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International privacy law no shield against complying with discovery obligations

Denying an employer’s petition for a writ of prohibition or mandamus in relation to a long-running discovery dispute with a discharged CEO, the Nevada Supreme Court held that the existence of a foreign international privacy statute does not itself preclude state district courts from ordering foreign parties to comply with discovery rules, but should be considered as part of the sanctions analysis. Thus, the court stated,” civil litigants may not utilize foreign international privacy statutes as a shield to excuse their compliance with discovery obligations in Nevada courts.” Consequently, a Nevada district court did not err in determining that the employer’s conduct in providing documents redacted on the basis of the foreign statute violated its earlier order that the employer could not rely on that statute in raising an objection to the production of documents (Las Vegas Sands Corp v The Eighth Judicial District Court of the State of Nevada, August 7, 2014, Gibbons, M). Sanctions order. Throughout discovery relating to a determination as to whether the employer was subject to personal jurisdiction in Nevada, the employer maintained that it could not disclose certain documents because they were located in Macau, which had a law protecting personal data (the Macau Personal Data Protection Act or MPDPA). Nevertheless, almost a year into jurisdictional discovery, the employer disclosed that many of those documents had, in fact, been sent to the United States. The court ordered a sanctions hearing and, after determining that the documents had been knowingly transferred and placed on a server located in the United States and that the transfer had been concealed, issued an order precluding the employer from using the foreign law as an objection to production of documents. The employer did not challenge that sanctions order. Nevertheless, the employer later filed a report detailing its document production and, in that report, indicated that with regard to the documents that had been transferred from Macau, it had redacted personal data based on the MPDPA. The employee moved for sanctions, arguing that the employer had violated the court’s order. After a hearing, the court found that he made out a claim that the employer had violated its order. In its findings, the court indicated that “there may be some balancing” to do and some consideration as to “why” it had been done. The court set an evidentiary hearing but, before that hearing was held, the employer filed its writ with the state high court. Intervention by high court. Although the high court found that the employer had not persuasively argued that its intervention was warranted, it elected to hear the petition. “[T]he question of whether a Nevada district court may effectively force a litigant to choose between violating a discovery order or a foreign privacy statute raises public policy concerns and presents an important issue of law that has relevance beyond the parties to the underlying litigation and cannot be adequately addressed on appeal,” the court explained. First, the court noted that the U.S. Supreme Court found that a foreign privacy statute did not, alone, excuse a party from complying with a discovery order. Second, the court noted that courts typically consider a series of factors including the importance of the documents, the specificity of the request, where the information originated, the availability of other means of getting the information, and the extent to which compliance or noncompliance would undermine the interests of the United States or the foreign jurisdiction. Compliance with rules required. Next, however, the court noted that there was some disagreement among the courts of appeal as to when those factors should be considered. Some jurisdictions evaluate them both when a decision is being made regarding issuing an order to compel and when sanctions are issued. Other jurisdictions, including the Tenth Circuit, apply the factors only when imposing sanctions and not when determining whether to issue an order. The latter view, according to the Nevada Supreme Court, was “more in line with Supreme Court precedent.” Thus persuaded that approach was best, the high court concluded that the “mere presence of a foreign international privacy statute itself does not preclude Nevada courts from ordering foreign parties to comply with Nevada discovery rules.” Instead, the existence of such a statute was “relevant to the district court’s sanctions analysis in the event that its order is disobeyed.” Because the district court had not yet had an opportunity to apply “the relevant factors,” the state supreme court concluded that the employer had not satisfied its burden of showing that the lower court had exercised its discretion in an arbitrary or capricious manner or exceeded its jurisdiction. Therefore, it denied the employer’s request for a writ. Justice Cherry’s concurrence. Justice Cherry wrote a short separate concurrence agreeing that intervention was not warranted, but faulting the court for its lengthy opinion and for prematurely attempting to “anticipate, project, or predict the totality of findings that the district court may make after the conclusion of any evidentiary hearing.”
By Brandi O. Brown, J.D.