Ninth Circuit affirms denial
of discovery requests in California federal court by foreign company for use in
Chinese and Taiwanese litigation where foreign company had previously
misappropriated trade secrets, and material in question was subject to
protective order in Ohio proceedings
A Taiwanese company, Four Pillars
Enterprises Co., Ltd. (FPE), sought to take depositions and to have documents
produced under 28 U.S.C. Section 1782 from Avery Dennison Corporation (ADC) for
use in FPE’s suits against ADC in China and Taiwan. Both FPE and ADC
manufacture adhesive tape and labels. Several years ago, the two companies began
working on an Asian joint venture that later went sour over charges of stealing
trade secrets.
FPE sued ADC in an Ohio federal
court over misappropriation of various trade secrets. Ultimately, the jury
found for ADC. During the course of the litigation, the Ohio court entered a
protective order regarding any material produced by ADC. It required that the
parties could only use the confidential material in the Ohio proceedings.
FPE later brought the Section
1782 petition in a California federal court. A magistrate judge granted FPE the
right to serve three of its document requests, but denied several others. FPE
appealed. The U.S. Court of Appeals for the Ninth Circuit, however, affirmed
the lower court’s decision.
The Ninth Circuit noted that Section
1782 provides in part that: “(a) 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 order may be made pursuant to a letter rogatory issued,
or request made, by a foreign or international tribunal or upon application of
any interested person and may direct that the testimony or statement be given,
or the document or other thing produced, before a person appointed by the court
...”
The Court agreed with the lower
court’s application of Section 1782 here. “The magistrate judge did not abuse
his discretion in denying much of the relief sought by [FPE] pursuant to 28
U.S.C. Section 1782. Congress gave the federal district courts broad discretion
to determine whether, and to what extent, to honor a request for assistance
under 28 U.S.C. Section 1782. (Cite).” [Slip op. 7]
“Here, the magistrate was
presented with a set of special circumstances that he was entitled to take into
account. [ADC] had produced extensive confidential and trade-secret material in
the Ohio civil litigation over the theft of such secrets. That litigation ended
in a verdict finding that [FPE] had stolen secrets. In addition, [FPE] had been
criminally convicted of attempt and conspiracy to steal [ADC’s] secrets.”
“The purpose of the Ohio
protective order was to prevent misuse of the confidential material, including
its use against [ADC] in retaliatory litigation. Faced with this unusual and
unequivocal scenario, the magistrate judge did not abuse his discretion in
concluding that a discovery order for this material under Section 1782 would
improperly frustrate the order of the District Court for the Northern District
of Ohio.” [Slip op. 10]Although the judge below had also spoken of Section
1782's possible application to discover material located in Asia, the appellate
Court does not rule on the issue. “The magistrate judge denied [FPE’s] requests
for documents that [ADC] possessed in Asia, observing that he did ‘not view the
purpose of Section 1782 as encompassing the discovery of material located in
foreign countries.’”
“There is some support for the
magistrate judge’s view. (Cite). We ourselves have described Section 1782 as
legislation ‘which permits domestic discovery for use in foreign proceedings,’
but we did not rule on any attempted discovery outside the United States.
(Cite) ...”
“In this case the responsive
materials in issue were in China, where [FPE] was pursuing civil litigation
against [ADC]. The Chinese courts are well situated to determine whether such
material is subject to discovery, and in what manner.” [Slip op. 12-13].
*** Mr. Kenneth Todd Wallace is an attorney and founding partner of the law firm. He has nearly 20 years of experience in the legal and business professions with established excellence in trial advocacy, negotiation, strategic and initiative planning, government relations, mergers and acquisitions, and team building. See http://www.walmey.com/
