NML Capital and FSIA Jurisdictional Discovery

Following NML Capital, a significant issue is whether the Supreme Court’s holding applies with respect to FSIA jurisdictional discovery.  Some commentators believe that NML Capital indicates that “lower courts have been too generous in protecting foreign sovereigns from [jurisdictional] discovery requests.”   See Wuerth, Republic of Argentina v. NML Capital: Discovery and the Foreign Sovereign Immunities Act. Although the issue is complex and requires further analysis, this post sets forth my preliminary thoughts.

First, Argentina’s position in the NML Capital litigation was wholly unlike that of a foreign sovereign facing FSIA jurisdictional discovery.  Argentina had previously waived both immunity from jurisdiction and immunity from execution, and the Supreme Court concluded that the FSIA did not confer any immunity over Argentina’s overseas assets.  See The Republic of Argentina v. NML Capital, Ltd. (No. 12-842): Why Both Sides Are Wrong (“NML Article”) at 2-3; see also Republic of Argentina v. NML Capital, Ltd., 134 S. Ct. 2250, 2256, 2257 (2014).  The district court had held that it had subject matter jurisdiction over the action, a conclusion that was uncontested by Argentina.  NML Article at 3.  The district court had entered judgments against Argentina that were indisputably valid.  Id.  Argentina’s position had, in short, no similarities to that of a foreign sovereign that is presumptively immune from suit in a court where jurisdiction is in doubt.  See Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993) (“Under the Act, a foreign state is presumptively immune from the jurisdiction of United States courts; unless a specified exception applies, a federal court lacks subject-matter jurisdiction over a claim against a foreign state.”).  Given the contrast between Argentina’s position and the position of foreign sovereigns confronting the possibility of jurisdictional discovery, it would be injudicious to draw conclusions from the NML Capital case with regard to FSIA jurisdictional discovery.  See, e.g., Cohens v. State of Virginia, 19 U.S. 264, 399, 6 Wheat. 264, 399 (1821) (“It is a maxim not to be disregarded, that general expressions, in every opinion, are to be taken in connection with the case in which those expressions are used.” ); see also Armour & Co. v. Wantock, 323 U.S. 126, 132-33 (1944) (“words of . . . opinions are to be read in the light of the facts of the case under discussion . . . . General expressions transposed to other facts are often misleading.”).

Second, while plaintiffs’ counsel are likely to rely upon the Supreme Court’s discussion of Rule 69(a)(2) and its conclusion that the FSIA does not modify the Rule’s authorization of broad post-judgment discovery (cf. NML Capital, 134 S. Ct. at 2254-57), it is unclear whether the same analysis is applicable with respect to FSIA jurisdictional discovery.  To draw a sustainable analogy to NML Capital, a plaintiff’s attorney would need to show that the scope of discovery provided by Rule 26(b) applies where subject matter jurisdiction has not even been established.  This is a complicated issue that merits further examination, but there are reasons to believe that Rule 26(b) discovery is inappropriate if the district court has not yet resolved the issue of subject matter jurisdiction.  See Steven R. Swanson, Jurisdictional Discovery Under the Foreign Sovereign Immunities Act, 13 Emory Int’l L. Rev. 445, 457-58 (1999) (“[I]t has not always been clear whether the FRCP permit jurisdictional discovery.  After all, before jurisdiction has been established a court technically lacks power to order discovery.”); cf. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 n.13 (1978) (indicating that discovery is available with respect to jurisdictional issues, without distinguishing between personal jurisdiction and subject matter jurisdiction); Insurance Corporation of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701-03 (1982) (distinguishing subject matter jurisdiction from personal jurisdiction); see also, e.g., United States v. Sherwood, 312 U.S. 584, 589-90 (1941) (holding that the rules of civil procedure do not “modify, abridge or enlarge the substantive rights of litigants or  . . . enlarge or diminish the jurisdiction of federal courts”); Am. Telecom Co., L.L.C. v. Republic of Lebanon, 501 F.3d 534, 538-39 (6th Cir. 2007) (“Courts are constituted by authority and they cannot [go] beyond the power delegated to them. If they act beyond that authority, and certainly in contravention of it, their judgments and orders are regarded as nullities. They are not voidable, but simply void, and this even prior to reversal.”); Rolls Royce Indus. Power (India) v. M.V. Fratzis M. Stratilatis Navigation Ltd., 905 F. Supp. 106, 107 (S.D.N.Y. 1995) (declining to order discovery in the absence of subject matter jurisdiction).

Third, the “Civil Rule vs. FSIA” conflict advanced by Argentina – which was the “single, narrow question” resolved by the Supreme Court (NML Capital, 134 S. Ct. at 2255) – is a red herring in the context of FSIA jurisdictional discovery.  The issue is not whether the FSIA itself governs jurisdictional discovery; indeed, as the Supreme Court correctly pointed out, the FSIA only expressly addresses discovery in a very limited way.  NML Capital, 134 S. Ct. at 2256; see also 28 U.S.C. § 1605(g).  Instead, the question is whether a district court should exercise its discretion to limit any jurisdictional discovery ordered against a foreign sovereign.  See Crawford-El v. Britton, 523 U.S. 574, 598 (1998).  In this regard, two important observations are in order:

  • District courts limit FSIA jurisdictional discovery in recognition of the fact that (1) a foreign sovereign is presumptively immune from discovery at the beginning of the litigation (cf. NML Article at 12-13) and (2) the court’s subject matter jurisdiction is in doubt. That is true not only with respect to jurisdictional discovery under the FSIA, but also in other circumstances where a defendant is presumptively immune or jurisdiction has not yet been established.   In fact, there are strong similarities between the rules applied in FSIA jurisdictional discovery cases and the rules applied in other situations where a court confronts the propriety of jurisdictional discovery.  See, e.g., Freeman v. United States, 556 F.3d 326, 342 (5th Cir. 2009); St. Clair v. City of Chico, 880 F.2d 199, 202 (9th Cir. 1989); Razore v. Tulalip Tribes of Wash., 66 F.3d 236, 240 (9th Cir. 1995); Encompass Office Solutions, Inc. v. Ingenix, Inc., No. 4:10-CV-96, 2010 WL 2639563, at *2 (E.D. Tex. June 28, 2010); Dichter-Mad Family Partners, LLP v. United States, 707 F. Supp. 2d 1016, 1053-54 (C.D. Cal. 2010).  Because precedent regarding FSIA jurisdictional discovery does not rely on any textual analysis of the FSIA – but instead relies upon well-established precedent regarding the propriety of discovery prior to a resolution of immunity or a determination of subject matter jurisdiction – such precedent remains unaffected by NML Capital.
  • The Supreme Court in NML Capital expressly recognized that comity considerations govern discovery requests targeting foreign sovereigns. See NML Capital, 134 S. Ct. at 2258 n. 6 (“Although this appeal concerns only the meaning of the Act, we have no reason to doubt that . . . other sources of law ordinarily will bear on the propriety of discovery requests of this nature and scope, such as . . . the discretionary determination by the district court whether the discovery is warranted, which may appropriately consider comity interests and the burden that the discovery might cause to the foreign state.”).  In support of this proposition, the Supreme Court cited Société Nationale Industrielle Aérospatiale v. USDC, 482 U.S. 522, 543-44, and n. 28 (1987).  In the portion of Société Nationale relied upon by the NML Capital Court, the Supreme Court stated that factors relevant to “any comity analysis” include “(1) the importance to the . . . litigation of the documents or other information requested; (2) the degree of specificity of the request; (3) whether the information originated in the United States; (4) the availability of alternative means of securing the information; and (5) 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.”  Société Nationale Industrielle Aérospatiale v. USDC, 482 U.S. at 544 n.28.  Because these are similar to factors considered in a traditional FSIA jurisdictional discovery analysis, a plaintiff would at best be jumping from the frying pan (FSIA jurisdictional discovery precedent) into the fire (international comity analysis).  Regardless of which mode of analysis is utilized, it is unlikely to make a material difference in any given case.

In short, a plaintiff seeking to rely upon NML Capital to argue for broader jurisdictional discovery is unlikely to succeed.  Foreign sovereigns – like other similarly situated litigants – should continue to enjoy discovery protections in the context of a challenge to a district court’s jurisdiction under the FSIA.

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