The opinion of the court was delivered by: PAUL FRIEDMAN, District Judge
This matter is before the Court on defendants' objections to
the Special Master's Report and Recommendation No. 11 ("R&R 11"),
Report and Recommendation No. 13 ("R&R 13"), Report and
Recommendation No. 19 ("R&R 19"), the supplement to Report and
Recommendation No. 19 ("R&R 19S") and Report and Recommendation
No. 23 ("R&R 23"). Although testimony has now been taken from all
the witnesses in question under the Hague Convention, Minebea
continues to assert that the issues regarding the "control" of
these witness by Papst needs to be established so that either (1)
Papst can be ordered to produce the witnesses in person for
trial, or (2) adverse inferences can been drawn from its failure
to do so. It is not clear whether, if the witnesses are not
produced in person, Minebea seeks preclusion of the Hague witness
summaries as well as adverse inferences. Minebea's initial
reaction in open court was that it would prefer both.
Upon consideration of all of the reports and recommendations,
Papst's objections thereto, Minebea's oppositions and Papst's
replies, the Court concludes that Papst should have produced the inventors: Bernard Schuh, Heinrich Cap, Dieter
Elsaesser, Ulrich Koletzki, Johann von der Heide and Rolf Mueller
for deposition testimony in the United States. Papst is directed
to produce these witnesses for live testimony at trial. If Papst
fails to do so, the jury will be instructed as to what adverse
inferences may be drawn from Papst's failure to produce them. The
Court concludes, however, that Papst should not be ordered to
produce Dr. Gerhard Schaetzle, Dr. Hans-Joachim Koenig, and
Messers. Michael Herrmann and Klaus Lenz.
I. SPECIAL MASTER'S REPORTS AND RECOMMENDATIONS
At the time the Special Master issued R&R 11, the witnesses in
question were (a) seven alleged inventors of Papst patents, (b)
Dr. Schaetzle, the past president of Papst Motoren, (c) Dr.
Koenig, a German attorney once retained by Papst Motoren, and (d)
Messrs. Herrmann and Lenz, former employees of Papst
Motoren.*fn1 R&R 11 explains that each of the seven
inventors had executed an assignment to Papst Motoren which
expressly provided that the inventor would testify with regard to
the assigned invention when requested by Papst Motoren, its
successors and assigns. See R&R 11 at 2. None of the other
witnesses have executed any written commitments. See id.
Papst, in cooperation with Minebea and the Special Master,
delivered letters to all of the witnesses requesting their
voluntary appearance for deposition. All of the witnesses
declined. See Defendants' Objections to Report and
Recommendation No. 11. Minebea then asked the Special Master to
compel Papst to produce these witnesses for deposition or, in the
alternative, to require Papst to sue them in Germany to compel
their appearance. See R&R 11 at 3. Minebea also requested that if Papst failed to do so (1)
adverse inference be drawn, and (2) Papst be precluded from
making any arguments based on testimony from any such witness.
See id. The Special Master declined to order Papst to pursue
its contractual rights through lawsuits in Germany. See id.
The Special Master did, however, recommend that Papst be ordered
to "take all appropriate steps to compel each of the eleven
German witnesses identified in Minebea's motion to appear for
deposition in this action," and required Papst to report to the
Special Master the steps taken and progress made. Id. at 4. The
request for sanctions was deferred. Papst objected to the Special
The Special Master then issued Report and Recommendation No.
13. The Special Master noted that Papst continued to maintain
that under the Federal Rules of Civil Procedure it had no
obligation to produce the witnesses in question, that the
assignments in the record did not create a benefit by which
Minebea could compel depositions, and that Minebea must proceed
by way of the Hague Convention. See R&R 13 at 2-3. The Special
Master stated that unless Papst filed suit in a German court to
enforce the inventors' assignment agreements, Papst could not be
said to have taken all appropriate steps to comply with Report
and Recommendation No. 11. See id. at 6. The Special Master
also noted that it was unclear what obligation Dr. Schaetzle had
to Papst Licensing, but the Special Master suggested that Papst
be ordered to take all steps available to produce him for
deposition and that Papst produce any documents referring to Dr.
Schaetzle's duties and responsibilities at Papst Motoren and the
terms of his employment. See id. at 8.
The Special Master also suggested in Report and Recommendation
No. 13 that Dr. Koenig's refusal to appear for deposition was
based upon Papst's refusal to release him from his duty of
secrecy. See R&R 13 at 10. The Special Master recommended that
Papst be ordered to provide Dr. Koenig with such a release as well as produce any
documents referring to Dr. Koenig's duties and responsibilities
at Papst Motoren and/or Papst Licensing and any terms of his
engagement by either. See id. Finally, the Special Master
explained that the record gave him no basis for determining
whether Messrs. Herrman and Lenz have any obligation to testify
at Papst Licensing's request, but the Special Master did order
that Papst be directed to produce any documents referring to
their duties and responsibilities at Papst Motoren and/or Papst
Licensing and any terms of employment by either. See id. at
11. The Special Master ordered Papst to submit monthly reports as
to the status of its endeavors to produce the witnesses in
question. Papst objected to the Special Master's ruling.
In accordance with R&R 13, Papst began submitting status
reports to the Special Master and the Court in connection with
its efforts to produce these witnesses for deposition. The first
status report indicated that Papst was investigating the
available courses of action for bringing suit against the
inventors in Germany to obtain their testimony. See Papst's
Status Report Concerning German Witnesses at 2. Papst also
indicated that it was reviewing Dr. Schaetzle's contractual
obligations to Papst Motoren and the duty of secrecy asserted by
Dr. Koenig. See id. at 3. Papst's second status report,
submitted June 1, 2004, indicated that Dr. Schaetzle owed a duty
of secrecy to Papst Motoren and that ebm-papst St. Georgen was
the successor to Papst Motoren. See Second Status Report
Concerning German Witnesses at 1. The Report also indicated that
Dr. Koenig has a duty of secrecy to ebm-papst St. Georgen. See
id. Papst's third status report argued that the inventors were
compelled by statute to execute the assignment agreements in
question and that they therefore did not "volunteer" to testify
by signing the assignment agreements. See Third Status Report
Concerning German Witnesses at 1. The fourth and fifth status
reports indicated only that Papst awaited the Court's decision on R&R 11 and R&R 13. See Fourth Status Report Concerning German
Witnesses; Fifth Status Report Concerning German Witnesses.
The Special Master then submitted Report and Recommendation No.
18 in preparation for the September 2, 2004 status conference
before the Court and in response to Minebea's request that
certain facts be treated as established as a sanction for Papst's
failure to produce these witnesses for deposition. See R&R 18
at 1. The Special Master noted that Papst representatives and
counsel had had numerous oral and written communications with the
German witnesses and that these communications were revealed for
the first time in Papst's July 28, 2004 report to the Special
Master, even though the communications had been on-going since
October 2003. See id. at 4. The Special Master noted that
while Papst's conduct might warrant imposing on Papst the entire
cost to all parties of going forward with proceedings in Germany,
he had reservations about the sanctions Minebea had proposed.
See id. at 5. The Special Master recommended that the Court
instruct the Special Master whether he should consider and report
further as to (1) the propriety of the inferences sought by
Minebea, and (2) the propriety of compelling Papst to bear all
parties' costs of the proceedings in Germany pursuant to the
Letters of Request. See id. at 6.
The Special Master then submitted Report and Recommendation No.
19, which explained that it came to the Special Master's
attention in an emergency telephone conference on September 5,
2004 that counsel for Papst had been arranging for meetings
between Mr. Schnayer and each of the witnesses in Germany. See
R&R 19 at 2. The purpose of the meetings was to prepare the
witnesses to give testimony pursuant to the Hague Convention.
See id. Mr. Schnayer anticipated that the witnesses would
retain Mr. Schayer as their counsel and that Papst would pay the
fees incurred. See id. The Special Master noted that Papst
had failed to bring this information to the Court's attention. See id. The Special
Master also suggested that Papst's counsel had set up a "real
possibility for a conflict of interest." See id. The Special
Master concluded that Papst's behavior "has gone a long way
toward providing additional persuasive evidence" that the Papst
defendants have control over the witnesses in question. The
Special Master was prepared to recommend sanctions should Papst
fail to produce the witnesses. See id. at 3.
The Special Master then filed a supplement to Report and
Recommendation No. 19. The Special Master explained that Mr.
Schnayer had met with all of the potential German witnesses and
was representing at least six of them five of the inventors and
Mr. Lenz and that Papst was to pay the fees for the
representation of those witnesses. See R&R 19S at 2.*fn2
Dr. Koening, Dr. Schaetzle and Mr. Elsaesser were to be
represented by counsel selected by Papst Motoren, and Papst
Motoren was to pay the fees. The arrangements with respect to Mr.
Hermann had yet to be made. See id. Mr. Schnayer was reported
to have urged each witness to appear voluntarily in the United
States. See id. The Special Master opined that because
Papst's lawyers were serving as counsel for six of the witnesses,
Papst clearly was in a position to produce those six witnesses.
See id. at 6. The Special Master further recommended that
Papst could, through Papst Motoren, produce Dr. Koenig, Dr.
Schaetzle and Mr. Elsaesser. See id. The Special Master
recommended that if Papst failed to produce the witnesses for
deposition in the United States, that Papst bear all the costs of the Hague
proceedings in Germany. See id. at 10.
Papst's sixth status report indicated that counsel for Papst
had met with each of the German witnesses and urged them to
appear in the United States. See Sixth Status Report Concerning
German Witnesses at 2. Papst also indicated that Messers. Schuh,
von der Heide, Koletzki, Muller, Cap and Lenz had retained
Papst's counsel to represent them. Id. Papst's seventh status
report indicated that it would take no further action absent the
Court's ruling on its various objections. See Seventh Status
Report Concerning German Witnesses at 1.
Finally, the Special Master issued Report and Recommendation
No. 23 which concluded that "Papst's counsel's conduct as
evidenced in the recent correspondence . . . reinforces my
opinion that Papst's repeated exercise of its unilateral control
over each of the German witnesses . . . demonstrates that Papst
is in a position to produce each of the German witnesses in this
District for a deposition in this action." R&R 23 at 6. The
Special Master concluded that the Hague proceedings should go
forward and recommended that resolution of who should bear the
costs of the Hague Convention proceedings ...