Metallgesellschaft AG v. Hodapp

121 F.3d 77
CourtCourt of Appeals for the Second Circuit
DecidedAugust 12, 1997
DocketNo. 2328, Docket 97-7479
StatusPublished
Cited by5 cases

This text of 121 F.3d 77 (Metallgesellschaft AG v. Hodapp) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Metallgesellschaft AG v. Hodapp, 121 F.3d 77 (2d Cir. 1997).

Opinion

WALKER, Circuit Judge:

Metallgesellschaft AG (“MG”), a German industrial and trading company, appeals from a final judgment of the United States District Court for the Southern District of New York (Thomas P. Griesa, Chief Judge), sitting in Part One, denying MG’s application to compel discovery from Siegfried Hodapp pursuant to 28 U.S.C. § 1782(a) and vacating a prior subpoena issued by the same court ordering discovery in aid of a foreign proceeding. We agree with MG that the district court abused its discretion in refusing discovery. We reverse and remand.

I. BACKGROUND

MG applied for discovery pursuant to 28 U.S.C. § 1782(a) from Hodapp, a New York resident and the former president of MG’s principal subsidiary in the United States. Hodapp is suing MG in the Labor Court (“Arbeitsgericht”) in Frankfurt, Germany, for breach of his employment contract with MG alleging that MG failed to pay severance remuneration during an 18-month period following his dismissal by the company. In response, MG has asserted that Hodapp has forfeited his right to such compensation under German law because he was in commercial competition with MG during the period following his dismissal. It was discovery relevant to this defense that MG sought pursuant to 28 U.S.C. § 1782(a). On March 25, 1997, the district court granted MG’s application.

On April 9, 1997, the date for Hodapp’s deposition and document production, Hodapp refused to testify or to produce documents, claiming a privilege under German law. MG promptly moved to compel Hodapp’s compliance with the court’s order, and on April 10, 1997, the district court heard the parties’ arguments in chambers. Later that day, the district court vacated its formerly-issued subpoena for reasons stated on the record. The district court was of the view (1) that, generally speaking, it was preferable for discovery issues to be raised and resolved before the foreign tribunal in which the action was pending and (2) that the information sought by MG would not have been available to it had it been sought from the German court. See Joint Appendix at 159-60. The court also noted that the parties were scheduled to appear before the German Labor Court on April 18, 1997, where the matter could be raised for the foreign tribunal’s consideration. See id. at 160. MG appeals from the dismissal of its § 1782(a) application.

II. DISCUSSION

Title 28, section 1782(a), of the United States Code provides in pertinent part:

The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal. The order may be made ... upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court____ The order may prescribe the practice and procedure, which may be in whole or part the practice and procedure of the foreign country or the international tribunal, for taking the testimony or statement or producing the document or other thing.

Under § 1782, once the statutory requirements are met, a district court is free to grant discovery in its discretion. See In re Esses, 101 F.3d 873, 875 (2d Cir.1996) (per curiam); In re Lancaster Factoring Co., 90 F.3d 38, 42 (2d Cir.1996). The parties do not dispute that the statutory requirements of § 1782 are satisfied: (1) Hodapp resides in [79]*79the Southern District of New York, (2) the information sought is for use in a proceeding before a foreign tribunal, and (3) the applicant, as the defendant in that proceeding, is an interested person. See Esses, 101 F.3d at 875. The only open question is whether the district court abused its discretion in denying discovery.

The permissive language of § 1782 vests district courts with discretion to grant, limit, or deny discovery. However, on several occasions recently, we have circumscribed that discretion. See, e.g., In re Application of Euromepa, S.A., 51 F.3d 1095, 1099-1100 (2d Cir.1995); In re Application of Gianoli, 3 F.3d 54, 58-60 (2d Cir.1993); In re Application of Malev Hungarian Airlines, 964 F.2d 97, 100-01 (2d Cir.1992). Underlying these decisions is our view that district courts must exercise their discretion under § 1782 in light of the twin aims of the statute: “providing efficient means of assistance to participants in international litigation in our federal courts and encouraging foreign countries by example to provide similar means of assistance to our courts....” Malev, 964 F.2d at 100. In stating its views, the district court did not advert to these objectives, explicitly or implicitly, and in fact the reasons the court did give were at odds with these goals. Specifically, the district court remarked:

I have decided to not order the discovery here and I have decided to vacate the subpoena because I believe, on balance, this kind of discovery would not be afforded at this juncture in the German court if the matter were before the German court. I also believe that it is better to have these discovery issues come up on the 18th of April in the German court and be decided by the German court.

Joint Appendix at 159-60.

We have rejected any requirement that evidence sought in the United States pursuant to § 1782(a) be discoverable under the laws of the foreign country that is the locus of the underlying proceeding. Gianoli, 3 F.3d at 59-60. Our holding in Gianoli rests on the text of § 1782, which “makes no reference whatsoever to a requirement of discoverability under laws of the foreign jurisdiction,” id. at 59, as well as the history and purpose of the provision, see id. at 57-58. Similarly, we have held that a district court may not refuse a request for discovery pursuant to § 1782 because a foreign tribunal has not yet had the opportunity to consider the discovery request. See Malev, 964 F.2d at 100. Such a “quasi-exhaustion requirement,” finds no support in the plain language of the statute and runs counter to its express purposes, as “[i]t would undermine the policy of improving procedures for assistance to foreign and international tribunals by imposing an additional burdens on persons seeking assistance from our federal courts.... ” Id. The district court abused its discretion by imposing such extra-statutory requirements and, as noted, by failing to take into consideration the twin aims of the statute in reaching its decision.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
121 F.3d 77, Counsel Stack Legal Research, https://law.counselstack.com/opinion/metallgesellschaft-ag-v-hodapp-ca2-1997.