Publications

17 Mar 2011

Litigants in foreign proceedings may obtain documents, other evidence located in US

Litigation Alert

Robert J. Mathias
Claudia T. Salomon
Matthew Saunders

In Heraeus, a party in litigation in Germany concerning the misappropriation of trade secrets commenced an action in the United States District Court for the Northern District of Indiana to obtain evidence under 28 U.S.C. § 1782 to be used in the German litigation.  Section 1782, a longstanding but little-known provision of US law, is a statute that permits parties to commence limited-purpose actions in the U.S. to obtain documents and other evidence in support of foreign legal proceedings.

The district court in Heaeus initially denied the Section 1782 application on grounds that the document requests were overbroad.  The aggrieved petitioner appealed the district court’s decision to the Seventh Circuit, which determined that even though the document requests might be overbroad, that was no reason to deny the Section 1782 application.  The Seventh Circuit reversed the district court and granted the Section 1782 petition, with instructions for the district court to address any issues of over-breadth using the Federal Rules of Civil Procedure governing the requests for documents and other evidence. 

28 U.S.C. § 1782 and Obtaining Evidence in Support of Foreign Litigation and Arbitration

Section 1782 permits a US district court to order testimony, a statement or documents from persons found in that district “for use for use in a proceeding in a foreign or international tribunal.”  The request for evidence under Section 1782 may be made by letter rogatory or by the court or foreign tribunal or “upon the application of any interested person.” 

To obtain evidence under Section 1782, an applicant must show that: (1) he is an “interested person” in a foreign proceeding; (2) the evidence is sought for use before a foreign tribunal; and (3) the person from whom evidence is sought is located in the district of the court considering the application. 

There is some disagreement among the US courts regarding whether an arbitration between private parties qualifies as a “foreign tribunal” for purposes of Section 1782.  While there is some older case law from the U.S. Courts of Appeal for the Second and Fifth Circuits holding that private arbitrations do not qualify, the present trend is to recognize foreign or international arbitral tribunals as “foreign tribunals” under Section 1782.

In Intel Corp.  v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), the US Supreme Court outlined four additional discretionary factors that courts should consider if the statutory requirements are met.  Those four factors, commonly referred to as the “Intel factors,” are:

• whether the party from whom evidence is sought is an actual party to the foreign proceeding, which militates against granting the petition;
• the nature of the foreign tribunal and its receptivity to assistance from a US court;
• whether the application is a disguised attempt to circumvent foreign evidentiary practices: and
• the breadth and intrusiveness of the requests for evidence. 

The Seventh Circuit’s Analysis in Heraeus

In Heraeus, the district court concluded that the applicant had satisfied the three statutory requirements for a Section 1782 application, but ultimately denied the document requests because the court deemed them to be overbroad and a concealed attempt to circumvent German law.  The Seventh Circuit disagreed and found the district court’s conclusions to be “serious errors.”

First, the Seventh Circuit found that the Section 1782 application was not an attempt to circumvent German law and was merely an effort to obtain evidence that was needed to prevail in the German litigation but could not be obtained under German procedures.  The Seventh Circuit concluded that those circumstances presented “a textbook” example of when a Section 1782 application should be granted.

Second, the Seventh Circuit found that if the Section 1782 application was not brought for an abusive purpose and the statutory prerequisites had been satisfied, then the application should have been granted.  The Seventh Circuit concluded that if the application was overbroad in the evidence it sought but not otherwise abusive, the application should be granted and the scope of document requests narrowed.

Significance of the Heraeus Decision

The Heraeus decision articulates an analytical framework for considering Section 1782 applications that places less emphasis on the four Intel factors enunciated by the United States Supreme Court and more significance on whether the requests for documents or other evidence suggest an abusive purpose for the application.  Although the Seventh Circuit briefly cited Intel, it started from the proposition that the requests would be granted unless sought for an improper or abusive purpose.  Specifically, the Seventh Circuit stated that “[o]nce a section 1782 applicant demonstrates a need for extensive discovery for aid in a foreign lawsuit, the burden shifts to the opposing litigant to demonstrate, by more than angry rhetoric, that allowing the discovery sought (or a truncated version of it) would disserve the statutory objectives.”

The Seventh Circuit’s approach in Heraeus is significant because it appears to place the onus on the party opposing the application to show that the request for evidence should not be granted.  The Heraeus decision is also noteworthy because it minimizes the fourth Intel factor, which requires courts to consider whether the request for documents or other evidence is overbroad or impermissibly intrusive.  In Heraeus, the Seventh Circuit was willing to grant a Section 1782 application that was admittedly overbroad and impermissibly intrusive because it was not abusive and the requests could be revised to bring them within permissible boundaries.

Conclusion

Section 1782 is an important tool for parties in litigation, and potentially arbitration, outside of the United States who have a need to obtain documents, testimony or other evidence from persons or entities in the United States.  The Heraeus decision signals a greater opportunity to use a Section 1782 application, provided the request is not for an abusive or improper purpose. 

For more information about the implications of Heraeus and the opportunities to use Section 1782 to obtain evidence in the United States for use in foreign litigation, please contact:

Neil Gerrard

Robert J. Mathias

Claudia T. Salomon

Matthew Saunders