The EU Data Protection Reform's Impact on Cross Border e-Discovery: new Developments after the LIBE...

The EU Data Protection Reform's Impact

onCross-Border e-Discovery

MONIQUE ALTHEIM, Esq., CIPP/US, CIPP/E

Monique Altheim, the managing partner of The Law Office of Monique Altheim, is a multilingual and multi-jurisdictional attorney, admitted to the New York Bar, as well as the Antwerp Bar in Belgium.

Ms. Altheim advises clients on international e-discovery, international data transfers, and counsels them on privacy/data protection and social media law.She is a Certified Information Privacy Professional (CIPP) in the US and the EU, and an active member of The Sedona Conference Working Group 6: International Electronic Information Management, Discovery and Disclosure.

Monique Altheim runs a widely read blog, EDiscoveryMap.com and recently developed her own mobile information sharing App for iPhone/iPad and Android.

Ms. Altheim is a regular contributor to international conferences on privacy and e-discovery.

http://altheimlaw.com/

http://ediscoverymap.com/

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1. The Cross-Border U.S. Discovery vs. EU Data Protection Conundrum

U.S. civil discovery obligations extend to ESI outside the U.S

•Rule 34 FRCP “possession, custody , or control” of ESI•Duty to preserve, legal hold•Duty to disclose (Rule 26, FRCP)•Sanctions for non-compliance


Obstacles to discovery in the EU member states

•Data Privacy Laws•Blocking Statutes•Bank Secrecy Laws•Labor Laws•Telecom LawsAND•U.S. style discovery in civil litigation is a common law tradition and is unknown in civil law countries


Is there a treaty signed by both the U.S. and EU member states to resolve this conflict?

Yes, The Hague Evidence Convention (1970).But, it has many problems.


Conflicts of Law: Does the International Treaty Apply or the National Law?

•U.S. approach: Aerospatiale Doctrine: Hague Evidence Convention is optional and does not supersede FRCP. Balancing of interests test in the name of international comity.

•EU approach: The Hague Evidence Convention applies; letters of request.

2. How are EU data privacy laws different than other laws which restrict U.S. discovery?

Data Protection is a Human Right

(art. 8 Charter of Fundamental Rights of the European Union)

3.Introduction to the EU Data Protection Directive (Directive 95/46/EC)

•Omnibus Law.•Implemented into national laws by 28 Member States of EU, plus Iceland, Liechtenstein and Norway. (European Economic Area, or EEA).•Directive acts as a floor. Not uniformly implemented by Member States.


Definitions

•Personal Data•Sensitive Data•Data Subject•Data Processing•Data Controller•Data Processor•Consent


When does the Directive apply?

•The Controller’s establishment is in a Member StateAnd he processes personal data in the context of his establishment’s activity

Or

• The Controller uses equipment in a member state for the purpose of processing personal data


Controller’s obligations and data subject’s rights

•Two separate situations: 1. processing 2. transfer outside of EEA

•Processing: legal basis for processing, notification of DPAs, notice to data subject, data accuracy, data security, data minimization, purpose limitation, right of access, rectification & erasure and liability to data subject.•Transfer outside of EEA: legal basis for transfer, notification of DPAs


Processor’s obligations

Contract with controller:

•Will only process on instruction of controller•Will provide adequate security


Legal basis for processing personal data (for discovery purposes):

•Consent

•Legitimate interest of the controller, balanced against fundamental rights of data subject


Legal basis for transferring personal data outside of EEA (for discovery purposes)

•Adequate country•Consent of the data subject•Safe Harbor (U.S.)•Standard Contractual Clauses•BCRs (Binding Corporate Rules)

4. How to reconcile cross-border discovery with the directive?

•Article 29 WP 158 on pre-trial discovery for cross-border litigation (2009)•The Sedona Conference International Principles on Discovery, Disclosure and Data Protection (2011)•American Bar Resolution 103 (2012)

5. The Proposed General Data Protection Regulation (GDPR)

The Directive no longer meets the challenges of globalization and technological advances.

•Caveat: The GDPR does not cover data processing by Law Enforcement. Subject of separate proposal, not covered here

General Data Protection Regulation


•1/25/2012: Commission proposals for a regulation and a directive•1/10/2013: Presentation of the draft report by MEP Albrecht (LIBE Committee)•1/23/2013: Internal Market Committee votes on its opinion •2/20/2013: Industry Committee votes on its opinion •2/21/2013: Employment Committee votes on its opinion •3/19/2013: Legal Affairs Committee votes on its opinion•3/20/2013: First discussion on amendments in the LIBE Committee •5/6-7/2013: Second discussion on amendments in the Civil Liberties Committee•5/31/2013:The Irish Presidency of the Council of the EU released a draft compromise text•10/21/2013:Vote of LIBE Committee Draft

Next: Council of Ministers agreement & Trilogue: LIBE Committee-Commission-Council negotiations

If no agreement, Plenary Vote in EU Parliament in April 2014?

Timeline


Main Objectives

•Greater harmonization•One-Stop-Shop•Strengthening individual rights•Greater accountability/Reducing administrative burden of data controllers•Enforcing high level of protection for data transferred outside the EEA•More effective enforcement of the rules


Color Code

Red: GDPR proposal that was abandoned or changed by the LIBE CommitteeBlue: Current draft, as voted by the LIBE Committee on 10/21/2013

5. The Proposed General Data Protection Regulation (GDPR):How will it affect cross-border discovery?

Directive GDPR LIBE amendments

Council

Instrument Directive Regulation Some MSprefer a Directive

5. The Proposed General Data Protection Regulation (GDPR)How will it affect cross-border discovery?


JURISDICTION

•Establishment of controller

•Use of equipment

•Establishment of controller

•Offering goods or services to/monitoring of EU residents

•Even free of charge



Council

Personal Data/Data Subjects

•Any information relating to an identified/identifiable natural person

•Any information relating to the data subject•DS: Identified or identifiable natural person in particular by reference to an identification number, location data, online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of that person;

•Broadens definition of PD to include broad category of unique identifiers•Creates new categories of “Pseudonymous Data” and “Encrypted Data” and “Anonymous Data”- lighter obligations for pseudonymous and encrypted data ex. consent

•Introduces list of rights & obligations that are excluded for pseudonymous data: right of access, right to be forgotten, etc…



Council

CONSENT as basis for processing

•Unambiguous,freely given, specific & informed•May be withdrawn

•Freely given, specific & informed•May be withdrawn•Explicit•Restricted use in employment context

•Restricted use in employment context•Purpose limited

•Reverts back to unambiguous consent•Relaxes restrictions in employment context



Council

LEGITIMATE INTEREST as basis for processing

•Legal basis for processing

•Legal basis for processing•Notice to data subject of type of legitimate interestand of right to object

•Limited to “exceptional circumstances•Lists specific situations where applicable•Must meet reasonable expectations of data subject•More flexibility for pseudonymized data

Extends list to:•Fraud prevention•Anonymized/pseudonymized data•Direct marketing

5. The Proposed General Data Protection Regulation (GDPR): How will it affect cross-border discovery?


Council

LEGAL OBLIGATION as basis for processing

Art.7 (c) Art. 6(3) clarifies: Only EU or Member State Law

same Extends it as legal basis to processing of sensitive data



Council

NOTICE •List of obligatory notice requirements (Article 10)

•Additional notice requirements (Art. 14)e.g. Which legitimate interest•Easily accessible•Clear and plain language

•Additional notice requirements•e.g. Specific information about the safeguards used for transfer of data outside of EU•Use of standardized icons

•Greatly reduces list of notice requirements


,


Council

Data Breach Notification by Data Controllers

•No requirement•Some MS ex. Germany

•Obligatory•To supervisory authority, within 24 hours•To data subjects: w/o undue delay, if likely to have adverse effect

•To supervisory authority, within 72 hours•Without undue delay.

•To supervisory authority, within 72 hours,ONLY if significant breach•Creates list of exemptions



Data Breach Notification by Data Processors

•No requirement•Some MS

•Notify controller “immediately”



Council

Obligations of Data Controllers/Processors

•DC: Duty to notify DPA of data processing activities

•Data Protection Impact Assessments (DPIA) in high risk situations•Data Protection by Design & by Default

•Welcomed as core innovations of the reform

•DPIA only for Data Controllers•Exhaustive list of processing activities requiring DPIAs•Limits application of Data Protection by Design and by Default



Obligations of Data Controllers & Processors

•Documentation of all data processing activities

•Documentation requirement coupled with notice requirement



Council

Obligations of Data Controllers & Processors re DPOs

•Some Member States

•Appoint Data Protection Officer >250 employees

•Appoint Data Protection Officer >5000 data subjects processed in 12 consecutive months.

•Optional!



Council

Obligation of Data Processors

•Data Security•Only process PD as instructed by Controller

Plus:•If processes PD other than instructed by controller, considered joint controller•Consent of Controller for sub-processing

none •No joint controller•No consent of Controller for sub-processing



Cross-Border Data Transfers

•Adequate Countries

•Until amended, replaced or repealed by the Commission•Added Adequate Sectors

•Will only remain in force for max. five years after the GDPR takes effect, unless amended, replaced or repealed by the Commission.•No Adequate Sectors




•U.S. Safe Harbor

•Until amended, replaced or repealed by the Commission

•Will only remain in force for max. five years after the GDPR takes effect, or until amended, replaced or repealed by the Commission.




•Standard Contractual Clauses•Prior authorization in some MS

•No prior authorization required•Until amended, replaced or repealed by the Commission

Sunset Clause:Standard Clauses authorized under Directive: RE-authorization by DPA required within 2 yrs of Regulation coming into effect.




•Binding Corporate Rules (BCRs))

•Formally recognized for Controllers and Processors•Sunset Clause: RE-authorization by DPA required within 2 yrs of Regulation coming into effect of BCRs authorized under Directive.

•Formally recognized for Controllers •Increase of requirements for approval•e.g. Privacy by Design


Directive

GDPR LIBE amendments


•Legitimate Interest of Data Controller /Processor•Not for “frequent and massive” transfers -44(h)

•Legitimate Interest of Data Controller /Processor:

•NEW: European Data Protection Seal


Directive

GDPR LIBE amendments


•Recital 90•Original Art.42 that appeared in leaked Regulation, disappeared in published GDPR

Addition of Article 43a)Access request from non-EU authorities require prior approval of DPA and notification of data subjects



Data Protection Authorities (DPAs)

•Greater enforcement powers•Lead DPA system: DPA of data controller’s main establishment (One-Stop-Shop)

•Lead DPA’s role watered down to co-ordination role with all other involved DPAs



Sanctions •Left to implementation by member states.

•Tiered fine system, up to 2% of annual sales of data controller/processor

•Tiered fine system, up to 5% of annual sales of data controller/processor or or 100 million euros •More flexibility in determining the amount of fines, with accountability & cooperation of data controllers as criteria•European Data Protection Seal exemptions

5. The Proposed General Data Protection Regulation (GDPR) How will it affect cross-border discovery?

Other changes, less relevant for cross-border discovery

•Right of erasure•Right of data portability•Prohibition against profiling•European Data Protection Board (EDPB), formerly Article 29 WP•Consistency mechanism


Practical tips

•Keep up-to-date with GDPR•Review: Notice forms, Consent forms, Privacy Policies, Data Controller – Data Processor contracts•Implement data breach notification readiness, where applicable•Implement a data processing documentation system•Data Protection (DP) by Design and DP by Default, where applicable•Conduct DP Impact assessments, where applicable•Minimize processing of Private Data (PD) and review in-country• Pseudonymize/Anonymize/Encrypt PD whenever possible•Secure PD adequately


How will the NSA/PRISM leaks affect the GDPR and Cross-Border Discovery?

To be followed…

Questions?

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The EU Data Protection Reform's Impact on Cross Border e-Discovery: new Developments after the LIBE...

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