FEDERAL COURT OF AUSTRALIA

Capic v Ford Motor Company of Australia Limited (No 4) [2017] FCA 1575

ORDERS

THE COURT:

1.    GRANTS LEAVE to the Applicant to apply under § 1782 of Title 28 of the United States Code to the United States District Court for the Central District of California for the production by the Ford Motor Company of the classes of documents set out at paragraph 21 of the Court’s reasons herein.

2.    DIRECTS the Applicant to serve the Respondent with a copy of that application and any supporting materials therewith within three business days of their being filed with the United States District Court.

3.    DIRECTS the Applicant to bring to the United States District Court’s attention the Court’s reasons.

4.    ORDERS that costs be costs in the cause.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

PERRAM J:

1    This is an application by the Applicant for leave to make an application under § 1782 of Title 28 of the United States Code seeking discovery from the Ford Motor Company (‘Ford US’). The application is supported by an affidavit of Milan Cakic sworn 7 December 2017. It was opposed by the Respondent in this Court, the Ford Motor Company of Australia Limited (‘Ford Australia’). Ford Australia relies upon three affidavits:

    Mark Cruse sworn 15 March 2017;

    Belinda Thompson sworn 12 May 2017; and

    Belinda Thompson sworn 12 October 2017.

2    A set of the Court’s orders made on 30 August 2017 was also tendered and became Exhibit 2. Exhibit 1 was an application for an anti-suit injunction brought by the Respondent at an earlier stage of the proceeding.

3    The Applicant sues Ford Australia over her 2012 Ford Focus which she says is defective by reason of a troublesome gearbox. The gearbox is known as a DPS6 transmission. The action is a class action. The vehicles in question were not manufactured in Australia but were imported into Australia by Ford Australia.

4    Ford Australia has already been ordered to provide discovery in this proceeding and will complete that task on, or before, 31 January 2018: Order 9(b) of the orders of 30 August 2017; Exhibit 2. Although the proceeding was originally listed for hearing on 11 June 2018, that date has now been abandoned by popular consent and the matter is instead fixed for a three week trial commencing on 3 December 2018. There is, therefore, just under a year before the trial starts. This has some relevance to the case management issues which now arise.

5    It is necessary to understand some technical aspects of the DPS6 transmission and the cars into which they were inserted before turning to the actual discovery issues.

6    The DPS6 transmission is a 6-speed dry dual-clutch PowerShift automatic transmission. In a traditional automatic transmission, power and torque are transferred by a torque converter. However, the DPS6 resembles a manual transmission in that power and torque are transferred via a dry dual-clutch assembly. The two clutches (one for the odd gears, one for the even) are controlled by electric motors and lever actuators. In turn, these are controlled by software which operates on hardware systems contained in the transmission control module. This kind of automatic transmission may, perhaps, be best understood as a complex dual-clutch manual transmission operated by an on-board computer.

7    It appears that the DPS6 transmission was designed, tested and manufactured by Getrag Transmission Corporation (‘Getrag’). Getrag manufactured the hardware for the DPS6 transmission at its plants at Bari in Italy and Irapuato in Mexico.

8    The relationship between the various Ford vehicles involved and the DPS6 transmission is not necessarily straightforward. Vehicles fitted with a DPS6 transmission which were sold in Australia between January 2011 and May 2016 were manufactured at plants in Thailand, India or Germany. Some of these plants used DPS6 transmissions made by Getrag at its Bari plant and some from the plant at Irapuato.

9    However, the software loaded into the transmission control module was designed, developed and tested by Ford US in the United States. Further, this software was produced in many versions, not only because the software was customised for each vehicle model and engine size (known as a ‘calibration’), but because it was continuously updated over time.

10    Obviously, the DPS6 transmission will be at the heart of the trial. The discovery categories which Ford Australia has been ordered to produce seek only what an importer might be expected to have, i.e., customer complaints, internal reports and so on. The Applicant has not sought to obtain from Ford Australia the documents which Ford US has in relation to the inner workings of the DPS6 transmission. This is not because of oversight. Rather, in procedurally complex ways, the Applicant has for some time sought to obtain the DPS6 transmission material from Ford US itself.

11    In the United States the discovery has been given (or, as will be seen, has been partially given) by Ford US in two class actions commenced in the United States District Court for the Central District of California. These were entitled:

    Klipfel, et al v Ford Motor Company, Case No.2:15-cv-01240-AB (FFMx); and

    Vargas, et al v Ford Motor Company, Case No.2:12-cv- 08388-AB (FFMx).

12    Those proceedings (which were eventually consolidated as the Vargas proceeding) concern North American Ford vehicles fitted with the DPS6 transmission. The vehicles were Ford Fiestas (2011-2013) and Ford Focuses (2012-2013). The Vargas proceeding has settled but is awaiting formal approval of that settlement by the District Court. All of the transmissions used in those vehicles were sourced exclusively from Getrag’s Irapuato plant. In the Vargas proceeding, Mr Vargas’ lawyers (Capstone Law APC), issued a set of requests for the production of documents to Ford US on 25 January 2013. These were divided into some 47 categories. In addition to those requests, there were other discovery requests. In all, they totalled some 69 requests contained in three separate sets of requests for production of documents. In response, Ford US began to produce documents. Until the process was brought to halt by the settlement negotiations, Ford US had produced some 256,170 documents consisting of 1,829,224 pages of information. The documents which were produced related to Ford Fiestas fitted with a DPS6 transmission manufactured between 2011 and 2013 and Ford Focuses fitted with a DPS6 transmission manufactured between 2012 and 2013.

13    Documents pertaining primarily to the Australian market were not included in the US discovery. During argument it emerged that this meant that there were some vehicles which were sold into the Australian market that were never sold into the North American market. However, there were nevertheless vehicles in the North American market that were also in the Australian market. One significant difference is that the US discovery does not include much material about the DPS6 transmissions produced by Getrag in Bari since all of the North American Ford vehicles involved in the Vargas proceeding contained DPS6 transmissions from Irapuato. In practical terms, nevertheless, the US discovery will be pertinent to, at least, some vehicles in Australia. I say ‘at least’ because, depending on what is in the material, it may potentially be of broader application.

14    There are three further limitations inherent in the US discovery which should be noted. First, its date range runs from November 1999 to June 2016 but the majority of the material is current only to late 2014/early 2015. The Applicant’s vehicle in the Australian proceeding is a 2012 Ford Focus. The class whom she represents is defined in the pleadings (leaving out some irrelevant detail) in this way:

    Ford Focus (2011-2015);

    Ford Fiesta (2010-2016); and

    Ford EcoSport (2013-2016).

15    There is, therefore, some overlap in the periods involved and also in some of the cars involved, i.e., Ford Fiestas manufactured during the 2011-2013 period and Ford Focuses manufactured during the 2012-2013 period. From the Applicant’s forensic perspective, the overlap could no doubt be greater (in the sense of being more inclusive) but the inquiry is still clearly useful.

16    Secondly, I was told the US discovery material was, in some parts, subject to protective orders (i.e. confidentiality regimes). I accept this. No doubt the United States District Court for the Central District of California is likely to make orders in relation to those matters if it is successfully approached under § 1782. However, it does not make too much of a difference from the perspective of this Court.

17    Thirdly, the US discovery process was suspended once settlement negotiations were commenced. This reduces the completeness of the discovery.

18    From a relatively early date in this proceeding the Applicant has been seeking to access this US material. On 27 January 2017, she filed an application in this Court for the issue of a letter of request to the US District Court for the Central District of California seeking the production of an electronic copy of the documents discovered in the US proceedings. This application then underwent several developments. First, on 1 February 2017 at a case management hearing, the Applicant foreshadowed seeking orders under § 1782. At another hearing on 7 June 2017, the Applicant announced that she was going to seek the lifting of an order in the US which prevented the Applicant’s lawyers in the US from speaking to the Applicant’s lawyers in this case. On 30 August 2017, the interlocutory application of 27 January 2017 was discontinued and the Applicant ordered to pay the costs. The Applicant also foreshadowed that she might apply for an order under § 1782 in California and Ford Australia foreshadowed that it might, in response, apply for an anti-suit injunction in Australia in this proceeding. At that time, what the Applicant wanted seemed to lack focus.

19    The Applicant then applied in the US, on 15 September 2017, for an ex parte order under § 1782 against Capstone (that is, the plaintiffs’ lawyers in the US). The Applicant was ordered by the US District Court for the Central District of California on 25 September 2017 to serve Ford US which then opposed the application on bases which included that it was not appropriate to seek the documents from the plaintiff’s lawyers in the US proceeding and that Ford US was the proper defendant. On 16 October 2017, Judge Mumm agreed with this and refused the application: Biljana Capic v Capstone Law APC (unreported, United States District Court, Central District of California, Mumm J, No. MC-17-118-UA, 16 October 2017). Judge Mumm was told that I was aware of the application which was being made to him. I am by no means certain that is a correct statement and it is certainly not a complete one. I was aware an application might be made but I was also aware that an anti-suit injunction might be sought if it was. The time for me to express my views on the § 1782 procedure had not yet arrived. I did not therefore regard myself as having, at that stage, given a green light to the § 1782 application.

20    I am going to proceed on the basis that this unfortunate occurrence involved error rather than a deliberate course of conduct. In any event, it is now a matter of history.

21    The Applicant now does apply for permission to seek § 1782 orders against Ford US. What is now sought (as outlined orally at the hearing) is:

1.    Copies of transcripts and depositions of Ford US employees taken in the Ford US proceedings, including all exhibits to the depositions.

2.    Categories 9, 12, 13, 19, 23 and 32 of the US categories outlined in the Plaintiffs’ first request in the Vargas proceeding.

22    The categories in the Vargas proceeding were as follows:

‘9.    Please produce all DOCUMENTS, including but not limited to all ESI, evidencing, exhibiting, or otherwise relating to YOUR knowledge of tests, analyses, studies, simulations, investigations, expert reports and/or evaluations of POWERSHIFT TRANSMISSION(s) in YOUR possession, custody, or control from five (5) years prior to the CLASS PERIOD to the present, including but not limited to premature failure analysis, the expected useable life, durability, and failures of the POWERSHIFT TRANSMISSION(s).

…

12.    Please produce the Design Guide for each and every version of the POWERSHIFT TRANSMISSION(s) used in the CLASS VEHICLES.

13    Please produce all DOCUMENTS, including but not limited to all ESI such as electronic data and e-mails, concerning or relating in any way to the failure and replacement rate of each version of the POWERSHIFT TRANSMISSION(s) in the CLASS VEHICLES.

…

19.    Please produce all COMMUNICATIONS, including but not limited to letters, notes, memos, e-mails, and notices, between YOU and any manufacturer or material supplier relating to problems, potential problems, or concerns about the POWERSHIFT DEFECT or problems or issues regarding the POWERSHIFT TRANSMISSION(s) used in the CLASS VEHICLES from five (5) years prior to the CLASS PERIOD to the present.

…

23.    Please produce all DOCUMENTS and COMMUNICATIONS, including all ESI, evidencing, exhibiting or otherwise relating to all Special Service Messages (“SSMs”) and Technical Service Bulletins (“TSBs”) regarding problems or failures in the POWERSHIFT TRANSMISSIONS(s) used in the CLASS VEHICLES, including but not limited to all materials, tests, analyses, studies, simulations, investigations, expert reports and/or evaluations relied upon in formulating the SSMs and TSBs, relating to the CLASS VEHICLES and issued by YOU from the beginning of the CLASS PERIOD to the present.

…

32.    Please produce all DOCUMENTS, including but not limited to electronic data and e-mails, reports, studies or presentations concerning or relating in any way to any analysis or investigation by you or on your behalf concerning or related in any way to the POWERSHIFT TRANSMISSION(s) used in the CLASS of vehicles, or any of the components that can be affected by the POWERSHIFT DEFECT used in the CLASS VEHICLES.’

23    Having regard to the relationship between the cars which were sold in North America and those in Australia, I am satisfied that the material which is to be sought sufficiently bears on the issues in the proceeding before me that if Ford US were a party I would be content to order discovery against it in such terms.

24    It was nevertheless argued that I should allow Ford Australia to complete its Australian discovery before permitting the Applicant to go down this path. I do not agree. It is unlikely that Ford Australia will produce the kind of material about the DPS6 transmission which is now to be sought from Ford US. Ford Australia is an importer not a manufacturer. What is needed by the Applicant for her Australian proceeding are the materials of the manufacturer. Given that the trial is only 12 months away, I see any further delay in this process as engendering a real risk to that hearing date.

25    Ford Australia submitted that the process could potentially be burdensome for it. If a large volume is produced to the Applicant, Ford Australia will then have to inspect it and this would be a species of prejudice. I accept that is so but it was not suggested that it could not be done in time for the trial.

26    In Lavecky v Visa Inc [2017] FCA 454 this Court considered when, in relation to the production of documents, permission should be granted to apply under § 1782 to the United States District Court. At [19] this was said:

‘19    Whilst it is unwise to be definitive about these matters in advance, the following matters are likely to be germane to a consideration of whether to endorse an application made under procedures such as § 1782:

(1)    What is the importance of the material to be sought under the procedure to the applicant’s case?

(2)    Are there other methods available for obtaining it?

(3)    Does the material sought impinge upon or undermine some important procedural limitation in this jurisdiction such as, for example, the unwillingness of the Court to permit fishing expeditions or, perhaps, the general unwillingness of this Court to order depositions?

(4)    What is the cost involved in the process for the parties before this Court?

(5)    Is that cost a proportionate burden having regard to the significance of the material?

(6)     Is the proposed proceeding under § 1782 in the District Court frivolous or obviously doomed to fail?

(7)    How long might the applications take to resolve and what impact might they have upon the timely preparation of the matter before this Court for trial?

(8)     Is there any need to impose conditions upon the endorsement so as to address any issues arising from (1)-(7) above?’

27    Each of (1)-(7) favours the Applicant. As I have explained above, the material is likely to be useful notwithstanding some of its limitations. It is not available to this Court under its own procedures but the § 1782 procedure strongly resembles this Court’s own third party discovery procedure (FCR 20.23) and is by no means alien to this Court’s processes. I do not think given the exigencies of the situation that it would be productive to make an order that Ford Australia do everything in its ability to procure Ford US to produce the material to it (cf. Sabre Corporation Pty Limited v Russ Kalvin’s Hair Care Company [1993] FCA 557; (1993) 46 FCR 428 per Lockhart J). Ford US’ ability to do so is constrained by the protective order. Further, it is not entirely clear what I would do if the material, or some of it, were not produced. As the non-moving party I could not stay Ford Australia’s claim. Perhaps I might enter judgment against it for failing to comply with an order but that might be seen as disproportionate. Further, given the timing pressures, I do not wish to undertake a process involving an intermediary (Ford Australia) which can only engender delay.

28    The costs of this process will, no doubt, be large but in the first instance they will fall on the Applicant. There is nothing to suggest the § 1782 application is frivolous or vexatious; to the contrary, it seems plain that it is not. Although the trial is only a year away, I am satisfied that the trial date is not imperilled by the application. In short, leave should be granted. I will only impose two conditions and that is that the Applicant serve Ford Australia with a copy of the application and supporting materials once filed and that the Applicant bring to the US District Court’s attention these reasons so that it can be clear that this Court is content for the application to proceed.

Associate:    

Dated:    20 December 2017