Cravath, Swaine & Moore will not have to hand over documents related to its client, the energy company Royal Dutch Shell, as part of discovery, reversing a decision by U.S. District Judge Alvin Hellerstein of the Southern District of New York that would have handed over the documents to a group of Nigerian plaintiffs suing over human rights abuses.
The panel—composed of Circuit Judges Dennis Jacobs, José Cabranes and Richard Wesley—found that an order forcing Cravath to turn over their client’s documents in a suit the lower court found it lacked jurisdiction was an abuse of the district court’s discretion.
The documents at issue were part of legal action brought by the Nigerian plaintiffs under the Alien Tort Statute against the Dutch company. The material in the suits were mostly marked confidential and were to be destroyed or returned at the conclusion of the action. Any re-designation, therefore, would require the parties agreeing to do so.
The relevant case ultimately saw a portion dismissed for lack of subject-matter jurisdiction, which was upheld by the U.S. Supreme Court, affirming based on the conduct taking place outside the United States and the Alien Tort Statute’s presumption against extraterritoriality.
Later, Esther Kiobel, whose claims were rejected by the nation’s highest court, prepared to sue Shell in the company’s native country with the same allegations. Seeking to deploy the discovery from the American litigation, she was impeded by the confidentiality agreement in the previous case.
In 2016, Kiobel filed a petition with the U.S. district court for access to evidence to be used in her action in the Netherlands. Her subpoena targeted Cravath, rather than Shell, seeking an efficient route to needed material to help meet Dutch courts’ higher evidentiary standard at the filing stage.
Hellerstein agreed with Kiobel, directing the parties to keep the information to the pleadings only, and that a new stipulation should be signed. Cravath said that it lacked authority to designate the documents—it was not party to the original suit, and Shell was not before the court.
After the district court ordered Cravath to produce the documents, Cravath appealed, arguing that Shell, who owns the documents the firm was simply holding, was not a resident of SDNY. The panel was not persuaded by Cravath’s jurisdiction argument.
“A law firm’s representation of a foreign client is a factor worth considering; but it is a discretionary factor, not a jurisdictional requirement,” the appellate court stated, finding the district court correctly possessed jurisdiction over the petition.
However, the panel agreed that the district court erred in applying precedential factors in reaching its decision. The circuit’s rulings counsel against granting a petition seeking documents from U.S. attorneys for a foreign company involved in a foreign proceeding, which Hellerstein acknowledged. While these factors “are not to be applied mechanically,” if allowed to stand the district court’s ruling would “undermine confidence in protective orders,” especially given Shell’s lack of participation in the proceedings.
“If foreign clients have reason to fear disclosing all pertinent documents to U.S. counsel, the likely results are bad legal advice to the client, and harm to our system of litigation,” the panel stated.
Cravath was represented on appeal by Hogan Lovells partner Neal Katyal. He deferred comment to Cravath’s client, Shell’s Nigerian subsidiary. In a statement, a spokeswoman said in a statement that the company supported the panel’s decision.
“Suing a U.S. law firm should not be a back door to secure documents from foreign clients who are outside of U.S. jurisdictional boundaries,” the spokeswoman said.
A spokeswoman for the attorneys representing Kiobel at EarthRights International, led by attorney Richard Herz, did not respond to a request for comment.