United States: Intel Corp. v. Advanced Micro Devices

In our recent article regarding the F. Hoffmann-LaRoche v. Empagran case, we discussed the extent to which foreign plaintiffs can bring suit under U.S. antitrust law for injury occurring outside the United States. The Supreme Court has now decided another antitrust case, Intel Corp. v. Advanced Micro Devices, No. 02-572 (June 21, 2004), addressing a similar issue – the availability of discovery in the United States courts in aid of a foreign antitrust investigation. Under this decision, a district court may, in its discretion, order discovery "for use in" a foreign investigation instigated by a competitor or other "interested party," even if the discovery would not be available in the foreign proceeding and is not sought by the foreign tribunal. Although the case arose from an antitrust investigation, its ramifications will go beyond antitrust law and affect any party that may be involved in a foreign litigation, investigation, or administrative proceeding.

In Intel, the Supreme Court addressed the scope of 28 U.S.C. § 1782(a), which authorizes a United States District Court, at the request of a "foreign or international tribunal or upon the application of any interested person" to order discovery "for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation." The Court interpreted the statute to grant a district court broad authority to order discovery in aid of a wide variety of foreign proceedings. The Court emphasized, however, that the district courts have discretion to deny such discovery requests as unwarranted. Although the Court gave some guidance as to when it would be appropriate to grant a discovery request under § 1782(a), it is likely that district courts will be grappling with the question of when an interested person is entitled to discovery in a United States court for quite some time before a consistent practice develops.

Intel arose when Advanced Micro Devices ("AMD") brought a complaint before Directorate General- Competition (DG-COMP) of the Commission of the European Union (European Commission), alleging that Intel, its main competitor, violated Articles 81 and 82 of the Treaty of Rome by abusing its dominant market position. DG-COMP, either acting on its own or in response to a complaint, can initiate a preliminary investigation to determine whether a company has violated the antitrust laws and has the authority to seek information from the accused company and to penalize the company for refusing to provide such information. If DG-COMP undertakes an investigation in response to a complaint, DG-COMP may also provide the complainant the opportunity to support its allegations.

If DG-COMP determines that there is sufficient evidence, it recommends that the European Commission initiate a complaint. The Commissioner of DG-COMP makes the preliminary determination as to whether a violation has occurred and, if so, it serves a Statement of Objections on the target, to which the target may submit written and oral comments. After reviewing the responses, the Commissioner drafts a preliminary decision, which is then reviewed further within the European

Commission. The Commissioner may then adopt that decision as a final decision, which becomes enforceable within the European Union. The Commissioner’s final decision is subject to review by the Court of First Instance and the European Court of Justice.

In response to AMD’s complaint, DG-COMP initiated a preliminary investigation and requested that Intel answer questions and produce certain documents. AMD requested that DG-COMP also obtain from Intel documents that Intel had produced in the United States in a private antitrust litigation in Alabama, but DG-COMP declined to seek those records.

Despite DG-COMP’s lack of interest in the documents, AMD filed an action in the United States District Court for the Northern District of California, pursuant to 28 U.S.C. § 1782(a), requesting that the district court order Intel to produce the documents from the Alabama litigation. The district court noted that the investigation was still in its initial stages, and that the European Commission acted more as an administrative agency than a foreign tribunal in that it did not separate the functions of investigation, prosecution, and decision-making. The District Court therefore found the preliminary investigation did not constitute a "proceeding in a foreign or international tribunal" and that § 1782(a) did not authorize the court to consider AMD’s request.

The Ninth Circuit reversed the district court’s decision, finding that because DG-COMP makes its recommendation to the Commissioner, which has the authority to issue binding opinions that may be appealed to European courts, the preliminary investigation was "at a minimum, one leading to quasijudicial proceedings," which satisfied the statute. The Ninth Circuit also decided an issue that had been a subject of conflict among the circuits in finding that it was irrelevant that AMD was not entitled to obtain the requested documents in the foreign proceeding, DG-COMP’s investigation. Accordingly, the Ninth Circuit remanded the case to the district court and ordered it to consider the merits of AMD’s discovery request.

Intel petitioned the Supreme Court to review the Ninth Circuit’s decision, arguing that it exposed U.S. individuals and corporations to countless pre-litigation discovery requests stemming from foreign administrative proceedings, "including literally thousands of competition law matters reviewed each year by foreign antitrust agencies." Petition for Writ of Certiorari, 2002 WL 32151598, at *6 (Nov. 15, 2002). The Supreme Court granted certiorari and addressed several issues. The Court held that i) AMD was an "interested person" under the statue; ii) the investigation was a "proceeding in a foreign tribunal" for purposes of the statute; iii) the proceeding at issue need not be imminent to entitle the interested party to discovery, only within "reasonable contemplation;" and iv) there was no threshold requirement that the discovery sought would be available in the foreign proceedings.

The Court rejected Intel’s argument that to be "an interested person" entitled to discovery under § 1782(a), AMD had to be a litigant in the proceeding or a foreign sovereign. The Court noted that although AMD was not a party to the proceeding, it had certain rights as complainant to DG-COMP, such as the right to submit evidence and to proceed in Court if the Commission discontinued the investigation or dismissed the complaint. The Court found that since AMD possessed a "reasonable interest in obtaining [judicial] assistance," it qualified as an interested person under § 1782(a).

The European Commission submitted an amicus brief which urged the Supreme Court to overturn the Ninth Circuit’s finding that it is a tribunal. The European Commission argued that the Ninth Circuit misunderstood its function in that it is a law enforcement rather than an adjudicative body, explaining that its function is to investigate claims and that it never decides disputes between parties. The European Commission further stated that the Ninth Circuit’s opinion would impede that function as a law enforcement body by interfering with its "leniency program." Under its leniency program, companies are encouraged to submit information that they possess about existing cartels in exchange for leniency from the Commission for their own conduct as part of the cartel. The program has been extremely effective, but the Commission fears that companies would be less likely to participate if their submissions to the Commission could be discoverable in the United States pursuant to § 1782(a).

The United States Government made a similar argument in F. Hoffmann-LaRoche. The United States there asked the Court not to interpret the FTAIA to permit foreign parties to bring civil suit in the United States to remedy a purely foreign injury because it would interfere with the United States’ amnesty plan used to prosecute international cartels. The United States argued, as did the European Commission in Intel, that its program has been quite effective but feared that companies would not come forward with information in exchange for leniency if doing so would expose those companies to civil liability in the United States for foreign injury.

In Intel, however, the United States Government argued that the Court should interpret the scope of authority granted by § 1782(a) broadly, and leave it to the district courts’ discretion whether to grant individual discovery requests. The Solicitor General contended that the DG-COMP’s preliminary investigation would be a "proceeding in foreign or international tribunal," even though the European Commission itself characterized the proceeding as investigative rather than adjudicative.

The Court found that the investigation conducted by the DG-COMP, and any subsequent proceeding before the European Commission, constituted a "proceeding" before a "foreign tribunal" for purposes of the statute. Intel had argued that AMD’s complaint was still in the investigative stage, and that since neither the DG-COMP nor the European Commission have a traditional proof-taking function of a tribunal, there was no "proceeding" before any "foreign tribunal."¹

The Court rejected Intel’s argument. Instead, it held that a district court is authorized to order discovery pursuant to §1782(a) in quasi-judicial proceedings as well as traditional judicial proceedings. The Court reasoned that the European Commission, as a first instance decision-making body, qualified as an foreign tribunal under the statute. Furthermore, the Court found that, even

though the investigation was still in the preliminary stage, a quasi-judicial proceeding in the form of a decision from the European Commission subject to review by the European Courts was "within reasonable contemplation" which satisfied § 1782(a).

The Supreme Court resolved the conflict among the circuit courts as to whether § 1782(a) requires that the material sought would be discoverable in the foreign jurisdiction. The First Circuit, Fifth Circuit and the Eleventh Circuit had all held that a litigant requesting assistance under § 1782(a) must demonstrate that the discovery it requests would be available under foreign law, and the Second and Third Circuits, joined by the Ninth Circuit, rejected imposing such a requirement.

The Supreme Court determined that nothing in the text of the statute or in the legislative history suggested that Congress intended to limit the district courts’ authority to order discovery to that which would be discoverable in the foreign jurisdiction. The Court, therefore, found that a district court can order discovery under §1782(a) even if such discovery would not be available in the foreign jurisdiction.

The Court’s decision in Intel, therefore, permitted AMD to request discovery from Intel to aid in a proceeding before a foreign tribunal, even though i) AMD is not actually a party to that investigation; ii) the investigation is not a judicial proceeding or before a traditional tribunal; iii) any quasi-judicial proceeding that might occur is not yet underway or even imminent; and iv) the discovery sought was not necessarily available under the law of the foreign proceeding or desired by the foreign tribunal.

Recognizing the breadth of the authority granted under §1782(a), the Court stressed that the district court has the discretion to deny the discovery sought. In deciding whether to grant the discovery request, the Court directed the district court to consider the nature of the tribunal, the character of the proceedings abroad, and the receptivity of the foreign government to the district court’s assistance. The Court also recommended that the district court scrutinize the request itself to determine if the scope of the request is appropriate or if the request in an attempt to circumvent foreign proof gathering restrictions. The Court, therefore, left the extent of discovery available to aid in foreign proceedings to the largely unfettered discretion of the district courts.

The lone dissenter,² Justice Breyer, found that the Court should have put some limits on the scope of § 1782(a) to avoid the expense, delay, and threats thereof associated with discovery and discoveryrelated proceedings. Justice Breyer would have imposed a prohibition on discovery requests under § 1782(a) in any situation where both i) a private person seeking discovery would not be entitled to that discovery under foreign law, and ii) the discovery would not be available under domestic law in analogous circumstances. Justice Breyer felt that both circumstances were present in Intel.

The Intel Corp. decision grants broad authority to the district Courts to order discovery in aid of foreign proceedings. Intel Corp. could open the door to significant and costly discovery orders based on firms’ overseas conduct. At the least, it seems likely that firms can expect to have to fend off such requests in various district courts until more case law develops. The true impact of Intel Corp., however, will not be known until the district courts have addressed specific requests.