Court orders second production of ESI in a reasonably usable form and rejects argument that foreign privacy laws or the Hague Convention bars production of personal information

February 15th, 2010 | By Steve Puiszis

AccessData Corp. v. ALSTE Technologies GMBH, 2010 WL 318477 (D.Utah Jan. 21, 2010)

AccessData is a software developer that entered into an agreement with ALSTE to sell its software products. AccessData brought a breach of contract action against ALSTE involving the sale of its forensic software. ALSTE claimed that the software was defective and filed a counterclaim asserting a breach of a technical support agreement. In discovery, AccessData sought production of information concerning customer complaints and any damages flowing from that counterclaim. ALSTE objected, arguing that the discovery requests were overbroad and the disclosure of information about the identities of third parties who voiced the complaints would violate German law. AccessData brought a motion to compel that information and also sought the reproduction of emails in their native format.

Failing to follow Rule 34’s requirements triggers order to reproduce ESI in a reasonably useable form.

In several of our prior blog posts which you can read here and here, we discussed Rule 34’s process for addressing the format of ESI production. Rule 34(b)(2)(D) requires the party responding to a production request to inform the requesting party of the format in which it proposes to produce its ESI in two scenarios – when the producing party objects to the requested production format specified in the production request or if no form is specified in that request. That is precisely what occurred here. AccessData did not specify a format in its Rule 34 production request. ALSTE scanned hard copy printouts of emails and other documents rather than produce them in their original electronic format. Apparently, Optical Character Recognition (“OCR”) was not added to the PDF images because AccessData argued that the documents were not reasonably usable because they were not “searchable.”

ALSTE argued that it would be unnecessarily burdensome and expensive to now extract specific information to make the emails text searchable and pointed to Rule 34(b)(2)(E)(iii) which provides that a party is not obligated to produce the same ESI in more than one form.

The court was not persuaded by these arguments. It noted that ALSTE failed to follow Rule 34’s requirements by failing to notify the plaintiff of the format it intended to use in producing the requested discovery. As the Advisory Committee Notes to the 2006 Amendment to Rule 34 explains:

Stating the intended form before the production occurs may permit the parties to identify and seek to resolve disputes before the expense and work of the production occurs. A party that responds to a discovery request by simply producing electronically stored information in a form of its choice, without identifying the form in advance of the production and the response required by Rule 34(b), runs the risk that the requesting party can show that the produced form is not reasonably usable and that it is entitled to production of some or all of the information in an additional form.

Fed.R.Civ.P.34(b) Advisory Comm. Notes to 2006 Amendment

Rejecting ALSTE’s argument, the court pointed to another statement appearing in the Advisory Committee Notes to Rule 34 that warns:

If the responding party ordinarily maintains the information it is producing in a way that makes it searchable by electronic means, the information should not be produced in a form that removes or significantly degrades this feature.

Id. The court in AccessData concluded that the scanned PDF’s were not reasonably usable and ordered the defendant to reproduce the electronic discovery in its native format or in a reasonably usable form.

German Data Protection Act and Hague Convention did not bar disclosure of personal third-party information.

ALSTE argued that German law prohibited the production of third-party personal information and suggested that if it complied with the plaintiff’s discovery requests, it would be subject to civil and criminal penalties. The district court rejected that argument and noted that one provision of the German Data Protection Act specifically provides that transfers of “personal information to countries that do not have the same level of data protection ‘shall be lawful, if … the data subject has given his/her consent [or] … the transfers are necessary or legally required… for the establishment, exercise or defense of legal claims.’”

Additionally, the court observed that in Societe Nationale Industrielle Aerospatiale v. United States District Court, 482 U.S. 522, 544 n.29 (1987), the Supreme Court held: “It is well settled that such [blocking] statutes do not deprive an American court of the power to order a party subject to its jurisdiction to produce evidence even though the act of production may violate the statute.” Moreover, the Supreme Court cited the American Law Institute’s Restatement which explains:

When a state has jurisdiction to prescribe and its courts have jurisdiction to adjudicate, adjudication should (subject to generally applicable rules of evidence) take place on the basis of the best information available …. [Blocking] statutes that frustrate this goal need not be given the same deference by courts of the United States as substantive rules of law at variance with the laws of the United States.

Id. (quoting Restatement of Foreign Relations Law of the United States (Revised) § 437, Reporter’s Note 5 (1986)).

ALSTE suggested that plaintiff must comply with the rules set forth in the Hague Convention for Taking Evidence Abroad with respect to the private information about the defendants’ customers. The district court summarily rejected that argument by again pointing to the Supreme Court’s Societe Nationale decision where the Court held “we cannot accept petitioners’ invitation to announce a new rule of law that would require first resort to [Hague] Convention procedures whenever discovery is sought for my foreign litigant.” Id.

Under the holding of Societe Nationale, parties might have to comply with Hague Convention procedures where suits involve foreign states or if “the additional cost of transportation of documents or witnesses to or from foreign locations … increase[s] the danger that discovery [is] sought for [an] improper purpose.” Id. at 546. Because neither scenario was presented by the plaintiff’s breach of contract action, the district court in AccessData ruled that the Hague Convention procedures were inapplicable.

Laptop photo courtesy Flickr user Mike Licht under this Creative Commons license.

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