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Rouson v. Eicoff

October 11, 2006


The opinion of the court was delivered by: Matsumoto, United States Magistrate Judge


Plaintiff Jessamy Rouson moves to compel non-party the New York State Banking Department ("Banking Department") to produce documents in response to a subpoena served by plaintiff on the Banking Department on April 24, 2006 and returnable May 19, 2006. (See Subpoena for Documents, Annexed as Ex. 1 to Doc. No. 66, Letter from Megan Prendergast, dated June 27, 2006.) For the reasons that follow, the Court grants in part and denies in part plaintiff's motion to compel.


On June 30, 2004, plaintiff Jessamy Rouson, on behalf of the estate of her father, John Rouson, commenced this action against defendants Tania and Richard Eicoff, alleging that, beginning in 1988, when John Rouson was disabled by two strokes, until Rouson's death in March 2000, the Eicoffs systematically defrauded Mr. Rouson out of several hundred thousand dollars while purportedly caring for Mr. Rouson and managing his finances. (Doc. No. 1, Compl. ¶ 13.) Specifically, plaintiff complains that Tania Eicoff misappropriated funds belonging to Mr. Rouson and held by Chase Manhattan Bank, CitiBank and Marine Midland Bank, by forging Mr. Rouson's signature on checks drawn on these accounts and then depositing them in an account at Northfield Savings Bank, which she established in her and Mr. Rouson's names. (Id. ¶¶ 33, 53-57.) Plaintiff further alleges that Tania Eicoff, by improperly utilizing her designation as Mr. Rouson's "power-of-attorney" and forging Mr. Rouson's signature, withdrew funds from the Northfield Savings Bank account and, without Mr. Rouson's consent, deposited those funds into accounts held by her and her husband for their own personal benefit. (Id. ¶¶ 59-74.) Plaintiff asserts violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961 et seq. and state law.

On April 24, 2006, plaintiff served a subpoena on the New York State Banking Department, commanding that it produce "[a]ll reports of examinat[ion]s and investigations, correspondence and memoranda concerning or arising out of [its] investigation of Northfield Savings Bank . . . in connection with Jessamy Rouson's complaint that, inter alia, Richard and Tania Eicoff misappropriated funds from John Rouson by forging signature cards and checks." (Subpoena, Annexed as Ex. 1 to Doc. No. 66, Letter from Megan Prendergast, dated June 27, 2006.)

Following review of the subpoena by the Superintendent of Banks, by letter dated June 2, 2006, the Banking Department objected to disclosure of the requested documents on the ground that the information requested is protected from disclosure by New York State Banking Law § 36(10), which provides that "all reports of examinations and investigations, correspondence and memoranda concerning or arising out of such examinations and investigations . . . shall be confidential communications, shall not be subject to subpoena and shall not be made public unless, in the judgment of the superintendent, the ends of justice and the public advantage will be subserved by the publication thereof . . . ."

On June 28, 2006, plaintiff moved this Court for an order compelling the State Banking Department to disclose documents in response to the subpoena, arguing that (1) the Banking Department waived any objection to the subpoena, because it failed to object within the 15-day period provided for in Fed. R. Civ. P. 45(c)(2)(B), and (2) the Court should compel disclosure of the requested documents because "the ends of justice and the public advantage will be served by the publication thereof." (Doc. No. 65, Letter from Jonathan D. Warner.) The Banking Department opposed, and simultaneously submitted to the Court, for in camera review, documents responsive to the subpoena, along with a privilege log.

However, the Banking Department excluded those documents which it claims relate to a joint investigation of Northfield by it and the Federal Deposit Insurance Corporation ("FDIC"), because the FDIC had not consented to disclosure of such information. See 12 C.F.R. § 309.5(g)(8) ("A request for records may be denied if the requested record contains information . . . contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of the FDIC or any agency responsible for the regulation or supervision of financial institutions.")

Further, the FDIC has submitted to the Court a copy of a letter from FDIC to the Banking Department, in which the FDIC noted that the documents requested by plaintiff's subpoena appeared to be "exempt" documents pursuant to 12 C.F.R. § 309.5(g)(8), and clarified its position with respect to disclosure of the documents pertaining to a joint investigation of Northfield by the FDIC and the Banking Department. (See Doc. No. 69, Letter from Barbara Monheit, dated July 18, 2006.) The FDIC explained, in relevant part:

While the FDIC has limited authority to make discretionary disclosure of exempt information, it will do so only where 1) such records are relevant to the matter in litigation; 2) a demonstration of good cause justifying the disclosure has been made; and 3) a protective order has been entered that adequately protects the interests of the FDIC, the depository institution and third parties. The FDIC will not release exempt documents for use in litigation unless there is a clear showing "that the production is in the best interests of justice." (Id. at 2 (quoting 12 C.F.R. § 309.6(b)(8)(ii)).) The FDIC further noted that it had received no written request for information, as required by 12 C.F.R. § 309.6(b)(8). (Id.)

Northfield also opposes plaintiff's motion, asserting the work-product privilege, in addition to the privilege provided for in New York Banking Law § 36(10). Northfield argues that, "[a]lthough [it] is not a party to this action, it nonetheless has standing to be heard in support of a decision of the Superintendent of the NYSBD to invoke the bank examination privilege in refusing to produce documents related to an investigation of which it was a target." (Doc. No. 71, Letter from Scott S. Christie, dated July 24, 2006, at 3 (citing Raffa v. Wachovia Corp., No. 8:02-CV-1443-T-27EAJ, 2003 WL 21517778, at *3 (M.D.Fla. May 15, 2003)).)

The Court has reviewed the documents provided by the Banking Department in camera and, for the reasons set forth below, the Court finds that: (1) the Banking Department has not waived any assertion of privilege; however, (2) the records reviewed by the Court are relevant to the claims and defenses in this action and are thus discoverable by plaintiff, because (a) the state Banking Law privilege is inapplicable in this federal action, (b) disclosure is not barred pursuant to the official information privilege and (c) the documents do not fall within the scope of the work-product privilege. The Court therefore grants plaintiff's motion to compel with respect to the documents it has reviewed in camera, as set forth below. With respect to documents regarding a joint investigation by the Banking Department and the FDIC, plaintiff may make a written request for those documents from the FDIC as provided by its regulations and, should it be necessary, make an appropriate motion to the Court.


Whether the Banking Department has Waived its Assertion of Privilege

Plaintiff argues that the Banking Department has waived any assertion of privilege, because it failed to object to the subpoena with 15 days of its service, as required by Fed. R. Civ. P. 45(c). As memorialized in a letter dated May 16, 2006, from the Banking Department to plaintiff's counsel, (see Letter from Megan Prendergast, dated May 16, 2006, attached as Ex. B to doc. no. 66), "after receiving the subpoena, [which was served by plaintiff on May 3, 2006,] the Department requested and received an extension of the return date to respond from the attorney for the plaintiff until June 2, 2006," (doc. no. 66, Letter from Megan Prendergast, dated June 27, 2006, at 2). The Banking Department states that it, "in good faith, believed that this was also an extension of the time provided to serve a written objection of the production of the documents pursuant to [Fed. R. Civ. P.] 45(c)(2)(B)." (Id.) On June 2, 2006, the Banking Department notified plaintiff's counsel that the Superintendent had determined that the requested documents were "confidential communications" and, therefore, the Banking Department would not be providing documents in response to plaintiff's subpoena. (Letter from Megan Prendergast, dated June 2, 2006, attached as Ex. C to doc. no. 66.)

Rule 45(c)(2)(B) provides, in relevant part: a person commanded to produce and permit inspection and copying may, within 14 days after service of the subpoena or before the time specified for compliance if such time is less than 14 days after service, serve upon the party or attorney designated in the subpoena written objection to inspection or copying of any or all of the designated materials or of the premises.

Generally, the failure to timely object to a subpoena typically constitutes a waiver of any objections, including an assertion of privilege. In re DG Acquisition Corp., 151 F.3d 75, 81 (2d Cir. 1998). However, it is within the Court's discretion to consider a party's objections, even if untimely, for good cause shown and if warranted by the circumstances presented in a particular case. Id. at 81-82; Concord Boat Corp. v. Brunswick Corp., 169 F.R.D. 44, 48, 51-52 (S.D.N.Y. 1996); Semtek Int'l, Inc. v. Merkuriy Ltd., No. 3607 DRH, 1996 WL 238538 (N.D.N.Y. May 1, 1996). Courts have excused untimely objections where, inter alia, "the subpoenaed witness is a nonparty acting in good faith . . . [and/or] counsel for witness and counsel for subpoenaing party were in contact concerning the witness' compliance prior to the time the witness challenged legal ...

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