Heidelberg Americas, Inc. v. Tokyo Kikai Seisakusho, Ltd.

United States Court of Appeals
For the First Circuit

No. 01-2463

HEIDELBERG AMERICAS, INC.,
HEIDELBERG WEB SYSTEMS, INC.,

Petitioners, Appellees,

v.

TOKYO KIKAI SEISAKUSHO, LTD. AND TKS (USA), INC.,

Respondents, Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Joseph A. DiClerico, U.S. District Judge]

Before

Torruella, Lynch and Howard,
Circuit Judges.

Barry J. Reingold, with whom Perkins Coie, LLP, James P.
Bassett, Marty Van Oot, and Orr & Reno, were on brief, for
appellants.
Mark C. Rouvalis, with whom Sarah B. Knowlton, McLane, Graf,
Raulerson & Middleton, P.A., and Hugh T. Lee, were on brief, for
appellees.

June 20, 2003
 HOWARD, Circuit Judge. In July 2001, Tokyo Kikai

Seisakusho and TKS (USA), Inc. (collectively, "TKS"), served a

subpoena duces tecum on Heidelberg Americas, Inc., and Heidelberg

Web Systems, Inc. (collectively, "Heidelberg"). The subpoena

sought information purportedly relevant to a lawsuit in which TKS

is a party but Heidelberg is not. Heidelberg, which was served at

its offices in New Hampshire, successfully moved to quash the

subpoena in the resident United States District Court under Fed. R.

Civ. P. 45(c)(3). TKS appeals, asserting abuse of discretion. We

affirm.

I. Background

TKS is a defendant in a civil action pending in the

United States District Court for the Northern District of Iowa.

The plaintiff in that action, Goss Graphic Systems, Inc., alleges

that TKS and seven other defendants (collectively "Iowa

defendants") violated the Anti-Dumping Act of 1916, 15 U.S.C. § 72

(2003)1 ("the Anti-Dumping Act"), by selling newspaper printing

1
In relevant part, the Anti-Dumping Act provides:

It shall be unlawful for any person importing or
assisting in importing any articles from any
foreign country into the United States, commonly
and systematically to import, sell or cause to be
imported or sold such articles within the United
States at a price substantially less than the
actual market value or wholesale price of such
articles, . . . Provided, That such act or acts be
done with the intent of destroying or injuring an
industry in the United States, or of preventing the
establishment of an industry in the United States,

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presses at prices substantially below their market values. The

Iowa lawsuit itself derives from an earlier trade dispute that

culminated in a 1996 Department of Commerce ("DOC") determination

that the Iowa defendants had engaged in illegal dumping and a 1996

International Trade Commission ("ITC") determination that further

imports by the Iowa defendants posed a risk of economic harm to

Goss.

After the 1996 determinations, Goss' financial condition

precipitously declined. In 1999, Goss filed a petition to

reorganize under Chapter 11 of the Bankruptcy Code. Following its

emergence from bankruptcy in early 2000, Goss brought the Iowa

lawsuit, which attributes Goss' late-1990s financial woes to the

anti-competitive practices of the Iowa defendants. The complaint

in the Iowa action alleges, for example, that the Iowa defendants

violated the Anti-Dumping Act by continuing to unlawfully dump even

after the DOC and ITC rulings, causing Goss to lose crucial sales

and contracts.

Heidelberg, a manufacturer of newspaper printing presses,

is not a party in the Iowa action. Nor was it a party to the DOC

or ITC investigations. Heidelberg became involved in this matter

or of restraining or monopolizing any part of trade
and commerce in such articles in the United States.
. . .
Any person injured in his business or property be reason
of any violation of, or combination or conspiracy to
violate, this section . . . shall recover threefold the
damages sustained . . ..

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as a result of acquisition talks it had with Goss. In July 2002,

Goss and Heidelberg entered into an agreement in which the parties

promised not to disclose for two years any confidential information

obtained during the negotiations between them. As part of ongoing

discussions, Heidelberg allegedly evaluated Goss' value as a going

concern.

A year after the confidentiality agreement was entered

into, TKS subpoenaed Heidelberg in New Hampshire, requesting the

production of "[a]ll documents received, reviewed or generated by

Heidelberg since 1991 relating to the possible acquisition of (a)

an ownership interest in Goss, or (b) any other type of business

affiliation with Goss." Heidelberg responded by objecting to the

subpoena on the grounds that it was "unduly broad, overly

burdensome, [and] seeks trade secrets and other confidential

research development or commercial information." Heidelberg also

cited a then-recent report of the World Trade Organization that

concluded that the Anti-Dumping Act violated two treaties to which

the United States was a signatory.2 Subsequently, Heidelberg filed

its motion to quash.

On August 6, 2001, the New Hampshire district court

granted the motion to quash in a margin order. Two days later, the

Iowa district court stayed the underlying proceedings based on

2
Heidelberg asserted that the putative unlawfulness of the
Anti-Dumping Act undermined the legal basis for Goss' lawsuit and
rendered the subpoena suspect, if not illegitimate.

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proposed legislation in Congress to repeal the Anti-Dumping Act.

TKS soon thereafter filed a motion for reconsideration in the New

Hampshire district court. This was denied "on the grounds that the

subpoena was unduly burdensome, overly broad, and sought documents

that contained trade secrets and confidential information." The

court further found that "the relevanc[e] of the requested

documents was not sufficiently justified." Even if there were

adequate grounds for the subpoena, the court added, the dubious

legal status of the Anti-Dumping Act militated against its

execution.

TKS appealed,3 but we stayed the appeal for the duration

of the stay of the Iowa litigation. Congress subsequently failed

to pass legislation repealing the Anti-Dumping Act. Accordingly,

in August 2002, the Iowa district court lifted its stay and

directed the parties to complete discovery. We then lifted our

stay as well.

II. Analysis

TKS challenges the ruling below on three overlapping

bases. First, TKS contends that it did indeed establish the

relevance of the documents sought. Second, it says the subpoena

3
Although interlocutory orders are usually non-appealable, we
may review a district court order quashing a subpoena duces tecum
in a jurisdiction outside the principal proceeding. See Horizons
Titanium Corp. v. Norton Co., 290 F.2d 421, 423-24 (1st Cir. 1961);
15B Wright, Miller & Cooper, Federal Practice & Procedure §
3914.24, at 180-83 (2d ed. 1994).

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was narrowly tailored to solicit information related to the Iowa

litigation, and thus was neither overly broad nor unduly

burdensome. Finally, TKS contests the district court's

determination that the information sought constituted protected

trade secrets or confidential commercial information. To a degree,

all these arguments address one question central to the appeal:

whether TKS' need for the information overcomes Heidelberg's

rationale for resisting disclosure. We therefore fix our attention

on TKS' second argument.

District courts exercise broad discretion to manage

discovery matters. In turn, we review discovery orders for an

abuse of that discretion, "recognizing that an appeals court

simply cannot manage the intricate process of discovery from a

distance." Brandt v. Wand Partners, 242 F.3d 6, 18 (1st Cir.

2001). Put another way, we will disturb a discovery order only

"upon a clear showing of manifest injustice, that is, where the

lower court's discovery order was plainly wrong and resulted in

substantial prejudice to the aggrieved party." Mack v. Great Atl.

& Pac. Tea Co., 871 F.2d 179, 186 (1st Cir. 1989).

While district courts are to interpret liberally the

discovery provisions of the Federal Rules of Civil Procedure to

encourage the free flow of information among litigants, limits do

exist. See, e.g., Fed. R. Civ. P. 26(b) advisory committee notes

(1983). For example, Fed. R. Civ. P. 26(c) provides that, upon a

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showing of good cause, the presiding court "may make any order

which justice requires to protect a party or person from

annoyance, embarrassment, oppression or undue burden or expense."

Even more pertinently, Fed. R. Civ. P. 45(c)(3)(A)(iv) commands

that a court "shall" quash or modify a subpoena if the subpoena

"subjects a person to undue burden."

In its uphill battle to convince us that the district

court abused its discretion, TKS asserts that it established need

for the materials sought because the materials bear on causation

and damages in the Iowa suit. And, TKS further argues, any burden

placed on Heidelberg does not eclipse this need. TKS explains that

it will defend the Iowa lawsuit on the theory that Goss' inept

management, rather than TKS' dumping practices, caused Goss'

financial difficulties. Heidelberg's assessment of Goss as a going

concern, so the argument goes, likely contained an assessment of

Goss' management that could substantiate this defense theory.

Moreover, even if no such assessment is among Heidelberg's records,

Heidelberg's analysis of market dynamics during the relevant period

of time (an analysis that was likely committed to paper) might help

to explain to the factfinder, or lead to the discovery of evidence

that would help explain to the factfinder, why Goss was

experiencing financial problems. This argument does not persuade

us that the district court was plainly wrong in quashing the

subpoena.

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 Even were we to assume, for the sake of analysis and

contrary to the district court's assessment of the matter, that TKS

has established that the documents have some relevance to the Iowa

litigation, but cf. Micro Motion, Inc. v. Kane Steel Co., Inc., 894

F.2d 1318, 1328 (Fed. Cir. 1990) ("A litigant may not engage in

merely speculative inquiries in the guise of relevant discovery."),

the district judge acted within his discretion in concluding that

the subpoena cast too wide a net. The materials sought are not

probative of whether TKS engaged in unlawful dumping, the threshold

issue in the Iowa litigation. They are at least potentially

germane to whether and how much any such dumping harmed Goss, but

some considerable question exists as to how discovery of the

materials would lead to admissible evidence. In other words, the

documents are not obviously, and perhaps not even reasonably,

calculated to lead to other discoverable materials.

The burden on the non-party Heidelberg, by contrast,

appears to be significant. See Cusumano v. Microsoft Corp., 162

F.3d 708, 717 (1st Cir. 1998) ("[C]oncern for the unwanted burden

thrust upon non-parties is a factor entitled to special weight in

evaluating the balance of competing needs[.]"). The subpoena

encompasses a decade's worth of materials and asks for "all

documents received, reviewed or generated by Heidelberg . . .

relating to . . . any . . . type of business affiliation with

Goss." (emphases supplied). Given this apparent imbalance between

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TKS' need and the imposition on Heidelberg, the court permissibly

granted the latter relief under Fed. R. Civ. P. 45(c)(3).4

Affirmed.

4
Of course, if circumstances change, the district court may
revisit its decision. See Ariel v. Jones, 693 F.2d 1058, 1060
(11th Cir. 1982)(per curiam); 9A Wright, Miller & Cooper, Federal
Practice & Procedure § 2459, at 53-55 (2d ed. 1994).

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