DocketNumber: No. 11 Civ. 1266(SAS)
Citation Numbers: 910 F. Supp. 2d 548
Judges: Scheindlin, Shiraa
Filed Date: 10/29/2012
Status: Precedential
Modified Date: 11/26/2022
OPINION & ORDER
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” or “the Bank”), alleging acts of international terrorism and aiding and abetting international terrorism under the Antiterrorism Act (“ATA”),
Before the Court is plaintiffs’ motion to compel BOC to produce documents under its control. Some of these documents are the subject of an outstanding Letter of Request from this Court to the Ministry of Justice of China under the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (the “Hague Convention”). BOC’s opposition to plaintiffs motion encourages this Court to wait for a response to the Letter of Request, and argues that plaintiffs’ discovery requests should be narrowed and made more specific. For the reasons stated below, plaintiffs’ motion is granted with certain limitations.
On June 16, 2011, plaintiffs made their first set of requests to BOC for the production of documents. The requests included: first, documents concerning bank accounts related to Said al-Shurafa, an alleged leader of the terrorist organization responsible for the bombing, the Palestinian Islamic Jihad (“PIJ”); second, documents concerning investigations of BOC or sanctions imposed on BOC by any governmental agency, domestic or foreign; third, documents concerning communications with any governmental agency about BOC’s anti-money laundering procedures; and, fourth, documents identified by BOC in its initial disclosures.
As long as the demands submitted by the U.S. judicial authorities are in compliance with ... the Hague Evidence Convention, and do not violate fundamental principles of law of the People’s Republic of China, China’s judicial authorities and relevant financial management departments will take them seriously and provide reasonable assistance.6
Based on PBOC’s response, BOC asked this Court to issue a request to Chinese authorities under the Hague Convention.
As of the date of this Opinion — more than thirteen months later — this Court has received no response to the Letter of Request. On February 20, 2012, BOC emailed the Ministry to inquire into the status of the request.
A September 3, 2012 circular from PBOC to BOC concerning the status of the Letter of Request stated that on March 26, 2012, the Bureau requested PBOC’s assistance with the Letter of Request; that PBOC “conducted a review” of the request, which has now been completed; and that “[f]ollowing the completion of domestic approval procedures, the Supreme People’s Court will, through the Ministry of Justice ... submit relevant evidentiary materials to the United States Department of Justice in the near future.”
In an August 20, 2012 scheduling order, this Court ordered all documents to be produced by October 31, 2012.
III. APPLICABLE LAW
In Société Nationale Industrielle Aérospatiale, the Supreme Court established that the use of the Hague Convention process is optional, not mandatory, and does not deprive a District Court of the jurisdiction it would otherwise possess “to order a foreign national party before it to produce evidence physically located within a signatory nation.”
When evaluating the propriety of an order directing the production of information or documents in contravention of foreign law, courts in the Second Circuit consider the following five factors, drawn from Aérospatiale:
(1) the importance to the investigation or litigation of the documents or other information requested;
(2) the degree of specificity of the request;
(3) whether the information originated in the United States;
*553 (4) the availability of alternative means of securing the information; and
(5) the extent to which noncompliance with the request would undermine important interests of the United States, or compliance with the request would undermine the important interests of the state where the information is located.19
Courts in the Second Circuit also consider:
(6) the hardship of compliance on the party or witness from whom discovery is sought; and
(7) the good faith of the party resisting discovery.20
IV. DISCUSSION
This is not the first case in which a party has sought the production of documents by BOC, BOC has objected that production would threaten it with civil and criminal liability under China’s bank secrecy laws, and a court has responded by applying the Second Circuit’s multi-factor comity test.
Two other aspects of the earlier cases are relevant to this Court’s application of the comity test in the instant case. First, despite BOC’s concerns, BOC has apparently never been sanctioned by the Chinese government for complying with American court orders to produce documents in contravention of China’s bank secrecy laws. On at least two occasions BOC has now been ordered to produce discovery materials.
Second, the Ministry of Justice of China has -now responded to at least one Letter of Request for the production of documents by BOC in contravention of China’s bank secrecy laws.
Neither of these developments could have been fully known to plaintiffs when they consented to the submission of the Letter of Request on August 29, 2011.
1-2. Importance of Documents and Specificity of Request
On the one hand, plaintiffs persuasively argue that each of the general categories of their requested discovery contains documents that are important to their case.
Significantly, plaintiffs do not meaningfully contest BOC’s conclusion that requests 7-9 are overbroad.
Based on the above, there may be room for the parties to resolve at least some of their numerous disputes over the scope of discovery without this Court’s intervention. As BOC’s opposition brief notes, and plaintiffs’ reply brief confirms, the parties did not meet and confer regarding the narrowing of plaintiffs’ requests prior to the submission of plaintiffs’ motion to compel.
However, to the extent that plaintiffs’ narrowed discovery requests call for the production of confidential regulatory documents created by the Chinese government whose production is clearly prohibited under Chinese law, I decline to order production of such regulatory documents.
Returning to the comity analysis in light of the above, I conclude that the importance of the documents requested by plaintiffs in its First Requests weighs in favor of granting plaintiffs’ motion to compel. At present, the lack of specificity of some of plaintiffs’ discovery requests weighs against granting plaintiffs’ motion. But once plaintiffs’ discovery requests have been narrowed in accordance with the principles articulated above, the specificity factor will weigh in plaintiffs’ favor as well.
3. Whether Information Originated in United States
As in Weixing Li and Forbse,
In earlier cases involving attempts to obtain materials from BOC in contravention of Chinese bank secrecy laws, BOC argued that the Hague Convention would provide “a perfectly adequate means of securing the information ... requested without forcing the Bank to violate Chinese law,”
In the instant case, BOC emphasizes the significance of the pending Hague request, “to which the PRC Supreme Court reportedly has devoted substantial time and resources.”
BOC also draws this Court’s attention to a November 3, 2011 letter from PBOC and the China Banking Regulatory Commission (“CBRC”) to four judges of the Southern District of New York.
While I recognize and respect the sovereign interest expressed by the PBOC-CRBC letter,
Second, the time that has already passed since this Court’s submission of the Letter of Request on August 31, 2011 by itself calls into question whether the Hague Convention process can be viewed as a reasonable alternative means of discovery. The U.S. Supreme Court has recognized that where the Hague Convention process “would be unduly time consuming and' expensive,” requiring the parties to submit to the process is inconsistent with the “overriding interest in the ‘just, speedy, and inexpensive determination’ of litigation in our courts.”
In light of the preceding considerations, plaintiffs lack sufficient alternative means for obtaining their requested materials. This factor weighs in favor of granting plaintiffs’ motion to compel.
5. Weighing of U.S. and Chinese Interests
This factor — the balancing of national interests — “is the most important, as it directly addresses the relations between sovereign nations.”
I have given serious consideration to the countervailing Chinese interest, expressed in the PBOC-CBRC letter, in “the development of China’s banking industry” through the enforcement of its bank secrecy laws.
6. Hardship of Compliance
As earlier cases have noted, BOC’s New York branches are not subsidiaries of a foreign parent company, but rather are branches of the same corporate entities as their counterparts in China.
7. Good Faith of Party Resisting Discovery
Plaintiffs argue that BOC may not be acting in good faith, based on two considerations. First, BOC continues to promote the use of the Hague Convention process, despite evidence from past cases that the results of such requests are uncertain,
BOC’s response, accompanied by no legal support, is unacceptable. As plaintiffs rightly note, Federal Rule of Civil Procedure 34(b)(2)(C) clearly states: “An objection to part of a request must specify the part and permit inspection of the rest.” Plaintiffs’ discovery requests 7-9 are clearly overbroad, as noted earlier. But those requests also contained documents that are relevant to plaintiffs’ claims. BOC was obligated under the Federal Rules to permit inspection of such documents.
Nevertheless, I lack sufficient evidence at the present time to ascribe bad faith to BOC.
8. Weighing the Factors
Considering the totality of the circumstances,
In light of this finding, as stated above, the parties are ordered to meet and confer without further delay concerning the narrowing of plaintiffs’ discovery requests. The parties are then to submit a revised and swift discovery schedule, including the immediate production of documents that should already have been produced. If the parties remain unable to resolve specific discovery disputes, they may submit letters regarding those disputes, as prescribed in this Court’s Individual Rules.
For the reasons stated above, plaintiffs’ motion to compel is granted, subject to the narrowing of plaintiffs’ discovery requests 7-9 through the process described above. The Clerk of the Court is directed to close this motion [Docket No. 165]. A conference is scheduled for November 30, 2012 at 4:30pm.
SO ORDERED.
. See 18 U.S.C. § 2333.
. See Wultz v. Islamic Republic of Iran, 755 F.Supp.2d 1 (D.D.C.2010).
. See Wultz v. Bank of China Ltd., 865 F.Supp.2d 425 (S.D.N.Y.2012) ("Wultz III"); Wultz v. Bank of China Ltd., 860 F.Supp.2d 225 (S.D.N.Y.2012) ("Wultz II"); Wultz v. Bank of China Ltd., 811 F.Supp.2d 841 (S.D.N.Y.2011) ("Wultz I"), overruled by Wultz III, 865 F.Supp.2d 425.
. See Plaintiffs' First Set of Requests for Production of Documents to Defendant Bank of China Limited ("First Requests”), Ex. A to 8/24/12 Declaration of Olav A. Haazen, counsel for plaintiffs ("Haazen Decl.”).
. See 8/10/11 Letter from Mitchell R. Berger, counsel for BOC, to the Court ("Berger Letter”), Ex. C to Haazen Deck, at 4.
. 8/3/11 Reply to Bank of China's Request for Instructions concerning the Cross-Border Submission of Evidentiary Material, Ex. 2 to 9/4/12 Declaration of Mitchell R. Berger, counsel for BOC ("Berger Deck”).
. See Berger Letter at 4.
. See 8/29/11 Letter from Robert J. Tolchin, former counsel for plaintiffs (“Tolchin Letter”), to the Court, Ex. 5 to Berger Deck
. See 8/31/11 Letter of Request for International Judicial Assistance Pursuant to the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters, Ex. E to Haazen Deck, at 1.
. Id. at 9.
. See 2/20/12 Email from Yuanyuan Zhu, PRC counsel for BOC, to Zhiying Li, International Legal Cooperation Center, Ministry of Justice of China, Ex. F (tab 1) to Haazen Deck
. Id.
. 9/3/12 Circular regarding Review Status of the United States Overseas Evidence Retrieval Request, Ex. 8 to Berger Decl. BOC’s attorney states that the past practice of the Ministry suggests the Ministry will transmit discovery materials to this Court, and not, as PBOC’s letter states, to the U.S. Department of Justice. See Berger Decl. ¶ 9.
. Berger Decl. ¶ 9.
. See 8/20/12 Scheduling Order [Docket No. 157],
. Plaintiffs' Memorandum of Law in Support of Their Motion to Compel Production of Documents (“PL Mem.”), at 2 n. 2. BOC does not contest plaintiffs’ characterization of its discovery efforts in BOC’s Memorandum of Bank of China Limited in Opposition to Plaintiffs’ Motion to Compel Production Documents (“Opp. Mem.”).
. Société Nationale Industrielle Aérospatiale v. United States Dist. Ct. for the Southern Dist. of Iowa, 482 U.S. 522, 539-40, 107 S.Ct. 2542, 96 L.Ed.2d 461 (1987).
. Id. at 543-44 & n. 27, 107 S.Ct. 2542.
. See Strauss v. Credit Lyonnais, S.A., 249 F.R.D. 429, 438-39 (E.D.N.Y.2008) (citing Aérospatiale, 482 U.S. at 544 n. 28, 107 S.Ct. 2542; Restatement (Third) of Foreign Relations Law of the United States § 442(l)(c)). See also Gucci America, Inc. v. Weixing Li, No. 10 Civ. 4974, 2011 WL 6156936, at *5 (S.D.N.Y. Aug. 23, 2011).
. See Strauss, 249 F.R.D. at 438-39 (citing Minpeco S.A. v. Conticommodity Servs., Inc., 116 F.R.D. 517, 523 (S.D.N.Y.1987)).
. See Tiffany (NJ) LLC v. Forbse, No. 11 Civ. 4976, 2012 WL 1918866 (S.D.N.Y. May 23, 2012) (ordering BOC, as non-party, to produce materials in contravention of Chinese law, in part based on suggestion of potential bad faith by BOC in context of multi-factor comity analysis); Weixing Li, 2011 WL 6156936 (ordering BOC, as non-party, to comply with subpoena in contravention of Chinese law, based on multi-factor comity analysis); Tiffany (NI) LLC v. Qi Andrew, 276 F.R.D. 143 (S.D.N.Y.2011) (declining to compel BOC, as non-party, to produce documents in contravention of Chinese law, based on multi-factor comity analysis).
. See supra note 21.
. See Forbse, 2012 WL 1918866, at *11; Weixing Li, 2011 WL 6156936, at *12.
. See Forbse, 2012 WL 1918866, at *9 (noting BOC's contention that sanctions were "much more than speculative”); Weixing Li, 2011 WL 6156936, at *11 (noting BOC's contention that if forced to comply with subpoena, "not only would Bank of China be subject to heavy fines, but employees of Bank of China could spend several years in jail”).
. Opp. Mem. at 4.
. On November 3, 2011, two of the bodies responsible for banking regulation in China, PBOC and the China Banking Regulatory Commission ("CBRC”), wrote a letter to four judges of the U.S. District Court for the Southern District of New York noting that PBOC and CBRC had already issued a "severe warning” to BOC and were determining "appropriate sanctions” in response to BOC's compliance with Judge Sullivan's order in Weixing Li. See 11/3/11 Letter from People’s Bank of China and the China Banking Regulatory Commission to Judges Pauley, Sullivan, Pitman, and Batts ("PBOC-CBRC Letter”), Ex. 6 to Berger Deck, at 3.
. Forbse, 2012 WL 1918866, at *9.
. See %/1!12 Letter from Ministry of Justice, People’s Republic of China, to the Honorable Magistrate Judge Henry B. Pitman ("Ministry Letter”), Ex. 7 to Berger Deck
. See id. at 1.
. Id. See also Hague Conference on Private International Law, Declaration by People’s Republic of China, Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters ("China Deck”) ¶ 2.
. Ministry Letter.
. See Aérospatiale; 482 U.S. at 542, 107 S.Ct. 2542 ("It is well known that the scope of American discovery is often significantly broader than is permitted in other jurisdictions, and we are satisfied that foreign tribunals will' recognize that the final decision on the evidence to be used in litigation conducted in American courts must be' made by [American] courts.”). Reporters' Notes ¶ 1, Restatement (Third) of Foreign Relations Law of the United States § 442, describes in greater detail the international hostility to United States discovery practices. The note concludes that despite this hostility, ”[t]he United States position ... has been that persons who do business in the United States, or who otherwise. bring themselves within United States jurisdiction to prescribe and to adjudicate, are subject to the burdens as well as the benefits of United States law, including the laws on discovery.” Today’s opinion regarding BOC's discovery obligations reflects the United States position. See also Restatement (Third) of Foreign Relations Law of the United States § 441(2)(a) ("In general, a state may require a person of foreign nationality ... to do an act in that state even if it is prohibited by the law of the state of which he is a national .... ”).
. See Tolchin Letter.
. Id.
. See Fed.R.Civ.P. 1. See also Aerospatiale, 482 U.S. at 542-43, 107 S.Ct. 2542 (rejecting the mandatory use of Hague Convention as first resort whenever discovery is sought from a foreign litigant, because "[i]n many situations the Letter of Request procedure ... would be unduly time consuming and expensive, as well as less certain to produce needed evidence than direct use of the Federal Rules” and therefore "inconsistent with the overriding interest in the ‘just, speedy, and inexpensive determination’ of litigation in our courts” (quoting Fed.R.Civ.P. 1)).
. See PI. Mem. at 4-5.
. See Opp. Mem. at 5-10.
. See id. at 5-9.
. See id.
. Plaintiffs’ requests 7-9 seek the production of:
7.All documents concerning any examination or investigation of BOC by any governmental agency (domestic or foreign).
8. All documents concerning any penalty or sanction imposed on BOC by any governmental agency (domestic or foreign).
9. All documents concerning communications to which any governmental agency (domestic or foreign) was a party, which relate to, refer to, describe and/or evidence BOC’s AML/STF procedures, operations and activities.
First Requests at 6. BOC correctly objects that these requests lack any time-frame and sweep far beyond the universe of documents relevant to plaintiffs’ claims. Obviously, not every governmental examination of BOC or penalty imposed on BOC will be relevant to plaintiffs' claims.
. See PL Mem. at 6 (regarding specificity of requests); Plaintiffs' Reply Memorandum of Law in Support of Their Motion to Compel Production of Documents ("Reply Mem.”), at 1.
. Reply Mem. at 5; Opp. Mem. at 8.
. See Opp. Mem. at 5; Reply Mem. at 1.
. Fed.R.Ciy.P. 26(b)(1).
. Restatement (Third) of Foreign Relations Law of the United States § 442, cmt. a.
. 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.
. See Aérospatiale, 482 U.S. at 546, 107 S.Ct. 2542 (“American courts should ... take care to demonstrate due respect for any special problem confronted by the foreign litigant on account of its nationality or the location of its operations, and for any sovereign interest expressed by a foreign state.’’).
. See Forbse, 2012 WL 1918866, at *5-6; Weixing Li, 2011 WL 6156936, at *6.
. See First Amended Complaint ¶ 69 (alleging that most of the transfers for the PIJ were
. Weixing Li, 2011 WL 6156936, at *7. Accord Forbse, 2012 WL 1918866, at *6; Qi Andrew, 276 F.R.D. at 152-53.
. See Forbse, 2012 WL 1918866, at *7. See also Weixing Li, 2011 WL 6156936, at *7; Qi Andrew, 276 F.R.D. at 152-53.
. Opp. Mem. at 3.
. Id.
. See id., citing PBOC-CBRC Letter. BOC identifies PBOC and CBRC as "China's principal bank regulators.” Id.
. PBOC-CRBC Letter at 2 (emphasis omitted).
. Id. at 3.
. Id.
. See Aerospatiale, 482 U.S. at 546, 107 S.Ct. 2542 ("American courts should ... take care to demonstrate due respect for ... any sovereign interest expressed by á foreign state.”).
. Weixing Li, 2011 WL 6156936, at *9.
. See Ministry Letter.
. Id. at 1.
. See China Decl.
. PBOC-CRBC Letter at '2 (emphasis added).
. Fed.R.Civ.P. 26(b)(1).
. Aérospatiale, 482 U.S. at 542-43, 107 S.Ct. 2542 (quoting Fed.R.Civ.P. 1).
. Milliken & Co. v. Bank of China, 758 F.Supp.2d 238, 247 (S.D.N.Y.2010) (quoting Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468, 1475 (9th Cir.1992)).
. Id. (quotation marks and citation omitted).
. Madanes v. Madanes, 186 F.R.D. 279, 286 (S.D.N.Y.1999).
. Strauss, 249 F.R.D. at 443-44 (citations and quotation marks omitted) (performing comity analysis in context of French banking corporation alleged to have provided material support to foreign terrorist organization and to have financed acts of terrorism).
. Id. at 443.
. See id.
. PBOC-CBRC Letter at 3.
. Cf. Forbse, 2012 WL 1918866, at *8 (“The fact that numerous Chinese government organs are vested with the power to override the confidentiality provisions only underscores the notion that the secrecy laws were not designed to protect Chinese citizens who engage in unlawful behavior..”).
. See id. at *7-9.
. See id. at *3 (citing and quoting Qi Andrew, 276 F.R.D. at 147 n. 1).
. First Nat’l City Bank of N.Y. v. IRS, 271 F.2d 616, 618 (2d Cir.1959).
. See Opp. Mem. at 2 n. 4.
. See id. See also Forbse, 2012 WL' 1918866, at *3 ("[I]t is revealing that BOC was able to quickly produce the relevant documents located at its Chinese branch following Judge Sullivan’s decision in Weixing Li.”).
. See Forbse, 2012 WL 1918866, at *11; Weixing Li, 2011 WL 6156936, at *12.
. See, e.g., Forbse, 2012 WL 1918866, at *7 (citing statistics from the Chinese Ministry of Justice that "roughly half of the Hague Convention requests that China received from 2006 to 2010 ... were returned unexecuted, and over this time period, it took an average of six months to one year for China to execute such requests.").
. See PI. Mem. at 8.
. Id. at 9.
. Opp. Mem. at 10 n. 16.
. I note, however, that another judge in the Southern District recently found BOC to have acted in bad faith in its discovery practices: "From our view, BOC's actions reflect a conscious decision to selectively disclose information pertinent to the case, and to the discovery dispute more specifically, only as it suits BOC’s litigation interests.” Tiffany (NJ) LLC v. Forbse, No. 11 Civ. 4976, 2012 WL 3686289, at *6 (S.D.N.Y. Aug. 23, 2012). This Court assumes BOC understands that selective disclosure and tactical delays will not be tolerated under any circumstances.
. I reiterate that BOC is a party in this action over whom the Court has exercised personal jurisdiction and that some of the requested documents may be present in the United States.
. Individual Rules and Procedures of Judge Shira A. Scheindlin, Rule V.B.