In re Application for an Order Permitting Metallgesellschaft AG to Take Discovery

New York resident Siegfried Hodapp (plaintiff) sued Metallgesellschaft AG (MG) (defendant) in Labor Court in Frankfurt, Germany, for breach of contract. Hodapp claimed that MG did not pay him an agreed-on severance, and MG argued that Hodapp had forfeited his severance. MG applied under 28 U.S.C. § 1782 to the United States District Court for the Southern District of New York for discovery related to Hodapp’s forfeited severance. The application was granted. However, on the date Hodapp’s deposition and documents were set to be taken, Hodapp refused to cooperate. The district court heard arguments from both parties after MG filed a motion to compel Hodapp to comply with the subpoena. The district court ultimately denied MG’s motion and vacated the subpoena. The district court reasoned that it is preferable to resolve discovery disputes in the court where the proceeding is pending, that the information MG subpoenaed would not be available under German law, and that the case was scheduled for an upcoming court date in Labor Court, so that discovery issues could be soon raised in front of that court. The district court made no reference to the purposes underlying § 1782 in its decision. MG appealed the district court’s dismissal of its § 1782 application and decision to vacate the subpoena. The parties disagreed as to whether the district court abused its discretion by denying discovery.