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explaining that courts repeatedly quash “subpoenas directed to non-parties where the discovery sought was obtainable from a party to the litigation”
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CIVIL ACTION NO. 17-mc-50228
2019-10-24
Hartmut BÄUMER, Walter Weiss, and Financialright GmbH, Petitioners, v. Oliver SCHMIDT, Respondent.
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.
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. (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.)
Petitioners did not submit a verbatim recitation or copy of Respondent's objections with their Motion to Compel, but the Court was able to locate Respondent's objections elsewhere in the record.
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 "to assure that an individual is not compelled to produce evidence which later may be used against him as an accused in a criminal action," Maness v. Meyers , 419 U.S. 449, 461, 95 S.Ct. 584, 42 L.Ed.2d 574 (1975). The Sixth Circuit recently summarized the standard for determining the validity of an invocation of the privilege:
The test for a valid invocation of the Fifth Amendment, discussed in detail in the Supreme Court's seminal case, Hoffman v. United States [341 U.S. 479, 71 S.Ct. 814, 95 L.Ed. 1118 (1951) ], is whether the witness has "reasonable cause to apprehend danger from a direct answer." 341 U.S. at 486, 71 S.Ct. 814. The scope of the privilege protects the witness from compelled disclosure "not merely ... [of] evidence which may lead to criminal conviction," but also of "information which would furnish a link in the chain of evidence that could lead to prosecution, as well as evidence which an individual reasonably believes could be used against him in a criminal prosecution." Maness , 419 U.S. at 461, 95 S.Ct. 584 (citing Hoffman , 341 U.S. at 486, 71 S.Ct. 814 ). A court may only require a witness to answer if it is " ‘perfectly clear, from a careful consideration
of all the circumstances in the case, that the witness is mistaken, and that the answer(s) cannot possibly have such tendency’ to incriminate." Hoffman , 341 U.S. at 488, 71 S.Ct. 814 (quoting Temple v. Commonwealth , 75 Va. 892, 898 (1881) ).
In Hoffman , the Court recognized that "if the witness, upon interposing his claim, were required to prove the hazard in the sense in which a claim is usually required to be established in court, he would be compelled to surrender the very protection which the privilege is designed to guarantee." Id. at 486, 71 S.Ct. 814. Rather than allowing the witness to be placed in such a double-bind, the Court held that "[t]o sustain the privilege, it need only be evident from the implications of the question, in the setting in which it is asked, that a responsive answer to the question or an explanation of why it cannot be answered might be dangerous because injurious disclosure could result." Id. at 486–87, 71 S.Ct. 814. As a prior opinion of this Court aptly summarized the standard from Hoffman , an invocation of privilege should be sustained "if a court can, by the use of reasonable inference or judicial imagination, conceive a sound basis for a reasonable fear of prosecution." In re Morganroth , 718 F.2d at 169. "[I]n determining whether the witness really apprehends danger in answering a question, the judge cannot permit himself to be skeptical." Emspak v. United States , 349 U.S. 190, 198 n. 18, 75 S.Ct. 687, 99 L.Ed. 997 (1955) (internal quotation marks omitted).
Convertino v. U.S. Dep't of Justice , 795 F.3d 587, 592-93 (6th Cir. 2015).
a. Category One Questions
Petitioners ask the court to compel Respondent's testimony to ten deposition questions regarding whether he is withdrawing statements that he made during the plea and sentencing proceedings in his criminal case or whether those statements were truthful. For example, Petitioners asked:
• Are there any statements or elements of [the plea] agreement that you're presently withdrawing?
• In your letter to the Court, ..., in connection with your guilty plea and your sentencing, did you advise the Court that in any way you were not telling the truth?
• In this sentencing hearing, was anything stated by your counsel on your behalf, by you, or by the government attorneys addressing the Court, which you now assert was incorrect or false?
• Have you always been honest with regard to your representations to the Court in connection with the charge to which you pled guilty?
• [At the sentencing hearing], you said, "When I met with him" -- meaning Dr. Ayala – "I did not disclose the intentional cheating that had gone on for almost ten years." ... Is that a correct statement?
(ECF No. 10-12, PageID.927-928.) In opposing Petitioners' Motion, Respondent asserts that these questions inherently subject him to a risk of perjury. (ECF No. 25, PageID.1437-1438.)
"When a witness is asked a question in a subsequent proceeding, the answer to which could show that he has already committed the crime of perjury in a prior proceeding, his refusal to answer is permissible almost by the definition of self-incrimination." In re Morganroth , 718 F.2d 161, 166 (6th Cir. 1983). In Morganroth , the Sixth Circuit examined "what sort of showing must be made by a witness to justify the invocation of the fifth amendment privilege when the only possible risk of prosecution which might flow from testimony in a subsequent proceeding is for perjury." Id. The court first noted that "[a] witness risks a real danger of prosecution if an answer to a question, on its face, calls for the admission of a crime or requires that the witness supply evidence of a necessary element of a crime or furnishes a link in the chain of evidence needed to prosecute." Id. at 167. The court then discussed the Hoffman standard:
In Hoffman , the Supreme Court held that a real danger of prosecution also exists where questions, which appear on their face to call only for innocent answers, are dangerous in light of other facts already developed. In such a situation a witness bears no further burden of establishing a reasonable cause to fear prosecution beyond asserting the privilege and identifying the nature of the criminal charge or supplying sufficient facts so that a particular criminal charge can reasonably be identified by the court. The witness has met his burden and the court does not need to inquire further as to the validity of the assertion of the privilege, if it is evident from the implications of a question, in the setting in which it is asked, that a responsive answer might be dangerous to the witness because an injurious disclosure could result.
Id. (citing Hoffman , 341 U.S. at 486-87, 71 S.Ct. 814 ). The court recognized that the Hoffman guidelines "work[ ] well in cases in which in which an individual expresses a concern of perjury prosecution stemming from statements made in earlier proceedings in which the trial judge has a personal familiarity." Id. at 168. The court held, however, that in cases where the witness claims privilege solely on the basis of perjury, the trial court has no background familiarity with the prior proceedings, and the incriminating nature of the answer is not evident from the implications of the question in the setting in which it is asked, "a witness must supply personal statements under oath or provide evidence with respect to each question propounded" to establish the foundation of the privilege. Id. at 168-70.
Petitioners argue that Respondent has not provided the requisite evidence under Morganroth to establish his foundation for invoking the Fifth Amendment. (ECF No. 10, PageID.503-504; ECF No. 32, PageID.1786-1787.) This case, however, is distinguishable from Morganroth and does not require additional evidence. Here, while Respondent's sole basis for invoking the privilege in responding to the Category One questions is perjury, and this Court is not particularly familiar with the scope and content of the prior proceedings, this is not a case where the incriminating nature of the answer is not evident from the implications of the questions in the present setting. To the contrary, many of the questions asked by Petitioners are not innocent on their face, but they boldly ask Respondent, in not so many words, whether he lied in the plea and sentencing proceedings in his criminal case. And to the extent that the questions in this category could be construed on their face as calling for innocent answers, the incriminatory implications of the questions are obvious. Accordingly, the Court finds that Respondent validly invoked the Fifth Amendment privilege with regard to Petitioners' Category One questions.
b. Category Two Questions
Petitioners' Category Two questions seek information regarding the involvement of specific VW employees in the diesel emissions scandal. The following is a sample of the questions for which Petitioners seek Respondent's testimony:
• In [your pre-sentencing] letter [to the court], you state that, "I have learned that my superiors that claimed to me to have not been involved earlier than me at VW knew about this for many, many years." Who are the superiors that you were referring to in that sentence?
• In the next paragraph, you state, "I must say that I feel misused by my own company in the diesel scandal or ‘Dieselgate.’ " ... Who misused you?
• With whom did you conspire?
• What individuals at VW participated in the wrong that you committed?
• [W]hat superiors at VW instructed you not to disclose the intentional cheating that had gone on at VW with regard to the Dieselgate VW vehicles that had gone on for almost ten years?
• On the basis of what you learned from other Volkswagen employees and what you were told by Volkswagen management or members of the board of directors, who participated both in the intentional cheating or the installation and marketing of the devices and its coverup?"
(ECF No. 10-12, PageID.929-933.)
Petitioners argue that Respondent's testimony regarding the identity of his co-conspirators could not further incriminate him. (ECF No. 10, PageID.505-507.) First, they correctly argue that Respondent cannot invoke the privilege against self-incrimination to protect his co-conspirators from prosecution because the privilege is solely for the benefit of the witness, not for the benefit of others. (ECF No. 10, PageID.506 (citing Rogers v. United States , 340 U.S. 367, 371, 71 S.Ct. 438, 95 L.Ed. 344 (1951).) Secondly, Petitioners argue that Respondent has already admitted that other VW employees, supervisors, and executives were involved in the scandal and has already admitted to conspiring, so merely providing the identities of his co-conspirators would not further incriminate him. Petitioners also rely on Rogers , 340 U.S. at 374-75, 71 S.Ct. 438, for this second argument, but Rogers does not help Petitioners here.
Where a witness has previously made incriminating disclosures but claims the Fifth Amendment privilege in the face of additional questions, courts must determine whether those questions "present[ ] a reasonable danger of further crimination in light of all the circumstances, including previous disclosures." Rogers , 340 U.S. at 374, 71 S.Ct. 438. In Rogers , a woman voluntarily testified to her status as the former Treasurer of the Communist Party of Denver, Colorado, but she refused to identify the person to whom she had given the Party's books. The Court held that the woman's invocation of the privilege was invalid because she had already incriminated herself as to both a violation of and conspiracy to violate the Smith Act, so "disclosure of acquaintance with her successor present[ed] no more than a mere imaginary possibility of increasing the danger of prosecution." Id. at 374-75, 71 S.Ct. 438 (footnotes and internal quotation marks omitted).
Unlike the woman in Rogers whose further disclosures could not result in any additional criminal charges, Respondent faces a reasonable danger of further crimination and prosecution in light of the circumstances surrounding this matter. Respondent is a German citizen who is physically present in the United States as a result of his criminal sentence and incarceration at FCI Milan. He therefore remains within the reach of law enforcement authorities, and the plea agreement between Respondent and the United States is narrow and does not foreclose the possibility of further criminal charges at either the federal or the state levels. Notably, "the fifth amendment privilege is not lost by a witness's pleading guilty ‘if that witness is still subject to a realistic risk of incrimination on other charges, or if the desired testimony about the transaction in question would give rise to a risk of incrimination in connection with other transactions.’ " U.S.S.E.C. v. Militano , No. 89 CIV. 0572 (JFK), 1991 WL 270116, at *5 (S.D.N.Y. Dec. 9, 1991) (quoting United States v. Rodriguez , 706 F.2d 31, 36–37 (2d Cir. 1983) ).
Here, Respondent explains that the plea agreement does not cover the entire VW diesel emissions scandal, as "he pled guilty under a heavily negotiated statement of facts in which two months and 8,757 cars are attributed to him out of a 60 months-plus conspiracy that affected approximately 500,000 U.S. vehicles." Additionally, as Respondent points out, the plea agreement explicitly binds only three federal agencies: the United States Attorney's Office for the Eastern District of Michigan; the United States Department of Justice, Criminal Division, Fraud Section; and the United States Department of Justice, Environment and Natural Resources Division, Environmental Crimes Section; and these agencies only agreed to refrain from bringing any additional charges against Respondent based on the conduct known to them prior to entry of the plea agreement. Thus, Respondent could face further federal prosecution for matters outside of the narrow scope of the plea agreement and for conduct that had not been previously disclosed to prosecutors. Respondent also describes with ample particularity his risk of facing criminal prosecution in California and the criminal charges that he could face in Michigan. Respondent further asserts that the contentious nature of his criminal proceedings and the prosecutors' skepticism of his truthfulness in those proceedings create a fertile ground for false statement and perjury charges should his answers to Petitioners' deposition questions conflict with his plea agreement or other statements that he made in meetings with those prosecutors. (ECF No. 25, PageID.1432-1439.) Respondent has met his burden of establishing a reasonable cause to fear further incrimination and prosecution.
Moreover, when questions regarding an individual's personal or professional associations are asked in a setting of possible incrimination, the Supreme Court and the Sixth Circuit have repeatedly applied Hoffman to sustain invocation of the Fifth Amendment privilege. Convertino , 795 F.3d at 593-94 (citing Emspak , 349 U.S. at 199, 75 S.Ct. 687 ; Malloy v. Hogan , 378 U.S. 1, 13-14, 84 S.Ct. 1489, 12 L.Ed.2d 653 (1964) (witness properly invoked the Fifth Amendment to refuse to answer questions about associates at the time of a prior arrest, despite the expiration of the statute of limitations, because such disclosure "might furnish a link in a chain of evidence sufficient to connect the petitioner with a more recent crime"); United States v. Bates , 552 F.3d 472, 475-76 (6th Cir. 2009) (blanket Fifth Amendment privilege could be invoked when necessary foundation questions would require the witness to admit association with alleged co-conspirator); Aiuppa v. United States , 201 F.2d 287 (6th Cir. 1952) (Fifth Amendment privilege was properly invoked in response to questions about whether the witness knew certain individuals allegedly involved in organized crime); United States v. Hubbell , 530 U.S. 27, 43, 120 S.Ct. 2037, 147 L.Ed.2d 24 (2000) ("[W]e have no doubt that the constitutional privilege against self-incrimination protects the target of a grand jury investigation from being compelled to answer questions designed to elicit information about the existence of sources of potentially incriminating evidence.").
Petitioners' Category Two questions fit this bill. The questions seek the identities of and information regarding Respondent's co-conspirators, the extent of their involvement in the VW diesel emissions scandal, and the extent of Respondent's association with them. While Respondent has already pleaded guilty to conspiracy, his co-conspirators are potential sources of incriminating evidence, and Respondent's disclosure of their identities and his association therewith could furnish a link in the chain of evidence sufficient to connect Respondent with a crime outside the scope of the plea agreement and/or not previously known to prosecutors. See Hubbell , Malloy , supra . Accordingly, Respondent's invocation of the Fifth Amendment privilege in response to Petitioners' Category Two questions was valid.
Respondent also refused to answer the first two Category Two questions listed above under cover of the Protective Order entered in his criminal case. Those questions were based on statements that Respondent made in a letter that he wrote to the court prior to his sentencing hearing:
After reading the government's discovery during my many sleepless nights in my prison cell, I've learned that my superiors that claimed to me to have not been involved earlier than me at VW knew about this for many, many years. In fact, somewhat to my detriment, much of what I now know about what transpired here I learned from reading the discovery.
...
I must say that I feel misused by my own company in the Diesel scandal or "Dieselgate." ... during my whole time as the General Manager of the Engineering and Environmental Office in Auburn Hills from March 1, 2012 to February 28, 2015 ... I was never made aware of the existence of the Defeat Device by my supervisors or by those who are now my co-defendants.
(ECF No. 10-15.)
Respondent asserts that he properly refused to answer the questions because they relate to information that he learned from the discovery materials he received under the Protective Order, which prohibits him from disclosing any Protected Information that he received from the government for any purpose other than in connection with his criminal case. (ECF No. 25, PageID.1442-1443; ECF No. 10-10.)
Petitioners argue that the additional information sought by the two questions cannot be covered by the Protective Order because they merely ask for details regarding the information disclosed in Respondent's sentencing letter. In the alternative, Petitioners argue that if the information is covered by the Protective Order, then Respondent violated the Order by voluntarily disclosing the information in his sentencing letter, which is available to the public. Petitioners further argue that by disclosing that information, Respondent opened the door to further questioning, and he should not now be allowed to invoke the previously-violated Protective Order to shield the details of the disclosures that he already made. (ECF No. 10, PageID.511-512.)
Petitioners' assertion that the information sought by the two deposition questions cannot be covered by the Protective Order lacks merit; the details that Petitioners seek regarding the information in Respondent's sentencing letter could indeed be Protected Information prohibited from disclosure under the Order. Moreover, there is no indication that Respondent violated the Protective Order through the statements that he made in his sentencing letter, but to the extent that he did, the Court will not order Respondent to further violate the Protective Order by disclosing detailed information related to those statements.
c. Category Three Questions
Petitioners' Category Three questions seek deposition testimony related to an email that Respondent allegedly sent on or about May 20, 2014 to the then-CEO of VWGoA and another employee with an attached document analyzing the possible consequences/risks of an ICCT study. (ECF No. 10-12, PageID.934.) Specifically, Petitioners want to know to whom Respondent sent the email, who asked him to prepare the email, why he prepared the email, whether Respondent created the attached document, who, if anyone, asked him to prepare the document, and to which VW officers and managers was the document distributed.
Petitioners argue that Respondent's answers to these questions cannot further incriminate him because U.S. federal authorities relied on the email in their criminal complaint against Respondent. (ECF No. 10, PageID.507-508.) Indeed, in paragraph 37 of the affidavit submitted in support of the criminal complaint, it is alleged that Respondent sent the email and the attached document on May 20, 2014, and the content of each is briefly described. (ECF No. 10-13.) Petitioners argue in conclusory fashion that this paragraph of the complaint publicly disclosed all relevant information about the email and its attachment that could possibly incriminate Respondent and that the undisclosed details of those documents cannot further incriminate him. In making this argument, Petitioners assert that it is already a public fact that Respondent wrote the risk analysis in the attached document at issue.
Petitioners' arguments are again without merit. First, paragraph 37 of the criminal complaint affidavit does not indicate that Respondent authored the risk analysis, and there is no other indication that he did. Moreover, the undisclosed details of the email and its attachment, i.e. , their purpose and the players involved, do create a risk of incrimination for Respondent. Respondent points out that neither the email nor its attachment formed part of the factual basis of his guilty plea. (ECF No. 25, PageID.1441-1442.) Notably, both documents were generated and/or contain information generated in or around May 2014, one year before the July 2015 date that Respondent admittedly became involved in the conspiracy – a date that the federal prosecutors view with much skepticism. (See ECF no. 25, PageID.1436-1437.) It is therefore evident from the implications of the questions that Respondent's answers thereto could result in an injurious disclosure regarding information outside the scope of the plea agreement and/or not previously known to prosecutors, and the Court is easily able to "conceive a sound basis for a reasonable fear of prosecution." See Hoffman , 341 U.S. at 486-87, 71 S.Ct. 814 ; Morganroth , 718 F.2d at 169. The Court will therefore sustain Respondent's invocation of the Fifth Amendment privilege as to Petitioners' Category Three questions.
d. Category Four Questions
Finally, Petitioners seek testimony from Respondent on "[q]uestions relating to a presentation [he] 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." The two questions listed in this category are:
• Did you make a presentation to the management of VW on July 27, 2015?
• Did you prepare any papers that you presented either -- in any format, electronic or otherwise, that was [sic] presented to VW management on July 27, 2015?
(ECF No. 10-12, PageID.935.) Petitioners argue that Respondent cannot further incriminate himself by answering these questions because he already admitted to making the presentation in his plea agreement. (ECF No. 10, PageID.508-509.) Indeed, the following facts formed part of the basis for Respondent's guilty plea:
On or about July 27, 2015, other VW employees presented to VW management about the defeat device and SCHMIDT presented to VW management about the potential severe financial consequences to VW if the defeat device was discovered by U.S. regulators.
(ECF No. 10-4, PageID.607.)
To support his claim of privilege in this regard, Respondent asserts that the July 27, 2015 VW meeting was a topic covered extensively in his meetings with federal prosecutors and that many of the other VW meeting participants also spoke with the prosecutors. He asserts that there is a risk of inconsistent recollections among the witnesses about the meeting and that the prosecutors may credit certain recollections more than others. He therefore believes that any answers to these questions that he provides to Petitioners will expose him to prosecution for making false statements or perjury, and he also points out that any new information that he might disclose is not covered under his plea agreement. (ECF No. 25, PageID.1442.)
Here, unlike Petitioners' Category One questions, the two questions in this category appear to be innocent on their face. And in the present setting, it is not evident from the implications of the questions that Respondent's answers thereto would constitute injurious disclosures. However, in addition to his arguments above, Respondent has provided sufficient explanation and evidence to show that he has reasonable cause to fear prosecution for perjury or making false statements should he answer these questions. See Morganroth , 718 F. 2d at 169 n.3. Specifically, Respondent has described the contentious nature of his criminal proceedings and his relationship with the federal prosecutors involved, explained that the factual basis of his plea agreement was highly negotiated, and produced evidence of the prosecutors' contentions that Respondent had committed spoliation of documentary evidence and of their skepticism regarding the date Respondent actually became involved in the diesel emissions conspiracy. (ECF No. 25, PageID.1432-1433, 1436-1437.) Under these circumstances, Respondent's fear of further crimination or prosecution for perjury or making false statements is not merely imaginative or speculative; it is real, and it is reasonable.
For the reasons stated above, the Court finds that Respondent's invocation of the Fifth Amendment privilege against self-incrimination in response to Petitioners' deposition questions was valid, and the Court will deny Petitioners' Motion to Compel Respondent's deposition testimony on this basis.
2. German Privilege Against Self-Incrimination
Respondent also invoked his privilege against self-incrimination under Section 384(2) of the German Code of Civil Procedure, which provides that "[w]itnesses may refuse to testify ... on questions, the answer to which ... would entail the risk of their being prosecuted for a criminal offence or an administrative offence." (ECF No. 25-2, PageID.1455.) Section 1782's privilege provision that "[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" extends to foreign privileges. See Dep't of Caldas v. Diageo PLC , 925 F.3d 1218, 1222-23 (11th Cir. 2019) ; Ecuadorian Plaintiffs v. Chevron Corp. , 619 F.3d 373, 378 (5th Cir. 2010) ; In re Application for an Order Permitting Metallgesellschaft AG to take Discovery , 121 F.3d 77, 80 (2d Cir. 1997) ; In re Grand Jury Proceedings, Doe No. 700 , 817 F.2d 1108, 1112 (4th Cir. 1987) ; In re Veiga , 746 F. Supp. 2d 8, 26 (D.D.C. 2010). Nevertheless, because Respondent is protected from testifying in this matter under the Fifth Amendment privilege, his claim of privilege under German law is moot, and the Court need not undertake the extensive inquiry of determining the applicability of the German privilege to this matter – an inquiry which courts have called "a speculative foray[ ] into legal territories unfamiliar to federal judges." See Ecuadorian Plaintiffs , 619 F.3d at 378 (quoting Metallgesellschaft , 121 F.3d at 80 (quoting Euromepa , 51 F.3d at 1099 )).
B. Document Requests
Petitioners seek a court order compelling the production of documents responsive to document requests two through seven in the subpoena:
2. All minutes and notes from the meeting held July 27, 2015 where you made a presentation to Volkswagen management about "the potential severe financial consequences to VW if the defeat device was discovered by U.S. regulators."
3. All documents prepared for or distributed during the meeting held July 27, 2015 where you made a presentation to Volkswagen management about "the potential severe financial consequences to VW if the defeat device was discovered by U.S. regulators."
4. Any and all Scripts or Storylines prepared in relation to the meeting held on July 27, 2015, and any meetings held with CARB from July 1, 2015 to November 30, 2015.
5. Email sent on or about May 21, 2014 to Oliver Schmidt, describing a Meeting with Heinz Jakob Neusser about Emissions issues in the Generation 2 2.0 liter vehicles.
6. An email you wrote on October 17, 2013 in which you said "It would be good if you deleted us from the cover page. If such a paper somehow falls into the hands of the authorities, VW can get into considerable difficulties" referenced in the Government Sentencing Memorandum, p. 15, fn. 2.
7. An email you wrote on June 10, 2014 to another VW employee in which you said "I only have mentioned documents on a flash drive and do not want to load them on to the computer" referenced in the Government Sentencing Memorandum, p. 15, fn. 2.
(ECF No. 10-16, PageID.980-981.)
Respondent generally objected to these requests to the extent that: (1) they implicate his right against self-incrimination under the Fifth Amendment, German law, and the laws of other relevant jurisdictions; (2) the documents are protected from disclosure by the protective order in his criminal case, a confidentiality agreement with Volkswagen, the attorney-client privilege, the work product doctrine, and other applicable privileges; (3) they impose an undue burden or expense on Petitioner and seek documents more readily available from more convenient, less burdensome, and less expensive sources, like Volkswagen and the U.S. Government; (4) they call for the location and/or restoration of data archived or stored on computers or electronic media ("Archived Data Sources"); (5) they require him to search for documents that are not "reasonably accessible;" and (6) they impose obligations or procedures beyond those required by the Federal or Local Rules. (ECF No. 33-4, PageID.1871-1873.)
Respondent also purported to provide specific objections to the document requests – and did so with regard to Request nos. 2 and 3. For example, Respondent objected to Request no. 2 as overly broad insomuch as it incorporated a broad definition of "Minutes" and unduly burdensome because it required him to search for responsive documents in Archived Data Sources that he may not have prepared or reviewed. He objected to Request no. 3 on the assertion that the phrase "prepared for" is vague and ambiguous and as unduly burdensome for the same reasons as Request no. 2. Respondent's specific objections to Request nos. 2 and 3 are accompanied by the following paragraph, which paragraph also represents the entirety of Respondent's "specific" objections to Request nos. 4-7:
Notwithstanding the foregoing general and specific objections, Mr. Schmidt will produce on or prior to the deposition date any responsive documents in his possession that are not (i) subject to the protective order, confidentiality agreement, the work product doctrine, privileges against self-incrimination, or other applicable privilege or (ii) maintained in Archived Data Sources.
(ECF No. 33-4, PageID.1873-1876.)
In pre-Motion correspondence from Respondent's counsel to Petitioners' counsel reflecting the parties' efforts to meet and confer regarding the substance of the subpoena, Respondent's counsel continued to assert that Respondent is prevented from producing the documents under the protective order in his criminal case and his confidentiality agreement with Volkswagen and that the documents are otherwise protected by the attorney-client privilege and the work product doctrine. (ECF No. 10-11, PageID.904-909, 911-912.) Respondent's counsel also reiterated the objection that the documents are more readily available with less expense and inconvenience from other sources. Specifically, counsel stated:
As we reminded you during the meet and confer, Mr. Schmidt is not a party to your German litigation. All of the documents you have requested from Mr. Schmidt are company documents that are readily available from Volkswagen – the defendant in your litigation – and its affiliates. As far as we know (you refused to answer our questions about this during the meet and confer), you have made no effort whatsoever here or elsewhere to obtain any of these documents from the party that you are suing. It is inappropriate and unduly burdensome to seek production of company documents from a non-party ex-employee, particularly when he is prevented from producing those documents as described below.
(ECF No. 10-11, PageID.907, 912.)
"The scope of discovery under a subpoena is the same as the scope of discovery under Rule 26." Callidus Capital Corp. v. FCA Grp. , No. 14-10484, 2018 WL 1556231, at *3 (E.D. Mich. Mar. 30, 2018) (citation omitted). Pursuant to Rule 26(b)(2)(C)(i), the court must limit the scope of discovery if it determines that the discovery is unreasonably cumulative or duplicative or that it can be obtained from some other source that is more convenient, less burdensome, or less expensive. Fed. R. Civ. P. 26(b)(2)(C)(i). Under this principle, courts in this circuit have repeatedly denied motions to compel discovery and quashed subpoenas directed to non-parties where the discovery sought was obtainable from a party to the litigation. See Vamplew v. Wayne State University Bd. Of Governors , No. 12-14561, 2013 WL 3188879, at *4 (E.D. Mich. June 20, 2013) (subpoena for production of emails from non-party quashed because request was overbroad and information sought could be obtained from party to litigation); Versata Software v. Internet Brands, Inc. , No. 11-mc-50844, 2011 WL 4905665, at *2 (E.D. Mich. Oct. 14, 2011) (Majzoub, M.J.) (quashing subpoena where Court was not persuaded that the information sought by plaintiff could not be more readily obtained from defendant or other less burdensome sources); Versata Software v. Internet Brands, Inc. , No. 11-mc-50846, 2011 WL 4905691, at *2 (E.D. Mich. Oct. 14, 2011) (Majzoub, M.J.) (same); Seven Bros. Painting, Inc. v. Painters & Allied Trades Dist. Council No. 22 , No. 09-12506, 2010 WL 11545174, at *3 (E.D. Mich. June 7, 2010) (quashing subpoenas where plaintiff made no showing that it could not obtain relevant information from other sources, including the defendant, or that it had exhausted other, less burdensome, avenues of discovery); Hansen Beverage Co. v. Innovation Ventures, LLC , No. 2:09-mc-50356, 2009 WL 1543451, at *2 (E.D. Mich. June 2, 2009) ; In re CareSource Mgmt. Grp. Co. , 289 F.R.D. 251, 253-54 (S.D. Ohio 2013) (refusing to impose on non-party the burden of producing documents that were apparently available to plaintiff from its party-opponent) (citing Musarra v. Digital Dish, Inc. , No. 2:05-CV-545, 2008 WL 4758699, at *3-4 (S.D. Ohio Oct. 30, 2008) (same)); Recycled Paper Greetings, Inc. v. Davis , No. 1:08-MC-13, 2008 WL 440458, at *4-5 (N.D. Ohio Feb. 13, 2008) (granting a motion to quash subpoena, in part, because the majority of the relevant documents could have or had been produced by a party to the litigation)); Cleveland Clinic Health Sys.-E. Region v. Innovative Placements, Inc. , No. 1:11-CV-2074, 2012 WL 187979, at *2 (N.D. Ohio Jan. 23, 2012) (granting motion to quash where defendants had another viable means – the plaintiff – to obtain the many of documents that they requested from non-party) (citing Haworth, Inc. v. Herman Miller, Inc. , 998 F.2d 975, 978 (Fed. Cir. 1993) (holding that the district court properly required the defendant "to seek discovery from its party opponent before burdening the nonparty")).
In their Motion to Compel, Petitioners argue that Respondent's assertion that the documents are more appropriately and conveniently obtained from Volkswagen is nothing more than a boilerplate objection. They also argue that Respondent produced documents to the German state police, so he must be capable of producing the requested documents to Petitioners. Additionally, Petitioners argue that Respondent's argument in this regard is moot because the court granted Petitioners' Section 1782 App lication for Discovery fully aware of Respondent's status as both a non-party and an ex-employee of Volkswagen. Petitioners further argue that Respondent's assertion that all of the documents requested are Volkswagen company documents conflicts with assertions that Respondent had received some documents from the government and that Respondent's criminal defense counsel didn't know what documents Respondent still had in his possession. (ECF No. 10, PageID.517-518; ECF No. 32, PageID.1789.)
Petitioners' arguments are unavailing. The authority cited above demonstrates that Respondent's objection to the document requests on the basis that they seek documents more readily available from a more convenient, less burdensome, and less expensive source, i.e. , Volkswagen, is not a boilerplate objection. And the fact advanced by Petitioners that Respondent produced some unspecified documents to German police is irrelevant to the instant matter. Additionally, the assertions that all of the documents requested are Volkswagen company documents, that Respondent received some documents from the government, and that Respondent's criminal defense counsel didn't know what documents Respondent still had in his possession are not mutually exclusive. Finally, the court's order granting Petitioners' application for leave to obtain discovery pursuant to 28 U.S.C. § 1782 simply granted Petitioners leave to serve the proposed subpoena; it did not explicitly address the substance of the subpoena on its merits or prohibit any objections thereto.
Here, Petitioners' requests inherently seek documents concerning the internal business-related communications of Volkswagen and its employees. These documents are more appropriately sought and more readily available from Volkswagen, the party-opponent in Petitioners' German lawsuits. Notably, there is no indication that Petitioners requested and were unable to obtain these documents from Volkswagen or from VWGoA, its American subsidiary. Accordingly, and pursuant to Rule 26(b)(2)(C)(i), the Court will not impose the burden of producing the requested documents on Respondent, a non-party to Petitioners' foreign proceedings.
IT IS THEREFORE ORDERED that Petitioners' Motion to Compel Deposition Testimony and Production of Documents [10] is DENIED .
IT IS FURTHER ORDERED that VWGoA's Motion to Intervene [23] and Petitioners' Motion to Strike [29] are DENIED as moot.