Court Zaps Subpoena of Attorney Records on Shell Oil

MANHATTAN (CN) - Delivering another defeat to a human-rights case that fell apart at the Supreme Court, the Second Circuit blocked an order Tuesday that would have forced a U.S. law firm to turn over client records.

Back in the early days of the case, the New York law firm Cravath, Swaine & Moore had represented Royal Dutch Shell against a group of Nigerians who suffered atrocities at the hands of their country’s military and police. Led by Esther Kiobel, the Nigerians sought to hold Shell liable under the Alien Tort Statute, but the Supreme Court eventually found that the United States lacked jurisdiction in the suit.

With lead plaintiff Esther Kiobel now pursuing justice at The Hague, where Shell is based, she subpoenaed the firm Cravath to turn over its old case documents.

A federal judge in New York granted Kiobel’s petition, but the Second Circuit reversed Tuesday, calling it an abuse of discretion to have “American counsel to deliver documents that would not be discoverable abroad.”

Quoting the 1997 case Application of Sarrio S.A., the appeals court said relief for Kiobel here “would jeopardize ‘the policy of promoting open communications between lawyers and their clients.’”

Indeed, the 15-page ruling states, “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.”

Writing for a three-person panel, U.S. Circuit Judge Dennis Jacobs warned of the potential fallout that courts could see if Kiobel’s subpoena was granted.

“In order to avoid potential disclosure issues under Section 1782, U.S. law firms with foreign clients may be forced to store documents and servers abroad, which would result in excessive costs to law firms and clients,” Jacobs wrote. “Alternatively, U.S. law firms may have to return documents to foreign clients (or destroy them) as soon as litigation concludes.”

(Parentheses in original.)

Kiobel was represented on appeal by Marco Simons, general counsel for EarthRights International. Simons said they are considering a petition for rehearing, calling the ruling here novel.

“This is the first time the Second Circuit has reversed a District Court’s discretionary decision to allow discovery under this statute,” Simons said in an interview.

Representatives for Cravath meanwhile declined to comment, forwarding a request on to Shell.

"Pursuit of this appeal does not change our firm commitment to support fundamental human rights in line with the legitimate role of business,” Shell said in a statement. “We have always denied, in the strongest possible terms, the allegations made by the plaintiffs in this tragic case. We believe it is right that the court has ruled against discovery of documents that were sent to the US for the purpose of American legal proceedings, in order to pursue a case in another jurisdiction. Suing a US law firm should not be a back door to secure documents from foreign clients, who are outside of US jurisdictional boundaries."

Many of Kiobel’s former co-plaintiffs settled before the case went to the Supreme Court. Kiobel, whose husband was executed in 1995, claims that residents of Nigeria’s Ogoniland faced persecution for opposing oil exploration of their land.

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