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In re Application of Gemeinshcaftspraxis

United States District Court, S.D. New York
Dec 29, 2006
Civ. M19-88 (BSJ), PART I (S.D.N.Y. Dec. 29, 2006)


granting broad discovery to a German partnership under § 1782

Summary of this case from Diedenhopen-Lennartz v. Diedenhofen


Civ. M19-88 (BSJ), PART I.

December 29, 2006



McKinsey Company, Inc. ("McKinsey") moves to: (1) vacate an order under 28 U.S.C. § 1782, in which this Court granted Gemeinschaftspraxis Dr. Med. Bernard Schottdorf and Partners ("Schottdorf") leave to serve a subpoena upon McKinsey in furtherance of foreign litigation; and (2) to quash the ensuing subpoena. For the reasons below, McKinsey's motion is DENIED.


A. The Relationship of the Parties

Schottdorf is a German partnership. It operates a laboratory that analyses human samples for medical diagnosis, at the volume of about 60,000 tests per day. Under the German national public healthcare system, Schottdorf is paid for its services by an association of physicians ("Physicians Associations") from moneys that these associations have collected from public health insurance companies. The Physicians Associations are all members of the Kassenärztliche Bundesvereinigung ("Federal Association"), which negotiates the fee schedule by which the public health insurance companies pay the Physicians Associations.

In 1999, a special committee comprised of members of the Federal Association and the public health insurance companies altered the fees payable to laboratories. As relevant here, a new rule provided for a 20% reduction in fees for all tests conducted by a laboratory exceeding 450,000 within a quarter year (the so-called "20% Rule").

According to the Federal Association, the 20% Rule was wholly or largely based on a study and report by McKinsey, which is a global consulting firm headquartered in New York, New York. The report, which McKinsey prepared in Germany in the German language, allegedly determined that the fee reduction was justified by economies of scale (the "McKinsey Report").

B. The German Litigation

1. The Social Court Action

Schottdorf responded to the 20% Rule by filing several actions in the Sozialgericht München (the Munich "Social Court") challenging the determination of fees by the Bavarian Physicians Association, which is the regional association responsible for paying Schottdorf. Each action is based, in part, on Schottdorf's assertion that the 20% Rule violates Schottdorf's right to equal protection under German law. Both the Bavarian Physicians Association and the Federal Association are parties to those actions, which have been held in suspense pending the resolution of a lead action captioned: Gemeinschaftspraxis Dr. med. Bernd Schottdorf u.s. v. Kassenärzliche Vereinigung Bayerns wegan Honorarbescheid für das Quartal III/99 (the "Social Court Action").

The Social Courts are a special branch of the German judiciary competent to hear, inter alia, disputes relating to the compensation paid to physicians participating in Germany's public health system. See Affidavit of Prof. Dr. Burkhard Hess, dated November 3, 2006 ("Hess Aff."), ¶ 13.

In that proceeding, the Social Court requested that the Federal Association provide answers to several questions posed by the court concerning McKinsey's role in what became the 20% Rule. In particular, the court made the following request:

It is understood that [sic] basis for the threshold was a McKinsey opinion. Is that correct? In the case of affirmation, the submission of the opinion is requested.

See Declaration of Juergen Ostertag, dated August 15, 2006 ("Ostertag Dec."), at 3 (providing translation).

To which the Federal Association responded:

It is correct that [sic] basis for the laboratory reform was, as already stated above, an opinion of the company McKinsey. The opinion of [McKinsey] concerns intellectual property of [McKinsey], and the Federal Association is prohibited under the commissioning agreement to share this expert opinion with a third party. Hence, the expert opinion has to be requested directly from [McKinsey].


The Social Court apparently did nothing further to pursue its request for the McKinsey Report, either from the Federal Association or McKinsey itself.

On March 4, 2004, the Social Court issued a decision upholding the 20% Rule. The court began its analysis by stressing its "restrictive examination authority" in reviewing fee schedules promulgated by the Federal Association, and explained that:

An intervention by the courts is permissible only if it can be established without a doubt that the Assessment Committee has exceeded its regulatory purview or has abused its valuation authority by placing a minority group of physicians at a disadvantage in their fees, or otherwise identifiably allowing itself to be guided by non-relevant considerations.
The court continued:
[Schottdorf] is unsuccessful with its objection that the [20% Rule] is based upon an insufficient data set. This is because there is no general obligation, even based upon the principles of the rule of law, that material facts must be completely and accurately determined prior to the creation of standards and immediately used as the basis for decisions by issuers of standards in the creation of these standards [citations omitted]. . . . A study was performed by McKinsey prior to implementation of the [20% Rule]. The results of the expert opinion would have ultimately led to a threshold of 450,000 services. Even though it would have been desirable in the view of the court to inspect the expert opinion (submission of the expert opinion was rejected, with reference to contractual provisions), given a consideration of the aforementioned rulings, this cannot be used as a basis to automatically conclude that the rule is arbitrary. The [Federal Association] has given a detailed presentation in its brief . . . as to how it established that threshold at 450,000 parameters. According to this presentation, in conjunction with considerations of normal service volumes for the physician's fee, and assumption of a maximum of 225,000 parameters per year per physician was assumed. Assuming four physicians in a large joint practice, this would be 125,000 parameters per quarter. If one then doubles this amount to 450,000 parameters in accordance with the fundamental principle cited above, then the unit costs would potentially decrease to at least 20% based on the fundamental principle of rationalization in business economics. In the view of the court, this involves a pertinent and objectively plausible basis in the sense of Article 3 of the German Basic Law.

See Hess Aff., Ex. 1 (providing translation).

Id. As explained in the Discussion infra, the parties vigorously dispute the import and meaning of the Social Court's decision with respect to the relevance, if any, of the McKinsey Report to its holding.

Schottdorf's appeal of this decision is scheduled to be heard by a regional Social Court (the "Appellate Social Court") in March 2007.

2. The Düsseldorf Action

Meanwhile, Schottdorf filed a separate action (the "Düsseldorf Action") directly against McKinsey in the German regional court in Düsseldorf (the "Düsseldorf Court"). It appears that the nature of the Düsseldorf Action was for discovery only, although Schottdorf's filings in that court also contemplated that an action for damages might follow — depending on what the sough-after material revealed.

This effort to obtain the McKinsey Report also failed. On February 22, 2006, the Düsseldorf Court dismissed the action on several grounds, including the absence of legal privity between Schottdorf and McKinsey, and the lack of any viable tort theory to hold McKinsey accountable for Schottdorf's alleged harm. In so holding, the court also remarked that:

See Hess Aff., Ex. 2 (providing translation).

[T]he production of documents, which is to serve the conduct of litigation in the present case, is finally regulated by §§ 134, 142 ZPO [German Code of Civil Procedure]. If one of the parties to a proceeding refers to this study, and if the Court deems this study to be relevant to its decision, the Court can order this document to be produced. If the existence and the materiality of the document in terms of the decision have been established, there is, to that extent, also no discretion on the part of the Court. It is therefore possible for [Schottdorf] to pursue its rights in the [Social Court Action] pursuant to § 142 ZPO, so that a special claim to information [in the general Düsseldorf regional court] is not required.


Schottdorf appealed the Düsseldorf Court's decision to a higher court, which remains pending.

C. This Court's Ex Parte Order Pursuant to 28 U.S.C. § 1782 and McKinsey's Motion to Vacate and Quash the Subpoena

Still empty-handed after exhausting available means in Germany, on August 15, 2006, Schottdorf turned to this Court for assistance under 28 U.S.C. § 1782(a). As explained further below, that provision affords a United States district court the authority to order a person or entity located within its district to provide discovery for use in a foreign proceeding. To this end, Schottdorf filed an ex parte application seeking this Court's leave to serve a subpoena on McKinsey requesting production of, inter alia, the McKinsey Report and related documents. Judge Scheindlin (Part I) granted the application, and Schottdorf served a subpoena on McKinsey the following day.

Section 1782(a) provides in relevant part:

The district court of the district in which a person resides or is found may order him to . . . produce a document or other thing for use in a proceeding in a foreign or international tribunal. The order may be made pursuant to . . . the application of any interested person. . . . 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 . . . producing the document or other thing. To the extent that the order does not prescribe otherwise, the . . . document or other thing [shall be] produced in accordance with the Federal Rules of Civil Procedure. A person may not be compelled to . . . produce a document or other thing in violation of any legally applicable privilege.
28 U.S.C. § 1782(a).

Specifically, Schottdorf asked leave to seek production of the following documents from McKinsey: (1) "Reports, analyses, memoranda, or other documents created by McKinsey pursuant to and/or in connection with its retention by the [Federal Association] and concerning the Federal Association's promulgation of [the 20% Rule]"; (2) "Documents that McKinsey relied upon in generating any of the above-referenced documents for the Federal Association"; and (3) Communications with the Federal Association or its representatives concerning the bases or rationales of the 20% Rule or McKinsey's retention by the Federal Association for the above-referenced services." See Declaration of Marion B. Johnson, dated November 8, 2006 ("Johnson Dec."), Ex. C.

On or about November 8, 2006, McKinsey filed the instant motion to vacate the § 1782 order and to quash the subpoena. In support of its motion, McKinsey filed, inter alia, a memorandum of law and an affidavit from its German legal expert, Professor Dr. Buckhard Hess. In opposition thereto, Schottdorf filed, inter alia, a memorandum of law and supporting declaration by its German legal expert, Professor Dr. Jur Fritjof Haft.

Judge Batts, then the Part I Judge, issued a briefing schedule and ordered oral argument for December 26, 2006, the week I assumed Part I duties. I cancelled the argument and decide the matter in this Opinion and Order.


A. 28 U.S.C. § 1782

"A request for discovery under § 1782 presents two inquiries: first, whether the district court is authorized to grant the request; and second, if so, whether the district court should exercise its discretion to do so." In re Application of Grupo Qumma, S.A., No. M8-85 (DC), 2005 WL 937486, at * 1 (S.D.N.Y. Apr. 22, 2005); accord Schmitz v. Bernstein, Liebhard Lifshitz, LLP, 376 F.3d 79, 83-84 (2d Cir. 2004).

Authorization under 28 U.S.C. § 1782 exists where: (1) the person or entity from whom discovery is sought resides or is found in the district; (2) the discovery is for use in a proceeding before a foreign tribunal; and (3) the application is made by a foreign or international tribunal or "any interested person." 42 U.S.C. § 1782; see In re Application of Gianoli Aldunate, 3 F.3d 54, 58 (2d Cir. 1993).

If these threshold requirements are met, the Court must then exercise its discretion as to whether and what extent to lend its assistance. See Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264 (2004); In re Application of Metallgesellschaft AG, 121 F.3d 77, 78 (2d Cir. 1997). The Supreme Court has identified at least four discretionary factors relevant to the inquiry:

(1) Whether the person from whom discovery is sought is a participant in the foreign proceeding, in which case "the need for § 1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant in the matter arising abroad";
(2) "the nature of the foreign tribunal, the character of proceedings underway abroad, and the receptivity of the foreign government, court, or agency to federal-court judicial assistance";
(3) "whether the § 1782(a) request conceals an attempt to circumvent foreign proof-gathering limits or other policies of a foreign country or the United States"; and
(4) whether the discovery requests are "unduly intrusive or burdensome."
Intel, 542 U.S. at 264-65; accord In re Application of Microsoft Corp., 428 F. Supp. 2d. 188, 192-93 (S.D.N.Y. 2006); In re Grupo Qumma, 2005 WL 937486, at * 1.

As the Second Circuit has further explained, "district courts must exercise their discretion under § 1782 in light of the twin aims of the statute: `providing efficient means of assistance to participants in international litigation in our federal courts and encouraging foreign countries by example to provide similar means of assistance to our courts. . . .'" Schmitz, 376 F.3d at 84 (quoting In re Metallgesellschaft, 121 F.3d at 79).

As explained further below, these considerations counsel heavily in favor of generous federal-court assistance. See, e.g., In re Application of Edelman, 295 F.3d 171, 180 (2d Cir. 2002). And it is from this posture that I now turn to McKinsey's motion.

B. This Court Is Authorized to Grant Schottdorf's § 1782 Application

As a threshold matter, this Court clearly is authorized to grant Schottdorf's § 1782 application because all of the express elements of the statute have been met. Namely, (1) McKinsey maintains its headquarters in New York, and thus is "found" within this district; (2) the requested discovery is sought for use in a foreign tribunal, to wit, the Appellate Social Court; and (3) Schottdorf is an "interested person" in that proceeding. See 28 U.S.C. § 1782(a); In re Metallgesellschaft, 121 F.3d at 78-79.

Schottdorf claims that the Appellate Social Court is authorized under that court's procedural rules to receive and admit new evidence on appeal. See Declaration of Martin Imbeck, dated July 20, 2006, ¶ 23. McKinsey does not appear to contest this point, other than to say that the evidence sought to be introduced is irrelevant to the appeal.

Further, the Court rejects McKinsey's suggestion that § 1782 assistance cannot extend to the production of documents located abroad. There is no such express restriction in the statute, and the Court is unwilling to engraft one onto it.

While McKinsey raises this argument in connection with the fourth Intel discretionary factor, McKinsey's affirmative statement that "Schottdorf is not entitled to discovery of documents located in Germany," coupled with the cases upon which McKinsey relies, see infra n. 13, is understood by the Court as an argument that the foreign location of the documents operates as an absolute bar to their production. See McKinsey's Memorandum of Law, at 15.

Section 1782 requires only that the party from whom discovery is sought be "found" here; not that the documents be found here. 28 U.S.C. § 1782(a). For this Court to read an implicit document-locale requirement into § 1782 would be squarely at odds with the Supreme Court's instruction that § 1782 should not be construed to include requirements that are not plainly provided for in the text of the statute. See Intel, 542 U.S. at 260. While the issue in Intel was whether § 1782 should be construed to categorically bar a district court from ordering production of a document that was non-discoverable abroad, the Supreme Court's reasoning in rejecting such an implied requirement applies with equal force here. ("`If Congress had intended to impose . . . a sweeping restriction on the district court's discretion, at a time when it was enacting liberalizing amendments to [§ 1782], it would have included statutory language to that effect.'") (quoting In re Gianoli Aldunate, 3 F.3d at 59); accord In re Malev Hungarian Airlines, 964 F.2d 97, 100 (2d Cir. 1992) (refusing to "engraft" a foreign-exhaustion requirement onto § 1782 for similar reasons).

Rather, absent any express statutory language, the location of the documents at issue should at most be a discretionary consideration, which will be considered infra in the context of discerning the alleged hardship and burden on McKinsey in obtaining and producing the requested material. Cf. Intel, 542 U.S. at 259-64 (rendering the non-discoverability of documents abroad a discretionary factor); In re Gianoli Aldunate, 3 F.3d at 59-60 (same); In re Malev, 964 F.2d at 100 (rendering foreign-exhaustion a discretionary consideration).

Although the Court held in In re Application of Sarrio S.A., No. M9-372 (RPP), 1995 WL 598988, at ** 2-3 (S.D.N.Y. Oct. 11, 1995), that § 1782 does not extend to the discovery of documents located abroad, on appeal the Second Circuit expressly declined to rule on the issue and overruled the district court's decision on other grounds, 119 F.3d 143 (2d Cir. 1997). More recently, in In re Microsoft, 428 F. Supp. 2d. 188, 192-93 (S.D.N.Y. 2006) (CM), the district court stated in dicta, but without analysis, that the scope of § 1782 is limited to domestically located documents. Id. at 194 n. 5. Although there is some support for this proposition in the legislative history, see S.Rep. No. 1580, 88th Cong., 2d Sess. (1964) (stating that the intent of the 1964 amendments to § 1782 was "to clarify and liberalize existing U.S. procedures for assisting foreign and international tribunals and litigants in obtaining oral and documentary evidence in the United States") (emphasis added), this passage is at best ambiguous on the issue of whether documents abroad could be obtained through affiliated parties located in the United States, and should not be used to supplant the otherwise non-restrictive language of § 1782. See Intel, 542 U.S. at 260; In re Gianoli Aldunate, 3 F.3d at 59. Further, while certain policy considerations may counsel in favor of not allowing § 1782 to be used as an instrument to compel discovery of documents located abroad, see Sarrio, 1995 WL 598988, at * 2 (noting Professor Hans Smit's concerns that § 1782 would be used to interfere with foreign procedures and place undue burden on United States courts), such considerations cannot supplant the policy expressed by Congress in the plain words of the statute. Rather, for the reasons explained in the text above, such considerations should be weighed on a case-by-case basis along with the other discretionary factors.

C. The Balance of Discretionary Factors Tips In Schottdorf's Favor

Turning now to Intel's four discretionary factors, the Court finds that they collectively weigh in Schottdorf's favor.

1. McKinsey Is Not a Party to the Foreign Litigation for Which Discovery Is Sought

As explained above, the first discretionary factor is whether the party from whom discovery is sought is a party to the foreign litigation at issue. See Intel, 542 U.S. at 264. This factor rests on the notion that the "need for § 1782(a) generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant in the matter arising abroad." Id.

The foreign litigation at issue is the Social Court Action, to which McKinsey is neither a party nor a participant. While McKinsey was a party to the separate Düsseldorf Action, that is not the foreign litigation for which Schottdorf seeks discovery under § 1782.

McKinsey nevertheless claims that the thrust of Intel's first discretionary factor is not the target's status as a party to the foreign litigation, but rather whether the documents sought are within the reach of the foreign tribunal. McKinsey overstates the matter by placing too much emphasis on the foreign tribunal's need of United States assistance, while ignoring the interested party's need of such assistance. When the target of discovery is not a party the foreign tribunal may be less inclined — even if it is empowered — to compel third-party discovery or, more precisely here, to compel the production of material subject to a third-party's confidentiality restrictions.

The parties vigorously dispute whether the Social Court is empowered to compel the discovery sought, a matter addressed in Section C.2, infra.

Accordingly, the Court finds that the first factor weighs decisively in Schottdorf's favor.

2. McKinsey Has Failed to Demonstrate that This Court's Assistance Would Offend Germany or Its Courts

The second discretionary factor concerns the receptivity of the foreign government or its courts to United States federal-court assistance. See Intel, 524 U.S. at 264. As relevant here, this factor separately encompasses considerations of: (1) whether United States assistance would offend the foreign country, see, e.g, In re Application of Euromepa S.A., 51 F.3d 1095, 1099-1100 (2d Cir. 1995); and (2) whether the material sought is admissible evidence in the foreign tribunal, see, e.g., In re Grupo Qumma, 2005 WL 937486, at * 2; In re Application of Imanagement Serv., Ltd., No. M05-89 (FB), 2005 WL 1959702, at * 3 (E.D.N.Y. Aug. 16, 2005).

The Second Circuit has instructed this Court to consider "only authoritative proof" in considering these factors. See Euromepa, 51 F.3d at 1099-1100; accord In re Metallgesellschaft, 121 F.3d at 80; see also In re Imanagement Serv., 2005 WL 1959702, at * 3. Such authoritative proof has been found to exist where the representative of a foreign sovereign has expressly and clearly made its position known. See Schmitz, 376 F.3d at 84-85; In re Microsoft, 428 F. Supp. 2d at 194.

In Schmitz for example, the Second Circuit upheld the denial of discovery in aid of a German securities litigation, where the German Ministry of Justice and German prosecutor submitted an amicus brief affirmatively opposing such discovery on the ground that it would jeopardize an ongoing German investigation. See Schmitz, 376 F.3d at 84-85. And in In re Microsoft, this Court (McMahon, J.) rejected a § 1782 application where the foreign tribunal submitted an amicus brief expressly opposing the discovery sought and stating that it would not be receptive to United States judicial assistance. In re Microsoft, 428 F. Supp. 2d at 194.

By contrast, proof resting on equivocal interpretations of foreign policy or law generally provides an insufficient basis to deny discovery. See, e.g., Grupo Qumma, 2005 WL 937486, at * 3 (granting § 1782 discovery application where the foreign court's receptiveness of the discovery was disputed). Rather, in such cases the Second Circuit has instructed that district courts generally should err on the side of permitting the requested discovery. See Euromepa, 51 F.3d at 1101 (2d Cir. 1995) ("[I]t is far preferable for a district court to reconcile whatever misgivings it may have about the impact of its participation in the foreign litigation by issuing a closely tailored discovery order rather than by simply denying relief sought."). This liberal construct is owing to the availability of corrective measures abroad; for example, the foreign tribunal may simply choose to exclude or disregard the discovered material should that tribunal find that the district court overstepped its bounds in ordering the discovery. See Euromepa, 51 F.3d at 1101; In re Grupo Qumma, 2005 WL 937486, at * 3.

Here, McKinsey relies on the decisions of both the Social Court and Düsseldorf Court — neither of which compelled production of the McKinsey Report — to argue that those courts' sovereignty would be undermined, and their decisions effectively overruled, if discovery were now permitted. I am not at all convinced.

The parties sharply dispute both the import and meaning of the Social Court's decision, as well as the Düsseldorf Court's interpretation of it. Relying on the opinion of its legal expert, McKinsey maintains that the Social Court was empowered to, yet declined to, order production of the McKinsey Report because it was "irrelevant" to the disposition of that case. ( See Hess Aff., ¶¶ 24-27.) Indeed, that is how the Düsseldorf Court appears to have understood the Social Court's decision. Schottorf's legal expert, however, points out that the Social Court in fact requested the document and noted in its decision that it would have been desirable to have it, but was not empowered under the relevant law to compel production of the document. ( See Haft Dec., ¶¶ 12-24.) He also notes that, to the extent the Düsseldorf Court found otherwise, that court's decision is based on an erroneous interpretation of the law and has been appealed.

It is unnecessary for me to further explore these polar differences in expert opinion, because after having carefully reviewed the German court decisions and the experts' respective affidavits, in the end the Court is left without an answer as to which expert is correct. And, as the Second Circuit has instructed, the Court is not expected to declare a winner in this "battle-by-affidavit of international legal experts." See In re Euromepa, 51 F.3d at 1099 ("[W]e do not read the statute to condone speculative forays into legal territories unfamiliar to federal judges.").

This is not an abdication of the Court's discretionary role; rather, my restraint itself is the exercise of discretion. See Euromepa, 51 F.3d at 1099-1100 (holding that district court abused its discretion in denying § 1782 assistance based on its "speculative foray" into foreign law, and stating that "we do not think that the district court's concern for trespassing upon the prerogatives of French sovereignty should have weighed so heavily in its decision).

If in fact the Appellate Social Court opposes United States assistance, that court may simply choose to exclude the discovered material from evidence. See id. at 1101. The availability of that corrective measure assuages any concern I may otherwise have had on the issue. See In re Grupo Qumma, 2005 WL 937486, at ** 2-3 (granting § 1782 discovery application and deferring to Mexican tribunal to decide admissibility of material where two competing expert affidavits were submitted by the parties concerning the import of prior Mexican court orders and Mexican evidentiary law); In re Imanagement Serv., 2005 WL 1959702, at * 5 (to same effect in connection with Russian litigation).

Accordingly, the second discretionary factor also weighs in favor of permitting the requested discovery.

3. Schottdorf Does Not Appear to Be Impermissibly Circumventing Foreign Proof-Gathering Restrictions or Other German Policies

The third discretionary factor aims to protect against abuse of § 1782 as a vehicle to end-run foreign proof-gathering restrictions or other foreign policies. See Intel, 524 U.S. at 265. Here, McKinsey points to no proof-gathering restriction under German law. Rather, McKinsey claims that production of its report could have been compelled under German law, but was passed upon by both the Social Court and Düsseldorf Court because the document was neither relevant nor necessary to the decision in the Social Court Action. Again, these are hotly contested issues that overlap with previously addressed arguments, and do not advance McKinsey's cause for much of the same reasons. See Section C.1 2 supra.

To be sure, Schottdorf's § 1782 application is a last resort to acquire discovery that it was unable to obtain abroad. But that is not an "impermissible" use of § 1782 because, in some respects, that is precisely the type of assistance that the statute was designed to afford. See In re Imanagement, 2005 WL 1959702, at * 5 (granting § 1782 application, inter alia, where "resort to § 1782 may be the only avenue by which [the requesting party] can obtain the discovery it seeks.").

It appears that Schottdorf is seeking discovery because it has a good faith belief that it will be able to use the evidence in the Social Court Action. See In re Grupo Qumma, 2005 WL 937486, at * 3. Absent any indication of bad faith on Schottdorf's part, the Court is simply unwilling to weigh the request for § 1782 assistance itself as a negative discretionary factor. See id. It is at most a neutral consideration in this case.

4. The Subpoena Is Neither Unduly Intrusive Nor Burdensome

Under the fourth and final Intel factor, the Court must consider whether Schottdorf's discovery requests are unduly intrusive or burdensome. See Intel, 524 U.S. at 265. As noted above, Schottdorf has subpoenaed the production of: (1) "Reports, analyses, memoranda, or other documents created by McKinsey pursuant to and/or in connection with its retention by the [Federal Association] and concerning the Federal Association's promulgation of [the 20% Rule]"; (2) "Documents that McKinsey relied upon in generating any of the above-referenced documents for the Federal Association"; and (3) Communications with the Federal Association or its representatives concerning the bases or rationales of the 20% Rule or McKinsey's retention by the Federal Association for the above-referenced services." (Johnson Dec., Ex. C.)

These requests appear to be sufficiently tailored to the litigation issues for which production is sought. The fact that the documents are located abroad, itself, is of little concern. They can easily be shipped to McKinsey's headquarters in New York (or perhaps accessed electronically), and McKinsey does not contend otherwise.

Moreover, any concern that the production would be unduly intrusive can be remedied by an appropriate confidentiality agreement. If the parties cannot reach such an agreement on their own, the Court is willing and ready to assist.

Finally, the Court rejects McKinsey's claim that the production will be unduly burdensome on the ground that the documents will have to be translated from German into English so that they may be reviewed by McKinsey's United States, non-German speaking, counsel. Initially, the Court is not in a position to gauge the extent of this purported burden because McKinsey has not disclosed the volume of documents that are subject to production. In any event, McKinsey's tactical approach to the requested discovery is hardly the type of burden that could weigh in favor of blanket nonproduction. Section 1782 applications, which presuppose that the discovered material will be used in connection with foreign litigation, may often involve requests for material in a foreign language. Such language differences are inevitable, and may carry added expense for both parties. But these additional burdens are not "undue," and cannot be used as a shield where, as here, the decision to translate and review the documents in the United States is a matter of choice.

Accordingly, the fourth and final discretionary consideration weighs in Schottdorf's favor.


For the foregoing reasons, McKinsey's motion to vacate the § 1782 order and quash the resulting subpoena is DENIED. The documents shall be produced by January 31, 2007, under an appropriate confidentiality agreement. I remain available to the parties in the event that the Court's assistance is necessary.


Summaries of

In re Application of Gemeinshcaftspraxis

United States District Court, S.D. New York
Dec 29, 2006
Civ. M19-88 (BSJ), PART I (S.D.N.Y. Dec. 29, 2006)

granting broad discovery to a German partnership under § 1782

Summary of this case from Diedenhopen-Lennartz v. Diedenhofen

approving application seeking documents relating to the creation of a single report by consulting firm

Summary of this case from In re Application of 000 Promneftstroy for an Order to Conduct Discovery for Use in a Foreign Proceeding.

rejecting argument that section 1782 assistance cannot extend to production of documents located overseas

Summary of this case from In re Stati
Case details for

In re Application of Gemeinshcaftspraxis

Case Details


Court:United States District Court, S.D. New York

Date published: Dec 29, 2006


Civ. M19-88 (BSJ), PART I (S.D.N.Y. Dec. 29, 2006)

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