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In re Application of Hornbeam Corp.

United States District Court, S.D. New York

May 22, 2017


          Dennis H. Tracey, III, David R. Michaeli, Hogan Lovells U.S. LLP, James H. Power, Sean P. Barry, Holland & Knight LLP Counsel for Applicant Hornbeam Corp.

          Steven Cooper Reed Smith LLP, Bruce S. Marks, Thomas C. Sullivan, Marks & Sokolov, LLC Counsel for Intervenor Panikos Symeou.


          VERNON S. BRODERICK, United States District Judge

         Before me is the motion of Intervenor Panikos Symeou to stay the use or dissemination of bank records produced as a result of authorized discovery under 28 U.S.C. § 1782 pending appeal. (Doc. 88.) For the reasons that follow, Symeou's motion to stay is denied.

         I. Applicable Law[1]

         When deciding whether to issue a stay pending appeal, courts consider four factors: “(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.” In re Application of Chevron Corp., 709 F.Supp.2d 283, 300 (S.D.N.Y. 2010) (quoting In re World Trade Ctr. Disaster Site Litig., 503 F.3d 167, 169 (2d Cir. 2007)). “The necessary level or degree of possibility of success will vary according to the court's assessment of the other stay factors.” Id. (alterations omitted) (quoting Mohammed v. Reno, 309 F.3d 95, 101 (2d Cir. 2002)); see also Strougo v. Barclays PLC, 194 F.Supp.3d 230, 233 (S.D.N.Y. 2016) (“Courts have treated these factors ‘like a sliding scale' such that ‘more of one excuses less of the other.'” (citation omitted)). Still, “the movant cannot prevail by showing a mere possibility of success or harm.” Sutherland v. Ernst & Young LLP, 856 F.Supp.2d 638, 641 (S.D.N.Y. 2012) (citing Nken v. Holder, 556 U.S. 418, 434 (2009)).[2]

         H. Discussion

         A. Likelihood of Success

         Symeou's arguments in his motion do not support a determination that he has a strong or even substantial case on the merits that my prior interpretation and application of § 1782's statutory requirements was incorrect. (See Symeou Mem. 9-16.)[3] Symeou claims that proceedings in the BVI were not within reasonable contemplation and that, even if they were within reasonable contemplation when I originally granted Hornbeam's application for discovery under § 1782 on December 24, 2014, they were not within reasonable contemplation in January 2017 when I granted Hornbeam's request for an extension of time to use the materials gathered. (Id. at 14-16.) To begin with, courts in this Circuit “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 113, 124 (2d Cir. 2015). At the time of Hornbeam's § 1782 application, it had “initiated two legal proceedings in the BVI related to the underlying dispute over Warren Steel, and [intended] to initiate further proceedings once it obtain[ed] additional information.” (Doc. 5 at 6.) In any event, even if I were to re-assess at this juncture, Hornbeam has clearly identified the reasons it has not brought foreign proceedings, (see Doc. 77), and Hornbeam has represented that it expects to initiate foreign claims by May 29, 2017, (see Docs. 99, 108). Moreover, although Symeou originally moved to vacate the Authorizing Order in part on the basis that Hornbeam had to satisfy a large judgment before reinitiating BVI proceedings and argued as a result that those BVI proceedings could not be reasonably contemplated, (see Doc. 35 at 14-15), and also later moved for reconsideration, contending that Hornbeam and Shulman had no intention of paying that BVI judgment, Hornbeam paid the judgment on October 26, 2016, (see Doc. 83 at 13).

         Symeou further contends that § 1782 does not permit the “broad pre-filing document discovery permitted here.” (Symeou Mem. 16.) As outlined in my prior decisions, after requiring Hornbeam to narrow its requests to exclude unnecessary and irrelevant material, I concluded that the discovery requests were not unduly broad. (See Doc. 5 at 8-9; Doc. 35 at 16; Doc. 83 at 9.) My view on this issue has not been altered by the largely repetitive arguments made by Symeou in his current motion. Moreover, to the extent Syemou's arguments could be construed as an objection to Hornbeam obtaining discovery prior to filing a foreign proceeding, the Supreme Court has clearly stated that foreign proceedings do not have to be “pending” or “imminent” to fall within § 1782. Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 259 (2004).

         Additionally, with respect to its argument that the Authorizing Order should have been vacated and discovery suppressed, Symeou argues that Hornbeam (1) improperly proceeded with its § 1782 application ex parte, (Symeou Mem. 9-11); (2) did not disclose all of the potentially relevant facts in connection with its ex parte § 1782 application, thereby violating its duty of disclosure, (id. at 11-12); and (3) violated Federal Rule of Civil Procedure 45 by failing to provide notice to its adversaries before issuing third-party subpoenas, (id. at 12-14). Because these arguments reiterate Symeou's arguments in his motion to vacate and for reconsideration, I rely on the rationale for rejecting these arguments in my prior decisions, (see Doc. 35 at 6-12; Doc. 83 at 14), and I do not restate them here, but rather hold simply that Symeou's reiteration of the arguments does not satisfy the required showing of a likelihood of success on appeal.

         B. Equitable Factors

         Although I acknowledge that denial of a stay risks the use of the confidential materials in the contemplated foreign proceedings and therefore raises the specter that Symeou might be harmed, a protective order is currently in place that limits Hornbeam's use of the evidence and requires that Hornbeam seek permission from this Court before using such materials (the “Protective Order”). (See Doc. 106.) Indeed, the Protective Order was recently amended to provide Symeou with additional assurances limiting the use of the materials. In addition, the Protective Order requires that Hornbeam destroy documents by a certain date if foreign proceedings are not filed.

         Finally, I find that the public interest weighs in favor of denying the stay, as the discovery granted under § 1782 in this case as well as the anticipated use of the materials gathered as a result of that discovery serve the “public interests in justice, fair play, and full disclosure, ” In re Application of Chevron Corp., 709 F.Supp.2d at 310, as well as “the truth in ...

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