Opinion
1:00MC17
March 3, 2000
W. Kearns Davis, Jr., for Merck Co.
Michael E. Ray, for Novartis Crop Protection Inc.
Larry I. Moore, III., for Collag Corp.
ORDER
Petitioner Merck Co., Inc., a New Jersey corporation, has submitted an application pursuant to 28 U.S.C. § 1782(a) for an order permitting it to take discovery in aid of a foreign proceeding. The applicant shows that an action entitled, Collag Corp. and Collag, Ltd. v. Merck Co., Inc., ("Collag") was commenced in the High Court of Justice of England and Wales, Chancery Division, Patents Court, on or about June 4, 1998. The plaintiffs in that action allege that defendant Merck misappropriated and misused confidential information relating to certain pesticide formulations. Petitioner claims that one aspect of the litigation was plaintiff Collag's claim that Merck provided confidential information to Novartis Crop Protection AG ("Novartis"), a Swiss corporation, which has facilities in Greensboro, North Carolina. Novartis allegedly manufactured or procured the manufacture of a formulation using Collag's alleged confidential information. Petitioner contends that certain Novartis employees located in Greensboro, North Carolina, have information concerning whether Novartis, in fact, performed said acts.
Petitioner Merck asserts that Novartis refuses to voluntarily provide the information for the litigation pending in the United Kingdom and, therefore, it needs to obtain an order to conduct depositions pursuant to 28 U.S.C. § 1782.
In addition to an order permitting Merck to take discovery, it also requests that the Court require certain practices and procedures, to wit:
(a) The depositions of the Novartis witnesses will be conducted pursuant to the Federal Rules of Civil Procedure and recorded both by sound-and-visual means and by a United States stenographer;
(b) Stephen Bennett and Thomas Mitcheson — who are attorneys of record in the UK Litigation and, respectively, a solicitor of the Supreme Court of England and Wales and a member of the bar of England and Wales — or, at Merck's option, Merck's U.S. counsel, will be allowed to depose the witnesses on behalf of Merck;
(c) Collag's English counsel or, at Collag's option, its U.S. counsel will be allowed to cross-examine the Novartis witnesses on behalf of Collag;
(d) The parties may depose the witnesses by way of videoconference;
(e) The form of confidentiality undertaking which is being used in the UK Litigation (Exhibit 3) will apply to the depositions of the Novartis witnesses, unless the parties agree to another form of confidentiality agreement; and
(f) Unless waived by the parties or Novartis, the Novartis witnesses will be permitted to review their transcripts and make changes pursuant to Fed.R.Civ.P. 30(e)
(Application at 4)
Petitioner Merck states that Novartis does not object to the depositions and that Merck has requested that Collag agree to the depositions. it further states that it has provided copies of the Application by U.S. Mail and fax to Collag's counsel and to Novartis' counsel. Petitioner wants to take the depositions on March 7 and 8, 2000, in Winston-Salem, North Carolina. The Application was submitted to the undersigned for review on February 28, 2000. The undersigned instructed the Clerk to hold the matter until the other parties in the United Kingdom action had time to file a response. Thereafter, petitioner Merck submitted a letter dated February 29, 2000 wherein it instructed the Court:
I write to clarify that this is an ex parte matter under 28 U.S.C. § 1782 to which there are no other parties, so that there is no one entitled to file a response. In that regard, this Application is much like a request for a subpoena to take discovery in another state in state-court litigation.
The Court was further informed by Merck that, in its view, anyone wishing to contest taking the depositions could only do so by filing a motion to quash the subpoenas after issuance. Counsel then added that both counsel for deponents and opposing counsel in the United Kingdom action were consulted about the Application and expressed no objection.
The Court takes issue with Merck's contention that every application made pursuant to 28 U.S.C. § 1782 is an ex parte matter in which no other party or person may participate. The Court further takes issue with Merck's suggestion that the Court has little, if any, discretion in ruling on a Section 1782 application. Evidently, counsel expects the Court to sign any order for discovery presented to it which otherwise meets the prerequisites of Section 1782. The Court disagrees with this reading of the statute and the Court's powers and responsibilities.
In pertinent part, Section 1782(a) provides:
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, . . . . The order may be made . . . upon application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court. . . . The order may prescribe the practice and procedure, which may be in whole or part the practice and procedure of the foreign country or the international tribunal, for taking the testimony or statement or producing the document or other thing. To the extent that the order does not prescribe otherwise, the testimony or statement shall be taken, and the document or other thing produced, in accordance with the Federal Rules of Civil Procedure.
The Second Circuit has indicated that there are three basic requirements to obtain an order under Section 1782: (1) the person from whom discovery is sought must reside in the district; (2) the discovery must be for use in a proceeding before a foreign tribunal; and (3) the application can be made either by a foreign or international tribunal or "any interested person." Application of Esses, 101 F.3d 873, 875 (2d Cir. 1996). A proceeding includes any proceeding in which an adjudicated function is being exercised or is imminent. Lancaster Factoring Co., Ltd. v. Mangone, 90 F.3d 38 (2d Cir. 1996). An interested person includes a party to the foreign litigation, whether directly or indirectly involved. Id. (agent of Trustee in foreign bankruptcy proceeding).
Contrary to petitioner Merck's assertion, a finding that a Section 1782 application meets the Second Circuit's three-prong test only satisfies the jurisdictional threshold. it does not circumscribe the Court's authority to regulate the application proceeding before it or the issuance and contents of a discovery order. Case law supports the view that not only does the Court have wide discretion to determine whether to grant discovery, but it possesses equally wide discretion to tailor such discovery to avoid attended problems. Application of Esses, 101 F.3d at 876. In ruling on Section 1782 applications, district courts are admonished to keep in mind two important aims — (1) to provide an efficient means of assistance to participants in foreign litigation; and (2) to encourage litigation cooperation with and from foreign countries by providing an example through fair discovery orders and by being sensible to special concerns of foreign countries. See Application of Esses, 101 F.3d at 876.
The Court's duty to exercise such discretion in the granting of Section 1782 applications necessarily covers regulating the application procedure itself. Nothing in Section 1782 states that the application is to be made ex parte, much less that the Court must entertain the application ex parte. Moreover, such a reading would seem to be contrary to the purpose of the statute, which is to help promote evenhanded justice and a sense of fair treatment. To that end, the Court need not confine itself to the assertions set out in the application. It necessarily has inherent authority to require that other parties to the foreign litigation be notified of the application and be allowed to present their views to the Court. This is also supported by the provisions of Section 1782 which provide the Court with authority to approve the practice and procedure of the discovery, and by virtue of the fact that in absence of any special practice and procedure, the discovery is governed in accordance with the Federal Rules of Civil Procedure. (Those rules require that opposing parties be notified of discovery requests. See In re Letters Rogatory from Tokyo Dist. Pros. off., 16 F.3d 1016 (9th Cir, 1994).)
Ex parte Section 1782 discovery orders can result in unfairness. In In re Letters Rogatory from Tokyo, the party obtained an ex parte Section 1782 order, and did not notify the other parties to the litigation, resulting in defective discovery, unfairness, and perhaps, irreparable damage to those other parties.
When the Court approves a Section 1782 discovery application, it has the authority to require that other parties in the foreign litigation be notified of the request in the same fashion as parties to litigation in federal court are entitled to such notice. This arises out of the explicit provision of the statute permitting the Court to order special practices and procedures, and because the Federal Rules of Civil Procedure normally requires the same. Therefore, nothing in Section 1782 prevents the Court in any given case from advancing the process by requiring the notification to take place at an earlier time in order to reduce disruption and conserve judicial resources.
Admittedly, the Court could simply issue an order that an applicant may serve deposition subpoenas on third parties with notice to opposing counsel in the foreign litigation as is proposed in the instant application. However, the Court would be derelict in its duty if it were not assured that the other parties had sufficient notice because of the long distance and short time present in this case. Therefore, in any case where the Court has such doubts or for other reasons, it has authority to simply require notification of other parties in the foreign litigationprior to the issuance of an order to a Section 1782(a) applicant for subpoenas.
In the instant case, petitioner Merck wants the Court to issue, ex parte, a Section 1782 discovery order which includes certain special practices and procedures. It claims that the other parties to the action in the United Kingdom do not oppose the application. However, those parties have not made a joint application. Nor does Merck represent that they consent to the application and proposed order. In fact, only yesterday, an attorney, identifying himself as representing an interested party in the United Kingdom action, requested that the Court permit time to file a response to the Section 1782 Application. This situation necessarily puts the Court in an awkward position inasmuch as no formal appearance has been made. Such uncertainties are inherent to ex parte proceedings and demonstrate the dangers of last minute Section 1782 ex parte discovery applications. It is precisely these situations which cause the Court to look with askance and disfavor at ex parte applications.
The purported depositions are scheduled to begin in two business days. There is no assurance that the other party or parties could or should be prepared for depositions in such a short time. Granting an order under such circumstances invites upset, chaos, and ill-will. Nor is there any indication that because of some exigent circumstance discovery will be lost without an immediate Section 1782 order. Consequently, in this case, the Court elects to set a formal time for response to the Section 1782 application.
IT IS THEREFORE ORDERED that the Application by Merck Co., Inc. pursuant to 28 U.S.C. § 1782 to issue two subpoenas duces tecum for Dr. Peter Schmid and Mr. Robert Brown is stayed pending petitioner's notification of all interested parties in the United Kingdom litigation of the Application and this Order and of their right to file a formal response, if any, in this Court on or before March 9, 2000. Petitioner Merck shall also immediately submit an amendment to its application resetting the time for the depositions to a later date. Merck shall provide notice and copies of this order to the other parties in the United Kingdom action by telephone and fax, as well as by normal service procedures.