Aviva Sports, Inc. v. Fingerhut Direct Marketing, Inc.

Background

Aviva sought post-judgment discovery from Manley Toys, Ltd. After Manley failed to respond, the court ordered production. Manley later entered liquidation in Hong Kong and transferred twenty bankers’ boxes and compact discs to its liquidators, Mat Ng and John Robert Lees. The court later ordered the liquidators to send the documents to Aviva in the United States.

The liquidators asked the court to reconsider that order, stay production, allow a review for legally protected communications and personal data, permit production of copies instead of originals, require Aviva to obtain an approval order from a Hong Kong court, and make Aviva pay for the review. Aviva opposed reconsideration and moved to hold the liquidators in civil contempt for producing no documents by the December 15, 2021 deadline. Aviva requested a daily penalty of $5,000 and reimbursement of fees and costs.

Reconsideration ruling

The court treated the request as a motion to reconsider an earlier nonfinal order under the District of Minnesota’s local rule. It concluded that the liquidators had not timely raised most privilege and privacy objections, but also determined that it had failed to account adequately for possible privilege under Hong Kong law and had not given the liquidators an opportunity to address production of originals.

The court modified the document-production order in several respects:

- The liquidators may review eight compact discs of legal documents in Box 17 and Boxes 19 and 21 for documents potentially protected by privilege. This is the “Privilege Review Set.” - Documents in that set that are not legitimately privileged, and documents connected with the United States, must be produced. Any documents withheld or redacted on privilege grounds must be identified in a privilege log meeting Federal Rule of Civil Procedure 26(b)(5)(A). - The liquidators may produce forensically sound copies instead of originals. - The liquidators may not conduct a separate review to withhold or redact documents under Hong Kong’s Personal Data (Privacy) Ordinance. The court found that the documents may contain protected personal data, but concluded that the balance of interests favored production rather than delaying or limiting discovery under Hong Kong privacy law. - The court did not require Aviva to obtain an approval or “comfort” order from a Hong Kong court. It stated that such an order might reduce resistance to production but was not required because the liquidators were subject to the United States court’s order. - Aviva must pay $3,000 for the initial privilege review and preparation of the privilege log. The court reserved the question of who must pay for any later redactions.

The liquidators’ motion for reconsideration was therefore granted in part and denied in part. The court ordered production of documents outside the Privilege Review Set by June 21, 2022, and production of nonwithheld documents within that set, along with the privilege log, by June 30, 2022. The request for a stay was denied as moot.

Contempt ruling

The court determined that the liquidators’ motion for reconsideration did not substantially justify their failure to comply with the earlier production order. A motion for reconsideration or a request for a stay did not excuse compliance while the order remained in effect. The court also found that the liquidators could have produced documents for which they had no possible basis to withhold or redact them.

Even so, the court did not recommend imposing Aviva’s requested daily civil contempt fine at that time because it expected the liquidators to comply with the modified order. Aviva could seek the court’s intervention if noncompliance continued. The liquidators had to bear or reimburse Aviva for storage costs incurred from December 15, 2021, through the date of the order, and had to pay Aviva $2,500 in attorneys’ fees. Aviva’s other requests for attorneys’ fees and costs related to the contempt motion were denied.

Aviva’s motion for contempt and sanctions was granted in part and denied in part. The parties also had to confer about changes to the protective order so the documents could be used in a related case, subject to that case’s protective order.