## Facts

- Investors sued Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren (KPMG-B), a Belgian auditing firm, in federal court for alleged securities fraud connected to the collapse of Lernout & Hauspie Speech Products, N.V.
- During U.S. discovery, plaintiffs sought KPMG-B’s audit records and work papers.
- KPMG-B refused to produce the documents, claiming Belgian secrecy law prohibited disclosure.
- A magistrate judge ordered production notwithstanding the asserted Belgian-law restrictions.
- KPMG-B then filed a proceeding in Belgium seeking to impose substantial penalties on persons who took steps to continue the U.S. discovery process.
- Plaintiffs sought an international antisuit injunction in the U.S. district court to stop KPMG-B from prosecuting the Belgian action to the extent it interfered with U.S. discovery.
- The district court granted the injunction, and KPMG-B appealed.

## Issues

1. Under what standard may a federal court issue an international antisuit injunction restraining a party from pursuing a foreign proceeding that is intended to undermine U.S. court orders.
2. Whether the district court properly enjoined KPMG-B’s Belgian action as an improper collateral attack on U.S. discovery orders, consistent with international comity.

## Decision

- The First Circuit affirmed the injunction.
- The court held that federal courts have equitable authority to issue international antisuit injunctions but must do so sparingly and with sensitivity to comity.
- The court adopted a flexible, fact-specific approach rather than rigid categorical tests.
- The Belgian action was properly viewed as a collateral effort to thwart compliance with U.S. discovery orders by threatening penalties against those using U.S. procedures.
- The injunction was sufficiently tailored because it restrained only KPMG-B’s prosecution of the Belgian case insofar as it interfered with the U.S. discovery process, without directing the Belgian courts.

## Legal Principles

- Federal courts may enjoin parties subject to their jurisdiction from pursuing foreign litigation when necessary to protect the court’s ability to manage and enforce its orders.
- International antisuit injunctions require a case-by-case balance between the enjoining court’s interests (including preventing evasion of orders) and respect for foreign sovereign interests.
- A foreign proceeding calculated to undermine or frustrate a U.S. court’s authority over ongoing litigation weighs strongly in favor of injunctive relief.
- Comity concerns are reduced where the injunction operates on the litigant, is limited to preventing interference with U.S. proceedings, and is narrowly tailored to the specific obstruction.
- Rigid requirements (such as limiting relief to exact identity of parties and issues, or to narrowly defined threats to jurisdiction or public policy) are disfavored in favor of contextual assessment.

## Conclusion

The First Circuit upheld a narrowly tailored international antisuit injunction barring a Belgian proceeding designed to penalize participation in U.S. discovery, holding that federal courts may protect their proceedings through comity-sensitive, fact-specific equitable relief.


Quaak v. Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren, 361 F.3d 11 (1st Cir. 2004)