Imagine going to buy a piece of property, and the realtor tells you it’s prime real estate. But then after you sign on the dotted line, you find out it’s in a flood zone, or close to something noisy like an airport. You got the ole bait n’ switch.
That principle is at the heart of this case for Luxshare, involving 28 U.S.C. § 1782—but for SCOTUS specifically, it’s what the hell constitutes a foreign or international tribunal. I know, you’re already riveted, right?
Well, a lot of people are apparently interested, because unlike most cases which have two sides, one representative each, and maybe one amicus between then, this case had three fucking people arguing for the petitioners, ZF Automotive, and two arguing for the respondents Luxshare. Five fucking people arguing this shit! That’s a record, for me.
Anyway…
Congress wrote 28 U.S.C. § 1782 to assist in international disputes, as a courtesy to other nations. As you may know, when you sue someone, you can request relevant documents, if you have evidence they’re pertinent to your case, via a subpoena.
So the gist of this law is basically that if a company is being sued in Germany for instance, but their headquarters are in New York, the German court can ask New York to order the company they want documentation from, to turn that shit over for use in German court proceedings, just as they’d have to do if the suit were all transpiring in the United States.
Most countries have a similar law—it’s just a way to reciprocate with each other in a world that has a lot of international business disputes.
When 28 U.S.C. § 1782 was originally written in 1948, it specified “courts” as the entity who can demand discovery. But then congress amended the language in 1964 to read as “foreign tribunals.”
It is well understood their intentions in amending this language were meant to broaden the scope to more than just courts, as there are other “official” proceedings that should have a right to subpoena evidence. It’s been applied to magistrates and governmental investigations around the world.
However, people have also attempted to use it to apply to international private arbitrations, which is why we’re here now—SCOTUS has had enough of this shit. Private arbitrations are when two parties agree to hire arbitrators, which are private entities—often lawyers—to settle their dispute out of court.
For the case in question here, in 2017, technology company Luxshare bought a Michigan factory owned by German auto-manufacturer ZF Automotive. But after moving into its new digs, Luxshare was not pleased with their purchase. They believed that ZF Automotive were less than honest about the value of this shithole.
As an Ohioan, I’d like to point out that it was in Michigan, so you’d think they’d have known it was basically worthless—nothing good comes from Michigan, except maybe Tom Brady.
Once Luxshare realized they’d gotten got, they wanted restitution. In their purchasing contract with ZF, they agreed to arbitration in Germany if there were any disputes of this nature. So using 28 U.S.C. § 1782 as their wingman, Luxshare requested a Michigan court to force ZF to help them with discovery documents from ZF Auto.
They wanted to prove they were highballed, since the ZF location in question is located in Michigan, but the discovery is to assist in support of their agreed-upon arbitration in Germany.
Stepping back for a second, I suppose I should explain something I haven’t previously. I know I often gloss over this, but in general, it should be understood that basically no one gets to go straight to the fucking Supreme Court.
Otherwise, the opposite of original jurisdiction is “Appellate Jurisdiction,” which is when a lower court rules, and a party of that decision, generally the loser, is none too pleased with those fucking idiots, and decides to appeal to a higher court.
This is called submitting a writ of certiori. The higher court reviews this writ, and decides whether they think it’s worth their time to review, or if they think it’s a big old nothing burger and tell them to pound sand.
If the higher court does grant certiori (agree to hear the appeal), either the petitioner loses again, or the superior court decides the lower court were fucking idiots, and overrule them.
So now, whomever lost the second round is pissed, and they appeal that appeal to a higher court again. This dance of sore losers eventually meanders it’s way to SCOTUS, one higher court at a time.
SCOTUS is generally an appellate court—the prettiest appellate court in all the land. There is no appeal once you lose there—other than maybe trying to get your shit heard again by a newer SCOTUS years later.
While we’re on the subject of shit I often gloss over, it’s also worth noting that on the subject of legal documents, it’s good practice to define terms that are written in your law or contract that could be ambiguous. The better one does this, the less likely the document will be scrutinized in courts.
For instance, in a contract, maybe you have verbiage that says, “This contract is null and void if either party acts like an asshole.”
Asshole is a word that is rather open to interpretation. So the contract would (and should) have a definitions section, and there, it would define “asshole” specifically. It might say, “Asshole: A person who has made publicly disparaging remarks against the other party.”
So now, when courts or arbitrators have to determine if one of the parties was an asshole, they clearly understand what the test is to determine if they were an asshole or not—did that party talk shit about the other publicly?
Make sense?
So, now that you understand that, this a great time to mention that those lazy fucks in congress didn’t define “Foreign or international tribunal” in 28 U.S.C. § 1782. They were too busy insider trading and grandstanding in front of congressional cameras to write an actual well-written law. Classic fucking congress! It should be known that probably 90% of what SCOTUS does, is cleaning up congress’ rather avoidable fucking messes.
SCOTUS is often just an editor for whatever congress writes. Congress writes a law with the linguistic skills of a caveman, so then some member of the public interprets their idiotic law one way, while some other idiot or government official interprets it another way, and now these two have beef which could have been avoided if congress had spent a little time writing a better fucking law.
So SCOTUS had to read 28 U.S.C. § 1782, and be like, “What fucking idiot forgot to define ‘Foreign or international tribunals?’ Here, let us fix this for you, you fucking morons. There’s 538 of you fucking idiots, and you can’t write a decent fucking law between you.”
I know SCOTUS is all polite and professional in public, but you know in closed quarters, this is the language they use.
Anyway, on to the arguments…
Counsel Roman Martinez opened for the petitioner’s ZF Automotive by pointing out that the reports from congress, when updating this law to read “foreign tribunals” clearly show that their intent was to create a cooperative effort with foreign governments in a similar way as we’d hope they’d do for us if the roles were reversed. There’s no fucking mention of private arbitrations in this shit.
He also points out that since arbitrations are more common than court proceedings, district courts are going to have these requests falling out of their assholes if the court were to side with Luxshare.
Justice Kagan, ever the skeptic, pointed out that things like “foreign university” or “foreign language” don’t necessarily mean it’s government related. So your fucking argument is full of holes, bro!
Counsel Martinez went out to point out that the rules commission who drafted this new rule, were specifically told to do so by congress, in an effort to enhance cooperation between nations. So how the fuck would that translate to private arbitrations?
Justice Breyer, being ever the contrarian was like, “Sure congress gave them a directive, but this language can be interpreted more broadly to include private arbitration, so what’s the fucking harm in that?”
Next up was counsel Joseph Baio, also arguing for the petitioners. He also wanted to answer Justice Breyer’s question with the Judge Judy defense. No shit!
He was like, “If some asshole goes on Judge Judy’s program and asks for discovery, we wouldn’t give that old bag jack shit. Even though she’s an actual judge, her fucking show is just private arbitration. So for you to side with those other assholes, you’d be arguing that a German Judge Judy, would have the right to discovery that American Judge Judy does not!”
My quote may not be verbatim, but that was the basic gist of it.
He went on to tell justice Breyer, “if you side with those dipshits, you’re basically incentivizing ambulance chasers like me to start our arbitrations in foreign countries, so we can bypass your rules here.
Justice Breyer seemed unimpressed.
Counsel Baio, being a man of extreme examples, also put forth his violin defense.
He was like, “A foreign orchestra could hold an audition for a violinist. That is a decision-making process that would be allowed if you ruled for those fucking idiots over there. Do you really want that shit?”
Justice Sotomayor, seemingly unimpressed, asked about the World Trade Organization (WTO). She was like, what if they pick some arbitrators. They’re an independent organization, and not a government. So are they fucked?
Counsel Baio was like, “Listen, I’m sick of your shit. If the individuals disputing the case select the arbitrators, it’s fucking private, and they can get bent. If however the WTO picks the arbitrators, it’s an international organization of cooperating governments, so they get to demand discovery. Why is this so difficult?”
Next up was Edwin Kneedler, acting on behalf of the US Government in support of the petitioners. His opening was basically a greatest hits of the first two. He was like, “Listen, y’all know the reason we passed this fucking law. It was about international cooperation with other governments. Why are we even talking about this shit?”
He argued quite simply, that the line he draws, is that an international tribunal has to be:
Established by government, and exercising governmental authority.
He also cited international comity. The idea that the standard the respondents want isn’t what other countries recognize. So if he were to lose, the US would be giving up discovery like a twenty dollar whore, where other countries would be more like a thousand dollar whore or something.
Finally, for the respondents, we first have counsel Andrew Davies. He argued that the “best and most natural interpretation” of foreign tribunal includes commercial tribunals, because they’re adjudicating a party’s legal rights.
He also points out that the courts benefit from arbitrations, because that means they don’t have to handle all those fucking disputes. So if SCOTUS rules against his side, that will actually create more work for the courts, not less, because people will be less likely to arbitrate international affairs knowing they won’t have that discovery option available.
He also cited that the court has sided with previous arbitrations, as promoting international comity, so the other side are a bunch of fucking liars spewing bullshit. That while they may be right that some countries don’t provide arbitration support, most of our major trading partners do.
Justice Neil “Golden Voice” Gorsuch chimed in and was like, “Back in 1964, arbitration wasn’t “a thing” like it is today. So surely congress then couldn’t have envisioned the world we live in now, with fucking arbitrations all over the god damn place. Clearly, congress wasn’t considering private arbitrations when they wrote this fucking rule, yeah?”
Counsel’s response was essentially to point out there there are lots of countries already supporting arbitrations in this manner, and the language doesn’t rule it out, so that should be good enough.
Justice Breyer, siding with Gorsuch was like, “Dawg, you crazy.”
Finally, counsel Alexander Yanos for the respondent. He dug deep and was like, “Hey man, these other assholes are just flat wrong when they say congress didn’t anticipate arbitration in this law. The senate report used to incite the committee to draft this law cited a German Mixed Claims Commission, which was effectively arbitration.
Justice Roberts pointed out that a representative for the government was here, and arguing the opposite position. Shouldn’t their opinion matter?
But counsel Yanos was certain that the point of the law was for international cooperation. If an arbitration is set up in a foreign country, and it’s decisions are binding under law, and only appealable by the courts, then it’s an international tribunal, even if it’s private arbitration, because any appeals do end up in court.
Justice Gorsuch, seemingly unimpressed with counsel Yanos’ argument, and in agreement with the idea that it’ll add a lot more work to American courts, pointed out that 3rd party discovery is a pain in the ass that no one fucking likes. As such, he’s pretty sure congress wasn’t intending to make that shit the norm.
In a unanimous decision for ZF Automotive Group, SCOTUS decided that a foreign and international tribunal shall be defined as a governmental agency abroad, and not some rando third party arbitrators. Otherwise, it’ll basically be anarchy up in this bitch. Anyone with an international beef that forms some sort of inquiry board will be asking for shit they have no right to ask for.
As such, ZF is not required to hand over documents to Luxshare under 28 U.S.C. § 1782.
Weirdly, Justice Barrett who authored the opinion acknowledged that the word tribunal could certainly be interpreted as something that isn’t governmental in nature.
She also acknowledged that foreign just means not located in the US, it also doesn’t have to mean a foreign government.
But when used together, a foreign tribunal is generally thought of as a governmental agency that isn’t part of the United States. Her argument for this was the term “foreign leader.” She was like, you wouldn’t call the president of a company abroad a foreign leader would you? Fuck no. You’d call the leader of a foreign country that.
They went on to define a foreign tribunal as a governmental agency from a foreign country, and an international tribunal is one where two governments join together to form some intergovernmental agency, like maybe NATO, or the United Nations.
She then suggested that it was plainly obvious the US passed this law to create a level of mutual respect among international governments and the US, and if that’s the purpose, helping third-party arbitrators doesn’t really serve that purpose.
She finally hit her opinion home by pointing out that in the US, third-party arbitrators don’t often get the right to demand discovery. So if we don’t do it here at home carte blanche, why the fuck would we give some international assholes that power?
Hear oral arguments and read about the case here at Oyez, or here at SCOTUSBlog
The Logical Libertarian™ 