APPLICATIONS OF HERAEUS KULZER, GMBH, FOR ORDERS COMPELLING DISCOVERY FOR USE IN A FOREIGN PROCEEDING v. BIOMET (January 24, 2011)
Heraeus Kulzer, a German company and a leading producer of bone cement, sued Biomet, an American company, in a German court. Heraeus Kulzer alleges that Biomet obtained confidential information from a former Heraeus Kulzer distributor and used it in a competing product. As part of its case preparation, Heraeus Kulzer sought discovery in Indiana federal court. Judge Miller (N.D. Ind.) denied the application, concluding that Heraeus Kulzer was attempting to circumvent German law and that Heraeus Kulzer's requests were overly broad.
In their opinion, Circuit Judges Bauer and Posner and District Judge Pallmeyer reversed and remanded. The Court stated that § 1782 allows a district court to order the production of documents for use in a foreign tribunal. In the sound discretion of a district court, an applicant can obtain as much discovery as if the case had been brought in that court. The Court noted however, the potential for abuse in different ways: seeking discovery that is already available in the foreign court for harassment purposes only, seeking discovery that would be inadmissible in a foreign court again for harassment purposes, inundating a foreign court with evidence that would be inadmissible in an American court, seeking discovery that the foreign court would disapprove of because of the cost of compliance, and obtaining a discovery advantage by using American discovery rules while limiting one's adversary to foreign discovery rules. The Court saw no abuse, however, in Heraeus Kulzer's application. It appeared that the requested discovery was not available under the German procedures and there was no indication that the requested evidence would be inadmissible. Biomet neither sought any relief from the German court nor sought any conditions on Heraeus Kulzer's application from the American court. Because Heraeus Kulzer had demonstrated a need for the discovery, it is Biomet’s burden to establish that the discovery would be inappropriate under the statute. Since Biomet did not do that, the Court held that the § 1782 requirements were met. The Court also stated that the district court committed error by turning down the request without requiring some negotiation as to its scope. Biomet had refused to meet with Heraeus Kulzer to negotiate restrictions on the discovery and the district court never demanded evidence from Biomet as to its alleged burden. Once a party establishes entitlement to § 1782 discovery, the matter is governed by the federal discovery rules. They Court remanded for further consideration of the request under those rules.