Global Reach: U.S. Federal Rules Provide Assistance for Discovery in Foreign Matters

Imagine the following scenario: Your company has filed several lawsuits around the world, all concerning generally the same subject matter, but against different parties because of jurisdictional limitations. The litigation overseas is subject to discovery rules that are far more limited than those available in the United States. The U.S. litigation has been stayed pending the result of the foreign matter. However, important information and witnesses that are useful in prosecuting the foreign litigation are located in the U.S., outside of the foreign court’s jurisdiction and applicable discovery rules. In this complex situation, is there any way to obtain that critical bit of information? Or can the U.S. witnesses evade all production and testimony because of jurisdictional bounds?

This was precisely the complicated bind Medytox, Inc. recently found itself in. Medytox is a Korean biopharmaceutical company that develops and produces biopharmaceutical drugs. After learning that a competitor, Daewoong Pharmaceuticals Co., Ltd. and Daewoong Co., Ltd. (collectively “Daewoong”), had acquired approval from the Korean Ministry of Food and Drug Safety for a drug similar to their own, Medytox launched an investigation into potential theft of its trade secrets.

Medytox’s investigation revealed that a former employee, Dr. Lee, who worked for Medytox in Korea from 2004 through 2008 and had access to trade secret information, subsequently had several connections with Daewoong, including having worked as a consultant for Daewoong starting in 2010. Once Medytox’s investigation was complete around 2017, Medytox initiated lawsuits in Korea and California, and later in Indiana. At that time, Dr. Lee lived in Indiana and was only named in the Indiana suit because neither the Korean nor California courts had jurisdiction over him. Given the overlapping issues, both U.S. courts stayed their cases pending resolution of the Korean action.

On July 13, 2018, Medytox filed an application for judicial assistance in the Indiana case pursuant to 28 U.S.C. § 1782 to obtain discovery from Dr. Lee for use in the Korean action. Medytox represented that its investigation revealed Dr. Lee was in extensive contact with Daewoong during the development of its BTX drug and Medytox therefore sought to depose and obtain documents from Dr. Lee related to his work at Medytox and Daewoong during this time.

Section 1782 is intended to provide an efficient means of assistance to parties in international litigation seeking discovery domestically. Before a district court can grant an application for discovery, four prima facie requirements must be met: (1) the request must be made “by a foreign or international tribunal,” or by “any interested person”; (2) the request must seek evidence; (3) the evidence must be “for use in a proceeding in a foreign or international tribunal”; and (4) the person from whom discovery is sought must reside or be found in the district of the district court ruling on the application for assistance. Dr. Lee did not dispute that Medytox met these prima facie requirements.

However, the court must also consider four discretionary factors when deciding how to rule on a Section 1782 application—and Dr. Lee argued that Medytox had failed to show that these factors weighed in favor of granting the application. The four discretionary factors were set forth by the U.S. Supreme Court in Intel v. Advanced Micro Devices, Inc.: (1) whether “the person from whom discovery is sought is a participant in the foreign proceedings”; (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 discovery is otherwise “unduly intrusive or burdensome.”

Rejecting Dr. Lee’s arguments, the Indiana court found that each factor weighed in favor of granting Medytox’s application. Importantly, the court found that Dr. Lee possessed information that was not readily available through other means and he was outside the jurisdictional reach of the Korean court—the Korean court had even tried to speak with Dr. Lee, but had been unable to compel his participation. The court further rejected Dr. Lee’s argument that Medytox must first attempt to obtain discovery from the Korean court: the U.S. Supreme Court had held that Section 1782 did not impose an exhaustion requirement and doing so render the statutory provision meaningless. Finally, the court found that sitting for a deposition in his home district did not and could not, constitute an undue burden for Dr. Lee. Given that all four factors weighed in favor of granting the application, the magistrate judge recommended that Medytox’s application be granted.

The court’s holding is a helpful reminder that, in this era of a global economy, harms may occur in ways that touch on more than one country. At least with respect to discovery, Section 1782 thankfully provides an avenue for parties to obtain evidence needed to pursue claims to remedy those harms.