Discovery Sanctions in § 1782 Proceedings: The Fifth Circuit Clarifies No Mandatory Conference Is Required Before Rule 37(b) Relief

Introduction

Banco Mercantil v. Paramo (No. 24-20375, 5th Cir. Aug. 11, 2025) is the latest skirmish in a growing line of cross-border asset-recovery disputes. Two Mexican financial institutions—Banco Mercantil de Norte, S.A. and Arrendadora y Factor Banorte, S.A. de C.V. (collectively, “the Banorte Parties”)—have accused a Mexican businessman, Juan Jose Paramo, of fraud and asset concealment. Having located Paramo in Texas, the Banorte Parties invoked 28 U.S.C. § 1782 to collect U.S. discovery in aid of ongoing Mexican civil proceedings.

The discovery battle culminated in the district court’s imposition of sanctions under Federal Rule of Civil Procedure 37(b) after Paramo produced a Rule 30(b)(6) witness who was almost entirely unprepared. On appeal the Fifth Circuit affirmed, holding that:

• Rule 37(b) sanctions were appropriate when a corporate designee lacked the knowledge required by Rule 30(b)(6);
• § 1782 discovery orders and related sanctions are immediately appealable under the collateral-order doctrine once the scope of discovery is conclusively fixed; and
• Rule 37(b) does not require the movant to certify that it conferred with the opposing party, distinguishing the express conference requirements in Rules 37(a) and 37(d).

Summary of the Judgment

The panel (Chief Judge Elrod and Judges Duncan & Engelhardt) unanimously affirmed the district court’s award of $36,139.70 in joint-and-several attorneys’ fees and costs against Paramo and Somaris & JJ Properties LLC. Key holdings include:

1. The Fifth Circuit possessed appellate jurisdiction because the sanctions order “fully resolved the scope of discovery” and therefore fell within the collateral-order doctrine applicable to § 1782 disputes (Banca Pueyo standard).
2. Failure to meet-and-confer is not fatal to a Rule 37(b) motion when the underlying discovery violation concerns a court-ordered Rule 30(b)(6) deposition. Rule 37(b) itself lacks a conferral requirement.
3. Testimony revealing that the designee had no substantive knowledge “well within the scope” of the 30(b)(6) notice supports sanctions. The district court’s factual finding that the witness was unprepared was not clearly erroneous.
4. The court’s fee award—calculated under the lodestar method, informed by affidavits on prevailing rates, and discounted for overlap with future preparation—fell within the district court’s broad discretion.

Analysis

Precedents Cited and Their Influence

• Banca Pueyo SA v. Lone Star Fund IX (US), L.P., 978 F.3d 968 (5th Cir. 2020) – Confirmed that certain § 1782 discovery orders are immediately appealable. The panel relied on its “conclusively determined” standard to find jurisdiction.
• Brazos River Auth. v. GE Ionics, Inc., 469 F.3d 416 (5th Cir. 2006) – Articulated the duty of a corporate designee to be fully knowledgeable and prepared; cited to underscore why the Somaris witness failed the Rule 30(b)(6) obligations.
• Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., 685 F.3d 486 (5th Cir. 2012) – Provided the framework for awarding attorneys’ fees under Rule 37(b) (lodestar method and use of affidavits).
• Resolution Trust Corp. v. Southern Union Co., 985 F.2d 196 (5th Cir. 1993) – Earlier sanction for an unknowledgeable 30(b)(6) witness; the panel cited this to reaffirm that sanctions are proper when the designee “possessed no knowledge” relevant to the deposition topics.
• Fessler v. Porcelana Corona de México, 23 F.4th 408 (5th Cir. 2022) & Combs v. City of Huntington, 829 F.3d 388 (5th Cir. 2016) – Supplied abuse-of-discretion standards and clarified when factual or legal missteps constitute reversible error.

Legal Reasoning

The circuit court’s reasoning progressed through three logical stages:

1. Jurisdiction. Applying Banca Pueyo, the panel reiterated that § 1782 discovery orders can be appealed immediately if they finally decide the discovery dispute. Because no further modifications to the Somaris subpoena were contemplated, the order was final for collateral-order purposes.
2. Entitlement to Sanctions.
   • Rule 30(b)(6) requires a corporation to designate a witness who embodies the “collective knowledge” of the entity.
   • Rule 37(b) permits sanctions for disobeying any discovery order, including implicit orders requiring that a proper 30(b)(6) witness appear.
   • The witness testified to complete ignorance of even the documents explicitly listed in the subpoena. This established a “failure to obey” within Rule 37(b)(2).
   • The panel rejected Paramo’s argument that sanctions were improper because some questions exceeded the notice’s scope. The court found ignorance even as to in-scope matters, rendering the objection irrelevant.
3. Appropriateness and Calculation of Fees.
   • Under Smith & Fuller, the lodestar analysis begins with hours reasonably expended multiplied by a reasonable hourly rate; there is a strong presumption that the computed figure is reasonable.
   • The Banorte Parties submitted affidavits on market rates for complex cross-border discovery, which the district court credited.
   • The court exercised discretion to reduce fees for work product reusable in a future deposition, underscoring thoughtful application rather than rubber-stamping.
   • No separate “meet-and-confer” certificate was required because Rule 37(b) lacks that textual requirement; any perceived gap was cured by evidence of pre- and post-deposition discussions and the futility of further conferences.

Impact on Future Litigation

The opinion, though unpublished, crystallizes several practical and doctrinal points that will likely influence § 1782 practice and discovery sanctions nationwide:

• Clarity on Conference Requirements. Litigants sometimes conflate the “good-faith conference” mandates of Rules 37(a) and 37(d) with Rule 37(b). The Fifth Circuit’s explicit clarification will serve as a citation in future disputes where parties attempt to defeat sanctions motions by pointing to an alleged failure to confer.
• Elevated Risk in Cross-Border Asset Cases. Asset-concealment defendants who use shell entities (like Somaris) are now on notice that offering an uninformed straw executive can generate tangible fee awards. Counsel will need to vet designees carefully or seek protective orders early.
• Expansion of Collateral-Order Appealable Spectrum. By reiterating that sanctions determining the “scope” of § 1782 discovery are appealable, the Fifth Circuit assures practitioners that appellate review is available without awaiting final judgment in the foreign case (which may never occur in the U.S.).
• Fee Affidavits Are Enough. The court endorsed affidavits alone as sufficient to establish market rates, simplifying fee-application burdens in sanctions motions.

Complex Concepts Simplified

• 28 U.S.C. § 1782: A U.S. statute that allows parties in foreign or international tribunals to obtain discovery through U.S. federal courts, so long as the evidence “resides” in the United States. It is a powerful tool for cross-border litigants.
• Rule 30(b)(6) Deposition: A deposition of an organization (corporation, LLC, agency) where the entity, not the individual, is the deponent. The organization must designate one or more persons who testify on its behalf and who must be prepared to speak knowledgeably on the listed topics.
• Rule 37(b) Sanctions: Remedies a court may impose when a party fails to comply with a discovery order. Sanctions range from fee-shifting to harsher measures like default judgment or contempt.
• Collateral-Order Doctrine: An exception to the “final judgment rule.” It allows immediate appeal of orders that (1) conclusively decide an important issue, (2) are separate from the merits, and (3) would be effectively unreviewable after final judgment.
• Lodestar Method: A two-step calculation for attorneys’ fees: (1) reasonable hours × reasonable hourly rate, then (2) adjustments for factors such as novelty, complexity, or success achieved.

Conclusion

Banco Mercantil v. Paramo fortifies several pillars of discovery jurisprudence in the Fifth Circuit. First, it removes doubt that parties who fail to present a competent Rule 30(b)(6) witness in § 1782 proceedings risk prompt sanctions—without the delaying shield of a mandatory meet-and-confer. Second, it reinforces the collateral-order pathway for immediate appellate review of discovery orders where foreign litigation is ongoing. Finally, it affirms district courts’ broad discretion in crafting fee awards so long as they tether their analysis to the lodestar framework and the record evidence.

In cross-border asset recovery, time is often the plaintiff’s enemy and concealment the defendant’s ally. The Fifth Circuit’s opinion arms district courts with confidence to police discovery abuse swiftly and to shift the economic burden of non-compliance. Counsel, particularly those representing shell entities or asset-shielding defendants, must heed the lesson: produce knowledgeable witnesses or be prepared to open the checkbook.