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2012 OFII General Counsel Conference Washington, D.C. 1 Federal Rules of Civil Procedure –A party may serve on any other party a request... : (1) to produce.

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Presentation on theme: "2012 OFII General Counsel Conference Washington, D.C. 1 Federal Rules of Civil Procedure –A party may serve on any other party a request... : (1) to produce."— Presentation transcript:

1 2012 OFII General Counsel Conference Washington, D.C. 1 Federal Rules of Civil Procedure –A party may serve on any other party a request... : (1) to produce and permit the requesting party or its representative to inspect, copy, test, or sample the following items in the responding party's possession, custody, or control  Fed. R. Civ. P. 34(a)(1) Hague Convention – Chapter 1 – Letters of Request –In civil or commercial matters a judicial authority of a Contracting State may, in accordance with the provisions of the law of that State, request the competent authority of another Contracting State, by means of a Letter of Request, to obtain evidence, or to perform some other judicial act.  Convention adopted at the Eleventh Session of The Hague Conference on Private International Law October 26, 1968; T.I.A.S. No. 7444, 23 U.S.T. 2555, 1972 WL , (U.S. Treaty), October 07, 1972 Two Methods To Obtain Discovery From A Foreign Affiliate

2 2012 OFII General Counsel Conference Washington, D.C. 2 [T]he Convention was intended as a permissive supplement, not a pre-emptive replacement, for other means of obtaining evidence located abroad. –Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Court for S. Dist. of Iowa, 482 U.S. 522, 536 (1987) If the Hague Convention were the exclusive means for obtaining evidence located abroad, every American court hearing a case involving an international entity would be subject to the internal laws of the foreign country. –Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Court for S. Dist. of Iowa, 482 U.S. 522, 539 (1987) Hague Convention Is A “Supplement” To Federal Rules of Civil Procedure

3 2012 OFII General Counsel Conference Washington, D.C. 3 Under Rule 34, “control” does not require that the party have legal ownership or actual physical possession of the documents at issue [but] when that party has the right, authority, or practical ability to obtain the documents from a non-party to the action. –In re NTL, Inc. Sec. Litig., 244 F.R.D. 179, 195 (S.D.N.Y.) aff'd sub nom. Gordon Partners v. Blumenthal, 02 CIV 7377 LAK, 2007 WL (S.D.N.Y. May 17, 2007) (internal quotations & citation omitted) [I]issue of control is more a question of fact than of law, and it rests on a determination of whether the defendant has practical and actual managerial control over, or shares such control with, its affiliate, regardless of the formalities of corporate organization. –In re Uranium Antitrust Litig., 480 F. Supp. 1138, 1145 (N.D. Ill. 1979) “Control” Of Documents Possessed by Foreign, Non-Party Affiliates

4 2012 OFII General Counsel Conference Washington, D.C. 4 “Control” Of Documents Possessed by Foreign, Non-Party Affiliates The test to determine whether a corporation has custody and control over documents located with an overseas affiliate is not limited to whether the corporation has a legal right to those documents. … Rather, the test focuses on whether the corporation has “access to the documents” and “ability to obtain the documents.” –Hunter Douglas, Inc. v. Comfortex Corp., CIV. A. M8-85 (WHP), 1999 WL 14007, at *3 (S.D.N.Y. Jan. 11, 1999) (quoting Addamax Corp. v. Open Software Found.,Inc., 148 F.R.D. 462, 467 (D. Mass. 1993)).

5 2012 OFII General Counsel Conference Washington, D.C. 5 Factors To Determine “Control” [D]ocuments in the possession of one corporation may be deemed under control of another corporation … [t]hese factors focus on the other corporation's actual control or inferred control, including any “complicity” in storing or withholding documents. They include: (a) commonality of ownership, (b) exchange or intermingling of directors, officers or employees of the two corporations, (c) exchange of documents between the corporations in the ordinary course of business, (d) any benefit or involvement by the non-party corporation in the transaction, and (e) involvement of the non-party corporation in the litigation. Uniden Am. Corp. v. Ericsson Inc., 181 F.R.D. 302, 306 (M.D.N.C. 1998)

6 2012 OFII General Counsel Conference Washington, D.C. 6 The Intercorporate Relationship Close Relationship / Overlapping Board –In addition to being a wholly owned subsidiary, KMC's [defendant U.S. subsidiary] Board consists of upper echelon KMAG [non-party German parent] employees who have substantial oversight responsibility in that corporation. Key decisions regarding this litigation … were made by a KMAG employee [and] KMAG has provided documents at the request of KMC, demonstrating that the requested items are within KMC's reach. The intercorporate relationship balances in favor of finding that KMC has control of the requested documents.  Afros S.P.A. v. Krauss-Maffei Corp., 113 F.R.D. 127, 132 (D. Del. 1986) Separate Entities –Other than shared membership in the common association of Ernst & Young International, Ernst & Young LLP, Ernst & Young Singapore, and Ernst & Young Thailand are separate entities. Goh v. Baldor Electric Co., No. 3:98-MC-064-T, 1999 WL 20943, at *3 (N.D. Tex. Jan. 13, 1999)

7 2012 OFII General Counsel Conference Washington, D.C. 7 Motions To Compel The party seeking to compel a subsidiary to produce the documents of its foreign parent has the burden of showing that the documents are within the local subsidiary's control. –Linde v. Arab Bank, PLC, 262 F.R.D. 136, 141 (E.D.N.Y. 2009) When the order compelling documents is not based on actual control, but on the inferred control and complicity prong, the court will more likely tie the scope of the request to the extent of the complicity. This should help regulate concerns over unfairness and burdensomeness when actual legal ability to control is not present. –Uniden Am. Corp. v. Ericsson Inc., 181 F.R.D. 302, (M.D.N.C. 1998)

8 2012 OFII General Counsel Conference Washington, D.C. 8 International Comity (1) (a) A court or agency in the United States, when authorized by statute or rule of court, may order a person subject to its jurisdiction to produce documents, objects, or other information relevant to an action or investigation, even if the information or the person in possession of the information is outside the United States. …. (c) In deciding whether to issue an order directing production of information located abroad, and in framing such an order, a court or agency in the United States should take into account: –the importance to the investigation or litigation of the documents or other information requested; –the degree of specificity of the request; whether the information originated in the United States; –the availability of alternative means of securing the information; and –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 state where the information is located. Restatement (Third) of Foreign Relations Law § 442(c) (1987)

9 2012 OFII General Counsel Conference Washington, D.C. 9 Sanctions While inability to comply must be taken into account in assessing the sanction of dismissal, even inability does not preclude lesser sanctions, such as adverse inferences or exclusion of evidence.... [Non-Party’s] refusal to produce documents will not necessarily absolve [Party] and free it from the threat of any sanction. –Uniden Am. Corp. v. Ericsson Inc., 181 F.R.D. 302, 308 (M.D.N.C. 1998)

10 2012 OFII General Counsel Conference Washington, D.C. Conflicting Demands of US and Home Country Laws: The China Example 10

11 2012 OFII General Counsel Conference Washington, D.C. Conflicting Demands of US and Home Country Laws State Secrets and Sensitive Information Data Privacy Sovereignty US Civil Litigation US Regulators Home Country Regulators

12 2012 OFII General Counsel Conference Washington, D.C. U.S. Civil Litigation Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Court International Comity Factors Bank of China Cases –Tiffany (NJ) LLC v. Forbse, 2012 WL (S.D.N.Y. 2012) –Gucci America, Inc. v. Weixing Li, 2011 WL (S.D.N.Y. 2011) –Tiffany (NJ) LLC v. Qi Andrew, 276 F.R.D. 143 (S.D.N.Y. 2011) –Gucci America v. Curveal Fashion, 2010 WL (S.D.N.Y. 2010) –Milliken & Co. v. Bank of China, 758 F.Supp.2d 238 (S.D.N.Y. 2010) 12

13 2012 OFII General Counsel Conference Washington, D.C. U.S. Regulators 13

14 2012 OFII General Counsel Conference Washington, D.C. Home Country Regulators 14

15 2012 OFII General Counsel Conference Washington, D.C. E-Discovery: The Cloud & Technology Possession, custody and control Contractual language/rights Jurisdiction Server location Subpoena Access without notice Foreign data privacy Preservation and collection Response time 30(b)(6) witness/testimony ConfidentialitySecurity Local storage Document review/predictive coding


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