Nidec Motor Corporation v. Broad Ocean Motor LLc et al

Filing 184

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Plaintiff's Motion to Compel, Doc. 173 , is GRANTED. Defendants shall respond to Nidec's Request for Production No. 7 in accordance with the Federal Rules of Civil Procedure no later than February 24, 2023. The Court will not extend the deadline for compliance absent truly exceptional circumstances. Signed by District Judge Sarah E. Pitlyk on 01/20/2023. (ANP)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
NIDEC MOTOR CORPORATION,

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Plaintiff,
v.
BROAD OCEAN MOTOR, LLC., et al.,
Defendants.

Case No. 4:13-cv-01895-SEP

MEMORANDUM AND ORDER
Before the Court is Plaintiff Nidec Motor Corporation’s Motion to Compel, Doc. [173].
For the reasons set forth below, the motion is granted.
BACKGROUND
Nidec seeks a court order compelling Defendants—Chinese companies—to comply with
its Request for Production No. 7, which seeks the production of certain sales data of the Accused
Products in the United States.1 Docs. [148] at 2. In a prior order, the Court overruled
Defendants’ substantive objections to producing the sales data. Doc. [168]. Later it held a status
conference and instructed Nidec to refile its motion to compel. Docs. [171], [176]. Nidec did so,
and the motion before the Court presents a single issue: Should the Federal Rules of Civil
Procedure or the Hague Evidence Convention apply to Nidec’s pursuit of documents responsive
to its Request for Production No. 7?
LEGAL STANDARD
“The taking of discovery from foreign entities in civil litigation pending in the United
States federal courts is regulated by two sets of rules: the Federal Rules of Civil Procedure . . .
and the Hague Evidence Convention.” St. Jude Med. S.C., Inc. v. Janssen-Counotte, 104 F.

Plaintiff’s Request for Production No. 7 states: “For each Accused Product, documents sufficient to
show, since January, 2007, (a) total U.S. sales and/or licensing revenues; (b) the total unit volume of U.S.
sales, licenses, and/or shipments to customers; (c) the total dollar volume of U.S. customer returns and/or
cancellations; (d) the total unit volume of U.S. customer returns; (e) the number of units manufactured or
produced for sale or use in or importation into the U.S.; (f) the costs of production, manufacturing,
delivery and/or distribution of Accused Products for sale or use in, or importation into, the U.S.; (g) the
profits on such sales; and (h) the research and development costs.” Doc. [149-3] at 7.
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Supp. 3d 1150, 1160 (D. Or. 2015). “[T]he Federal Rules are ‘the normal methods’ for federal
litigation involving foreign national parties unless the ‘optional’ or ‘supplemental’ Convention
procedures prove to be conducive to discovery under some circumstances.” In re Auto.
Refinishing Paint Antitrust Litig., 358 F.3d 288, 302 (3d Cir. 2004) (quoting Société Nationale
Industrielle Aérospatiale v. U.S. Dist. Ct. for S. Dist. of Iowa, 482 U.S. 522, 536 (1987)). “[T]he
Convention was intended as a permissive supplement, not a pre-emptive replacement, for other
means of obtaining evidence located abroad.” Aérospatiale, 482 U.S. at 536. Defendants, “as
the part[ies] [advocating] for application of the Hague Convention, bear[] the burden of showing
that the Convention applies.” Inventus Power v. Shenzhen Ace Battery, 339 F.R.D. 487, 498
(N.D. Ill. 2021).
The Court considers the following factors to determine whether to employ the Hague
Convention procedures: (1) the importance to the litigation of the documents or other
information requested; (2) the degree of specificity of the request; (3) whether the information
originated in the United States; (4) the availability of alternative means of securing the
information; (5) the extent to which noncompliance with the request would undermine important
interests of the United States, or compliance with the request would undermine important
interests of the state where the information is located; (6) the hardship of compliance on the party
or witness from whom discovery is sought; and (7) the good faith of the party resisting
discovery. Aérospatiale, 492 U.S. at 544 n.28; Inventus Power, 339 F.R.D. at 505.
DISCUSSION
On balance, the Aérospatiale factors militate against the use of Hague Convention
procedures in this case. First, no one denies that the sales information requested by Nidec is
important to the litigation. See Doc. [168] at 9 (“The request data certainly is integral to this
litigation.”). Defendants argue only that Nidec “provides absolutely no basis as to why the
limited financial information sought is allegedly important at this time.” Doc. [179] at 8
(emphasis added). But this Court already observed that there is not much “more time [to] keep
kicking the can down the road before this information is going to . . . become very salient.” Doc.
[176] at 24:4-6. Moreover, Defendants provide no authority for their unstated premise that
Nidec is not entitled to the sales information it seeks until some impending deadline makes the
information critical. Thus, the undisputed importance of the sales data weighs against
application of the Hague Convention.
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Second, Nidec’s discovery request is specific. Despite now complaining of Nidec’s
“[b]road and generalized reques[t],” Doc. [179] at 9, Defendants’ counsel stated in open court
that “it’s a narrow request for information with respect to the sales information.” Doc. [176] at
11:2-3. The Court agrees with the latter characterization and finds that the request’s specificity
weighs against use of the Hague Convention.
“[T]he third factor only addresses the physical location of the documents.” Gucci Am.,
Inc. v. Curveal Fashion, 2010 WL 808639, at *3 (S.D.N.Y. Mar. 8, 2010). To the extent the
information at issue here exists electronically, the Court notes that several courts have questioned
whether “electronic documents are . . . actually located in China.” Sun Grp. U.S.A. Harmony
City, Inc. v. CRRC Corp., 2019 WL 6134958, at *5 (N.D. Cal. Nov. 19, 2019); see also Strauss
v. Credit Lyonnais, N.A., 249 F.R.D. 429, 441 n.12 (E.D.N.Y. 2008). Despite having similar
grounds for doubt in this case, the Court assumes the extraterritoriality of the information Nidec
seeks for the purposes of this motion and counts the third factor in favor of using the Hague
Convention.
The fourth factor invites the Court to consider whether alternative means of securing the
requested information exist, for “if the information sought can easily be obtained elsewhere,
there is little or no reason to require a party to violate foreign law.” Milliken & Co. v. Bank of
China, 758 F. Supp. 2d 238, 246 (S.D.N.Y. 2010) (internal quotation marks and citation
omitted). “Conversely, if the information cannot be easily obtained through alternative means,
this factor is said to counterbalance the previous factor—the location of the documents and
information—and weighs in favor of disclosure.” Id. (internal quotation marks and citation
omitted). Here, the only alternative Defendants have proposed to production under the Federal
Rules is the Hague Evidence Convention.
Hague Evidence Convention procedures are “often unduly time-consuming and
expensive, and less likely to product needed evidence than direct use of the Federal Rules,” and
courts have found such concerns especially acute with respect to China. Inventus Power, 339
F.R.D. at 503 (citation omitted). Defendants do point to a handful of recent and at least partially
successful Hague Evidence Convention requests to China, and they present evidence that China
has streamlined the process for making such requests since 2019. See Doc. [179] at 3-5. But
Plaintiff correctly points out that none of those cases is on all fours with this one. See Doc. [181]
at 2-4. All but one of the cases involve foreign non-parties against whom discovery under the
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Federal Rules of Civil Procedure is unavailable. See Tulip Computs. Int’l B.V. v. Dell Comput.
Corp., 254 F. Supp. 2d 469, 474 (D. Del. 2003) (“When discovery is sought from a non-party in
a foreign jurisdiction, application of the Hague [Evidence] Convention, which encompasses
principles of international comity, is virtually compulsory.” (citation omitted, alteration in
original)). And in the one case involving parties to a litigation, discovery under the Hague
Convention appears to have resulted in a series of ancillary disputes regarding the adequacy of
production. See Sun Group U.S.A. Harmony City, Inc. v. CRRC Corporation LTD, 3:17-cv02191 (N.D. Cal.).
Meanwhile, “[w]ith respect to China specifically, many courts have found that the Hague
Convention would not be a viable alternative in light of China’s prior tendency to deny the full
scope of requested discovery and the undue delay that would result from resorting to the Hague
procedures.” Inventus Power, 339 F.R.D. at 503 (collecting cases). Moreover, China’s Hague
Evidence Convention summary still indicates that production of documents under the treaty takes
between 6 and 12 months. Doc. [179-7] at 3. In this case, the information sought by Nidec goes
to damages and will likely require supplementation as more sales are made. See Doc. [181] at 10
(citing Fed. R. Civ. P. 26(e)). If the Court were to require the use of Hague Evidence
Convention procedures to obtain the information, Nidec would likely have to submit repeated
requests as this litigation progresses, and each request could result in a 6-to-12-month delay.
Under such circumstances, the Court cannot find that the Hague Evidence Convention is an
alternative means of production by which the information sought can “easily be obtained”
without requiring Defendants to violate foreign law. Milliken & Co., 758 F. Supp. 2d at 246.
Hence, the fourth factor also weighs in favor of requiring disclosure under the Federal Rules of
Civil Procedure.
The fifth factor—balancing the national interests of the United States and China—“is the
most important, as it directly addresses the relations between sovereign nations.” Wultz v. Bank
of China, Ltd., 942 F. Supp. 2d 452, 558 (S.D.N.Y. 2013) (citation omitted). “The United States
has a ‘substantial’ interest in ‘vindicating the rights of American plaintiffs’ and an ‘overriding
interest in the just, speedy, and inexpensive determination of litigation in [its] courts.’” Inventus
Power, 339 F.R.D. at 504 (first quoting Richmark Corp. v. Timber Falling Consultants, 959 F.2d
1468, 1475 (9th Cir. 1992), then quoting Aérospatiale, 482 U.S. at 542-43). More specifically,
“the United States has a powerful interest in enforcing the acts of Congress, especially those . . .
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that are designed to protect intellectual property rights.” Nike, Inc. v. Wu, 349 F. Supp. 3d 310,
339 (S.D.N.Y. 2018) (quotation marks and citation omitted).
On the other side of the ledger, China assuredly “has a significant national interest in
ensuring that its citizens abide by its laws,” id. at 338, including those described in Defendants’
counsel’s declaration, Doc. [151-1]. As further detailed below, however, Defendants do not
point to a single example of a Chinese entity being penalized for producing documents for use in
a United States litigation. The Court finds that the United States’s “powerful interest” in
enforcing its intellectual property laws outweighs China’s interest in compliance with a law that
it does not appear to have enforced under circumstances similar to these. Thus, the fifth factor
weighs against application of Hague Convention procedures. See, e.g., Inventus Power, 339
F.R.D. at 505; Nike, 349 F. Supp. 3d at 338; Milliken, 758 F. Supp. 2d at 249.
Sixth, the Court looks at any hardship associated with compliance. “[T]his factor is
concerned primarily with any sanctions or criminal penalties a foreign defendant may suffer in
its own country for complying with a discovery request in a United States court.” Inventus
Power, 339 F.R.D. at 505 (citation omitted). Here, Defendants offer only speculation that they
may be subject to penalties under Chinese law if they produce the requested information. Doc.
[151-1]; see also id. ¶ 19 (“I am not sure whether . . . the Protective Order [in this case] will
excuse a [Chinese] entity . . . from complying with the aforementioned [Chinese] laws and
regulations. . . .”). While Defendants cite a single, three-sentence Reuters article stating that the
“China Securities Regulatory Commission (CSRC) has punished 26 cases of improper
information disclose [sic] by 18 listed companies this year. . . ,” Doc. [151-3] at 2, they fail to
cite a single instance of a Chinese entity being penalized or prosecuted for producing documents
for use in a United States litigation. Thus, the sixth factor also weighs against use of the Hague
Convention.
As to the final factor, nothing before the Court indicates bad faith on Defendants’ part.
Nidec complains that Defendants asserted that they have “never publicly disclosed financial
information regarding the products accused of infringement,” while an associated entity’s
website discloses the total revenue from Defendant ZBOM’s sales in the United States. Doc.
[173] at 11. But Nidec does not explain why ZBOM’s disclosure of its total U.S. sales revenue
vitiates Defendants’ claim that more specific information—i.e., the sales data associated with the

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Accused Products—has never been publicly disclosed. Thus, the seventh factor does not
disfavor requiring use of the Hague Convention.
Taking all of the factors together, then: Assuming that the information Nidec seeks is
located in China and finding no bad faith on the part of Defendants, the other five factors
nevertheless counsel against requiring Plaintiff to pursue discovery via the Hague Evidence
Convention. Defendants have thus failed to bear their burden to show that the Hague
Convention should be used under the circumstances presented in this case. Defendants must
therefore respond to Nidec’s Request for Production No. 7 in accordance with the Federal Rules
of Civil Procedure.
Accordingly,
IT IS HEREBY ORDERED that Plaintiff’s Motion to Compel, Doc. [173], is
GRANTED. Defendants shall respond to Nidec’s Request for Production No. 7 in accordance
with the Federal Rules of Civil Procedure no later than February 24, 2023. The Court will not
extend the deadline for compliance absent truly exceptional circumstances.
Dated this 20th day of January, 2022.

SARAH E. PITLYK
UNITED STATES DISTRICT JUDGE

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