Power Integrations, Inc. v. Fairchild Semiconductor International, Inc.

233 F.R.D. 143, 2005 U.S. Dist. LEXIS 30570, 2005 WL 3271498
CourtDistrict Court, D. Delaware
DecidedDecember 2, 2005
DocketNo. 04-1371-JJF
StatusPublished
Cited by5 cases

This text of 233 F.R.D. 143 (Power Integrations, Inc. v. Fairchild Semiconductor International, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Power Integrations, Inc. v. Fairchild Semiconductor International, Inc., 233 F.R.D. 143, 2005 U.S. Dist. LEXIS 30570, 2005 WL 3271498 (D. Del. 2005).

Opinion

MEMORANDUM OPINION

FARNAN, District Judge.

Presently before the Court is LG Electronic U.S.A. Inc.’s Combined (i) Objections To Subpoena Duces Tucem And (ii) Motion To Quash Subpoena Ad Testificandum And For A Protective Order (D.1.130). The Motion has been fully briefed and argued before the Court. For the reasons discussed, the Court will grant the Motion To Quash and deny as moot the Objections to the subpoena duces tucem filed by LG Electronic U.S.A. Inc.

I. Background

Power Integrations, Inc. (“Power Integrations”) filed this patent infringement action against Fairchild Semiconductor International, Inc. and Fairchild Semiconductor Corporation (“Fairchild”). LG Electronic USA Inc. (“LGE-USA”) is not a party to this action; however, Power Integrations has served a subpoena duces tucem and a subpoena ad testificandum (collectively, “the subpoena”) on LGE-USA seeking documents and information regarding 43 integrated circuits allegedly manufactured by Fairchild, which Power Integrations believes may be contained in certain products marketed by LGE-USA. In addition, Power Integrations seeks a deposition from LGE-USA on these issues.

In response to the subpoena, LGE-USA reviewed its records and informed Power Integrations that it had no documents or information responsive to its request. Power Integrations refused to withdraw its subpoena, contending that LGE-USA has an obligation to request the subpoenaed documents from its parent company, LGE-Korea, a Korean corporation with a principal place of business in Seoul. Because Power Integrations declined to withdraw the subpoena, LGE-USA has filed the instant Motion To Quash.

II. Parties’ Contentions

The parties’ dispute centers on the question of whether a non-party, domestic subsidiary corporation is obligated to obtain documents from its foreign parent corporation in response to a subpoena served on the non-party subsidiary in the United States. By its Motion to Quash, LGE-USA contends that it is not obligated to obtain these documents, because it is a discrete and separate legal entity from its parent, LGE-Korea. LGE-USA also contends that, as a factual matter, LGE-USA operates its business independently from LGE-Korea. LGE-Korea is a manufacturer of electronic equipment and LGE-USA purchases this equipment from LGE-Korea in Korea and then imports the equipment into the United States for sale. LGE-USA also has a separate subsidiary LGE-Alabama that deals with service and [145]*145maintenance issues for the products sold by LGE-USA. Thus, LGE-USA is strictly a marketing and sales company.

LGE-USA contends that it has no control over its parent corporation or the documents it possesses, because they are not normally utilized in LGE-USA’s business. According to LGE-USA, their products are coded by LGE part number. The LGE part number does not show who the suppliers are for each part and there may be multiple suppliers for the components of each part. Thus, LGE maintains that there is no “master list” or “magic decoder ring” in Korea or the United States that matches the LGE numbers with a supplier, and in any event, it would be unduly burdensome and time consuming for LGE-USA to send its'staff to Korea to sift through this information. LGE-USA contends that the proper procedure for Power Integrations to follow is to subpoena its foreign parent through the Hague Convention by means of service through this Court or the use of Letters Rogatory.

In response, Power Integrations contends that the Court must go beyond “corporate formalities” in determining whether LGE-USA has control within the meaning of Federal Rule of Civil Procedure 45, and determine whether LGE-USA has the practical ability to obtain the materials Power Integrations seeks on demand from its foreign parent. According to Power Integrations it does not matter that the subsidiary has no “control” over its parent. Rather, Power Integrations contends that the term “control” should be liberally interpreted to include a consideration of such factors as: (1) the relationship between the parties, (2) whether the subsidiary would be able to access and obtain the documents during its usual business, and (3) whether the subsidiary is in regular contact with the parent. As for the costs and expenses LGE-USA might incur in having to obtain this information from Korea, Power Integrations contends that such costs, with the exception of reasonable copy costs, are a normal part of doing business in the United States.

III. DISCUSSION

Federal Rule of Civil Procedure 45(a)(1) provides:

Every subpoena shall
(A) state the name of the court from which it is issued; and
(B) state the title of the action, the name of the court in which it is pending, and its civil action number, and
(C) command each person to whom it is directed to attend and give testimony or to produce and permit inspection and copying of designated books, documents or tangible things in the possession, custody or control of that person, or to permit inspection of premises, at a time and place therein specified; and
(D) set forth the text of subdivisions (c) and (d) of this rule.

Pursuant to Rule 45(a)(1)(C), the test for the production of information sought by a subpoena is whether the information is “in the possession, custody or control” of the person on whom the subpoena is served. Control is defined as the legal right to obtain the documents required on demand. Gerling International Ins. Co. v. Commissioner of Internal Revenue, 839 F.2d 131, 140 (1988) (collecting eases). Although parent corporations have been required to produce documents held by their subsidiaries, see Novartis Pharm. Corp. v. Eon Labs Mfg., Inc., 206 F.R.D. 392, 395 (D.Del.2002), the converse is not trae. A subsidiary, by definition, does not control its parent corporation. Further, the separate and distinct corporate identities of a parent and its subsidiary are not readily disregarded, except in rare circumstances justifying the application of the alter ego doctrine to pierce the corporate veil of the subsidiary. Gerling, 839 F.2d at 140.

In this case, the Court concludes that the relationship between LGE-USA and LGE-Korea is not the type of relationship that would justify disregarding the discrete, corporate identity of LGE-USA. In addition to being separate legal entities with separate corporate places of incorporation, LGE-Korea and LGE-USA also function as separate entities in the business world. LGE-Korea and LGE-USA have little more than a vendor relationship, with LGE-Korea being the [146]*146supplier and LGE-USA being the purchaser. LGE-USA has no interest in the manufacturers of the component parts of the products they purchase from LGE-Korea. In the course of its daily business, LGE-USA uses LGE numbers to track how many products it sells, regardless of who made the components of those parts. Thus, LGE-USA does not utilize the information requested by Power Integrations in the normal course of its business.

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233 F.R.D. 143, 2005 U.S. Dist. LEXIS 30570, 2005 WL 3271498, Counsel Stack Legal Research, https://law.counselstack.com/opinion/power-integrations-inc-v-fairchild-semiconductor-international-inc-ded-2005.