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Seventh Circuit Clarifies Standards for 28 U.S.C 1782 Discovery Requests

By Elenore Cotter Klingler, Litigation News Associate Editor – April 20, 2011

Foreign litigants are increasingly using federal district courts to obtain discovery from U.S. companies through a federal statute designed to encourage other countries to liberalize their discovery procedures. A recent opinion from the U.S. Court of Appeals for the Seventh Circuit provides an overview of the considerations and analysis applicable to discovery requests under 28 U.S.C. § 1782. Applications of Heraeus Kulzer, Gmbh v. Biomet, Inc. [PDF].

Discovery Through Section 1782
28 U.S.C. § 1782 provides, in relevant part, "[t]he district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal." The statute was narrowly interpreted by courts and infrequently used by parties until 2004, when the U.S. Supreme Court decided Intel Corp. v. Advanced Micro Devices, Inc.

In that case, the Supreme Court dismissed many of the restrictions placed on use of the statute by lower courts. Since 2004, courts have generally been in accord with the high court's liberal view of the law.

The Seventh Circuit’s decision in Biomet, however, lists several “potential abuses” that district courts must be “alert for” when considering a section 1782 request. According to the court, section 1782 requests should not be used by a foreign litigant to obtain discovery that it could already obtain in the foreign jurisdiction. The court noted that an abuse could also occur when a section 1782 request is used to request discovery of “documents or other materials that the foreign court would not admit into evidence.” Section 1782 requests should not be used to swamp foreign courts, especially those with more liberal admissibility requirements, with the “fruits of American discovery that would be inadmissible in an American court.”

The court also noted that district courts should monitor section 1782 requests to ensure that the requesting party is not seeking discovery that the foreign court would disapprove of because it would impose an “undue expense” on an opponent or third party. Finally, the Seventh Circuit noted that an abuse of section 1782 may result when the parties are not in “reciprocity” with each other in terms of the types of discovery procedures available to each party.

The Seventh Circuit determined that none of these abuses were a factor in the case before it. The court focused on the responding party’s failure to: show that its opponent could obtain the needed discovery under the foreign court’s discovery procedures; identify the nature and extent of any burden it faced in responding to the discovery requests; show that the foreign court would not admit any resulting discovery into evidence; or indicate that the foreign court was “worried about being swamped” with responsive discovery. The court concluded that, although the discovery sought might be excessive, excessiveness must be analyzed under the traditional standards set forth in the Federal Rules of Civil Procedure.

With regard to reciprocity, the court pointedly noted that the responding party never asked the district court to condition granting the application to take discovery on the requesting party’s consent to respond to reciprocal discovery. This illustrated the “weakness of [the responding party’s] position,” the court noted.

Understanding the Law
Additional limitations on section 1782 requests seem pointless, according to Edward M. Mullins, Miami, cochair of the ABA Section of Litigation’s International Litigation Committee. "This is not really any more burdensome than the federal rules of discovery that companies are already familiar with," he says.

Mullins cautions against knee-jerk resistance to section 1782 requests, observing, "[w]hen people get these, it can turn into mini-litigation, and it really shouldn't." He suggests that substantive objections to the scope of the discovery can be handled in the same way as objections to domestic discovery under the Federal Rules of Civil Procedure. Mullins notes, however, that the technical requirements of the statute, such as opening an action solely to obtain discovery, might be unfamiliar to many lawyers.

Betsy P. Collins, Mobile, AL, cochair of the Section of Litigation’s Pretrial Practice and Discovery Committee, warns that section 1782 can create traps for the unwary. In particular, she notes that privacy laws in Europe and elsewhere are very strict, and discovery U.S. lawyers consider to be uncontroversial could be problematic if gathered from a European affiliate by a U.S. parent company. "I think a lot of lawyers are not aware of some problems that they can blindly stumble into," she says.

A Useful Tool
Both Mullins and Collins believe section 1782 requests are likely to become more common for U.S. companies with international ties. "Litigators may think this is not something they will run up against, but as the economy becomes global, more litigators, even in the most basic litigation, will run into these issues," Collins cautions. She recommends that younger lawyers lead the way in educating their firms about international discovery. "The more senior lawyers may not even have this on their radar," she advises. "This is something young lawyers can bring to the table." Mullins agrees, observing, "[c]ertainly it's a helpful and powerful tool that anyone should know about and use.”

Keywords: litigation, Seventh Circuit, discovery, foreign litigation

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