Wultz v. Bank of China Ltd.

979 F.Supp.2d 479

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, Plaintiffs,

v.BANK OF CHINA LIMITED, Defendant.

No. 11 Civ. 1266(SAS).

United States District Court, S.D. New York.

Oct. 25, 2013.

Lee S. Wolosky, Esq., Steven I. Froot, Esq., Marilyn C. Kunstler, Esq., Jaime Sneider, Esq., Boies, Schiller & Flexner LLP, New York, NY, for Plaintiffs.

Mitchell R. Berger, Esq., Patton Boggs LLP, Washington, D.C., Zachary Carter, Esq., Lanier Saperstein, Esq., Neil McDonell, Esq., Eric Epstein, Esq., Daniel Goldberger, Esq., Dorsey & Whitney LLP, New York, NY, for Defendant.

OPINION AND ORDER

SHIRA A. SCHEINDLIN, District Judge.

I. INTRODUCTION

This suit arises out of the death of Daniel Wultz and the injuries of Yekutiel Wultz, suffered in a 2006 suicide bombing in Tel Aviv, Israel. Four members of the Wultz family brought suit against Bank of China (“BOC”), alleging acts of international terrorism under the Antiterrorism Act (“ATA”), ¹ among other claims.

All of plaintiffs' non-federal claims against BOC have been dismissed. ² In addition, plaintiffs' attempt to hold BOC liable for aiding and abetting international terrorism under the ATA has been categorically foreclosed by the Second Circuit.³ The plaintiffs' only remaining claim against BOC is for acts of international terrorism under the ATA, based on BOC allegedly having provided material support and resources to a terrorist organization.⁴

The general facts and procedural history of this case and plaintiffs' numerous attempts to obtain discovery from BOC were laid out in previous opinions and familiarity with them is assumed.⁵ Before this Court is plaintiffs' third motion to compel BOC to produce documents located in China in BOC's control.⁶ BOC argues that the documents are protected by the attorney-client privilege and/or the work-product doctrine. For the reasons stated below, plaintiffs' motion is granted in part.

II. BACKGROUND

I first addressed plaintiffs' motion to compel BOC to produce various documents in its possession, specifically documents located in China pertaining to anti-money laundering (“AML”) and compliance procedures and investigations in an order issued on October 29, 2012 (“the October 29 Order”).⁷ BOC argued that the requested production of documents would violate China's bank secrecy laws. Applying the Second Circuit's seven-factor comity test,⁸ I granted plaintiffs' motion in part and ordered BOC to produce relevant documents except “confidential regulatory documents created by the Chinese government whose production is clearly prohibited under Chinese law.” ⁹

Rather than comply with the October 29 Order, BOC continued to object to its discovery obligations and raised alternative provisions of Chinese law—those relating to combating money laundering and other illegal financial transactions—which allegedly prevented the disclosure of any document whose production was ordered.¹⁰

In an opinion issued on May 1, 2013 (“the May 1 Order”), I granted plaintiffs' second motion to compel in part, again applying the Second Circuit's multi-factor comity test. The May 1 Order required BOC to produce documents pertaining to (1) “communications from the Chinese government to BOC from prior to January 23, 2008” concerning Said al-Shurafa (“Shurafa”) and related accounts, (2) “materials concerning AML or [counter-terrorist financing] (“CTF”) problems or deficiencies at BOC's Guangdong Branch from January 1, 2003 to September 2008,” (3) documents “concerning AML or CTF problems or deficiencies at BOC's Head Office from January 1, 2003 to September 2008, to the extent that those problems or deficiencies related to the [Palestinian Islamic Jihad (“PIJ”) ], Hamas or any terrorists allegedly involved with those organizations,” and (4) documents concerning Shurafa and related accounts, “including visits of foreign officials related to those same topics.” ¹¹

The May 1 Order to produce was subject to two exceptions. First, BOC could withhold Suspicious Transaction Reports or Large–Value Transaction Reports, provided they were produced to the Court for in camera review. ¹² Second, BOC could withhold “items subject to the attorney-client or work-product privileges,” provided that the items were “listed in a document-level privilege log produced to plaintiffs, providing enough information to determine whether the documents are in fact privileged.” ¹³

Following the May 1 Order, BOC “produced a variety of documents” including “reports to its Chinese regulators concerning Said al-Shurafa,” “minutes in its possession for meetings between BOC officials and representatives of the People's Bank of China,” “policies and procedures related to” AML and CMF, and “internal audits of its United States branches for AML and CTF compliance during the relevant time period ... as well as all reports prepared by outside auditors Grant Thornton and KPMG.” ¹⁴ In sum, “BOC has produced more than 200,000 pages.” ¹⁵

Plaintiffs claim that BOC's main production, made on May 21, 2013, “consisted largely of publicly available materials, previously-produced account records, and other filler.” ¹⁶ According to plaintiffs, the May 21 production was the only “substantial production from the files of [BOC's] Chinese employees” and consisted of “5,751 documents.” ¹⁷

BOC subsequently provided two privilege logs, dated June 7, 2013 (“the June 7 Log”) ¹⁸ and June 20, 2013, amended on August 6, 2013 (“the August 6 Log”).¹⁹ The two logs combined consist of 6,253 entries over which BOC asserts attorney-client privilege, work-product protection, or both.²⁰ Plaintiffs estimate that, in total, BOC has withheld 13,953 documents—“a figure more than double the number of documents that BOC has actually produced from China in response to the May 1 Order.” ²¹

III. APPLICABLE LAWA. Choice of Law

Under Federal Rule of Evidence 501, questions of privilege are “governed by the principles of common law.” ²² “The ‘common law’ applied under Rule 501 includes ‘choice of law’ questions.” ²³ “In determining which country's law applies to claims of privilege involving foreign documents, courts in the Second Circuit have adopted the ‘touch base’ approach applied in Golden Trade [ S.r.L. v. Lee Apparel Co.]” ²⁴ “Under this analysis, the Court applies ‘the law of the country that has the predominant or the most direct and compelling interest in whether [the] communications should remain confidential, unless that foreign law is contrary to the public policy of this forum.’ ” ²⁵ “The country with the ‘predominant interest’ is 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.’ ” ²⁶ “Thus, American law typically applies to communications concerning ‘legal proceedings in the United States' or ‘advice regarding American law,’ while communications relating to ‘foreign legal proceeding[s] or foreign law’ are generally governed by foreign privilege law.” ²⁷

B. Chinese Law

The party objecting to a discovery motion based on foreign law bears the burden “ ‘of demonstrating that such law actually bars the production or testimony at issue.’ ” ²⁸ “ ‘In order to meet that burden, the party resisting discovery must provide the Court with information of sufficient particularity and specificity to allow the Court to determine whether the discovery sought is indeed prohibited by foreign law.’ ” ²⁹ The party must describe, among other things, “ ‘the provisions of the foreign law, the basis for its relevance, and the application of the foreign law to the facts of the case.’ ” ³⁰

“ ‘Foreign law, though formerly treated as an issue of fact, is now recognized as an issue of law, to be established by any relevant source, including testimony.’ ” ³¹ Federal Rule of Civil Procedure (“Rule”) 44.1 establishes that “[t]he court's determination [of foreign law] must be treated as a ruling on a question of law.”

Chinese courts do not routinely issue opinions: “ ‘[t]here is no system of guidance by precedent, judges deciding cases do not issue explanatory published opinions, and their judgments do not bind co-ordinate or lower courts in other cases.’ ” ³² As I noted in two prior opinions in this case, “[t]he interpretation of Chinese law should be informed by attention to the general practices and features of China's legal institutions, rather than by relying solely on inferences drawn from indeterminate legal language.” ³³

C. Attorney–Client Privilege

“The attorney-client privilege is one of the oldest recognized privileges for confidential communications.” ³⁴ The privilege is designed to “encourage full and frank communication between attorneys and their clients.” ³⁵ The privilege serves the dual purpose of shielding “from discovery advice given by the attorney as well as communications from the client to the attorney, made in pursuit of or in facilitation of the provision of legal services.” ³⁶ However, because the attorney-client privilege “stands in derogation of the public's ‘right to every man's evidence’ ... ‘[i]t ought to be strictly confined within the narrowest possible limits consistent with the logic of the principle.’ ” ³⁷

“It is well settled that ‘[t]he burden of establishing the existence of an attorney-client privilege, in all of its elements, rests with the party asserting it.’ ” ³⁸ “In order to prevail on an assertion of the attorney-client privilege the party invoking the privilege” must show that:

“(1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom communication was made (a) is a member of...