Supreme Court Rules Upon Impact of Foreign Privacy Statutes & Scope of Attorney-Client Privilege

What happens if your client receives a request for production seeking information that your client possesses, but it is stored in a foreign country that legally prohibits dissemination of that information? The predicament is the client is legally obligated in the United States to produce the information, but it is legally obligated in the foreign country not to produce the information. Second, who can waive a corporation’s attorney-client privilege for the purpose of obtaining and using documents in litigation? The Supreme Court of Nevada answered both these questions on August 7 in two published decisions arising from the same litigation. This particular litigation was previously discussed on this blog. To get a feel for how contentious this litigation is, the case is apparently three years old and is still in jurisdictional discovery.

Both opinions have the same caption. Las Vegas Sands v. Dist. Ct., 130 Nev. Adv. Op. 61 addressed the foreign privacy law question. “Throughout jurisdictional discovery, Sands China has maintained that it cannot disclose any documents containing personal information that are located in Macau due to restrictions within the Macau Personal Data Protection Act (MPDPA).”

In this opinion, we consider whether a Nevada district court may properly issue a discovery order that compels a litigant to violate a foreign international privacy statute. We conclude that the mere existence of an applicable foreign international privacy statute does not itself preclude Nevada district courts from ordering foreign parties to comply with Nevada discovery rules. Thus, civil litigants may not utilize foreign international privacy statutes as a shield to excuse their compliance with discovery obligations in Nevada courts. Rather, the existence of an international privacy statute is relevant to a district court’s sanctions analysis if the court’s discovery order is disobeyed. Here, the district court properly employed this framework when it found that the existence of a foreign international privacy statute did not excuse petitioners from complying with the district court’s discovery order.

The court’s decision cited to and relied upon Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Ct., 482 U.S. 522, 544 n.29 (1987) for support.

This ruling creates a conundrum for Sands, as it had apparently already been contacted by the Macau government about this issue. It can choose to violate the Macau statute and risk sanctions there or it can choose to violate the Nevada court’s order to produce the information and risk sanctions here, but argue that sanctions are inappropriate because of the statute. A tough predicament.

Las Vegas Sands v. Dist. Ct., 130 Nev. Adv. Op. 69 answered the attorney-client privilege question. Plaintiff Jacobs, a former CEO, was terminated and took 40 gigabytes of documents with him. He filed suit against the company later and wants to use these documents against the company. The company objected to certain of the documents, arguing they were subject to the attorney-client privilege. The question was who could waive the privilege?

Additionally, Jacobs argued that the “collective corporate client” approach to the attorney-client privilege applied, such that Sands could not “deprive Jacobs of access to the proof, particularly when he was a participant in its creation.” Essentially, Jacobs argued that he was “the client” when he was directly involved in running Sands China, and therefore had a right to access and use any privileged documents that had been created while he was CEO of Sands China.

In opposition, Sands argued that pursuant to NRS 49.045 and 49.095, Sands was the sole holder of the attorney-client privilege, and it had not waived that privilege.

The court agreed with Sands this time.

[W]e consider whether a former chief executive officer of a corporation, who is now suing his former employer, is within a “class of persons” entitled to access the corporation’s privileged documents for use in the litigation. We conclude that a corporation’s current management is the sole holder of its attorney-client privilege, and thus, Nevada law does not allow for a judicially created class of persons exception to attorney-client privilege. Accordingly, we grant [Sands]’ request for a writ of prohibition in part to prevent [Jacobs] from using the purportedly privileged documents in the underlying litigation.