International E-Discovery
A Clash of Cultures and Law
Philip M. Berkowitz, Nixon Peabody LLP
E-mail and other electronic records have swiftly become the most important kind of evidence in litigation. E-mail is spontaneous; it is the equivalent of thinking out loud. People say things in e-mail that they would never say in a one-on-one conversation, much less in a formal, written memo. As a result, e-mail often contains admissions against interest, and provides a treasure trove of evidence that can be crucial to the success or failure of a case.
In much of the world, countries have adopted legislation that protects the privacy of electronic information. These laws may prohibit the electronic transmission of information across borders, without the express consent of the subject of the communication. And this consent may be impossible to obtain: in many jurisdictions (notably, many countries in the European Union, which has adopted the E.U. Privacy Directive), it may be impossible to obtain the consent of employees; such consent is often considered to be inherently coerced due to the subordinate nature of the employee relationship.
This conflict between U.S. and European law is not merely legal; it reflects nothing less than a clash of cultures.
In the litigation context, restrictions on the international transmission of data can present an enormous barrier to the discovery of electronic information kept overseas. Thus far, there appears to be no reported case law construing the conflict between discovery obligations, on the one hand, which are broader than discovery in virtually every other jurisdiction in the world, and the restrictions on the transmission of electronic data imposed by the E.U. Privacy Directive.
Of course, international discovery is not a new phenomenon. Nor is the conflict that exists between the broad discovery principals, on the one hand, and conflicting laws of foreign countries, on the other. We don’t have to look too far, or too far back, to see an example of this conflict in action.
In June 2007, in a case pending in the Eastern District of New York, Magistrate Judge Matsumoto decided Strauss v. Credit Lyonnais, S.A. There, the plaintiffs brought suit under the Anti-Terrorism Act of 1992, which permits citizens to sue as victims of terrorism and receive treble damages. The plaintiffs claimed that the bank maintained bank records for an alleged Hamas related charity that was, allegedly, a front for terrorism. They sought access to bank records reflecting the accounts of the alleged charity, as well as correspondence between the bank and its customer, correspondence between the banks and government entities, as well as any internal report concerning those bank accounts.
Credit
Lyonnais cited a French law that prohibits disclosure of information in connection with foreign judicial proceedings, except by international treaty or agreement, as well as the French criminal code, which purportedly prohibits disclosure of information regarding ongoing criminal investigations. It also cited the French bank secrecy law.
The court, however, ordered the records disclosed. In ordering disclosure, the court cited, as its principal point of analysis, the Restatement (3d) of Foreign Relations Law of the United States, § 442. Under that Section, a court may order a person subject to its jurisdiction to produce evidence even if the information is located outside the United States. The court must take into account five factors in determining whether to order disclosure:
1. The importance of the documents to the litigation;
2. The respective interests of the United States and the foreign national where the information is located;
3. A degree of specificity of the request;
4. Whether the information originated in the United States; and
5. The availability of alternate means to get the information.
Courts generally consider the first two of these factors as the most important in determining whether the information should be produced.
In the Second Circuit, moreover, courts generally also consider two other factor
1. The hardship of compliance on the party or witness from whom the discovery is sought, and
2. The good faith of the party resisting discovery.
The court rejected a more stringent test for discovering documents located overseas and affirmed that, under Rule 26(b)(1) of the Federal Rules of Civil Procedure, the standard in determining whether information should be produced is relevance and that information need not be admissible in evidence to be discovered.The court held that the documents were crucial to the litigation, that the requests were narrowly tailored, and that the plaintiffs need not exhaust their remedies through the Hague Convention prior to recovering the documents. The court further concluded that the U.S. and France have a mutual interest in combating terrorism. Moreover, it rejected Credit
Lyonnais' argument that it would face possible prosecution by French banking authorities, holding that there was, in fact, a low likelihood of actual prosecution.In support of its decision, the court also cited the U.S. Supreme Court’s 1987 decision in Societe Nationale Industrielle Aerospatiale v. United States District Court for the Southern District of Iowa. In that case, the Court held, inter alia, that the mere fact that the scope of discovery is generally broader in the U.S. than in other jurisdictions does not require, as a matter of comity, that U.S. courts resort to the Hague Convention in the first instance.The Supreme Court also dealt, with similar dispatch, with the so-called French “blocking statutes,” which it characterized as being designed solely to frustrate foreign discovery. The Court held that these statutes do not deprive courts of the power to order a party subject to its jurisdiction to produce evidence.Another important and interesting
New York case on the subject is Minpeco, S.A. v. Conticommodity Services. There, Judge Lasker construed the Swiss banking laws which, of course, protect the confidentiality of a broad swath of banking records, and came to the opposite conclusion, while also citing the Restatement.It is likely that future courts construing the tension between discovery rules and the E.U. Privacy Directive will find that the Privacy Directive reflects an important state interest of foreign governments. However, the question will be whether the interest of the court or litigant is important enough to override that interest, combined with consideration of the other issues identified in the Restatement.
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2000 Dist. LEXIS 38378 (E.D.N.Y. May 25, 2007). The court also decided Weiss v. National Westminster Bank, P.L.C., 2007 U.S. Dist. LEXIS 35103 (May 14, 2007), which involves similar issues. This article focuses on the Strauss ruling.
482 522 (1987)
116 F.R.D. 517 (S.D.N.Y. 1987)
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Author Bio: Philip Berkowitz is a partner in the
New York office of Nixon Peabody LLP. He represents corporate clients in labor and employment matters. He defends cases of alleged discrimination and harassment; wrongful dismissal; Sarbanes-Oxley whistle-blowing and other alleged retaliation claims; and ERISA fiduciary breach and denial of benefits claims. Mr. Berkowitz also advises on employment contracts and restrictive covenants. He has litigated employment law cases in courts and administrative agencies throughout the , and handles arbitrations in tribunals in the and overseas. Mr. Berkowitz conducts training, counsels employers on preventing personnel disputes, and advises on personnel policies, severance plans, and related procedures.