Once again a U.S. court has ordered production of overseas documents despite the objection of a party asserting that transfer of the data will result in a breach of European data protection laws.  In this case, AccessData Corp. v. Alste Techn. Gmbh, No. 2:08-cv-00569 (D. Utah Jan. 21, 2010), a federal magistrate judge granted a motion to compel defendant/counterclaimant Alste to produce certain customer records from Germany.  Alste had objected, arguing that production of this “private third party information” would subject Alste to civil and criminal penalties under the German Data Protection Act, and that the parties should instead proceed under Hague Convention procedures.  The court granted the motion to compel because it was unpersuaded that the German Act actually prohibited Alste’s compliance with the discovery request.  It also noted that foreign “blocking statutes” (a term it used overbroadly to describe the German Act, which unlike a true blocking statute does not serve solely to block foreign discovery) do not deprive American courts of the power to order the production of evidence.  Although the court ordered production of the documents, it did not reach the question of sanctions, and its opinion suggests ways that future parties in Alste’s position can bolster their arguments in favor of accommodating foreign law and/or proceeding through the Hague Convention.

Adequately briefing foreign law.  Alste did not provide the court very much support for its assertion that production of the documents at issue would violate the German Data Protection Act.  Alste submitted no expert affidavit or other evidence in support of its view of German law, and the court noted that Alste did not even cite to particular statutory or constitutional provisions.  Left to navigate the German Data Protection Act on its own, the court noted that the Act contains an exception for transfers of data that are “necessary or legally required ... for the establishment, exercise or defence of legal claims.”  The extent to which this exception applies at all to U.S. “legal claims” is open to some debate, but at the very least burdens such as in-country review, data filtering, and extensive redaction could be imposed on a party taking advantage of the exception.  An expert could have explained the workings of the various exceptions contained in the German Act, and could have testified as to government prosecution of failures to comply.  By failing to address the German Act in greater detail, Alste lost the chance to make a persuasive argument that production would place an unreasonable burden upon it. 

Demonstrating good faith.  The court noted that Alste had failed to demonstrate that it was unable to obtain consent from the affected customers for the transfer of the data in question.  Statements from the “data subject” customers (i.e., those whose private data was at issue) refusing to consent to the transfer would have demonstrated Alste’s good faith, which is often an important factor for U.S. courts making these conflict-of-law determinations, and would have brought the concerns of the real party-in-interest (the German data subjects) before the court.  Such an approach might have been especially effective in this case, because the very data subjects at issue – Alste’s customers – were German law enforcement agencies, and would have been able to help Alste convey to the court the privacy interests at issue and any potential civil or criminal sanctions faced by Alste.

Intervention by non-U.S. government.  Indeed, regardless of the government’s status as a data subject, an effective step in cases such as this can be to seek intervention by the relevant foreign government to explain the importance of honoring the foreign law in question.  Other foreign governments have intervened when their laws were at issue, and U.S. courts have found such input highly persuasive.

Clearly any litigant hoping to invoke foreign data protection laws to avoid or delay U.S. discovery obligations faces a challenge.  But cases like this – where for whatever reason the issue is not rigorously litigated – might create an exaggerated impression of the lack of sympathy U.S. courts have for litigants’ overseas privacy obligations.  That being said, Alste’s streamlined approach to arguing the issue in this case may be understandable, given that the case involves claims for just $180,000.

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