Published on Nov 26, 2014 Among the most high-profile cases involving spoliation, you may have noticed a trend: Japanese companies do not have a stellar track record when it comes to complying with U.S. e-Discovery rules. Some of the most prominent examples include:
The e-Discovery challenges that plague Japanese companies can be divided into three areas: legal, cultural, and technical. Given the risks of sanctions, attorneys representing Japanese companies need to understand the unique challenges those companies face in complying with U.S. e-Discovery rules.
1. Legal
One of the most difficult problems for Japanese companies is understanding how different American discovery is to discovery in Japan. Unfamiliarity with the American process can make it overwhelming and time consuming. Discovery in Japan takes place during trial[6] (as opposed to pre-trial discovery in America) and is narrower.[7] Unlike in America, attorneys in Japan “have no real power to compel the production of evidence or to elicit testimony…and must therefore rely on voluntary cooperation or seek intervention by the court.”[8] Discovery power is vested in judges, who take an active role in evidence production, often examining evidence sua sponte, cross-examining parties and witnesses, and designating and summoning expert witnesses.[9] Discovery powers are used to obtain discrete pieces of evidence, rather than all evidence relevant to the issues. Japanese companies are therefore often at a loss to understand the requirements of broad American discovery. Furthermore, they are not accustomed to the outrageous cost associated with American discovery. For the unwary Japanese litigant, a failure to produce evidence can easily result from a failure to understand why documents are necessary combined with a desire to limit litigation costs.
2. Cultural
A variety of cultural issues also complicate e-Discovery for Japanese companies. First, the Japanese greatly value privacy. It is sometimes difficult to convince a Japanese client that its own privacy concerns do not defeat American discovery rules, which require the exchange of massive amounts of information. The level of transparency required by American discovery is often viewed as unacceptable in Japan.
Second, Japanese people value loyalty. Japanese companies have historically practiced lifetime employment; the average Japanese man works for the same company his entire life. An employee who discloses sensitive material, even in response to a discovery request, runs the risk of appearing disloyal.
Finally, Americans may have difficulty working with Japanese companies in any fashion, including discovery, because of the Japanese cultural reluctance to directly say “no.” A Japanese person, especially in an uncomfortable situation, will sometimes say “yes” without any intention of actually agreeing. To another Japanese person, it would be clear that no agreement was reached; to a foreigner, it can be confusing and create misunderstandings.
3. Technical
Technical problems also can complicate collecting necessary data from Japanese companies. Asian countries generally use software that is very different from software used in America.[10] Asian companies also tend to encrypt more data, so Americans need to be prepared to deal with a greater number of passwords.
The characters used in Asian languages themselves can also create discovery issues. The same characters are used in many different words and different characters are used for the same word, and there are no spaces, which makes it difficult to identify individual words.This may complicate searching through both keywords and predictive analytics. Searching may also be less effective because Optical Character Recognition (OCR) software does not always work as well for Japanese documents as English and many Japanese businesses still keep a tremendous number of documents in paper form.
Despite these challenges, there are some promising developments for Japanese companies. The proposed amendments to Rule 37(e) on spoliation may at least limit the possibility of enormous verdicts like Takeda’s if spoliation occurs. In addition, some Japanese companies such as UBIC are now implementing training programs to teach Japanese employees how to handle American discovery.[11]
For American attorneys representing a Japanese company in matters involving e-Discovery, it is imperative to work closely with the client to ensure that it understands, is willing, and is able to comply with the broad demands of American e-Discovery.
[1] Daniel Levine and Edmund Klamann, Japan Drugmaker Takeda to Fight $6 Billion Damages Awarded by U.S. Jury, REUTERS, Apr. 8, 2014, available online at http://www.reuters.com/article/2014/04/08/us-takeda-pharm-actos-verdict-idUSBREA3708F20140408.
[2] Sekisui America Corporation is a subsidiary of the Japanese Sekisui Chemical Group.
[3] Sekisui Am. Corp. v. Hart, 2013 WL 4116322 (S.D.N.Y. Aug. 15, 2013)
[4] The sanctions included limited voir dire time, a reduced number of juror strikes, reduced time for opening and closing statements, and attorney fees and costs. Potential Increased Use of Sanctions for E-Discovery Abuses Against Attorneys Representing Asian-Based Companies, UBIC NORTH AMERICA, INC., Apr. 15, 2011, available online at http://www.ubicna.com/en/Download/sanctions042411-ver2.pdf.
[5] Id.
[6] Craig P. Wagnild, Civil Discovery in Japan: A Comparison of Japanese and U.S. Methods of Evidence Collection in Civil Litigation, 3 Asian-Pac. L. & Pol’y J. 1, 4 (2002).
[7] “Narrow” is probably generous. Discovery in Japan has been called “woefully inadequate.” Id.
[8] Id.
[9] Id. at 7.
[10] Coping with Asian Languages in E-Discovery, Uncovering Fraud, Intrusions and More, THE METROPOLITAN CORPORATE COUNSEL, Aug. 19, 2013, available online at http://www.metrocorpcounsel.com/articles/25026/coping-asian-languages-e-discovery-uncovering-fraud-intrusions-and-more.
[11] UBIC Launches Corporate eDiscovery Training in Japan, UBIC NORTH AMERICA, INC., June 10, 2014, available online at http://ir.ubicna.com/releasedetail.cfm?ReleaseID=853745.
