Anwar et al v. Fairfield Greenwich Limited et al

Filing 1194

ENDORSED LETTER: addressed to Judge Victor Marrero from Amar D. Sarwal dated 9/18/2013 re: On behalf of the Association of Corporate Counsel, we urge this court to reverse the magistrate judge's decision, and hold that because the communications between the Dutch company and its Dutch in-house lawyer would have stayed confidential in the Netherlands, courts in the U.S. should treat them as privileged. ENDORSEMENT: The Clerk of Court is directed to enter into the public record of this action the letter above submitted to the Court by Association of Corporate Counsel. (Signed by Judge Victor Marrero on 9/23/2013) (js) Modified on 9/23/2013 (js).

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Association of
Corporate Counsel

1025 Connecticut Avenue. NW, Suite 200
Washington. DC 20036-5425 USA
tel + 1 202.293.4103
fax + 1202.293.4701
www.acc.com

September 18, 2013
Hon. Victor Marrero
United States District Judge
Daniel Patrick Moynihan
United States Courthouse
Courtroom lIB
500 Pearl Street
New York, NY 10007-1312
Sent by overnight delivery;
service copies sent bye-mail

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Amicus letter from Association ofCorporate Counsel supporting
Citco Defondants ' privilege arguments in Anwar v.
Fairfield Greenwich, Ltd., Master File No. 09-CV-OOl18 (VM)

Dear Judge Marrero:
On behalf of the Association of Corporate Counsel, we urge this court to reverse
the magistrate judge's decision, and hold that because the communications
between the Dutch company and its Dutch in-house lawyer would have stayed
confidential in the Netherlands, courts in the U.S. should treat them as privileged. 1
Different countries have different legal systems. They use a wide range of legal
mechanisms to address even common goals, such as protecting communications
between clients and their lawyers. The U.S. legal system recognizes the world's
legal diversity under the doctrine of comity, by establishing the "touching-base"
and other tests to prevent American norms from riding roughshod over the law
from other countries. This U.S. respect for laws from elsewhere is especially
important to in-house lawyers, whose employers' operations increasingly span
national boundaries. Having to already deal with a patchwork quilt of regulations
facing their multinational clients, in-house counsel should not have to worry that
their legal advice will be subject to the whim of a plaintiffs forum selection.

This letter uses "attorney-client priVilege," the term common in the United
States, and "legal professional privilege," the term common in Europe and
elsewhere, as synonyms.

By in-house counsel, (or in-house counse/.®

Page 2

Underscoring that widespread concern, this letter points to a number of differences
between the Dutch legal system and that of the United States, particularly as they
relate to the disclosure of the information sought in this case. For instance, the
Dutch legal system protects confidentiality by limiting discovery overall, in stark
contrast with the American approach. In addition, Dutch in-house counsel are not
even required to be admitted to, or otherwise registered with, the bar in order to
practice law for their clients. And the differences don't end there. In the United
States, the client famously controls the privilege. In the Netherlands (and many
other jurisdictions around the world), the lawyer does. By ignoring those
differences, among other things, the magistrate judge imposed American views
about confidentiality and discovery onto the Dutch legal system. Doing so not
only violates legal precedent, but also ignores the realities oftoday's global legal
profession.

I.

ACC's interest in protecting in-house privilege

The Association of Corporate Counsel is a global bar association that promotes the
common professional and business interests of in-house counsel. ACC has over
33,000 members who are in-house lawyers employed by over 10,000
organizations in more than 75 countries. Almost 4,200 of our members are in­
house lawyers from other countries who work outside the United States. For over
30 years, ACC has advocated to ensure that courts, legislatures, regulators, bar
associations, and other law or policy-making bodies understand the role and
concerns of in-house counsel and the legal departments where they work.
As a core focus, ACC has championed the importance of attorney-client privilege.
In the United States and around the world, ACC has pushed courts and agencies to
adopt and expand the scope ofthe privilege. And ACC has especially worked to
ensure that a robust privilege applies to a client's confidential communications
with in-house lawyers, as the Supreme Court held in Upjohn Co. v. United States,
449 U.S. 383, 390 (1981). ACC also intervened in Akzo Nobel Chern. Ltd and
Akcros Chern. Ltd v. Cornrn 'n, Case C-550/07 P (Apr. 29, 2010), to argue that the
European Union's antitrust authority should honor privilege for in-house lawyers
just as it honors the privilege for outside lawyers. 2
The views of the in-house bar are especially important in this case, given that the
dispute concerns how to treat advice that a Dutch in-house counsel gave to his
Dutch client.

2

See http://advocacy.acc.com/tags/privilege/ (listing recent briefs, letters,
and meetings where ACC has advocated for stronger attorney-client privilege.)

By in-house counsel, fiIr in-house counsel.®

Page 3

II.

In-house legal practice has gone global.

The practice of law is inherently global today for all lawyers, including in-house
lawyers. Clients "routinely encounter legal issues that implicate foreign or
intemationallaw and want the advice of trusted lawyers from other jurisdictions.,,3
While this is true across the United States, it is especially so in New York, whose
legal community views globalization with pride. As a report from the New York
State Bar Association states, "New York State is fortunate to belong to a nation
that is deeply committed to the liberalization of global trade and finance.,,4
Often even more than other lawyers, in-house counsel operate within the global
context. About l3 percent of ACC's members are non-U.S. members. Others ACC
members have U.S. law degrees but work outside the U.S.; still others received
their education or training abroad but now work here. Many companies have
operations that span national boundaries, and they expect their in-house lawyers to
have the flexibility to operate according to the laws and standards in each country.
And other companies, such as the Citco defendants in this case, employ in-house
counsel who work in their own countries, but can become involved in litigation,
disputes, or investigations in the U.S. or elsewhere.

III. The touching-base test embodies comity and respect for foreign legal
systems.
The magistrate judge below looked to the touching-base test. That test, which
courts in the Second Circuit have used to determine when to apply the law of other
countries in discovery disputes, embodies the principles of comity and deference
to foreign legal systems.

A.

Comity encourages courts to apply foreign legal systems in
international discovery disputes.

The touching-base test arises "as a matter of comity." Golden Trade, S.r.L. v. Lee
Apparel Co., 143 F.R.D. 514, 520 (S.D.N.Y. 1992). Similarly, in Gucci Am., Inc.
v. Guess?, Inc., 271 F.R.D. 58, 67 (S.D.N.Y. 2010) ("Gucci 1'), the magistrate
judge emphasized that its conclusion "does not offend principles of comity." And
the district court in Astra Aktiebolag v. Andrx Pharm., Inc., 208 F.R.D. 92,98

3

Am. Bar Ass'n, Comm'n on Ethics 20120, "Resolution and Report: Model
Rule 5.5 (Unauthorized Practice of Law; Multijurisdictional Practice ofLaw),"
Report at 1, available at http://tinyurl.com/kpyqz77.
4
N.Y. State Bar Ass'n, Task Force on N.Y. Law in Int'l Matters, "Final
Report," (June 25,2011), at 12, available at http://tinyurl.com/m6ep8t:x.

By in-house counsel, for in-house counsel.®

Page 4
(S.D.N.Y. 2002) referred to the inquiry as the "the comity or 'touching base'
approach," and mentioned comity nearly a dozen times in reaching its conclusions.
Earlier this year, the Second Circuit wrote that at its core, "[i]nternational comity
is a consideration guiding courts, where possible, towards interpretations of
domestic law that avoid conflict with foreign law." Linde v. Arab Bank, PLC, 706
F.3d 92, 111 (2d Cir. 2013) (cert. pending). See also Hilton v. Guyot, 159 U.S.
113, 164 (1895) (stating comity is "the recognition which one nation allows within
its territory to the legislative, executive, or judicial acts of another nation") (quoted
in Linde); u.s. v. First Nat. City Bank, 396 F.2d 897, 901 (2d Cir. 1968) (stating
"a court of one country should make an effort to minimize possible conflict
between its orders and the law of a foreign state affected by its decision"); Golden
Trade, 143 F .R.D. at 522 (same, quoting language from First Nat. City Bank). As
Golden Trade emphasized, "sensitivity to the interests of other jurisdictions is
perhaps most compelling in the international arena." Id. at 521. And that requires,
''where possible, ... interpretations of domestic law that avoid conflict with
foreign law." Linde, 706 F.3d at 111.
B.

The touching-base test enhances comity by applyingforeign law
absent serious conflicts with us. law.

The touching-base test enhances the sensitivity to the laws of foreign jurisdictions
that makes up the essence of comity. Laws of other countries should govern
discovery disputes when "these countries have the predominant interest in whether
those communications should remain confidential, and enforcement of their laws .
. . would not seriously impinge on any significant policy of this forum." Golden
Trade, 143 F.R.D. at 522.
To determine which jurisdiction has the "predominant interest" under the test,
courts look to "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.'" Astra, 208 F.R.D. at 98, quoting Golden Trade, 143
F.R.D. at 521-22. As Gucci I explained, that means "communications regarding a
foreign legal proceeding or foreign law 'touch base' with the foreign country."
271 F.R.D. at 65.

c.

Us. courts must not apply rules rigidly, or consider foreign law
in a vacuum.

In order to show respect to the legal systems of other countries, the Second Circuit
has made clear that "[m]echanical or overbroad rules of thumb are of little value."
First Nat. City Bank, 396 F .2d at 901. See also Minpeco, S.A. v. Conticommodity

By iflohouse counsel. for in-house counsel.®

Page 5
S.A., 116 F.R.D. 517, 521 (S.D.N.Y. 1987) (same). There is no "reason to read the
rule ... inflexibly." Golden Trade, 143 F.R.D. at 521.

Instead, courts in the Second Circuit look at the totality of the circumstances to
make sure that they give proper weight to the legal systems of other countries. The
Second Circuit has held that courts must perform a "particularized analysis,"
Linde, 706 F.2d at 109 (quoting Societe Nationale 1ndustrielle Aerospatiale v. u.s.
Dist. Court, 482 U.S. 522, 543 (1987), which is "holistic" and "multi-factored."
1d. at 112. See also First Nat. City Bank, 396 F.2d at 901 (calling for "a balancing
of the interests involved.").
In the context of countries with alternate methods of discovery, it is not
appropriate to compare the U.S. system to the foreign system in an a la carte
manner. Rather, it is crucial to view the foreign discovery system as a whole. "The
scope of discovery in the foreign country is also a valid consideration in resolving
choice oflaw issues." Gucci 1,271 F.R.D. at 68.
The reasoning that the Astra court used is instructive. There, the court considered
documents in Korea. It decided to apply the American attorney-client privilege,
despite differences with the Korean system. According to the court, "vastly
different discovery practices, which permit only minimal discovery, are applicable
to civil suits conducted in Korea." Astra, 208 F.R.D. at 102. So, where "none of
the documents at issue here would be discoverable in a Korean civil suit," it would
"offend the very principles of comity" to disclose the documents in U.S. litigation.
1d. Acting otherwise would wrongly result in applying foreign law "in a vacuum."
1d. 5

5

Other authorities also agree on the need to look at international ethics laws
in a holistic manner. As the New York Bar Association stated in an ethics opinion
considering professional responsibility in relation to lawyers from other countries,
it is not appropriate to "require an identity of ethical and disciplinary rules, which
is not likely to be the case." N.Y. State Bar Ass'n, Comm. on Prof. Ethics, Op. 762
(Mar. 5,2003), at n.7 (available at
https:!lwww.nysba.org/ContentiContentFolderslEthicsOpinions/Opinions7518251
EO_762.pdf). Or, as stated more bluntly by a task force of the American Society
of International Law, "it is important to emphasize the need to avoid the
parochialism or elitism that can infect discussions of legal professionalism and
ethics." Am. Soc. of Int'l Law, "Report ofthe ASIL Task Force on International
Professional Responsibility," (Dec. 2007), at 6 (available at
http://www.asil.org/pdfs/taskforcereport.pdf).

8y in-house counsel, for in-house counsel.®

Page 6

D.

The magistrate judge misapplied the touching-base test by viewing
attorney-client privilege in rigidly American terms.

The magistrate judge here applied the touching-base test in the sort of mechanical
manner that the Second Circuit has prohibited. As a result, the magistrate did not
display comity toward the Dutch legal system here. It viewed the case through a
purely American lens, which precedent prohibits.
The magistrate judge asked whether Dutch law provides for in-house privilege in
precisely the same way as the United States does. And when it arrived at the
inevitable conclusion that the two legal systems differ, the magistrate judge held
that no privilege exists here and closed the matter.
But that sort of crabbed inquiry doesn't acknowledge how Dutch law operates in
practice. The Citco Defendants describe that system in the declarations
accompanying their opening brief to this Court. They readily admit that attorney­
client privilege does not operate the same way for in-house counsel in the U.S.
versus those in the Netherlands. Here, of course, courts fully recognize privilege
between clients and in-house counsel. See Upjohn, 449 U.S. at 390. U.S. law
accomplishes that by allowing parties to request documents, and then permitting
parties to withhold them pursuant to the privilege. That works just fine. But it is
not the only way.
The Dutch system leads to the same result, using a different mechanism. In the
Netherlands, the discovery system prohibits parties from asking for attorney-client
communications in the first place. This is true whether or not the in-house counsel
has a law license. Whether courts label this a "privilege" or something else, the
bottom line is exactly the same: parties do not disclose confidential
communications about legal questions that occur between a client and a lawyer.
Equally important, looking to the second prong of the touching-base test, no U.S.
interest suffers by recognizing the Netherlands' alternate system for maintain
confidentiality. The United States strongly protects confidential legal
communications between clients and their lawyers, in order to encourage people to
learn about the law and obey it. As the Supreme Court held in Upjohn, the
privilege's "purpose is to encourage full and frank communication between
attorneys and their clients, and thereby promote broader public interests in the
observance oflaw and administration ofjustice." Upjohn, 449 U.S. at 389. See
also Gucci Am., Inc. v. Guess?, Inc., No. 09 Civ. 4373,2011 WL 9375 at *2

8y in-house counsel, for in-house counse/.®

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(S.D.N.Y. Jan. 3,2011) ("Gucci If') (same). The Dutch system arrives at that
6
same place, albeit by a different route.
Given the international reach of the legal issues today, described above, the U.S.
has a strong interest in protecting attorney-client communications wherever they
may occur. The fact that the U.S. system protects confidentiality in one manner,
and the Dutch system chooses a different mechanism, is hardly material. In the
words of the Astra court, the magistrate judge here wrongly looked at the Dutch
system in a "vacuum."
IV.

The Akzo opinion has no relevance to this case.

Finally, ACC notes that in their submission to the magistrate judge, the plaintiffs
relied in part on the European Commission case of Akzo Nobel, and it is possible
that they pointed to it in their sealed brief to this Court. But Akzo offers no support
to the magistrate judge's opinion.
ACC is extremely familiar with Akzo. As mentioned above, ACC intervened in
that case, to argue that the European Union's antitrust authorities should respect
in-house legal privilege. Unfortunately, the Court of Justice held that the privilege
did not apply in that case. But it made absolutely clear that its holding has no
authority outside ofEU antitrust investigations. It wrote that "[i]n the context of
... national proceedings and search measures, any protection afforded by legal
professional privilege is neither 'withdrawn' or 'eroded; on the contrary it
continues to apply without restriction." Akzo at, 186. It continued that the holding
"applies only to competition proceedings and investigations conducted by the
Commission; it does not affect the law governing national proceedings." Id.
(emphasis added).
In fact, earlier this year the Supreme Court of the Netherlands declined to follow
Akzo, and instead upheld the validity of in-house legal privilege in the context of
national legal proceedings. See LJN BY6101, 12/02667 (Mar. 15,2013) (available
at http://tinyurl.com/ofb8x91.) In Belgium, the Brussels Court of Appeal reached
essentially the same conclusion in a different case. See En Cause De Belgacom,
S.A., 2011IMRl3 (Mar. 5, 2013) (available at http://tinyurLcom/n56qb98).
Given the strong limits that the Court of Justice placed on its Akzo holding, and the
refusal of the Supreme Court of the Netherlands to adoptAkzo for national
6

To further emphasize the different mechanism that Dutch law uses to
protect attorney-client privilege, even for Dutch lawyers with law licenses, the
attorney holds the legal professional privilege. That contrasts with the U.S.
system, where the client controls privilege.

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proceedings, there are no grounds to expand it to a situation such as this one, with
no connection whatsoever to a European Commission antitrust investigation.

v.

Conclusion

The magistrate judge's opinion denying privilege has multiple flaws. It ignores the
reality of global in-house practice, and it completely fails to grant the proper level
of respect and comity to the Dutch legal system. That system does protect the
confidentiality of communications between clients and authorized in-house
lawyers, whether or not they have law licenses. It simply uses a different
mechanism to that end. When considered in context, it should be clear that the
Dutch attorney-client communications here should stay protected.
In parsing out differences between Massachusetts and New York law, then-Judge
Benjamin Cardozo emphasized that "[w]e are not so provincial as to say that every
solution of a problem is wrong because we deal with it otherwise at home."
Loucks v. Standard Oil Co., 224 N.Y. 99, 111 (N.Y. 1918). When it comes to
international discovery disputes in U.S. courts, the Second Circuit has made clear
that it is not at all "provincial."
Therefore, ACC respectfully requests that this Court reverse the magistrate judge's
privilege decision.
Sincerely yours,

Amar D. Sarwal
Vice President and Chief Legal Strategist
[e-mail]
Evan P. Schultz
Senior Counsel and Director of Advocacy
cc:
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By in-house counsel. (or in-house counsel.®

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