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Purolite Corp. v. Hitachi America, Ltd.

United States District Court, S.D. New York

May 9, 2017

PUROLITE CORPORATION, et al., Plaintiffs,
HITACHI AMERICA, LTD., et al., Defendants.

          OPINION & ORDER

          PAUL A. ENGELMAYER, District Judge.

         This decision addresses the pending application, Dkt. 1, by petitioners Purolite Corp., Purolite AG, and Purolite K.K. (together, "Purolite") for an order, pursuant to 28 U.S.C. § 1782, directing respondent Hitachi America, Ltd. ("HAL") to comply with third-party discovery sought in aid of Purolite AG's pending lawsuit in Tokyo against Hitachi-GE Nuclear Energy, Ltd. ("HGNE"), Purolite AG v. Hitachi-GE Nuclear Energy, Ltd., Case No. Heisei 26th Year (Wa) No. 29420, Tokyo District Court, Civil Division, Section 46-D ("the Japan Action"). The Court assumes familiarity with the parties' submissions on Purolite's application. For Purolite, these consist of declarations by Leonard A. Feiwus, Esq. ("Feiwus Decl."), Dkt. 2, and Mitsuhira Kamiya ("Kamiya Decl."), Dkt. 3, and a memorandum of law, Dkt. 4 ("Purolite Mem."); HAL also submitted a memorandum of law, Dkt. 18 ("HAL Mem."). The Court also assumes familiarity with the related action that Purolite Corp. has brought in this Court against HAL, AVANTech, Inc. ("Avantech") and certain Avantech personnel, Purolite Corp. v. Hitachi America, Ltd., No. 16 Civ. 6852 (PAE) ("the U.S. Action"). On January 6, 2017, the Court stayed that action pending progress in the Japan Action.

         The Court's analysis, applying the statutory § 1782 factors and the discretionary factors identified by the Supreme Court in Intel Corporation v. Advanced Micro Devices, Inc., 542 U.S. 241, 264-265 (2004), follows below.

         In summary, the Court's judgment is that there is a proper basis under § 1782 on which to order HAL to provide third-party discovery for use in the Japan Action by Purolite AG. That is because Purolite AG's theory of HGNE's liability in that action centrally implicates HAL. HAL is alleged, on HGNE's behalf, to have solicited business from U.S. entities, and/or to have executed contracts with such entities, for remediation work at the Fukushima plant that would use Purolite's proprietary technology, allegedly in breach of the Partnership Agreement between HGNE and Purolite. For that reason, § 1782 discovery from HAL is warranted, much as the United States District Court for the District of South Carolina, in its order of April 4, 2016, held third-party discovery under § 1782 warranted from Avantech, a U.S. entity that Purolite alleges was solicited by HAL and worked with HGNE in connection with the Fukushima remediation work in a manner that breached the Partnership Agreement. See Dkt. 2, Ex. 1. The Court accordingly stands ready to approve a properly drawn subpoena for such use; and grants Purolite's application, to the extent that it seeks approval in concept of third-party discovery by Purolite AG of HAL for use in the Japan Action.

         However, the Court cannot approve Purolite's proposed subpoenas for documents and testimony as they are currently drafted. See id., Exs. 2-3. These subpoenas are patently overbroad. They would improperly reach evidence held outside the United States, including evidence held in Japan by HAL affiliates. And they appear aimed in part at fortifying the incipient U.S. Action, rather than being tailored to the distinct claims, defenses, and needs of the Japan Action. The subpoena for documents in particular presents significant concerns of an undue burden. The Court therefore will direct counsel for Purolite AG and HAL, now that they are apprised that the Court will approve properly tailored subpoenas under § 1782, promptly to work together to negotiate the parameters of materially narrowed subpoenas, consistent with the discussion herein.

         1. Statutory Requirements

         The Court first considers the three statutory prerequisites for discovery under § 1782. See Brandi-Dohrn v. IKB Deutsche Industriebank AG, 673 F.3d 76, 80 (2d Cir. 2012); In re Chevron Corp., 749 F.Supp.2d 141, 160 (S.D.N.Y. 2010).

         The first statutory requirement is that the person from whom discovery is sought resides or is found in the District in which the application is made. Id. Because HAL is headquartered in Tarrytown, New York, and conducts business out of its New York headquarters, see Kamiya Decl. ¶ 12, that requirement is met.

         However, as HAL notes, some evidence covered by Purolite's subpoena appears held abroad, including in Japan. The document subpoena, for example, defines "Hitachi America" and "You"-meaning the subpoena's recipients-to include HAL's "parents, subsidiaries, and affiliates, " presumably including Japan-based HGNE. HAL Mem. at 9-10. To the extent that the subpoena seeks non-U.S. discovery, including by seeking discovery from HAL's foreign affiliates through the expedient of a subpoena to HAL, such evidence is beyond the reach of a § 1782 subpoena. See In re Sarrio, S.A., 119 F.3d 143, 147 (2d Cir. 1997); In re Microsoft Corp., 428 F.Supp.2d 188, 194 n.5 (S.D.N.Y. 2006). In finding the first statutory prerequisite met, the Court relies only on evidence held by HAL, a U.S. entity, not by its non-U.S. affiliates.

         The second statutory requirement is that the discovery requested be for use in a foreign proceeding. Brandi-Dohrn, 673 F.3d at 80; Chevron, 749 F.Supp.2d at 160. This requirement, too, is satisfied with respect to some of the discovery that Purolite seeks. Most obviously, HAL's efforts in the United States on behalf of or in coordination with HGNE, either (1) disclosing Purolite's proprietary technology to other entities in connection with potential Fukushima remediation work, or (2) seeking to partner, or partnering, with other entities in connection with such work as would make use of Purolite's proprietary technology are centrally germane to the Japan Action. At a minimum, the Court finds, these efforts by HAL are an appropriate subject of § 1782 discovery.

         But the same finding cannot be made across-the-board as to Purolite's two proposed subpoenas. Purolite has not shown that all 23 calls in its 22-page subpoena duces tecum, or all 13 subjects covered by its testimonial subpoena for a corporate witness from HAL, are relevant, let alone "central to the claims" in the Japan Action. Purolite Mem. at 18. As HAL notes, some document calls do not refer to HGNE at all. And some appear targeted to the U.S. action against HAL as opposed to the Japan Action. Most revealing in this regard is Purolite's 21st call. It seeks HAL's "written policies, practices or procedures and guidelines relating to Your document retention and destruction, " and specifically demands production of all such materials as to a host of subsidiary topics. These include "backup tape rotation schedules, " "employee use policies of Your computers, data, and any other technology, " "file naming conventions and standards, " "password, encryption and other security protocols, "diskette, CD, DVD, and any other removable-media labeling standards, " "email storage conventions (/. e., limitations on mailbox sizes/storage locations, schedule and logs for storage, etc.), " "electronic media deployment, allocation and maintenance procedures for new employees, current employees, or departed employees, " "software and hardware upgrades (including patches) through the present (who and what organization conducted such upgrades)"; and "personal and home computer usage for work-related activities." Dkt. 2-2, at 21. A United States court might welcome such production from a party to a lawsuit. But Purolite offers no reason to believe that the Tokyo court would have any interest whatsoever in such evidence regarding a third party's systems, databases, and internal protocols. In finding the second statutory requirement met, the Court finds that only some, not all, evidence sought by Purolite is for use in the foreign proceeding.[1]

         The third statutory requirement is that Purolite be an "interested person." Purolite AG, the plaintiff in the Japan Action, qualifies as such. See In re Lancaster Factoring Co. v. Mangone, 90 F.3d 38, 42 (2d Cir. 1996).

         2. The Intel Factors

         The Court next considers the four discretionary factors identified by the Supreme Court in Intel. These are: (1) whether the respondent from whom discovery is sought is a "participant in the foreign proceeding, " (2) the receptivity of the foreign tribunal to U.S. court assistance, (3) whether the Section 1782 request is an attempt to "circumvent foreign proof-gathering restrictions, " and (4) ...

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