Wultz et al v. Bank of China Limited

Filing 247

MEMORANDUM OPINION AND ORDER: #103125 For the reasons set forth herein, I adopt plaintiffs' proposal. BOC is directed to produce to Judge Katz, immediately, an unredacted version of the document it has already produce in redacted form as the "Shurafa Investigative Report." Judge Katz is invited, at his discretion, to review the unredacted document and to determine whether the production of any of the presently redacted passages would in fact reveal the existence or contents of a SAR and thereby violate the SAR privilege. Judge Katz is then invited to order BOC to produce to plaintiffs an unredacted, or less heavily redacted, version of the document, as appropriate. SO ORDERED. (Signed by Judge Shira A. Scheindlin on 4/16/2013) (ja) Modified on 4/29/2013 (jab).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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)(

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
WULTZ, minor, by his next friends and
guardians Sheryl Wultz and Yekutiel Wultz,

MEMORANDUM

OPINION AND ORDER

11 Civ. 1266 (SAS)

Pia in tiffs,
- against ­
BANK OF CHINA LIMITED,
Defendant.

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)(

SHIRA A. SCHEINDLIN, U.S.D.J.:

On April 9, 2013, this Court ordered defendant Bank of China
Limited ("BOC") to produce the following:
(1) BOC's 2008 Shurafa investigative flIes [(the "Shurafa
Investigative Files")]' These files relate to an internal
investigation that BOC conducted in response to Plaintiffs'
demand letter dated January 23, 2008 and ended with a report.
The investigation concerned Said al-Shurafa and Shurafa's wire
transfer patterns, which BOC eventually concluded were not

suspicious.1
On April 10, 2013, plaintiffs informed this Court that BOC had stated
(in plaintiffs’ words) “it currently has no intention of producing the Shurafa
Investigative Files or other documents that the Court ordered BOC to disclose,
because BOC might file a motion for reconsideration.”2 Plaintiffs requested the
Court to order BOC to produce the Shurafa Investigative Files and approximately
ten other documents by the close of business on Thursday, April 11, 2013, so that
plaintiffs would be able to use the documents at the Rule 30(b)(6) depositions of
BOC taking place in Hong Kong under the supervision of retired Judge Theodore
H. Katz, beginning Monday, April 15, 2013 (New York time).3
After reviewing a response letter from BOC, this Court filed a letter
endorsement on April 11, 2013 (the “April 11 Order”), ordering BOC to produce
the Shurafa Investigative Files by close of business on Thursday, April 11, 2013,
but staying the remainder of the April 9 Order until April 23, 2013.4 Rather than

1

Wultz v. Bank of China Ltd., No. 11 Civ. 1266, 2013 WL 1453258, at
*5 (S.D.N.Y. Apr. 9, 2013) (the “April 9 Order”).
2

4/10/13 Letter from Lee Wolosky, counsel for plaintiffs, to the Court

3

See id.

at 1.

4

See 4/10/13 Endorsed Letter from Lanier Saperstein, counsel for
BOC, to the Court (Dkt. No. 245, filed April 11, 2013).
2

complying with the Court’s order, BOC produced, according to a letter from
plaintiffs submitted to the Court on April 12, a highly redacted version of “what
[BOC] describes as ‘the Shurafa Investigative Report.’”5 BOC had apparently
redacted every portion of the document reflecting BOC’s opinions, analysis,
deliberations, or narrative descriptions of the transactions at the center of this
lawsuit. Plaintiffs stated that there were approximately 160 redactions totaling 125
full pages. Plaintiffs also stated that “BOC’s failure to timely produce the Shurafa
Investigative Files as instructed by the Court has denied Plaintiffs the opportunity
to review and translate the Files for use at the 30(b)(6) depositions,” and requested
“an order instructing BOC to make immediate production of the unredacted and
complete Files.”6
BOC responded to plaintiffs’ letter three days later, on April 15, 2013,
arguing that the production was not incomplete, because “the documents that were
produced are the very same set of documents that was referred to in the Court’s
April 11 Order as the 2008 Shurafa Investigative Files.”7 BOC also argued that the

5

4/12/13 Letter from Lee Wolosky to the Court at 1 (emphasis added).

6

See id. at 2. Plaintiffs also requested “that the Court grant Plaintiffs
the right to reopen next week’s depositions in New York City at BOC’s expense,
. . . along with any sanctions the Court deems appropriate.” Id.
7

4/15/13 Letter from Lanier Saperstein to the Court at 1.
3

redactions “are of the same character as those approved by this Court” in its
discussion of the SAR privilege in the April 9 Order.8
BOC’s production was not, in fact, what the Court intended in its
April 11 Order. Indeed, it is plain that BOC has violated the April 11 Order.
BOC’s interpretation of the April 9 Order is baseless. First, the Shurafa
Investigative Files are described in the April 9 Order as “files” that “relate to an
internal investigation” that “ended with a report.”9 No good-faith interpretion of
this language could conclude that the Shurafa Investigative Files consist only of the
report. If the Files consisted only of the report, it would have been unnecessary to
speak of “files” (plural), much less of files that “relate to an internal investigation
that . . . ended with a report.”10 The Shurafa Investigative Files include, at
minimum, any materials used in the investigation leading up to the report, and any
materials cited in the report. By apparently producing only the report itself, and
none of the underlying materials, BOC has violated this Court’s order.
Second, if BOC believed that portions of the Shurafa Investigative

8

Id. (citing April 9 Order at 17, that is, Wultz, 2013 WL 1453258, at *5
(summarizing applicable law concerning SAR privilege)). BOC acknowledges that
it has redacted approximately ten percent of the Shurafa Investigative Files. See id.
at 2.
9

Wultz, 2013 WL 1453258, at *5.

10

Id. (emphasis added).
4

Files were protected by the SAR privilege, it had ample opportunity to make this
argument in its opposition brief to plaintiffs’ motion to compel, which was the
subject of the April 9 Order.11 BOC failed to raise this argument. Instead, in a
section entitled “The ‘2008 Shurafa Investigative Files’ Are Subject to the
Attorney-Client and Work Product Privileges,” BOC appended a single paragraph
containing oblique references suggesting that the Shurafa Investigative Files might
have been transmitted to the OCC, and that the transmittal might have been related
in some way to a SAR.12 This paragraph cited no cases, and certainly no binding
precedent for the proposition that the transmittal of the Files to the OCC, if such a
transmittal occurred, affected the discoverability of the Files in this litigation.
Indeed, BOC did not even explicitly make this claim. BOC’s lack of legal
argument on this point was especially noteworthy, because plaintiffs’ opening brief
had explicitly criticized the argument that documents fall within the SAR privilege
merely by having some relation to a SAR.13
As the April 9 Order concluded based on the parties’ briefing, “the
OCC’s SAR regulations, at their most expansive, prohibit the disclosure of ‘any

11

See id. at *1 & n.3.

12

See 2/15/13 Memorandum of Law on Behalf of Bank of China, Ltd. in
Opposition to Plaintiffs’ Motion to Compel Discovery (“BOC Opp.”) at 23–24.
13

See Pl. Mem. at 21 (citing numerous cases).
5

information that would reveal the existence of a SAR.’”14 It is difficult to see how
an internal report by BOC’s compliance department could reveal the existence of a
SAR on 160 different occasions — and that these occasions would happen to
encompass every analytical and narrative portion of the report.
I also note that the Shurafa report is not itself a SAR. As plaintiffs
have accurately stated, “[a] SAR is a specific government form, not unlike a Form
1040 or other Treasury Department filing.”15 In addition, even if BOC filed a SAR
based on the Shurafa report, the report itself would not be privileged — to the
extent that it could be produced without revealing the existence of the SAR filing.16
The analysis would be no different if the OCC later requested the Shurafa report as
part of its SAR investigation, because production of the report by itself still would

14

Wultz, 2013 WL 1453258, at *12 (quoting 12 C.F.R. § 21.11(k)(1)(i)).

15

2/1/13 Memorandum of Law in Support of Plaintiffs’ Motion to
Compel Production of Investigative Files and U .S. Regulatory Communications
(“Pl. Mem.”) at 19 (citing the blank SAR form available on FinCEN’s website).
See generally FinCEN, Suspicious Activity Reporting Guidance,
http://www.fincen.gov/news_room/rp/sar_guidance.html.
16

See 12 C.F.R. § 21.11(k)(1)(ii)(A)(2) (“[T]his paragraph . . . shall not
be construed as prohibiting: (A) The disclosure by a national bank . . . of: . . . (2)
The underlying facts, transactions, and documents upon which a SAR is based
. . . .”); Freedman & Gersten, LLP v. Bank of Am., N.A., No. 09 Civ. 5351, 2010
WL 5139874, at *3 & n.2 (D.N.J. Dec. 8, 2010) (granting “Plaintiff’s request for
any memoranda or documents drafted in response to the suspicious activity at issue
in this case,” despite defendant’s claim that the documents “were prepared in
anticipation of filing a SAR”) (collecting and analyzing cases).
6

not reveal the existence of the SAR. Indeed, under such circumstances, a bank
would only reveal the existence of the SAR filing — and thereby violate the law —
by refusing to produce the report and citing the SAR privilege as the basis for
doing so — as BOC may have done in this case.
Nevertheless, if BOC is correct that one or more of the redacted
portions of the Shurafa Investigative Files in fact reveals the existence of a SAR, it
would be inappropriate to order the production of those passages to plaintiffs. In
an April 15 letter, plaintiffs propose a compromise solution, requesting “that BOC
be directed to provide the full, unredacted production . . . to Judge Katz in Hong
Kong for in camera review.” 17
I adopt plaintiffs’ proposal. BOC is directed to produce to Judge
Katz, immediately, an unredacted version of the document it has already produced
in redacted form as the “Shurafa Investigative Report.”18 Judge Katz is invited, at

17

4/15/13 Letter from Lee Wolosky to the Court at 2.

18

In the interest of simplicity, and out of concern for Judge Katz’s
schedule in Hong Kong, I do not order the immediate production of the materials in
the Shurafa Investigative Files other than the Shurafa report. (I assume that there
are such materials, unless the Shurafa report contains complete copies of all
supporting materials and all materials used in the preceding investigation.) BOC
must produce all relevant remaining materials, however, as soon as practicable
after Judge Katz finishes reviewing the Shurafa report, and in accordance with
Judge Katz’s conclusions regarding the applicability of the SAR privilege to the
Shurafa report.
7

his discretion, to review the unredacted document and to determine whether the
production of any of the presently redacted passages would in fact reveal the
existence or contents of a SAR and thereby violate the SAR privilege. 19 Judge
Katz is then invited to order BOC to produce to plaintiffs an unredacted, or less
heavily redacted, version of the document, as appropriate.

SO ORDERED:

Dated:

April 16, 2013
New York, New York

See Wultz, 2013 WL 1453258, at *5, * 12-13; PI. Mem. at 19-21;
BOC Opp. at 22-24; 2/19/13 Non-Party Office of the Comptroller of the
Currency's Response in Opposition to Plaintiffs' Motion to Compel Production of
Investigative Files and U.S. Regulatory Communications at 20-22. I note at the
outset that it is possible that none of the redacted passages fall within the SAR
privilege.
19

8

- Appearances For Plaintiffs:

For Defendant:

Lee S. Wolosky, Esq.
Steven I. Froot, Esq.
Marilyn C. Kunstler, Esq.
Jaime Sneider, Esq.
Boies, Schiller & Flexner LLP
575 Lexington Avenue
New York, NY 10022
[phone]

Mitchell R. Berger, Esq.
Patton Boggs LLP (DC)
2550 M Street, N.W.
Washington, D.C. 20037
[phone]
Zachary Carter, Esq.
Lanier Saperstein, Esq.
Neil McDonell, Esq.
Eric Epstein, Esq.
Daniel Goldberger, Esq.
Dorsey & Whitney LLP
51 West 52nd Street
New York, NY 10019
[phone]

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