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Pinchuk v. Chems Tar Products LLC

United States District Court, D. Delaware

June 26, 2014


Kelly E. Farnan, Esq., Anthony Flynn Jr., Esq., Richards, Layton, & Finger, P.A., Wilmington, DE., for Plaintiff Victor Mikhaylovich Pinchuk.

Bradley R. Aronstam, Esq., Benjamin J. Schladweiler, Esq., Seitz Ross Aronstam & Moritz LLP, Wilmington, DE., for Defendants Chemstar Products LLC, Demeter Diversified LLC, and Empire Chemical LLC.


RICHARD G. ANDREWS, District Judge.

Before the Court is Respondents Chemstar Products LLC, Demeter Diversified LLC, and Empire Chemical LLC's (collectively, the "Respondents") motion to vacate in part the November 28, 2013 order granting Petitioner Victor Mikhalyovich Pinchuk's ex parte discovery application. (D.I. 15 at 4). The Court previously granted the Petitioner's application pursuant to 28 U.S.C. § 1782. A motion to compel the subpoenas was issued on December 30, 2013. (Id. at 8). Respondents' motion is pursuant to Rules 60 and 45(c) of the Federal Rules of Civil Procedure. (Id. at 4).[1] Both these orders relate to proceedings in the London Court oflnternational Arbitration (the "LCIA") and the Limassol District Court of the Republic of Cyprus (the "Cyprus Court") (collectively, the "Foreign Proceedings"). (Id.).

I. Background

Mr. Pinchuk has been in a business relationship with Igor Valeryevich Kolomoisky and Gennadiy Borisovich Bogolyubov since 2006. (D.I. 20 at 2). In 2013, Pinchuk filed an action in the LCIA and 22 petitions for relief in the Cyprus Court, asserting that Kolomoisky and Bogolyubov violated the parties' agreement. (Id.). Pinchuk claims that Kolomoisky and Bogolyubov failed to include Pinchuk in various corporate opportunities in the ferroalloy industry. (Id.) Pinchuk believes that the Respondents, Delaware limited liability companies, are directly or indirectly controlled by Kolomoisky and Bogolyubov's business interests. (Id.). On November 19, 2013, the Court granted Mr. Pinchuk's ex parte application, ordering the Respondents to "preserve documents and evidence, electronic or otherwise" and permitting Pinchuk to serve subpoenas seeking the documents identified in the application. (D.I. 15 at 8).In doing so, the Court refused to rule on whether all objections to the Subpoenas had been waived, citing the lack of any adverse party. (D.I. 10).

After retaining counsel, Respondents filed objections and responses to the subpoenas. (D.I. 15 at 8). Respondents provided all documents located in the United States. (Id.). Respondents now ask this Court to vacate the prior orders. (Id.). Thus, the crux of the dispute is whether the Court should compel Respondents to provide documents located abroad, particularly in Cyprus.

II. Legal Standard

"The district court 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.... The order may be made... upon the application of any interested person...." 28 U.S.C. § 1782(a). Accordingly, the district court has authority to grant an application when three conditions are met: (1) the person from whom discovery is sought resides or is found within the district; (2) the discovery is for use in a proceeding before a foreign or international tribunal; and (3) the application is made by an interested person. Id .; see also In re Bayer AG, 146 F.3d 188, 193 (3d Cir. 1998).

A district court is not required to grant a § 1782 discovery application simply because it has the authority to do so. See Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264 (2004). In choosing whether to exercise its discretion, the district court may consider the following factors: (1) whether the person from whom discovery is sought is a participant in the foreign proceeding; (2) the nature of the foreign tribunal and the character of the proceedings; (3) whether the application conceals an attempt to circumvent foreign proof-gathering restrictions or other policies; and (4) whether the discovery sought is unduly intrusive or burdensome. See id. at 264-65. Courts must also be mindful of the twin aims of§ 1782: providing efficient means of assistance to participants in international litigation in our federal courts and encouraging foreign countries by example to provide similar assistance to our courts. See id. at 252.

Ill. Discussion

Respondents are Delaware limited liability companies and reside in the District of Delaware for the purposes of§ 1782. (D.I. 15-1 at 2, 15-2 at 2, 15-3 at 2). Petitioner has filed actions with both the LCIA and the Cyprus Court. While proceedings have not yet begun, § 1782(a) does not limit the provision ofjudicial assistance to "pending" adjudicative proceedings. Intel, 542 U.S. at 260-61. There is also no requirement that the proceedings be imminent. Id. As the Intel court explained, all that is necessary is that the evidence may be eventually used in such a proceeding. Id. Petitioner seeks discovery for use in the Foreign Proceedings in which he is a litigant, and thus, an interested party. Respondents have already produced all documents located in the United States. The Court thus considers whether to enforce the remainder of the Petitioner's§ 1782 request for Respondents' documents located in Cyprus. Accordingly, the Court will revisit the Intel factors, while also taking into account the location of the remaining documents.

The Intel factors, while not dispositive, bear consideration on whether a court should exercise its discretion in granting a § 1782 request. In assessing the first Intel factor, courts consider "whether the documents... sought are within the foreign tribunal's jurisdictional reach, and thus accessible absent§ 1782 aid." Kulzerv. Esschem, Inc., 390 F.Appx. 88, 91 (3d Cir. 2010) (citing In re Microsoft Corp., 428 F.Supp.2d 188, 193 (S.D.N.Y. 2006)). None of the Respondents are parties to the Foreign Proceedings. Respondents argue that ifthe Court assumes Pinchuk's assertion that the Respondents are under the control ofKolomoisky and Bogolyubov as true, then both the LCIA and the Cyprus Court would have jurisdictional reach over the Respondents. (D.I. 15 at 7; D.I. 24 at 3, 4, n. 4). However, this assumption would require the Court to make a determination that is central to the Foreign Proceedings. This would have the effect of potentially interfering with the judicial proceedings of the foreign tribunals, a result that the Court wishes to avoid. Further, while the Respondents assert that they are each headquartered in Cyprus and therefore are presumably subject to the jurisdiction of the Cyprus Court, there has been no evidence offered in support of this assertion. Even if the assertion were true, there still would remain the question of whether the LCIA has jurisdictional reach over the Respondents. The Respondents cite to the LCIA Rules, Article 22.1 (e), which states that the LCIA can order any party to produce documents "in their possession, custody or power." (D.I. 4, n. 4, citing D.I. 2, Ex. 5 at 10). However, as mentioned above, this discovery rule would only apply if the Respondents were found to be under the control ofKolomoisky and Bogolyubov. This Court will not engage in any inquiry requiring it to resolve an issue that may result in interference with the Foreign Proceedings. Thus, the first factor weighs in favor of granting the discovery.

The second Intel factor asks the court to consider the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign court to U.S. federal court judicial assistance. 542 U.S. at 265. The relevant inquiry for this factor is "whether the foreign court would consider the evidence revealed from a§ 1782 order." Via Vadis, 2013 WL 646336, at *2 (D. Del. Feb. 21, 2013). The party opposing discovery has the burden of demonstrating that the foreign court would not consider the discovery sought pursuant to a § 1782 order. In Re Chevron Corp., 633 F.3d 153, 162 (3d Cir. 2011) (citing In re Bayer AG, 146 F.3d 188, 196 (3d Cir. 1998)). Respondents have not proffered sufficient evidence to convince the Court that the Foreign Tribunals would not consider evidence revealed from a§ 1782 order. Neither of the foreign proceedings have made any ruling in regard to Pinchuk's § 1782 applications.[2] The LCIA, in a December 18, 2013 order, stated that "it does not presently need to seek the assistance of the U.S. Courts for the purpose of this arbitration." (D.I. 15-4 at 2). However, this does not mean that the LCIA will not consider evidence revealed from a § 1782 order. Further, despite the Southern District of Florida's request for assistance regarding a similar § 1782 application, the LCIA opted not to answer the District Court's questions and refused to specify a position if discovery were to be obtained. (D.I. 24-1 at 9; D.I. 24-2 at 2). Similarly, the Cyprus proceedings are still in the preliminary stages, and no ruling has been made regarding the scope of discovery. (D.I. 15-1 at 11). Respondents insist that the motions filed with the Cyprus Court ...

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