When Does a Parent Have Control? In re Uranium Antitrust Litigation

In re Uranium Antitrust Litigation, 480 F. Supp. 1138 (N.D. Ill. 1979), is a widely cited case in which a federal court set forth a standard as to when a U.S. company is required to produce documents from a foreign subsidiary. The standard is clear when the parent owns more than 50% of a subsidiary's stock, but the parent can also exercise sufficient control in other circumstances. Judge Marshall ruled that:

". . . the issue of control is more a question of fact than of law, and it rests on a determination of whether the defendant has practical and actual managerial control over, or shares such control with, its affiliate, regardless of the formalities of corporate organization.

Once personal jurisdiction over the person and control over the documents by the person are present, a United States court has power to order production of the documents. The existence of a conflicting foreign law which prohibits the disclosure of the requested documents does not prevent the exercise of this power."

With respect to a Canadian corporation that both owned 43.8% of shares in a Canadian business that kept its own books and held separate corporate meetings, and also wholly owned other Canadian, Australian and American subsidiaries, the Court found that it had control over the responsive documents from the latter but not the former.

SCOTUS on the Hague Convention

Societe Nationale Industrielle Aerospatiale v. U.S. District Court for the Southern District of Iowa,482 US 522 (1987) was a decision by the United States Supreme Court in which it ruled on the extent to which federal courts must apply the Hague Convention when parties file interrogatories, requests for admissions, production requests on foreign parties over which the courts have jurisdiction. The court rejected the idea that the Convention should be the exclusive vehicle for cross border discovery, and denied the petitioners' argument that the Convention's procedures have to be the first resort whenever discovery is requested from a foreign party. Furthermore the Court ruled that the Convention did not preclude the jurisdiction that the Court would otherwise have to obtain the production of evidence located in another country.

The Supreme Court's decision noted production can be obtained in violation of foreign blocking statutes designed to prevent the transfer of commercially valuable information. The court endorsed a test listed in the Restatement of Foreign Relations Law to analyze whether or not international discovery can be conducted in violation of a foreign blocking statute:

"(1) the importance to the . . . litigation of the documents or other information requested; "(2) the degree of specificity of the request; "(3) whether the information originated in the United States; "(4) the availability of alternative means of securing the information; and "(5) the extent to which noncompliance with the request would undermine important interests of the United States, or compliance with the request would undermine important interests of the state where the information is located."