Anwar et al v. Fairfield Greenwich Limited et al

Filing 1202

ENDORSED LETTER: addressed to Judge Victor Marrero from David A. Barrett dated 10/10/2013 re: Plaintiffs respectfully request that the Court accept this letter in response to the September 18, 2013 amicus letter of the Association of Corporate Counsel ("ACe") [Dkt. no. 1194] and Citco's reply brief [Dkt. no. 1198] objecting to Magistrate Judge Maas' July 8 Order (the "Reply"). the Reply incorporates portions of the ACC's brief and raises new arguments based on a new declaration of Citco's Dutch counsel, Michel Deckers, Plaintiffs believe these new filings warrant this further response. ENDORSEMENT: The Clerk of Court is directed to enter into the public record of this action the letter above submitted to the Court by Plaintiffs. (Signed by Judge Victor Marrero on 10/11/2013) (js)

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B 0 I E S, S CHI L L E R & F LEX N E R L L P 575 LEXINGTON AVENUE' 7TH FLOOR' NEW YORK, NY 10022' PH, 212 446,2300 • FAX 212.446 2350 October 10,2013 BY HAND \" ., !.jOCUi\lL\ I I Judge Victor Marrero United States District Court Southern District of New York 500 Pearl Street New York, New York 10007 Re: , .: EL.ECTI~O;-':IC-\LLY nl .If) ,i Anwar, et al. v. Fairfield Greenwich Limited, et al. Master File No. 09-CY -00118 (VM) (THK) Dear Judge Marrero: Plaintiffs respectfully request that the Court accept this letter in response to the September 18, 2013 amicus letter of the Association of Corporate Counsel ("ACe") [Dkt. no. 1194] and Citco's reply brief [Dkt. no. 1198] objecting to Magistrate Judge Maas' luly 8 Order (the "Reply"). l'he Reply incorporates portions of the ACC's brief and raises new arguments based on a new declaration of Citco's Dutch counsel, Michel Deckers,l Plaintiffs believe these new filings warrant this further response. As shown below, the Netherlands has a fully-developed law of attorney-client privilege, in which it has made the express choice to deny that privilege to unlicensed in-house lawyers in the context of a plenary discovery system. Citco and ACC concede that the "touching base" test would normally require application of Dutch privilege law to Citco' s relationship with Mr. Boonstra, Comity requires simple application of that Dutch law, not a hodge-podge that jumps back and forth between Dutch and U.S. law as Citco and ACC urge. Neither Citco. Mr. Deckers nor ACC disputes the evidence from Professor Jan Eijsbouts [Dkt. no. 1177]. who is, among other things, former General Counsel of the Dutch-headquartered multi-national Akzo Nobel. He testifies not only that "no Dutch court. . ever recognized" a right of unlicensed in-house lawyers to claim privilege, but that in his decades of experience as an in-house lawyer, Prof. Eijsbouts "dor es1not know of any in-house lawyers \\'ho believe that [such] communications ... are generally protected." and any such belief"would not at all be wise, or reasonable:' undisputed facts alone demonstrate that Citco has failed to meet its burdens to show both 0) that Judge Maas' Order was clearly erroneOllS. and (ii) that the Boonstra Documents are privileged. I Mr. Deckers does not mention. in either of his declarations. that he is not simply a paid experL but is appearing as Citco's cou[1s<.'1 in the Dutch litigation discussed in ·1~132-37 of his Octobc:r 3. 2013 declaration ("Reply Decl.·'). WWW.8SFLLP.COM BOIES, SCHILLER & FLEXNER LLP Honorable Victor \;larrero October 10, 2013 Page 2 I. Citco's Choice-of-Law Approach \Vould Turn the Straightforward "Touching Base" Test into a Potpourri of Different Laws 'rhe "touching base" analysis provides a straightfonvard test that mandates the application of foreign privilege law when the relationship at issue is centered abroad. See ilstret Aklieho/ag v. Andrx Pharmacellficu/s, Inc., 208 F.R.D. 92,98 (S.D.N.Y. 2(02). It is undisputed that Citco's relationship with Me Boonstra is centered in and therefore "touches base" with the Netherlands. 2 A limited exception applies \vhen a foreign country virtually precludes discovery of any kind whatever. and therefore has no reason to devclop any protections for privileged information. Only in those circumstances could there be disclosure of attorney-client communications where neither the country involved nor the U.S. had contemplated such disclosure. Id:' Instead of this simple and well-established Citco and ACC want the Court to ignore Dutch prh'ilege lavv and. based on their perception of Dutch discovery rules. recognize a pi':vilege under US. law. See Reply 1. Such cherry-picking is not the proper choice-or-law approach. 5,'ee Malletier v. Dooney & Bourke. Inc., 2006 WL 3476735. at * 18 (S.D.N.Y. Nov. 30. 2(06) (rejecting "cherry-picking segments of French law in support of a legal protection afforded by neither French nor American law" to unlicensed French in-house counsel). Nor does the cherry-picking end there. Arguing for "full protection of American privilege law" (Reply 1). Citco and ACe are confronted with the fact that U.S. law also denies a privilege to unlicensed la~Jers. Accordingly, Citco switches gears again, and proposes to return to Dutch laH' arguing that under more lenient Dutch [egal practice requirements, an unlicensed Dutch lawyer (whose communications are not privileged) is the functional equivalent of a licensed attorney in the Unitcd States (whose communications are privileged under C.S. law). Reply 9-10. There is no support for this strained and illogical approach, which would protect documents that are not privileged undcr either Dutch or U.S. law. II. Dutch Discovery Rules Are Not an Alternate System for Maintaining Attorney­ Client Confidentiality Citco and ACC argue that Dutch discovery rules arc so narrO\\i as to effectively fUllction as an "alternate system for maintain[ingl confidentiality" of attorncy-client communications. ACT Be 6: Reply I 5. This claim that the Netherlands protects non-privileged communications through its general discovery rules fails for at least four reasons . • <.,'ei.! App. Br. 10 (,'There is simply no States."): ACC Br. 4 . sense in which these issues can be said to ·touch the United Thm is not the factual scenario here. For thc reasons explained in Point II bel()\\ (see Opp. Br. 13-15). Dutch "'WilL' ufthe documcnts at i,sue ... \Vlluld [have been] discoverable." I.I/ru. 2()S F R.D. at 102 (emphasis added). . 1 disc(lVdy rules differ substantial I)- from those in Italy and Korea. where BOIES, SCHILLER & FLEXNER LLP Honorable Victor Marrero October 10, \3 Page 3 First. such an argument \vas rejected in In re Rivustigmine Polen! Litigation, 239 F.R.D. 351 (S.D.N.Y. 20(6) (Baer. 1.). There, plaintiffs argued that "because of more limited Swiss discovery procedures, a Swiss court ... would not order disclosure of the documents at issue" and therefore "comity dictates non-disclosure." Id. at 359. The court recognized that foreign jurisdictions have discovery systems that are not comparable to our own but held that it cannot 4 "imply [a1 privilege from discovery procedures where none exists." Jd. Second. the claim that general Dutch discovery rules serve to protect attorney-client privilege makes no sense. If discovery were as narrow as Citco and ACC claim. why ~would the Netherlands need to develop privilege law at all? On the contrary, the Netherlands does have a well-defined attorney-client privilege that applies in clearly-defined circumstances but has chosen not to extend it to unlicensed in-house lawyers. s Third, the implication of Citco's and ACe's theory is that nearly all documents vl/ould be protected by the purportedly narrow Dutch discovery rules. Under this reasoning, comity and public policy' would require this Court to permit Citco to withhold production of all documents­ whether privileged or not -. a position that directly conflicts vvith the Supreme Courfs holding in Societe Nationa/e Indllslrielle Aerospatiaie v. DistriCI Court, 482 U.S. (1987) (discovery may proceed under U.S. law, despite foreign restrictions on discovery). And of course, it IS inconsistent with Citco's production of literally millions of pages of documents in this case. us F(ntrth, if the fact that a country's discovery rules are narrower than those in the U.S. were sufflcient to ignore that country's limitations on the attorney-client privilege, it would be impossible for a U.S. court ever to apply foreign law because the United States discovery rules are the \vorld's most liberal. This would mean that two decades of this Court's cases rejecting privilege protections under various foreign laws were wrongly decided. 6 Citco is wrong in it~ view that the case is inapposite because the court did not consider comity given the parties' agreement that Swiss law (Reply 7). See In re Rm/sligmine. 239 F.R.D. at 359 (addressing cOlllity). , See Koppenol-Laforce Decl. ~tl 10-19: Eijsbouts Decl. 'I~I 4-8. Citeo's Dutch counsel does not disagree. 5;ee. e.g.. Reply Deel. ,: 6 ("Lawyers that are licensed are entitled to slich privilege ... "): Deckers Decl. t, 9 ("The Netherlands does not recognize as privileged communications between a Dutch company and its unlicensed in-lwlIse legal counsel.") /11 rc Rin/sllglllinL'. 239 F.R.D. at 358-60 (non-Icmycr's docllments not privileged under Sv\iss law): Ou/eh Fein d<'11111 ('0.. 2005 WL 1925656. at H) (S D. N. Y. I I, 2(05) (documents not aut!lOred bv attorney not priVileged under N la\V)~ ('Olll/'li/er ( l' .\II1I<'lId(l ('0. 1992 WL 5153-1. at *2-3 (S.DNY. Mar. 10. 19(2) (rejecting privilege under Japanese law). (, S,-,c. 1\ i(}hel \. BOIES, SCHILLER & FLEXNER LLP Honorable Victor Marrero (Jctober 10. 13 Page 4 Ill. The Netherlands Allows for Substantial Discovery To the extent 1t is relevant to the issues at hand. Dutch discovery rules (whether characterized as broad or narrow) are t~lr different from the non-existent or minimal discovery that apparently prevailed in Korea or Italy. See Reply 5-6. Citco's claim that there is no disclosure in the Netherlands "'for purposes of what is known in Common Law jurisdictions as dLvcovery" (Deckers Decl. ~ 9) is contradicted on Dutch counsel's own website. which declares that (i) Dutch law "allows pretrial discovery of documents," and OJ) communications between a company's board of directors and in-house counsel '"may have to be disclosed in civil proceedings." ,<"'ee Koppenol-Laforce Decl. -: 5 & Exs. A. B. The \vebsite is correct. ,)'ee Koppenol-Laforce Dec!. 4f~ 20-28 (discussing numerous 7 Dutch discovery mechanisms. induding preliminary witness examinations and the disclosure methods of Arts. 22. 162 and 843a DeCp, Arts. 2:345(2), 2:351 and 4:78 DCC. and Art. 35 of the Data Protection Act). Indeed. Citco concedes that there is no testimonial privilege for unlicensed legal personnel. Reply Decl. ~[ 6; Deckers Decl. ~ 9. Thus, viewing the Dutch discovery system "as a whole" (Reply 1), it is clear that Citco always has known that Mr. Boonstra's communications were not immune from disclosure and Citco is not the unexpected victim of any unforeseeable contlict of Imv. (aJ Dutch /uw provides/in' substantial discovery Although the burden of proal' is on Citco, Plaintiffs demonstrated in their opposition. with extensive case citations and excerpts from Dutch literature, that document discovery has been an integral part of Dutch civil procedure for over a decade. Koppenol-Laforce Decl. ~i~ 36­ 46. Citco's Dutch counsel does not deny that there \vere hundreds of published decisions involving document requests pursuant to Article 843a during 2002-2009. and that "a substantial portion" of those requests were granted in whole or in part. Koppenol-Laforce Dec!. 52: see Fijsbouts Decl. • 7 (document disclosure "'is quite extensive and often voluminous"), ,l As for the many authorities Prof. Koppenol-Laforce discusses in her Declaration (~~ 36­ 46). Mr. Deckers admits that the Project X case and Jonkman v. Dekker involved a "broad reading of Alticle 843a DCCP." thus contradicting his theory that broadly and generally described document requests will never be granted. Reply Decl. I\I'i 11. 23. \11'. Deckers also does not deny that the court in Sher/and Pony Park Slugharen (where the defendant bad requested "({II the manager's emails") rejected \1r. Deckers' specificity requirement and "ruled that it was not necessary for the company to describe each email In the l\:ethcrlands. witness testimony rcrm:'sents un alternutive method tor to inquire ubout documents without (a, Citco"s Dutch counsel admits) LIIIl ri,;ht for unlicensed in-house like Mr. Boonstra to refuse to di:;cll)se tile documents' content. See Reply Dec!. ~: 6: Deckers Decl. , 9: Koppenol-Laforce Decl. 'I~I 4, 53. BOIES, SCHILLER & FLEXNER LLP Honorahk Victor Marrero Octoher 10.2013 Page 5 individually." ld. Nor docs Mr. Deckers deny that in Trientu/is. the requesting party was ahle to ohtain his entire correspondence with his assistant without Identifying specific emails.ld. fT 25. Nor does Mr. Deckers deny that in Theodoor Gilissen Bankicrs. the Dutch Supreme COUlt ordered production. even though the requesting pany did not describe the documents \vith spccificity and could not demonstrate they actually existed. ld. 41[ 24. He merely argues that all these cases were "unique," "particular," and "unusual" (id. c:,r 24-26). Mr. Deckers fails to explain, however. why any of these holdings should be limited to its facts. He provides no quotations, no pin cites, and no translations of the cases he purports to distinguish. See id. c:,r 19-26. Clearly. there is nothing fact-specific about the general observation in Allianz Nederland that "if Article 843a DeCp only related to documents of which the content is in principle already known. the practical application of Art. 843a ... would run counter to the intent oCthe Legislature." Koppenol-Laforce Decl. ,r 37. Similarly, while the court in Ernst & Young Participalies held that a document request must be clear enough to know to (Reply Dec!. ~ 18; Koppcnol-Laforce Decl. '1 36) (which is not v"hat documents it inconsistent with broad discovery), Mr. Deckers points to nothing in this decision to suggest its holding that ··[tJhe case law is settled that the content of the requested documents need not be Koppenol-Laforce known beforehand" is limited to the particular circumstances of that case. Decl. ,r 37. Theodoor Gilissen Bankiers. Allian:::, and Ernst & Young demonstrate that an isolated 1988 remark by a former Minister of Justice (see Reply Dec!. ,r 9 (document disclosure should be limited to documents already known to requesting party)) does not reflect the state of Dutch law today or during the 2000-2008 time period, and that there is in fact no rule limiting discovery to documents that the requesting party already kno\vs. In light of the hundreds of Dutch cases contradicting the total absence of disclosure that Citco claims, Citco' s theory that discovery limitations under Dutch law would have protected the Boonstra Documents must be rejected. x (h) The Boonstra Documents salisfy discovery requirements ofDulch ia'vl' Citco's Dutch counsel admits that Dutch law's specificity requirement in actuality requires no more than a description sufficient to 0) clarify "v, hat documents the request concerns" and (ii) determine if the requesting party has an evidentiary interest in the documents requested. Reply Dec!. ~ 11. Neither of these purposes requires the identification of individual documents. thus undercutting Citco's claim that each document requested must be "readily­ identifiable:' Reply 3.') x Citco tries to bolster its position by pointing to litigation against it in Amsterdam arising from the Fairfield Sentry Fund's collapse, Mr. Deckers serves as trial counsel in that action. where there apparently has been no discovery to date. There is no record. however. that the Dutch plaintiffs reque~tcd the Boonstra Documents: they may well have forsaken discovery tor reasons unrelated to the scope of discover:. eg. hecZlu'Se their claims under Dutch law require different proof than the U,S. 1<1\'> claims at issue here. or because Dutch law requires the requesting party to pay the costs of , In any event- the Bool1<;tra Documents no\\ at issue arc specificall~ identified in Cilco's privilege log. BOIES, SCHILLER & FLEXNER LLP Honorahle Victor Marrero October 10, 13 Page 6 For the first time in its Reply, Citco argues that tbe Boonstra Documents would be shielded from discovery if (hypothetically) Plaintiffs had sued in the Netherlands hecause the requests supposedly do not meet other requirements of Dutch law. As Citco concedes, however. the requirement that the documents must "relate to" the alleged cause of action requires no more than that "the requesting party ... prove the request's relevance:' Reply 4 (emphasis added). Nothing further is required. The purported limitation that the documents must "relate to an es:tahlished legal relationship" het\veen the parties (Reply 3; emphasis added), is an invention of eiteo's brief-writer. There is no such language in the parties' declarations. See Reply Decl. ~~ 28-29. 34 (acknowledging that tort allegations may suffice and that an existing contractual relationship is not required). It) eitco further contends that Plaintiffs would not meet the relevance requirement under Dutch law. Reply 4; Reply DecL .1 36. Citco this assertion on its Dutch counsel's vague ipse dixit that under Dutch tort lmv .. there are good grounds to argue . .. that Citeo had no duty and could not take into account the interests of investors in the Fairfield Funds." Id (emphasis added 1. Needless to , a prediction hy Citco 's trialla\V)'er of \Vhat he might argue, with or "vithout success, in a hypothetical case that Plaintiffs never filed, is not "evidence" of Dutch law. I I IV. Globalization Does Not Require this Court to Impose U.S. Privilege Law on the World Complaining ahout a purported "patchwork quilt of regulations," the ACC and Citco argue that ..the realities ortoday's global legal profession" require that foreign in-house counsel should not have to worry about "the whim of a plaintiffs forum selection." ACC Br. I see Reply 8. Consequently, Citco advocates that when a country does not protect communications by in-house lawyers, the courts "should apply American privilege la,,\." Reply at 7. Citco and ACe ignore. however. that unification of the world's privilege laws by imposing U.S. law is 110t the role of this Court and is tlatly inconsistent with realistic notions of comity. The ACC has been lobhying tlX years, largely unsuccessfully, for Europe to adopt US­ III Citco misquotes Plaintiffs' .::xp.::rt as conc.::ding that an existing contractual relationship is required. Plaintiffs' expert uid 1101 state that ··the documents must 'n.:latc to the relationship at isslIc.'" Reply 5. Rather. she stated that the uocuments mllst "relate to the relationsh ip Ii. e.. the ron. contract. or olher C(fllse oj'actioll) at issue." Koppenol­ L.aforce Ded ~. ::5 (emphasis added). In other \\ords. the documents mllst be relevant to the claim or ut:lCnsc. as the: must under Rule 26(b)( I) SeC' Reply DecL ~l 7 (discovery through tcstimony must be "relevant to the litigatIOn at hand"). II Thi~ also disposes of Citco' contention thaI there is no "legitimate interest." whieh eitco claims must be bas.::d on a legal re between the undt.T Dutch tort IZlw Reply 4: Reply DecL'; 37. As Plaintiffs' expert explalils (Koppenol-Laforce Dec!. ~l ) and Citco's Dutch cOLinsel uoes not dispute. the "legitimate interest" prong requires no more than an e\'idenlhIlT Interest in obtaining the requeskd documents. BOIES. SCHILLER & FLEXNER LLP Honorable Victor Marrero October 10, 2013 Page 7 style attorney-client privilege. To that end, it intervened in the ,/k::o 'vohellitigation in the European COUIt of Justice, but the court did not adopt its views. ACC Br. 2, 7. Similarly, the Netherlands Supreme Court rejected a privilege for unlicensed in-house lawyers, who are not subject to regulatory oversight by limiting the privilege only to licensed in-house Ud1'OCUlen. Koppenol-Laforce Decl. ~;~r 18-19~ Eijsbouts Dec!. ~i 5. As for ACCs plea for recognition of its members' globalized law practices, Dutch global giants like Abo Nobel, Royal DSM, and Royal Philips Electronics all (like Citco) headquartered in the Netherlands - with, respectively, 60,000, ,500 and 120'c)00 employees around the world (Eijsbollts Dec!. I 12), are doing just line. Dutch law readily enables companies to protect their in-house law'yers' legal advice from disclosure, while having "operations that span national boundaries:" The lawyer need only be admitted to the local Dutch bar and satisfy its regulatory requirements, while employers like Citco need only uphold the in­ house lawyer's independence by signing a professional charter. 5,'ee Koppenol-Laforce Dec!. If,! 16-17. The fact that neither Mr. Boonstra nor Citco is will ing to take these steps does not mean that Magistrate Judge Maas' Order is preventing the global expansion of Dutch businesses. As Plaintiffs' expert declarations prove without dispute, many other Dutch in-house lawyers, with their employers' cooperation, have become advocaten precisely to ensure the contidentiality of their communications. Id.'i 54; Eijsbouts Dec!. ~ 6. Thus, application of Dutch privilege Imv here is a proper implementation of comity principles and in no way "fundamentally threatens the attorney-client relationship on a global scale." Reply 8. It simply recognizes what both the Netherlands and the United States already require, namely, admission to the bar to claim the protections of attorney-client privilege. A:1~ David 1\. Barrett cc: All counsel of record (via email)

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