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The Global Courtroom:Discovery of Foreign Documents in U.S. Products Liability Litigation

Lori Cohen, Esq., Christiana Jacxsens, Esq., Jackie Tambone, Esq., Chelsea FreemanGreenberg Traurig, LLP1

I. Introduction

The laws of discovery in the United States provide for expansive and far-reaching

discovery obligations from parties that may include the production of documents from foreign

parties. Foreign documents can often be at issue in U.S. products liability litigation in light of

the complex nature of corporate structure and distribution chains and relationships. U.S. product

manufacturers and distributors may have parent companies located outside of the U.S. Products

involved in U.S. products liability litigation may have been designed, tested, manufactured,

inspected, labeled or packaged outside of the U.S. Corporate entities outside of the U.S. may be

involved in customer service, complaint handling or product surveillance.

The threshold inquiry for compelling the production of documents is control and not

location.2 A foreign parent company possessing documents relevant to litigation in the U.S. may

be compelled to produce those documents as long as the party subject to the jurisdiction of the

U.S. court has “control” over the documents possessed by the foreign company.3 U.S. courts

1 Lori Cohen is Chair of Greenberg Traurig's Trial Practice Group, as well as its Pharmaceutical, Medical Device &Health Care Litigation Practice. She is also Co-Chair of its Atlanta Litigation Practice. Christiana Jacxsens, a shareholder in Greenberg Traurig’s Atlanta office, concentrates her practice on complex medical and products liability litigation, with a focus on pharmaceutical and medical device litigation. Jackie Tambone, an associate in Greenberg Traurig’s Boston office, focuses her practice on a range of litigation matters, including products liability, commercial litigation, complex business disputes, and white collar criminal matters. Chelsea Freeman is a law clerk in Greenberg Traurig’s Atlanta office and part of the firm’s Pharmaceutical, Medical Device & Health Care Litigation Practice.

2 See Marc Rich & Co., A.G. v. United States, 707 F.2d 663, 667 (2d Cir. 1983) (“[t]he test for production of documents is control, not location.”; see also Hunter Douglas, Inc. v. Comfortex Corp., 1999 WL 14007, at *3 (S.D.N.Y. Jan. 11, 1999) (test to determine whether a corporation has custody and control over documents located with an overseas affiliate is not limited to whether corporation has a legal right to those documents; rather, the test focuses on whether corporation has “access to the documents” and “ability to obtain the documents”.).3 Jayne Risk, Nika Gembicki, & Emma Karabell, Commentary, Crossing International Borders in Pursuit of Evidence: Electronic Discovery on a Global Scale, 25 No. 22 Andrews Toxic Torts Litig. Rep. 6 at *1 (2007).

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implement the “control” analysis on a case-by-case basis with the burden of proving “control” on

the requesting party.4 However, with the ever-increasing amount of electronic data and

documents, the analyses related to control and possession can be complex. To further complicate

the question of discoverability of foreign documents, discovery laws in other countries often

conflict with the U.S. discovery laws or impose additional constraints and burdens.

This article will analyze the applicable U.S. law related to discovery of foreign

documents and the interaction with foreign discovery law in products liability litigation.

II. Foreign Documents and the Scope of United States Discovery Obligations

Generally, courts have found that the broad scope of discovery under the Federal Rules of

Civil Procedure (“FRCP”) may include foreign documents. FRCP 26(b)(1) provides that unless

otherwise limited by court order, the scope of discovery is as follows:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.

Rule 26 also sets out specific limitations on electronically stored information (“ESI”)5 as

follows:

A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery

4 Sec. & Exch. Comm'n. v. Credit Bancorp, Ltd., 194 F.R.D. 469, 471 (S.D.N.Y. 2000); see also, Linde v. Arab Bank, PLC, 262 F.R.D. 136, 141 (E.D.N.Y. 2009) (requesting party has burden to prove that documents held by foreign parent are within local subsidiary's control).5 ESI is defined broadly under the FRCP, including “…writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations – stored in any medium from which information can be obtained either directly or, if necessary, after translation by the responding party into a reasonably usable form[.]” FRCP 34(a)(1)(A).

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is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery.

FRCP 26(b)(2)(B).

In product liability cases, several courts have found that foreign documents are not

exempt from the scope of discovery under FCRP 26(b)(1) merely on the basis of being located or

generated in a foreign country.6 In denying a motion to compel production of foreign

documents, adverse event reports and product surveillance documents, the In re Benicar court

held it was “not foreclosing an Order directing defendants to respond to appropriate document

requests asking for relevant [Defendant company] Europe documents that have not already been

produced.”7 The court explained that “[g]iven the stakes in the litigation, the interests of justice

weigh in favor of authorizing limited additional document discovery but only if plaintiffs show

that materially relevant [Defendant company] Europe documents impacting the interests of 1800

plaintiffs have not already been produced.”8 Similarly, the court in Burrow v. Forjas, Taurus

S.A. and Braztech Int’l, L.C., 2017 WL 2620067 (S.D. Fla. June 16, 2017) ruled in favor of

production of Brazilian foreign documents related to the design, manufacturing and distribution

of the revolver product at issue, noting that “depriving plaintiffs of the information sought while

the foreign sovereign had full access, would not only place the parties on unequal footing, but

6 See In re Benicar (Olmesartan) Products Liability Litigation, 2016 WL 5817262 (D.N.J. Oct. 4, 2016); Ney v. Owens-Illinois, Inc., 2016 WL 7116015 (E.D. Pa. Dec. 6, 2016) (court ruled in favor of a limited production of foreign documents related to the sale and supply of asbestos fibers despite a Canadian blocking statute; court specifically stressed important interest of U.S. in protecting its citizens from harmful products); see also7 In re Benicar (Olmesartan) Products Liability Litigation, 2016 WL 5817262 at *7.8 Id. at * 14 (citing Consejo,de Defensa Del Estado de la Republica de Chile v. Espirito Santo Bank, No. 09-20613-CV, 2010 U.S. Dist. LEXIS 142758, 2010 WL 2162868, at * 2 (S.D. Fla. May 26, 2010) .

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would impede a full and fair adjudication of the matter.”9 Thus, while the scope of discovery

under Rule 26 does not foreclose discovery of foreign document generally, courts have limited

the extent of production of foreign documents based on other grounds, including whether the

requests for the documents were sufficiently narrow or tailored and whether the requested

documents were relevant to the claims and defenses and proportional to the needs of the case.

III. Compelling U.S. Discovery from Foreign Companies

The Federal Rules also set out the process by which parties in litigation in the U.S. may

compel discovery of foreign documents. FRCP 34(a)(1)(A)-(B) provides that a party requesting

discovery may serve on any other party a request within the scope of Rule 26(b), outlined above,

to do the following:

(1) To produce and permit the requesting party or its representativeto inspect, copy, test, or sample the following items in the responding party's possession, custody, or control:(A) Any designated documents or electronically stored information – including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilation – stored in any medium from which information can be obtained either directly or, if necessary, after translation by the responding party into a reasonably usable form; or(B) any designated tangible things.

FRCP 34(a)(1)(A)-(B) and FRCP 37 provides for the filing of a motion to compel based on the

failure to respond to discovery. Courts which have ruled on a motion to compel foreign

documents have relied heavily on analyses based on FRCP’s mandate that the documents

requested are “in the responding party’s possession, custody, or control.”

A. Possession and Custody Analysis

The responding party is responsible for all items in “the responding party's possession,

custody, or control.” FRCP 34(a)(1). However, actual possession, custody or control is not

9 Burrow, 2017 WL 2620067, at *2.

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required; rather, “[a] party may be ordered to produce a document in the possession of a non-

party entity if that party has a legal right to obtain the document or has control over the entity

who is in possession of the document.”10 Per the Sedona Conference, “a responding party will

be deemed to be in Rule 34 or Rule 45 ‘possession, custody, or control’ of the Documents and

ESI when that party has actual possession or the legal right to obtain and produce the Documents

and ESI on demand.”11

Although the terms “possession” and “custody” are straightforward and generally do not

present issues for discovery analysis, in today’s world of cloud hosts and servers, the relationship

between a party in litigation and the individual or entity that actually “possesses” potentially

relevant documents and ESI has become complex and multi-faceted.12 Generally, when a

challenge is raised about whether a responding party has Rule 34 or Rule 45 “possession,

custody, or control” over documents and ESI, the court may apply the modified “business

judgment rule” factors that, if met, would allow certain, rebuttable presumptions in favor of the

responding party.13 Under the rule, the requesting party bears the burden to show that the

responding party's decisions concerning the location, format, media, hosting, and access to

documents and ESI lacked a good faith basis and were not reasonably related to the responding

party's legitimate business interests.14

B. Control Analysis

10 Conforto v. Mabus, No. 12CV1316-W BLM, 2014 WL 3896079, at *8 (S.D. Cal. Aug. 8, 2014) (citing Soto v. City of Concord, 162 F.R.D. 603, 619 (N.D.Cal.1995).11 The Sedona Conference Commentary on Rule 34 and Rule 45 “Possession, Custody, or Control” (2016), A Project of The Sedona Conference Working Group on Electric Document Retention & Production (WG1). 17 Sedona Conf. J. 467, 491 (2016)12 Id. at 469-70.13 Id. at 469.14 Id.

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The control analysis is a bit more complex, as “control” has been established by courts in

several different and meaningful ways. The differing approaches maintained by the courts have

led to a lack of clarity for lawyers and litigants, specifically because businesses and individuals

conduct business nationwide and litigation may be brought in courts throughout the country.

“Control” is defined broadly by the courts. For example, courts have compelled parties to

produce documents over which that party did not have legal ownership or actual physical

custody.15 Indeed, courts have held that a party is deemed to have “control” over documents

“when that party has the right, authority or practicable ability16 to obtain the documents from a

nonparty to the action.”17 Courts have found a subsidiary to have “control” over documents held

by its parent corporation and vice-versa.18 Further, a company’s ability to demand and access

documents in the normal course of business gives rise to the presumption that such documents

are in the litigant corporation’s realm of “control.”19

There are five (5) factors that courts have analyzed in determining whether a corporate

party has the requisite “control” over documents held by a non-party, each of which is discussed

in turn below: (1) commonality of ownership; (2) corporate intermingling; (3) benefit to non-

party; (4) non-party involvement in litigation; and (5) regular exchange of documents.20

1. Commonality of Ownership

In Power Integrations, Inc., v. Fairchild Semiconductor Int’l, Inc., the court held that

although parent corporations have been required to produce documents held by their subsidiaries,

15 In re NTL Inc. Sec. Litig., 244 F.R.D. 179, 195 (S.D.N.Y. 2007).16 Courts have applied this standard by requiring a corporation to make an attempt to obtain responsive documents before insisting that the documents are not within the corporation's control. Export-Import Bank of U.S. v. Asia Pulp and Paper Co., 233 F.R.D. 338 (S.D.N.Y. 2005).17In re NTL Inc.,244 F.R.D. at 195.18 194 F.R.D. at 472.19 In re Benicar (Olmesartan) Products Liability Litigation, 2016 WL 5817262, * at 6. 20 181 F.R.D. at 305-06.

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the converse is not true.”21 According to that court, a subsidiary, by definition, does not control

its parent corporation.22 Further, the separate and distinct corporate identities of a parent and its

subsidiary are not readily disregarded, except in rare circumstances justifying the application of

the alter ego doctrine to pierce the corporate veil of the subsidiary.23 The court concluded that

the relationship between the U.S. subsidiary and foreign parent was not the type of relationship

that would justify disregarding the discrete, corporate identity of the U.S. subsidiary. The court

specifically referenced the fact that foreign parent and U.S. subsidiary function as separate

entities in the business world.24 The relationship between the two is merely a vendor relationship

such that U.S. subsidiary does not utilize the foreign parent’s information in the normal course of

business to reasonably conclude that it has “control” over the foreign parent’s information.25

However, other courts have found the opposite that a subsidiary did have “control” over

documents held by its parent corporation.26 In particular, courts have also found “control” where

the subsidiary was an agent of the parent company involved in the lawsuit, such as negotiating or

engineering the deal involved in the transaction.27 In Alcan International Ltd. v. S.A. Day Mfg.

Co. Inc.,28 the court found that the plaintiff had “control” over foreign affiliate documents as well

21 233 F.R.D. 143, 145 (D. Del. 2005).22 Id. 23 Id. 24 Id.25 Id. at 146. 26 194 F.R.D. at 472.27 Camden Iron & Metal, Inc. v. Marubeni Am. Corp., 138 F.R.D. 438, 443 (D.N.J. 1991); see also Dieterich v. Bauer, 198 F.R.D. 397, 401 (S.D.N.Y. 2001) (evaluating “control” by assessing the ownership between the entities, establishment of common policies between the entities, the overlap between the managing executives of the entities, and the exercise of control over the operations of the other entity); but see, In re Uranium Antitrust Litigation, 480 F. Supp. 1138, 1144 (N.D. Ill. 1979) (assessing factors such as: parent's ownership share in the subsidiary or affiliated corporation; whether corporations had interlocking management structures; and degree of control exercised by parent over the subsidiary's officers and employees).28 Alcan International Ltd. v. S.A. Day Mfg. Co. Inc., 176 F.D.R. 75 (W.D.N.Y. 1996).

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as the ability to depose employees29 because the corporations were corporate members of a

unified worldwide business “under common control” of another corporation.30 The court stated

that there should be a focus on the nature of the relationship between the two corporations when

analyzing “control” as to be discoverable under the FRCP.31 “[T]he nature of the transactional

relationship between the [corporate entities]” is essential to determine whether a court should

order that discovery be compelled.32 In Alcan, it was determined that “common control” existed

not only because of the manufacturer-distributor relationship, but also because the corporation

that controlled both corporations issued a consolidated annual financial report.33 Additional

evidence of common ownership was that the two entities used the same corporate logo and had

regular contact with each other.34

2. Corporate Intermingling

In Gerling Int'l Ins. Co. v. C.I.R.,35 the court found “control” to exist when the litigating

corporation is the subsidiary and the parent possesses the records, and where the “alter ego”

doctrine36 warranted piercing the corporate veil.37 Similarly, the litigating subsidiary in In re

Uranium Antitrust Litigation38 was held responsible for the documents possessed by the

Canadian parent where evidence established that corporations “operated as a single functional

unit in all aspects of their uranium business” and “have shared an interlocking structure of

29 But see In re Benicar (Olmesartan) Products Liability Litigation, 2016 WL 5817262 (There is no textual basis in the federal rules for the argument that the ‘control’ test is applicable to the court's consideration regarding [the] request to depose individual witnesses pursuant to Fed. R. Civ. P. 30).30 Alcan, 176 F.D.R. at 78–9. 31 Id. at 78.32 Id.33 Id. at 79. 34 Id.35 Gerling Int'l Ins. Co. v. C.I.R., 839 F.2d 131 (3d Cir. 1988).36 181 F.R.D. at 305 (recognizing substance over form and will ignore separate corporate entities to protect against fraud and deceit.). 37 839 F.2d at 140.38 In re Uranium Antitrust Litigation, 480 F.Supp. 1138 (N.D.Ill.1979).

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corporate directors, officers, and executive and administrative personnel who have managed the

uranium-related activities of both corporations."39 Additionally, courts have also found the “alter

ego” doctrine and veil-piercing appropriate where the two corporations shared the same

stockholders and directors and where the subsidiary was an agent of the parent in the transaction

giving rise to the suit and was litigating on the parent corporation's behalf.40

3. Benefit to Non-Party

Courts have found “control” where the non-party benefitted from the transaction of the

underlying suit41 or where the non-party would benefit from the outcome of the litigation.42 In

Peerless Indus., Inc. v. Crimson AV, LLC, the court found that “control,” for purposes of

implicating a deposition and request for production of documents directed a foreign national who

is not an employee or officer of the responding party under FRCP 30 governing depositions, is

found when such foreign national is considered a “managing agent” of the responding party.43

The court found that the foreign national was the principal of both responding parties, thus there

was “close coordination between the companies” such that the responding party must produce

the deposition and requested documents.44 The court reasoned that the separation of two

companies “cannot be used as a screen to disguise the coordinated nature of their business.”45 In

Mt. Hawley Ins. Co. v. Felman, an insurance company’s motion to compel was granted where

the subsidiary had “control” over documents related to the parties’ claims and defenses since the

39 Id. at 1152-53.40 Advance Labor Service, Inc. v. Hartford Accident & Indemnity Co., 60 F.R.D. 632, 634 (D.C. Ill. 1973).41 Peerless Indus., Inc. v. Crimson AV, LLC, 2013 WL 1195829 (N.D. Ill. Mar. 22, 2013) (considering factor in context of quasi parent/subsidiary relationship where two entities were so closely coordinated that the non-party benefited from outcome of underlying transaction will feel benefits or burdens of any award in case).42 Mt. Hawley Ins. Co. v. Felman, 269 F.R.D. 609 (2010) (considering factor in context of parent/subsidiary relationship where the non-party would experience the benefits and/or burdens of the outcome underlying transaction).43 Peerless Indus., Inc., LLC 2013 WL 1195829, at *5.44 Id. at *4.45 Id. at *11–2.

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entities operated the subsidiary as if it were their sole proprietorship.46 The court particularly

noted that the subsidiary had little independence, as the documents were entirely within the

custody of the representatives Ukrainian entities.47

4. Non-Party Involvement in Litigation

Analysis of a foreign non-party’s involvement in the litigation may turn on factors such

as whether the foreign parent corporation manufactures the product involved in the litigation48 or

whether the parent corporation physically holds the contracts relevant to the case.49 Courts have

found “control” where the non-party foreign parent corporation manufactured the devices

involved in the lawsuit and provided them to the subsidiary to sell and distribute in the U.S.50

Additionally, where a foreign parent corporation had originally produced the requested

documents in a different action as a co-defendant with the subsidiary, the subsidiary would have

the “legal” right to obtain and subsequently produce the requested documents in a separate action

where the foreign parent corporation is non-party to the suit.51

5. Regular Exchange of Documents

Courts will also focus their determination on whether an entity has “control” over

documents by analyzing the corporation's ability to obtain documents held by the other

corporation and whether those documents “flow freely” between the two entities.52 In Zenith

Electronics, LLC v. Vizio Inc.,53 the court held that a domestic subsidiary did not have “control”

over its parent's documents, where the only evidence of “control” was the parent-subsidiary

46 See 269 F.R.D. 609 (2010).47 Id. 48 Orthoarm, Inc. v. Forestadent USA, Inc., 2007 WL 1796214, at * 2 (E.D. Mo. 2007).49 M.L.C., Inc. v. N. Am. Philips Corp., 109 F.R.D. 134, 138 (S.D.N.Y. 1986).50 Orthoarm, 2007 WL 1796214 at *3.51 109 F.R.D. at *138; see also, DeSmeth v. Samsung Am., Inc., 1998 WL 74297, at *10 (S.D.N.Y. 1998) (finding “control” where subsidiary had already produced documents that were clearly from foreign parent).52 Linde, 262 F.R.D. 136 (2009) (holding routine exchange of limited documents between affiliated entities not enough to establish “freely flowing” documents to prove “control”). 53 Zenith Electronics, LLC v. Vizio Inc., 2009 WL 3094889 (S.D.N.Y. Sept. 25, 2009).

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relationship and the subsidiary's request to the foreign parent for the documents that were

requested.54 The court reasoned that there was no showing of “control” because the subsidiary

did not have the ability to access the parent's documents in the ordinary course of business

because the two companies maintained separate records and archives.55

A party will also be deemed to have “control” over the documents of a parent if there is

“demonstrated access” to the parent’s documents, meaning that the corporation has the ability or

had previously obtained the documents from the parent.56 Additionally, a party may be found to

have “control” over a non-party's documents if the entity stores its ESI on a third party server

and the party has the exclusive and complete access to the documents on that third party server.57

For example, in Nycomed U.S.,58 the party argued that it did not have control over the

documents on the server database, which a third party owned and managed offsite.59 The court

found that the party had “control” over the third server database because a “handful” of the

party's employees were able to access the server through password-protected accounts to modify

and access documents, while the third party had never touched the documents.60 In Hageman,61

the court stated that it did not matter in the “control” analysis that the agreement between the

party and the third party server corporation stated that the third party server corporation had

ownership over the documents since the party's employees could access the documents on the

server.62 Additionally, courts have also found that although a party's ESI was “temporarily”

54 Id. at*1.55 Id. at *2; but see, Hunter Douglas, Inc. v. Comfortex Corp., 1999 WL 14007 (S.D.N.Y. Jan. 11, 1999) (finding documents ordinarily flow freely between corporations because of the nature of the affiliate relationship).56 Zenith, 2009 WL 3094889 at *1.57 Nycomed U.S. Inc. v. Glenmark Generics Ltd., 2010 WL 3173785, at *7 (E.D.N.Y. Aug. 11, 2010).58 Id.59 Id. 60 Id.61 Hageman v. Accenture, LLP, 2011 WL 8993423 (D. Minn. 2011).62 Id. at 4.

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stored by another party, the party retained “control” since it could “manipulate at will how the

[information was] routed.”63

In Cooper Indus. v. British Aerospace Inc.,64 the court held that the documents of the

parent corporation were in “control” of the defendant because the defendant was the distributor

for the parent corporation in the U.S. and also had access and the ability to obtain the documents.

In Cooper, the plaintiffs sought all documents that related to the planes involved in the product

liability action, including service manuals and blueprints, which the defendants had unlimited

access to since they sold and serviced them in the U.S every day.65 The court further reasoned

that it would be “inconceivable” that the defendant would not have the access to the documents

and the ability to acquire the documents for its normal course of business.66 Thus, if documents

are regularly exchanged between the U.S. and foreign parent subsidiary in the ordinary course of

business or utilized by the U.S. subsidiary in its routine business, it will be deemed to be under

the “control” of the U.S. subsidiary for discovery purposes.67

C. Accessibility Analysis

Once a court determines the party has “control” over the documents, it next must

determine whether the requested documents are accessible.68 The Zubulake court determined

that “accessible” ESI includes active online data, “near-line” data on removable media and

63 Cyntegra, Inc. v. Idexx Laboratories, Inc., 2007 WL 5193736, at *5 (C.D. Cal. 2007) aff'd, 322 F. App'x 569 (9th Cir. 2009) (citing Columbia Pictures Indus. v. Bunnell, 2007 U.S. Dist. LEXIS 46364, at *25 (C.D. Cal. May 29, 2007).64 Cooper Indus. v. British Aerospace Inc., 102 F.R.D. 918 (S.D.N.Y. 1984).65 Id. at 919.66 Id. at 919–20.67 Cooper Indus. v. British Aerospace Inc., 102 F.R.D. 918, 919 (S.D.N.Y. 1984) (finding documents of parent corporation in “control” of defendant because defendant was distributor of parent corporation in U.S. and had access and ability to obtain documents).68 Zubulake v. UBS Warbug LLC, 217 F.R.D 309, 318 (S.D.N.Y. 2003) (Zubulake I).

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offline storage/archives.69 However, accessibility demands more precise scrutiny than answering

the question whether a foreign jurisdiction has in place procedures to compel document

discovery.70 An assessment of the importance and relevance to the requesting party’s case is

critical in the accessibility analysis.71

The court in Ex parte Cooper Tire and Rubber Co.72 outlined nine factors that aid in the

aforementioned analysis.73 There, the court deemed it imperative to consider: (1) the likelihood

of discovering critical information; (2) the availability of such information from other sources;

(3) the amount in controversy as compared to the total cost of production; (4) the parties’

resources as compared to the total cost of production; (5) the relative ability of each party to

control costs and its incentive to do so; (6) the importance of the issues at stake in the litigation;

(7) the importance of the requested discovery in resolving the issues at stake in the litigation; and

(8) the relative benefits to the parties of obtaining the information. The court reiterated that the

presumption stands that the responding party will pay for the discovery requests unless that party

demonstrates that the costs should be shifted to the plaintiffs.74 Furthermore, the location and

language of such documents and the need to resort to a comparatively more restrictive process

are also germane.75 Likewise, the need of a party to avail itself of the compulsory process is

properly considered upon a showing that the compulsory process is necessary.76 FRCP

26(b)(2)(B) states that a “party need not provide discovery of [ESI] from sources that the party

69 Id. at 320.70 Hefferan v. Ethicon Endo-Surgery Inc., 828 F.3d 488, 499 (2016). 71 See Ex Parte Cooper Tire and Rubber Co., 987 So.2d 1090,1106 (2007).72 See generally, 987 So.2d 1090 (2007).73 Id. at 1106. 74 Id. 75 Hefferan, 828 F.3d at 488. 76 Id.

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identifies as not reasonably accessible because of undue burden or cost.”77 The rule also

provides that discovery requests can be limited if they are “unreasonably cumulative or

duplicative” or when the documents can be obtained through a more convenient source.78 Courts

have still required production of alleged “inaccessible” documents, but at the cost of the

requesting party.79

D. Compelling Documents Under the Restatement (Third) of Foreign Relations Law

The Restatement (Third) of Foreign Relations Law provides that a court or agency should

apply a five part test when deciding to issue an order directing production of documents located

outside of the U.S:80

(1) The importance to the investigation or litigation of the documents or other information requested; (2) The degree of specificity of the request; (3) Whether the information originated in the United States; (4) The availability of alternative means of securing the information; and (5) The extent to which noncompliance with the request would undermine important interests of the United States, or compliance with the request would undermine important interests of the country where the information is located.

Restatement (Third) of Foreign Relations Law §442(1)(c) (1987). The analysis of the court in In

Re Xarelto (Rivaroxaban) Prods. Liab. Litig. exemplifies how the five factors of the Third

Restatement can provide a court with the applicable framework for determining a motion to

77 Fed. R. Civ. P. 26(b)(2)(B). 78 Id. 79 Zubulake, 217 F.R.D at 320.80 See Ney v. Owens-Illinois, Inc., 2016 WL 7116015 (E.D. Pa. Dec. 6, 2016) (court ruled that all 5 factors weigh in favor of production of foreign documents despite a Canadian blocking statute; the court specifically stressed important interest of the United States in protecting its citizens from harmful products); see also Burrow v. Forjas, Taurus S.A. and Braztech Int’l, L.C., 2017 WL 2620067 (S.D. Fla. June 16, 2017) (court ruled that all 5 factors weigh in favor of the production of Brazilian foreign documents, noting that “depriving plaintiffs of the information sought while the foreign sovereign had full access, would not only place the parties on unequal footing, but would impede a full and fair adjudication of the matter”).

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compel foreign documents.81 The court noted at the outset that a “district court is only directed

to determine whether foreign discovery procedures are appropriate after scrutiny in each case of

the particular facts, sovereign interests, and likelihood that a resort to these procedures would

prove effective.”82 First, the court evaluated the importance of the requested discovery to the

litigation and determined that the evidence must be critical or compelling.83 The court found that

the information sought - personnel files of German employees who were leaders of the

applicable business units for the product in question - arose to the status of “critical” and thus

would be relevant to a finding of compelling support for the requesting party’s theory of the

case.84 Next, the court addressed the degree of specificity of the request, noting that the

requesting party did not seek the entirety of the personnel files, but rather easily identifiable

materials from within them.85 The court concluded that no persuasive argument of burden was

applicable, thus this factor weighed in favor of production.86 Subsequently, the court considered

whether the information originated in the U.S.87 Here, the entirety of the requested documents

originated outside of the U.S.88 However, the court concluded that this factor held limited

weight, specifically referencing the fact the responding party voluntarily entered into a

commercial partnership with the requesting party, such that it availed itself of U.S. markets.89

Thus, the requesting party could not sufficiently allege that it was caught unaware because “the

transfer of blockbuster profits to Germany continu[ed] unabated.”90

81 2016 U.S. Dist. LEXIS 95453 at *41.82 Id. at 41–2.83 Id. at 43. 84 Id. at 46.85 Id. at 47.86 Id. at 48.87 Id. 88 Id. 89 Id. 90 Id. at 49.

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The court followed up with an inquiry into the availability of alternative means to procure

information. Specifically, the court stated “if the information sought c[ould] easily be obtained

elsewhere” the requesting party’s request is inappropriate. However, the inquiry is confined to

whether or not the information could be obtained elsewhere. The quantity of documents already

held by the requesting party is irrelevant. When the desired material is both highly probative and

not readily obtainable, the balancing scale tips in favor of production.”91 Finally, the court

considered the balance of national interests.92 The court noted that the interests of the foreign

state are demonstrated by: (1) expressions of interest by the foreign state; (2) the significance of

disclosure in the regulation of the activity in question; and (3) indications of the foreign state’s

concern for confidentiality prior to the controversy.93 The court noted that often “foreign

countries, particularly civil law countries, do not subscribe to open-ended” pretrial discovery

procedures.94 Here, the court was forced to consider the “national interest” within the context of

the German Data Protection Act, under which Germany manifests a weighty national interest in

protecting the personal data of German citizens in their employee capacity.95 However, the court

concluded that this interest has limits.96 The presence of a clearly compelling state interest, such

as national security, would most heavily cut in favor of the responding party under this factor.97

Moreover, the criminal and civil penalties contained in the applicable foreign regulation

must impose more than a slight or speculative possibility of foreign enforcement for the balance

to tip in favor of non-disclosure.98 The onus is on the responding party to produce evidence

91 Id. 92 Id. at 51. 93 Id. 94 Id. at 51–2.95 Id. at 52.96 Id. at 53.97 Id. 98 BrightEdge Techs., Inc. v. Searchmetrics, Gmbh, 2014 U.S. Dist. LEXIS 112377, at * 15.

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sufficient to show that the foreign nation has imposed sanctions in response to compliance with a

U.S. court order.99 Here, the responding party failed to meet its burden because it failed to cite

any examples of the German entity being civilly or criminally prosecuted for the production of

personal data pursuant to a U.S. discovery order.100 The lack of evidence of this type is

significant when weighing the interests of foreign nations.101 Domestically, the U.S. has a

substantial interest in “vindicating the rights of American Plaintiffs.”102 As such, the court

concluded the balance of factors leaned toward production.103 That said, the general consensus

seems to be that “foreign governments . . . have usually not punished companies that obey a

U.S. court order and produce documents in violation of the law[,]” and as a result this defense in

response to discovery requests has carried little weight with American courts.104

IV. Conflicting US Discovery Laws and European Union Privacy Laws

A. Data Privacy in the European Union

As explained in the In re Xarelto decision, European data privacy laws may conflict with

U.S. discovery laws. The European Union Data Protection Directive Regulation (“Directive”)

was enacted in 1995. The Directive is a guideline adopted by many EU countries that allows the

Member States to determine the conditions under which the processing of personal data is lawful

in that particular country.105 This Directive makes data privacy a fundamental human right and

also requires the EU members to provide that privacy protection as a “right to privacy with

99 In Re Xarelto, 2016 U.S. Dist. LEXIS 95453, at *54.100 Id. 101 Id. 102 Id. at *55.103 Id. at *58.104 Court-Ordered Law Breaking: U.S. COURTS INCREASINGLY ORDER THE VIOLATION OF FOREIGN LAW, 81 Brooklyn L. Rev. 181, 221 (2015). 105 EU Data Protection Directive 95/46/EC (1995), article 5.

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respect to the processing of personal data.”106 The definitions outlined in the Directive give a

broader meaning to “personal data”107 and “processing”108 which encompasses a more expansive

definition than what is recognized in the United States under these terms. In May 2018, the

Directive will be replaced by the General Data Protection Regulation (“GDPR”) (Regulation

(EU) 2016/679), which is intended to strengthen and unify data protection for all individuals

within the EU. The main focuses of the GDPR are to harmonize the data privacy laws across

Europe but also update data privacy rules since much has changed in this area since 1995. The

GDPR will require that all businesses in the EU become compliant under the GDPR by May 25,

2020. This will also be applicable to non-US businesses that process the data of EU citizens

since the applicability will apply to personal data whether it is processed in the EU or not.

B. Hague Convention on Taking Evidence

Another international discovery law that affects the U.S. discovery process is the Hague

Convention on Taking Evidence (“Convention”), which was entered into in 1972 for the purpose

of bridging the gap between civil and common law systems.109 The Convention established the

procedures for transnational litigation in terms of discovery information. The United States and

53 other countries have acceded to the Convention, which states that the Contracting States agree

that the judicial authority in the contracting states “may […] request the competent authority of

another Contracting State, by means of a Letter of Request, to obtain evidence, or to perform

106 Directive article 9.107 Personal data includes, but is not limited to, social security numbers or medical information and “any information relating to an identified or identifiable natural person.” Directive article 2(a).108 Processing includes formatting conversions, re-duplication, filtering, indexing, as well as any collection or manipulation of data. Directive article 2(b).109 Risk et al., at *3.

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some other judicial act.”110 Article 23 of the Convention also states that the countries are

allowed to “declare that it will not execute letters of request issued for the purpose of obtaining

pre-trial discovery of documents.”111 Article 23 additionally provides that a Contracting State

may “declare that it will not execute letters of request issued for the purpose of obtaining pretrial

discovery of documents as known in common law countries.”112 The Convention allows for a

nation to deny a letter of request if it “considers that its sovereignty or security would be

prejudiced” by complying with the Letter of Request.113

The Supreme Court has addressed the conflict between the liberal Federal Rules of Civil

Procedure and the Hague Convention procedures in its 1987 decision in Societe Nationale

Industrielle Aerospatiale v. U.S. District Court for the Southern District of Iowa.114 In

Aerospatiale, the court held that the Convention was a “permissive supplement, not a preemptive

replacement, for other means of obtaining evidence located abroad.”115 The court recommended

that the lower courts conduct a balancing test on a case-by-case basis, taking into account the

following factors: the substance and effect of the discovery request, which includes the

importance of the information sought and the ability of the requesting party to obtain the

110 Hague Evidence Convention, Article 1. Letters of request are petitions from a court in one nation to a court in another nation for the purposes of requesting assistance in obtaining relevant information in that nation. Risk et al., at *3.111 Hague Evidence Convention, Article 23.112 Id.113 Hague Evidence Convention, Article 12. Additionally, most of the Contracting States have filed reservations under Article 23, which prohibits the production of any information, if that information is requested for pretrial discovery purposes in a common-law country. Risk et al., at *3.114 Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Ct. for the S. Dist. of Iowa, 482 U.S. 522 (1987). The defendant, a French-owned corporation, argued that the plaintiffs could not use the Federal Rules to obtain information, but must instead use the Convention. Id. at 525-26. Additionally, the defendant argued that it would violate French penal law if they were to comply with the discovery requests. Id. at 526.115 Id. at 536; see In re Yasmin and Yaz: (Drospirenone) Marketing, Sales Practices and Relevant Products Liability Litigation, 2011 WL 3759699 at *1 (the Supreme Court has concluded that district courts have complete discretion in resolving conflicts presented between the application of the Federal Rules of Discovery and the Hague Convention when assessing discovery requests effectuated in a foreign country and give rise to conflicts between U.S. and foreign law).

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information by other means.116 Ultimately, the court held that the Convention is neither a

mandatory nor exclusive mechanism to obtain information from another country during the

discovery process.117 Thus, since the court has set this precedent, U.S. courts have followed this

lead and have seldom required litigants to resort to the Convention procedure.118 However, the

Supreme Court has cautioned, under “certain circumstances,”119 a district court should give

deference to the laws of a foreign sovereign when doing so demonstrates “due respect for any

special problem confronted by the foreign litigant on account of nationality or location of

operation” or protects foreign litigants from “unnecessary, or unduly burdensome discovery”120

that runs counter to the benefits of the proposed discovery.

The Seventh Circuit ruling in Hagenbuch v. 36B Sistemi Elettronici Industriali S.R.L.,121

shows that the general disposition of district courts is to favor access to information when

weighing national and foreign interests.122 The court in Hagenbuch denied defendant's motion

for a protective order, which argued that the plaintiff should utilize the Convention for obtaining

the requested discovery.123 The court reasoned that U.S. interests are adversely affected by

following the Convention because the procedures are prolonged and result in a smaller amount of

discovery than what is acceptable in the U.S. court system.124 Interpreting the Convention to be

116 Id. at 544, n. 28. 117 Marissa L. P. Caylor, Modernizing the Hague Evidence Convention: A Proposed Solution to Cross-Border Discovery Conflicts during Civil and Commercial Litigation, 28 B.U. Int'l L. J. 341, 347 (2010).118 Article 29 Data Protection Working Party, Working Document 1/2009 on pre-trial discovery for cross border civil litigation; available at http://ec.europa.eu/justice_home/fsj/privacy/index_en.htm.119 In re Yasmin, at *2. 120 Aerospatiale, 482 U.S. at 546; see In re Bard IVC Filters Products Liability Litigation, 317 F.R.D. 562, 566 (2016) (concluding that burden and expense of searching ESI from 18 foreign entities over a 13-year period based on a mere possibility of finding a foreign communication was inconsistent with a United States communication and outweighs the benefit of proposed discovery). 121 Hagenbuch v. 36B Sistemi Elettronici Industriali S.R.L., 2005 WL 6246195 (N.D. Ill. Sept. 12, 2005).122 Risk et al., at *6. 123 Hagenbuch, at *4.124 Id. at*5. Additionally, the court reasoned that it did not believe that the “declared desire to limit pretrial discovery to be an important or compelling sovereign interest, as such an outcome would result in finding an

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the exclusive governing law of discovery abroad would be to undermine the “fair administration

of justice in American courts.”125 Such an interpretation creates unacceptable asymmetries that

“run counter to the fundamental maxim of discovery” that promotes mutual knowledge of all the

relevant facts gathered by both parties.126

C. “Blocking Statutes”

The third international discovery law that can conflict with U.S. discovery rules is the

“blocking statutes” that many EU countries have enacted, which limits the production of

documents within the country in addition to the procedures set out by the Convention. Examples

of some of these laws enacted by EU countries include requiring the local courts to conduct the

discovery process within its own borders for litigation abroad127 to criminal penalties in order to

prevent private parties from conducting discovery within the country for litigation abroad.128 In

2007, In re Advocat Christopher X129 became the first case where the French Supreme Court

upheld a conviction and fine under the French blocking statute to prosecute a French national for

not complying with the French Blocking Statute when facilitating the collection of evidence for

the use in a foreign judicial proceeding.130

important sovereign interest in every case. ” See also, Great Lakes Dredge & Dock Co., 1990 WL 147066, at *2 (refusing to find that a foreign sovereign's interest in protecting its nationals from discovery abuses is an important sovereign interest).125 Moake v. Source Intern. Corp., 263 N.J. Super. 455, 458 (1993). 126 Id.127 Article 271 provides: “Prohibited acts for a foreign state. (1) Whoever, without being authorized, performs acts for a foreign state on Swiss territory that are reserved to an authority or official, whoever performs such acts for a foreign party or another foreign organization, whoever aids and abets such acts, shall be punished with imprisonment and, in serious cases, sentenced to the penitentiary.” Schweizerisches Strafgesetzbuch [StGB], Code penal Suisse [CP], Codice penal svizzero [CP] {Penal Code] Decl. 21, 1937, SR 311.0, art. 271 (Switz.).128 Article 1A of the French Penal Law No. 80-538, provides: “Subject to treaties or international agreements and applicable laws and regulations, it is prohibited for any party to request, seek or disclose, in writing, orally or otherwise, economic, commercial, industrial, financial or technical documents or information leading to the constitution of evidence with a view to foreign judicial or administrative proceedings or in connection therewith.” 129 In re Advocat Christopher X, Cour de Cassation, Chambre Criminelle [Criminal Chamber of Supreme Court] Paris, Dec. 12, 2007, No. 07-83228.130 Id.; see Strauss v. Credit Lyonnais S.A., 242 F.R.D. 199, 228 (E.D.N.Y. 2007).

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The decisions in In re Vivendi Universal Securities Litigation131 and Buttitta v. Asbestos

Corp. Ltd.132 shed light on how the U.S. courts are treating the “blocking statutes” of the EU

countries. The court in In re Vivendi disagreed with the argument of the French non-party that

the French blocking statutes prevented compliance with the plaintiff's request for documents

located abroad.133 The court reasoned that the French blocking statutes were enacted in order to

show the French disapproval of the American pretrial discovery laws.134 Similarly, in Buttita, the

New Jersey Court of Appeals concluded that the blocking statute is only relevant to the extent

that its terms and its enforcement identify the nature of the sovereign interest.135 In other words,

neither the discovery order nor the blocking statute can have the same omnipresent effect that it

would have in a world of only one sovereign.136

V. Conclusion

It is not uncommon today to have a litigant company based in the U.S. while its parent

and/or subsidiaries are located abroad. Where the foreign parent and/or subsidiary company

designed, manufactured, tested, or inspected or performed other critical product activities, the

U.S. litigant may have discovery obligations pertaining to that data located abroad. When

representing a party in a products liability litigation, it is critical to know where a litigants

potentially relevant data is located - whether located in a domestic location or abroad - and

whether the data located abroad is duplicative of the data located in the U.S. so as to minimize

the costs and amount of data for processing and transferring in that foreign country. However,

131 In re Vivendi Universal S.S. Sec. Litig., 2006 WL 3378115 (S.D.N.Y. Nov. 13, 2006).132 Buttita v. Asbestos Corp. Ltd., 2006 WL 2355200 (N.J. Super. Ct. App. Div. Aug. 16, 2006).133 In re Vivendi, at *1.134 Id. at *3.135 Buttita, at *11. 136 Id.

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the inquiry does not end there. Outside counsel should determine with assistance of in-house

counsel:

The relationship between the entity in possession of the data and the U.S. litigant

both generally but also in the context of the product at issue;

The ability of the U.S. litigant to obtain the documents and the use of the

documents by the U.S. litigant for business purposes;

The ability of the U.S. litigant to regularly access and/or modify the documents;

and

The burden imposed on the U.S. entity to obtain the documents.

Further, once it is determined that potentially relevant data is located abroad, it is important that

U.S. counsel understand the differing and most times conflicting data privacy laws for that

specific country. Working in tandem with local counsel who specialize in privacy law in that

foreign country at issue is one way to avoid violation of the data privacy laws of that country.

As discussed above, the U.S. discovery laws are very liberal as compared to the discovery laws

abroad. It is equally important that U.S. counsel educate both the court and opposing counsel on

the potential legal hurdles and costs associated with the collection of data outside the U.S. To

the extent data is collected from the foreign parent and/or subsidiaries, additional protections,

such as protective orders, will likely need to be in place to secure the disclosure of foreign data

outside of the litigation.

In addition, counsel should also analyze the request for foreign documents as it would the

request for any documents related to the scope and burden of the request and whether the

documents are relevant to the claims and defenses in the case and whether the need for the

documents is in proportion to the case. Further, even with good basis for objecting to the

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production of foreign documents, counsel for U.S. litigants may consider waiving the objections

if the foreign documents are critical to the defense of the case.

It is clear that U.S. courts will likely be dealing with incompatible and inhibiting foreign

discovery laws for years to come. With conflicting rulings on how to navigate through these

discovery inconsistencies and the integral role these documents may play in a party’s position

and strategy in a case, counsel should make sure that they are apprised of the most current and up

to date applicable rulings for the litigation’s jurisdiction.