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Client Alert

December 22, 2020

Supreme Court Asked to Rule on Whether 28 U.S.C. § 1782 May be Used in Support of Private Arbitration


As we reported in our November 2, 2020 client alert, on September 22, 2020, the U.S. Court of Appeals for the Seventh Circuit ruled that 28 U.S.C. § 1782 cannot be used in support of Private Arbitration.  We noted in our prior alert that the Seventh Circuit’s ruling in Servotronics deepened a circuit split on this recurring issue, and noted the possibility that the U.S. Supreme Court would be required to resolve the fundamental disagreement among the federal courts relating to it.1

The Supreme Court will now have that opportunity.  On December 7, 2020, Servotronics filed a Petition for a Writ of Certiorari to appeal the Seventh Circuit’s decision in Servotronics, Inc. v. Rolls-Royce PLC, et al, No. 19-1847, 2020 WL 5640466 (7th Cir. Sept. 22, 2020), that 28 U.S.C. § 1782(a) (“Section 1782”) may not be invoked in aid of foreign private commercial arbitrations.2  Should the Court grant Servotronic’s petition, the Supreme Court will be able to resolve the circuit split between, on one hand, the Second,3 Fifth4 and Seventh5 Circuits, which have all found that Section 1782 may not be used in aid of foreign private arbitrations, and on the other hand, the Fourth6 and Sixth Circuits7 that have recently held the opposite. 

Background

The Servotronics case involves a private arbitration between Servotronics, Inc. (“Servotronics”) and Rolls-Royce PLC (“Rolls-Royce”).  The arbitration was seated in the United Kingdom and conducted under the rules of the Chartered Institute of Arbitrators.8  Rolls-Royce alleged that Servotronics supplied it with defective engine valves which caused significant damage to engines it manufactured and supplied to The Boeing Company (“Boeing”) for the Boeing 787 Dreamliner aircraft. 

Servotronics filed an application in the United States District Court for the Northern District of Illinois asking the court to issue a subpoena compelling Boeing to produce documents for use in the London-seated arbitration.  After the district court granted Servotronics’s ex parte application, Rolls-Royce and Boeing moved to quash the subpoenas on the basis that Section 1782 does not authorize a court to provide assistance in private foreign arbitrations.  The district court granted Rolls-Royce’s and Boeing’s motion, relying on precedent from the Second and Fifth Circuits (e.g., Nat’l Broad. Co., Inc., v. Bear Stearns & Co., Inc., 165 F.3d 184 (2d Cir. 1999) and Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880 (5th Cir. 1999), as well as its prior holding in In re Arbitration between Norfolk S. Corp., Norfolk S. Ry. Co., & Gen. Sec. Ins. Co. & Ace Bermuda Ltd., 626 F. Supp. 2d 882 (N.D. Ill. 2009), to hold that Section 1782 may not be used in aid of private commercial arbitrations.9  Servotronics appealed.

The Seventh Circuit then weighed in, acknowledging the circuit split between the Fourth and Sixth Circuits, on one hand, and the Second and Fifth Circuits, on the other.  Ultimately, the Seventh Circuit aligned itself with the Second and Fifth Circuit interpretations of Section 178210.  Again, Servotronics appealed.

Servotronics’ Cert Petition

Servotronics’ petition for certiorari and presents the United States Supreme Court with the following question:11

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.

Should the Supreme Court grant the petition, Servotronics will take the position that Section 1782 does authorize discovery assistance in aid of foreign commercial arbitrations, arguing that the congressional history of the statute reflects a legislative intent to apply the statute broadly.12

Servotronics’ Cert Petition alleges three grounds for granting review:  (1) the Courts of Appeals are divided on the question presented and will remain so absent a ruling from the Supreme Court;13 (2) the Servotronics case is ideally suited to resolve the question presented14; and (3) the Seventh Circuit (which held that foreign private commercial arbitration was outside the scope of Section 1782), interpreted Section 1782 incorrectly due to its “misapplication of time-honored cannons of statutory construction.”15

Importance of the Decision

The present circuit split on the issue of whether Section 1782 assistance extends to private arbitral tribunals has left parties and practitioners to analyze their ability to obtain discovery in aid of private arbitrations on a circuit-by-circuit basis.  Over time these inconsistencies have the potential to create forum-shopping and inequitable circumstances between parties, based solely upon where relevant evidence happens to be located in the United States, a result that Congress surely would not have intended.  Servotronics’ petition therefore provides an opportunity for the Supreme Court to unify the law by finally settling this deep and binary circuit split.

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1          See Seventh Circuit Denies Discovery in Support of Private Arbitration.

2          Pet. For Writ of Cert., Servotronics, Inc. v. Rolls-Royce PLC and the Boeing Company, No. 20-794 (U.S.).

3          Hanwei Guo v. Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC., No. 19-781, 2020 WL 3816098 (2nd Cir. July 8, 2020); National Broadcasting Co. v. Bear Stearns & Co., 165 F.3d 184 (2d Cir. 1999); for further analysis of the Second Circuit’s Hanwei decision see Second Circuit Denies Discovery in Support of Private Arbitration.

4          El Paso Corp. v. La Comision Ejecutiva Hidroelectrica Del Rio Lempa, 341 F. App’x 31 (5th Cir. 2009); Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880 (5th Cir. 1999).

5          Servotronics, Inc. v. Rolls-Royce PLC, et al, No. 19-1847, 2020 WL 5640466 (7th Cir. Sept. 22, 2020); for further analysis of the Seventh Circuit’s Servotronics decision see Seventh Circuit Denies Discovery in Support of Private Arbitration.

6          Servotronics Inc. v. Boeing Co., 954 F.3d 209 (4th Cir. 2020); for further analysis of the Fourth Circuit’s Servotronics decision see Fourth Circuit Allows Discovery in Support of Private Arbitration.

7          Abdul Latif Jameel Transp. Co. v. FedEx Corp., 939 F.3d 710 (6th Cir. 2019); for further analysis of the Sixth Circuit’s Abdul Latif Jameel decision see Sixth Circuit Allows Discovery In Support of DIFC Arbitration.

8          Servotronics filed another 1782 application in the District of South Carolina in connection with the same arbitration.  The district court’s decision to grant that application was affirmed by the Fourth Circuit, which held that Section 1782 could be utilized in aid foreign private arbitrations.  See Servotronics Inc. v. Boeing Co., 954 F.3d 209, 210 (4th Cir. 2020) (“[W]e conclude that the arbitral panel in the United Kingdom is indeed a foreign tribunal for purposes of § 1782 . . .”).

9          In re Servotronics, Inc., No. 18-CV-7187, 2019 WL 9698535, at *3 (N.D. Ill. Apr. 22, 2019), aff'd sub nom. Servotronics, Inc. v. Rolls-Royce PLC, No. 19-1847, 2020 WL 5640466 (7th Cir. Sept. 22, 2020).

10         Id. at *4; see also Seventh Circuit Denies Discovery in Support of Private Arbitration (discussing the Seventh Circuit’s analysis in further detail).

11         Pet. For Writ of Cert., Servotronics, Inc. v. Rolls-Royce PLC and the Boeing Company, No. 20-794 (U.S.) at i.

12         Id. at pp. 16-18.

13         Id. § I.

14         Id. at § II.

15         Id. at § III.