United States Court of Appeals
For the First Circuit
No. 03-2704
HANS A. QUAAK ET AL.,
Plaintiffs, Appellees,
v.
KLYNVELD PEAT MARWICK GOERDELER BEDRIJFSREVISOREN,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Patti B. Saris, U.S. District Judge]
[Hon. Robert B. Collings, U.S. Magistrate Judge]
Before
Selya and Lipez, Circuit Judges,
and DiClerico,* District Judge.
Ira M. Feinberg, with whom George A. Salter, John A. Redmon,
Nicholas W.C. Corson, Hogan & Hartson LLP, Michael J. Stone, and
Posternak Blankstein & Lund LLP were on brief, for appellant.
Glen DeValerio, with whom Jeffrey C. Block, Berman DeValerio
Pease Tabacco Burt & Pucillo, Steven E. Cauley, Curtis L. Bowman,
Cauley Geller Bowman Coates & Rudman, LLP, Lee S. Shalov, James
Bonner, Patrick L. Rocco, Shalov Stone & Bonner LLP, Gregory P.
Joseph, Gregory P. Joseph Law Offices LLC, Steven Singer, Erik
Sandstedt, Bernstein Litowitz Berger & Grossmann LLP, Jack R.
Pirozzolo Professional Corporation, Willcox, Pirozzolo & McCarthy,
Terrence K. Ankner, Partridge Ankner & Horstmann LLP, Karen C.
Dyer, and Boies Schiller & Flexner were on brief, for appellees.
March 8, 2004
___________
*Of the District of New Hampshire, sitting by designation.
SELYA, Circuit Judge. It is widely thought that "[n]o
aspect of the extension of the American legal system beyond the
territorial frontier of the United States has given rise to so much
friction as the requests for documents in investigation and
litigation in the United States." Restatement (Third) of Foreign
Relations Law of the United States § 442, reporters' note 1 (1987).
As the imperatives of transnational business shrink the size of the
globe, the task of devising an effective yet respectful paradigm
for easing this friction becomes more and more urgent. The instant
appeal brings the titration into full focus.
The genesis of the problem in this case lies with an
auditing engagement accepted by Klynveld Peat Marwick Goerdeler
Bedrijfsrevisoren (KPMG-B), a Belgian firm that served as the
auditor for a publicly-traded company, Lernout & Hauspie Speech
Products, N.V. (L&H). L&H's collapse precipitated a flood of
actions against KPMG-B and others in the courts of this country,
alleging massive securities fraud. KPMG-B refused to produce
relevant auditing records and associated work papers, asserting
that to do so would violate Belgian law. A magistrate judge
rejected this assertion and ordered production. See In re Lernout
& Hauspie Sec. Litig., 218 F.R.D. 348 (D. Mass. 2003) (L&H III).
In response, KPMG-B repaired to a Belgian court
requesting that substantial penalties be imposed on those who might
"take any step of a procedural or other nature in order to proceed
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with the discovery-procedure." The plaintiffs in the pending
American litigation (who had obtained the turnover order in the
first instance) implored the district court to enjoin KPMG-B from
pursuing the Belgian action. The district court obliged. See In
re Lernout & Hauspie Sec. Litig., 2003 WL 22964378, at *2 (D. Mass.
Dec. 12, 2003) (L&H IV).1 KPMG-B immediately appealed. We issued
a partial stay of the antisuit injunction and expedited the appeal.
We now affirm the district court's order.
I. BACKGROUND
As said, this appeal arises out of a welter of cases
having a common theme: the allegation that KPMG-B and others
perpetrated large-scale securities fraud leading to L&H's collapse.
Those cases include several class actions. Some of them were
commenced in the United States District Court for the District of
Massachusetts and others were transferred to that district. See,
e.g., Filler v. Lernout, 2002 WL 227079 (D. Del. Feb. 8, 2002).
The district court has consolidated all the cases. It would serve
no useful purpose to dissect the plaintiffs' allegations, and we
urge the reader who thirsts for more detailed background knowledge
to consult the district court's published opinions. See, e.g., In
re Lernout & Hauspie Sec. Litig., 230 F. Supp. 2d 152 (D. Mass.
1
The district court accepted, adopted, and elaborated upon the
report and recommendation of the magistrate judge. For
simplicity's sake, we do not distinguish between the two judicial
officers, but, rather, take an institutional view and refer to the
determinations below as those of the district court.
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2002) (L&H II); In re Lernout & Hauspie Sec. Litig., 214 F. Supp.
2d 100 (D. Mass. 2002) (L&H I). We rehearse here only those
developments needed to frame the issues on appeal.
KPMG-B is a target of an ongoing criminal investigation
in Belgium, which arises out of the L&H fiasco. It is also a
principal defendant in the aforedescribed securities fraud
litigation. KPMG-B has not disputed the district court's in
personam jurisdiction. It did seek to secure dismissal of the
securities fraud litigation on forum non conveniens grounds, but
failed in that effort. See L&H II, 230 F. Supp. 2d at 176. At the
same time, the district court determined that the consolidated
complaint against KPMG-B satisfied the stringent pleading
requirements of the Private Securities Litigation Reform Act of
1995 (PSLRA), 15 U.S.C. § 78u-4(b)(2), and Federal Rule of Civil
Procedure 9(b). L&H II, 230 F. Supp. 2d at 165-66.
Once past these threshold issues, the securities fraud
plaintiffs embarked on pretrial discovery. In September of 2002,
they served document requests for KPMG-B's work papers. See Fed.
R. Civ. P. 34. The plaintiffs did not get very far; KPMG-B refused
to comply with the requests, asseverating that Belgian law
prohibited it from divulging the information sought. While this
game of cat and mouse was taking place, the plaintiffs, acting on
KPMG-B's advice, became civil co-prosecutors in the ongoing Belgian
criminal investigation. Through this participation, they were able
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to examine all the documents that were not deemed confidential by
the Belgian prosecutor, but they were not permitted to copy
documents for use in the securities fraud litigation.
Tantalized by their glimpse of the work papers, the
securities fraud plaintiffs moved to compel their production. A
magistrate judge took briefing and heard argument on the
applicability of and exceptions to the Belgian secrecy law.2 On
November 13, 2003, he rejected KPMG-B's arguments and ordered
production of the work papers on or before the close of business on
December 1, 2003.
On November 27, 2003 — Thanksgiving day — KPMG-B filed an
ex parte petition with a court in Brussels, seeking to enjoin the
securities fraud plaintiffs from "taking any step" to proceed with
the requested discovery. To ensure compliance, they asked the
Belgian court to impose a fine of one million Euros for each
violation of the proposed injunction.3 The Belgian court
2
The parties agree that, as a general matter, Article 458 of
the Belgian Criminal Code prohibits auditors from disclosing
confidential client information. There are, however, numerous
exceptions to that general proscription. The parties have
differing views as to whether KPMG-B's disclosure of its work
papers pursuant to the district court's turnover order would (or
would not) fall within any one of these exceptions.
3
In pertinent part, KPMG-B's petition asked the Belgian court
for the following:
To prohibit defendants, upon forfeitment of a
penalty of 1.000.000 EUR per infraction by
each defendant, to take any step of a
procedural or other nature in order to proceed
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refused to act ex parte; instead, it directed that notice be
provided to the securities fraud plaintiffs and scheduled a hearing
for December 16, 2003. On December 1, KPMG-B gave notice of the
institution of the Belgian action to the securities fraud
plaintiffs. It also filed an objection to the magistrate judge's
recommended decision. That objection is still pending in the
district court (there is, among other things, a disagreement as to
its timeliness). Finally, KPMG-B moved to stay the turnover order.
Faced with the threat of extravagant fines, the
securities fraud plaintiffs sought the district court's protection.
On December 9, the magistrate judge issued a report and
recommendation urging the entry of an order enjoining KPMG-B from
proceeding with its Belgian action. The district judge held a
hearing two days later and issued an antisuit injunction, the full
text of which is reproduced below:
with the discovery-procedure, initiated by
them in the framework of the aforementioned
American procedures, including but not limited
to:
1. taking any step of a procedural or
other nature in order to execute or rely on
the decision of the District Court of
Massachusetts dated 13 November 2003 to
produce the audit working papers;
2. taking any step of a procedural or
other nature in the framework of the order of
the American judge in its decision of 13
November 2003 to meet and confer with
Petitioner concerning the production of the
requested documents . . . .
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The Court preliminarily enjoins KPMG-Belgium
from proceeding with its writ, orders KPMG-
Belgium to withdraw forthwith its writ in the
Court of First Instance of Brussels and orders
it not to proceed with the hearing scheduled
on December 16, 2003. KPMG-Belgium shall file
proof of compliance with this order.
L&H IV, 2003 WL 22964378, at *2. Hot on the heels of this order,
the magistrate judge denied KPMG-B's motion to stay the turnover
order, branding that motion untimely. In re Lernout & Hauspie Sec.
Litig., 219 F.R.D. 28, 30-31 (D. Mass. 2003) (L&H V). KPMG-B
immediately appealed the entry of the antisuit injunction. We
granted a limited stay of the injunction, permitting KPMG-B to
appear at the December 16 hearing in Brussels for the sole purpose
of requesting a continuance. The Belgian court has been fully
cooperative, and the foreign action has been continued periodically
during the pendency of this expedited appeal. There has been no
further action with regard to the turnover order itself.
II. STANDARD OF REVIEW
A grant of a preliminary injunction typically receives
deferential review. McGuire v. Reilly, 260 F.3d 36, 42 (1st Cir.
2001). The trial court's order will stand unless it "mistook the
law, clearly erred in its factual assessments, or otherwise abused
its discretion in granting the interim relief." Id. In our view,
however, international antisuit injunctions — which involve
important considerations of comity — warrant a heightened level of
appellate review. Cf. United States v. O'Brien, 895 F.2d 810, 814
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(1st Cir. 1990) (considering the importance of the interest at
stake when ascertaining the appropriate standard of review).
Consequently, we deem it appropriate to conduct an independent
review of the justification for the issuance of an international
antisuit injunction. This is an "intermediate level of scrutiny,
more rigorous than the abuse-of-discretion or clear-error
standards, but stopping short of plenary or de novo review."
United States v. Tortora, 922 F.2d 880, 883 (1st Cir. 1990). Given
our chosen standard of review, we cede a modest degree of deference
to the trier's exercise of discretion, but "we will not hesitate to
act upon our independent judgment if it appears that a mistake has
been made." El Dia, Inc. v. Hernandez Colon, 963 F.2d 488, 492
(1st Cir. 1992).
III. ANALYSIS
Determining the appropriateness of an international
antisuit injunction is a highly nuanced exercise. An inquiring
court must find a way to accommodate conflicting, mutually
inconsistent national policies without unduly interfering with the
judicial processes of a foreign sovereign. See Laker Airways Ltd.
v. Sabena, Belgian World Airlines, 731 F.2d 909, 916 (D.C. Cir.
1984). This task is particularly formidable given the absence of
guidance from the Supreme Court and the paucity of precedent in
this circuit; the Justices have not spoken to the criteria for
granting an international antisuit injunction and this court has
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passed on that question only once (and then, glancingly). See
Canadian Filters (Harwich) Ltd. v. Lear-Siegler, Inc., 412 F.2d 577
(1st Cir. 1969). We begin our analysis by articulating the
standards that ought to govern the question. We then apply those
standards to the case at hand.
A. Articulating the Standards.
It is common ground that federal courts have the power to
enjoin those subject to their personal jurisdiction from pursuing
litigation before foreign tribunals. See, e.g., Kaepa, Inc. v.
Achilles Corp., 76 F.3d 624, 626 (5th Cir. 1996); China Trade &
Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 35 (2d Cir. 1987).
The exercise of that power must be tempered, however, by the
accepted proposition that parallel proceedings on the same in
personam claim generally should be allowed to proceed
simultaneously. Laker Airways, 731 F.2d at 926. The decisional
calculus must take account of this presumption in favor of
concurrent jurisdiction. It also must take account of
considerations of international comity. After all, even though an
international antisuit injunction operates only against the
parties, it effectively restricts the jurisdiction of a foreign
sovereign's courts. See, e.g., China Trade, 837 F.2d at 35-36.
Federal courts have been consentient in endorsing these
principles. Beyond that point, however, the waters grow murky.
The courts of appeals have differed as to the legal standards to be
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employed in determining whether the power to enjoin an
international proceeding should be exercised. Two basic views have
emerged. For ease in reference, we shall call the more permissive
of these views the liberal approach and the more restrictive of
them the conservative approach. See Note, Antisuit Injunctions and
International Comity, 71 Va. L. Rev. 1039, 1049-51 (1985) (using
this nomenclature).
The liberal approach has been championed by two courts of
appeals: the Fifth Circuit, Kaepa, 76 F.3d at 627, and the Ninth
Circuit, Seattle Totems Hockey Club, Inc. v. Nat'l Hockey League,
652 F.2d 852, 855-56 (9th Cir. 1981). In addition, the Seventh
Circuit has pronounced itself "incline[d] toward" the liberal view.
Philips Med. Sys. Int'l v. Bruetman, 8 F.3d 600, 605 (7th Cir.
1993). Under this approach, an international antisuit injunction
is appropriate whenever there is a duplication of parties and
issues and the court determines that the prosecution of
simultaneous proceedings would frustrate the speedy and efficient
determination of the case. Kaepa, 76 F.3d at 627; Seattle Totems,
652 F.2d at 856. We do not mean to suggest that courts employing
the liberal approach do not give weight to considerations of
international comity. For the most part, they do — but they tend
to define that interest in a relatively narrow manner and to assign
it only modest weight. See, e.g., Kaepa, 76 F.3d at 627 (noting
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that an international antisuit injunction does not "actually
threaten relations" between the two involved nations).
Four courts of appeals have espoused the conservative
approach for gauging the propriety of international antisuit
injunctions. See Stonington Partners, Inc. v. Lernout & Hauspie
Speech Prods., 310 F.3d 118, 126 (3d Cir. 2002); Gau Shan Co. v.
Bankers Trust Co., 956 F.2d 1349, 1355 (6th Cir. 1992); China
Trade, 837 F.2d at 36 (2d Cir.); Laker Airways, 731 F.2d at 927
(D.C. Cir.). Under this approach, the critical questions anent the
issuance of an international antisuit injunction are whether the
foreign action either imperils the jurisdiction of the forum court
or threatens some strong national policy. See, e.g., Stonington
Partners, 310 F.3d at 127; China Trade, 837 F.2d at 36. This
approach accords appreciably greater weight to considerations of
international comity.
We reject the liberal approach. We deem international
comity an important integer in the decisional calculus — and the
liberal approach assigns too low a priority to that interest. In
the bargain, it undermines the age-old presumption in favor of
concurrent parallel proceedings — a value judgment that leaves us
uneasy — and presumes that public policy always favors allowing a
suit pending in an American court to go forward without any
substantial impediment. To cinch matters, this approach gives far
too easy passage to international antisuit injunctions. We
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understand that the judicial process is a cornerstone of the
American way of life — but in an area that raises significant
separation of powers concerns and implicates international
relations, we believe that the law calls for a more cautious and
measured approach.
The conservative approach has more to commend it. First,
it recognizes the rebuttable presumption against issuing
international antisuit injunctions (and, thus, honors the
presumption favoring the maintenance of parallel proceedings).
Second, it is more respectful of principles of international
comity. Third, it compels an inquiring court to balance competing
policy considerations. Last — but far from least — it fits snugly
with the logic of Canadian Filters, in which we said that issuing
an international antisuit injunction is a step that should "be
taken only with care and great restraint" and with the recognition
that international comity is a fundamental principle deserving of
substantial deference. 412 F.2d at 578.
We stop short, however, of an uncritical acceptance of
the conservative approach. The recent expositions of that approach
have come to regard the two main rationales upon which
international antisuit injunctions may be grounded — preservation
of jurisdiction and protection of important national policies — as
exclusive. See, e.g., Gen. Elec. Co. v. Deutz AG, 270 F.3d 144,
160-61 (3d Cir. 2001) (describing these as the "only"
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justifications that can support the issuance of such an
injunction); Gau Shan, 956 F.2d at 1355 (similar). We are
uncomfortable with this gloss, for it evinces a certain woodenness.
In our view, the sensitive and fact-specific nature of the inquiry
counsels against the use of inflexible rules.
We therefore reject this reworking of the conservative
approach and instead endorse its traditional version. That version
is not only more flexible but also more consistent with Laker
Airways — which we regard as the seminal opinion in this field of
law. The Laker Airways court did not suggest that its two stated
rationales were the only ones that could justify issuing an
international antisuit injunction. 731 F.2d at 927 (noting that
"[i]njunctions are most often necessary" to protect the court's
jurisdiction or to prevent evasion of the nation's important
policies). Rather, the court indicated that it was prudent to use
a wider-angled lens, making clear that the equitable considerations
surrounding each request for an injunction should be examined
carefully. Id.
In order to provide guidance for the district courts, we
spell out the manner in which our preferred approach operates. The
gatekeeping inquiry is, of course, whether parallel suits involve
the same parties and issues. Unless that condition is met, a court
ordinarily should go no further and refuse the issuance of an
international antisuit injunction. See, e.g., China Trade, 837
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F.2d at 36; Laker Airways, 731 F.2d at 928; see also George A.
Bermann, The Use of Anti-Suit Injunctions in International
Litigation, 28 Colum. J. Transnat'l L. 589, 626 (1990) (stating
that courts generally "will not consider issuing anti-suit
injunctions" unless there are "parallel local and foreign actions
between the same parties over the same claim"). If — and only if
— this threshold condition is satisfied should the court proceed to
consider all the facts and circumstances in order to decide whether
an injunction is proper. In this analysis, considerations of
international comity must be given substantial weight — and those
considerations ordinarily establish a rebuttable presumption
against the issuance of an order that has the effect of halting
foreign judicial proceedings.
We acknowledge that the task of determining when a
litigant has overcome this presumption is a difficult one. That is
partly because comity is an elusive concept. The Supreme Court has
defined it as "the recognition which one nation allows within its
territory to the legislative, executive or judicial acts of another
nation, having due regard both to international duty and
convenience, and to the rights of its own citizens or of other
persons who are under the protection of its laws." Hilton v.
Guyot, 159 U.S. 113, 164 (1895). Judge Aldrich trenchantly
described it as "a blend of courtesy and expedience." Canadian
Filters, 412 F.2d at 578. Whatever definition is employed, it is
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pellucid that comity is not a matter of rigid obligation, but,
rather, a protean concept of jurisdictional respect. And to
complicate matters, comity, like beauty, sometimes is in the eye of
the beholder.
We hasten to add that although the definition of comity
may be tenebrous, its importance could not be more clear. In an
increasingly global economy, commercial transactions involving
participants from many lands have become common fare. This world
economic interdependence has highlighted the importance of comity,
as international commerce depends to a large extent on "the ability
of merchants to predict the likely consequences of their conduct in
overseas markets." Gau Shan, 956 F.2d at 1355. This
predictability, in turn, depends on cooperation, reciprocity, and
respect among nations. That helps to explain the enduring need for
a presumption — albeit a rebuttable one — against the issuance of
international antisuit injunctions.
In the final analysis, rebutting this presumption
involves a continual give and take. In the course of that give and
take, the presumption may be counterbalanced by other facts and
factors particular to a specific case. These include (but are by
no means limited to) such things as: the nature of the two actions
(i.e., whether they are merely parallel or whether the foreign
action is more properly classified as interdictory); the posture of
the proceedings in the two countries; the conduct of the parties
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(including their good faith or lack thereof); the importance of the
policies at stake in the litigation; and, finally, the extent to
which the foreign action has the potential to undermine the forum
court's ability to reach a just and speedy result.
Seen in this light, we agree that either the preservation
of jurisdiction or the safeguarding of important national policies
may afford a sufficient basis for the issuance of an international
antisuit injunction. We do not, however, attach talismanic
significance to concepts such as jurisdiction-stripping and insults
to public policy. Instead, we hold that in every case a district
court should examine the totality of the circumstances in deciding
whether a particular case warrants the issuance of an international
antisuit injunction. See Laker Airways, 731 F.2d at 927 ("There
are no precise rules governing the appropriateness of antisuit
injunctions."). If, after giving due regard to the circumstances
(including the salient interest in international comity), a court
supportably finds that equitable considerations preponderate in
favor of relief, it may issue an international antisuit injunction.
B. Applying the Standards.
Against this backdrop, we ponder whether the district
court acted within the realm of its discretion when it enjoined
KPMG-B from pursuing the Belgian litigation. We conclude that it
did.
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The lower court applied the traditional four-part test
for preliminary injunctions. See, e.g., Ross-Simons of Warwick,
Inc. v. Baccarat, Inc., 102 F.3d 12, 15 (1st Cir. 1996) (describing
the four-part test). Because this generic algorithm provides an
awkward fit in cases involving international antisuit injunctions,
district courts have no obligation to employ it in that context.
See Stonington Partners, 310 F.3d at 129. Here, however, any
methodological error was harmless: the district court, as part of
its inquiry, carefully considered all of the critical factors.
We need not belabor the obvious. The parties and issues
are substantially similar, thus satisfying the gatekeeping inquiry.
The district judge acknowledged the importance of comity concerns
in her published opinion. See L&H IV, 2003 WL 22964378, at *2. A
reading of the hearing transcript leaves no doubt that she was
fully aware of the potential ramifications with respect to
international comity and that she gave heavy weight to those
concerns. However, she placed on the opposite pan of the scale the
character of the foreign action, the public policy favoring the
safeguarding of investors from securities fraud, the need to
protect the court's own processes, and the balance of the equities.
Id. at *1-*2. In the end, the court determined that those factors
counterbalanced comity concerns in the peculiar circumstances of
this case. Id. at *2. Having conducted an independent review, we
find that determination fully supportable.
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The essential character of the Belgian action is easily
discerned. In it, KPMG-B seeks to impose huge financial penalties
on the securities fraud plaintiffs should they take any steps to
enforce the district court's turnover order. This attempt to chill
legitimate discovery by in terrorem tactics can scarcely be viewed
as anything but an effort to "quash the practical power of the
United States courts." Laker Airways, 731 F.2d at 938; see United
States v. Davis, 767 F.2d 1025, 1029 (2d Cir. 1985) (upholding
injunction of foreign proceeding where the "sole purpose" of
instituting that proceeding "was to block compliance with a
legitimate trial subpoena"). Thus, the foreign action is plainly
interdictory in nature.
Where, as here, a party institutes a foreign action in a
blatant attempt to evade the rightful authority of the forum court,
the need for an antisuit injunction crests. See Laker Airways, 731
F.2d at 929-30. Fairly read, KPMG-B's petition to the Belgian
tribunal seeks to arrest the progress of the securities fraud
action by thwarting the very discovery that the district court,
which is intimately familiar with the exigencies of the underlying
case, has deemed essential to the continued prosecution of the
action against any of the defendants. In technical terms, this may
not constitute a frontal assault on the district court's
jurisdiction, but the practical effect is the same. That is a
matter of considerable import: a court has a right — indeed, a
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duty — to preserve its ability to do justice between the parties in
cases that are legitimately before it. See id. at 930; see also
Davis, 767 F.2d at 1039 (upholding an antisuit injunction as
"necessary to ensure a complete adjudication of the matter before
it").
The equities also counsel in favor of affirming the
district court's order. This is not a case in which a trial court
is enabling a fishing expedition. The securities fraud plaintiffs
have survived the PSLRA's heightened pleading requirements and,
moreover, they have actually seen the documents that they seek.
Consequently, they know that they are not fishing in an empty
stream.
In weighing the equities, we also think it noteworthy
that KPMG-B, not the securities fraud plaintiffs or the district
court, set the stage for a crisis of comity. If KPMG-B had not
filed a foreign petition calculated to generate interference with
an ongoing American case, the district court would have had no need
to issue a defensive injunction that sought only to preserve the
court's ability to adjudicate the claims before it according to the
law of the United States. And, finally, KPMG-B's actions are
harder to accept because it had available to it other options for
seeking resolution of its client confidentiality concerns. The
most obvious choice was to pursue and exhaust its position in the
federal judicial system before attempting to sidetrack that system.
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Alternatively, it could have sought clarification from the Belgian
courts without raising the stakes to a level that necessarily
precipitated a direct conflict with the pending securities fraud
action. It eschewed these options. Having called the tune, it
hardly seems inequitable that KPMG-B must now pay the piper.
KPMG-B's remaining arguments need not occupy us for long.
First, it posits that the district court erred when it entered the
antisuit injunction prior to reviewing the magistrate judge's
turnover order (including his assessment of the Belgian law issue).
This argument is hopeless.
District courts have broad discretion in determining the
sequence of their rulings. Cf. Dynamic Image Techs., Inc. v.
United States, 221 F.3d 34, 38 (1st Cir. 2000) (noting trial
court's substantial discretion in deciding when to rule upon
particular motions). Here, moreover, KPMG-B left the district
court no practical alternative. By electing to file its petition
in Belgium before it lodged an objection to the magistrate judge's
recommended decision, KPMG-B effectively dictated the sequence of
subsequent events.
KPMG-B next contends that the lower court erred as a
matter of law by failing to give due regard to the possible use of
letters rogatory as a means of securing the requested documents.
This contention lacks force.
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While letters rogatory are among the discovery devices
available in a federal court, parties are not required to resort to
them come what may. See Société Nationale Industrielle
Aérospatiale v. United States Dist. Court, 482 U.S. 522, 543-44
(1987). The transcripts of the relevant hearings make it crystal
clear that, in this instance, the district court fully considered,
and flatly rejected, the argument that letters rogatory would serve
as a satisfactory substitute for a turnover order. Bearing in mind
the district court's superior coign of vantage, we are loath to
second-guess its pragmatic judgment. Under the best of
circumstances, letters rogatory are burdensome, costly, and time-
consuming. Id. at 542. For various reasons — including the fact
that Belgium is not a signatory to the Hague Convention4 — the
circumstances here are far from ideal.
Nor can we accept KPMG-B's related contention that, as a
matter of law, no international antisuit injunction can issue if
the forum court's goal can be achieved in some other way. While we
encourage trial courts to search out alternatives that might avoid
the need to issue antisuit injunctions, we will not force them to
4
The Hague Convention provides a set of minimum standards for
securing evidence across national borders. See Société Nationale,
482 U.S. at 532. American courts know that signatory nations are
committed to comply with those standards (and, thus, with requests
made in conformity therewith). Because Belgium is not a signatory
to the Hague Convention, there is an added element of uncertainty
as to whether (and if so, to what extent) the Belgian courts will
honor requests via letters rogatory.
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exhaust remote possibilities. Here, there is no compelling
justification for overriding the district court's considered
judgment that letters rogatory are not a reasonably equivalent
alternative to the turnover order.
Finally, KPMG-B asserts that because the securities fraud
plaintiffs will eventually gain access to the requested documents
even in the absence of a turnover order, the injunction was
improvidently issued. This assertion elevates hope over
likelihood.
KPMG-B's thesis is, in substance, that the work papers
will be made available by the Belgian prosecutor at the conclusion
of the criminal investigation. But there is a rub: we have no
reliable way of knowing when that investigation will end and, in
all events, the record is unclear as to whether the outcome of the
investigation will (or will not) affect the availability of the
work papers. We do not think that a district court must bring the
resolution of a case within its jurisdiction to a dead halt in the
hope that the resolution of a foreign criminal proceeding at an
uncertain future date may alleviate the need for a discovery order.
IV. CONCLUSION
We do not mean to minimize the potential difficulty of
the situation that KPMG-B faces. To some extent, however, that
situation is the natural consequence of its decision to ply its
wares in the lucrative American marketplace. Having elected to
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establish a major presence in the United States, KPMG-B must have
anticipated that it would be subject to suit in this country (and,
thus, subject to pretrial discovery rules that are pandemic to the
American justice system). See Restatement (Third) of Foreign
Relations Law § 442, reporters' note 1 (1987) (noting "that persons
who do business in the United States . . . are subject to the
burdens as well as the benefits of United States law, including the
laws on discovery"). While courts should "take care to demonstrate
due respect for any special problem confronted by [a] foreign
litigant on account of its nationality," Société Nationale, 482
U.S. at 546, a foreign national that chooses to engage in business
in the United States likewise must demonstrate due respect for the
operation of the American judicial system.
We need go no further. For the foregoing reasons, we
hold that the district court acted within the encincture of its
discretion in enjoining KPMG-B from pursuing its Belgian
litigation. In the last analysis, an international antisuit
injunction, like any other injunction, is an equitable remedy
designed "to bring the scales into balance." Rosario-Torres v.
Hernandez-Colon, 889 F.2d 314, 323 (1st Cir. 1989) (en banc). In
this case, the district court acted defensively to protect its own
authority from an interdictory strike and we are confident that, in
doing so, the court kept the balance steady and true.
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We affirm the district court's injunction order and
vacate the partial stay of that order previously issued by this
court. Costs shall be taxed against the appellant.
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