Case to Watch: In re POSCO

In re POSCO, a petition for a writ of mandamus now pending in the Federal Circuit, is a case for § 1782 watchers to keep an eye on. In 2012, Nippon Steel sued POSCO in Japan for trade secret misappropriation. Both firms were in the business of manufacturing grain-oriented electrical steel. POSCO brought an action for a declaratory judgment in Korea. Nippon sued POSCO for patent infringement and violations of the Lanham Act in New Jersey, while POSCO sought reexamination of Nippon’s patents in the USPTO. The patent issues were being litigated only in the United States; the trade secret issues were being litigated only abroad.

In the US case, the parties agreed on a confidentiality order to allow the exchange of highly confidential information necessary for the litigation of a patent litigation case. The order, as original entered, forbade the use of information exchanged in the foreign lawsuits. Once the order was entered, POSCO produced, so to speak, the crown jewels. Nippon then persuaded the District Court to modify the order to permit use of the confidential information in the foreign litigation. POSCO, alleging that it would suffer irreparable harm if the documents were to be sent abroad, sought a writ of manadamus.

The parties briefed the case on the understanding that the issue was whether the District Court had erred in modifying the protective order. (Here is Nippon’s first brief). But the court threw a wrench into the works by asking the parties to brief the following question: “Whether, in light of the Supreme Court’s decision in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), 28 U.S.C. § 1782 provides the exclusive means for securing documents from another party for use in a foreign proceeding?”

Nippon’s brief argued that nothing in Intel or in § 1782 changes the ordinary rules of discovery, under which, once documents or information are in a party’s possession, the party can use them for any purpose, absent a protective order. Thus in Nippon’s view, there is really no question about § 1782 at all. The only question is whether, under ordinary principles, the judge was wrong to modify the protective order.

But POSCO’s brief takes the court’s hint. When the predecessor to § 1782 was enacted in 1855, it was in light of an opinion of the Attorney General that there was no statutory authority that would allow a federal court to execute a foreign letter rogatory. Thus, POSCO reasons, without the statute there would be no authority for courts to execute letters rogatory, which is another way, maybe, of saying that § 1782 is the exclusive mechanism for securing documents from another party for use in a foreign proceeding. (Intel is important in this argument only because it reviews the legislative history of the statute).

After receiving the parties’ new briefs, the court invited the government to weigh in on the same question, and in addition on a second question: “Whether 28 U.S.C. § 1782 in all circumstances provides the exclusive means for securing documents from another party for use in a foreign proceeding, when such documents have already been obtained in the course of discovery?”

I have to say I question whether the court’s two questions are really well stated. There’s obviously an important issue in this case—can a party use a bait-and-switch, obtaining confidential information on the understanding that it will be used only in US litigation and then seeking modification of the protective order to permit its use elsewhere? But my take is that this isn’t really a question about § 1782, because once the evidence has been “secured,” to use the word from the questions the court posed, it has been “secured.” To be sure, a party that has obtained confidential documents from its opponent in this way may have to bring a § 1782 application and try to obtain them again if it cannot persuade the US court to modify the protective order. But if the court does modify the protective order, why should § 1782 come into play at all?

Suppose Nippon hadn’t sought a protective order in the first place, or suppose the court had refused to issue a protective order (unlikely, I know, but just consider). The logic of POSCO’s position is that Nippon would not be able to use the confidential information obtained in the foreign litigation even in that situation. To make the hypothetical clearer, imagine that the foreign case was not pending at the time of the original US discovery. Even in that case, the logic of POSCO’s position, it seems to me, would forbid Nippon to use the confidential information in the foreign proceeding. It seems clear to me that that can’t be right. In the terms of § 1782, I would say that the evidence had not been obtained for use in the foreign litigation at all. It was obtained for use in the US litigation.

But since the court has posed the question, what’s the Letters Blogatory view? If § 1782 were repealed tomorrow, would courts have the power to help litigants obtain evidence in the United States for use abroad. As a first cut, let’s put the question in a more limited form: without Section 1782, can a federal court execute foreign letters rogatory?

I think this is an interesting and complex question. Here are some thoughts:

  • Letters rogatory are a civil law procedure, not a common law procedure. The common law used commissions, which were not nearly as effective, as the commissioners generally lacked the power to compel.
  • In England, equity, the admiralty, and ecclesiastical law followed the civil law rather than the common law in terms of procedure, and thus letters rogatory could be used, for example, in admiralty. See, e.g., Clerke, The Practice of the High Court of Admiralty, in Hall, The Practice and Jurisdiction of the Courts of Admiralty 35 (Baltimore, 1809).
  • I assume that a US court that issued a letter rogatory would also execute letters rogatory, since the letter rogatory itself informs the foreign court that the US court will provide reciprocity.
  • But the the only early example I can find is an admiralty case. See Nelson v. United States, 17 F. Cas. 1340 (C.C. D. Pa. 1816). It seems to me that authors who cite Nelson for the proposition that US courts could indeed execute foreign letters rogatory read too much into the case. See, e.g., Walter B. Stahr, Discovery Under 28 U.S.C. § 1782 For Foreign And International Proceedings, 30 Va. J. Int’l L. 597, 601 n.15 (1990); Okezie Chukwumerije, International Judicial Assistance: Revitalizing Section 1782, Geo. Wash. Int’l L. Rev. 649, 654 n.27 (2005). It is fair to argue that Nelson shows that US courts could execute letters rogatory in admiralty matters, since otherwise it is difficult to imagine that they could issue letters rogatory in admiralty matters; but I don’t see how you can get from there to any conclusions about letters rogatory in cases at common law. So In re Pacific Railway Corp., 32 F. 241 (C.C.N.D. Cal. 1887) which followed enactment of the predecessor to § 1782 but which seems to suggest that the courts had inherent power to issue and execute letters rogatory prior to the statute’s enactment (the case almost reads the statute as a limitation on the scope of the preexisting inherent power) is not that convincing to me.
  • Is that the end of the story? Nope. Imagine an early breach of contract case in the federal courts where one side needed discovery. Before the merger of law and equity, if a party in an action at law needed discovery (discovery wasn’t generally available at common law), he would file a bill of discovery in a separate suit in equity. Learned Hand gave a good explanation of the procedure in American practice in Pressed Steel Car Co. v. Union Pacific Co., 241 F. 964 (S.D.N.Y. 1917). With the merger of law and equity, and the importation of the procedural devices of equity into the Federal Rules of Civil Procedure, it’s no longer necessary to bring a separate action, so we’ve mostly forgotten, but there may still be cases where an independent action in the nature of an equitable bill for discovery can be brought. Indeed, until 1991 Rule 34 of the FRCP expressly contemplated that possibility. See 8 Wright & Miller § 2005 (3d ed.).
  • If a federal court after the merger of law and equity could hear an action for discovery when the underlying suit is in a US court, is there any reason it couldn’t hear such an action when the underlying suit is in a foreign court? I can’t think of one.

These considerations lead me to think that of course § 1782 cannot be the only means by which a US court can aid a litigant in obtaining evidence from another party for use in a foreign litigation, since it seems a litigant in the foreign case could approach the US court directly and seek discovery as an equitable remedy. Of course, there still might be jurisdictional problems: perhaps there would have to be diversity of citizenship among the parties to the action for discovery, for example. But as I hope I will get to examine if I ever get around to writing about the excellent new paper by James E. Pfander and Daniel D. Birk on the non-contentious jurisdiction of the US district courts, as I said I would a few days ago, there may well be deep jurisdictional questions lurking behind § 1782, too!

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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