United States District Court, D. New Jersey
IN RE APPLICATION FOR DISCOVERY FOR USE IN FOREIGN PROCEEDING PURSUANT TO 28 U.S.C. § 1782
McNulty United States District Judge.
the Court is the Report and Recommendation
("R&R") of Magistrate Judge James B. Clark,
III, (DE 25) regarding (1) the application (DE 2) of
petitioner Michael Page do Brasil Ltda. ("Page")
pursuant to 28 U.S.C. § 1782 for judicial assistance in
obtaining evidence located in the United States from
respondent Robert Half International Inc.
("International"); (2) Page's request to seal
all docket entries that disclose its identity and to permit
the parties to use pseudonyms (DE 1); and (3)
International's motion to strike certain exhibits that
were attached to Page's judicial assistance application
R&R of the Magistrate Judge disposed of the second and
third applications thus: Page's application to seal and
proceed anonymously was denied (DE 1); and
International's motion to strike was granted in part and
denied in part (DE 16). As to those two rulings, neither
party has filed an objection. This Court, having conducted an
independent review of the recommendation, adopts and affirms
the Magistrate Judge's R&R.
R&R also recommended denial of the first application,
Page's application for judicial assistance in obtaining
discovery in the United States pursuant to § 1782. As to
that portion of the R&R, Page has filed a timely
objection. The remainder of this Opinion is confined to that
I adopt and affirm the R&R and endorse the Magistrate
Judge's thorough and well-reasoned opinion. In
particular, I agree with the Magistrate Judge's analysis
of the first, third, and fourth discretionary factors that
guide the § 1782 analysis under Intel Corp. v.
Advanced Micro Devices, Inc., 542 U.S. 241, 247, 124
S.Ct. 2466, 159 L.Ed.2d 355 (2004). I disagree with the
Magistrate Judge's resolution of the second factor,
finding that weight must be given to Brazil's signatory
status to the Hague Convention. In re O'Keeffe,
646 Fed.Appx. 263, 265-66 (3d Cir. 2016). Nevertheless, like
the Magistrate Judge, I find that the balance of all four
factors mandates the denial of Page's application. This
denial is without prejudice to a subsequent application, in
the event, for example, that the circumstances change in the
underlying Brazilian action.
an employment recruitment firm, located in Sao Paulo, which
places candidates with employer-clients throughout Brazil.
(App. at ¶l 1). International is a professional
recruitment firm based in the United States that operates
internationally. (App. at ¶12). International's
subsidiary, Robert Half Trabalho Temporario Ltda.
("Robert Half Brazil") operates in Brazil and is
Page's direct competitor. (App. at ¶¶3,
alleges that Alexandre Arima, an employee who had
unrestricted access to Page's network and servers, left
Page to work for Robert Half Brazil in December of 2007.
(App. at ¶¶ 19-20). Sometime between 2006 and 2008,
Arima allegedly planted malware that manipulated the source
code of Page's website and permitted third parties to
gain access to Page's confidential business information.
(App. ¶¶ 19-24; Obj. at 5).
learned of the malware when Juan Pablo Correa Santa, an
employee who had formerly been employed by Robert Half
Brazil, told Page that Robert Half Brazil employees had
"accessed confidential information through
Petitioner's website by using special computer command
codes." (App. at ¶21). Santa disclosed that the
"confidential identities" of Page's clients
were discovered, allowing Robert Half Brazil to target those
clients and "offer competing services."
commenced an internal investigation to determine whether its
website had been compromised. (App. at ¶22). That
investigation determined that someone had altered the source
code of Page's website in a manner that permitted third
parties to access the identities of Page's clients
through certain computer command codes. (App. at
¶¶22, 24). The investigation further revealed
"an unusually high number of visits to its website
originating from multiple IP addresses registered to
Respondent," i.e., Robert Half Brazil. (App. at
¶24). Those visits, the investigation determined,
"targeted and consulted webpages where [Page's]
confidential data was being improperly revealed." (App.
contracted with an outside computer forensics firm, which
ultimately confirmed its internal findings. (App. at
¶24). The computer forensics firm determined that the
visits originating from IP addresses owned by Robert Half
Brazil had targeted webpages where Page's confidential
data was stored. (App. at ¶25).
January 2009, Page commenced a legal proceeding against
Robert Half Brazil and Arima in Sao, Paulo Brazil for the
"anticipatory production of evidence" (the
"Search and Seizure Action"). (DE 2-7; App. at
¶27). Page sought the procurement of evidence that would
substantiate its claims against Robert Half Brazil.
Brazilian court appointed an independent information
technology expert, Dr. Raul Spiguel, to seize and evaluate
computers and other devices that belonged to Robert Half
Brazil and Arima. (DE 2-5; App. at ¶28). On February 6,
2009, investigators executed warrants at the offices of
Robert Half Brazil and at Arima's home. (DE 2-5, at 4-5).
At the offices, investigators located seventy-two computers
and two servers. (DE 2-5, at 6). Investigators accessed the
computers, and determined that the computers were connected
to the network and were configured to connect with servers
located at the parent company, International, in the United
States. (DE 2-5, at 8). This particular configuration
eliminated the use of local hard drives; all the data and
user files were recorded on hard drives located on the
servers in the United States. (DE 2-5, at 8, 10). As a
result, this data was not accessible to the expert.
(Id.). The investigators were nonetheless able to
determine that the computers at Robert Half Brazil connected
to the internet using two IP addresses that were identified
by Page in its Search and Seizure complaint. (DE 2-5, at 9).
completing their search of the office computers,
investigators accessed and searched Arima's laptop
computer. (DE 2-5, at 10). Arima's laptop, too, was
configured to store certain data on International's main
server located in the United States, but Arima also utilized
a local hard drive. (DE 2-5, at 10-12). As a result,
investigators were able to copy Arima's data and remote
files that were located on the main server in the U.S. (DE
2-5, at 12). In addition to Arima's laptop, the
investigators seized a second laptop that was found in the
company director's room. At Arima's home,
investigators seized a desktop computer and external hard
drive, as well as a laptop and internal hard drive. (DE 2-5,
the searches were completed, the Brazilian court appointed a
second expert, Dr. Dante Grasso Junior, who examined the data
that was collected during the search. (App. at ¶33; DE
2-6). Dr. Grasso prepared a report, dated March 13, 2013.
(App. at ¶34; DE 2-6). The report concluded that Arima
visited Page's website and reviewed a job advertisement.
(DE 2-6, at 26, 31-32, 36-37). It further noted that after
reviewing the job advertisement, Arima searched for "SGD
Brasil" and visited that company's website. (DE 2-6
at 27-32). This, asserts Page, was a search for one of
Page's non-public, confidential clients. (Obj. at 9).
Nonetheless, Dr. Grasso's report did not conclude that
that search improperly attained confidential information.
(See DE 2-6). The expert also concluded that there
was "no truly positive evidence" that Page or Arima
had installed the malware or accessed confidential
information. (DE 2-6, at 60-61). The Brazilian Court accepted
Dr. Grasso's findings, and the Search and Seizure Action
was dismissed on August 17, 2015. (DE2-7).
18, 2017, Page commenced a second action in Sao Paulo, Brazil
against Arima, Robert Half Brazil, and International. This
action asserted claims for unfair competition and customer
misuse based upon allegations similar to those set forth in
the earlier Search and Seizure Action. (DE
2-2).On June 13, 2017, Page filed an application
pursuant to 28 U.S.C. § 1782 with this Court, seeking
discovery for its second action. (DE 2-1).
January 19, 2018, the Magistrate Judge issued his Report and
Recommendation, which addressed (1) Page's application
pursuant to 28 U.S.C. § 1782 to serve discovery requests
on International (DE 10); (2) Page's motion to seal
certain documents and to proceed anonymously (DE 1); and (3)
International's motion to strike certain exhibits that
were attached to Page's reply brief in support of its
application for discovery (DE 16). The Magistrate Judge
denied Page's application for discovery and its motion to
seal and proceed anonymously, but granted in part and denied
in part International's motion to strike. (DE 25).
February 20, 2018, Page filed objections to the Report and
Recommendation. (DE 29). Page's objections are limited to
its application for judicial assistance in obtaining
discovery in the United States under 28 U.S.C. § 1782.
Magistrate Judge's authority to "hear and
determine" matters is derived from 28 U.S.C. §
636(b)(1). See EEOC v. City of Long Branch,
866 F.3d 93, 99 (3d Cir. 2017) (citation omitted). The
standard of review of a Magistrate Judge's decision is
determined by whether the ruling is dispositive or
non-dispositive. If the ruling is dispositive, the Magistrate
Judge may enter a report and recommendation, which this Court
reviews de novo. Fed. R. Civ. P. 72 (b). If
non-dispositive, the Magistrate Judge is to enter an order,
which the District Court reviews for clear error.
Fed.R.Civ.P. 72 (a).
are divided as to whether decisions on discovery applications
under § 1782 are dispositive or non-dispositive. See
In re Macquarie Bank Ltd., 2015 U.S. Dist. LEXIS 72544,
at *6 (D. Nev. May 28, 2015) (collecting cases and noting
that "most courts have found that ruling on a §
1782 motion is a non-dispositive matter within the province
of a magistrate judge's authority"),
reconsideration denied, 2015 U.S. Dist. LEXIS 155186
(D. Nev. Nov. 17, 2015). Courts that have held § 1782
decisions are non-dispositive have focused on the Magistrate
Judges' core role in resolving procedural and discovery
disputes. See, e.g, In re Macquarie Bank Ltd., 2015
U.S. Dist. LEXIS 72544, at *7. On the other hand, the sole
relief sought in a standalone § 1782 proceeding is the
obtaining of discovery, so in that sense, a Magistrate
Judge's ruling either way would dispose of the entire
case. See 12 Wright 85 Miller, Federal Practice
and Procedure § 3068.2 (3d ed. 2014)
("The sole purpose of the [§ 1782] proceeding is to
obtain discovery, and accordingly, a motion to compel such
discovery is a final, dispositive
party in this case directly addresses the standard of review.
The Magistrate Judge's decision is styled as a report and
recommendation, however, and both parties seem to assume that
the standard of review is de novo. (Obj. at 10;
Oppo. at 8). Out of caution, then, and to avoid unfair
surprise, I review the matter de novo. See In re
Cohen, 2016 U.S. Dist. LEXIS 169622, at *7 n.3 (E.D.N.Y.
Dec. 6, 2016) (treating § 1782 application as
dispositive "in an abundance of caution," without
resolving the "unsettled question" of whether
motions under § 1782 are dispositive), adopting
R&R, 2016 U.S. Dist. LEXIS 177418 (E.D.N.Y. Dec. 22,
purpose of 28 U.S.C. § 1782 is "to provide
federal-court assistance in gathering evidence for use in
foreign tribunals." Intel Corp. v. Advanced
Micro Devices, Inc., 542 U.S. 241, 247, 124
S.Ct. 2466 (2004). "Congress enacted 1782 to further the
following goals: facilitating the conduct of litigation in
foreign tribunals, improving international cooperation in
litigation, and putting the United States into the leadership
position among world nations." Bayer AG v. Betachem,
Inc., 173 F.3d 188, 191 (3d Cir. 1999) (internal
these goals do not in turn mean that a parry to foreign
litigation is entitled to unbridled and unlimited discovery
under the statute." Id. "Section 1782
vests district courts with discretion to grant, limit or deny
discovery .... [A] district court may refuse to grant a
discovery request, or may impose various conditions and
protective orders attendant to the production of requested
deciding whether to grant a § 1782 application for the
production of discovery for use in a foreign tribunal, the
Court (1) determines whether the statutory requirements are
met; and then (2) evaluates whether to exercise its
discretion to grant the application. In re
O'Keeffe, 646 Fed.Appx. 263, 265-66 (3d Cir. 2016).
initial statutory prerequisites to § 1782 relief are as
(1) the person from whom discovery is sought resides or is
found in the district of the district court to which the
application is made,
(2) the discovery is for use in a proceeding before a foreign
tribunal, and (3) the application is made by a foreign or
international tribunal or any interested person.
In re Bayer AG, 146 F.3d 188, 193 (3d Cir. 1998)
(citing In re Esses, 101 F.3d 873, 875 (2d Cir.
1996)). Here, the Magistrate Judge determined that Page's
application satisfied the statutory prerequisites. (DE 25, at
6 (concluding that (1) International is a Delaware
Corporation with eight offices in New Jersey; (2) the
discovery was sought for use in the second Brazilian action;
and (3) Page, as a party to the second Brazilian action, is
an interested party)). These conclusions are clearly correct,
and neither party objects to them.
second step, and the one at issue here, requires the analysis
of four discretionary "Intel factors."
Even if a court is authorized to grant discovery under §
1782, it is not required to do so. Intel, 542 U.S.
at 264 (providing that "a district court is not required
to grant a § 1782(a) discovery application simply
because it has the authority to do so." (citation
omitted)). A discovery request may be denied on a
discretionary basis if the relevant factors do not weigh in
favor of it. A court acts within its discretion only if it
"fashions its order in accordance with the 'twin
aims' of § 1782,  'providing efficient means
of assistance to participants in international litigation in
our federal' courts and  encouraging foreign countries
by example to provide similar means of assistance to our
courts.” In re Esses, 101 F.3d at 876 (quoting
In re Malev Hungarian Airlines, 964 F.2d 97, 100 (2d
Cir.), cert, denied, 506 U.S. 861, 113 S.Ct. 179,
121 L.Ed.2d 125 (1992)).
Intel, the Supreme Court identified the
considerations that should guide a court considering whether
to exercise its discretion to grant a § 1782(a) request.
The court must consider four factors: (1) whether the person
from whom discovery is sought is a participant in a foreign
proceeding; (2) the nature of the foreign litigation, the
character of the proceedings already underway, and the
foreign country's receptivity to court assistance from
the U.S.; (3) whether the petitioner is attempting to
circumvent proof-gathering restrictions in foreign or
American courts; and (4) whether the request for discovery is
unduly intrusive or overly broad. Intel, 542 U.S. at
264-65; see Heraeus Kulzer GmbH v. Esschem, Inc.,
390 Fed.Appx. 88, 91 (3d Cir. 2010) (citation omitted).
takes issue with the Magistrate Judge's analysis of each
of the four Intel factors. I address them in turn.
First Intel Factor
first Intel factor focuses on whether the person
from whom discovery is sought is a participant in the foreign
proceeding. Intel, 542 U.S. at 264-65; see
Esschem, Inc., 390 Fed.Appx. at 91. Although
International is indisputably a party to the action in
Brazil, the ...