This post was written by Kevin Xu and John L. Hines, Jr.

U.S. courts often disregard foreign data privacy laws in the context of discovery. Litigants sometimes find themselves compelled to produce under U.S. law what they are forbidden to produce under the privacy laws of another country. However, a recent U.S. court decision indicates increasing sensitivity to the privacy expectations of persons abroad.

On August 27, 2010, in connection with In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, the court ruled that some data collected and processed in the EU would have been unlawful to transfer to the United States under the EU Privacy Directive, and thus, should not be subject to production in U.S. litigation.

Judge John Gleeson of the U.S. District Court for the Eastern District of New York deferred to the European Commission’s request to shield documents related to its antitrust investigation of the interchange fee practices of Visa and MasterCard from the discovery request of plaintiffs. The plaintiffs had asked the court to compel production of the documents, claiming they were relevant to the litigation at hand, while the European Commission sought to keep the documents confidential under its Privacy Directive. The court held that even though the materials requested by the plaintiffs are plainly relevant to the litigation, federal courts should avoid any unnecessary circumventions of the practice of international comity. Further, the court felt that the European Commission’s assertions of the need of document confidentiality, such as to encourage cooperation among third parties during investigations, outweighed the interests of the plaintiffs in discovering the documents, especially given that the documents did not originate in the United States.

The court further rejected the plaintiffs’ alternative suggestion that the court compel production but issue a protective order keeping the materials from becoming public. The court held that “preventing the European documents’ use in foreign litigation is among the legitimate reasons for keeping their contents secret,” and a protective order would not adequately protect this legitimate interest of the Commission.

Plaintiffs’ attorney stated that his clients would not appeal this ruling of the court. Clients seeking to protect their European information from discovery in the United States have much to cheer for with this court decision.