Takeaway
In short, a foreign partnership may be compelled to comply with a New York subpoena when its partner is validly served in New York, and neither due process nor the Hague Convention required a different result here.
Before BCCI collapsed, Price Waterhouse United Kingdom Firm (PW-UK) served as its worldwide auditor. PW-UK used affiliated Price Waterhouse firms in other countries, including Price Waterhouse LLP in the United States (PW-US), to audit local BCCI entities and provide information for PW-UK’s consolidated financial statements.
First American Corporation and First American Bankshares alleged in a District of Columbia action that BCCI had secretly acquired them through an unlawful conspiracy. Seeking documents relevant to that litigation, First American served a Rule 45 subpoena in New York on “Price Waterhouse,” expressly defining that term to include PW-UK. The subpoena was hand-delivered in Manhattan to Clive Newton, a PW-UK partner seconded to work at PW-US’s New York office. PW-UK did not produce the requested documents.
The Southern District of New York compelled production and later held PW-UK in contempt, imposing a stayed $1,000-per-day sanction. The district court concluded that PW-UK was doing business in New York through PW-US under New York’s general-jurisdiction statute. It rejected First American’s theory that Price Waterhouse was a worldwide partnership by estoppel because First American had not shown its own reliance on any such representation. Both sides appealed.
Issue #1
Whether a New York federal court had personal jurisdiction over PW-UK to enforce the Rule 45 subpoena.
Holding
Yes. Valid personal service in New York on Newton, an admitted PW-UK partner, gave the court jurisdiction over the partnership under N.Y. C.P.L.R. § 310(a).
Reasoning
The court did not rely on the district court’s more complicated conclusion that PW-UK was “doing business” in New York through PW-US. Instead, it applied C.P.L.R. § 310(a), which permits personal service on a partnership by personally serving any one of its partners. Under that provision, service and personal jurisdiction are effectively resolved together: service on a partner within New York establishes jurisdiction over the partnership.
Newton was undisputedly a PW-UK partner when the subpoena was served, and the record established that he was personally handed the subpoena at PW-US’s Manhattan office. PW-UK’s argument that Newton’s Connecticut residence defeated New York jurisdiction confused rules governing residence and notice with the separate rule governing service on partnerships.
Although the subpoena was directed to “Price Waterhouse,” it expressly defined that term to include PW-UK. Because it was served on a PW-UK partner, PW-UK had adequate notice that it was itself a target. The court therefore had no need to decide whether a worldwide Price Waterhouse partnership existed or whether PW-US acted as PW-UK’s agent.
Issue #2
Whether jurisdiction based on service of the subpoena on PW-UK’s partner in New York comported with due process.
Holding
Yes. The exercise of jurisdiction was consistent with due process.
Reasoning
Relying on Burnham v. Superior Court, the court held that personal service on a person physically present in the forum remains a constitutionally valid basis for jurisdiction. That traditional rule gave PW-UK clear notice that sending one of its partners to New York could expose the partnership to legal process there.
PW-UK’s foreign status and its position as a nonparty witness did not create a categorical due-process exception. Indeed, Newton was not a brief or casual visitor: PW-UK had seconded him to a prolonged assignment at PW-US’s New York office, where he performed work connected to audits that assisted PW-UK’s consolidated BCCI audit.
The connection to New York was especially substantial because PW-US audited BCCI’s American subsidiaries, including entities relevant to First American’s allegation that BCCI concealed its ownership of First American. Enforcing a document subpoena in these circumstances did not offend traditional notions of fair play and substantial justice.
Issue #3
Whether First American had to seek discovery first through the Hague Convention on the Taking of Evidence Abroad rather than through a Rule 45 subpoena.
Holding
No. The Hague Convention was neither exclusive nor a mandatory first resort, and the circumstances favored direct Rule 45 discovery.
Reasoning
Under Société Nationale Industrielle Aérospatiale, the Hague Convention does not displace ordinary federal discovery procedures and courts must assess comity case by case. Rule 45 also does not impose a narrower discovery standard merely because the target is a nonparty.
PW-UK’s nonparty status was relevant to comity but was not dispositive. Critically, PW-UK did not establish a true conflict between federal discovery rules and British confidentiality law. British authority indicated that confidentiality duties may yield where disclosure is compelled by law or where disclosure serves the public interest in exposing fraud.
British courts had already considered related requests and indicated that customer injunctions and applicable confidentiality rules did not bar production. If a foreign court later actually prohibited disclosure, PW-UK could seek relief from sanctions by showing substantial justification for noncompliance under Rule 37. The court therefore saw no present conflict requiring it to defer to foreign procedures.
Hague Convention procedures would also be ineffective for this request. The United Kingdom’s Article 23 reservation permits pretrial document discovery only when each document is individually described, while First American plausibly could not identify particular documents without access to the broader BCCI-related records. Requiring Hague procedures would thus unduly restrict access to potentially important evidence.
Issue #4
Whether the subpoena was impermissibly overbroad or unduly burdensome.
Holding
No. The district court did not abuse its discretion in enforcing it.
Reasoning
The subpoena sought documents concerning BCCI’s acquisition or ownership interest in First American, which was the precise subject of the underlying lawsuit. Its potentially large scope reflected the scale and complexity of the alleged BCCI misconduct rather than an improper lack of relevance.
PW-UK showed that production could be burdensome, but it did not demonstrate that the burden was undue. It also did not obtain, or challenge on appeal the denial of, a protective order shifting production costs to First American.
Issue #5
Whether First American could establish that Price Waterhouse was a worldwide partnership by estoppel, or obtain appellate resolution of whether such a partnership existed in fact.
Holding
No. First American did not establish partnership by estoppel, and the court declined to decide in the first instance whether a worldwide partnership existed in fact.
Reasoning
Partnership by estoppel required First American to show that it relied on a representation that Price Waterhouse operated as a worldwide partnership. Even assuming representations of that kind were made to BCCI and relied on by BCCI, the district court found insufficient evidence that First American itself relied on them, and the court of appeals found no reason to disturb that finding.
The district court had not ruled on First American’s separate theory that Price Waterhouse was a worldwide partnership in fact. Because the appellate court could uphold jurisdiction through valid service on a PW-UK partner, it declined to resolve that unresolved factual and legal question for the first time on appeal.