Commercial Litigation and Arbitration

Duplicative § 1782 Application Filed in Second District Court Properly Dismissed — Under FRCP, Parent Corporation or Subsidiary May Be Order to Produce Documents Held by the Other

Lufthans Technik AG v. Astronics Corp., 2014 U.S. App. LEXIS 1352 (2d Cir. Jan. 24, 2014):

Lufthansa Technik AG appeals from the judgment of the United States District Court for the Western District of New York (Arcara, J.), dismissing Lufthansa's application for discovery in aid of a foreign proceeding pursuant to 28 U.S.C. § 1782. Lufthansa is pursuing a patent infringement claim in Germany against Astronics Advanced Electronic Systems Corporation ("AES"), a wholly-owned subsidiary of respondent Astronics Corporation. Lufthansa has filed two nearly-identical applications for discovery assistance: one in the Western District of Washington against the subsidiary, and the other against the parent in the Western District of New York. The New York court dismissed the petition without prejudice as duplicative of the petition in Washington. We assume the parties' familiarity with the underlying facts, the procedural history, and the issues presented for review.

"As part of its general power to administer its docket, a district court may stay or dismiss a suit that is duplicative of another federal court suit." Curtis v. Citibank, N.A., 226 F.3d 133, 138 (2d Cir. 2000); see also Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817-18 (1976). "We review the exercise of this power for abuse of discretion." Curtis, 226 F.3d at 138.

The district court appropriately exercised its discretion in dismissing Lufthansa's duplicative petition. The document requests in both petitions are substantively identical, they relate to the same foreign proceeding, and both corporations are represented by the same counsel. As Lufthansa points out, there is no rule requiring subsidiaries to produce the documents held by a parent; however, courts may at times order the production of those documents in an action against the subsidiary. See, e.g., United States v. Stein, 488 F. Supp. 2d 350, 361 (S.D.N.Y. 2007) ("Parent corporations have been compelled to produce documents in the hands  of subsidiaries, [and] subsidiaries documents in the hands of their parent entities . . . ."); Ferber v. Sharp Elecs. Corp., No. 84 Civ. 3105, 1984 WL 912479, at *1 (S.D.N.Y. Nov. 28, 1984). This conclusion is reinforced by assurances and representations made by Astronics at oral argument: 1) Astronics concedes that the Washington court has authority to order it to produce discovery; and 2) Astronics has already searched for materials in its possession under the Washington court's order.

Lufthansa cites the policy purposes behind § 1782 and a historical practice of granting overlapping discovery requests. However, no case supports Lufthansa's argument that § 1782 forecloses an exercise of discretion to dismiss duplicative actions. To the contrary, district courts have dismissed duplicative § 1782 petitions for reasons similar to the ones discussed in this order. See, e.g., In re Adolf Horler, 799 F. Supp. 1457, 1465 (S.D.N.Y. 1992); In re Alves Braga, 789 F. Supp. 2d 1294, 1310-11 (S.D. Fla. 2011) (staying part of a § 1782  petition pending the resolution of foreign proceedings). Additionally, in many of the cases relied on by Lufthansa, the overlapping discovery requests were filed in a single tribunal, where the risk of competing judgments is lessened. Here, the district judge was appropriately concerned with issuing decisions conflicting with those made by the court in Washington. To protect Lufthansa's interests, though, the district court dismissed the petition without prejudice in the event the Washington court could not provide Lufthansa with the discovery it seeks.

While Lufthansa argues the district court inappropriately imposed an extra-statutory barrier to its petition, the statute itself is to the contrary. District courts are directed to order discovery "in accordance with the Federal Rules of Civil Procedure." 28 U.S.C. § 1782(a). Thus, "the district court retains broad authority under Fed. R. Civ. P. 26(b)(1) to limit discovery where . . . the discovery sought is unreasonably cumulative or duplicative . . . ." In re Malev Hungarian Airlines, 964 F.2d 97, 102 (2d Cir. 1992) (internal quotation marks omitted). Concern for duplicative § 1782 petitions is not an extra-statutory burden.

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