United States District Court, S.D. New York
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,
BANK OF CHINA LIMITED, Defendant
For Plaintiffs: Lee S. Wolosky, Esq., Steven I. Froot, Esq., Marilyn C. Kunstler, Esq., Jaime Sneider, Esq., Boies, Schiller & Flexner LLP, New York, NY.
For Defendant: Mitchell R. Berger, Esq., Patton Boggs LLP (DC), Washington, D.C.; Zachary Carter, Esq., Lanier Saperstein, Esq., Neil McDonell, Esq., Eric Epstein, Esq., Daniel Goldberger, Esq., Dorsey & Whitney LLP, New York, NY.
OPINION & ORDER
Shira A. Scheindlin, U.S.D.J.
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" ), among other claims.
All of plaintiffs' non-federal claims against BOC have now been dismissed. 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. Thus, 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.
Before this Court is plaintiffs' second motion to compel BOC to produce documents that BOC argues it is prohibited from producing under the banking laws of the People's Republic of China (" the Chinese government," or " the PRC" ). For the reasons stated below, plaintiffs' motion is granted in part.
Plaintiffs summarize their allegations as follows:
[I]n 2005, a year before the terrorist attack in Israel that killed 16-year old U.S. citizen Daniel Wultz and seriously wounded his father Yekutiel Wultz (also a U.S. citizen), Israeli officials began a series of meetings with Chinese government officials to warn the Chinese government and BOC about various BOC account-holders, including Said al-Shurafa (" Shurafa" ). Subsequently, U.S. officials initiated similar meetings in China concerning the use of BOC by state sponsors of terrorism, such as Iran, and terrorist organizations supported by Iran, such as the Palestinian Islamic Jihad (" PIJ" ) and Hamas. These meetings all covered BOC's facilitation of terrorist violence in Israel. They included BOC's bank regulator, the People's Bank of China (" PBOC" ), and other agencies responsible for foreign affairs, security, and law enforcement in China, including the Ministry of Foreign Affairs (" MFA" ), Ministry of State Security (" MSS" ), and Ministry of Public Security (" MPS[" ]) (together with PBOC, the " PRC Agencies" ). Some meetings are believed to have also included BOC officials, including Geng Wei, BOC's Chief Compliance Officer.
During approximately ten meetings that took place in China from 2005-2007, Israeli officials asked the PRC Agencies to take action to ensure that BOC -- which was at the time, and remains today, a majority state-owned bank -- stop[ped] supporting the PIJ and Hamas, and close[d] the accounts of Shurafa and his affiliates (the " Shurafa Accounts" ). BOC nonetheless continued to process numerous wire transfers through the Shurafa Accounts for the
benefit of PIJ and Hamas, up to and after the murder of Daniel Wultz.
In 2008, after Daniel Wultz's survivors sent a demand letter to BOC threatening this lawsuit, BOC conducted an internal investigation and, according to plaintiffs, " finally began closing the Shurafa Accounts." 
Plaintiffs' attempts to obtain discovery from BOC have a long, complex, and contested history. This has been especially true of plaintiffs' attempts to obtain evidence concerning BOC's communications with the PRC, and internal BOC communications located in China.
In an order issued on October 29, 2012 (" the October 29 Order" ), I addressed plaintiffs' first motion to compel BOC to produce various categories of documents in contravention of Chinese law. Applying the Second Circuit's seven-factor comity test, I granted plaintiffs' motion in part, ordering BOC to produce documents requested by plaintiffs that would be discoverable under the Federal Rules of Civil Procedure, but that BOC was withholding because production of the documents would violate Chinese bank secrecy laws. I created a single, narrow exclusion from this general rule: " 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."  I added in a footnote: " 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." 
Rather than resolving the parties' dispute, the October 29 Order had little effect. On November 9, 2012, BOC responded to plaintiffs' third set of document
requests by " reiterating its objection to producing regulatory communications and filings barred by the laws and regulations of the PRC."  It eventually became clear that BOC was refusing to produce the requested Chinese documents not only based on the bank secrecy laws discussed in the October 29 Order, but also based on other laws, including laws primarily concerned with combating money laundering and other illegal financial transactions. With the benefit of hindsight, BOC's briefing prior to the October 29 Order contains references to such laws. Instead of promptly bringing to the Court's attention the importance of these laws to BOC's position, however, BOC failed to comply with the Court's order and claimed that its behavior was justified by the language in the footnote quoted above. Once again: the October 29 Order stated that BOC was required to produce relevant documents except " confidential regulatory documents created by the Chinese government whose production is clearly prohibited under Chinese law."  The Order emphasized in a footnote that this exception did " not apply to materials created by BOC and provided to the Chinese government in the course of regulatory reviews."  Despite the absence of any statement in the Order that BOC was permitted to withhold documents
created by BOC and provided to the Chinese government outside the course of regulatory review -- which would have been a significant exclusion -- BOC claimed to believe that this exclusion was implied simply by the Court's use of the phrase " in the course of regulatory reviews" in the footnote.
In an order on January 10, 2013 (" January 10 Order" ), I rejected BOC's interpretation of the footnote in the October 29 Order, but recognized the validity of BOC's concerns regarding materials whose production is prohibited under Chinese laws other than the bank secrecy laws addressed in the October 29 Order. The January 10 Order concluded that under the multi-factor comity test, Chinese laws that are " primarily concerned not with protecting the confidentiality of bank
clients, but with combating money laundering and other illegal financial transactions" would offer stronger protection to BOC than Chinese bank secrecy laws. As a result, I held that BOC would not be required automatically to produce " communications from BOC to the Chinese government whose disclosure is specifically and categorically prohibited under" several Chinese laws cited by BOC:
" Article 5(1) of the Anti-money Laundering Law of the PRC; Articles 7, 15(2) and 16 of the Rules for Anti-money Laundering by Financial Institutions; and Article 6 of the Measures for the Administration on Financial Institutions' Reports of Large-sum Transactions and Suspicious Transactions." 
I also provisionally accepted BOC's representation that two specific types of document transmitted from banks to Chinese regulators -- Suspicious Transaction Reports (" STRs" ) and Large-value Transaction Reports (" LTRs" ) -- are analogous to Suspicious Activity Reports (" SARs" ), which U.S. regulations prohibit banks from producing in discovery. But I invited the parties to provide further briefing regarding the laws cited by BOC as the basis for its withholding of Chinese discovery materials despite the October 29 Order. That briefing is the subject of this Opinion.
III. APPLICABLE LAW
A. Multi-Factor Comity Analysis