The opinion of the court was delivered by: Gorenstein, United States Magistrate Judge.
Terra Nova Insurance Company Limited ("Terra Nova") seeks an
order compelling disclosure of certain documents that Bank of
America, N.A. (the "Bank") has withheld from discovery as
privileged. For the reasons stated below, the motion is granted.
The 1999 Reinsurance Contracts and Letter of Credit
In 1999, Palladium Insurance Limited and some of its
affiliates, including Platinum Indemnity Limited, (collectively,
"Palladium") entered into a series of weather derivative
contracts with various third parties under which Palladium
accepted certain weather related risks at locations throughout
the United States. In connection with these contracts, the Bank
entered into letter of credit agreements with Palladium pursuant
to which the Bank extended letters of credit for Palladium's
In the letter of credit transactions between the Bank and
Palladium, the Bank was represented by the law firm of Winston &
Strawn. Palladium was represented by the firm of Conyers, Dill &
Pearman. Pursuant to the letter of credit agreements, the Bank
issued letters of credit for Palladium's account. Also pursuant
to these agreements, Palladium purported to procure reinsurance
policies from Terra Nova and other insurance companies in order
to provide security for the Bank's potential obligations on
draws that might occur under the letters of credit. Under these
reinsurance policies, Terra Nova and the other companies had to
indemnify the Bank and Palladium for any payments they were
required to make in connection with the underlying weather
On March 17, 2002, Terra Nova served Loren Weil of Winston &
Strawn, the Bank's counsel in its dealings with Palladium, with
a subpoena duces tecum requiring him to testify and produce
documents concerning the 1999 letter of credit agreements
between the Bank and Palladium. In response, the Bank provided
Terra Nova with documents to which it has asserted no privilege
and also provided Terra Nova with a privilege log identifying a
number of communications between Well and Palladium in 1999 that
the Bank claims to be privileged under the "common interest"
doctrine. See Privilege Log, reproduced as Exhibit B to Letter
from John M. Aerni, dated May 17, 2002 ("May 17 Letter"), at 1.
Terra Nova seeks to compel production of these documents
(hereinafter, the "Disputed Documents") on the ground that the
relationship between Weil and Palladium was not one of attorney
and client but merely "debtor and creditor" and that therefore
the common interest doctrine does not apply.
At the outset, the parties disagree as to which law of
privilege applies to this case. The Bank claims that the Court
should apply the federal law of privilege, while General Star
Indemnity Company ("General Star") — an insurance company in a
related case that seeks similar documents from the Bank — argues
that New York law should apply. Rule 501 of the Federal Rules of
Evidence provides that although federal common law generally
governs federal court proceedings, "in civil actions and
proceedings, with respect to an element of a claim or defense as
to which State law supplies the rule of decision, the privilege
. . . shall be determined in accordance with State law."
The Bank argues that because subject matter jurisdiction is
based on the Edge Act, 12 U.S.C. § 632, the federal law of
privilege applies. General Star argues that while the Edge Act
provides federal jurisdiction for claims involving international
or foreign banking, it does not provide a rule of decision but
merely acts as a "pass-through to state law principles." Lloyds
Bank PLC v. Republic of Ecuador, 1998 WL 118170, at *6
(S.D.N.Y. March 16, 1998) (citing Pescatore v. Pan Am. World
Airways, Inc., 97 F.3d 1, 12 (2d Cir. 1996)); see also A.I.
Trade Finance, Inc. v. Petra Int'l Banking Corp., 62 F.3d 1454
(D.C.Cir. 1995) (applying District of Columbia's choice of law
rules in action arising under the Edge Act). Thus, General Star
argues that the Edge Act, for purposes of privilege law, is the
equivalent of diversity jurisdiction under 28 U.S.C. § 1332
because it merely offers access to the federal courts without
providing the substantive law for disposition of the claims.
The Court need not reach this issue because, as described
below, the result is the same under either body of law. Indeed,
"New York law governing the attorney-client privilege is
generally similar to accepted federal doctrine." Bowne of New
York City, Inc. v. AmBase Corp., 150 F.R.D. 465, 470 (S.D.N.Y.
1993); accord Josephson v. Marshall, 2001 WL 815517, at *2
(S.D.N.Y. July 19, 2001). Because federal case law is much more
comprehensive with respect to the particular issue raised by the
parties — the application ...