Rethinking jurisdictional discovery under the Hague Evidence Convention.

• Author: Gilchrist, Kathleen Braun

ABSTRACT

When a federal court in the United States compels the discovery of information located abroad to determine whether it has jurisdiction over the defendant, the court can apply the Federal Rules of Civil Procedure or the Hague Evidence Convention. This Note argues that the approach taken by most courts--applying the balancing test formulated by the Supreme Court in Societe Nationale Industrielle Aerospatiale v. U.S. District Court and favoring application of the Federal Rules--is misguided. Courts should apply the Evidence Convention more often in jurisdictional discovery disputes. They can do so under the existing legal framework with one of three holdings: (1) the Aerospatiale test does not apply to jurisdictional discovery disputes and parties must use the Evidence Convention; (2) the Aerospatiale test does not apply and the Evidence Convention should be used as a first resort, turning to the Federal Rules only when the Convention's procedures prove infeasible; or (3) the Aerospatiale test applies, but recognition that the court has not established personal jurisdiction weighs so heavily in favor of applying the Evidence Convention that it has a similar effect as the first-resort approach. Each of these alternatives is preferable to the current approach.

TABLE OF CONTENTS I. INTRODUCTION II. BACKGROUND A. Discovery and Jurisdiction in the United States B. Evidence Gathering Outside of the United States C. Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters D. The Aerospatiale Decision E. Lower Courts' Application of Aerospatiale F. Comity G. Jurisdictional Discovery Under the Hague Evidence Convention III. PROPOSALS A. The Evidence Convention as the Exclusive Means for a Party to Obtain Jurisdictional Discovery Abroad B. The Evidence Convention as a First Resort C. Applying the Evidence Convention as a Result of the Aerospatiale Balancing Test IV. CONCLUSION I. INTRODUCTION

Justice Blackmun, in the U.S. Supreme Court decision Societe Nationale Industrielle Aerospatiale v. U.S. District Court (Aerospatiale), explained that, "no 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 request for documents associated with investigation and litigation in the United States." (1) The Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (Evidence Convention), ratified by the United States in 1972, reflects an effort on behalf of the signatory countries to find common ground in light of significant differences in evidence-gathering procedures. (2) In 1987, the U.S. Supreme Court, in Aerospatiale, held that the Evidence Convention is an optional procedure that can be used in lieu of the Federal Rules of Civil Procedure (Federal Rules). (3) The Court granted lower courts the discretion to employ the procedures of the Evidence Convention in a case after examining "the particular facts, sovereign interests, and likelihood that resort to those procedures will prove effective." (4) Subsequent lower court cases generally have placed the burden of persuasion on the party requesting application of the Evidence Convention. (5) Furthermore, these courts usually conclude that the party failed to meet that burden and apply the Federal Rules. (6)

In Aerospatiale, the defendant did not contest personal jurisdiction, and as a result, the Court did not address whether its holding applies to jurisdictional discovery. A number of district courts and one appellate court have addressed this issue, and most have held that (1) the Aerospatiale balancing test applies equally to jurisdictional discovery, and (2) the balancing test favors application of the Federal Rules. (7) The arguments in support of these positions are misguided. They do not fully consider the scope of the Aerospatiale holding, do not adequately perform the comity analysis, and ultimately do not give sufficient regard to the Evidence Convention procedures. Courts can apply the Evidence Convention more frequently under the existing legal framework with one of three holdings: (1) the Aerospatiale test does not apply to jurisdictional discovery disputes and parties must use the Evidence Convention; (2) the Aerospatiale test does not apply and the Evidence Convention should be used as a first resort, turning to the Federal Rules only when the Convention's procedures prove infeasible; or (3) the Aerospatiale test applies, but recognition that the court has not established personal jurisdiction weighs so heavily in favor of applying the Evidence Convention that it has a similar effect as the first-resort approach.

This Note begins by explaining some of the differences in civil procedure in the United States and abroad; it then surveys the contours of the Evidence Convention, the Aerospatiale decision and its comity analysis, and lower court cases guided by that decision--focusing on those addressing jurisdictional discovery disputes. Next, it sets out the three alternative approaches, observing the benefits and drawbacks to each one. (8)

2. BACKGROUND

   1. Discovery and Jurisdiction in the United States

      Under the Federal Rules, parties have wide latitude to conduct pretrial discovery. A party can obtain information on "any nonprivileged matter that is relevant to any party's claim or defense." (9) Further, "relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." (10) Professor Stephen Yeazell observed that, "[l]awyers conduct discovery without any but the slightest judicial supervision unless something goes wrong. So long as things remain in this state, discovery has virtually disappeared from the judicial arena." (11)

      Before a court in the United States can assess the merits of a case, it must establish both personal and subject matter jurisdiction. Parties can use discovery procedures to resolve factual disputes over a court's jurisdiction. (12) Trial judges maintain significant discretion to grant or deny jurisdictional discovery. (13) As a consequence, courts have construed the standard for granting jurisdictional discovery in slightly different terms. The Third Circuit, in Metcalfe v. Renaissance Marine, Inc., explained that, "if 'the plaintiffs claim is not clearly frivolous [as to the basis for personal jurisdiction], the district court should ordinarily allow discovery on jurisdiction in order to aid the plaintiff in discharging that burden."' (14) The Eighth Circuit remanded a case for jurisdictional discovery even though it found that the plaintiff had not made a prima facie showing of personal jurisdiction over the defendant. (15) Although not all courts agree that a prima facie showing of personal jurisdiction is an absolute prerequisite for permitting jurisdictional discovery, "[w]hen a plaintiff offers only speculation or conclusory assertions about contacts with a forum state, a court is within its discretion in denying jurisdictional discovery." (16) Courts have also considered whether the defendant has control of the jurisdictional facts, whether the defendant has provided evidence rebutting the assertion of jurisdiction, and other equitable factors. (17)

      In Insurance Corp. of Ireland v. Compagnie Des Bauxites De Guinee, petitioners, fourteen foreign insurance companies, (18) filed a motion for summary judgment in the district court alleging that the court lacked personal jurisdiction over them. (19) After several unsuccessful attempts to obtain documents located abroad, the respondent filed a motion to compel production and the district court gave petitioners sixty days to produce the information. (20) When petitioners failed to produce the information, the district court held that it had personal jurisdiction over petitioners. (21) The court invoked Federal Rule 37(b)(2)(A), which states that "[i]f a party ... fails to obey an order to provide or permit discovery ... the court ... may issue further just orders." (22) The Third Circuit affirmed the district court's jurisdictional holding (23) and the Supreme Court affirmed the Third Circuit's decision. (24)

      The Court observed that petitioners failed to recognize the distinction between subject matter jurisdiction and personal jurisdiction. (25) It noted that subject matter jurisdiction is both a constitutional requirement, flowing from Article III, and a statutory requirement. (26) According to the Court, it "functions as a restriction on federal power, and contributes to the characterization of the federal sovereign." (27) "[N]o action of the parties can confer subject-matter jurisdiction upon a federal court." (28) Thus, the principles of estoppel and waiver do not apply. (29) In contrast, the Court explained that personal jurisdiction derives from the Due Process Clause of the Fifth Amendment rather than Article III. (30) Therefore, "[i]t represents a restriction on judicial power not as a matter of sovereignty, but as a matter of individual liberty." (31) The Court then cited International Shoe Co. v. Washington, stating that the test for personal jurisdiction "requires that the maintenance of the suit not offend traditional notions of fair play and substantial justice." (32)

      Ultimately, personal jurisdiction is "a legal right protecting the individual." (33) Therefore, a party can waive a claim that personal jurisdiction is lacking and a defendant can be estopped from raising the issue. (34) The Court observed that "[t]he expression of legal rights is often subject to certain procedural rules: The failure to follow those rules may well result in a curtailment of the rights." (35) Insurance Corp. of Ireland is cited for the proposition that a trial court has jurisdiction to determine its jurisdiction, (36) or more specifically, that a court can compel jurisdictional discovery abroad to determine whether it has personal jurisdiction over the...