When U.S. e-Discovery Travels Through the Americas

By: Annie Rosenthal, 2L

(Source: http://www.hightechnologyforensics.com/services/electronic-discovery/)

In today’s world, companies can easily conduct business with just a click on a mouse, touchpad, or smartphone screen. As convenient as this appears, it poses a problem during litigation involving multinational corporations that rely heavily on the use of technology and electronically stored information (ESI). Federal Rule of Civil Procedure 34 allows for a litigant to request relevant documents, no matter the form. The issue emerges when the requested electronic documents are in the legal possession of that corporation’s foreign branch.

Many foreign countries, including those in Latin America, have blocking statutes in place which restrict the extraterritorial transfer of documents. For example, in 2018, Brazil passed the  Lei Geral de Proteção de Dados (LGPD), which limits the transfer of ESI to only countries that provide a similar level of data protection as the LGPD. But the law did not detail how this would be determined, or who would determine whether the protections were sufficient. Rules of this nature leave U.S. litigants at risk when faced with cross-border electronic discovery.

Rule 34 specifies that for a proper discovery request, the documents must be in the responding party’s possession, custody, or control. But when the requested ESI is in the legal possession of a branch located in one of the foreign countries that have blocking statutes – who has control for purposes of U.S. litigation?

The Eleventh Circuit has held that control is “defined not only as possession, but as the legal right to obtain the documents requested upon demand.” However, the United States Supreme Court has previously held that a foreign nation’s blocking statute does not deprive American courts of power to order a party subject to its jurisdiction to produce evidence. The Supreme Court held this to be true even though producing the documents may violate that blocking statute. However, because responding parties are unable to retrieve the documents from foreign jurisdictions, they are subject to a risk of sanctions under Rule 37(b)(2)(A).

Admittedly, if U.S. courts allowed parties to use foreign blocking statutes to avoid producing electronic data requested during discovery, this might incentivize multinational corporations to act in bad faith and store an overwhelming majority of their electronic data outside the jurisdiction of U.S. courts.

But, as it stands today, regardless of how a multinational corporation chooses to structure its business, when it comes to Rule 34, all forms of data are subject to the same obligations of discovery. In preparing for future litigation, today’s technology-driven companies must consider the structure of the electronic systems in which they rely. And more generally, the legal community is in desperate need of a uniform process to conduct the discovery of ESI during litigation with parties overseas. Without a more consistent and reliable solution to effectively conduct litigation with multinational corporations, attorneys for these corporations will have to decide between breaking foreign laws or receiving U.S. sanctions.

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