Wultz et al v. Bank of China Limited
Filing
203
MEMORANDUM OPINION AND ORDER #102798: that in light of the considerations above, I order the following: First, BOC will not be required automatically to produce SRTs, LTRs, and any other communications from BOC to the Chinese government whose disclosure is specifically and categorically prohibited under the Chinese laws specified above in (1 ). Nor is BOC required to produce a more specific "log" of such communications than already provided. If plaintiffs believe there is a legal basis for overruling BOC's assertion of privilege despite the language in this Order - perhaps by analogy to a court review under the Administrative Procedure Act of a U.S. agency decision not to disclose non-public information such as a SAR-plaintiffs are invited to submit a letter not to exceed three single-spaced pages explaining the legal basis for compelling production and proposing any protective measures that might be necessary for the review of non-public materials. The next discovery conference will be held January 30, 2013 at 4:30 pm. The parties are invited to submit pre-conference letters of no more than three single-spaced pages no later than January 27, 2013. (Signed by Judge Shira A. Scheindlin on 1/9/13) (pl) Modified on 1/16/2013 (tro).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------------------------- )(
SHERYL WULTZ, individually, as personal
representative of the Estate of Daniel Wultz,
and as the natural guardian of plaintiff
Abraham Leonard Wultz; YEKUTIEL
WULTZ, individually, as personal
representative of the Estate of Daniel Wultz,
and as the natural guardian of plaintiff
Abraham Leonard Wultz; AMANDA
WULTZ; and ABRAHAM LEONARD
WUL TZ, minor, by his next friends and
guardians Sheryl Wultz and Yekutiel Wultz,
MEMORANDUM
OPINION & ORDER
11 Civ. 1266 (SAS)
Plaintiffs,
- againstBANK OF CHINA LIMITED,
Defendant.
--------------------------------------------------------
)(
SHIRA A. SCHEINDLIN, U.S.D.J.:
On October 29, 2012, I granted plaintiffs' motion to compel Bank of
China Ltd. ("BOC") to produce foreign discovery materials even where doing so
would contravene Chinese bank secrecy laws.] As part of the October 29 Order, I
See Wultz v. Bank a/China Ltd., - F. Supp. 2d -,2012 WL
5378961 (S.D.N.Y. Oct. 29,2012) ("October 29 Order").
1
declined to order BOC to produce "confidential regulatory documents created by
the Chinese government whose production is clearly prohibited under Chinese
law.,,2 In a footnote, I stated: "To be perfectly clear, this exception does not apply
to materials created by BOC and provided to the Chinese government in the course
of regulatory reviews.,,3
BOC has argued that it should not be required to produce documents
in certain categories not explicitly addressed by the Order: first, documents that
were produced by BOC and provided to the Chinese government outside the course
of regular regulatory reviews; and second, documents whose production is
prohibited under Chinese laws other than the bank secrecy laws addressed in the
Order. 4 In particular, BOC has refused to produce, specifically log, or even
acknowledge the existence of:
(1) Reports, if any, that BOC would have submitted to the PRC
government regulators from July 2003 to July 2008 not in
the course of a regular regulatory review, subject to Article
5(1) of the Anti-money Laundering Law of the PRC;
Articles 7, 15(2) and 16 of the Rules for Anti-money
Laundering by Financial Institutions; and Article 6 of the
Measures for the Administration on Financial Institutions'
Reports of Large-sum Transactions and Suspicious
2
Id. at *5.
3
Id. at *5 n.46.
4
See Transcript of 11/20/12 Conference ("Tr. 11/20112") at 18: 10-23.
2
Transactions.
(2)
Communications, if any, that BOC would have sent to the
PRe government regulators from January 23, 2008, the
date of plaintiff[s'] demand letter, to September 2008
referencing or referring to any documents in category ( 1). 5
BOC argues that just as it would not be required under U.S. law
automatically to produce a Suspicious Activity Report ("SAR") in civil litigation,
so it should not be required to violate the analogous Chinese laws specified above
in (1) by producing analogous documents submitted to Chinese regulators, such as
Suspicious Transaction Reports ("SRTs") and Large-value Transaction Reports
("LTRs,,).6 BOC also notes that U.S. regulators recently rejected, in large part,
plaintiffs' requests for SARs and other non-public information submitted by or
regarding BOC. 7
12128112 Letter from Lanier Saperstein, Counsel for BOC, to Lee
Woiosky, Counsel for Plaintiffs, attached to 1/2113 Letter from Wolosky to the
Court ("112/13 Wolosky Letter").
5
See Tr. 11120112 at 18:10-23; Tr. 12/26112 at 7:11-9:2; 12/26112
Letter from King & Wood Mallesons, PRC Counsel for BOC, to Saperstein,
attached to 1/2/13 Wolosky Letter. I assume based on plaintiffs' failure to provide
any authority or affidavit to the contrary that the representation of Chinese law
contained in the letter from BOC's PRC counsel is accurate.
6
See 10/2/12 Letter from Bill S. Bradley, Financial Crimes
Enforcement Network (FinCEN), Treasury Department, to Wolosky ("10/2/12
Bradley Letter"), Ex. B to 11/28112 Letter from Saperstein to the Court ("11/28112
Saperstein Letter"); 10/29/12 Letter from Michael L. Brosnan, Office of the
Comptroller of the Currency, to Wolosky, Ex. A to 11128/12 Saperstein Letter.
7
3
After reviewing the submissions of the parties, I find BOC's argument
persuaSIve. The October 29 Order concluded that the Second Circuit's multi-factor
comity test argued in favor of ordering plaintiffs to produce documents in
contravention of Chinese bank secrecy laws. 8 The comity test leads to a different
result when applied to the production of the documents in contravention of the
Chinese laws specified above in (1). The latter laws are primarily concerned not
with protecting the confidentiality of bank clients, but with combating money
laundering and other illegal financial transactions. As FinCEN wrote in rejecting
plaintiffs' request for SARs filed by BOC, keeping reports of suspicious activity
confidential "makes it easier for financial institutions to candidly and
energetically" file such reports. 9 Combating money laundering in turn furthers one
of the central interests considered in the October 29 Order: depriving international
terrorist and other criminal organizations of funding. 10
I reject, however, BOC's suggestion that documents created by BOC
and communicated to the Chinese government outside the course of "regular
regulatory reviews" need not be produced, as a rule, under the October 29 Order.
8
See Wultz, 2012 WL 5378961, at *1, 3,5,7.
9
10/2112 Bradley Letter at 2.
10
See Wultz, 2012 WL 5378961, at *7.
4
The Order states that BOC materials provided to the Chinese government in the
course of regulatory reviews are not exempt from the order to produce. This does
not imply that BOC materials provided to the Chinese government outside the
course of regulatory reviews are exempt. Moreover, BOC has provided no
argument as to why documents submitted during regulatory reviews and those
submitted at other times should be treated differently.
In light of the considerations above, I order the following:
First, BOC will not be required automatically to produce SRTs, L TRs,
and any other communications from BOC to the Chinese government whose
disclosure is specifically and categorically prohibited under the Chinese laws
specified above in (1 ).11 Nor is BOC required to produce a more specific "log" of
such communications than already provided. If plaintiffs believe there is a legal
basis for overruling BOC's assertion of privilege despite the language in this Order
-
perhaps by analogy to a court review under the Administrative Procedure Act of
a U.S. agency decision not to disclose non-public information such as a SARplaintiffs are invited to submit a letter not to exceed three single-spaced pages
explaining the legal basis for compelling production and proposing any protective
I f there are, in fact, categories of communication other than SRTs and
L TRs whose disclosure BOC believes is specifically and categorically prohibited
under the Chinese laws specified above in (1), BOC is required to identify those
categories as a condition of withholding production. See Tr. 11120 at 19:22-24.
II
5
measures that might be necessary for the review of non-public materials.
Second, BOC is ordered to produce any materials that it has withheld
because BOC provided the materials to the Chinese government outside the course
of "regulatory reviews" or "regular regulatory review," as well as the materials
described above in (2), or redacted versions of them, to the extent that doing so
would not violate the Chinese laws specified in (I).
Third, with regard to plaintiffs' discovery request No.7, as I stated at
the December 26 conference, BOC is ordered to produce all documents, including
communications, concerning any examination, investigation, or sanction ofBOC's
New York Branch, BOC's Guangdong Branch, and BOC's Head Office by the
U.S. or PRC governments or any of their agencies regarding Anti-Money
Laundering (AML), Counter-Terrorism Financing (CTF), and AML or CTF
problems or deficiencies from January 1,2003 to September 2008, subject to the
restriction involving SRTs, LTRs, and other documents as stated above. 12 BOC is
ordered to produce immediately any materials it has already identified that are
12
See Tr. 12/26 at 24:14-25. This Order also continues to exclude "the
production of confidential regulatory documents created by the Chinese
government whose production is clearly prohibited under Chinese law." Wultz,
2012 WL 5378961, at *5. IfBOC is withholding the production of any materials
on this basis, it is ordered to identify the documents in a log and specify the basis
in Chinese law prohibiting production of such documents.
6
responsive to the request as limited here,13 and to complete its search for any
remaining documents and produce them without further delay.
The next discovery conference will be held January 30, 2013 at
4:30 pm. The parties are invited to submit pre-conference letters of no more than
three single-spaced pages no later than January 27,2013.
SO ORDERED:
Dated:
January 9,2013
New York, New York
13
Plaintiffs argue BOC has continued to withhold responsive documents
without a legal basis for doing so. See 112/13 W olosky Letter at 3. I note that
BOC's January 7 letter to the Court leaves unclear whether BOC has withheld
materials that it knew to be validly discoverable under its own proposed revision of
plaintiffs' request No.7. See 1/7/13 Letter from Saperstein to the Court at 2 n.3.
This Court stated in no uncertain terms in the October 29 Order that '" [a]n
objection to part of a request must specifY the part and permit inspection of the
rest'" Wultz, 2012 WL 5378961, at *8 (quoting Fed. R. Civ. P. 34(b)(2)(c)). If
BOC is engaging in discovery in bad faith, as plaintiffs have argued since before
the October 29 Order, see id. at *8 & n.82, plaintiffs may be entitled to move for
appropriate sanctions.
7
- Appearances
For Plaintiffs:
For Defendant:
David Boies, Esq.
Mary Boies, Esq.
Olav A. Haazen, Esq.
Boies, Schiller & Flexner LLP
333 Main Street
Armonk, NY 10504
(914) 749-8200
Mitchell R. Berger, Esq.
Patton Boggs LLP (DC)
2550 M Street, N.W.
Washington, D.C. 20037
(202) 457-5601
Lee S. Wolosky, Esq.
Marilyn C. Kunstler, Esq.
Jaime Sneider, Esq.
Boies, Schiller & Flexner LLP
575 Lexington Avenue
New York, NY 10022
(212) 754-4205
Elissa Judith Glasband, Esq.
James Edward Tyrrell, Jr., Esq.
Patton Boggs LLP (NJ)
The Legal Center
One Riverfront Plaza
Newark, NJ 07102
(973) 848-5600
David Taylor Case, Esq.
K & L Gates LLP (DC)
1601 K Street, NW
Washington, DC 20006
(202) 778-9084
Sarah Peck Kenney, Esq.
Walter P. Loughlin, Esq.
K&L Gates LLP (NYC)
599 Lexington Avenue
New York, NY 10022-6030
(212) 536-4880
8
For Defendant (continued)
Lanier Saperstein, Esq.
Allen & Overy LLP
1221 A venue of the Americas
New York, NY 10020
(212) 756-1136
Geoffrey R. Sant, Esq.
Morrison & Foerster LLP (NYC)
1290 Avenue of the Americas
New York, NY 10104
(212) 468-8000
Siubhan Josephine Ellen Magee, Esq.
Hughes Hubbard & Reed LLP (NY)
One Battery Park Plaza
New York, NY 10004
(212) 837-6409
Zachary Warren Carter, Esq.
Dorsey & Whitney LLP
51 West 52nd Street
New York, NY 10019
(212) 415-9345
9
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