Gucci v Curveal: a blow for US interests – whichever way you understand that expression

British 19th Century “gunboat diplomacy” and the song The Wreck of the Old 97 are what came to mind when I read the latest Opinion of a US court about the relative importance of US interests and the laws of other countries restricting the discovery of private information. Carry on like this, USA, and you may well need a gunboat to support document collections.

The article by the respected US e-Discovery commentator Tom O’Connor Why the Rest of the World Thinks we are Crazy concerns an Opinion of the District Court of the Southern District of New York which orders a Malaysian bank, not party to the proceedings, to produce documents despite a Malaysian statute prohibiting them from doing so. I volunteer to speak on the half of “the Rest of the World”

I took part in an interview recently with Tom O’Connor and with Browning Marean of DLA Piper US. Amongst our subjects was the perpetual collision between US demands for documents (for FRCP and other purposes) and the data protection laws of other countries, particularly the EU. There are many aspects of US discovery which amaze the rest of the world, and not generally in a nice way, but it is your playground, and if you want to use it to fight in, that is up to you. It is not as if any of the rest of us claim to have got things right.

Where US discovery does impinge on the rest of us is when its demands for documents conflict with the privacy, data protection or, in this case, banking secrecy, laws of other countries. The playground bully marches into our yard, and expects us to follow his rules.

It is not in fact quite as simple as that, and it is wise for outsiders to avoid adverse commentary on whether an Opinion of a foreign court is correctly decided under its own law. This is, after all, S.D.N.Y., not some hick court from a flyover state where no one has a passport and no-one could find Malaysia in an atlas. There are lots of factors here going one way or the other: those who seek the benefits of US trade (and particularly its courts) must take its burdens; the US itself benefits from such trade and wants to encourage it in general if not in the case of this particular business; the existence of foreign restrictions on the use of personal data is not exactly a secret; there was already a default judgment against the original defendant; the protection of IP rights is to some extent a matter of national interest; the position under Malaysian law does not seem to be been argued with great thoroughness (though it would be quite fun to apply the same critical analysis to the logic of the Opinion as its author gave to the Malaysian affidavit); the party against whom discovery was sought was not in fact a party to the original dispute. All these factors muddy the waters, and I propose to ignore them all and focus instead on the words “the important interests of the United States” referred to in the Restatement (Third) of Foreign Relations Law of the United States which are set out in the Opinion.

You might first like to read Tom O’Connor’s article, the commentary from the K&L Gates Electronic Discovery Law site and the opinion itself.

To an outsider, the conclusion that “the interest of the United States outweighs that of Malaysia under the circumstances” implies an alignment between the interests of a private company (the Plaintiff) and the national interest. It reminds me of that splendid time in British imperial history when Lord Palmerston sent the British fleet to blockade Piraeus in 1848 because the Greek government had failed to pay compensation to Don Pacifico, a merchant of Portuguese Jewish birth, who had had the good fortune to have been born in Gibraltar. There were those who doubted that this was a proper use of British power and authority. Palmerston’s magnificent speech, with its evident disdain for any country but his own, might serve as a model for those drafting the Opinions of US courts in this context, as you can see from its famous closing lines:

whether, as the Roman, in days of old, held himself free from indignity, when he could say Civis Romanus sum; so also a British subject, in whatever land he may be, shall feel confident that the watchful eye and the strong arm of England, will protect him against injustice and wrong.

‘Just send in the Navy and teach these foreign chappies to show some respect’ was the attitude which gave “gunboat diplomacy” its name, and the Don Pacifico incident was its defining moment.

The US test, recited in the opinion, is “the extent to which non-compliance with the request would undermine important interests of the United States, or compliance with the request would undermine the important interests of the state where the information is located”.  My hesitation in treading into matters of US jurisprudence does not prevent me from wondering whether the reference to “important interests of the United States” applies narrowly to the facts of the case under consideration, or more widely (as the Opinion itself suggests) to the protection of US intellectual property interests, or whether it refers to the broadest interests of the US vis-à-vis the rest of the world in respect of data collections. I agree with Tom O’Connor that this Opinion, and those which it follows, can only encourage Germany, Italy or France to (as Tom puts it) “make it even harder for US courts to get their documents than they do now”. How will that serve US interests? What will you do? Perhaps you will simply sanction every party who is unable to produce documents. Or maybe you should, Palmerston-like, send round a gun-boat every time a foreign country presumes to raise its own laws in conflict with yours.

Browning Marean often says of this coming conflict that “there will be a train wreck”. The best-known train crash in American railway history took place on at 2.13pm on 27 September 1903 when the Fast Mail plunged off Stillhouse Trestle near Danville, Virginia. Browning, I think, envisaged a collision of the head-to-head type, but this crash, immortalised in the song The Wreck of the Old 97 has elements in it relevant to my theme. It is on my play-list, in Johnny Cash’s version, and I know its words by heart.

The Wreck of the Old 97 at Stillhouse Trestle

For one thing, there was a serious commercial pressure on the Southern Railway, in that their contract with the US Mail included a penalty clause tied to each minute’s delay. In other words, there were serious sanctions at stake, just as there are with data collection:

Well they gave him his orders at Monroe, Virginia,
Said: “Steve, you’re way behind time,
This is not 38, this is Ol’ 97,
Put her into Spencer on time”

The departure was an hour late out of a running time of four hours and 15 minutes. The usual average speed for the journey was 39 mph; an average of around 51 mph was needed to make up the time. We have all known discovery exercises like that. If you start late, you have to do things in a hurry and cut corners.

Then he turned around and said to his black, greasy fireman,
“Shovel on a little more coal.
And when we cross that White Oak mountain,
Watch Ol’ ’97 roll”

Excessive speed, for railway trains and discovery exercises alike, gives ample opportunity for mistakes.

But it’s a mighty rough road from Lynchburg to Danville
In a line on a three mile grade
It was on that grade that he lost his air brakes
See what a jump he made

All this speed and noise leaves little room for mature reflection as to the object of the exercise – whether that is compliance with the discovery deadlines or getting into Spencer on time.

He was goin’ down the grade makin’ 90 miles an hour
His whistle broke into a scream
He was found in the wreck with his hand on the throttle
Scalded to death by the steam

The data collections world is full of stories of people setting off with an overnight bag and getting home six months later after a job which proved more difficult and prolonged than expected. Tom O’Connor suggests that the authorities of Germany, Italy and France might find ways of making future US collections more difficult. I am not sure that I would want to be the next data collection expert into Malaysia – the penalties for breach of the banking secrecy laws include imprisonment, I gather. As the last verse of Old 97 puts it:

So now all you ladies you better take a warnin’
From this time on and learn
Never speak harsh words to your true lovin’ husband
He may leave you and never return

I say again that I do not presume to suggest to any US court what that part of the Restatement (Third) of Foreign Relations Law of the United States actually means when applied in any particular case. You do not, however, need great skills as a prophet to be clear that “important interests of the United States” face serious damage if US courts continue to take the line that (as Tom O’Connor puts it) “our lawsuits are more important than your statutes protecting confidential information”.

So, this is certainly a blow for US interests. That is a nicely ambiguous phrase: read it one way and you have the Palmerstonian triumph of having put one over Johnny Foreigner; read it the other way – well, just wait a bit, and see how the French and Germans, to say nothing of the Malaysians, react.


About Chris Dale

I have been an English solicitor since 1980. I run the e-Disclosure Information Project which collects and comments on information about electronic disclosure / eDiscovery and related subjects in the UK, the US, AsiaPac and elsewhere
This entry was posted in Data privacy, Data Protection, Discovery, eDisclosure, eDiscovery, Electronic disclosure, EU, Forensic data collections. Bookmark the permalink.

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