Aurelius Capital Master, Ltd. v. Republic of Argentina

13-4054(L) NML Capital, Ltd. v. Republic of Argentina UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 1 At a stated term of the United States Court of Appeals 2 for the Second Circuit, held at the Thurgood Marshall United 3 States Courthouse, 40 Foley Square, in the City of New York, 4 on the 23rd day of December, two thousand fourteen. 5 6 PRESENT: RALPH K. WINTER, 7 DENNIS JACOBS, 8 BARRINGTON D. PARKER, 9 Circuit Judges. 10 11 - - - - - - - - - - - - - - - - - - - -X 12 AURELIUS CAPITAL MASTER, LTD., ACP 13 MASTER, LTD., AURELIUS OPPORTUNITIES 14 FUND II, LLC, BLUE ANGEL CAPITAL I 15 LLC, DIETER SCHECK, LYDIA SCHECK, 16 AURELIUS CAPITAL PARTNERS, LP, 17 Plaintiffs-Appellees, 18 19 NML CAPITAL, LTD., 20 Plaintiff-Counter-Defendant- 21 Appellee, 22 23 -v.- 24 13-4054(L) 25 13-4059(CON), 13-4063(CON) 26 13-4068(CON), 13-4075(CON), 27 13-4082(CON), 13-4085(CON), 28 13-4086(CON), 13-4088(CON), 29 13-4089(CON), 13-4090(CON), 1 1 13-4109(CON), 13-4110(CON), 2 13-4112(CON), 13-4114(CON), 3 13-4116(CON), 13-4118(CON), 4 13-4119(CON), 13-4120(CON), 5 13-4122(CON), 13-4123(CON), 6 13-4124(CON), 13-4125(CON) 7 8 THE REPUBLIC OF ARGENTINA, 9 Defendant-Counter-Claimant- 10 Appellant. 11 - - - - - - - - - - - - - - - - - - - -X 12 13 FOR APPELLANT: JONATHAN I. BLACKMAN (Carmine D. 14 Boccuzzi, Daniel J. Northrop, 15 and Michael M. Brennan, on the 16 brief), Cleary Gottlieb Steen & 17 Hamilton LLP, New York, New 18 York. 19 20 FOR APPELLEES: MATTHEW D. MCGILL (Theodore B. 21 Olson, Gibson, Dunn & Crutcher 22 LLP, Washington, DC; Robert A. 23 Cohen, Dechert LLP, New York, 24 New York; Roy T. Englert, Jr. 25 and Mark T. Stancil, Robbins, 26 Russell, Englert, Orseck, 27 Untereiner & Sauber LLP, 28 Washington, DC; Martin Gusy, 29 Cozen O’Connor, New York, New 30 York, on the brief), Gibson, 31 Dunn & Crutcher LLP, Washington, 32 DC. 33 34 Appeal from an order of the United States District 35 Court for the Southern District of New York (Griesa, J.). 36 37 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED 38 AND DECREED that the order of the district court be 39 AFFIRMED. 40 41 Appellant the Republic of Argentina (“Argentina” or the 42 “Republic”) appeals from the order of the United States 43 District Court for the Southern District of New York 44 (Griesa, J.), denying Argentina’s motions to quash and 45 granting appellees’ motions to compel with respect to 46 certain post-judgment discovery demands that appellees 47 served on Argentina and non-party banks. We assume the 2 1 parties’ familiarity with the underlying facts, the 2 procedural history, and the issues presented for review. 3 4 Ordinarily, a post-judgment discovery order is not 5 immediately appealable because it is not a final decision 6 under 28 U.S.C. § 1291. EM Ltd. v. Republic of Argentina, 7 695 F.3d 201, 205 (2d Cir. 2012). We have, however, 8 exercised review under the collateral order doctrine over 9 otherwise non-final orders that present issues of sovereign 10 immunity, Blue Ridge Investments, LLC v. Republic of 11 Argentina, 735 F.3d 72, 80 (2d Cir. 2013), or treaty 12 interpretation, Swarna v. Al-Awadi, 622 F.3d 123, 140-41 (2d 13 Cir. 2010), because such orders conclusively resolve 14 important issues that are separate from the merits and 15 unreviewable from final judgment, EM Ltd., 695 F.3d at 205- 16 06. Our review of the district court’s order is in that 17 category because Argentina invokes the Foreign Sovereign 18 Immunities Act (“FSIA”), the Vienna Convention on Diplomatic 19 Relations (“VCDR”), and the Vienna Convention on Consular 20 Relations (“VCCR”). Insofar as Argentina challenges the 21 order on other grounds, we exercise pendent appellate 22 jurisdiction over those additional issues “to ensure 23 meaningful review of the appealable order.” Myers v. Hertz 24 Corp., 624 F.3d 537, 552 (2d Cir. 2010) (citation and 25 internal quotation marks omitted). 26 27 District court rulings on motions to compel or motions 28 to quash are reviewed for abuse of discretion. See 29 Arista Records, LLC v. Doe 3, 604 F.3d 110, 117 (2d Cir. 30 2010); Gualandi v. Adams, 385 F.3d 236, 244-45 (2d Cir. 31 2004). 32 33 “[B]road post-judgment discovery in aid of execution is 34 the norm in federal and New York state courts.” EM Ltd., 35 695 F.3d at 207. Federal Rule of Civil Procedure 69(a)(2) 36 allows judgment creditors like appellees to “obtain 37 discovery from any person--including the judgment debtor--as 38 provided in these rules or by the procedure of the state 39 where the court is located.” Fed. R. Civ. P. 69(a)(2). 40 Both the federal and the New York state rules allow liberal 41 post-judgment discovery. See Fed. R. Civ. P. 26(b)(1) 42 (permitting discovery “regarding any nonprivileged matter 43 that is relevant to any party’s claim or defense”); N.Y. 44 C.P.L.R. § 5223 (permitting discovery of “all matter 45 relevant to the satisfaction of the judgment”). 46 3 1 Argentina challenges appellees’ discovery demands on a 2 number of grounds.1 First, Argentina contends that the FSIA 3 prohibits discovery of sovereign property that is 4 potentially immune from attachment. See 28 U.S.C. §§ 1609, 5 1610. That argument, however, has already been rejected by 6 the Supreme Court. Republic of Argentina v. NML Capital, 7 Ltd., 134 S. Ct. 2250, 2256-58 (2014). 8 9 Second, Argentina argues that the VCDR and VCCR-- 10 treaties to which the United States and Argentina are 11 signatories--prohibit (a) attachment of diplomatic and 12 consular property and (b) discovery of diplomatic and 13 consular documents. See, e.g., VCDR arts. 22, 24, 27; VCCR 14 arts. 33, 35. 15 16 We take no view on Argentina’s treaty interpretations 17 because even if those interpretations are correct, 18 appellees’ discovery demands need not be quashed. Insofar 19 as the discovery demands reach diplomatic or consular 20 property that is immune from attachment, Argentina should 21 object if and when appellees actually seek to execute on 22 such property; its “self-serving legal assertion” of 23 immunity does not entitle it to withhold otherwise 24 discoverable information. See NML Capital, 134 S. Ct. at 25 2257-58; see also EM Ltd., 695 F.3d at 209 (holding that a 26 judgment creditor “need not satisfy the stringent 27 requirements for attachment in order to simply receive 28 information about Argentina’s assets”). Insofar as the 29 discovery demands reach diplomatic or consular documents 30 that may be privileged or “inviolable” under the treaties, 31 Argentina should present its objections to the district 32 court in the form of assertions of privilege or 33 inviolability. 34 35 At this juncture, it is entirely speculative whether 36 documents Argentina regards as privileged or inviolable will 37 be responsive to appellees’ discovery requests and, if so, 38 whether appellees will persist in demanding such documents 39 in the face of particularized claims of privilege or 1 We recognize that each group of appellees served different discovery demands and, furthermore, that the demands served on Argentina differed from the demands served on non-party banks. While these distinctions may be important under certain circumstances, they do not affect the analysis. 4 1 inviolability by Argentina. Where the diplomatic (or 2 military) documents of a foreign state are concerned, the 3 district courts’ usual practice of examining contested 4 documents in camera may not be practicable. Cf. Zuckerbraun 5 v. Gen. Dynamics Corp., 935 F.2d 544, 546-48 (2d Cir. 1991) 6 (“In camera review is a method by which a court can 7 confidentially review the evidence for which a privilege is 8 claimed and determine the propriety of the assertion of the 9 privilege.”). The district court will modify usual 10 procedures to accommodate that unusual eventuality in a way 11 that is effective and respectful. 12 13 Third, Argentina argues that appellees’ discovery 14 demands reach military property that is immune from 15 attachment under the FSIA and international law. See 28 16 U.S.C. § 1611(b)(2). Again, the potential immunity of 17 property from attachment does not preclude discovery of that 18 property; indeed, discovery may be necessary for the parties 19 to properly litigate the existence of immunity. NML 20 Capital, 134 S. Ct. at 2257-58. 21 22 Finally, Argentina argues that appellees’ discovery 23 demands are overbroad because they reach entities--and, in 24 some cases, individuals--that are not alter egos of the 25 Republic and therefore not liable for Argentina’s debts. 26 The district court clearly considered this argument: in 27 permitting discovery to proceed, the court specifically 28 excluded certain discovery demands concerning Banco de la 29 Nación Argentina. In any event, we are not persuaded that 30 the district court abused its discretion by permitting 31 discovery that concerns entities legally distinct from 32 Argentina. Even if an entity is not an alter ego (and thus 33 is not liable for Argentina’s debts), it may nevertheless 34 hold attachable assets on behalf of Argentina. Furthermore, 35 an entity that is closely tied to (but legally distinct 36 from) Argentina may possess information about Argentina’s 37 assets, even if it does not own or hold those assets itself. 38 Again, “broad post-judgment discovery in aid of execution is 39 the norm in federal and New York state courts.” EM Ltd., 40 695 F.3d at 207. To the extent that Argentina’s objections 41 also encompass assertions of head-of-state or foreign 42 official immunity under federal common law, Argentina should 43 present those objections in the same manner as it does 44 objections under the VCDR and VCCR. 45 46 Although we affirm the district court’s order in all 47 respects, we stress that Argentina--like all foreign 5 1 sovereigns--is entitled to a degree of grace and comity. 2 Cf. Republic of Austria v. Altmann, 541 U.S. 677, 689 3 (2004). These considerations are of particular weight when 4 it comes to a foreign sovereign’s diplomatic and military 5 affairs. Accordingly, we urge the district court to closely 6 consider Argentina’s sovereign interests in managing 7 discovery, and to prioritize discovery of those documents 8 that are unlikely to prove invasive of sovereign dignity. 9 10 For the foregoing reasons, and finding no merit in 11 Argentina’s other arguments, we hereby AFFIRM the order of 12 the district court. The mandate shall issue forthwith. 13 14 FOR THE COURT: 15 CATHERINE O’HAGAN WOLFE, CLERK 16 6