CPC Patent Techs. Pty Ltd. v. Apple, Inc.

• Decision Date: 18 May 2022
• Docket Number: 21-16212
• Parties: CPC PATENT TECHNOLOGIES PTY LTD., Petitioner-Appellant, v. APPLE, INC., Respondent-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

34 F.4th 801

CPC PATENT TECHNOLOGIES PTY LTD., Petitioner-Appellant,

v.APPLE, INC., Respondent-Appellee.

No. 21-16212

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 11, 2022 San Francisco, California

Filed May 18, 2022

Christina N. Goodrich (argued), K&L Gates LLP, Los Angeles, California; George Summerfield, K&L Gates LLP, Chicago, Illinois; for Petitioner-Appellant.

Tony Nguyen (argued), Fish & Richardson P.C., Houston, Texas; Seth M. Sproul and John W. Thornburgh, Fish & Richardson P.C., San Diego, California; Eda Stark, Fish & Richardson P.C., Atlanta, Georgia; for Respondent-Appellee.

Before: MILAN D. SMITH, JR., JACQUELINE H. NGUYEN, and DANIEL A. BRESS, Circuit Judges.

M. SMITH, Circuit Judge:

Appellant CPC Patent Technologies PTY Ltd. seeks documents to use in a potential lawsuit in Germany against an affiliate of appellee Apple, Inc. CPC filed an application in federal court seeking to compel Apple to turn over these documents pursuant to 28 U.S.C. § 1782, which allows district courts to provide discovery assistance to foreign or international tribunals. After a magistrate judge denied the petition, a district judge reviewed the magistrate judge's decision for clear error and declined to overturn it. We vacate the district court's order and remand for further proceedings because the district judge should have reviewed the magistrate judge's decision de novo.

BACKGROUND

I. Statutory Framework

This case addresses how the construction of one federal statute impacts the application of a second federal statute. The first statute is 28 U.S.C. § 636, which describes the limited powers of federal magistrate judges. Section 636(b)(1) and its procedural counterpart, Federal Rule of Civil Procedure 72, create a distinction between "non-dispositive" pretrial motions that may be referred to a magistrate judge for a decision and "case-dispositive motions" that "may be referred only for evidentiary hearing, proposed findings, and recommendations" to the district court unless the parties agree otherwise. Flam v. Flam , 788 F.3d 1043, 1046 (9th Cir. 2015) (quoting United States v. Reyna-Tapia , 328 F.3d 1114, 1118 (9th Cir. 2003) (en banc)).¹ When a magistrate judge rules on a non-dispositive matter, a district judge may "reconsider" that ruling only if it is "clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1)(A) ; accord Fed. R. Civ. P. 72(a). But when a magistrate judge issues a report and recommendation on a dispositive matter, a district judge must "make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." Id. § 636(b)(1)(C) ; see also Fed. R. Civ. P. 72(b)(3).

The second statute at issue here is 28 U.S.C. § 1782, which empowers a district court to provide discovery assistance to foreign or international tribunals, as well as to litigants in such proceedings. As relevant here, the statute states that:

The 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. The order may be made ... upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court.... The order may prescribe the practice and procedure ... for taking the testimony or statement or producing the document or other thing.

28 U.S.C. § 1782(a). "[E]ven where an applicant satisfies § 1782's statutory prerequisites, the district court still retains substantial discretion to permit or deny the requested discovery." Khrapunov v. Prosyankin , 931 F.3d 922, 926 (9th Cir. 2019). The threshold question in this case is whether a magistrate judge's denial of a § 1782 application that seeks an order to produce documents for use in a foreign tribunal is better understood as a non-dispositive discovery ruling or a case-dispositive decision.

II. Factual and Procedural Background

CPC is an investment company that recently acquired a portfolio of patents related to biometric security. In February 2021, it sued Apple in the Western District of Texas, alleging that several Apple products (including "iPhones, iPads, and personal computers") infringe patents in the portfolio.

Two months later, CPC filed a petition for discovery pursuant to § 1782 in the Northern District California. CPC explained that it "intends to file suit ... against Apple Retail Germany B.V. & Co. KG in Germany" for infringing the German equivalent of a patent asserted in the Texas action, and asked for an order requiring Apple, Inc. to produce documents "sufficient to describe" certain subject matter on that basis. The matter was assigned to a magistrate judge pursuant to the Northern District of California's General Order No. 44(E)(3),² which provides that "all civil miscellaneous matters" will be assigned to a magistrate judge by default. The magistrate judge denied CPC's petition, explaining that while CPC had satisfied § 1782's statutory prerequisites,³ its fifteen document requests were unduly burdensome. The magistrate judge also said that he was reluctant to order discovery given that Apple and CPC were "currently engaged in litigation" in the Western District of Texas, meaning that they were "able to discuss and negotiate information sharing in an already established venue."

CPC moved for de novo review of the magistrate judge's order by a district judge pursuant to Federal Rule of Civil Procedure 72. The district judge denied the motion in a brief order, determining at the outset that the clear error standard of review applied instead of a de novo standard, and concluding that the magistrate judge's order withstood scrutiny under this framework.

ANALYSIS

We hold that the magistrate judge was deciding a dispositive matter when he denied CPC's § 1782 application. Consequently, the district judge should have reviewed the magistrate judge's findings de novo rather than applying the deferential clear-error standard of review.⁴

I. Appellate Jurisdiction

As a preliminary matter, the parties agree that we have appellate jurisdiction over this case pursuant to 28 U.S.C. § 1291. Nonetheless, we briefly analyze the basis for our jurisdiction because we have an independent duty to do so, see, e.g., Bank of New York Mellon v. Watt , 867 F.3d 1155, 1157 (9th Cir. 2017), and because the analysis provides a useful reference point for our later discussion about the proper standard of review.

28 U.S.C. § 1291 vests federal courts of appeal with jurisdiction over "all final decisions of the district courts." A "final" decision is one "that places the parties ‘effectively out of [federal] court.’ " Cal. Dep't of Water Res. v. Powerex Corp. , 533 F.3d 1087, 1094 (9th Cir. 2008) (quoting Idlewild Bon Voyage Liquor Corp. v. Epstein , 370 U.S. 713, 715 n.2, 82 S.Ct. 1294, 8 L.Ed.2d 794 (1962) (per curiam)); see also id. (" ‘effectively out of court’ means effectively out of federal court" (cleaned up)). This test is satisfied when "the district court disassociates itself from the case entirely, retaining nothing of the matter on the federal court's docket." Snodgrass v. Provident Life & Acc. Ins. Co. , 147 F.3d 1163, 1166 (9th Cir. 1998) (quoting Quackenbush v. Allstate Ins. Co. , 517 U.S. 706, 714, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996) ); accord Powerex , 533 F.3d at 1096 ; see also Dannenberg v. Software Toolworks Inc. , 16 F.3d 1073, 1074 (9th Cir. 1994) ("A final [decision] under § 1291 is ‘a decision by the District Court that ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’ " (quoting Coopers & Lybrand v. Livesay , 437 U.S. 463, 467, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978) ).

Consistent with these standards, most federal courts of appeals to have considered the matter "have ruled that they have appellate jurisdiction over orders issued under § 1782" pursuant to § 1291 "without qualification or exception." In re Premises Located at 840 140th Ave. NE, Bellevue, Wash. , 634 F.3d 557, 566 (9th Cir. 2011) (collecting cases). That is because, unlike an ordinary discovery order that is just one step in an ongoing federal case, "[o]nce the district court has ruled on the parties' [ § 1782 ] motion[ ] ... there is no further case or controversy before the district court." Id. We have no difficulty concluding that appellate jurisdiction exists here pursuant to the general rule. The only relief sought by CPC in this federal case was court-ordered discovery pursuant to § 1782. When the magistrate judge denied this relief and the district judge affirmed the denial,⁵ there were no further issues for the federal court to resolve, and so the district court's order was "final."

We note that the Ninth Circuit has taken a slightly "less absolute" approach to appellate jurisdiction over § 1782 orders than do other circuits, recognizing a "narrow" exception to the general rule articulated above when a § 1782 application for a subpoena is granted and the subpoena is issued to a party that is also a litigant in the foreign proceeding. Id. at 566–67. "[W]hen the subject of [a § 1782 ] subpoena in the federal case is also a party to the foreign litigation ... [a]ppellate jurisdiction lies only if the interested party suffers contempt" for disobeying the subpoena. Id. at 567 (citing In re Letters Rogatory from Haugesund, Norway , 497 F.2d 378, 380–81 (9th Cir. 1974) ). However, that exception does not logically extend to cases such as this where the court declined to issue a discovery order that could later be disobeyed. Consequently, the general rule applies, and we have appellate jurisdiction.

II. Proper Standard of Review

As explained above, the standard of review a district court must apply to the denial of a § 1782...