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In re Application of Khrapunov

United States District Court, N.D. California

November 22, 2017

IN RE APPLICATION OF ILYAS KHRAPUNOV PURSUANT TO 28 U.S.C. § 1782 FOR THE TAKING OF DISCOVERY IN FOREIGN PROCEEDINGS

          ORDER GRANTING IN PART AND DENYING IN PART NON-PARTIES' MOTION TO QUASH SUBPOENA; ORDER STAYING COMPLIANCE Re: Dkt. No. 8

          KANDIS A. WESTMORE, United States Magistrate Judge

         On August 24, 2017, the undersigned granted Ilyas Khrapunov's ex parte Application pursuant to 28 U.S.C. § 1782, and the requested subpoena was issued on August 25, 2017. (Dkt. Nos. 5 & 6.)

         On October 1, 2017, Objectors and non-parties Pavel Prosyankin and John Doe (“Objectors”) filed a motion to quash the subpoena. (Dkt. No. 8.)

         On November 16, 2017, the Court held a hearing, and, for the reasons set forth below GRANTS IN PART AND DENIES IN PART the motion to quash the subpoena, and STAYS compliance for 15 days from the date of this order.

         I. BACKGROUND

         Pursuant to 28 U.S.C. § 1782, Ilyas Khrapunov (“Khrapunov”) applied ex parte for a subpoena to Google to obtain subscriber and location information regarding three Gmail accounts that were obtained and used in Europe. (Appl., Dkt. No. 1.) The Court granted the request on August 24, 2017, and the subpoena was issued for pr.pisemnet@gmail.com, peterpanmsk@gmail.com, and kapisam@gmail.com. (Subpoena, Dkt. No. 5 at 4.) The subpoena seeks the IP addresses and the subscriber information associated with the three Gmail accounts. Id.

         In the application, Khrapunov claims that this information is relevant to pending litigation in England where he is attempting to lift an order freezing his assets throughout the world and an order requiring that he testify under oath regarding his disclosure of his assets. (Appl. at 3, 7.) Khrapunov claims that the Gmail accounts were used by BTA Bank employees to arrange for the arrest of Ukrainian lawyer Olena Tyschenko, as well as for fraudulent purposes such as backdating documents. (Appl. at 4-6.)

         Since 2009, BTA Bank, formerly one of the largest banks in Kazakhstan, has pursued Khrapunov and Mukhtar Ablyazov for fraud. (Suppl. Decl. of Jeffrey L. Bornstein, “Suppl. Bornstein Decl., ” Dkt. No. 17 ¶¶ 7, 15, Ex. B & G.) Thus far, English courts have confirmed in final judgments that Ablyazov stole in excess of $4.6 billion from BTA Bank (“the Bank”), and have held preliminarily that Khrapunov conspired with Ablyazov to hide Ablyazov's assets from the Bank. See ids.

         In 2012, an English court sentenced Ablyazov to 22 months imprisonment for contempt, and he ultimately fled the United Kingdom to avoid arrest. (Suppl. Bornstein Decl., Ex. G ¶ 2; Suppl. Bornstein Decl., Ex. A ¶ 175.) Khrapunov is residing in Switzerland, and the Bank wishes to sue him in England. (Suppl. Bornstein Decl., Ex. G ¶ 2.)

         Beginning in 2009, the English court issued an order freezing Ablyazov's assets throughout the world. (Suppl. Bornstein Decl., Ex. B ¶ 8.) In 2015, the Bank obtained a worldwide freezing order (“WFO”) against Khrapunov, preventing him from dealing with his own assets or those he manages for Ablyazov. (Decl. of Peter M. Black, “Black Decl.”, Dkt. 3 ¶ 7.) When Khrapunov previously attempted to set aside the WFO issued against him, the court found that the Bank had “a good, arguable case that Mr. Khrapunov has committed the tort of conspiracy” and that there was a real risk that, unless restrained from doing so by court order, Khrapunov would dissipate his assets to prevent the Bank from being able to enforce any judgment it might ultimately obtain. (Suppl. Bornstein Decl., Ex. C ¶ 54.)

         Currently, Khrapunov has a two-day hearing scheduled for November 20 and 21, 2017, in the English court, to determine whether or not to discharge the English WFO and Cross-Examination orders against him. (Opp'n at 8.)

         II.LEGAL STANDARD

         A. Subpoenas pursuant to 28 U.S.C. § 1782

         Under 28 U.S.C. § 1782, a district court may order a person residing or found within its district to produce documents or testimony for use in a foreign legal proceeding, unless the disclosure would violate a legal privilege. 28 U.S.C. § 1782(a); Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 246-47 (2004). The statute may be invoked where: (1) the discovery sought is from a person or entity residing 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 applicant is a foreign or international tribunal or an “interested person.” See In re Republic of Equador, No. 10-mc-80225-CRB (EMC), 2010 WL 3702427, at *2 (N.D. Cal. Sept. 15, 2010).

         A district court is not required to grant the application, but instead retains wide discretion to determine what discovery, if any, should be permitted. See Intel, 542 U.S. at 264; see also Four Pillars Enters. Co. v. Avery Dennison Corp., 308 F.3d 1075, 1078 (9th Cir. 2002). In exercising that discretion, the court should consider the following non-exhaustive factors: (1) whether the “person from whom discovery is sought is a participant in the foreign proceeding”; (2) “the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance”; (3) whether the discovery request is an “attempt to circumvent proof-gathering restrictions or other policies of a foreign country or the United States”; and (4) whether the discovery requested is “unduly intrusive or burdensome.” Intel, 542 U.S. at 264-65 (“the Intel factors”).

         “The burden of persuasion in a motion to quash a subpoena issued in the course of civil litigation is borne by the movant.” In re Ex Parte Apple Inc., No. 12-mc-80013-JW, 2012 WL 1570043, at *1 (N.D. Cal. May 2, 2012) (quoting Green v. Baca, 226 F.R.D. 624, 653-54 (C.D. Cal. 2005) (citation omitted)).

         B. Request for Judicial Notice

         As a general rule, a district court may not consider any material beyond the pleadings in ruling on a motion. Lee v. City of Los Angeles,250 F.3d 668, 688 (9th Cir. 2001). A district court may take notice of facts not subject to reasonable dispute that are “capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b); United States v. Bernal-Obeso,989 F.2d 331, 333 (9th Cir. 1993). “[A] court may take judicial notice of ‘matters of public record, '” Lee, 250 F.3d at 689 (citing Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986)), and may also consider “documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading.” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbr ...


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