an ex parte application in the United States District Court for the 20 Southern District of New York to serve subpoenas for documents and depositions of three non- 21 parties--IKB Capital Corporation, Lord Securities Corporation, and William O'Brien--for use 22 in the German action. The discovery relates to the issue of whether IKB was aware that its 23 substantial exposure to subprime mortgage-backed CDOs created material risks that should have 24 been disclosed to its investors. Brandi-Dohrn intends to use any relevant material he is able to 3 1 obtain through this proceeding to convince the Oberlandesgericht to overturn the Landgericht.

2 Brandi-Dohrn's American counsel avers that the discovery will be used in Brandi-Dohrn's 3 pending action, but also acknowledges that Brandi-Dohrn's German counsel plans to use this 4 discovery on behalf of other clients who have similar claims pending against IKB in Germany. 5 The District Court granted the application on July 27, 2011. Brandi-Dohrn issued the 6 subpoenas shortly thereafter, but before any discovery was produced, IKB filed a motion to 7 vacate the July 27, 2011 Order or, in the alternative, to quash the subpoenas. In support of their 8 respective briefs, the parties submitted legal opinions of foreign counsel discussing whether the 9 German appellate court would admit the new evidence. 10 On November 16, 2011, the District Court granted IKB's motion to quash the subpoenas.

11 The District Court found troubling that Brandi-Dohrn sought this evidence in November 2011-- 12 more than a year after the German trial court dismissed the case in August 2010. 13 THE COURT: I might have felt differently if you brought this before me during 14 the trial or shortly after the trial but the trial ended August 10, 2010. The appeal 15 began November 5, 2010. It's now a year later after the appeal and there hardly 16 would be time to brief it before the argument of February 23, 2012

18 (Conference Transcript, November 9, 2011 ("Nov. 9, 2011 Conf. Tr."), at 15.)

Although the District Court did not suspect bad faith, it did suspect that the evidence 21 sought was actually for use in German counsel's other securities fraud cases. 22 [I]t's a matter of discretion . . . and I see so little purpose that you've pointed out 23 to me that I get the feeling this is a fishing expedition more suitable for 24 harassment and possible use in the many other cases that are pending or sought to 25 be brought against [IKB].

(Id. at 12.)

28 Furthermore, the District Court found that the evidence would likely not be used in the 1 foreign proceeding because Brandi-Dohrn failed to demonstrate that the Oberlandesgericht 2 would admit the evidence:

3 THE COURT: I am measuring whether you can have use in the particular 4 proceeding on appeal in the German Appellate Court.

MS. DAVIES [Counsel for Brandi-Dohrn]: And under the German Code of Civil 7 Procedure we can use it. We can ...


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