WeRide Corp. v. Huang

Background

The court had previously granted part of WeRide’s request for a preliminary injunction and authorized expedited discovery of each party’s source code. Because producing the defendants’ source code could implicate Chinese law, the court referred the discovery issue to a magistrate judge. The magistrate judge overruled the defendants’ general objections based on Chinese secrecy laws.

The defendants objected to that discovery ruling, arguing that their objection was not yet ready for decision because they had not identified particular documents and that the magistrate judge had not applied the factors described in Societe Nationale Industrielle Aerospatiale v. U.S. District Court for the Southern District of Iowa. The court denied that objection. The defendants later sought reconsideration concerning fourteen documents and submitted a declaration from Hui Zhan, described in the opinion as a Chinese lawyer and former judge. The magistrate judge denied reconsideration, and the court later denied the defendants’ request for relief from that decision. A motion by WeRide for discovery sanctions remained pending, and the opinion states that no sanctions had been imposed.

Motion for interlocutory appeal

Defendants Zhong Zhi Xing Technology Co. Ltd. and AllRide.ai Inc. moved under 28 U.S.C. § 1292(b) to certify four prior orders for interlocutory appeal and requested a stay pending appeal. An interlocutory appeal is an appeal before final judgment. Under § 1292(b), certification requires a controlling question of law, substantial grounds for a difference of opinion, and an immediate appeal that may materially advance the end of the litigation. The party seeking certification bears a heavy burden, and the court described certification as appropriate only in exceptional circumstances.

The defendants identified six proposed questions concerning foreign-law objections to discovery, the timing and required analysis of those objections, international comity, waiver through delay, the showing needed to overcome a foreign-secrets privilege, and whether sanctions for withholding documents could violate the Eighth Amendment’s ban on excessive fines. They argued that the questions were controlling because producing the documents might expose them to penalties under Chinese law, disrupt their business operations, and limit their ability to defend the case.

Ruling

Judge Edward J. Davila held that none of the proposed questions was a controlling question of law. The possibility of consequences under Chinese law and the possible effects on the defendants’ business did not materially affect the outcome of the underlying claims. The prior orders concerned specific discovery issues, not fundamental questions such as the court’s jurisdiction or the ability to issue a binding decision. Because the controlling-question requirement was not met, the court did not address the other two requirements for certification.

The court denied defendants’ motion for certification for interlocutory appeal and their request for a stay under 28 U.S.C. § 1292(b). The court also stated that the request for a corresponding stay was moot after certification was denied.