Case of the Day: In re Application of Kreke Immobilien

The case of the day is In re Application of Kreke Immobilien KG (S.D.N.Y. 2013). Kreke was a German limited partnership. It invested in real estate investment funds offered by Oppenheim, a German bank later purchased by Deutsche Bank. Kreke claimed that Oppenheim had misrepresented the risk of the funds.

Kreke sued Oppenheim, but not Deutsche Bank, in the District Court in Cologne. It then brought a § 1782 action to obtain documents from Deutsche Bank for use in the German case. In particular, it sought documents relating to Deutsche Bank’s purchase of Oppenheim and documents detailing Oppenheim’s management of the funds in question.

Judge Buchwald found that the statutory prerequisites for a § 1782 application were met. Deutsche Bank argued that the court had to deny the application because the documents in question were not kept in the United States. The statute does not, on its face, impose such a requirement. But the judge noted a split in the precedents on the question whether the statute permits discovery of documents located abroad. Citing Judge Rakoff’s decision in In re Godfrey, 526 F. Supp. 2d 417 (S.D.N.Y. 2007), the judge held that the statute does indeed bar extraterritorial discovery. She therefore denied the application.

How strong is this conclusion? Well, I don’t think Judge Rakoff’s decision was particularly compelling. He argued that in Intel the Supreme Court “implicitly assumed that evidence discoverable under § 1782(a) would be located in the United States.” But the evidence of that implicit assumption is merely the following dictum: “nonparticipants in the foreign proceeding may be outside the foreign tribunal’s jurisdictional reach; hence, their evidence, available in the United States, may be unobtainable absent § 1782(a) aid.”

I think Judge Rakoff, and thus Judge Buchwald, reads too much into the reasoning of Intel here. “Available in the United States” could mean simply that the evidence is obtainable in the United States; it need not mean that the evidence is actually found in the United States. And this seems the more sensible reading, particularly given the realities of cloud computing and the difficulty, in 2014, in determining exactly where a document is located. In the absence of any clear statutory direction, the better course seems to me to be to treat the location of the documents as a discretionary factor.

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