Could a third party be forced to hand over data if it is headquartered outside the US?

Question

In the run-up to Epic v. Apple, Apple as the defendant has requested information via court from several companies that while not involved directly in the lawsuit, could be relevant for making Apple's case in regards to their digital store's (the App Store) cut of financial transactions. This includes companies with existing video game digital stores like Valve (owners of Steam), Microsoft (owners of Xbox and the Microsoft Store), Sony (owners of the PlayStation Store) and Nintendo (owners of the eShop).

While in these cases third parties will participate and engage in discussion especially when they deem some requested information as "sensitive" to their businesses and/or not relevant to the case, my question is more about what the judge can demand from these companies should they fail to convince her otherwise.

Say, for example, that Apple requests information about markup margins for each of the aforementioned companies' digital stores and the judge complies with this request. Since Nintendo is headquartered in Japan, could they be obliged to reveal global numbers or are they free to restricting data that pertains to the US only, through their subsidiary Nintendo of America?

Answer 1

Strictly speaking, one has to define "forced". But with companies like these, in countries like these the answer is "Yes," by a couple of mechanisms.

1. American branches: Nintendo (and Sony) are Japanese companies, but they have American branches (e.g. Nintendo USA), that can be directly compelled.

2. American assets: Nintendo (and Sony) have assets that could be threatened if they do not comply (including access to the US markets).

3. Japanese court system: In theory, a US court could issue an order/subpoena, and the recipient (Apple) in this case, could get a Japanese court to order the Japanese Nintendo/Sony to comply.

Answer 2

Yes.

If there is almost any conceivable hook by which the U.S. government can assert its subpoena authority as a practical matter, the CLOUD Act of 2018 gives a federal court subpoena the authority to demand that the data be turned over. Foreign firms were U.S. servers were mostly already covered by the Stored Communications Act.

The CLOUD Act primarily amends the Stored Communications Act (SCA) of 1986 to allow federal law enforcement to compel U.S.-based technology companies via warrant or subpoena to provide requested data stored on servers regardless of whether the data are stored in the U.S. or on foreign soil.

If you have a foreign server, in a foreign country, with no employees or assets or agents in the U.S., obtaining documents from them through U.S. legal process may, as a practical matter, be impossible. In those cases, foreign subpoenas and foreign legal action is often available in most parts of the developed and developing world.

Intermediate between a foreign lawsuit and a U.S. lawsuit, is for a U.S. court to request that a foreign court issue "letters rogatory" which essentially allow discovery in another country's court case to be conducted through the courts of the country to which the letters rogatory are directed (if the discovery isn't contrary to the public policies of the country where the discovery conducting court is located).

For example, Alice in the United States, could not summon Jean from France to the US courthouse. Instead, the US court would issue a letter rogatory to a French court, which would then examine Jean in France, and send a deposition back to the requesting court.

But the Cloud Act closed all of the easy and trivial loopholes in prior law (especially the SCA).

Since Nintendo is headquartered in Japan, could they be obliged to reveal global numbers or are they free to restricting data that pertains to the US only, through their subsidiary Nintendo of America?

The scope of the request is determined by the discovery issuing court in accordance with its rules of civil procedure.

A common standard in U.S. civil procedure is that the target of a subpoena must turn over all records, which in its "possession, custody, or control" (see Federal Rule of Civil Procedure 34), that are relevant to the disputed issues of fact in the case or reasonably calculated to potentially lead to relevant evidence regarding the disputed facts, and are not privileged (see Federal Rule of Civil Procedure 26(b) and Federal Rule of Evidence 501). This is a very broad standard, although the court has discretion to narrow the scope of discovery for good cause.

If the target is a parent company, it could easily have global scope and apply to all of the firm's subsidiaries and affiliates.