Court Finds Counsel Should Have Been Aware of Need for More Substantial Discovery Effort
Sofaer Global Hedge Fund v. Brightpoint, Inc., 2010 WL 4701419 (S.D. Ind. Nov. 12, 2010). In this corporate litigation, the defendants sought to compel production to which the plaintiff objected claiming that producing documents from the French corporation’s possession would violate French law, that some of the sought-after documents do not exist and that it should not be required to search for documents in files other than those in possession of its principal. Addressing these arguments, the court found the documents belonging to the wholly-owned French subsidiary to be within the plaintiff’s control and cited the lack of arguments given regarding the potential violation of French law in ordering their production. Next, the court determined that the search of the principal’s files – by the principal himself – was not thorough based on “the paucity of documents” found and ordered the plaintiff to search electronic and paper files of additional employees. Addressing the issue of sanctions, the court held that “the scant amount” of documents acquired through the plaintiff’s search process, the inability to locate highly relevant and responsive documents and the overall resistance to discovery, “should have alerted counsel that a more substantial effort must be made to search for and locate responsive documents”, and awarded partial attorneys’ fees accordingly.
The world in which we live is rapidly becoming globalized. No longer do oceans create boundaries over which communication is impractical. Today’s lawyers and corporations are responsible for litigation without borders and discovery without language barriers. Cross-border discovery disputes can create headaches and issues, and must be approached in an educated and diligent manner.
In the case above, plaintiff’s counsel was apparently not well-versed in the delicate dance of international discovery as the court noted counsel did not tell the court “what the French Blocking Statute even says, nor has it explained the risk it would actually face if it obtained documents possessed” by the French corporation and produced them (emphasis in the original). Indeed, plaintiff’s counsel was contradictory at times noting at one point that discovery would not require resort to Hague Convention procedures and then completing a 180 degree spin to argue the defendant should prove the French Blocking Statute was not an obstacle to discovery.
In addressing this issue, courts in other jurisdictions have used an important decision from the United States Supreme Court in 1987, Societe Nationale Industrielle Aerospatiale v. United States District Court. In this case, the Supreme Court found the United States has an interest in adjudicating disputes and that American courts are not required to adhere blindly to the directives of foreign blocking statutes. One court that applied that decision is the District of Utah in a January 2010 opinion, AccessData Corporation v. Alste Technologies. This case involved an argument made by a German company in regard to a production request. The German company argued compliance would violate the German Data Protection Act subjecting the company to civil and criminal penalties under the German Blocking Statute. Ordering compliance, the District of Utah found that even if disclosure was prohibited, past courts have held that blocking statutes do not deprive U.S. courts of the power to compel production from a foreign party subject to its disclosure.
There are several more examples from recent case law that highlight a similar trend. What can counsel do to prepare themselves for international discovery? Educate, educate, educate. Familiarity with nation-specific laws is a necessity, and counsel should be fully aware of foreign laws and restrictions to ensure compliance when approaching a cross-border discovery dispute. The key is to anticipate the conflicts, recognize them when they arise and choose an appropriate resolution based on the facts and circumstances of each individual case.