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).
-5-
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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