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Chapter 4


  • U.S. Courts Can Provide Discovery To Foreign Proceedings

    U.S. judicial assistance under 28 U.S.C. § 1782 in aid of international proceedings boosted by two recent appellate decisions

    HeraeusKulzer, GmbH v. Biomet, Inc. and In Re Chevron Corp.

    Two recent appellate decisions have significantly expanded the availability of U.S. judicial assistance in aid of international proceedings.  Parties outside the U.S. can obtain documents and testimony from U.S. companies and individuals, even in cases where the local tribunal does not authorize such discovery of information. 

    A very large percentage of U.S. companies are organized under the laws of the State of Delaware.  Therefore, this decision, together with other prior precedent, supports the ability of foreign litigants to obtain discovery from U.S. companies by filing a proceeding in Delaware, regardless of where the information may be physically located. 

    The first new decision is in the case HeraeusKulzer, GmbH v. Biomet, Inc. in the Seventh Circuit Court of Appeals.  HeraeusKulzer, a German corporation, had sued Biomet, a United States company, in Germany for misappropriation of trade secrets.  HeraeusKulzer then filed an action in the U.S. under 28 U.S.C. § 1782 to obtain discovery of Biomet which it could not obtain in Germany.  The lower court denied HeraeusKulzer's applications because HeraeusKulzer was circumventing German law by seeking production of documents in U.S. that it could not obtain under German discovery laws, and the requests were too broad and unduly burdensome.  Speaking for the 7th Circuit, Judge Posner reversed the lower court decisions and ordered discovery, holding that German law did not prohibit the discovery and any potential abuse should be handled under normal discovery rules. 

    The second case is In Re Chevron Corp., in the Third Circuit Court of Appeals.  The main issue in this complex case was the statutory limitation that "[a] person may not be compelled to give his testimony or statement or to produce a document or other thing in violation of any legally applicable privilege."  In deciding that Chevron had waived its attorney-client privilege, the Third Circuit dismissed a series of objections to providing discovery.  Most interestingly, the Court ordered discovery in an UNCITRAL arbitration proceeding, without any discussion as to the availability of § 1782 in private arbitration proceedings, and on which lower courts had split. 

    The Third and Seventh Circuits’ strong reinforcement of the statute should enhance the scope of discovery, and render its application easier and more efficient.

    Companies in judicial proceeding outside the U.S. should consult with counsel about the availability of obtaining information under U.S. law.  RatnerPrestia attorneys -  and particularly our attorneys in Delaware (where many U.S. companies are organized) -- are available to assist you in this matter.

    The cases are: HeraeusKulzer, GmbH v. Biomet, Inc., Nos. 09-2858, 10-2639, 633 F.3d 591 (7th Cir. January 24, 2011), and In Re Chevron Corp., 633 F.3d 153 (3rd Cir. February 3, 2011).

    The statute, 28 U.S.C. § 1782, provides that "The 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, including criminal investigations conducted before formal accusation."

    The leading case remains Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241; 124 S. Ct. 2466; 159 L. Ed. 2d 355 (2004)