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Wultz v. Bank of China Limited

United States District Court, S.D. New York

February 13, 2014

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.

OPINION AND ORDER

SHIRA A. SCHEINDLIN, District Judge.

I. INTRODUCTION

This case 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 that BOC provided material support and resources to the Palestinian Islamic Jihad ("PIJ") by executing millions of dollars worth of wire transfers to an alleged PIJ leader, Said al-Shurafa ("Shurafa"). Plaintiffs' sole remaining claim against BOC is for acts of international terrorism under the Antiterrorism Act ("ATA").[1] Plaintiffs allege that BOC had actual knowledge of the connection between the wire transfers and the PIJ because Israeli counter-terrorism officials met with the Chinese government and bank regulators in April 2005 and allegedly warned them that Shurafa's accounts were used to transfer money to terrorist organizations.[2]

On September 28, 2012, BOC subpoenaed Bank Hapoalim ("Hapoalim"), a non-party Israeli bank, requesting documents pertaining to any transactions or wire transfers involving Shurafa. Hapoalim produced a number of documents, including transaction records for sixteen wire transfers from a single individual to Shurafa's BOC accounts, originated at Hapoalim between August 2004 and November 2007.[3] On June 30, 2013, BOC served Hapoalim with a second subpoena pursuant to Federal Rule of Civil Procedure ("Rule") 30(b)(6) seeking testimony on a variety of topics, including the sixteen specific Shurafa transactions, Hapoalim's anti-money laundering and counter-terrorism financing compliance policies and procedures, and communications between Hapoalim and the Israeli government concerning Shurafa specifically and anti-money laundering and counter-terrorism financing generally.[4]

Hapoalim filed a motion to quash or modify the subpoena on August 12, 2013, arguing that the subpoena violates Rule 45's prohibition on compelling an individual to travel more than 100 miles from where that person resides, is employed or regularly transacts business in person in order to be deposed.[5] Further, Hapoalim argued that the subpoena should be quashed on grounds of international comity because complying with the subpoena would require Hapoalim to violate a number of Israel's confidentiality laws and potentially cause Hapoalim to give self-incriminating testimony.[6] Finally, Hapoalim argued that the subpoena was cumulative, irrelevant and improper.[7]

I referred the dispute to Magistrate Judge Gabriel W. Gorenstein. After extensive briefing, Judge Gorenstein issued a written decision on October 15, 2013 in which he granted Hapoalim's motion to quash.[8] While my ruling on BOC's timely Rule 72(a) objections was pending, BOC amended its subpoena, significantly narrowing the deposition topics.[9] Further, on December 1, 2013 - while BOC's Rule 72(a) objections were pending but before it revised the subpoena - significant amendments to Rule 45 went into effect.

Because BOC amended its request and the governing rule has changed, it is no longer proper to address this issue as a Rule 72(a) objection. Rather, I rule on Hapoalim's motion to quash or modify the amended subpoena de novo. [10] Thus, nothing in this Opinion and Order represents a finding with respect to Judge Gorenstein's October 15, 2013 ruling. Although the subpoena has been significantly modified, the underlying issues of fact and law remain similar to those presented to the Magistrate Judge. Accordingly, I have considered the record and briefing on the original motion as updated by two teleconferences held on January 7 and 16, 2014 and additional letters submitted by BOC and Hapoalim. For the following reasons, Hapoalim's motion to quash or modify BOC's amended subpoena is DENIED.

II. BACKGROUND

A. BOC's Request

BOC's explanation as to why it needs testimony from Hapoalim is as follows:

Before and after the April 2005 Israeli-PRC meeting, and before and after the April 2006 terrorist bombing at issue here, Hapoalim originated in Israel at least 16 wire transfers to Shurafa's BOC accounts. Those transfers totaled $266, 100 and comprised 10% of the approximately 160 wire transfers to Shurafa's BOC accounts. The fact that Shurafa was the beneficiary was clearly indicated on the wire transfer orders that Hapoalim originated. The Israeli government had the jurisdiction, the authority, and the ability to halt any of those Shurafa transfers originated by Hapoalim. BOC seeks Hapoalim's testimony to determine whether the Israeli government made such efforts. Testimony confirming the absence of Israeli government efforts, at home in Israel, to block Hapoalim's origination of transfers to Shurafa would make it unreasonable to infer that the Israeli government at the same time traveled thousands of miles to China in an effort to block Shurafa's receipt of such transfers.[11]
Hapoalim does not contest that this Court has jurisdiction to issue a subpoena.[12] However, Hapoalim maintains that the court must quash the subpoena in light of Rule 45(c)'s geographical limitation on compliance for the following reasons. First, the Shurafa wire transactions "originated in Israel and have no connection to Hapoalim's New York office." Second, "there are no employees located in New York with any relevant knowledge of these topics." Finally, "it is not reasonable or even practical to educate' a New York employee concerning transactions and policies in which they have no knowledge."[13] Further, Hapoalim argues that even if the subpoena does not violate Rule 45, various Israeli confidentiality and secrecy laws bar "much of the discovery sought in the subpoena" and international comity analysis weighs in favor of quashal.[14]

III. APPLICABLE LAW

A. Non-Party Subpoenas Under Rules 30(b)(6) and 45

Rule 30(b)(6) provides, in relevant part, that a party's subpoena for deposition testimony may name as the deponent a public or private corporation... and must describe with reasonable particularity the matters for examination. The named organization must then designate one or more officers, directors, or managing agents, or designate other persons who consent to testify on its behalf; and it may set out the matters on which each person designated will testify.... The persons designated must testify about information known or reasonably available to the organization.

A Rule 30(b)(6) request for deposition can be served on a non-party whose attendance can be "compelled by subpoena under Rule 45."[15] Under Rule 45(c)(1)(A), a "subpoena may command a person to attend a... deposition only... within 100 miles of where the person resides, is employed, or regularly transacts business in person."[16] Rule 45(d)(1) further requires that a party issuing a subpoena "must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena." Rule 45(d)(3)(A) instructs a district court to quash or modify a subpoena that "[1] fails to allow a reasonable time to comply; [2] requires a person to comply beyond the geographical limits specified in Rule 45(c); [3] requires disclosure of privileged or other protected matter, if no exception or waiver applies; or [4] subjects a person to undue burden."

B. Multi-Factor Comity Analysis

In Societe Nationale Industrielle Aerospatiale, the Supreme Court established that the Hague Convention process 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."[17] The Supreme Court emphasized that "the spirit of cooperation in which a domestic tribunal approaches the resolution of cases touching the laws and interests of other sovereign states, " or "international comity, " requires a "particularized analysis of the respective interests of the foreign nation and the requesting nation."[18]

Courts in the Second Circuit consider the following five factors, drawn from the Supreme Court's analysis in Aerospatiale when evaluating the propriety of an order directing the production of documents or testimony that may be in contravention of foreign law:

(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;
(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 ...

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