Valna Holding Cypress Ltd v. Bibo Biopharma Engineering Company Ltd., et al.

Background

Valna Holding Cypress Ltd. filed an action seeking confirmation of arbitration awards against BiBo Biopharma Engineering Company Ltd., BiBo Pharma Scientific Company Ltd., and BiBo Biopharma Engineering Co., Ltd. The arbitration award required two respondents to pay $3 million, pre-award interest of $175,808.22, post-award interest at 3% per year, and specified legal and arbitration costs.

Before the arbitration award was confirmed, Valna moved for expedited discovery from third-party 89bio, Inc. Valna believed that BiBo Biopharma held accounts receivable from 89bio and sought information about a collaboration agreement, a reported $161.5 million payment, and a forthcoming $13.5 million milestone payment. The court ordered Valna to serve the motion on 89bio. No opposition was filed.

Legal standard

Rule 26(d) generally prevents a party from seeking discovery before the parties have held the required discovery conference, unless the rules, an agreement, or a court order allows it. Courts may permit early discovery for good cause when the need for expedited discovery, considering the administration of justice, outweighs the prejudice to the affected party. The court considered the absence of a preliminary-injunction motion, the scope and purpose of the request, the burden on 89bio, and the timing of the request.

Discussion

The court found no good cause. First, there was no pending motion for a preliminary injunction, and Valna did not indicate that it intended to file one. The court also found that it was unclear whether 89bio’s assets would ultimately be relevant because Valna only believed that BiBo Biopharma held accounts receivable from 89bio. Valna had not shown that it could not obtain assets directly from the respondents.

Second, the court recognized that the proposed discovery was narrow and focused. But the court determined that its purpose was to identify a possible way to enforce the arbitration award if the award were later confirmed, rather than to address the merits of whether the award should be confirmed. The court therefore found that the request would not meaningfully move the confirmation case forward.

Third, although the subpoena’s limited scope meant that the burden on 89bio was likely small, the court emphasized that nonparties should not bear discovery burdens that properly belong to the parties. Valna had not shown that the requested information was unavailable from the respondents. The court also found the usual timing factor inapplicable because this case was exempt from ordinary Rule 26 disclosure requirements and discovery was controlled by the judge.

Disposition

The court held that Valna had not shown that the need for discovery about enforcing an arbitration award that had not yet been confirmed outweighed even the low burden on 89bio. It denied Valna’s motion for expedited discovery. This order did not decide whether the arbitration award should be confirmed.