Court Denies Motion to Compel ESI Generated by Foreign Subsidiaries

October 17, 2016

By Timothy M. O’Shea

A recent products-liability case from a federal district court addressed the issue of the discoverability of communications between the defendants’ foreign subsidiaries with foreign regulators regarding the IVC filters at issue in the case. In re Bard IVC Filters Prod. Liab. Litig., 317 F.R.D. 562 (D. Ariz. 2016). All plaintiffs received their Bard filters and allegedly were injured in the United States. Most of the defendants’ communications with foreign regulators originated in the United States. However, there was evidence that some of the communications originated abroad, and may not have been captured in the ESI searches. The plaintiffs sought communications with foreign regulators to determine if any of those communications had been inconsistent with defendants’ communications with American regulators.

In applying the new e-discovery rules set forth in the December 1, 2015, amendments to the Federal Rules of Civil Procedure, the court discussed how the scope of permissible discovery has changed under the amended Rule 26(b)(1). First, to be discoverable, the information must be “relevant to any party’s claim or defense.” As the court aptly put it, “[t]he test going forward is whether evidence is ‘relevant to any party’s claim or defense,’ not whether it is “reasonably calculated to lead to admissible evidence.” Second, “[r]elevancy alone is no longer sufficient — discovery must also be proportional to the needs of the case.”

The court reasoned that the proposed discovery was “only marginally relevant” given the “mere conjecture” regarding the potential for inconsistencies in communications with American regulators versus foreign regulators. The court also agreed with the defendants that the proposed discovery was “not proportional to the needs of the case.” The defendants provided specifics as to why the burden and expense of the proposed discovery outweighed its likely benefit. For example, the defendants pointed out that Bard has entities in 18 different countries that would require the defendants to “identify the applicable custodians from these foreign entities for the last 13 years, collect ESI from these custodians, and search for and identify communications with foreign regulators.”

The court concluded that “the burden of this foreign discovery would be substantial.” The court reasoned that the plaintiffs were conducting substantial discovery with respect to the defendants’ communications with American regulators, which “should capture communications with foreign regulators that originate in the United States, as most appear to.”

Thus, the court concluded that the defendants were not required to search the ESI of its foreign entities for the communications with foreign regulators.

Takeaways

The exponential growth of ESI has increased the visibility of international e-discovery issues. Counsel making cross-border requests for ESI and counsel responding to such requests must be knowledgeable in the rules and procedures related to information requests in the jurisdiction where the data is located. This case demonstrates the importance of counsel providing specific examples as to why the proposed discovery was not proportional to the needs of the case as well as demonstrating that foreign discovery is not necessary when the relevant information can be obtained in the United States.