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Consorcio Ecuatoriano de Telecomunicaciones S.A. v. JAS forwarding (USA), Inc.

United States Court of Appeals, Eleventh Circuit

January 10, 2014

APPLICATION OF CONSORCIO ECUATORIANO DE TELECOMUNICACIONES S.A., Pursuant to 28 USC 1782 for Judicial Assistance in Obtaining Evidence From JAS Forwarding (USA), Inc., For Use In a Foreign Tribunal, Plaintiff - Appellee,
v.
JAS FORWARDING (USA), INC., Defendant, JET AIR SERVICE EQUADOR S.A., Intervenor - Appellant

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[Copyrighted Material Omitted]

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Appeal fro the United States District Court for the Southern District of Florida. D.C. Docket No. 1:10-mc-22320-DLG.

For APPLICATION OF CONSORCIO ECUATORIANO DE TELECOMUNICACIONES S.A., Plaintiff - Appellee: Jose I. Astigarraga, Arnoldo B. Lacayo, Edward M. Mullins, Annette C. Escobar, Astigarraga Davis, MIAMI, FL.

For JET AIR SERVICE EQUADOR S.A., Intervenor - Appellant: Andrew Robert Spector, Arnall Golden Gregory, LLP, MIAMI, FL; Robert Mark Borak, Marc Alan Rubin, Hyman Spector & Mars, LLP, MIAMI, FL; Debra G. Buster, Glenn P. Hendrix, Arnall Golden & Gregory, LLP, ATLANTA, GA.

Before MARCUS and BLACK, Circuit Judges, and HODGES,[*] District Judge.

OPINION

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MARCUS, Circuit Judge:

We sua sponte vacate the prior opinion in this case, issued on June 25, 2012 and published at 685 F.3d 987 (11th Cir. 2012), and substitute the following opinion in its place.

This appeal arises out of a foreign shipping contract billing dispute between Consorcio Ecuatoriano de Telecomunicaciones S.A. (" CONECEL" ) and Jet Air Service Equador S.A. (" JASE" ). CONECEL filed an application in the Southern District of Florida under 28 U.S.C. § 1782 to obtain discovery for use in foreign proceedings in Ecuador. According to CONECEL, the foreign proceedings include both a pending arbitration brought by JASE against CONECEL for non-payment under the contract, and contemplated civil and private criminal suits CONECEL might bring against two of its former employees who, CONECEL claims, may have violated Ecuador's collusion laws in connection with processing and approving JASE's allegedly inflated invoices. CONECEL's application seeks discovery from JASE's United States counterpart, JAS Forwarding (USA), Inc. (" JAS USA" ), which does business in Miami and was involved in the invoicing operations at issue in the dispute. The district court granted the application and authorized CONECEL to issue a subpoena. Thereafter, JASE intervened and moved to quash the subpoena and vacate the order granting the application. The district court denied the motion, as well as a subsequent motion for reconsideration. JASE now appeals the denial of both.

After thorough review and having had the benefit of oral argument, we affirm the orders of the district court. We hold that CONECEL's contemplated suits in Ecuador against its former employees satisfy the statutory requirements, because, as the Supreme Court put it in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 124 S.Ct. 2466, 159 L.Ed.2d 355 (2004), the anticipated proceedings were " within reasonable contemplation." Id. at 259. We also hold that the district court did not abuse its considerable discretion in granting the section 1782 discovery application over JASE's objections that it would be forced to produce proprietary and confidential information. The application was narrowly tailored and primarily requested information concerning JASE's billing of CONECEL, which is undeniably at issue in the current dispute between the parties. Finally, the district court did not abuse its discretion in denying JASE's motion for reconsideration.

I.

CONECEL and JASE have had a lengthy contractual relationship that reaches back at least a decade.[1] JASE agreed to provide transportation logistics services in connection with the international transportation of cell phones and accessories for CONECEL. The contracts between the parties contain descriptions of the potential services to be provided by JASE and detailed terms pertaining to the rate to be charged per applicable unit of weight transported. According to CONECEL, between 2002 and 2007 JASE invoiced, and CONECEL paid, more than $88 million for services rendered under the contracts. The relationship between the parties soured in 2008, and CONECEL contends that an internal investigation and audit " using the limited documentation in its possession" revealed that CONECEL had been improperly overbilled by millions of dollars.

CONECEL says that the agreements between the parties provided that CONECEL

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would pay the rate specified by the agreements (in terms of dollars per unit of weight) multiplied by the weight of the shipment. CONECEL contends that JASE introduced an " extra-contractual multiplication factor" into the equation, which " varied from shipment to shipment based on factors that are not known to CONECEL." [2] CONECEL also claims that the calculation of the " chargeable weight" of the shipments was erroneous.

CONECEL reports that an internal investigation and audit has led it to believe that two of its former employees, Lucy Egas Ribadeneira (" Egas" ) and Germania Narvá ez (" Narvá ez" ), had a hand in the overbilling scheme. The two former employees allegedly " participated in the processing and approval of JAS Ecuador's invoices during the relevant period and . . . there are indications that Ribadeneira and Narvá ez may be liable to CONECEL for its damages." CONECEL adds that its contemplated civil action for collusion would be filed in the civil-mercantile court of competent jurisdiction in Quito, Ecuador, and that under the applicable procedural rules, CONECEL must present all of the evidence necessary to support its claims at the moment it files the action. Then, if successful in a civil action, CONECEL could, under Ecuadorian law, pursue a private criminal action against its former employees. Since a party must present its evidence up front along with the pleadings, CONECEL seeks the discovery specified in section 1782 before commencing suit in Ecuador.

Not surprisingly, JASE tells a wholly different story. It claims that in 2008 CONECEL failed to pay several invoices. Pursuant to the contractual agreements between the parties, JASE has pursued arbitration in Ecuador before the Center for Arbitration and Conciliation of the Guayaquil Chamber of Commerce. CONECEL's primary defense in the pending arbitration proceeding is that the invoices do not correspond to the parties' agreed-upon price.

II.

On July 14, 2010, CONECEL filed an ex parte application for judicial assistance in the Southern District of Florida in order to obtain evidence pursuant to 28 U.S.C. § 1782. Section 1782 provides in relevant part:

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, including criminal investigations conducted before formal accusation. The order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court. . . . To the extent that the order does not prescribe otherwise, the testimony or statement shall be taken, and the document or other thing produced,

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in accordance with the Federal Rules of Civil Procedure.

28 U.S.C. § 1782(a).

CONECEL's detailed application, accompanied by two declarations and a memorandum of law, sought evidence from JAS USA relating primarily to the invoicing and calculation of rates charged to CONECEL.[3] The application was also accompanied by a sample air waybill purporting to show that JAS USA's Miami ...


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