In re Turquoise Hill Resources Ltd. Securities Litigation

Background

Defendants moved under Federal Rule of Civil Procedure 28(b), 28 U.S.C. § 1781(b)(2), and the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters for a letter of request to the appropriate Australian judicial authority. The requested letter sought the testimony of, and documents possessed by, Mark Adams, who was not a party to the case and resides in Australia, outside the court’s jurisdiction.

The second amended complaint identified Adams as confidential witness “FE 6.” It alleged that he worked in Contracts and Procurement Management for Rio Tinto at the Oyu Tolgoi mine from October 2016 through May 2017 and had information about mine delays and the lack of progress. Defendants sought to question Adams about his knowledge, the basis for that knowledge, what he told others, and the mine’s budget and schedule. They also sought related documents and information about his role as a confidential witness.

Legal Standard

The court explained that Rule 28(b) and Section 1781 authorize federal courts to issue letters of request for evidence located abroad. In deciding whether to issue one, the court applies the discovery standards in Rule 26. That rule permits discovery of nonprivileged information that is relevant to a party’s claim or defense and proportional to the needs of the case. The decision to issue a letter of request is within the court’s discretion, and the party seeking Hague Convention procedures bears a burden of persuasion that the court described as not heavy.

Parties’ Arguments and the Court’s Analysis

The plaintiff argued that the court should not issue the letter because it did not expect Adams to be an important witness. The court held that the plaintiff lacked standing to challenge the request based on relevance or undue burden. The court also noted that the plaintiff did not dispute that Adams would be a witness or that he had relevant testimony. Rule 26 did not limit defendants to deposing only witnesses whom the plaintiff considered important.

The plaintiff also relied on the court’s earlier motion-to-dismiss ruling, which had given the allegations concerning Adams no significant weight. The court explained that its earlier ruling did not decide that Adams’s testimony was irrelevant. Instead, the earlier ruling noted that the complaint did not explain how Adams would have been positioned to know what would have been obvious to senior leadership or why the mine’s underground progress would have been obvious to people touring the site. The court stated that additional information about the basis for Adams’s observations and statements could make his information particularly relevant.

The plaintiff further argued that defendants had taken the position that Adams was not a relevant custodian and had declined to produce documents from the period when he worked at the mine. The court noted that the parties were still discussing the relevant time period. Defendants represented that they possessed certain relevant documents concerning Adams and would not use documents at his deposition that had not been produced in the case. The court assumed those documents would be produced and stated that any dispute about withholding documents that should be produced under Rule 26 could be raised through a motion to compel. It declined to prejudge that issue or block the requested discovery.

Disposition

Judge Lewis J. Liman granted the motion for issuance of the letter of request. The clerk was directed to close docket entry 254. The order concerns discovery from Adams and does not resolve the merits of the securities litigation or take a position on any future motion to compel.