International E-Discovery: EU Privacy Protection vs. US Broad Disclosure

Katherine McGuigan, Vol. 37 Associate Editor

On September 18, 2015, the world discovered that Volkswagen had been cheating on its emission tests for its diesel-fueled cars.[1] Volkswagen admitted that over 11 million cars worldwide might contain “defeat devices” which can “make cars appear cleaner than they are during regulatory tests and disable emissions controls during normal driving conditions.”[2] Since that disclosure, VW has lost more than $34 billion of its company value.[3] Many countries have halted the sale of its cars.[4] Volkswagen now faces a tidal wave of lawsuits from disgruntled car owners[5] and could be fined up to $18 billion by the U.S. Environmental Protection Agency.[6] Volkswagen’s reach is global in the broadest sense of the word. Not only does it ship its cars all over the world, but Volkswagen AG owns subsidiaries in various countries including: Germany, which houses Volkswagen, MAN, Audi and Porsche, Skoda in the Czech Republic, SEAT in Spain, Bentley in the U.K., Bugatti in France, Lamborghini and Ducati in Italy, and Scania in Sweden.[7] Given its global reach, one of the most complicated features of the impending deluge of cases is going to be dealing with international e-discovery, particularly in cases between the United States and members of the European Union (“EU”). The European system of discovery differs in many crucial aspects from the United States Federal Rules of Civil Procedure. One difference that causes a lot of problems in cross-boarder disputes is the EU’s emphasis on privacy, which is in direct tension with the United States’ emphasis on disclosure.[8] In the United States, the Federal Rules of Civil Procedure state that the standard for discovery is relevance, which casts a wide net over what is discoverable and what is not.[9] This net can become even wider when “relevant” material is electronically stored, since thousands of pages of information can be stored and transferred with the click of a button.[10] Furthermore, in weighing competing concerns of privacy and disclosure of electronic information, United States courts often favor disclosure in litigation matters.[11] Historically, European courts have a much more restricted view of discovery. Many European countries see privacy and data protection as “fundamental human right[s].”[12] In response to growing concerns for privacy in the context of electronically stored information (“ESI”), the EU instituted the European Union Data Protection Directive.[13] The Directive requires for EU members to pass data protection laws, which in turn allows for free transfer of “personal data” between EU states. Personal data is defined as “any information relating to an identified or identifiable natural person.”[14] This definition of personal data is meant to have a very broad construction so as to include emails, surveillance videos and more.[15] The Directive imposes even stricter guidelines for the transmission of ESI from EU states to non-EU states.[16] Essentially, a member of the EU cannot send ESI containing “personal data” to a non-EU state unless the country receiving the information has “adequate protection” laws.[17] The United States, according to the EU, does not have adequate privacy laws and is therefore restricted from receiving information with personal data.[18] Since the Directive was issued, the EU and U.S. have allowed certain U.S. companies seeking e-discovery in a European State the chance to prove that they can adequately protect private information according to the Directive’s standards.[19] However this has only occurred on a case-by-case basis. The cases that will be brought against Volkswagen are susceptible to getting waylaid in this stage of the litigation. Undoubtedly, any case filed in the United States will seek e-discovery from countries in Europe and the information sought will most likely contain some personal data. The potential to become stuck on this issue is large and could be extremely costly to both sides. There is evidence that the United States and Europe have been moving towards a middle ground between their competing interests.[20] But until more of a convergence is reached, the impeding storm of litigation stemming from the Volkswagen emission scandal might become expensive and burdensome to both sides.

[1] Mike Spector, Volkswagen Faces Multi-Billion Dollar Tide of Lawsuits Over Emission Scandal, The Wall Street Journal (Sept. 29, 2015), http://www.marketwatch.com/story/volkswagen-faces-multibillion-dollar-tide-of-lawsuits-over-emissions-scandal-2015-09-29. [2] Id. [3] Chris Woodyard, Top VW Exec Warns Emissions Crisis Could Kill Company, USA Today (Oct. 5, 2015), http://www.usatoday.com/story/money/cars/2015/10/04/volkswagen-emissions-crisis/73356630/. [4] Reuters, How Regulators Around the World Have Reacted to the VW Emission Scandal, Fortune (Sept. 26, 2015), http://fortune.com/2015/09/26/heres-how-regulators-around-the-world-have-reacted-to-the-vw-emissions-scandal/. [5] See Chris Isadore, Volkswagen Faces 34 Federal Lawsuits in Emission Scandal, CNN Money (Sept. 23, 2015), http://money.cnn.com/2015/09/23/news/companies/volkswagen-emission-scandal-lawsuits/ (stating that just one week after disclosure, there were already 34 federal lawsuits filed in the Untied States). [6] Claudia Assis, Volkswagen at Risk of $18 billion EPA Fine, MarketWatch (Sept. 18, 2015), http://www.marketwatch.com/story/volkswagen-at-risk-of-18-billion-epa-fine-2015-09-18. [7] Volkswagen Brands and Products, http://www.volkswagenag.com/content/vwcorp/content/en/brands_and_products.html. [8] Michele C.S. Lange, International e-Discovery: Privacy and Data Protection Across the Globe 30 No. 11 Westlaw J. Computer & Internet 1 (2012). [9] Fed. R. Civ. P. 26. [10] Dan Cooper, EU Discovery and EU Privacy Laws—Part II, 8 Privacy & Data Protection 3 (2008). [11] Supra note 8. [12] Kristen Knapp, Enforcement of U.S. Electronic Discovery Law Against Foreign Companies: Should U.S. Courts Give Effect to the EU Data Protection Directive? 10 Rich. J. of Global L. & Bus. 111, 126 (2010). [13] 1995 O.J. (L 281) 31 (hereinafter EU Directive). [14] Id. [15] Erica Davila, Note, International E-Discovery: Navigating the Maze, 8 Pitt. J. of Tech. L. & Pol’y (2008). [16] EU Directive, supra note 13. [17] Supra note 8, at 2. [18] Id. [19] Id. [20] Erin Harrison, The Challenges of E-Discovery and International Privacy Laws, Legaltech News (Sept. 29, 2015).