United States District Court, S.D. New York
In re Application of ACCENT DELIGHT INTERNATIONAL LTD. and XITRANS FINANCE LTD. for an Under 28 U.S.C. § 1782 to Conduct Discovery for Use in Foreign Proceedings
MEMORANDUM OPINION AND ORDER
M. FURMAN, UNITED STATES DISTRICT JUDGE.
case, familiarity with which is a presumed, is a small piece
of a larger dispute between Petitioners Accent Delight
International Ltd. and Xitrans Finance Ltd. and their
principal, Dmitry Rybolovlev, on the one hand, and
Intervenors Yves Bouvier and MEI Invest Ltd., on the other.
In the larger dispute, Petitioners allege that Bouvier
defrauded them in connection with the purchase of a
world-class art collection, to the tune of approximately one
billion dollars. Perhaps not surprisingly, given the amount
of money at stake and the international flavor of the
personalities and transactions involved, the parties'
dispute has been, or is, the subject of litigation, civil and
criminal, in various fora around the world - including
Singapore, Switzerland, France, and Monaco. In earlier
proceedings, the Court granted Petitioners' application,
pursuant to Title 28, United States Code, Section 1782, for
discovery in aid of the proceedings pending in Monaco.
See In re Application of Accent Delight Int'l
Ltd., No. 16-MC-125 (JMF), 2016 WL 5818597 (S.D.N.Y.
Oct. 5, 2016). Over Intervenors' objection, the Court
authorized Petitioners to use the discovery materials in
connection with the proceedings in France and Singapore as
well, but provided in a Protective Order that Petitioners
could not use the materials “in other legal
proceedings” absent leave of Court. (Docket No. 84
(“Protective Order”), at ¶¶ 5.1-5.2).
On appeal, the Second Circuit affirmed, rejecting
Intervenors' argument that the Court had erred in
allowing Petitioners to use the materials beyond Monaco.
See In re Accent Delight Int'l Ltd., 869 F.3d
121, 133-36 (2d Cir. 2017).
now move for an order authorizing them to use the discovery
materials in connection with (1) a proceeding recently
initiated by Intervenors and Respondent Sotheby's, Inc.
(“Sotheby's”) in Switzerland and (2) a
proceeding that Petitioners are preparing to initiate against
Intervenors and Sotheby's in the United Kingdom.
(See Docket No. 108 (“Pet'rs'
Mem.”), at 4-5; Docket No. 121 (“Pet'rs'
Reply”), at 1). Relying on the Second Circuit's
opinion, they contend that they should be able to use the
discovery material they obtained in connection to the
proceedings in Monaco because they are not proceeding in bad
faith. (Pet'rs' Mem. 3). By contrast, Intervenors and
Sotheby's acknowledge that this Court has discretion to
allow Petitioners to use the discovery material in other
proceedings, but contend that the Court should apply the
requirements of Section 1782 anew in exercising that
discretion. (See Docket No. 117
(“Resp't's Opp'n”), at 4-6; see
also Docket No. 116 (“Intervenors'
Opp'n”), at 11-13). In the alternative, they assert
that Petitioners' prospective United Kingdom action,
coming on the heels of a spate of other actions in various
international fora, does evince bad faith. (Intervenors'
Opp'n 13-16; see also Resp't's Opp'n
have the better of the arguments. First, Intervenors' and
Sotheby's principal contention - that the Court should
engage in another full-blown Section 1782 analysis - cannot
be squared with the Circuit's decision on appeal. In
fact, the Court of Appeals explicitly rejected a nearly
identical argument to the one that Intervenors and
Sotheby's make here, that “a Section 1782 applicant
must satisfy the statutory requirements for each foreign
proceeding for which he or she wishes to use the requested
discovery.” 869 F.3d at 133. The Court reasoned that
the statute “entrusts to the district courts many
decisions about the manner in which discovery under the
statute is produced, handled, and used” and that there
was “no reason why the number or identity of the
foreign proceedings in which a successful applicant may use
discovery produced pursuant to the statute would fall outside
that discretionary grant.” Id. at 134. In
addition, the Court looked for guidance to the Federal Rules
of Civil Procedure, which “do not regulate what
litigants may do with discovery after it lawfully has been
obtained.” Id. at 135. Accordingly, the Court
concluded, “Section 1782 does not prevent an applicant
who lawfully has obtained discovery under the statute with
respect to one foreign proceeding from using the discovery
elsewhere unless the district court orders otherwise.”
course, the Court did enter a protective order in this case
and that protective order provides that Petitioners may not,
without leave of Court, use the materials they obtained
beyond the proceedings in Monaco, France, and Singapore.
(Protective Order ¶¶ 5.1-5.2). Normally, the burden
would be on a party seeking to modify the terms of a
protective order - here, Petitioners - to justify such
modification. See, e.g., In re Sept. 11
Litig., 262 F.R.D. 274, 277 (S.D.N.Y. 2009) (requiring
the party seeking to modify a protective order “to show
improvidence in the grant of a Rule 26(c) protective order or
some extraordinary circumstance or compelling need.”
(internal quotation marks omitted)). In this case, however,
the Court concludes that Petitioners should be allowed to use
the materials unless Intervenors and Sotheby's can
establish bad faith or some other abuse of process. That is
the case for two reasons. First, Intervenors and
Sotheby's do not argue that the burden should be placed
on Petitioners. As noted, they argue that Petitioners'
motion should be denied for failure to satisfy Section 1782;
in the alternative, they contend that Petitioners are
proceeding in bad faith. Thus, they have waived any argument
that the burden should be placed upon Petitioners. Second,
and in any event, the Court imposed the limitation in the
protective order - despite having previously rejected
Intervenors' argument “that the use and disclosure
of any subpoenaed documents should be limited to the foreign
proceeding for which [they have] been authorized, ”
Accent Delight Int'l Ltd., 2016 WL 5818597, at
*3 - based in large part on the lack of clarity with respect
to what limits, if any, Section 1782 places on an
applicant's right to use discovery obtained pursuant to
the statute in other proceedings. (See Docket No.
115 (“Levy Decl.”), Ex. D, at 3-4). Now that the
Circuit has clarified the law, the original justification for
that limitation is no longer extant. Thus, exercising its
discretion under the statute, the Court concludes that
Petitioners should be permitted to use the discovery they
obtained in connection with the proceedings in Switzerland
and the United Kingdom unless Intervenors and Sotheby's
can show bad faith or other “chicanery.” In
re Accent Delight Int'l Ltd., 869 F.3d at 135
(observing that “parties concerned in a particular case
that a Section 1782 applicant is attempting to use foreign
litigation as a ruse for obtaining discovery for use in other
foreign proceedings can and should bring evidence of such
chicanery to the Section 1782 court's attention”
and that, “[s]hould such evidence exist, it could
provide good cause for entry of a protective order
prohibiting use of the discovery in other proceedings
(internal quotation marks and brackets
Intervenors do attempt to make such a showing - arguing that
Plaintiffs have demonstrated bad faith in seeking to initiate
“frivolous [or] vexatious” legal action in the
United Kingdom (Intervenors' Opp'n 13-16) - they fall
short. The main evidence Intervenors provide for the
frivolous or vexatious nature of the litigation is the
history of Petitioners' legal adventures abroad.
(Id. at 14-15; see also Resp't's
Opp'n 10). It is true that this litigation has taken the
parties to various international fora, including France,
Monaco, Singapore, and Switzerland, but, as noted, that is
unsurprising given the international nature of the parties
and transactions involved. (See Pet'rs'
Reply 6). Moreover, the Court previously authorized use of
the discovery materials in three of those four fora and, when
it did so, Intervenors made no claim of bad faith. See
See In re Accent Delight Int'l Ltd., 869 F.3d at
135-36 (“Bouvier does not argue that Petitioners
initiated or sought discovery for use in the
Monégasque, Singaporean, or French proceedings in bad
faith. We are confident that Bouvier would have presented any
such evidence to the district court.”). Finally,
Intervenors do not argue that Petitioners are acting in bad
faith by seeking to bring suit against Sotheby's UK in
the United Kingdom (Intervenors' Opp'n 15), and
Petitioners provide good reasons for doing so (see
Pet'rs' Reply 2-3). Among other things, Petitioners
allege (and Intervenors and Sotheby's do not dispute)
that Petitioners learned new facts about Sotheby's
conduct in the underlying events from documents produced in
discovery under the prior Section 1782 authorization, that
those facts give rise to colorable claims against
Sotheby's UK, and that the United Kingdom is the forum
best suited to adjudicating those claims. (Pet'rs'
Mem. 1-2, 4). The Court therefore grants
Petitioners' request to use the discovery materials they
previously obtained under Section 1782 in their contemplated
legal proceedings in the United Kingdom. The Court likewise
grants Petitioners' request to use the materials in the
conciliation proceedings recently filed in Switzerland.
(See Pet'rs' Reply 7-8). As Intervenors and
Sotheby's are the ones who initiated those proceedings
(see Intervenors' Opp'n 10), they cannot
plausibly allege bad faith on that front.
leaves one final issue: Intervenors' and Sotheby's
requests to keep under seal Paragraphs 13 through 18 of the
Declaration of Michael Edwards (including the headings before
and within those paragraphs) as well as Exhibits E through Q
to that Declaration. (See Intervenors' Opp'n
20-21; Resp't's Opp'n 11; Docket No. 110).
Although there is a presumption in favor of public access to
judicial documents, the Court did not need to reference or
otherwise rely on the Edwards Declaration or Exhibits E
through Q in reaching its decision. At best, the weight of
any presumption is, therefore, limited. See Lugosch v.
Pyramid Co. of Onondaga, 435 F.3d 110, 119 (2d Cir.
2006) (“[T]he weight to be given the presumption of
access must be governed by the role of the material at issue
in the exercise of Article III judicial power and the
resultant value of such information to those monitoring the
federal courts.” (quoting United States v.
Amodeo, 71 F.3d 1044, 1049 (2d Cir. 1995))). The Court
therefore grants Intervenors' and Sotheby's request
to keep Paragraphs 13 through 18 and Exhibits E through Q
under seal. Intervenors and Sotheby's do not object to
the unsealing of the remainder of the Edwards Declaration or
to Petitioners' filing their Memorandum of Law and Reply
Memorandum in unredacted form. (See Intervenors'
Opp'n 20, 23 n.8; Resp't's Opp'n 11-19;
see also Docket No. 126, at 3; Docket No. 127, at
2-3). Accordingly, Petitioners shall promptly file on ECF (1)
unredacted versions of their Memorandum of Law and Reply
Memorandum, and (2) a version of the Edwards Declaration in
which all but Paragraphs 13 through 18 and Exhibits E through
Q are unredacted. Petitioners shall promptly file an
unredacted copy of the Edwards Declaration and all Exhibits
thereto with the Sealed Records Department.
Clerk of Court is directed to terminate Docket No. 106.
 That said, in view of the history of
this case, the Court leaves the protective order in place.
That is, should Petitioners wish to use the discovery they
obtained in some new proceeding in yet another forum, they
will need to apply to the Court for leave to do so, and
Intervenors and Respondents will be given an opportunity to
demonstrate bad faith.
 As evidence of Petitioners' bad
faith post-dating the Second Circuit's decision,
Intervenors point to the fact that Petitioners recently filed
suit in Switzerland in the Canton of Bern rather than Geneva,
alleging they did so in the hopes that Switzerland would
decline to exercise jurisdiction over the case (a fact that
might favor Petitioners in the Singaporean litigation).
(See Intervenors' Opp'n 8-9). But
Intervenors provide no actual evidence of such a motivation.
Nor do they show that the Swiss judicial system regularly
declines jurisdiction altogether over cases filed in the
wrong canton rather than transferring such cases to the
correct canton, as appears to have already occurred in this
case. (See id.; Levy Decl., Ex. H).
 Whether Bouvier himself would properly
be joined in the United Kingdom action is arguably less
clear. (See Intervenors' Opp'n 16). Having
found no bad faith in Petitioners' decision to bring suit
against Sotheby's UK in the United Kingdom, however, this
Court leaves it to the English ...