Anwar et al v. Fairfield Greenwich Limited et al

Filing 1158

DISCOVERY ORDER: Accordingly, the Citco Defendants' privilege objections are overruled and the motion to compel is GRANTED. (Signed by Magistrate Judge Frank Maas on 7/8/2013) Filed In Associated Cases: 1:09-cv-00118-VM-FM et al.Copies Sent by Chambers to Hon Victor Marrero(djc)

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POCUMENT
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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ELECfRONICALLY FILED

DOC #: ----~--l·

DATE FILED: 1- '6
I?

PASHA S. ANWAR,
Plaintiffs,

DISCOVERY ORDER

-against­
09 Civ. 118 (VM) (FM)
FAIRFIELD GREENWICH LTD, et al.,
Defendants.
This document relates to the
Citco Cases

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FRANK MAAS, United States Magistrate Judge.
This multi-district litigation consolidates numerous actions brought by
investors against various funds, administrators, intermediary banks, and auditors in an
attempt to recover losses arising out of the now-infamous Bernard Madoff investment
scandal. On April 25, the Plaintiffs deposed Renger Boonstra, a senior in-house lawyer at
Citco Bank Nederland, one of several defendant banks alleged to have provided financial
account services for the Fairfield Greenwich "feeder" funds. During the deposition,
counsel for the Citco Defendants instructed Mr. Boonstra not to answer certain questions,
apparently on the theory that the Plaintiffs' inquiries related to matters protected by the
attorney-client privilege.
Mr. Boonstra is a lawyer by education, but he is not a licensed attorney.
Although licensure is not a requirement for serving as in-house counsel in the
Netherlands, Dutch law does not recognize an attorney-client privilege for
communications with unlicensed in-house lawyers. Accordingly, the Plaintiffs have

requested an order overruling the Citco Defendants' privilege objections. In addition, the
Plaintiffs seek to compel disclosure of several of Mr. Boonstra's email communications
that the Citco Defendants have withheld on privilege grounds.
The Citco Defendants have a rather different view of the matter. They
argue that American

not Dutch -law governs the dispute. As a consequence, the Citco

Defendants contend that their communications with Mr. Boonstra are privileged even if
he was unlicensed because Citco had a "reasonable belief' that Mr. Boonstra was its
attorney.
In determining which country's law applies to a privilege dispute involving
foreign attorney-client communications, courts in this Circuit consider the country with
which the communications "touch base." Gucci America, Inc. v. Guess?, Inc. ("Gucci
1"),271 F.R.D. 58,64-65 (S.D.N.Y. 2010). Under this analysis, the Court applies "the
law of the country that has the 'predominant' or 'the most direct and compelling interest'
in whether [the] communications should remain confidential, unless that foreign law is
contrary to the public policy of this forum." Astra Aktiebolag v. Andrx Pharmaceuticals,
208 F.R.D. 92, 98 (S.D.N.Y. 2002) (quoting Golden Trade, S.r.L. v. Lee Apparel
Co., 143 F.R.D. 514, 522 (S.D.N.Y. 1992)). "The jurisdiction with the 'predominant
interest' is either 'the place where the allegedly privileged relationship was entered into'
or 'the place in which that relationship was centered at the time the communication was
sent.'" rd. Thus, American law typically applies to communications concerning "legal
proceedings in the United States" or "advice regarding American law," while

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communications relating to "foreign legal proceeding[ s] or foreign law" are general1y
governed by foreign privilege law. Gucci I, 271 F.R.D. at 65.
Mr. Boonstra's communications likely "touch base" with the United States
because they are related to legal issues arising out of the Citco Defendants' role in the
administration of key feeder funds involved in the Madoff scheme. I say "likely" because
the communications at issue were not provided to me for in camera review, and my
understanding of their contents is therefore based solely on the general descriptions set
forth in the parties' letters. There is no need to resolve this question, however, because
the same result obtains whether the communications "touch base" here or in the
Netherlands.
If the Plaintiffs are correct that Dutch law applies, the Boonstra
communications plainly are not privileged. Although Dutch law affords a "legal
professional privilege" to licensed in-house counsel, there is no recognized Dutch
privilege for unlicensed lawyers. In re Xv. Stichting H9 Invest, HR Mar. 15,2013, LJN
BY6101. Nor does there appear to be any exception to that rule in circumstances where a
client reasonably believes that its conversations are privileged.
If, on the other hand, the Citco Defendants are correct that American law
governs, Mr. Boonstra's communications still are not privileged. In the United States, the
attorney-client privilege generally applies only to communications with attorneys who are
licensed to practice law. In re Grand Jury Subpoenas Dated January 20, 1998,995 F.
Supp. 332, 337 (E.D.N.Y. 1998) (Raggi, J.). Since Mr. Boonstra is unlicensed, no
privilege could attach to his communications with the Citco Defendants.
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Notwithstanding the general rule that the attorney client privilege applies
only to licensed attorneys, courts have found communications with non-attorneys to be
privileged in limited circumstanccs in which the client "rcasonab[ly] believe[ s] that the
person to whom the communications were made was in fact an attorney." Gucci
America, Inc. v. Guess?, Inc. ("GUCCl II"), No. 09 ClV. 4373 (SAS), 2011 WL 9375, at *2
(S.D.N.Y. Jan. 3,2011). In Gucci II, for example, the court applied this exception to the
communications of a Gucci in-house lawyer in California who, despite having been
admitted to the bar in California and two other jurisdictions, was unauthorized to practice
law in California because his bar membership status there was "inactive." Id. at *4-5. To
support its privilege claim, Gucci submitted, among other things, six declarations from its
present and former executives stating that they considered the in-house lawyer to be an
attorney. In addition, Gucci adduced evidence that the lawyer routinely appeared in court
and before administrative agencies, and that it had paid his California bar membership
fees throughout his tenure as in-house counse1. Id. at *5. Based upon this evidence, the
court concluded that Gucci had demonstrated that it reasonably believed its lawyer was a
licensed attorney, thus enabling it to assert privilege with respect to its communications
with him. Id.
The facts here are not at all comparable to those in Gucci II. At the outset,
it is undisputed that Mr. Boonstra is not - and never has been - licensed in any
jurisdiction. Second, there is no evidence that Mr. Boonstra ever held himself out as a
licensed attorney or performed tasks (such as appearing in court) that would have
suggested that he was admitted to the Netherlands bar. Third, although in-house counsel
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must be admitted to the bar in order to practice in the United States, in-house lawyers in
the Netherlands are permitted to be, and frequently are, unlicensed. Moreover, Dutch law
requires that the employer of a licensed in-house attorney sign a professional charter
committing the employer to honor its attorney's independence. See In re X v. Stichting
H9 Invest, HR Mar. 15,2013, LJN BY6101 (citing Art. 3(3) of the Practicing In-House
Regulation of Nov. 27, 1996). Given that affirmative obligation, the Citco Defendants
cannot credibly argue that they were reasonably mistaken as to Mr. Boonstra's licensure
status.
Finally, even if the Citco Defendants mistakenly believed that Dutch law
protected their communications with an unlicensed in-house attorney, the reasonable
belief exception would not apply. Such an argument necessarily is predicated upon a
mistake of law, but the reasonable belief exception applies only in situations where the
client makes an "excusable mistake of fact." A.LA. Holdings, S.A. v. Lehman Bros.,
Inc., No. 97 Civ. 4978 (LMM) (HBP), 2002 WL 31385824, at *4 (S.D.N.Y. Oct. 21,
2(02). Indeed, a "client's beliefs, subjective or objective, about the law of privilege [do
not] transform an otherwise unprivileged conversation into a privileged one." In re Grand
Jury Subpoena Duces Tecum, 112 F.3d 910,923-24 (8th Cir. 1997). The Citco
Defendants' enoneous views on Dutch privilege law therefore cannot form the basis for
the relief they presently seek.

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Accordingly, the Citco Defendants' privilege objections are overruled and
the motion to compel is GRANTED.
SO ORDERED.
Dated:

New York, New York
July 8, 2013

United States Magistrate Judge

Copies to:
Hon. Victor Marrero
United States District Judge
All counsel (via ECF)

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