Wultz et al v. Bank of China Limited

Filing 353

OPINION AND ORDER: re: #103680 #294 MOTION to Quash Subpoena of Bank Hapoalim B.M. Notice of Motion by Non-party Bank Hapoalim B.M. to Quash or, Alternatively, Modify Subpoena filed by Bank Hapoalim B.M. For the foregoing reasons, Bank Hapoalims motion to quash (Docket #294) is granted. (Signed by Magistrate Judge Gabriel W. Gorenstein on 10/15/2013) (rsh) Modified on 10/21/2013 (sdi).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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SHERYL WULTZ, et al.,
:
Plaintiffs,
-v.-

:

OPINION AND ORDER

:
11 Civ. 1266 (SAS) (GWG)

BANK OF CHINA LTD.,

:

Defendant.
:
---------------------------------------------------------------X
GABRIEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE

Appearances of Counsel
For Defendant Bank of China, Ltd.: Mitchell Berger, Alan T. Dickey, Patton Boggs LLP,
Washington, D.C.; James E. Tyrell, Jr. Elissa J. Glasband, Patton Boggs LLP, New York, NY

For Nonparty Bank Hapoalim B.M.: Carol M. Goodman, Janice I. Goldberg, Herrick Feinstein
LLP, New York, NY

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------X
SHERYL WULTZ, et al.,
:
Plaintiffs,

:

-v.-

OPINION AND ORDER

:
11 Civ. 1266 (SAS) (GWG)

BANK OF CHINA LTD.,

:

Defendant.
:
---------------------------------------------------------------X
GABRIEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE
Bank of China, Ltd (“BOC”) has served the New York branch of Bank Hapoalim B.M., a
non-party, with a deposition subpoena. The subpoena invokes Rule 30(b)(6) of the Federal
Rules of Civil Procedure to seek testimony from Bank Hapoalim about topics that Bank
Hapoalim’s New York employees know nothing about. BOC contends that Bank Hapoalim
should be required to educate an employee in its New York branch about these topics. We hold
that Rule 30(b)(6) cannot be used to extend the subpoena power of this Court beyond the
confines of Rule 45 and thus grant Bank Hapoalim’s motion to quash the subpoena.
I.

BACKGROUND
A.

The Underlying Case

Plaintiffs Sheryl, Yekutiel, Amanda, and Abraham Wultz (“the Wultzes”) allege that
BOC and several other named defendants provided material support and resources to a terrorist
organization called the Palestine Islamic Jihad (“PIJ”), and in doing so, helped facilitate a
suicide bombing attack in Tel Aviv, Israel, on April 17, 2006. See First Amended Complaint,
filed Jan. 13, 2009 (Docket # 12) (“Am. Compl.”), ¶¶ 1-2. As a result of this attack, Sheryl and
Yekutiel’s son Daniel died, and Yekutiel suffered serious injuries. Id. ¶ 3. The Wultzes seek
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damages against BOC under the Anti-Terrorism Act, 18 U.S.C. § 2333 and other legal
provisions. Id. ¶ 1. They allege that BOC assisted the PIJ by executing dozens of wire transfers
totaling several million dollars to a PIJ senior operative named Said al-Shurafa. See id. ¶¶ 6876. BOC asserts that it cannot be held liable under the Anti-Terrorism Act because there is no
evidence that it had actual knowledge of any connection between the PIJ and the wire transfers.
See Defendant Bank of China Limited’s Motion to Dismiss the First Amended Complaint, filed
Mar. 5, 2009 (Docket # 15), at 25. The Wultzes, however, allege that Israeli counter-terrorism
representatives met with officials of the People’s Republic of China in April 2005 and warned
them that PIJ wire transfers were being made to Shurafa’s BOC account. See Am. Compl. ¶ 77.
B.

The Document Subpoena

To dispute the claim that Israeli officials warned it about the wire transfers, BOC
subpoenaed a nonparty Israeli bank, Bank Hapoalim B.M. (“Hapoalim”), for documents
pertaining to any transactions involving Shurafa. See Document Subpoena, dated Sept. 28, 2012
(“Doc. Sub.”) (annexed as Ex. 1 to Declaration of Carol Goodman in Support of Motion to
Quash, filed Aug. 12, 2013 (Docket #297)(“Goodman Decl.”)). BOC’s logic is that if Hapoalim
conducted transactions with Shurafa, then Israeli officials must not have informed Hapoalim
about Shurafa’s terrorist connections. See Memorandum of Law by Bank of China in
Opposition to Motion to Quash Subpoena, filed Aug. 26, 2013 (Docket #303) (“BOC Mem.”), at
2-5. And if the Israeli officials did not inform an Israeli bank such as Hapoalim about Shurafa, it
would be unlikely that they would have informed a Chinese bank such as BOC. See id.
Although Hapoalim is headquartered in Israel, BOC served the document subpoena on
Hapoalim’s branch office in New York. See Doc. Sub. Hapoalim responded to the subpoena by
producing internal policy documents and transaction records. See Declaration of Gina
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Frederique in Support of Motion to Quash, filed Aug. 12, 2013 (Docket #296) (“Frederique
Decl.”), ¶¶ 2-3.
C.

The Disputed Subpoena

On June 20, 2013, BOC served Hapoalim with a second subpoena, which sought a
deposition of Hapoalim pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure. See
Deposition Subpoena, dated June 20, 2013 (annexed as Ex. 2 to Goodman Decl.) (“Dep. Sub.”).
The subpoena lists sixteen topic areas, many with multiple subparts. The subpoena seeks, for
example, an explanation of the content of the Shurafa transaction records, the circumstances
surrounding the Shurafa transfers, the compliance procedures in place at Hapoalim’s Israeli
office at the time of the transfers, any communications between Hapoalim and the Israeli
government concerning Shurafa and the transfers, the process by which the Israeli government
communicates with Hapoalim about terrorist organizations, and explanations of statements in
Hapoalim’s annual reports relating to these areas. See id.
As part of the briefing on this motion, Hapoalim has offered undisputed evidence that
the wire transactions at issue have no connection to the branch office of Hapoalim in New York
and that the policies sought in the subpoena do not apply to the New York branch. Frederique
Decl. ¶ 4. Most significantly, “[t]here are no individuals working in New York who are familiar
with or have any relevant information or knowledge pertaining to” the topic areas described in
the subpoena, including the wire transactions, Bank Hapoalim’s internal policies as they relate to
the transactions, and the basis for statements in Bank Hapoalim’s internal reports. Id. ¶ 5.
On August 12, 2013, Hapoalim filed the instant motion to quash or modify the subpoena

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pursuant to Rule 45(c)(3) of the Federal Rules of Civil Procedure.1
II.

DISCUSSION
In support of its motion to quash, Hapoalim makes several arguments. First, Hapoalim

contends that the subpoena violates Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure
because there are no employees with knowledge of the subpoena’s topic areas located in its New
York branch. Hapoalim Mem. at 7-8. Hapoalim also argues that the Court should exercise its
discretion to prevent disclosure on grounds of international comity because enforcing the
subpoena would require Hapoalim to violate Israeli law prohibiting the disclosure of privileged
or confidential information. See id. at 2-3. Finally, Hapoalim argues that the subpoena must be
quashed or at least modified because it calls for information that is cumulative, irrelevant, or
improper. See id. at 3-4. Because we conclude that Fed. R. Civ. P. 45 requires us to quash the
subpoena, we do not reach the other issues raised.
A.

Subpoenas Pursuant to Rule 30(b)(6)

Fed. R. Civ. P. 30(b)(6) provides in relevant part that a party’s subpoena for deposition
testimony
may name as the deponent a public or private corporation. . . and must describe
with reasonable particularity the matters for examination. The named
organization must then designate one or more officers, directors, or managing
agents, or designate other persons who consent to testify on its behalf; and it may
set out the matters on which each person designated will testify. . . . The persons

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See Notice of Motion by Bank Hapoalim to Quash Subpoena, filed Aug. 12, 2013
(Docket #294) ; Declaration of Ehud Arzi in Support of Motion to Quash, filed Aug. 12, 2013
(Docket #295); Frederique Decl.; Goodman Decl.; Memorandum of Law in Support of Motion
by Nonparty Bank Hapoalim to Quash Subpoena, filed Aug. 12, 2013 (Docket # 298)
(“Hapoalim Mem.”); BOC Mem.; Declaration of Elissa Glasband in Opposition to Motion to
Quash, filed Aug. 26, 2013 (Docket #304); Reply Memorandum of Law in Support of Motion by
Nonparty Bank Hapoalim to Quash Subpoena, filed Sept. 4, 2013 (Docket #313); Second
Declaration of Ehud Arzi in Support of Motion to Quash, filed Sept. 4, 2013 (Docket #314).
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designated must testify about information known or reasonably available to the
organization.
This rule is available to obtain the deposition not only of a party but also of a nonparty by means
of a subpoena issued under Fed. R. Civ. P. 45. See Fed. R. Civ. P. 30(a)(1) (the “attendance of
witnesses may be compelled by subpoena as provided in Rule 45”); accord Price Waterhouse
LLP v. First Am. Corp., 182 F.R.D. 56, 61 (S.D.N.Y. 1998) (“A nonparty entity may be subject
to a subpoena for deposition testimony in accordance with Rule 30(b)(6).”)
B.

Rule 45(c)(3)(A)(ii) Territorial Restriction

Under Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure, a court must quash or
modify a subpoena that “requires a person who is neither a party nor a party’s officer to travel
more than 100 miles from where that person resides, is employed, or regularly transacts business
in person.” The purpose of this rule is to protect nonparty witnesses “from being subjected to
excessive discovery burdens in litigation in which they have little or no interest.” In re Edelman,
295 F.3d 171, 178 (2d Cir. 2002) (citing Price Waterhouse LLP, 182 F.R.D. at 63). Courts have
found that Rule 45(c)(A)(ii) applies to deposition testimony sought pursuant to Rule 30(b)(6).
See Price Waterhouse LLP, 182 F.R.D at 63 (“[A]ny contention that a subpoena served pursuant
to Rule 30(b)(6) need not comply with . . . Rule 45(c) would fly in the face of the intent of Rule
45(c) which is to protect nonparty witnesses from being inconvenienced by being compelled to
travel inordinate distances to have their depositions taken.”) (quotation marks omitted) (citing
Stanford v. Kuwait Airlines Corp., 1987 WL 26829, at *3 (S.D.N.Y. Nov. 25, 1987)). Thus,
courts have quashed subpoenas to nonparties where the subpoena called for the testimony of an
employee of the subpoenaed organization who was not located within Rule 45's territorial
restrictions. See Price Waterhouse LLP, 182 F.R.D at 63 (quashing subpoena where the
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knowledgeable employees of the subpoeaned party did not “reside,” were not “employed,” and
did not “regularly transact[ ] business in person” in the court’s jurisdiction); In re ANC Rental
Corp., 2002 WL 34729302, at *1 (E.D. Pa. June 20, 2002) (quashing subpoena that commanded
nonparty’s corporate designee to “travel over 1,200 miles”); RP Family, Inc. v. Commonwealth
Land Title Ins. Co., 2011 WL 6020154, at *4 (E.D.N.Y. Nov. 30, 2011) (quashing subpoena to
witness designated pursuant to Rule 30(b)(6) outside territorial limit where “the individual who
has been selected as the 30(b)(6) witness to answer these questions appears to be the most
competent” and “there appears to be no comparable employee located in New York with the
requisite knowledge necessary to answer the questions at issue”); see also Cates v. LTV
Aerospace Corp., 480 F.2d 620, 623 (5th Cir. 1973) (“a person designated by an organization
pursuant to Rule 30(b)(6) could not be required to travel outside of the limits imposed by” the
former version of Rule 45(c)(3)(A)(ii)).
Here, there is no evidence disputing Hapoalim’s contention that none of its employees
who live and work in New York have any knowledge of the information sought by the subpoena.
Frederique Decl. ¶¶ 5-6. Thus, in order to produce a knowledgeable designee for the deposition,
Hapoalim would presumably have to send an employee from Israel to New York, a distance
much greater than 100 miles, a result plainly barred by case law.
BOC’s argument is a simple one: because this Court has “jurisdiction” over Hapoalim’s
New York branch office, any information within the knowledge of the Hapoalim corporate entity
is discoverable by means of a Rule 30(b)(6) subpoena to the New York branch office. See BOC
Mem. at 25-26. The fact that no individual from Hapoalim with knowledge of the subpoenaed
topics “resides, is employed, or regularly transacts business in person” within Rule 45's
territorial restrictions is of no moment. Instead, BOC’s view is that Rule 30(b)(6) requires
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Hapoalim to “educate” a New York employee about the subpoenaed information. See id. at 26.
BOC contends that because Hapoalim could, under this scenario, designate a New York
employee to testify without violating the restrictions of Rule 45(c)(3)(A)(ii), it has a duty to do
so under Rule 30(b)(6) even if it means educating a New York employee who has no knowledge
of the subpoena’s topic areas.
We reject this argument. Certainly, Rule 30(b)(6) imposes upon subpoenaed
corporations the duty to “make a conscientious good-faith endeavor to designate the persons
having knowledge of the matters sought . . . and to prepare those persons in order that they can
answer fully, completely, unevasively, the questions posed . . . .” SEC v. Morelli, 143 F.R.D.
42, 45 (S.D.N.Y. 1992) (citations omitted); see also Reilly v. Natwest Markets Group Inc., 181
F.3d 253, 268 (2d Cir. 1999) (“[T]he corporate deponent has an affirmative duty to make
available such number of persons as will be able to give complete, knowledgeable and binding
answers on its behalf.”) However, in the case of nonparties subpoenaed pursuant to Rule 45, a
corporations’s duty to respond to a subpoena is subject to the requirements of Rules 45(c)(1) and
45(c)(3)(A)(iv), which mandate that a court must quash a subpoena that subjects a person to
“undue burden.” Here, the topics that would be the subject of BOC’s proposed “education”
exercise have nothing to do with the New York branch. They are also extensive in scope,
including an explanation of the content of wire transfer records that Hapoalim has given BOC
pursuant to the first subpoena, information about the circumstances surrounding the alleged wire
transfers made to Shurafa as well as any deviations from the Hapoalim’s normal policy and
procedures in relation to those transfers, information about any communications made between
Hapoalim and the Israeli government pertaining to Shurafa and the Shurafa wire transfers, an
explanation of various internal policies in place at Hapoalim’s offices in Israel, a description of
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the procedures Hapoalim typically follows for communicating with the Israeli government
concerning security and counter-terrorism matters, and information about the process that the
Israeli government normally undertakes in notifying Hapoalim about terrorist organizations and
operatives. See Dep. Sub. It would be unreasonable to expect Hapaolim’s employees with
knowledge of these areas to educate an individual in New York who has no knowledge about
them whatsoever.
BOC has pointed to no case that has imposed such a requirement. To the contrary, the
only cases that have dealt with this question of which this Court is aware have uniformly
quashed subpoenas in these circumstances. For example, in Sokolow v. Palestine Liberation
Organization, 2012 WL 3871380 (S.D.N.Y. Sept. 6, 2012), the court quashed a Rule 30(b)(6)
deposition subpoena served on the British Broadcasting Corporation in New York because “the
BBC ha[d] asserted it does not have any witnesses in the United States who may speak to the”
deposition topics. Id. at 4. In Estate of Klieman v. Palestinian Authority, 2013 WL 5273923
(D.D.C. Sept. 19, 2013), the plaintiffs served a deposition subpoena on the BBC’s Washington
D.C. Bureau office. The BBC represented that it did not employ “any individual in or near
Washington, D.C., who could serve as a deponent for this matter, and that every person who
could serve as a deponent resides and works in the United Kingdom.” Id. at *3. The court
concluded that a subpoena under these circumstances violated the plain language of Rule 45
because it would require a nonparty to “travel more than 100 miles from where that person
resides, is employed, or regularly transacts business in person.” Id. (quoting Fed. R. Civ. P.
45(c)(3)(C)(ii)). As is true here, the party issuing the subpoena argued that the BBC was
obligated under Rule 30(b)(6) to “create a witness or witnesses located within 100 miles of this
Court with responsive knowledge.” Id. (internal quotation marks and citation omitted)
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(emphasis in original). Estate of Klieman rejected this argument, noting the burden such a
course of action would place on the BBC and finding that a “contrary rule would render Rule
45(c)’s protections meaningless in the context of Rule 30(b)(6) witnesses.” Id. at *4.2
Finally, BOC contends that it would not be burdensome for Hapoalim employees to
comply with the subpoena because certain Israeli Hapoalim employees have been identified as
possible witnesses in a case in the Eastern District of New York. See BOC Mem. at 28-29.
BOC reasons that if Hapoalim employees travel to New York to testify in the Eastern District
case, then BOC can depose those same employees for this case. See id. This arguments is
rejected because the future travel plans of a particular employee are irrelevant for purposes of
Rule 45, which allows a subpoena only to a party who “resides, is employed, or regularly
transacts business in person” within the territorial limits.
III.

CONCLUSION
For the foregoing reasons, Bank Hapoalim’s motion to quash (Docket #294) is granted.
SO ORDERED.

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None of the cases cited by BOC suggest a contrary rule, let alone hold otherwise. In re
Edelman, 295 F.3d at 178, actually supports Hapoalim’s argument inasmuch as it found that
while there was personal jurisdiction over the subpoenaed corporate director who worked out-ofstate, Rule 45(c) might nonetheless require quashing the subpoena. See id. at 180-81 (remanding
the case to determine whether the movant “qualifies as an ‘officer’ of a party . . . and therefore
can be compelled to travel more than 100 miles from home and work”). Soroof Trading
Development Co., Ltd. v. GE Fuel Cell Systems, LLC, 2013 WL 1286078 (S.D.N.Y. March 28,
2013) and Bank of N.Y. v. Meridien BIAO Bank Tanz. Ltd., 171 F.R.D. 135 (S.D.N.Y. 1997)
did not involve Rule 45 subpoenas at all and merely discuss the responsibilities of an entity
receiving a Rule 30(b)(6) deposition notice.
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Dated: October 15,2013
New York, New York

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