In international litigation, the jurisdiction for a lawsuit should be predicated on where a litigant can recover its claim. When the litigation is commenced in a foreign court, U.S. discovery of persons or entities located in the U.S., with its wider scope, is still available to the litigants. The Seventh Circuit this week in Heraeus Kulzer, GMBH v. Biomet, Inc., 2011 WL 198117 (7th Cir. 2011), amplified when a foreign party is entitled to pursue discovery in the U.S. under 28 U.S.C. Section 1782 for use in a foreign proceeding.
There, a German company had sued Biomet and its affiliates for theft of trade secrets in a German court in 2008 and one month later applied to the federal district court where Biomet's corporate family had its headquarters to be permitted by Section 1782 to conduct discovery of materials in Biomet's possession in the U.S.
The court found that the discovery sought was undeniably important to prove misappropriation. Consequently, the burden shifted to Biomet to demonstrate that allowing the discovery sought would disserve the statutory objectives. The court decided that there was no abuse to warrant denial of the application for discovery. There was no indication that the German court would refuse to admit evidence obtained through U.S. discovery or that the discovery requests, if allowed by a German court, would impose an undue burden on Biomet. Biomet had time to ask the German court to bar the U.S. discovery or could have asked the district court to condition discovery on reciprocal discovery. However, Biomet did neither.
The Court ruled that a district court cannot merely turn down a discovery request without requiring the parties to negotiate a limitation to discovery to eliminate excessive burdens. "(T)he district court can and should cut down its request, but not to nothing, as it did. That is unreasonable."
Therefore, an application that meets the statutory requirements under Section 1782 will be allowed unless the opposing litigant can show abuse, and neither a hypothetical reaction by a foreign court nor excessive burden meets that showing.