Bayer AG v. Betachem, Inc. , 173 F.3d 188 ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
4-13-1999
Bayer AG v. Betachem Inc
Precedential or Non-Precedential:
Docket 98-6427
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Recommended Citation
"Bayer AG v. Betachem Inc" (1999). 1999 Decisions. Paper 100.
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Filed April 12, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 98-6427
BAYER AG, In re Application for an Order permitting
BAYER AG to take discovery, pursuant to the Federal
Rules of Civil Procedure, of BETACHEM, INC. for use in
an action pending in the FIRST INSTANCE COURT
NO. 25 of BARCELONA, SPAIN.
Appellant
v.
BETACHEM, INC.
Appellee
APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. No. 96-cv-05650)
District Judge: William H. Walls
ARGUED JANUARY 15, 1999
BEFORE: NYGAARD, ALITO, and LEWIS, Circuit Judges.
(Filed April 12, 1999)
Frederick L. Whitmer (Argued)
Pitney Harden Kipp & Szuch
PO Box 1945
Morristown, NJ 07962-1945
Attorney for Appellant
Dwight E Yellen (Argued)
Ballon, Stoll, Bader & Nadler
1450 Broadway
New York, NY 10018-2268
Attorney for Appellee
OPINION OF THE COURT
NYGAARD, Circuit Judge.
Bayer AG appeals the District Court's denial of its motion
seeking unredacted documents under 28 U.S.C. S 1782.
Bayer contends that the unredacted information is
necessary to (1) impeach the credibility of a witness in
litigation pending in Spain, and (2) discover additional
information concerning a drug master file at issue.
Betachem responds that the information sought is beyond
the scope of the subpoena, and alternatively, that Bayer
already has the information sought, albeit in a different
form. The District Court had jurisdiction under 28 U.S.C.
SS 1131 and 1782. We have jurisdiction under 28 U.S.C.
S 1291.1 We review the District Court's denial of a discovery
request made under 28 U.S.C. S 1782 for an abuse of
discretion. See In re Application Pursuant to 28 U.S.C.
S 1782 for an Order Permitting Bayer AG to Take Discovery,
146 F.3d 188, 191 (3d Cir. 1998) (hereinafter In re Bayer
AG). We will affirm.
I.
The facts surrounding Bayer AG's original discovery
request are amply set forth in In re Bayer AG, 146 F.3d at
189-91, where we concluded that a district court abuses its
discretion when it denies a section 1782 application for
discovery based on its own determination that the material
sought would not be discoverable or admissible in the
_________________________________________________________________
1. Only the discovery dispute under 18 U.S.C.S 1782 is occurring in the
United States. Therefore, because the underlying litigation is in Spain,
this discovery order is immediately appealable.
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foreign jurisdiction. Thus, we remanded the case to the
District Court.
Following our remand, Betachem produced approximately
four hundred documents in response to the subpoena
duces tecum. Despite a protective order issued by the
District Court, Betachem produced the documents in
redacted form. Betachem contends that the redacted
information was "beyond the scope of the subpoena" and
included references to "other drugs, the identity of
customers or potential customers, prices, marketing
strategies, marketing analyses, etc." SA 2.
Bayer then requested unredacted versions of the
documents. Betachem refused, but allowed independent
patent counsel for Bayer to review the original unredacted
documents at the law offices of Betachem's counsel.
However, patent counsel was not allowed to make any
notes. After the review, patent counsel requested
production of approximately seventy documents in full
unredacted form. Betachem produced thirty-five of the
requested documents.
After considering arguments from both counsel, the
District Court concluded that the requested information
was cumulative and that "the aims of discovery" were "more
than met by the redacted information being furnished." AA
63. Therefore, the District Court denied Bayer's request for
the unredacted documents. Bayer now appeals and
contends that the District Judge abused its limited
discretion under 28 U.S.C. S 1782 by imposing upon Bayer,
and the statute, requirements not enacted by Congress.
II.
First, we note that our previous decision did not imply
that Bayer is entitled to all discovery sought. See In re
Bayer AG, 146 F.3d at 196 ("Our discussion is not intended
to suggest that Bayer is necessarily entitled to have its
application granted. That determination will have to await
the district court's proper exercise of its discretion on
remand when it will be free to consider the relevance of
factors not before us, such as the timeliness of Bayer's
application and appropriate measures, if needed, to protect
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the confidentiality of the materials."). Second, we also
commented that "[t]he reference in S 1782 to the Federal
Rules suggests that under ordinary circumstances the
standards for discovery under those rules should also apply
when discovery is sought under the statute." Id. at 195. The
party opposing discovery has the "burden of demonstrating
offense to the foreign jurisdiction, or any other facts
warranting the denial of a particular application." Id. at
196.
Section 1782 states in relevant part:
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 pursuant to a
letter rogatory issued, or request made, by a foreign or
international tribunal or upon the application of any
interested person . . . . 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.
28 U.S.C. S 1782(a).
Congress enacted section 1782 to further the following
goals: "facilitat[ing] the conduct of litigation in foreign
tribunals, improv[ing] international cooperation in litigation,
and put[ting] the United States into the leadership position
among world nations." In re Bayer AG, 146 F.3d at 191-92.
However, these goals do not in turn mean that a party in
foreign litigation is entitled to unbridled and unlimited
discovery under the statute. To the contrary, under the
terms of the statute, the discovery process is generally
guided by the Federal Rules of Civil Procedure.
As we noted in In re Bayer AG, 146 F.3d at 195, "[t]he
reference in S 1782 to the Federal Rules suggests that
under ordinary circumstances the standards for discovery
under those rules should also apply when discovery is
sought under the statute." Moreover, "[t]he permissive
language of section 1782 vests district courts with
discretion to grant, limit, or deny discovery." In re
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Metallgesellschaft AG, 121 F.3d 77, 79 (2d Cir. 1997). Thus,
a district court should exercise its discretion while keeping
in mind the aims of the statute. To that end, a district
court may refuse to grant a discovery request, or may
impose various conditions and protective orders attendant
to the production of requested documents. See In re Bayer
AG, 146 F.3d at 192.
The applicable Federal Rules of Civil Procedure
concerning discovery state in relevant part:
(1) In General. Parties may obtain discovery regarding
any matter, not privileged, which is relevant to the
subject matter involved in the pending action whether
it relates to the claim or defense of the party seeking
discovery or to the claim or defense of any other party,
including the existence, description, nature, custody,
condition and location of any books, documents, or
other tangible things and the identity and location of
persons having knowledge of any discoverable matter.
The information sought need not be admissible at the
trial if the information sought appears reasonably
calculated to lead to the discovery of admissible
evidence.
(2) Limitations . . . . The frequency or extent of use of
the discovery methods otherwise permitted under these
rules and by any local rule shall be limited by the court
if it determines that: (1) the discovery sought is
unreasonably cumulative or duplicative, or is
obtainable from some other source that is more
convenient, less burdensome or less expensive.
Fed. R. Civ. P. 26(b)(1) & (2).
Although the scope of discovery under the Federal Rules
is unquestionably broad, this right is not unlimited and
may be circumscribed. See Micro Motion, Inc. v. Kane Steel
Co., 894 F.2d 1318, 1322 (Fed. Cir. 1990) (citing Hickman
v. Taylor, 329 U.S. 495, 507, 67 S. Ct. 385, 391 (1947)).
The Federal Rules of Civil Procedure expressly allow a
district court to use its discretion and deny discovery
requests if the material sought is "unreasonably
cumulative." Fed. R. Civ. P. 26(b)(2). Here, the District
Court examined some of the documents, listened to
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arguments presented by counsel and concluded that
unredacted versions of the documents desired would be
"cumulative" and that Bayer already "discovered the gold"
but refused to acknowledge it. AA 54, 58. During oral
argument, counsel for Bayer stated that the only
substantive redactions involved names of customers.
Although patent counsel for Bayer was not allowed to
take notes during his document review, counsel did spend
several hours scrutinizing unredacted original documents
which contained the names of Betachem's customers. SA
34-40. Additionally, counsel for Bayer twice mentions by
name in correspondence to the District Court the
supposedly unknown customer AA 24, 27. Last, the
Spanish interrogatories which were produced to Bayer in
unredacted form with English translation contain the name
of the unknown customers. SA 47-54. Despite Bayer's
assertions, this conclusion by the District Court does not
"improperly intrude . . . into the substantive role of the
foreign forum court." Bayer Br. at 9. Likewise, the decision
is not a prediction of the actions of the foreign tribunal. But
cf. In re Bayer AG, 148 F.3d at 192 (commenting that "it
``would contradict the express purpose of section 1782' if
the American court were required to predict the actions of
another country's tribunal" and finding that the District
Court's requirement that requested discovery be
discoverable in the foreign jurisdiction exceeded the proper
scope of section 1782) (quoting John Deere Ltd. v. Sperry
Corp., 754 F.2d 132, 136 (3d Cir. 1985)). Rather, the
decision is fully within the discretion granted the District
Court under the Federal Rules of Civil Procedure which are
incorporated by reference into 28 U.S.C. S 1782.
III.
In summary, section 1782, entitled "Assistance to foreign
and international tribunals and to litigation before such
tribunals," incorporates by reference the scope of discovery
permitted by the Federal Rules of Civil Procedure. See 28
U.S.C. S 1782. Rule 26 of the Federal Rules of Civil
Procedure expressly grants a district judge the authority to
deny discovery when the information sought is
"unreasonably cumulative." Fed. R. Civ. P. 26. Although the
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information already obtained may not be in the form most
desired by Bayer, we cannot say that the District Court
abused its discretion by denying Bayer's request for certain
unredacted documents. Accordingly, we will affirm the
District Court's denial.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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