[author: Phil Favro]
Cross-border data transfers to the United States in civil litigation have become increasingly complex in recent years, particularly data transfers from the People’s Republic of China. Litigants with ties to China often invoke its laws—including China’s state secrets law and corresponding regime of privacy regulations—to resist discovery obligations in U.S. courts.
Traditionally, courts have found that U.S. interests tip the scales over those of foreign nations. Nevertheless, decisions from the past few years have credited foreign interests, including those of China. Indeed, courts have even rejected certain attempts by requesting parties to obtain Chinese-based electronically stored information (ESI).
Among the more instructive cases regarding this trend is In re DiDi Global Inc. Securities Litigation (DiDi), where a court rejected certain plaintiffs’ requests for relevant ESI held by a corporate defendant in China. DiDishows how courts may balance competing national interests while offering a framework for preparing discovery requests that can survive foreign blocking statute challenges. DiDi also offers insights for practitioners on seeking and responding to such discovery.
Balancing Competing National Interests
The parties in DiDi brought multiple discovery disputes before the court, with plaintiffs seeking information from defendant DiDi Global, Inc. regarding its communications and interactions with Chinese government officials. Plaintiffs sought this information to substantiate their allegations that the defendant did not disclose crucial information about a Chinese government cybersecurity directive that caused the defendant’s stock price to plummet in the days following its initial public offering on the New York Stock Exchange.[1]
The defendant generally objected to such discovery, arguing that divulging this information would violate Chinese law and subject the defendant’s officials to criminal liability in China.
The disputes at issue involved:
- Several questions during a Rule 30(b)(6) deposition sought pre-IPO communications between the defendant and government officials.
- Certain documents defendant either withheld from production or whose contents defendant redacted before production.
- Two interrogatories sought details about meetings between the defendant and Chinese government agencies, along with specific government inquiries on the defendant’s data and security protocols.
The court adjudicated each dispute by drawing upon the five-factor framework the U.S. Supreme Court developed in Société Nationale Industrielle Aérospatiale v. U.S. District Court for Southern District of Iowa.[2] Four of the factors include key issues such as the importance of the requested information to the instant lawsuit, the specificity of the requests at issue, the origin of the requested information, and whether there are alternative sources of the sought-after materials. While each of these factors may impact the court’s determination of the dispute, the fifth factor—balancing competing national interests (in this case, between the U.S. and China)—is “the most important.”[3]
Rule 30(b)(6) Deposition Questions
Applying the Aerospatiale framework to the parties’ dispute over the Rule 30(b)(6) deposition questions, the court granted the plaintiffs’ motion to compel and ordered the defendant to make a witness available who could answer the plaintiffs’ questions. While reasoning that the Aerospatiale factors generally supported plaintiffs’ position, the court determined that the all-important “national interests” factor particularly favored discovery in this instance. The United States has a “keen interest” in regulating its “securities markets” and ensuring that matters litigated in its courts are “fully and fairly” decided.[4] In contrast, while acknowledging China’s interests in its data privacy, state secrets, and criminal statutes and regulations, the court opined that it was not apparent that the plaintiffs’ questions would intrude on those interests. Moreover, the court—disregarding a conclusory declaration offered by the defendant’s general counsel—found no evidence suggesting that China objected to the defendant’s divulging this information.
Withheld and Redacted Documents
Similar to the dispute over the deposition questions, the parties disputed whether the mosaic of Chinese laws forbade the defendant from disclosing certain documents in discovery.[5] Unlike the prior disagreement over the deposition questions, the court found that the defendant adequately demonstrated the interest of the Chinese government in preventing the defendant from divulging certain documents and other information. In this instance, the defendant supplied a factually detailed declaration from its general counsel. According to the declaration, the defendant identified approximately 40,000 documents responsive to the plaintiffs’ requests for production, which were submitted to government officials for their review. The government permitted 37,000 documents to be produced in full and another 1,500 documents to be produced with redactions. Defendant withheld the remaining 2,100 documents pursuant to the government’s instructions.
Given the legitimate interests of the Chinese government, the court next looked to the other Aerospatiale factors and found they generally militated against discovery. In particular, plaintiffs had already obtained most of the redacted documents from other parties to the litigation in unredacted form, which mostly obviated the need for a discovery order. For the balance of the redacted documents, plaintiffs had not established that those materials were significant to the litigation or could not be obtained through other means. Therefore, the court refused to order the defendant to produce complete copies of the 1,500 redacted documents.
Regarding the 2,100 documents withheld from discovery, the court ordered the defendant to produce a more fulsome log that offered additional details about the documents’ contents. In so doing, the court anticipated that plaintiffs could seek additional relief if they could show the documents were important to the litigation and they were unable to obtain such information from other sources.
Regarding the interrogatories, the court issued a mixed ruling. Interrogatory 13—which the court ultimately rejected—requested information about meetings between the defendant and Chinese government agencies covering various topics, including “national security” and “state secrets.” Interrogatory 14—to which the court ordered a response—sought details about specific government inquiries on the defendant’s data and security protocols. Defendant objected to both interrogatories, arguing that Article 36 of China’s Data Security Law prohibited disclosure of the requested information. According to the court, Article 36 prevents Chinese companies from providing data stored in China to “foreign justice or law enforcement institutions” without first receiving approval from Chinese government officials.[6]
While the court opined that Chinese law likely forbade discovery of the requested information, the court found that comity required the defendant to produce a further response to Interrogatory 14. Interrogatory 14 sought highly relevant evidence, i.e., actual government inquiries about the defendant’s security and data protocols before its initial public offering. The importance of the requested information, coupled with the United States’s “interest in fully and fairly adjudicating matters before its courts,” tipped the scales in favor of discovery.[7]
In contrast, the court held that Interrogatory 13 was overly broad, did not seek information “directly probative of the issues of the case,” and—perhaps most significantly—implicated legitimate Chinese interests in withholding communications with Chinese government authorities. While denying plaintiffs’ motions to compel and for reconsideration on Interrogatory 13, the court ordered the parties to negotiate over a proposal from plaintiffs to serve a revised and narrower version of Interrogatory 13.[8]
The Significance of a Foreign National Interest
The rationales underlying the holdings from DiDi are instructive and show the continuing importance of the national interest factor for courts that must address cross-border data transfer disputes.
In DiDi, where the defendant established a legitimate national interest on behalf of the Chinese government for the redacted documents, along with the information sought by Interrogatory 13, the court was more willing to sustain the defendant’s objections that targeted the overbreadth or lack of importance of the requested information. Conversely, the other disputes involving the Rule 30(b)(6) deposition questions and Interrogatory 14 generally turned in the plaintiffs’ favor once the court determined that the requested discovery would not undermine legitimate Chinese interests.
Thus, DiDi emphasizes for producing parties the importance of establishing a foreign national interest bearing directly on the issues in dispute if they are to withstand cross-border data transfers. For producing parties who believe they could be subject to criminal liability for failing to observe foreign norms, they should be prepared to offer corresponding evidence to support that position. Such evidence may include factually detailed declarations and other hard information showing infringement on foreign national interests that would lead to liability.
In contrast, requesting parties should be prepared to demonstrate that legitimate American interests predominate over those of foreign nations. While courts will generally spotlight the importance of conducting “full and fair discovery,” advancing other interests—such as the need to enforce U.S. security laws, as plaintiffs underscored in DiDi in seeking responses to deposition questions—may better substantiate requesting parties’ position on the issues.
Other Practical Considerations for Cross-Border Data Transfers
DiDi highlights additional considerations for practitioners in connection with requests for cross-border data transfers.
First, requesting parties (where possible) should prepare discovery requests that target specific forms of evidence rather than seeking broad categories of information. As the decisions from DiDi demonstrate, courts may be willing to bypass alleged foreign law proscriptions where targeted requests seek materials that are important (rather than marginally related) to the disposition of the litigation.
Next, both requesting and producing parties should consider the availability of alternative sources for the sought-after information that may not require addressing the complexities of cross-border data transfers. Doing so may help parties dispose of a dispute before it becomes costly and results in delays.
Finally, parties should consider informal resolutions to disputes over cross-border data requests. Whether that involves phasing discovery to focus initially on domestic information sources, investigating alternative information sources that won’t implicate the laws of foreign countries, or exploring accommodations with cross-border regulators to reduce concerns over violations of law or regulations, parties may find that informal discussions yield a more constructive and cost-effective method to resolving discovery issues than the zero-sum game approach of motion practice.
Assisted by GAI and LLM technologies.
SOURCE: HaystackID
[1] In re Didi Glob. Inc. Sec. Litig., No. 21-CV-5807 (LAK), 2025 WL 833437 (S.D.N.Y. Mar. 17, 2025).
[2] Société Nationale Industrielle Aérospatiale v. U.S. Dist. Court for S. Dist. of Iowa, 482 U.S. 522 (1987).
[3] In re Didi Glob. Inc. Sec. Litig., No. 21-CV-5807 (LAK), 2025 WL 267893 (S.D.N.Y. Jan. 22, 2025).
[4] Id.
[5] In re DiDi Glob. Inc. Sec. Litig., No. 21-CV-5807 (LAK), 2025 WL 743964 (S.D.N.Y. Mar. 7, 2025).
[6] In re DiDi Glob. Inc. Sec. Litig., No. 21-CV-5807 (LAK), 2025 WL 896053 (S.D.N.Y. Mar. 24, 2025).
[7] Id.
[8] In re DiDi Glob. Inc. Sec. Litig., No. 21-CV-5807 (LAK), 2025 WL 1069074 (S.D.N.Y. Apr. 8, 2025).
