I have a very interesting case for you today, which nearly came in under the radar. The case of the day is Drew Technologies, Inc. v. Robert Bosch, LLC (E.D. Mich. 2013). The claim was for patent infringement. The plaintiff sought leave to serve Robert Bosch GmbH and Bosch Engineering GmbH under FRCP 4(f)(3) by service on related US parties or on Bosch’s US lawyer. The judge granted the motion, and Bosch LLC moved for reconsideration.
The judge, in an unusual decision, concluded that FRCP 4(f)(3) never authorizes service on a foreign defendant by service on a person or entity in the United States. He noted that Rule 4(f), on its face, applies only to service “at a place not within any judicial district of the United States,” and he concluded that the plain language of the Rule forbids service by delivery to a person or entity in the United States.
There are, of course, many precedents to the contrary, including cases where the courts have permitted service on a foreign defendant by service on its US lawyer and cases where the courts have permitted service on a foreign defendant by service on a US entity affiliated with the foreign defendant. Readers may want to look at my archive of FRCP 4(f)(3) cases for examples. But the judge has a point about the language of the rule, so I think it’s important to address the language of the rule head-on.
I think it is possible to square the precedents with the language of the rule as follows. When I serve a defendant in Germany by delivering the documents to his US lawyer, I am serving the defendant in Germany, not the US lawyer. Rule 4(f) is limited to cases of service outside of the United States, not delivery of documents outside of the United States. So if delivery of documents within the United States effects service on a defendant abroad, the language of the rule is satisfied. It is obviously preferable, in my view, to read the rule this way, if for no other reason than it is consistent with a large number of precedents and judges should strive to rule in harmony with earlier precedents. But I do want to congratulate Judge Terrence G. Berg for a clear opinion that reads the rule with fresh eyes and for the courage to come to a conclusion he thought right despite the precedents.
The case of the day is In re Application of Kreke Immobilien KG (S.D.N.Y. 2013). Kreke was a German limited partnership. It invested in real estate investment funds offered by Oppenheim, a German bank later purchased by Deutsche Bank. Kreke claimed that Oppenheim had misrepresented the risk of the funds.
Kreke sued Oppenheim, but not Deutsche Bank, in the District Court in Cologne. It then brought a § 1782 action to obtain documents from Deutsche Bank for use in the German case. In particular, it sought documents relating to Deutsche Bank’s purchase of Oppenheim and documents detailing Oppenheim’s management of the funds in question.
Judge Buchwald found that the statutory prerequisites for a § 1782 application were met. Deutsche Bank argued that the court had to deny the application because the documents in question were not kept in the United States. The statute does not, on its face, impose such a requirement. But the judge noted a split in the precedents on the question whether the statute permits discovery of documents located abroad. Citing Judge Rakoff’s decision in In re Godfrey, 526 F. Supp. 2d 417 (S.D.N.Y. 2007), the judge held that the statute does indeed bar extraterritorial discovery. She therefore denied the application.
How strong is this conclusion? Well, I don’t think Judge Rakoff’s decision was particularly compelling. He argued that in Intel the Supreme Court “implicitly assumed that evidence discoverable under § 1782(a) would be located in the United States.” But the evidence of that implicit assumption is merely the following dictum: “nonparticipants in the foreign proceeding may be outside the foreign tribunal’s jurisdictional reach; hence, their evidence, available in the United States, may be unobtainable absent § 1782(a) aid.”
I think Judge Rakoff, and thus Judge Buchwald, reads too much into the reasoning of Intel here. “Available in the United States” could mean simply that the evidence is obtainable in the United States; it need not mean that the evidence is actually found in the United States. And this seems the more sensible reading, particularly given the realities of cloud computing and the difficulty, in 2014, in determining exactly where a document is located. In the absence of any clear statutory direction, the better course seems to me to be to treat the location of the documents as a discretionary factor.
The case of the day is In re Application of Nokia Corp. (N.D. Cal. 2013). Nokia, the Finnish smartphone company, sought leave to serve a subpoena on Google to obtain documents for use in patent litigation against HTC, a Taiwanese smartphone company, in Germany. The magistrate judge held that the statutory prerequisites under § 1782 were satisfied and that the first three Intel factors favored issuance of the subpoena. But the fourth factor, undue burden, raised an interesting issue. Nokia had drafted its proposed subpoena quite broadly, and it did not provide the court with a copy of the German pleadings to allow the court to compare the scope of the claims in the German case with the scope of the discovery sought. When Google raised undue burden, Nokia argued that any issues could be resolved by agreement between the parties or on a motion to quash. But the court reasoned that “Nokia’s position overlooks its burden to come to the court with narrowly-tailored requests in the first instance. It is no substitute to kick the can down the road ….” Thus the judge refused the application without prejudice.
True, Google could have raised its arguments on a motion to quash, and in practice that’s the more common approach; most applications under § 1782 are decided ex parte. But there’s an opportunity for an alert company that is the target of a § 1782 application to get a jump on the process by raising its arguments before the subpoena is even issued.
Disclosure: I represent HTC, Nokia’s antagonist, in related § 1782 proceedings.