Globalization and the growing mountain of Electronically Stored Information
Globalization and the growing mountain of Electronically Stored Information (“ESI”) inevitably will lead to an increase in discovery requests for ESI located abroad. Companies are meeting the challenge of globalization by creating networks of electronic data that allow for employees around the world to connect to the same set of data wherever it is located.
Corporations are no longer focusing on the physical location where processing may be occurring but are using a ‘best shore' strategy where they put their resources in the right location, whether that's the Far East, U.K.., U.S., or Canada. But no consistent methodology exists for United States courts to evaluate whether discovery of ESI abroad is appropriate, and if so, the consequences for not complying with a discovery order.
Although international discovery is not a new problem, global companies, the growth of international data infrastructures, and the explosion of ESI will bring the issues of e-discovery to the forefront of international litigation. Courts will be faced with comity considerations and issues related to the burden and cost of e-discovery, as well as complex international data protection laws.
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. In many jurisdictions (notably, many countries in the European Union, which has adopted the EU Privacy Directive), it may be impossible to obtain the consent of employees; such consent often is considered to be inherently coerced due to the subordinate nature of the employee relationship.
The increase in globalization and ESI has led to legislation in foreign countries to protect the disclosure of certain information. Some of this legislation specifically has targeted the protection against production of data for litigation. A party seeking protection against compelled discovery, relying on the basis that foreign law bars the production, has the burden of proving that the foreign law actually prohibits production of the data at issue.
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 that are broader than discovery in virtually every other jurisdiction in the world, and the restrictions on the transmission of electronic data imposed by the EU Privacy Directive. Discovery in the United States is built on the well-founded premise that all information that "appears reasonably calculated to lead to the discovery of admissible evidence" is discoverable.
Ultimately, courts in the United States will need to develop and apply a consistent standard to decisions involving the discovery of international ESI.
The view on privacy varies internationally and is strictly regulated in many countries. For instance, the European Union Data Protection Directive establishes a regulatory framework around the movement and treatment of personal data in the European Union. In addition to the personal data protection laws, the European Court of Human Rights has found that the right to private communications in the workplace is a fundamental freedom covered under the Convention for the Protection of Human Rights and Fundamental Freedoms. Laws promulgated in compliance with the Data Protection Directive and the views in the EU on workplace privacy provide barriers to complying with e-discovery in the U.S.
The Data Protection Directive allows the transfer of personal data between countries only if the country receiving the data ensures an adequate level of protection. In response to the restrictive Data Protection Directive, the United States Commerce Department negotiated a “safe harbor” with the EU, which provides requirements that United States companies may choose to adhere to in order to participate in the free exchange of personal data with companies in the EU. Personal data has been broadly construed under the Data Protection Directive to include e-mail and other commonly requested ESI.
United States courts have found that privacy laws promulgated under the Data Protection Directive reflect a legitimate foreign interest that needs to be considered when deciding discovery issues.
In addition to privacy laws created under the Data Protection Directive, many countries view privacy in the workplace differently than the United States does. There is generally no expectation of privacy in workplaces in the United States, and so requesting and receiving e-mail in discovery is commonplace. In the EU, however, there is an expectation of privacy in the workplace, and so e-mail sent and received via work accounts may not be discoverable.
In a recent holding, the European Court of Human Rights found that under the European Convention for the Protection of Human Rights and Fundamental Rights, which provides that "everyone has the right to respect for his private and family life, his home and his correspondence," telephone calls and e-mails made by an employee from work fall within the Human Rights Convention's notion of "private life" because they may contain “personal information.” (European Convention for the Protection of Human Rights and Fundamental Rights Protocol #11, Article 8). In that case, the court found that the employer's monitoring of telephone calls and e-mails without notice violated the employee's human rights under the Human Rights Convention.
French courts also have evaluated these protocols in numerous cases, with the results typically following the same trend as the European Court of Human Rights in limiting an employer's ability to inspect an employee's e-mails, files, or computers, even when the employer has reason to suspect wrongdoing on the part of the employee. (Philippe K. v. Cathnet-Science, Cour de Cassation, Chambre Sociale). These holdings, combined with the Data Protection Directive's finding that personal data includes e-mail, raise some serious concerns about whether international law will prohibit discovery of foreign e-mail in United States litigation in the future.
In June 2007, in a case 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 a suspected Hamas-related charity that was, allegedly, a front for terrorism. They sought access to bank records reflecting the accounts of the alleged charity, correspondence between the bank and its customer, correspondence between the banks and government entities, and any internal reports 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 ven if the information is located outside the United States.
Historically, foreign blocking statutes have been one of the most common impediments to United States discovery of information located abroad. The scope of the statutes varies, but they generally prohibit production of documents and disclosure of information related to a particular topic or industry. Many blocking statutes were enacted specifically to thwart United States discovery. Courts recognize that blocking statutes, like the French Blocking Statute, have been constructed purposefully to provide foreign nationals with tactical weapons and bargaining chips in United States courts.
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