Hazelden Betty Ford Foundation v. My Way Betty Ford Klinik GmbH

Background

Hazelden Betty Ford Foundation and the Elizabeth B. Ford Charitable Trust brought claims against My Way Betty Ford Klinik GmbH for trademark infringement, unfair competition, false advertising, cybersquatting, and infringement of the right of publicity. The plaintiffs alleged that the Klinik continued using the “Betty Ford” name after discussions in which it represented that it would adopt another name if the parties did not reach an agreement. The Klinik operates a drug and alcohol treatment facility in Germany.

During discovery, both sides filed motions to compel. Magistrate Judge Tony N. Leung’s March 29, 2023 order granted the motions in part and denied them in part. The Klinik objected to portions of that order under Federal Rule of Civil Procedure 72 and the District of Minnesota’s local rule governing objections to magistrate judge orders.

Issues on Review

The Klinik challenged four aspects of the magistrate judge’s order:

The parties also submitted supplemental briefing on Abitron Austria GmbH v. Hectronic International, Inc., a Supreme Court decision concerning the territorial reach of certain Lanham Act trademark provisions.

Standard of Review

The district court reviewed the magistrate judge’s order under a highly deferential standard. Reversal was appropriate only if the order was clearly erroneous or contrary to law. A decision is clearly erroneous when the reviewing court is left with a definite and firm conviction that a mistake has been made.

Analysis

Deposition Locations

Judge Tunheim held that the magistrate judge did not clearly err by ordering the depositions to occur in Minneapolis. Although depositions generally occur at a corporation’s place of business or near an individual’s residence or workplace, courts may change that location after considering the circumstances and equities of the case.

The magistrate judge considered the relative burdens on the parties, international respect between countries, and case-management concerns. The burden of travel favored Germany, but the court found that other considerations favored Minneapolis, including the United States’ interest in resolving disputes involving United States-based corporations and the likelihood that the depositions would not occur in Germany if the witnesses did not voluntarily participate. The court also rejected the argument that the Hague Convention was the exclusive way to obtain discovery from foreign witnesses.

Heimfarth’s Status as a Managing Agent

The court affirmed the finding that Helmut Heimfarth was a managing agent for purposes of Rule 30(b)(6). The magistrate judge considered Heimfarth’s role as the Klinik’s outside auditor, independent accountant, and tax advisor, along with communications indicating that he had participated in negotiations on the Klinik’s behalf and had sought information related to the litigation and the Klinik’s defense.

Although the question was close, Judge Tunheim concluded that the magistrate judge had not clearly erred. The court reasoned that Heimfarth’s communications concerning the litigation suggested that he was acting as more than simply an outside auditor or tax advisor.

Patient-File Discovery

The court explained that the magistrate judge’s order did not require the Klinik to produce all patient files. Requests Nos. 18 and 22 sought aggregate information about the number of people from or residing in the United States whom the Klinik had contacted about its addiction-treatment services or treated. If billing, intake, or another reasonably reliable source could provide that information, the Klinik would not need to produce the corresponding patient files.

The court also affirmed the conclusion that the requested production was not prohibited by the European Union’s General Data Protection Regulation. The magistrate judge had found that the information could be necessary to establish, exercise, or defend legal claims and could help determine whether the Klinik’s conduct substantially affected United States commerce. The Klinik did not show that the magistrate judge clearly erred in weighing the relevance and importance of the information against patient privacy and the burden of searching the files.

The court further held that Abitron did not eliminate the relevance of the requested foreign evidence at the discovery stage. Under Abitron, the relevant question for the Lanham Act claims is where the conduct connected to the statute’s focus occurred. The court concluded that evidence about the Klinik’s foreign conduct could still provide circumstantial evidence of domestic activity, including efforts to reach United States patients. The court stated that Abitron would be important at the summary-judgment stage but did not justify reversing the discovery order.

Request for Production No. 6

The court affirmed the decision to limit the Klinik’s Request for Production No. 6 to planned or future development in Germany. The Klinik had not explained why development throughout the entire European Union was relevant and proportional to the needs of the case. Its argument that Germany is part of the European Union and uses European trademarks did not establish clear error.

Disposition

The court ordered that the Klinik’s objection to the magistrate judge’s March 29, 2023 order was DENIED and that the magistrate judge’s order was AFFIRMED. This was a discovery ruling; the court did not resolve the merits of the plaintiffs’ trademark, unfair-competition, false-advertising, cybersquatting, or right-of-publicity claims.