Application of financialright claims GmbH v.

NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _____________ No. 24-3171 _____________ In re: Application of financialright claims GmbH For an Order Pursuant to 28 U.S.C. 1782 to Conduct Discovery for Use in a Foreign Proceeding BURFORD GERMAN FUNDING LLC; GERMAN LITIGATION SOLUTIONS LLC; BURFORD CAPITAL LLC, Appellants _____________ On Appeal from the United States District Court for the District of Delaware (D. Del. No. 1:23-cv-01481) District Judge: Honorable Colm F. Connolly _____________ Argued on March 4, 2025 _____________ Before: MATEY, FREEMAN, and ROTH, Circuit Judges (Filed: October 22, 2025) _____________ Travis G. Edwards Minsuk Han Derek T. Ho [Argued] Rund Khayyat Eliana M Pfeffer Daren G. Zhang Kellogg Hansen Todd Figel & Frederick 1615 M Street NW Sumner Square, Suite 400 Washington, DC 20036 Counsel for Appellants - Burford German Funding LLC and Burford Capital LLC Anne S. Gaza Samantha G. Wilson Young Conaway Stargatt & Taylor 1000 N King Street Rodney Square Wilmington, DE 19801 Counsel for Appellants - Burford German Funding LLC, Burford Capital LLC, and German Litigation Solutions LLC Edward P. Boyle Allison M. Cunneen Venable W 42nd Street 49th Floor New York, NY 10036 Counsel for Appellant - German Litigation Solutions LLC Albert Bates, Jr. Troutman Pepper Locke Grant Street Union Trust Building, Suite 300 Pittsburgh, PA Counsel for Amicus-Appellant Polina M. Bensman Jeffrey A. Rosenthal [Argued] Cleary Gottlieb Steen & Hamilton One Liberty Plaza New York, NY 10006 Counsel for Appellee ___________ OPINION ____________

ROTH, Circuit Judge, Appellee, financialright claims GmbH (FRH), initiated a discovery procedure under 28 U.S.C. § 1782. Appellants, Burford German Funding (BGF), Burford Capital LLC (BCL), and German Litigation Solutions LLC (GLS) (collectively “Burford”), believed that the proceeding breached FRH’s contractual commitments to them and moved to compel arbitration. Although 9 U.S.C. § 206 would likely have authorized that motion, Burford chose instead to bring it under 9 U.S.C. § 4. The District Court denied Burford’s motion, finding that § 1782 petitions are not “civil actions,” as required by § 4. As a matter of first impression, we agree. While both sides have put forth thoughtful arguments, and this appeal provides us with no need to determine the meaning of “civil actions” generally, our review of § 4’s history and context, as well as of our sister-circuits’ interpretation of parallel provisions, persuades us that the District Court properly disclaimed jurisdiction.

We will affirm.

I.

BGF is an entity created to fund mass antitrust suits in Germany. It is co-owned by BCL and GLS (collectively with BGF, “Burford”). Because German law does not allow for class actions, bringing a mass action necessitates going one by one to potential plaintiffs and having them assign their individual claims to a claim aggregator.

In July of 2016, the European Commission found that five truck manufacturers had engaged in price fixing. This gave many German truck owners potential causes of action against those manufacturers. In April 2017, BGF entered into a Capital Provision Agreement (CPA) with FRH, under which FRH would serve as the aggregator for those claims and BGF would fund the ensuing litigations. The CPA included an expansive arbitration provision, covering any “dispute, controversy or claim arising out of or in connection with” the CPA “including any question regarding its formation, existence, validity, interpretation, performance, breach, or termination.” 1 The CPA further required FRH to use BGF’s chosen law firm—Hausfield Rechtanswalte LLP—to prosecute the litigations. FRH entered into a representation agreement with Hausfield in June 2017. That agreement did not contain an arbitration provision and instead required all disputes to be litigated in German court in Berlin.

In late 2021, FRH came to believe that individuals affiliated with Hausfield held an undisclosed ownership stake in GLS, one of BGF’s parent entities. As a result, Hausfield was allegedly indirectly receiving a percentage of the recovery from the ongoing litigations—which, FRH argues, violated Germany’s restrictions on contingency fees.

This led FRH to file a complaint against Hausfield in German court in December 2023.

Simultaneously, FRH petitioned in the District of Delaware for an order, pursuant to 28 U.S.C. § 1782, authorizing it to seek discovery from Burford. 2 Relying on the arbitration clause in the CPA, Burford moved to compel arbitration under 9 U.S.C. § 4, and to stay proceedings pending that arbitration under 9 U.S.C. § 3. When pressed at a motion hearing, Burford confirmed that the statutory bases for its motions were §§ 3 and 4. The District Court denied Burford’s arbitration motion, finding that § 4 of the FAA does not confer subject matter jurisdiction to compel the arbitration of § 1782 petitions. 3 Burford appealed. 4 II.

The District Court had jurisdiction over FRH’s discovery petition under 28 U.S.C. § 1782. 5 It had putative jurisdiction over Burford’s motion to compel under 9 U.S.C. § 4, and over its stay motion under § 3. We have interlocutory appellate jurisdiction under 9 U.S.C. §§ 16(a)(1)(A)–(B). We apply plenary review to the District Court’s analysis of the FAA and determinations concerning its subject matter jurisdiction. 6 III.

9 U.S.C. § 4 authorizes any district court which, “save for” an arbitration agreement, “would have jurisdiction under title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties” to issue an order compelling arbitration. By its terms, § 4 thus requires the litigation in question to be both a “suit” and (outside of admiralty) a “civil action.” The District Court concluded that § 1782 petitions do not satisfy these predicate requirements, and we agree. That said, whether the drafters of the FAA would have viewed § 1782 petitions as suits is far from clear. Multiple lines of evidence, however, collectively persuade us that they would not have viewed them as civil actions.

A.

Although undoubtedly capacious, statutory references to the term “suit” have never been treated as encompassing all judicial proceedings. Instead, courts have traditionally assumed that (barring contrary evidence) Congress intended the term to cover only proceedings that are both sufficiently formal and sufficiently independent from any related litigation. 7 Likewise, courts have long expressed hesitancy before applying that term to requests for purely discretionary judicial intervention. 8 This reflects the reality that the touchstone of a “suit” has always been the vindication of an affirmative right of the suitor. 9 The boundaries laid out by these precedents are admittedly murky, and their application can be charitably described as inconsistent. 10 Yet, in the context of discovery mechanisms like § 1782, we do not write on a blank slate. While we are aware of no court that has meaningfully analyzed whether subpoena petitions are “suits” for the purpose of the FAA, courts have frequently been asked to decide whether various subpoena proceedings qualify as “suits” for Eleventh Amendment purposes—and have widely found that they do not. 11 Our Court has not yet weighed in on that question, but we note that the case for following our sister-circuits’ reasoning is stronger in the context of § 1782. Unlike other discovery mechanisms, § 1782 petitions are, by definition, ancillary to a separate matter of right and not of discretion”); Cohens v. Virginia, 19 U.S. 264, 410 (1821) (Marshall, C.J.) (declining to treat petition as suit where no substantive claim was asserted). proceeding, 12 purely discretionary, 13 and primarily aimed at assisting foreign tribunals.14 It is thus hard to describe § 1782 petitions as vindicating any “right” at all. 15 Nor are they comparable to declaratory or injunctive suits, in which a plaintiff has no right to a particular remedy but has suffered an injury to a vested legal 16 or equitable 17 right. We therefore question whether, even focusing solely on the statute’s “suit” requirement, § 1782 proceedings would qualify for arbitration under § 4.

B.

In fact, we need not resolve whether § 1782 proceedings satisfy § 4’s “suit” requirement because, even assuming Congress would have viewed § 1782 proceedings as “suits,” we do not believe it would have considered them to be “civil actions.”

Like many terms in the legal lexicon, the term “civil action” can be an elusive one.

In its broadest sense, it has sometimes been used synonymously with “suit.” 18 However, since the proliferation of the Field Code in the mid-19th century which merged law and equity and eliminated the traditional forms of action, 19 the term has developed a more technical, more common, and more limited definition: proceedings begun by a formal summons and pleadings and culminating in a judgment (as distinguished from special proceedings lacking these requirements). 20 While we acknowledge the considerable uncertainty in this area, we believe it most likely that the drafters of the FAA had this later definition in mind.

By the time Congress passed the relevant iteration of § 4 in 1954, versions of the Field Code’s conception of “civil action” had become widely adopted throughout the nation in both statutes and caselaw. 21 The Field Code definition was also reflected in the Alaskan civil code, enacted by Congress in 1900, 22 the Code of Civil Procedure of the Canal Zone, enacted by Congress in 1933, 23 and the Canal Zone Code, enacted by Congress in 1962. 24 Most importantly, the Field Code’s conception of civil actions was embedded in the Federal Rules of Civil Procedure, which Burford acknowledges were (along with the codification of Title 28) the immediate impetus for § 4’s current text. 25 Congress has also shown that, where it wishes to employ a broader definition of the term “civil action,” it knows how to do so. 26

Lamborn, 8 P. 582, 584 (Colo. 1885); Appeal of Slattery, 96 A. 178, 179 (Conn. 1915); Nelson v. Steele, 88 P. 95, 95–96 (Idaho 1906); Evans v. Evans, 5 N.E. 24, 27–28 (Ind.

1886); In re Bradley, 79 N.W. 280, 281 (Iowa 1899); Lanning v. Gay, 78 P. 810, 810–11 (Kan. 1904); Gay v. Morgan, 67 Ky. 606, 606–07 (1868); Schuster v. Schuster, 87 N.W. 1014, 1015 (Minn. 1901); Bopst v. Williams, 229 S.W. 796, 798–99 (Mo. 1921); Deer Lodge Cnty. v. Kohrs, 2 Mont. 66, 70–71 (1874); Turpin v. Coates, 11 N.W. 300, 301 (Neb. 1881); State ex rel. Germain v. District Court, 51 P.2d 219, 222 (Nev. 1935) (overruled primarily on statutory grounds by Cord. v. Second Judicial District, 533 P.2d 1355 (Nev. 1975)); Tate v. Powe, 64 N.C. 644, 647–48 (1870); Dow v. Lillie, 144 N.W. 1082, 1084 (N.D. 1914); State v. Rosenwald Bros. Co., 170 P. 42, 43–44 (N.M. 1918); Missionary Soc. of Methodist Episcopal Church v. Ely, 47 N.E. 537, 538 (Ohio 1897); Harryman v. Bowlin, 4 P.2d 1011, 1012 (Okla. 1931); Livesly v. Landon, 138 P. 853, 854 (Or. 1914); Smith v. Saye, 127 S.E. 568, 569 (S.C. 1925); In re Golder’s Estate, 158 N.W. 734, 736 (S.D. 1916); Smith v. Ormsby, 55 P. 570, 570 (Wash. 1898); In re Welch, 84 N.W. 550, 552 (Wis. 1900); see generally Kellen Funk, Equity without Chancery: The Fusion of Law and Equity in the Field Code of Civil Procedure, New York 1846–76, 36 J. Legal Hist. 152, 167 (2015) (noting that, by 1900, “more than twenty-five states and territories had enacted one or another version of the [Field] Code”).

This statutory history does not mean that the modern definition of “civil actions” has become that term’s only possible interpretation, or that it should be mechanically applied regardless of context. 27 Yet it does suggest to us that, in the absence of further Congressional guidance, it is the best interpretation for the purpose of this appeal. That is particularly true because, as with the term “suit,” we do not paint on fresh canvas. The pages of the U.S. Code are flush with references to “civil actions.” Whether it be the Equal Access to Justice Act, 28 the National Childhood Vaccine Injury Act, 29 the Federal Tort Claims Act, 30 or elsewhere, 31 courts addressing such clauses have generally done so through the lens of the Federal Rules (and the Field Code-inflected definition they reflect).

documents”); see also Florida v. Cohen, 887 F.2d 1451, 1454 (11th Cir. 1989) (holding that, prior to the enactment of § 1442(d)(1), subpoena proceedings were non-removable under § 1442). But cf. Brown & Williamson Tobacco Corp. v. Williams, 62 F.3d 408, 415 (D.C. Cir. 1995) (departing from Cohen based on “the purpose of the removal statute . . . rather than the actual language” of § 1442, while acknowledging that subpoena proceedings are not technically civil actions).

The most extensively analyzed such provision (and the only one Burford even attempts to address) is 28 U.S.C. § 1441, the primary vehicle through which litigants remove “civil actions” to federal court (which bears a near-identical statutory history to § 4). 32 The large majority of courts that have considered whether ancillary discovery proceedings constitute “civil actions” under § 1441 have concluded that they do not. 33 Burford attempts to distinguish these later cases because many involved prelitigation discovery, whereas FRH has already brought suit in Germany. 34 That might be an understandable distinction were Burford seeking to compel FRH to arbitrate its German civil action. Yet, that is not the case before us, and the existence of a civil action that is related to (or even subsumes) FRH’s § 1782 petition does not turn that petition itself into a civil action. 35

To be clear, we do not construe today any statute other than 9 U.S.C. § 4.

Particularly given the peculiar posture in which it has made its way to our desks, this appeal provides us with a poor vantage point to opine on the meaning of the term “civil action” generally. The breadth of the caselaw supporting FRH’s position nevertheless strengthens our conclusion that we walk the right path. This is especially true because, here too, the case for applying that caselaw’s reasoning is arguably stronger in the context of § 1782.

Most of our sister-circuits’ decisions attempting to define the term “civil action” have done so in the context of state-law proceedings, in which one relevant interpretative consideration is how best to integrate proceedings Congress did not design (and may not have envisioned) into a Congressionally-crafted framework. 36 In some instances, such cases may also implicate concerns that a state may be seeking to insulate its proceedings from federal review through creative use of procedure. 37 Here, meanwhile, it was Congress that enacted § 1782, and it was Congress that chose not to structure it as a traditional civil action. If our sister-circuits’ reasoning is to apply anywhere, we are satisfied that this appeal presents such a case.

Seeking to avoid the consequences of § 4’s text, Burford suggests that the words “civil action” in § 4 were intended as a non-substantive emendation to a prior version of § which referred to actions “at law, in equity, or in admiralty.” 38 This amendment history gives us momentary pause. However, as a general rule, “we must presume that a legislature says in a statute what it means and means in a statute what it says there.” 39 Even were we permitted to revise Congress’ handiwork, this appeal presents a poor candidate for doing so—and not only because it is doubtful that § 1782 petitions would have fallen under the prior version of the statute. Burford has not shown that Congress intended the 1954 amendments to the FAA to be purely non-substantive—and certainly has not presented enough evidence to override the best reading of those amendments’ text. 40 And to the extent there is ambiguity, the legislative history for the 1954 amendments expressly indicates that Congress did not intend § 4 to permit the arbitration of special proceedings (of which § 1782 petitions are an apparent example). 41 In short, the text, context, statutory history and (to whatever extent it is relevant) legislative history of § 4 collectively persuade us that, while the matter is not as clear as we may have wished, Congress most likely intended the term “civil action” in § 4 to mean precisely what it does in the Federal Rules of Civil Procedure and its precursors. There is no question that § 1782 proceedings—which are ancillary to a foreign suit, initiated without pleading or summons, granted without notice, 42 and concluded without a judgment—are not civil actions under that definition.

IV.

As an alternative ground for reversing, Burford asks us to find that, where “a case is already properly in federal court, the court’s jurisdiction over that case gives it jurisdiction to hear a motion to compel arbitration under FAA § 4” even if that case is not a Title 28 “civil action . . . of the subject matter of a suit.” Burford makes no meaningful effort to reconcile this suggestion with the text of § 4. 43 Nor does it explain why, if § 4’s Title 28 “civil action” requirement falls by the wayside as soon as a court has assumed jurisdiction, numerous traditionally non-arbitrable classes (such as criminal defendants) could not shift their prosecutions to arbitral tribunals. 44 Burford’s approach is also at tension with the Supreme Court’s guidance in Vaden that the presence (or absence) of § 4 jurisdiction should generally not turn on the parties’ filing choices. 45 As a justification for ignoring the plain text of § 4, Burford hangs its hat on the Supreme Court’s statement in Badgerow v. Walters that, where a court already has jurisdiction, “there is no need to ‘look through’ the motion in search of a jurisdictional basis outside the court.” 46 Yet, in context, Badgerow plainly did not mean that all limiting language in the FAA becomes irrelevant where a court has any basis for jurisdiction.

The language Burford cites addresses the longstanding rule that, in addition to those limitations expressly delineated in the FAA, a court may not grant a motion under Chapter of the FAA (9 U.S.C. §§ 1–16) unless it has a basis outside of the FAA for asserting jurisdiction. 47 The result of this rule is that, where (non-diverse) parties are fighting over a federal issue, a court may not act under Chapter 1 where the parties’ right to arbitrate that dispute arises solely from state law (or from the FAA itself). 48 In Vaden, the Court created a limited “look-through” exception to that rule for § 4, under which a district court that would have jurisdiction over the underlying dispute the parties seek to arbitrate may compel arbitration. 49 In Badgerow, the Court refused to expand this exception outside the confines of § 4. 50 It noted in this context that where litigation is already pending there is no role for a look-through style approach to play since, even under the FAA’s anomalously high standards, the independent-jurisdictional-basis requirement will already have been satisfied. 51 Badgerow did not hold that a court may also ignore the other prerequisites laid out in the FAA, and there is no basis for reading such a conclusion into its reasoning. 52 Burford’s invocation of language in Vaden v. Discovery Bank that, where “a federal- question suit has been filed in or removed to federal court, the court may order arbitration under FAA § 4” also fails to persuade us. 53 In light of our holding that § 1782 proceedings are not civil actions for the purpose of § 4, it is doubtful that they fall within § 1331’s grant of federal-question jurisdiction. 54 Yet even if they do, the passage Burford cites in Vaden merely held that § 4’s independent jurisdictional basis test is satisfied once federal-question jurisdiction has been shown. It did not hold that all threshold requirements imposed by § become irrelevant where federal-question jurisdiction exists.

V. As a final backstop, Burford urges us to hold that its motion should have been granted under Chapter 2 of the FAA (rather than under § 4). We do not reach this argument.

Despite multiple opportunities, Burford consistently declined to invoke Chapter 2 before the District Court and repeatedly told the District Court that its motion was predicated on § 4. Burford argues that, because the District Court raised subject matter jurisdiction sua sponte, it lacked a previous opportunity to respond. That suffices to let Burford raise new arguments defending the § 4 motion it actually presented. 55 Burford has done so, and we have considered those arguments carefully. It does not authorize Burford to present an entirely new statutory basis for its motion for the first time on appeal. 56 VI.

This is an unusual appeal, and we suspect the question it presents will not often recur. Meanwhile, the interpretive issues it implicates concerning the general definition of terms such as “suit” and “civil action” are both difficult and far-reaching. There will be time for a fuller discussion of those broader issues should the need present itself. For today, it is enough for us to hold that, in the limited context of § 4, Burford has failed to show that ancillary discovery proceedings pursuant to § 1782 would have been viewed by Congress as civil actions. We will accordingly affirm the District Court’s order, dismissing Burford’s motion to compel arbitration.

MATEY, Circuit Judge, dissenting.

The majority ably grapples with this discrete, yet demanding, question, concluding that proceedings pursuant to 28 U.S.C. § 1782 do not qualify as “civil actions” under 9 U.S.C. § 4. But I would look to the ordinary meaning of the term at the time of enactment. Early in the twentieth century, a civil action was understood in “Common Law” systems as “one which seeks the establishment, recovery, or redress of private and civil rights.” 1 That broad conception has remained constant, 2 and is consistent with section 1782, through which applicants may seek an order demanding information under penalty of contempt. See Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 247 (2004). Jurisdiction for section 4 requires a “suit,” which is satisfied because “the terms ‘action’ and ‘suit’ are [by 1951] nearly, if not entirely, synonymous.” 3 And the District Court needed no more to exercise jurisdiction over FRC’s section 1782 application and Burford’s motion to compel. See Badgerow v. Walters, 596 U.S. 1, 15 (2022); Vaden v.

Discover Bank, 556 U.S. 49, 62 (2009). For that reason, I would review the order denying the motion to compel arbitration and remand for a second look, and so respectfully dissent.