Anwar et al v. Fairfield Greenwich Limited et al

Filing 1160

MEMORANDUM OF LAW in Opposition re: #1158 Order, The July 8, 2013 Discovery Order of Magistrate Judge Frank Maas. Document filed by CITCO Bank Nederland N.V. Dublin Branch, CITCO Fund Services (Europe) B.V., Citco Canada Inc., Citco Fund Services (Bermuda) Limited, Citco Group Limited, Citgo Global Custody N.V.. (Gordon, Andrew)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ANWAR, et al.,
Plaintiffs,
MASTER FILE NO.
09-CV-0118 (VM)

- against FAIRFIELD GREENWICH LIMITED, et al.,
Defendants.
This Document Relates To: All Actions

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS THE CITCO
GROUP LTD., CITCO FUND SERVICES (EUROPE) B.V., CITCO (CANADA)
INC., CITCO GLOBAL CUSTODY N.V., CITCO BANK NEDERLAND N.V.
DUBLIN BRANCH, AND CITCO FUND SERVICES (BERMUDA) LTD.’S RULE
72(a) OBJECTIONS TO THE JULY 8, 2013 DISCOVERY ORDER OF
MAGISTRATE JUDGE FRANK MAAS

PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP
Andrew G. Gordon
1285 Avenue of the Americas
New York, New York 10019-6064
Tel: [phone]
Fax: [phone]
[e-mail]
Attorneys for Defendants The Citco Group Ltd., Citco
Fund Services (Europe) B.V., Citco (Canada) Inc.,
Citco Global Custody N.V., Citco Bank Nederland N.V.
Dublin Branch, and Citco Fund Services (Bermuda)
Ltd.

TABLE OF CONTENTS
Page
Table of Authorities ............................................................................................................. i
Preliminary Statement .........................................................................................................1
Background ..........................................................................................................................2
Relevant Procedural History ................................................................................................5
Argument .............................................................................................................................5
I.

Standard of Review......................................................................................6

II.

The Magistrate Judge Unfairly Denied Citco the Ability to Submit
Critical Evidence. ........................................................................................7

III.

The Magistrate Judge’s Order is Clearly Erroneous and Contrary to
Law ..............................................................................................................8
A.
B.

Under American Privilege Law, Mr. Boonstra Qualifies as
an Attorney. ...................................................................................12

C.
IV.

The Magistrate Judge Ignored Principles of Comity and
Public Policy. ...................................................................................8

The Magistrate Judge Misapplied the “Reasonable Belief”
Exception. ......................................................................................13

The Scope of Magistrate Judge Maas’ Ruling is Unclear and
Requires Modification ...............................................................................18

Conclusion .........................................................................................................................19

TABLE OF AUTHORITIES
Page(s)
CASES
Astra Aktiebolag v. Andrx Pharm., Inc.,
208 F.R.D. 92 (S.D.N.Y. 2002) ....................................................................................... 8, 9, 11
Catskill Dev., L.L.C. v. Park Place Entm’t Corp.,
206 F.R.D. 78 (S.D.N.Y. 2002) ................................................................................................. 7
In re Comverse Tech., Inc. Sec. Litig.,
06 Civ. 1875, 2007 WL 680779 (E.D.N.Y. Mar. 2, 2007) ........................................................ 7
Golden Trade, S.r.L. v. Lee Apparel Co.,
143 F.R.D. 514 (S.D.N.Y. 1992) ..................................................................................... 8, 9, 11
In re Grand Jury Subpoena Duces Tecum,
112 F.3d 910 (8th Cir. 1997) ................................................................................................... 14
In re Grand Jury Subpoena Duces Tecum Dated Sept. 15, 1983,
731 F.2d 1032 (2d Cir. 1984) ............................................................................................ 12, 13
Gucci Am., Inc. v. Guess?, Inc.,
271 F.R.D. 58 (S.D.N.Y. 2010) (“Gucci I”) ................................................................ 5, 6, 8, 11
Gucci Am., Inc. v. Guess?, Inc.,
No. 09 Civ. 4373, 2011 WL 9375 (S.D.N.Y. Jan. 3, 2011) (“Gucci II”) ...... 5, 6, 14, 15, 16, 17
JSC Foreign Econ. Ass’n Technostroyexport v. Int’l Dev. & Trade Servs., Inc.,
220 F.R.D. 235 (S.D.N.Y. 2004) ............................................................................................... 6
Renfield Corp. v. E. Remy Martin’s Co., S.A.,
98 F.R.D. 442 (D. Del. 1982) ............................................................................................ 13, 18
In re Richard Roe, Inc., 68 F.3d 38 (2d Cir. 1995) ................................................................. 12, 13
United States v. Gillock, 445 U.S. 360 (1980) .............................................................................. 14
United States v. Rivera, 837 F. Supp. 565 (S.D.N.Y. 1993) ......................................................... 14
Upjohn Co. v. United States, 449 U.S. 383 (1981) ....................................................................... 14
STATUTES
28 U.S.C. § 636(b)(1)(A) ................................................................................................................. 1

i

OTHER AUTHORITIES
Fed. R. Civ. P. 72(a) .................................................................................................................... 1, 6
Fed. R. Evid. 501 ........................................................................................................................... 14

ii

Defendants The Citco Group Ltd., Citco Fund Services (Europe) B.V.,
Citco (Canada) Inc., Citco Global Custody N.V., Citco Bank Nederland N.V. Dublin
Branch (“Citco Bank”), and Citco Fund Services (Bermuda) Ltd. (collectively, “Citco”),
pursuant to 28 U.S.C. § 636(b)(1)(A) and Rule 72(a) of the Federal Rules of Civil
Procedure, object to Magistrate Judge Maas’ July 8, 2013 Discovery Order (“Discovery
Order”) granting Plaintiffs’ request to compel discovery.1
Preliminary Statement
The attorney-client privilege is intended to encourage complete candor
between a client and its attorney without fear that the communication will later be
discovered. This privilege protects a client’s most critical and sensitive communications
from disclosure and allows attorneys to be well-informed to provide careful and sensible
legal advice and effective representation. Without this privilege, there would be a strong
chilling effect on the attorney-client relationship.
Here, the Magistrate Judge ordered that Citco Bank turn over all of its
privileged written communications with Renger Boonstra, the Bank’s senior most lawyer,
because Mr. Boonstra – a Dutch lawyer for a Dutch corporation who solely gave advice
to his client on issues of Dutch law – does not have a law license.

But, in The

Netherlands (like many other foreign jurisdictions), Mr. Boonstra does not need a law
license to serve as an in-house lawyer for a Dutch corporation. Thus, if the ruling below
is allowed to stand, the Discovery Order will fundamentally alter the attorney-client
privilege for in-house attorneys of foreign corporations and cast doubt over
communications that clients reasonably believed were protected.
1

Citations to “Ex. __” are references to the exhibits attached to the Declaration of
Patrick J. Somers. The Discovery Order is attached as Ex. 1 and cited as “Order.”
1

As we discuss in greater detail below, the Magistrate Judge clearly erred
in ordering the production of Mr. Boonstra’s documents for several reasons:
•

The Magistrate Judge’s Order was issued without the benefit of
considering essential evidence establishing that Mr. Boonstra is an
attorney and that his client reasonably believed its communications
with him were privileged.

•

The Magistrate Judge mistakenly ignored important principles of
comity and public policy.

•

The Magistrate Judge erroneously concluded that Mr. Boonstra did
not qualify as an attorney under American law.

•

The Magistrate Judge incorrectly concluded that, even under
American law, the “reasonable belief” exception did not apply.

•

And, the Magistrate Judge granted a “motion to compel” without
even considering the fact that some of the documents at issue are
privileged for reasons independent of Mr. Boonstra’s status as a
lawyer.
Accordingly, for the reasons set forth below, Citco’s objections to the

Discovery Order should be sustained.
Background
In The Netherlands (like in many foreign countries), individuals holding a
law degree do not need a license to be an attorney and practice law as in-house legal
counsel for a corporation.

(Declaration of Michel Deckers, dated July 16, 2013

(“Deckers Decl.”) ¶ 8.) Nor does The Netherlands require in-house attorneys to register
as a member of any bar (or its equivalent) for written communications between the inhouse attorney and its client to be protected from discovery. (Id. ¶ 9 (“Under Dutch law,
there is no obligation to disclose any non-oral communication such as e-mails, letters,
notes or any other written communication between an unlicensed legal counsel and his or

2

her clients.”).) Thus, as Michel Deckers, a Dutch attorney, explains, there is a legitimate
expectation in The Netherlands that written communications, including e-mails, notes,
letters, or any other form of written work, between Dutch corporations and their in-house
attorneys will not be subject to discovery. (Id. ¶ 12.)
At all relevant times, this expectation applied to Citco Bank’s relationship
with Renger Boonstra. Mr. Boonstra is the senior most lawyer at Citco Bank. (Id. ¶ 5;
Declaration of Renger Boonstra, dated July 19, 2013 (“Boonstra Decl.”) ¶ 4.) He holds a
law degree from Leiden University and works and lives in Amsterdam. (Deckers Decl.
¶ 5; Boonstra Decl. ¶ 6.) He has served as senior legal counsel for Citco Bank since
1997. In that role, he was (and still is) authorized to practice law as an attorney for Citco
Bank. (Boonstra Decl. ¶ 6.) And, over the last 16 years, Mr. Boonstra has provided a
variety of legal services and advice to Citco Bank, including, but not limited to, drafting
and revising contracts, providing regulatory advice, and providing legal advice.
(Boonstra Decl. ¶ 5)

These are services that only a lawyer can provide in The

Netherlands, and Citco Bank relied upon Mr. Boonstra to provide them. (Id.)
In providing these services, acting as an attorney, and holding himself out
as the senior most lawyer at Citco Bank, Citco Bank also reasonably believed, in accord
with Dutch law, that its written communications with Mr. Boonstra were privileged.
Citco Bank employees and other Citco employees have repeatedly testified that they
believed Mr. Boonstra served as Citco Bank’s attorney. (See, e.g., Declaration of Scott
Case, dated July 19, 2013 (“Case Decl.”) ¶ 4 (“I have always understood [Mr. Boonstra]
to be legal counsel for the Citco Bank.”); Braham Tr. Ex. 7 at 42:20-43:5 (“There are
several people that act as in-house counsel. . . . For the bank group – the bank division, a

3

gentleman named Renger Boonstra.”); DeRosa Tr. Ex. 8 at 128:9-10 (“[Mr. Boonstra]
was in-house counsel to Citco Bank Nederland”); Irausquin Tr. Ex. 9 at 197:15-16
(“Renger Boonstra, legal counsel at Citco Bank Netherlands”); Kavanagh Tr. Ex. 10 at
101:24 (“[Renger Boonstra] is legal counsel at [Citco Bank Nederland]”); Keunen Tr. Ex.
11 at 368:24-25 (“Renger Boonstra . . . is the legal counsel for the bank . . . .”); Murray
Tr. Ex. 12 at 226:4-7 (“[Mr. Boonstra] is an employee of Citco Bank . . . He was working
there as an attorney”); Rund Tr. Ex. 13 at 99:3-4 (“Renger Boonstra is the in-house
counsel for [Citco Bank Nederland.]”); Smith Tr. Ex. 14 at 70:17-18 (“[Mr. Boonstra is]
legal counsel based in Amsterdam for the Bank”).)
And, key employees of Citco Bank also have attested that they believed
that Mr. Boonstra was an attorney who they could seek (and did seek) legal advice from
without the fear that their communications would be discovered. For example, Scott
Case, a Managing Director of Citco Bank at the relevant time, stated that, “[b]ecause I
believed Mr. Boonstra was an attorney, during the course of my employment at Citco
Bank, I have sought legal advice from Mr. Boonstra on a variety of legal issues, including
with respect to Fairfield Sentry.” (Case Decl. ¶ 6.) Further, Mr. Case stated that,
“[e]very time I sought legal advice from Mr. Boonstra, I believed my written
communications with him were privileged and, as such, fully expected that they would
remain protected from disclosure.” (Id. ¶ 7.) Additionally, because the communications
“are generally not discoverable under Dutch Law,” Mr. Boonstra “never advised anyone
at Citco Bank that there was a risk that such communications could have to be produced.”
(Boonstra Decl. ¶ 8.)

4

Relevant Procedural History
On May 10, 2013, plaintiffs began questioning Mr. Boonstra’s status as an
attorney and asked “that Citco reconsider its position on withholding documents where
Mr. Boonstra’s status as Citco’s in-house counsel serves as the basis of any claim of
work-product or attorney-client privilege.” (Ex. 2 at 2.) Because plaintiffs’ request was
unreasonable, Citco refused. (Ex. 3 at 1.)
On May 28, 2013, plaintiffs sent a letter to Magistrate Judge Maas
requesting “a conference to address claims of attorney-client privilege made by Citco.”
(Ex. 4 at 1.) Three days later, Citco sent Magistrate Judge Maas a response and requested
“an opportunity to brief fully the issues – and submit affidavits from Mr. Boonstra and
others – raised in Plaintiffs’ letter.” (Ex. 5 at 1.) On June 4, 2013, Plaintiffs submitted an
additional letter to the Court and asserted, for the first time, that the issues “may be
decided on the basis of the parties’ letters.” (Ex. 6 at 3.)
Instead of holding a conference, allowing briefing on the issues about
privilege, or reviewing the documents, on July 8, 2013, the Magistrate Judge issued a
Discovery Order granting plaintiffs’ “motion to compel.” (Order at 6.) In so doing, the
Magistrate Judge made a number of clearly erroneous assumptions that would have been
corrected with the benefit of full briefing. (See, e.g., Order at 3 (speculating that the
documents “touch base” with the United States and noting that documents were not
provided for in camera review).)
Argument
The attorney-client privilege is one of the oldest and most important
privileges for confidential communications recognized in the United States. Gucci Am.,
Inc. v. Guess?, Inc., 271 F.R.D. 58, 70 (S.D.N.Y. 2010) (“Gucci I”). “The purpose of the
5

privilege is to protect the client’s communication, and to encourage full and frank
disclosure when seeking legal advice, which is why the client holds the privilege and
only the client can assert or waive it.” Gucci Am., Inc. v. Guess?, Inc., No. 09 Civ. 4373,
2011 WL 9375, at *4 (S.D.N.Y. Jan. 3, 2011) (“Gucci II”). The purpose of the privilege
is so important that courts have routinely recognized that the privilege applies even in
situations when a client communicates with a person who is not an attorney, “if the client
reasonably believed that the person to whom the communications were made was in fact
an attorney.” Id. at *2. Importantly, “[c]ommunications with in-house counsel in the role
of attorney-advisor are afforded the same protection as outside counsel. . . .” Gucci I,
271 F.R.D. at 70.
The Magistrate Judge’s Discovery Order guts the core purpose of this
privilege and threatens substantially to alter international corporations’ communications
with, and their reliance upon, their own in-house counsel about matters of foreign law by
ignoring the protections afforded by the relevant jurisdiction. The Magistrate Judge
clearly erred by (1) depriving Citco of the right to submit essential evidence of the issues
raised by plaintiffs concerning Mr. Boonstra and privilege, (2) ignoring principles of
comity and public policy, (3) rejecting Mr. Boonstra’s qualifications as an attorney, (4)
misapplying the reasonable belief exception, and (5) granting a “motion to compel”
without addressing other privilege claims over the documents.

Accordingly, the

Discovery Order should be overturned.
I.

Standard of Review
Rule 72(a) of the Federal Rules of Civil Procedure permits parties to

“serve and file objections” to a nondispositive order of a magistrate judge. The district
judge, to whom such objections are made, “must consider timely objections and modify
6

or set aside any part of the order that is clearly erroneous or is contrary to law.” Fed. R.
Civ. P. 72(a); JSC Foreign Econ. Ass’n Technostroyexport v. Int’l Dev. & Trade Servs.,
Inc., 220 F.R.D. 235, 237 (S.D.N.Y. 2004) (“The issue raised by the defendants
Objections is whether the Magistrate Judge’s orders . . . were clearly erroneous or
contrary to law.”). An order is clearly erroneous “when the reviewing court is firmly
convinced the lower court decided an issue in error.” Catskill Dev., L.L.C. v. Park Place
Entm’t Corp., 206 F.R.D. 78, 86 (S.D.N.Y. 2002); see also In re Comverse Tech., Inc.
Sec. Litig., 06 Civ. 1875, 2007 WL 680779, at *2 (E.D.N.Y. Mar. 2, 2007) (“A
magistrate judge’s findings may be considered clearly erroneous where on the entire
evidence, the [district court] is left with the definite and firm conviction that a mistake
has been committed”) (internal quotation marks omitted). “An order may be deemed
contrary to law when it fails to apply or misapplies relevant statutes, case law or rules of
procedure.” Catskill Dev., 206 F.R.D. at 86 (internal quotation marks omitted).
II.

The Magistrate Judge Unfairly Denied Citco the Ability to Submit Critical
Evidence.
The Discovery Order’s apparent acceptance of plaintiffs’ argument that no

protection applies to any of Citco’s communications with Mr. Boonstra or to
Mr. Boonstra’s documents was error. The root of this error likely lies with the Magistrate
Judge’s refusal to grant Citco’s request to brief fully the issues presented and submit
essential evidence.

Among other things, this evidence shows that Mr. Boonstra’s

documents touched upon the application of foreign law and that his client reasonably
believed that its communications with its Dutch attorney, about Dutch law, were shielded
from discovery. (Deckers Decl. ¶ 12 (“Citco Bank would have reasonably expected that
any written communications between Mr. Boonstra and his clients relating to the
7

Fairfield funds would have been fully protected from disclosure.”); see also Boonstra
Decl. Ex ¶ 8-9; Case Decl. ¶ 6-7.)

Further, this evidence shows that compelling

production of Mr. Boonstra’s documents offends principles of comity and public policy.
(See Deckers Decl. ¶ 12.) By overlooking the available evidence, the Magistrate Judge
unfairly deprived Citco of its ability to defend its assertions of privilege and, more
fundamentally, made conclusions unsupported by the record. As shown below, this
evidence – submitted here – fully supports Citco’s assertion of privilege.
III.

The Magistrate Judge’s Order is Clearly Erroneous and Contrary to Law.
A.

The Magistrate Judge Ignored Principles of Comity and Public Policy.
A fatal mistake in the Discovery Order was the Magistrate Judge’s failure

to grapple with the importance of principles of comity and public policy in assessing
whether plaintiffs are entitled to discovery of Mr. Boonstra’s documents. Indeed, the
Discovery Order fails to touch upon these issues at all, which was clear error.
To start with, all of the documents plaintiffs challenge are foreign
documents. Mr. Boonstra lives and works in The Netherlands. Citco Bank is located in
The Netherlands.

And the employees who communicated with Mr. Boonstra were

located abroad. Because Mr. Boonstra is a foreign attorney, who works for, and provides
legal advice to, a foreign client, about issues of foreign law, the applicability of any
privilege necessarily implicates issues of foreign law. Astra Aktiebolag v. Andrx Pharm.,
Inc., 208 F.R.D. 92, 97 (S.D.N.Y. 2002); Golden Trade, S.r.L. v. Lee Apparel Co., 143
F.R.D. 514, 520-21 (S.D.N.Y. 1992).
Applying these principles, courts in this Circuit have “adopted the comity
or ‘touching base’ approach and applied a traditional choice-of-law ‘contacts’ analysis to
determine the law that applies to claims of privilege involving foreign documents.”
8

Astra, 208 F.R.D. at 98 (citing Golden Trade, 143 F.R.D. at 518-19); see also Gucci I,
271 F.R.D. at 64-65. This analysis requires a court to “defer[ ] to the law of the country
that has the ‘predominant’ or ‘the most direct and compelling interest’ in whether those
communications should remain confidential, unless that foreign law is contrary to the
public policy of this forum.” Astra, 208 F.R.D. at 98 (quoting Golden Trade, 143 F.R.D.
at 522). Critically, in performing this analysis, a court must examine the discovery
practices of the foreign country to understand the substantive law relating to privilege.
See id. at 100-102. Where the discovery practices of a foreign country differ from the
United States, the development of, and need for, privilege law also differs. Put simply, if
virtually no discovery of documents is contemplated in a foreign country, it inescapably
follows that the need for a well-developed law of privilege is minimal. See id at 102
(noting that, “where virtually no disclosure is contemplated, it is hardly surprising that
Korea has not developed a substantive law relating to attorney-client privilege and work
product that is co-extensive with our own law.”).
The Discovery Order side-stepped this analysis, assumed that the
documents “likely ‘touch base’ with the United States,” and asserted that the results
would be the same under either Dutch or American law. (Order at 3.) This was clear
error.
First, the assumption that the documents likely touch base with the United
States is unfounded. The documents at issue concern, among other things, issues about
Citco Bank – a Dutch company – and the services it provided to Fairfield Sentry and
Fairfield Sigma – two foreign funds. Further, the contracts governing Citco Bank’s
services with these foreign funds are governed by Dutch law. There is simply no basis to

9

have assumed that these documents have anything to do with the United States. And, a
review of those documents shows they do not. With the exception of some documents
about Mr. Madoff’s arrest for fraud and possible litigation that might follow, these
documents touched upon foreign issues such as legal advice about Fairfield Sentry’s
listing on the Irish Stock Exchange, foreign tax withholding issues concerning Fairfield
Sentry, revisions to, and advice about, the Fairfield Sentry custodian agreement, which is
governed by Dutch law, and advice about the Fairfield Sentry private placement
memorandum, which was a document prepared for foreign investors. There is simply no
plausible sense in which these issues can be said to “touch upon” the United States.
Second, under Dutch law, these documents are not subject to discovery.
As Mr. Deckers explains in his affidavit, “[a]s a Dutch lawyer working as in-house
counsel for a Dutch corporation in The Netherlands providing advice on a commercial
relationship governed by Dutch law, Mr. Boonstra and his clients would have reasonably
expected that any written communication between he and his clients relating to the
Fairfield Funds would be protected from discovery.” (Deckers Decl. ¶ 7.) This is
because, “[u]nder Dutch law, there is no obligation to disclose any non-oral
communication such as e-mails, letters, notes, or any other written communication
between an unlicensed in-house legal counsel and his or her clients.” (Id. ¶ 9.) “As a
result, there is an expectation in The Netherlands that Dutch corporations will not be
forced to disclose their written communications with their Dutch in-house counsel in
which advice is requested or given, irrespective of whether that counsel is licensed or
not.” (Id. ¶ 12.)

10

The Discovery Order completely ignores this aspect of Dutch law.
Instead, the Magistrate Judge focused only on the fact that attorney-client privilege
concerning oral communications applies only to licensed in-house counsel. (Order at 3.)
Since Mr. Boonstra does not have a license (but is authorized to practice law in-house),
the Court reasoned that the documents are not privileged. (Id.) The Court’s focus on
Mr. Boonstra’s lack of a license obscured the fact that the Dutch legal system affords
other protections over these documents. Thus, “to apply [Dutch] privilege law, or the
lack thereof, in a vacuum—without taking account of the very limited discovery provided
in [Dutch] civil cases—would offend the very principles of comity that choice-of-law
rules were intended to protect.” Astra, 208 F.R.D. at 102; see also Gucci I, 271 F.R.D. at
68-70 (“The scope of discovery in the foreign country is . . . a valid consideration in
resolving choice of law issues.”); Golden Trade, 143 F.R.D. at 521 (“sensitivity to the
interests of other jurisdictions is perhaps most compelling in the international arena”).
Further, ordering discovery of Mr. Boonstra’s documents without applying
any of the protections under Dutch law offends the public policy of this forum, “which
promotes full discovery but, at the same time, prevents disclosure of privileged
documents.” Astra, 208 F.R.D. at 102. As the Astra court explained, “[i]f the court were
to rule without taking Korea’s discovery practices into account, the court would be
required to order complete disclosure of all of the Korean documents, many of which
would be protected under either the attorney-client privilege or work product doctrine as
applied in this jurisdiction.” Id. This would clearly be “[c]ontrary to the policies of
upholding or expanding privilege to protect documents whenever they would be
protected in other countries.” Id. The same is no less true here.

11

By failing to take into account principles of comity and public policy, the
Discovery Order creates an absurdly unfair result. It applies only select portions of
Dutch law to conclude that production is required, where a full application of that law
would have shielded the documents from production.

This Court should therefore

reverse to avoid such an unfair result and afford comity to Dutch law in this regard.
B.

Under American Privilege Law, Mr. Boonstra Qualifies as an
Attorney.
Moreover, as discussed below, a correct application of American law also

protects the documents from disclosure.
The attorney-client privilege is a sacred aspect of our legal system. In this
Circuit, the privilege applies:
(1) where legal advice of any kind is sought (2) from a professional legal
advisor in his capacity as such, (3) the communications relating to that
purpose, (4) made in confidence (5) by the client, (6) are at his instance
permanently protected (7) from disclosure by himself or by the legal
advisor, (8) except the protection be waived.
In re Grand Jury Subpoena Duces Tecum Dated Sept. 15, 1983, 731 F.2d 1032, 1036 (2d
Cir. 1984); In re Richard Roe, Inc., 68 F.3d 38, 39-40 (2d Cir. 1995) (same).
The Magistrate Judge did not apply this test to determine whether Citco’s
assertion of privilege was proper under American law. The Court instead concluded that
the documents were not privileged because “the attorney-client privilege generally
applies only to communications with attorneys who are licensed to practice law.” (Order
at 3.) But this analysis misapprehends the test a court is required to undertake in
assessing the application of American privilege law to a Dutch lawyer, who is authorized
to practice law in his jurisdiction.

In other words, imposing the American license

requirement on a Dutch lawyer defies common sense because the requirements to

12

practice law as a Dutch lawyer are determined by The Netherlands – not the United
States.
The better course is for a court to conduct a functional analysis to
determine whether the individual – here, Mr. Boonstra – “is competent to render legal
advice and is permitted by law to do so.” Renfield Corp. v. E. Remy Martin’s Co., S.A.,
98 F.R.D. 442, 444 (D. Del. 1982). Without question, Mr. Boonstra meets such a test.
There is no dispute that, under Dutch law, Mr. Boonstra is authorized to practice law as
an in-house attorney. (Deckers Decl. ¶ 8; Boonstra Decl. ¶ 6.) Perhaps more to the point,
under Dutch law, Citco (1) sought legal advice (2) from a professional legal advisor
(Mr. Boonstra) in his capacity as such, (3) the communications at issue related to that
purpose, (4) and were made in confidence, (5) by the client.

Accordingly, under

American law, these documents should be (6) permanently protected (7) from disclosure
by Citco or by Mr. Boonstra since (8) no waiver exists. See In re Grand Jury, 731 F.2d
at 1036; In re Richard Roe, 68 F.3d at 39-40. In short, the hallmarks for sustaining
attorney-client privilege apply here.
C.

The Magistrate Judge Misapplied the “Reasonable Belief” Exception.
Even if Mr. Boonstra does not qualify as an attorney for purposes of

applying American privilege law (which he does), Citco’s communications with him are
still privileged because Citco had a reasonable belief that it was communicating with an
attorney. Indeed, Mr. Boonstra is a Dutch attorney. The Magistrate Judge, however,
focused on whether Citco reasonably believed Mr. Boonstra had a law license. That was
clear error.
As courts have repeatedly made clear, the attorney-client privilege may
successfully be invoked with communications involving a non-attorney if the client
13

reasonably believed that it was communicating with an attorney. See, e.g., Gucci II, 2011
WL 9375, at *2 & n.14 (“Even if the communications at issue were not made to an
attorney, the privilege may be successfully claimed if the client reasonably believed that
the person to whom the communications were made was in fact an attorney.”) (citing In
re Grand Jury Subpoena Duces Tecum, 112 F.3d 910, 923 (8th Cir. 1997)); United States
v. Rivera, 837 F. Supp. 565, 568 n.1 (S.D.N.Y. 1993) (“It is common ground among the
parties that the attorney-client privilege attaches to confidential communications made to
an individual in the genuine, but mistaken, belief that he is an attorney.”); (see also Order
at 4 (acknowledging same).) A party’s “reasonable belief” is determined by taking into
account the unique facts and circumstances of each case on a case-by-case basis. See
Upjohn Co. v. United States, 449 U.S. 383, 396 (1981); United States v. Gillock, 445
U.S. 360, 367 (1980) (noting that Congress drafted Federal Rules of Evidence Rule 501
“to provide the courts with greater flexibility in developing rules of privilege on a caseby-case basis”).
An analysis of this case points to a finding that Citco reasonably believed
that, when it was communicating with Mr. Boonstra – the senior most lawyer at Citco
Bank – it was communicating with a lawyer.
First, on the facts, the reasonableness of Citco’s belief that Mr. Boonstra
is an attorney is well-established. Mr. Boonstra holds a law degree and has served as a
lawyer for Citco Bank for sixteen years. (Boonstra Decl. ¶ 5.) During this time period,
Mr. Boonstra has been regularly called upon to provide legal services and responded by
displaying the skills of a seasoned lawyer. Among other tasks, Mr. Boonstra has drafted
and revised sophisticated commercial agreements, provided regulatory advice, and

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provided legal advice. (Boonstra Decl. ¶ 4.) Moreover, during discovery, employeeafter-employee testified that he believes that Mr. Boonstra is a lawyer who provides legal
services to Citco Bank. (E.g., Case Decl. ¶ 4; Braham Tr. Ex. 7 at 42:20-43:8; DeRosa
Tr. Ex. 8 at 128:6-7; Irausquin Tr. Ex. 9 at 197:14-16; Kavanagh Tr. Ex. 10 101:19102:3; Keunen Tr. Ex. 11 at 368:6-369:3; Murray Tr. Ex. 12 at 226:3-7; Rund Tr. Ex. 13
at 99:2-4; Smith Tr. Ex. 14 at 70:10-18.)

Employees believed that they were

communicating with a lawyer and were unaware of Mr. Boonstra’s licensure status.
(E.g., Case Decl. ¶ 5.) Accordingly, Citco’s belief that Mr. Boonstra “was its attorney
was more than reasonable,” and therefore the documents in question are protected. Gucci
II, 2011 WL 9375, at *6.
The decision in Gucci II is particularly instructive here. At issue in Gucci
II were communications between Gucci and its director of legal services, whose only
state bar membership (California) was inactive during the entire time of his employment.
Gucci II, 2011 WL 9375, at *2, *4. The defendants challenged Gucci’s assertion of
privilege and argued that the Gucci lawyer’s inactive state bar license negated any claim
of privilege. The district court disagreed and held that the documents were privileged
because (1) the Gucci lawyer qualified as an attorney because he was an active member
of two federal bars and, in the alternative, (2) that Gucci had a reasonable belief that he
was an attorney. Id. at *4-5. With regard to reasonable belief, the court rejected the
argument that a heightened due diligence requirement applies to corporations asserting
the reasonable belief exception.

The court explained that the test consists only of

“whether the client had a reasonable belief that it was communicating with an attorney.”
Id. at *5 (emphasis added). Gucci’s belief was found to be reasonable because, when it

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hired the director of legal services, it knew he had a law degree, hired him to perform
legal work, which he did over a long period of time, and employees attested that they
thought he was a lawyer. Id. Thus, the court held that all the communications between
Gucci and its director of legal services were protected. Id. at *5-6.
So, too, here. Like the Gucci lawyer, Mr. Boonstra has a law degree and
has served as a lawyer for Citco Bank for over fifteen years. In this role, Mr. Boonstra
performed “functions routinely handled by an attorney.” Id. And, as in Gucci II, Citco
has offered deposition testimony and declarations from employees that clearly establish
their belief that Mr. Boonstra was (and is) their lawyer. For these reasons, Gucci II
compels sustaining Citco’s claims of privilege
The Magistrate Judge, however, disagreed and attempted to distinguish
Gucci II based on Mr. Boonstra’s lack of a law license. (See Order at 5 (“the Citco
Defendants cannot credibly argue that they were reasonably mistaken as to Mr.
Boonstra’s licensure status”).)2 This distinction rests on a faulty understanding of the
reasonable belief test and led to error. As the Gucci II court explained, the test for the
reasonable belief exception “is whether [Citco] has demonstrated that it had a reasonable
belief that [Mr. Boonstra] was its attorney when it communicated with him in the course
of his employment as its in-house counsel” – not whether Citco had a reasonable belief
that Mr. Boonstra was a licensed member of a bar. Id. at *5. The entire point of the
reasonable belief exception is that it applies to protect communications made to a person
2

The Magistrate Judge misapprehended the issue and devoted its decision to
discussing whether Mr. Boonstra held himself out as a licensed attorney and
whether that belief was reasonable. (Order at 4-5.) As discussed below, the
reasonableness of Citco’s belief must be assessed in the context of Mr. Boonstra’s
status as a lawyer under Dutch law. Accordingly, the Magistrate Judge’s
discussion is irrelevant.
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who turns out not to have had the necessary qualifications to serve as an attorney. Put
another way, the purpose of the reasonable belief exception is to protect instances in
which a client believes it communicated with an attorney who was later revealed to be
missing a qualification to be considered an attorney, such as a law license. See Gucci II,
2011 WL 9375, at *5 (“[T]he reasonable belief exception is well established. A number
of courts have sustained invocation of the privilege even when the communications were
not made with a member of the bar, if the client reasonably believed that it was
communicating with an attorney.”) Accordingly, the Magistrate Judge’s focus on a law
license was entirely beside the point. The point is whether the evidences establishes that
people reasonably believed Mr. Boonstra was an attorney. And, as shown above, they
did.
Moreover, unlike in the United States, a license is not required under
Dutch law to practice law as in-house counsel. In The Netherlands, Mr. Boonstra’s legal
training alone allowed him to do so. Thus, Citco’s belief that it was communicating with
an attorney was not only reasonable, it was – in fact – well-established under the law.
And under this same system, clients like Citco Bank would have reasonably believed that
its written communications with its in-house lawyer were protected from discovery.
The Magistrate Judge’s citation to the Dutch professional charter
commitment does not compel a different result. (See Order at 5 (“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”).) As discussed above, Citco Bank does
not contend (and the reasonable belief exception does not require) that it was under the
mistaken impression that Mr. Boonstra was licensed; rather, Citco Bank contends that it

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had a reasonable belief that, when it was communicating with Mr. Boonstra, it was
communicating with an attorney. Indeed, as the Magistrate Judge himself noted, under
Dutch law, Mr. Boonstra is, in fact, an attorney. (See Order at 1 (“licensure is not a
requirement for serving as in-house counsel in [T]he Netherlands”).)
Second, as a matter of policy, the Magistrate Judge’s decision carries a
grave risk of drastically altering in-house privilege globally and imposing serious
injustice. To maintain attorney-client privilege in the American judicial system, the
Discovery Order would require businesses around the globe to have their in-house
counsel become members of the bar in their respective countries, even where such
membership is not required by law or – in some cases – not even permitted. See, e.g.,
Renfield, 98 F.R.D. at 444. The Discovery Order thus vitiates protections afforded under
foreign law by imposing American licensing requirements and discovery rules on foreign
lawyers and their clients that have been hauled into our legal system. Such rule not only
is fundamentally unfair, but also it wreaks havoc on the international in-house legal
community by creating uncertainty about foreign corporations’ reasonable expectation
that their communications with their attorneys are protected. Such uncertainty directly
undermines the purpose of attorney-client privilege.
IV.

The Scope of Magistrate Judge Maas’ Ruling is Unclear and Requires
Modification.
Finally, while the Discovery Order is clearly contrary to law and this

Court should sustain Citco’s objections, in the event this Court disagrees, the Order
nevertheless should be modified. The Discovery Order purports to overrule Citco’s
“privilege objections” and to grant “the motion to compel.” (Order at 6.) As plaintiffs
note in their May 28, 2013 letter, “[t]here are 149 emails and email chains which Citco
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claims involve purported attorney-client communications with Mr. Boonstra or concern
legal analysis or advice given by him.” (Ex. 4 at 1.) Many of those emails are privileged
for reasons not addressed by the Magistrate Judge at all, including the fact that they
involve communications with other attorneys at Citco and are thus protected by the
attorney-client privilege for this independent reason or are protected by the work product
doctrine.
Conclusion
For all of the foregoing reasons, Citco’s objections should be sustained
and the Discovery Order should be overruled in all respects.
Dated: New York, New York
July 22, 2013

PAUL, WEISS, RIFKIND, WHARTON &
GARRISON LLP

By: s/ Andrew G. Gordon
Brad S. Karp
Allan J. Arffa
Leslie Gordon Fagen
Andrew G. Gordon
Patrick J. Somers
1285 Avenue of the Americas
New York, New York 10019-6064
Tel: [phone]
Fax: [phone]
[e-mail]

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