International
Aug. 6, 2002
9th Circuit Allows Liberal Discovery In U.S. for Use in Proceedings Abroad
Focus Column - By Edward A. Klein - In deciding the most recent skirmish between microprocessor giants Advanced Micro Devices and Intel, the 9th U.S. Circuit Court of Appeals reaffirmed its practice of allowing liberal discovery in the United States for use in proceedings abroad. Advanced Micro Devices Inc. v. Intel Corp. , 2002 DJDAR 6273 (9th Cir. June 6, 2002).
By Edward A. Klein
In deciding the most recent skirmish between microprocessor giants Advanced Micro Devices and Intel, the 9th U.S. Circuit Court of Appeals reaffirmed its practice of allowing liberal discovery in the United States for use in proceedings abroad. Advanced Micro Devices Inc. v. Intel Corp., 2002 DJDAR 6273 (9th Cir. June 6, 2002).
This dispute began when Advanced Micro filed a complaint against Intel with the directorate-general of competition of the European Commission. Advanced Micro claimed that Intel was abusing its dominant market position within the European Union, thus violating Article 82 of the Treaty Establishing the European Commission, which prohibits "abuse by one or more undertakings of a dominant position within the common market."
Advanced Micro sought discovery from Intel in the Northern District of California, where Intel is headquartered, under 28 U.S.C. Section 1782(a). That section enables parties to foreign or international proceedings to obtain discovery in the United States for use in those proceedings: "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."
Advanced Micro applied for an order seeking discovery under Section 1782. Advanced Micro sought the production of documents and transcripts of testimony elicited in discovery in an Alabama lawsuit for use in the European Commission proceeding. Intel opposed Advanced Micro's application on the ground that the proceeding did not qualify as a "proceeding in a foreign or international tribunal" within the meaning of Section 1782. The District Court agreed and denied the application. Advanced Micro appealed.
The 9th Circuit addressed two questions of first impression in the circuit: whether the proceeding before the European Commission's directorate-general of competition qualified as a "proceeding in a foreign or international tribunal"; and whether Section 1782 requires a showing that the information sought would be discoverable in the foreign proceeding.
Analyzing the first issue, the 9th Circuit noted that the statute's language and legislative history suggest that Section 1782 discovery was intended to be "broad and inclusive."
The court also referred to two earlier decisions, In re Letters of Request to Examine Witnesses from Court of Queen's Bench for Manitoba, Canada, 488 F.2d 511 (9th Cir. 1973), and In re Letters Rogatory from Tokyo District Prosecutor's Office, 539 F.2d 1216 (9th Cir. 1976).
In Manitoba, the 9th Circuit affirmed the trial court's finding that a Canadian Commission of Inquiry was not a foreign tribunal within the meaning of Section 1782 since its purpose was "to conduct investigations unrelated to judicial or quasi-judicial controversies." In contrast, Tokyo construed "tribunal" to include bodies of a quasi-judicial or administrative nature, as well as preliminary investigations leading to judicial proceedings.
Intel argued that the European Commission proceeding is not a "proceeding in a foreign or international tribunal" because the proceeding is purely administrative and preliminary to a nonjudicial proceeding and blurs the distinction between prosecutor and decision maker.
The 9th Circuit rejected both contentions. The court implicitly acknowledged that the European Commission proceeding is administrative and preliminary but found that it is "leading to quasi-judicial proceedings." The court relied on the fact that the directorate makes a recommendation to a body that issues written, binding and enforceable decisions appealable through the courts.
In dismissing Intel's separation-of-powers argument, the 9th Circuit noted that the European Commission has no discernible institutional bias toward a particular outcome of the process. Moreover, the court pointed out, the process permits each side an opportunity for input and requires the approval of an independent body before making a final enforceable decision. The court thus concluded that "the process qualifies as a 'proceeding before a tribunal' within the meaning of 28 U.S.C. Section 1782."
The court next addressed whether Advanced Micro was required to demonstrate that the discovery that it was seeking would be discoverable in the European Commission proceeding. The court noted three approaches to the "discoverability" issue among the circuits.
The 1st and 11th circuits require an applicant to demonstrate, before obtaining discovery in the United States, that the information would be subject to discovery in the foreign jurisdiction. In re Application of Asta Medica, 981 F.2d 1 (1st Cir. 1992); In re Request for Assistance from Ministry of Legal Affairs of Trinidad and Tobago, 848 F.2d 1151 (11th Cir. 1988). These courts find this requirement implied in the statute, based on its history and policy considerations.
The 2nd and 3rd circuits take a contrary position, refusing to impose a discoverability requirement. Euromepa S.A. v. R. Esmerian Inc., 154 F.3d 24 (2nd Cir. 1998); In re Bayer AG, 146 F.3d 188 (3rd Cir. 1998). These courts find no congressional intent to impose a requirement that the materials sought be discoverable in the foreign jurisdiction.
The 4th and 5th circuits come down in the middle. They impose a threshold discoverability requirement when the applicant is a private party but dispense with the requirement when the request emanates from the foreign tribunal itself. In re Letter of Request from Amtsgericht Ingolstadt, Fed. Republic of Germany, 82 F.3d 590 (4th Cir. 1996); In re Letter Rogatory from First Court of First Instance in Civil Matters, Caracas, Venezuela, 42 F.3d 308 (5th Cir. 1995). These courts reason that, although a discoverability requirement prevents circumvention of foreign restrictions on discovery and avoids offending foreign tribunals, such considerations fall by the wayside when the applicant is the foreign court itself.
The 9th Circuit came down squarely in the 2nd and 3rd circuit camp and refused to impose a discoverability requirement, regardless of whether the applicant is a private party or a foreign tribunal. The court found nothing in the plain language or the legislative history of Section 1782 "to require a threshold showing on the party seeking discovery that what is sought be discoverable in the foreign proceeding."
The court reasoned that, had Congress wished to impose such a requirement on parties, it easily could have done so. Further, the court stated that allowing liberal discovery is entirely consistent with the "twin aims" of Section 1782: providing efficient assistance to participants in international litigation and encouraging foreign countries by example to provide similar assistance to our courts.
Having found that the European Commission proceeding was a proceeding in a foreign tribunal within the meaning of Section 1782 and that the statute did not contain a discoverability requirement, the 9th Circuit reversed and remanded. Although neither holding was particularly extraordinary, the opinion underscores the 9th Circuit's liberal approach to Section 1782.
Edward A. Klein is a partner at O'Neill, Lysaght & Sun in Santa Monica. He practices entertainment and securities litigation and often represents foreign clients in U.S. proceedings as well as U.S. clients in foreign proceedings.
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