Amicus Briefs Are Coming in on Servotronics. And Oral Argument Is Set

This article first appeared in the weekly Securities Arbitration Alert of 22 July 2021 and is reposted here with permission.

Amicus Briefs have begun to be filed in Servotronics, where the Supreme Court has agreed to resolve a major split on whether 28 U.S.C Section 1782 provides for discovery in aid of private, foreign, commercial arbitration or only covers cases administered by governmental arbitration forums. And the case will be argued October 5.

First, some review from our past coverage. Under 28 U.S.C. § 1782, a party to a matter pending in a “foreign or international tribunal” can seek an ex parte discovery order in aid of arbitration. Specifically: “The district court of the district 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 … for use in the foreign proceeding.” But does section 1782 cover foreign, private arbitration proceedings? The answer is “Yes or No,” depending on the Circuit. Here’s the split as of today: the Second, Fifth and Seventh Circuits, and two Third Circuit District Courts, hold that section 1782 covers only governmental arbitration forums. The Fourth and Sixth Circuits extend section 1782’s reach to private arbitration organizations

The Split in a Nutshell: Same Arbitration Case Yields Different Results

We covered in SAA 2020-13 (Apr. 8) Servotronics, Inc. v. The Boeing Co. and Rolls-Royce PLC, 954 F.3d 209 (4th Cir. 2020), where, in a case involving a private commercial arbitration being held in England under Chartered Institute of Arbitrators Rules, the Court upheld a District Court decision ordering discovery from three Boeing employees residing in South Carolina. A more recent entry in the “no” camp was the Seventh Circuit, which in Servotronics, Inc. v. Rolls-Royce PLC, No. 19-1847, 2020 WL 5640466 (Sept. 22, 2020) – a dispute arising out of the same arbitration – held that section 1782 does not extend to private international commercial arbitration. As described in SAA 2020-37 (Oct. 7), the District Court barred Servotronics from obtaining discovery documents located in Illinois for use in the same private arbitration pending in London, and the Seventh Circuit (ed: then-Judge Amy Coney Barrett was not on the Panel deciding the case) affirmed unanimously. Among the Court’s rationales was a perceived conflict between section 1782 and the Federal Arbitration Act: “The discovery assistance authorized by § 1782(a) is notably broader than that authorized by the FAA…. If § 1782(a) were construed to permit federal courts to provide discovery assistance in private foreign arbitrations, then litigants in foreign arbitrations would have access to much more expansive discovery than litigants in domestic arbitrations. It’s hard to conjure a rationale for giving parties to private foreign arbitrations such broad access to federal-court discovery assistance in the United States while precluding such discovery assistance for litigants in domestic arbitrations. In sum, what the text and context of § 1782(a) strongly suggest is confirmed by the principle of avoiding a collision with another statute: a ‘foreign or international tribunal’ within the meaning of § 1782(a) is a state-sponsored, public, or quasi-governmental tribunal.”

A Split Worthy of Review

Every time we’ve covered this growing split, our editorial comment queried if SCOTUS would eventually be asked to take up this issue. As we reported in SAA 2020-47 (Dec. 17), Servotronics in December 2020 Petitioned the Court for Certiorari in the Seventh Circuit case, Servotronics, Inc. v. Rolls-Royce PLC and the Boeing Company, No. 20- 794. The question presented: “Whether the discretion granted to district courts in 28 U.S.C. §1782(a) to render assistance in gathering evidence for use in ‘a foreign or international tribunal’ encompasses private commercial arbitral tribunals, as the Fourth and Sixth Circuits have held, or excludes such tribunals without expressing an exclusionary intent, as the Second, Fifth, and, in the case below, the Seventh Circuit, have held.” And, as reported in SAA 2021-11 (Mar. 25), the Court on March 22 granted the Petition without comment (see page 1 of the Order List).

Amicus Briefs: U.S. Urges Narrow Application

Although the case will not be argued until next fall, several Amicus Briefs have already been filed and can be viewed here. Among the more noteworthy, the United States filed a Brief on behalf of Respondents urging narrow application of 28 U.S.C. §1782(a): “The parties and lower courts have disputed the ordinary meaning of ‘tribunal’ …. Whatever the meaning of that term in isolation, however, when properly construed as part of the broader phrase ‘foreign or international tribunal,’ in light of the statutory context and history, it does not extend to private commercial arbitration.”

Oral Argument Set for October 5

The newly-released oral argument calendar for October shows that the case is set for Tuesday, October 5. On June 28, the Government filed a still-pending Motion for leave to participate in oral argument and for divided argument. Specifically, Respondents consent to yield two minutes of their time allotted for oral argument. (ed: *Other noteworthy Briefs were filed by: the International Chamber of Commerce (in support of neither party); Institute of International Bankers (Respondents); and the International Arbitration Center in Tokyo (Respondents). **Our past coverage was blogged on March 22. ***We will certainly track this one.)

George Friedman

George H. Friedman is the publisher and Editor-in-Chief of the Securities Arbitration Alert, a weekly online publication covering the latest developments in financial services arbitration and mediation. He is also the principal of George H. Friedman Consulting, LLC, providing expert advice on arbitration and mediation in general and the FINRA…