Bäumer v. Schmidt

• Citation: 423 F.Supp.3d 393
• Decision Date: 24 October 2019
• Docket Number: CIVIL ACTION NO. 17-mc-50228
• Parties: Hartmut BÄUMER, Walter Weiss, and Financialright GmbH, Petitioners, v. Oliver SCHMIDT, Respondent.
• Court: U.S. District Court — Eastern District of Michigan

423 F.Supp.3d 393

Hartmut BÄUMER, Walter Weiss, and Financialright GmbH, Petitioners,

v.Oliver SCHMIDT, Respondent.

CIVIL ACTION NO. 17-mc-50228

United States District Court, E.D. Michigan, Southern Division.

Signed October 24, 2019

Jaye Quadrozzi, Young & Associates, Farmington Hills, MI, Michael David Hausfeld, Sarah Rebecca LaFreniere, Hausfeld LLP, Washington, DC, for Petitioners.

David Massey, Paul J. Devlin, Richards Kibbe & Orbe LLP, New York, NY, George B. Donnini, Butzel Long, Detroit, MI, for Respondent.

OPINION AND ORDER DENYING MOTION TO COMPEL [10], MOTION TO INTERVENE [23], AND MOTION TO STRIKE [29]

MONA K. MAJZOUB, UNITED STATES MAGISTRATE JUDGE

This matter comes before the Court on a Motion to Compel Deposition Testimony and Production of Documents filed by Petitioners Hartmut Bäumer, Walter Weiss, and financialright GmbH against Respondent Oliver Schmidt. (ECF No. 10.) Volkswagen Group of America, Inc. ("VWGoA") moves to intervene in this matter for the purpose of opposing Petitioners' Motion to Compel the production of documents and has filed a Response thereto. (ECF Nos. 23, 24.) Petitioners oppose VWGoA's Motion to Intervene and move to strike VWGoA's Response to their Motion to Compel. (ECF Nos. 28, 29.) The parties have filed response and reply briefs with respect to the pending Motions (ECF Nos. 25, 31, 32, 33, 34, 37), and the Motions have been referred to the undersigned for consideration (ECF Nos. 11, 36). The Court has reviewed the pleadings and dispenses with oral argument pursuant to Eastern District of Michigan Local Rule 7.1(f)(2). The Court is now ready to rule pursuant to 28 U.S.C. § 636(b)(1)(A).

I. BACKGROUND

In 2017, Respondent Oliver Schmidt, a German citizen and former manager of German automobile manufacturer Volkswagen AG ("Volkswagen" or "VW"), was prosecuted in the Eastern District of Michigan for his role in Volkswagen's diesel emissions fraud. United States v. Schmidt , No. 16-cr-20394-6 (E.D. Mich. 2017). Respondent pleaded guilty to (1) conspiracy to defraud the United States, to commit wire fraud, and to violate the Clean Air Act, in violation of 18 U.S.C. § 371 ; and (2) making a false statement under the Clean Air Act, in violation of 42 U.S.C. § 7413(c)(2)(A). (ECF No. 10-4.) Respondent was sentenced to seven years in prison and is currently incarcerated at the Federal Correctional Institution in Milan, Michigan (FCI Milan). (ECF No. 10-2, PageID.589.)

Petitioners Bäumer and Weiss are German citizens who owned Volkswagen vehicles affected by the diesel emissions fraud and have filed lawsuits in Germany to obtain a refund for their vehicles. Petitioner financialright GmbH is a German legal service provider that is pursuing legal actions against Volkswagen in Germany on behalf of thousands of car owners and lessees. (ECF No. 10, PageID.499.)

Petitioners sought and obtained an order from this court granting them leave to obtain discovery from Respondent for use in those foreign proceedings, pursuant to 28 U.S.C. § 1782. (ECF No. 9.) Pursuant to the order, Petitioners subpoenaed Respondent to submit to a deposition and produce documents on various topics. (ECF No. 10-16.) Respondent objected to the subject matter identified for examination in the subpoena and the subpoena's document requests on several grounds.¹ (ECF No. 33-4.) Respondent nevertheless appeared and testified at the deposition on May 17, 2018, at which he invoked his privileges against self-incrimination under the Fifth Amendment to the United States Constitution and Article 384 of the German Code of Civil Procedure in response to numerous questions, and he also declined to answer two of those questions on the basis that it would violate the Protective Order entered in his criminal case. (ECF No. 10-6.) Additionally, Respondent did not produce any of the subpoenaed documents at the deposition. (ECF No. 10-6, PageID.697-698.) Petitioners therefore filed the instant Motion to Compel, through which they seek a court order compelling Respondent's testimony in response to certain questions posed at his deposition and the production of documents responsive to requests two through seven in the subpoena. (ECF No. 10; see ECF No. 10-12, ECF No. 10-16, PageID.980-981.)

II. GOVERNING LAW

Pursuant to 28 U.S.C. § 1782, "[t]he district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation." 28 U.S.C.§ 1782(a). But "[a] person may not be compelled to give his testimony or statement or to produce a document or other thing in violation of any legally applicable privilege." Id. Unless otherwise prescribed in the court order, "the testimony or statement shall be taken, and the document or other thing produced, in accordance with the Federal Rules of Civil Procedure." Id. "[A]ny and all ... limitations upon discovery that would be available under Fed.R.Civ.P. 26 (particularly subparagraphs (b) and (c)), pertaining both to privileged and trial preparation matters and to protective orders, are also available under section 1782(a)." Euromepa S.A. v. R. Esmerian, Inc. , 51 F.3d 1095, 1100 n.4 (2d Cir. 1995).

The scope of discovery under the Federal Rules of Civil Procedure is traditionally quite broad. Lewis v. ACB Bus. Servs. , 135 F.3d 389, 402 (6th Cir. 1998). Parties may obtain discovery on any matter that is not privileged, is relevant to any party's claim or defense, and is proportional to the needs of the case. Fed. R. Civ. P. 26(b)(1). "Relevant evidence" is "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Fed. R. Evid. 401. Information need not be admissible in evidence to be discoverable. Fed. R. Civ. P. 26(b)(1). But the scope of discovery is not unlimited. "District courts have discretion to limit the scope of discovery where the information sought is overly broad or would prove unduly burdensome to produce." Surles ex rel. Johnson v. Greyhound Lines, Inc. , 474 F.3d 288, 305 (6th Cir. 2007).

Federal Rule of Civil Procedure 45 governs the issuance of subpoenas for the discovery of information from third parties. "[T]he scope of discovery through a subpoena is the same as that applicable to Rule 34 and the other discovery rules." Fed. R. Civ. P. 45, Advisory Committee Notes (1970). A party issuing a subpoena to a third party under Rule 45 "must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena." Fed. R. Civ. P. 45(d)(1). To determine whether a burden is undue, a court must balance the potential value of the information to the party seeking it against the cost, effort, and expense to be incurred by the person or party producing it. EEOC v. Ford Motor Credit Co. , 26 F.3d 44, 47 (6th Cir. 1994). Rule 45 provides that a nonparty served with a subpoena may make written objections to the subpoena before the time specified for compliance under the subpoena. Fed. R. Civ. P. 45(d)(2)(B). The court must, upon motion, quash or modify a subpoena if it fails to allow a reasonable time to comply, requires a person to travel more than 100 miles from where they reside, requires disclosure of privileged or protected material if no exception or waiver applies, or subjects a person to undue burden. Fed. R. Civ. P. 45(d)(3)(A).

III. ANALYSIS

A. Deposition Questions

Petitioners move the Court to compel deposition testimony from Respondent that falls into four categories of questioning, which Petitioners describe as follows:

(1) Whether Mr. Schmidt is withdrawing statements made during the plea and sentencing proceedings or whether those statements were truthful;

(2) The involvement of specific VW employees in the intentional cheating and the cover-up thereof, including, but not limited to, whether specific VW employees knew about and/or participated in the intentional cheating and whether they knew about and/or participated in the cover-up of that cheating; questions about which VW employees told Mr. Schmidt about the defeat device; and questions about which VW employees instructed Mr. Schmidt to cover up the defeat device and were involved in drafting and signing off on the related scripts and storylines;

(3) Questions relating to an email Mr. Schmidt sent on or about May 20, 2014 to the then-CEO of Volkswagen Group of America ("VWGoA") and another employee with a document analyzing the possible consequences/risks of the ICCT study, and;

(4) Questions relating to a presentation Mr. Schmidt made to VW management on July 27, 2015 about the potential severe financial consequences to VW if the defeat device was discovered by U.S. regulators.

(ECF No. 10, PageID.501; ECF No. 10-12.) In their Motion, Petitioners argue that Respondent was not justified in refusing to answer the deposition questions on this subject matter based on the U.S. or German privileges against self-incrimination or the protective order in his criminal case. (ECF No. 10, PageID.501-512.)

1. Fifth Amendment Privilege Against Self-Incrimination

The Fifth Amendment to the United States Constitution provides, in relevant part, that "[n]o person ... shall be compelled in any criminal case to be a witness against himself." U.S. Const. amend. V. The protections of the Fifth Amendment apply to all persons within the territory of the United States, including aliens. Harisiades v. Shaughnessy , 342 U.S. 580, 586 n.9, 72 S.Ct. 512, 96 L.Ed. 586 (1952) (citing Wong Wing v. United States , 163 U.S. 228, 238, 16 S.Ct. 977, 41 L.Ed. 140 (1896) ). The Fifth Amendment privilege against self-incrimination may be invoked in the course of any proceeding, criminal or civil, Kastigar v. United States , 406 U.S. 441, 444, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972), and is broadly construed ...