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Australia and New Zealand Banking Group Limited v. APR Energy Holding Limited

United States District Court, S.D. New York

September 1, 2017

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED, Plaintiff,
v.
APR ENERGY HOLDING LIMITED, Defendant.

          MEMORANDUM OPINION & ORDER

          VALERIE CAPRONI, UNITED STATES DISTRICT JUDGE.

         Australia and New Zealand Banking Group Limited (“ANZ Bank” or “Bank”) has commenced this action in order to quash a subpoena served on it pursuant to 28 U.S.C. § 1782 by APR Energy Holding Limited (“APR”). APR seeks documents from ANZ Bank as a nonparty for use in a foreign arbitration proceeding against the country of Australia. Because the Court lacks personal jurisdiction over ANZ Bank, the Bank's motion to quash is granted.

         BACKGROUND

         ANZ Bank is incorporated and headquartered in Australia. Kucharski Decl. ¶ 99(a) (Dkt. 4). It has a significant global presence, but the majority of its operations are based in the Oceania and Asia-Pacific regions; a small fraction of ANZ Bank's activities take place in New York. Maddigan Decl. ¶¶ 3-7 (Dkt. 3). For example, ANZ Bank has 1, 127 branches and representative offices; five are in the United States, including one in New York and four in Guam and American Samoa. Id. ¶ 3. Only 140 out of ANZ Bank's 46, 554 full-time employees are based in the New York office. Id. ¶ 6. In addition, only 2% of the Bank's $697 billion in assets, 2% of its operating income, and 2% of its profits are attributable to the New York office. Id. ¶ 7.

         This dispute is preceded by extensive multi-national litigation, which the Court will address briefly. In July 2013, ANZ Bank recorded a general security interest over all present and after-acquired property of Forge Group Power Pty. Ltd. (“Forge”), an Australian company, as security for a loan to Forge. Patrikoff Decl. ¶ 13 (Dkt. 12-2); Memorandum of Law in Support of Application for Judicial Assistance at 3 (Dkt. 12-1). In October 2013, APR, a supplier of “turnkey power generation solutions, ” through its subsidiaries, was assigned ownership of four mobile gas turbines that were being leased by Forge, plus the lease itself. Kucharski Decl. ¶ 8.

         On February 11, 2014, Forge initiated a bankruptcy proceeding. Id. ¶ 9. Pursuant to the Australian Personal Property Securities Act (“PPSA”), if a holder of a non-possessory interest in personal property fails to register its interest prior to the time the party in possession of the property becomes insolvent, title to the property vests with the estate of the party in possession, and the non-possessory interest holder becomes an unsecured creditor. See Id. ¶¶ 42-47. Because APR did not register the required financing statement relating to the four turbines, APR became an unsecured creditor, and title to the turbines vested with the estate of the entity in possession-Forge. Id. ¶ 10. Forge's receivers, who were appointed by ANZ Bank (Forge's primary secured creditor), refused APR's demand for the turbines, despite APR's claim that it was entitled to them under the terms of the lease. Patricoff Decl. ¶¶ 15-18.

         APR and others initially brought suit in federal court in Florida to claim title to the turbines. See Power Rental OP Co Austl. LLC v. Forge Grp. Power Pty. LTD, No. 3:14-CV-00445 (M.D. Fla filed Apr. 17, 2014). Subsequently, APR agreed to litigate its dispute with Forge in an Australian court. Kucharski Decl. ¶¶ 13, 15. The parties litigated the case to Australia's highest court, and Forge prevailed. Id. ¶¶ 16-18. After the Australian litigation had run its course, in July 2016, APR sued Forge in Texas state court. See APR Energy Holdings Ltd. V. Forge Grp. Power Ltd., No. 201646548 (Tex. Dist. Ct. Harris Cty. filed July 12, 2016). The Texas court dismissed the case for lack of personal jurisdiction; APR's appeal is pending. Kucharski Decl. ¶¶ 20-22.

         On April 14, 2017, APR initiated arbitration against Australia pursuant to Article 3 of the UNCITRAL Arbitration rules and the Australia-United States Free Trade Agreement (“AUSFTA”). Rooney Decl. ¶¶ 14-15 (Dkt. 11-2). APR claims that the divestment of its ownership interest in the turbines, through the application of the PPSA, is an expropriation of private property that violates the AUSFTA. See APR Energy Holdings Limited's Memorandum of Law in Opposition (“Def. Opp.”) 4, 7 (Dkt. 11). On May 15, 2017, Australia responded to APR's notice of arbitration, arguing that the tribunal lacks jurisdiction and that APR's claims are without merit. Rooney Decl. ¶ 16. APR and Australia are in the process of appointing three arbitrators. Id. ¶ 21.

         On April 28, 2017, in a separate proceeding in this court, Judge Oetken granted APR's ex parte application to subpoena ANZ Bank's New York branch office pursuant to 28 U.S.C. § 1782. Order, No. 1:17-MC-00143-P1 (S.D.N.Y. filed Apr. 28, 2017), ECF No. 4. Pursuant to its subpoena, APR seeks documents from ANZ Bank regarding ANZ Bank's financial transactions with Forge, Forge's financial condition and insolvency during the relevant period, the recording of ANZ Bank's lien, and the actions taken by Forge's receivers. See Lurie Decl. Ex. A; Patricoff Decl. ¶¶ 26-32. APR claims that it needs the documents to show that the PPSA enabled ANZ Bank, acting through Forge's receivers, to take APR's investment in Australia in a way that violated the AUSFTA. See Def. Opp. 9. All responsive documents are located in Australia. Kucharski Decl. ¶ 99(c); Oral Argument Tr. 14:7-17. On June 22, 2017, ANZ Bank moved to quash the subpoena. Dkt. 1.

         DISCUSSION

         Pursuant to 28 U.S.C. § 1782, “[t]he district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal . . . .” 28 U.S.C. § 1782. An applicant must satisfy three requirements in order for a court to enforce a section 1782 subpoena: (1) the person from whom discovery is sought must “reside” or “be found” in the district; (2) the discovery must be for use in a proceeding in a foreign tribunal; and (3) the applicant must be an “interested person.”[1] In re Edelman, 295 F.3d 171, 175-76 (2d Cir. 2002). If the three requirements are met, the court has discretion whether to enforce the subpoena, Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 260 (2004), and there are a series of factors the court must consider when exercising its discretion, see In re Godfrey, 526 F.Supp.2d 417, 419 (S.D.N.Y. 2007).

         The parties dispute whether these criteria are satisfied. In particular, the parties dispute whether ANZ Bank resides or is found in New York on account of its New York branch office. ANZ Bank argues that section 1782's requirement that the person be found or reside in the district refers to personal jurisdiction. See Memorandum of Law in Support of Australia And New Zealand Banking Group Limited's Motion to Quash (“Pl. Mem.”) 9-10 (Dkt. 2). ANZ Bank points to Daimler AG v. Bauman, 134 S.Ct. 746 (2014), in which the Supreme Court held that in order for there to be general personal jurisdiction in a state, a company's contact with that state must be so constant and pervasive when judged against its national and global activities that it is essentially at home in that state. Id. (citing 134 S.Ct. at 761-62). ANZ Bank argues that its contacts with New York do not rise to that level and that therefore there is no personal jurisdiction over it. See id. at 10. APR, on the other hand, contends that section 1782's requirement that the person be found or reside in the district does not refer to personal jurisdiction and that ANZ Bank is found in New York as that term is used in section 1782 because it has continuous and systematic contacts through its New York office. See Def. Opp. 9, 12-13; Oral Argument Tr. 2:21-3:11, 6:18-21, 14:23-15:7.

         Whether section 1782's requirement that the person be found or reside in the district equates to a requirement that the court have personal jurisdiction over the person in order to enforce a section 1782 subpoena is unclear. The District Court for the District of Columbia explicitly highlighted this ambiguity:

Courts considering whether to grant a petition for assistance pursuant to 28 U.S.C. § 1782 have analyzed their authority by referencing the language in section 1782-whether it is a district “in which a person resides or is found”-rather than discussing whether the Court has subject matter and personal jurisdiction over the entity or person from whom discovery is sought. To some extent, courts ...

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