District Courts Deciding Whether to Modify a Protective Order to Allow U.S. Discovery to Be Used in Foreign Litigation Must Consider Factors Relevant to Section 1782 Proceedings

In re Posco, __ F.3d ___ (Fed. Cir. July 22, 2015) (Newman, DYK, Hughes (concurrence in result)) (D.N.J.: Chesler) (1 of 5 stars)

Federal Circuit issues writ of mandamus directing district court to reconsider its modification of a protective order allowing foreign court access to U.S. discovery. The district court had granted a motion to permit the plaintiff to use the defendant's manufacturing documents against it in co-pending Japanese and Korean litigation if the courts there agreed that the material would be kept confidential. The court had analyzed the motion under the factors for modifying a protective order from Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994), which involved disclosure to a U.S. newspaper.

The district court legally erred by not analyzing the issue based on considerations relevant to 28 U.S.C. § 1782(a), which establishes a procedure for a U.S. court to direct a defendant to produce documents for use in foreign litigation. Section 1782 did not directly govern here, and it is not the exclusive remedy for obtaining documents for foreign litigation. Nevertheless, the § 1782 considerations articulated by Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), were instructive and should be considered. Those factors include (1) whether "the person from whom discovery is sought is a participant in the foreign proceeding"; (2) "the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance"; (3) "whether the § 1782(a) request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States"; and (4) whether the request is otherwise "unduly intrusive or burdensome." Slip op. at 9. None were accounted for in the Third Circuit's Pansy analysis, so the district court had to reconsider the issue with these factors in mind.

Concurrence: Judge Hughes disagreed that § 1782 was relevant. Unlike the typical § 1782 action, where the proceeding is a standalone dispute over the scope of future production, the plaintiff here already had the documents it wanted to use. Nevertheless, he agreed that mandamus was appropriate because comity concerns prohibit restricting how a foreign court (as opposed to the parties) could use the documents. He would thus remand for the district court to reconsider whether "good cause" exists to modify the protective order without a restriction of the foreign court's discretion.