Discovery
Letter of Request
Evidence
Attorney: Privilege
Crime/Fraud Exception
Convention on the Taking of Evidence Abroad in Civil or Commercial Matters
Comity
Plaintiff Lilly Lea Perry has moved for the issuance of a letter of request to obtain the assistance of the central authority in Switzerland to facilitate discovery. Lilly seeks international assistance to obtain electronic data that Swiss investigators seized from the law office of X., a defendant in this case, while investigating whether X. falsified evidence in a civil proceeding in Switzerland. A Swiss court determined that the investigators had reasonable cause to obtain the materials and that the investigators acted properly by only seizing evidence that was directly relevant to their investigation. The resulting evidence consists primarily of emails sent or received by X. and one of his assistants covering the period from May 1, 2015, through March 1, 2017 (the “Discovery Materials”). To obtain a letter of request, the movant must show initially that production would be ordered if the materials sought were subject to the court’s jurisdiction. In one of her proposals, Lilly seeks all of the Discovery Materials. In an alternative proposal, Lilly only seeks the Discovery Materials to the extent that they touch on particular issues relevant to this proceeding. The court adopts the latter proposal which makes the materials sought plainly relevant. If the Discovery Materials were subject to this court’s jurisdiction, the court would order them produced.
Whenever discovery involves a lawyer, there will be concerns about privilege. Here, those concerns are likely to be limited, because the investigators conducted a focused investigation and have stated that the Discovery Materials primarily implicate X. and his assistant, rather than clients. Additionally, privilege issues are unlikely to be of concern because of the crime/fraud exception. This court has previously ruled that the actions X. took that form the basis for this case bear sufficient hallmarks of fraud to invoke the crime/fraud exception. The Discovery Materials were also seized as part of an investigation into a crime.
A party seeking a letter of request also must convince the issuing court to ask a foreign court for assistance, taking into account the burden that such a request necessarily imposes on the judicial system of another nation. Lilly has met her burden on that issue by showing that the letter of request is targeted and appropriate. The Discovery Materials have already been collected and are easily identifiable. Under Swiss law, a private plaintiff can obtain the Discovery Materials, and Lilly has shown that investigators have provided similar information to a private plaintiff in the past.
Although not required to secure the issuance of a letter of request, Lilly has shown that it will be difficult, if not impossible, to obtain the information through other means. To be sure, X. is a party to this case and ostensibly subject to compulsory process. But since April 2017, X. has failed to participate meaningfully in this proceeding. He is a foreign national who previously refused to be deposed, despite his status as a defendant. Because of his non-participation in an earlier phase of this case, the court drew an inference that any evidence that X. could have provided would be favorable to Lilly. Another powerful indicator of X.’s non-participation is his failure to respond to Lilly’s motion. Only the BGO Foundation has raised objections to the letter of request. Lilly has made a convincing showing that X. would not produce the Discovery Materials if he had them, and the record suggests that he may no longer have them. The investigators reported that they seized the Discovery Materials, not that they made copies of them. It is reasonable to infer that the only source is the investigators’ files. Lilly’s motion is granted. The letter of request will issue.
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The court held a two-day evidentiary hearing to determine whether personal jurisdiction existed over the Foundation. The court then issued an opinion which concluded that the court could exercise personal jurisdiction over the Foundation because the Foundation had conspired with X. to commit torts that had a sufficient nexus to Delaware. Perry v. Neupert (Jurisdictional Decision), 2019 WL 719000, at *37 (Del. Ch. Feb. 15, 2019).
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Based on these and other events, Lilly is pursuing claims for fraud, conversion, and tortious interference with contract against X. and the Foundation. She seeks a decree invalidating (i) the issuance of shares to the Foundation and (ii) the conversion of the LLC into the Corporation.
The court’s factual findings only addressed the issue of personal jurisdiction, not the merits. After still more motion practice, the parties began merits discovery. As part of that process, both sides have asked the court to issue letters of request to obtain discovery from various foreign jurisdictions. In total, the parties have sought twenty-one letters of request. Lilly has sought three. The Foundation has sought eighteen.
On August 1, 2022, Lilly moved for a letter of request to the central authority of Switzerland to obtain the Discovery Materials, which are in the possession of the Prosecutor’s Office of the Canton of Zurich (the “Zurich Prosecutor’s Office”). Dkt. 375.
Lilly seeks to obtain the Discovery Materials using the procedures authorized under the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, which opened for signature on March 18, 1970. 23 U.S.T. 2555, T.I.A.S. No. 7444 (Codified as 28 U.S.C. § 1781. “This Convention—sometimes referred to as the ‘Hague Convention’ or the ‘Evidence Convention’—prescribes certain procedures by which a judicial authority in one contracting state may request evidence located in another contracting state.” Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Ct. for the S. Dist. of Iowa, 482 U.S. 522, 524 (1987).
See, e.g., Cosmo Techs. Ltd. v. Actavis Lab’ys FL, Inc., 2016 WL 4582498, at *2 (D. Del. Aug. 31, 2016) (issuing letter of request where witness was located in Italy and possessed evidence that was relevant and unlikely to be duplicative); Eli Lilly & Co. v. Teva Parenteral Meds., Inc., 2013 WL 12291616, at *3 (S.D. Ind. Apr. 26, 2013) (“It is undisputed that Dr. Calvert is a citizen of the United Kingdom. Defendants represent that Dr. Calvert refused to make himself available for deposition or to produce any documents. In these circumstances, Defendants’ resort to the Hague Convention appears entirely appropriate.”); Metso Mins. Inc. v. Powerscreen Int'l Distrib. Ltd., 2007 WL 1875560, at *3 (E.D.N.Y. June 25, 2007) (finding that use of Hague Convention procedures was warranted where witness had relevant evidence and “the procedures of the Hague Evidence Convention may be the only means by which the requested discovery may be obtained given the fact that Mr. Rafferty is a citizen of Northern Ireland, who is not a party to this action and is similarly not subject to the jurisdiction of this court”); Tulip Computers, 254 F.Supp.2d at 474 (“Resort to the Hague Evidence Convention in this instance is appropriate since both Mr. Duynisveld and Mr. Dietz are not parties to the lawsuit, have not voluntarily subjected themselves to discovery, are citizens of the Netherlands, and are not otherwise subject to the jurisdiction of the Court.”); Orlich v. Helm Bros., Inc., 160 A.D.2d 135, 143 (N.Y.A.D.1990) (“When discovery is sought from a non-party in a foreign jurisdiction, application of the Hague Convention, which encompasses principles of international comity, is virtually compulsory.”). (Fn. 5).
(…) As an alternative, Lilly asks for production of electronic records on all computers and other electronic devices belonging to X. or Y., which are currently in the possession of the Zurich Prosecutor’s Office, and which pertain to: a. Côte D’Azur; b. Filings with the Delaware Secretary of State; c. The Deed of Assignment . . .; d. Proceedings before the English Serious Organized Crime Agency (“SOCA”) involving the Deed of Assignment. Id. at 17 (the “Narrow Proposal”).
(…) The Narrow Proposal ties the production to the topics at issue in this proceeding. It identifies four categories of information that relate to materials at the heart of this case. Under the Narrow Proposal, the production is limited to relevant material.
(…) Discovery also must be “proportional to the needs of the case.” Ct. Ch. R. 26(b)(1). Neither of Lilly’s proposals raise any issues involving proportionality. The Discovery Materials already present a finite and easily accessible scope of production.
(…) Discovery extends to “any non-privileged matter.” Ct. Ch. R. 26(b)(1). X. has not responded to Lilly’s motion and has not taken any position on privilege. The Foundation objects that the letter of request will result in the production of privileged material simply because X. is a lawyer. Dkt. 393 ¶ 20. As a threshold matter, privileged communications involving X.’s clients are not likely to be a problem because of the focused nature of the investigation. As a Swiss court has found, the Zurich Prosecutor’s Office tailored its seizure to narrowly focus on its forgery investigation. Dkt. 375, Ex. 4 ¶ 2. The seizure involved only documents that were directly relevant to its investigation and from the narrow timeframe regarding the tortious act. Id. Privilege also is not likely to be at issue because of the crime/fraud exception. Delaware Rule of Evidence 502 shields from discovery any “confidential communications made for the purpose of facilitating the rendition of professional legal services to the client.” D.R.E. 502. But the rule establishes an exception when “the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew or reasonably should have known to be a crime or fraud.” Id. 502(d)(1).
The premise behind the crime-fraud exception is “that when a client seeks out an attorney for the purpose of obtaining advice that will aid the client in carrying out a crime or a fraudulent scheme, the client has abused the attorney-client relationship and stripped that relationship of its confidential status.” Princeton Ins. Co. v. Vergano, 883 A.2d 44, 55 (Del. Ch. 2005) (Strine, V.C.). For the crime-fraud exception to apply, the client must intend to use the communications “as a basis for criminal or fraudulent activity, whether or not that criminal or fraudulent intent ever comes to fruition.” In re Sutton, 1996 WL 659002, at *11 (Del. Super. Aug. 30, 1996). “To invoke the crime-fraud exception, . . . the proponent of the exception must make a prima facie showing that the confidential communications were made in furtherance of a crime or fraud.”. Buttonwood Tree Value P’rs, L.P. v. R.L. Polk & Co., Inc., 2018 WL 346036, at *6, *8 (Del. Ch. Jan. 10, 2018) (cleaned up)).
(…) Consequently, if the Discovery Materials were subject to this court’s jurisdiction, then the court would order production in conformity with the Narrow Proposal.
(…) Because Lilly seeks the issuance of a letter of request to the central authority of a foreign jurisdiction, it is not enough for the court to find that it would order production of the Discovery Materials that fall within the Narrow Proposal. The court must engage in additional analysis to determine whether to impose a burden on the courts in a foreign jurisdiction. In this case, Lilly has made the necessary showing. In Societe Nationale, the Supreme Court of the United States identified five factors to consider when determining whether to issue a letter of request. To reiterate, the five factors are: •the importance to the litigation of the documents or other information requested; •the degree of specificity of the request; •whether the information originated in the United States; •the availability of alternative means of securing the information; and •the extent to which noncompliance with the request would undermine important interests of the United States, or compliance with the request would undermine important interests of the state where the information is located. Societe Nationale, 482 U.S. at 544 n.28; see Restatement (Third) of Foreign Relations Law §§ 441–442 (Am. L. Inst. 1987), Westlaw (database updated Oct. 2022). Evaluating these factors “requires a particularized analysis of the facts of a case, the sovereign interests involved, and the likelihood that resorting to the Hague Convention will prove effective.” Ingenico Inc. v. Ioengine, LLC, 2021 WL 765757, at *2 (D. Del. Feb. 26, 2021).
(…) No one has identified any Swiss legal requirements that would limit or prevent production. Instead, Lilly has shown that under Swiss law, civil litigants can obtain information like the Discovery Materials. The third factor supports the issuance of a letter of request.
(…) The final factor is a balancing of the competing interests of the sovereigns involved. Societe Nationale, 482 U.S. at 544 n.28. Under this factor, the court weighs any interest that the United States or the forum state has in obtaining production of the information against any interest that the foreign state has in not providing discovery. Activision, 86 A.3d at 547. When considering the interests of the United States, the court may take into account the requesting party’s “important interests in developing its claims and defenses. ”Ingenico, 2021 WL 765757, at *3. When considering the interests of a foreign state, the court should take into account any foreign law that limits production. See Activision, 86 A.3d at 547 (giving consideration to French laws regarding data privacy). This factor is most important where the litigation implicates national security concerns or national economic policies. No such concern is implicated here. This is a civil case involving private parties. Where the litigants are all private parties, this factor is of secondary importance. See Milliken, 758 F. Supp. 2d at 248 (“Here, the underlying interest—collection of a judgment by a private party—is not so dramatic.”)
Secondary Sources: Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure § 2005.1 at 70 (3d ed. 2010); Restatement (Third) of Foreign Relations Law §§ 441–442 (Am. L. Inst. 1987).
(Court of Chancery of the State of Delaware, Nov. 18, 2022, In Re Côte d’Azur Estate Corp., Docket C.A. No. 2017-0290-JTL)
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