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In re Okean B.V.

United States District Court, S.D. New York

October 10, 2014

In re Application Pursuant to 28 U.S.C. § 1782 of Okean B.V. and Logistic Solution International to Take Discovery of Chadbourne & Parke LLP

For In Re: Application Pursuant to 28 U.S.C. 1782 of Okean B.V. And Logistic Solution International Limited, Gary Leo Cutler, Gary L. Cutler, P.C., New York, N.Y. USA.

For Non-Party Chadbourne & Parke Llp, Adr Provider: Thomas Joseph Hall, LEAD ATTORNEY, Chadbourne & Parke LLP (NY), New York, N.Y. USA.

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Paul A. Engelmayer, United States District Judge.

This case involves, and this decision resolves, an application pursuant to 28 U.S.C. § 1782 to take discovery for use in a foreign proceeding, specifically, a civil lawsuit filed in the District Court of Amsterdam, the Netherlands. The application, made in 2012, has been the subject of several prior decisions, in which the Court has addressed, inter alia, claims that production of the requested documents is barred by the attorney-client privilege and by various foreign laws.

Most recently, the Court directed respondent Chadbourne & Parke LLP (" Chadbourne" ), a law firm that is not a party to the foreign proceeding, to produce

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to petitioners Okean B.V. and Logistic Solution International Limited (collectively, " Okean" ), for review on an attorneys'-eyes-only basis, a sample of more than 600 documents responsive to Okean's § 1782 subpoena. See Dkt. 62-63. These documents were in Chadbourne's custody because they involved work that the firm's Russian or Ukrainian counsel had done. At the Court's direction, Chadbourne, at its own expense, had translated these documents into English from the native Russian or Ukrainian, in order to facilitate the Court's resolution of the § 1782 application. The purpose of Okean's counsel's review of these documents was to enable counsel, and thereafter the Court, to assess, on a non-speculative basis, the probative value of these materials. Following review of those documents by Okean's counsel, the Court directed the parties (1) to brief whether any further review or production of any documents is justified by the probative value, if any, of those documents; and (2) to submit for in camera review those documents from among the 600 that Okean regarded as probative.

The Court has now closely reviewed the parties' submissions and the sample documents. Based on that review, the Court holds that production of documents pursuant to the subpoena would be unduly burdensome and intrusive to Chadbourne; and that the probative value of these documents does not justify imposition of these burdens and intrusions. Chadbourne's motion to quash Okean's subpoena is, therefore, granted.

I. Background

On April 4, 2012, Okean moved in this District for an order authorizing it to take discovery from Chadbourne, pursuant to § 1782, for use in a lawsuit pending before the District Court of Amsterdam, in the case of Okean B.V. and Logistic Solution International Limited v. Olympus Investments (2001) B.V., Poizanter Holdings Ltd., Fradomna Investments Ltd., Blakur Company Inc., Judith Hamburger, and Private Joint-Stock Company Smart Holding. See Dkt. 1. In that lawsuit, Okean seeks to void, as fraudulent under the Dutch Civil Code, certain transactions entered into prior to the bankruptcy of Wadan Yards Group (" WYGAS" ).

Chadbourne is not a party to the Dutch litigation. The documents it held were, however, claimed to be relevant because Chadbourne had been retained by several companies, including Okean and several of the defendants in that lawsuit, to provide legal advice and services in connection with either the transactions in question or events leading to them. In addition to Okean, the group of companies thus represented by Chadbourne included: Mykolayiv Shipyard Okean (" Wadan Yards" ); Blakur Company Inc. (" Blakur," a British Virgin Islands company); Poizanter Holdings Ltd. (" Poizanter," a Cyprus company); Fradomna Investments Ltd. (" Fradomna," a Cyprus company); and Olympus Investments (2001) B.V. (" Olympus," a Dutch company). See Dkt. 12 (Declaration of Anna V. Putintseva in Support of Respondent's Motion to Quash Subpoena) ¶ 2.

In connection with its § 1782 application, Okean submitted a proposed subpoena seeking production of all documents in Chadbourne's possession, custody, or control, or that of its agents, created from November 1, 2009 to the present, that are responsive to any of 21 separately numbered document requests. Dkt. 11 Ex. 2 at 3, 6. Specifically, the subpoena seeks, inter alia, all (1) " documents concerning any acts" taken by Chadbourne at the direction of Chadbourne's clients Blakur, Poizanter, and Fradomna during the relevant time period, id. at 6, 7; (2) " documents concerning the negotiation and drafting of, and performance under" nine separate agreements or transactions entered into by one or more of Chadbourne's clients, id. at 7, 8; (3) " documents concerning" certain pleadings filed by Chadbourne's clients in the Wadan Yards bankruptcy proceedings pending in Ukraine, id. at 8; and (4) " documents concerning the signing of the Deeds of Assignment and Amendment to Term Loan Facility No. 1,

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No. 4 and No. 5, by and among Okean B.V., Blakur and Wadan Yards," id. at 10.

On April 6, 2012, the Honorable Barbara S. Jones, sitting in Part I, granted Okean leave to issue the subpoena. See Dkt. 6. That order also granted Okean leave to issue additional subpoenas for the production of documents as Okean reasonably deemed appropriate and that were consistent with the Federal Rules of Civil Procedure. See id.

On May 8, 2012, Chadbourne moved to quash Okean's subpoena, on the grounds that: (1) Okean sought documents that were located outside of the United States; (2) the documents sought could be obtained from one or more of the parties to the Dutch litigation; and (3) Okean's demands for documents were unduly intrusive and burdensome. See Dkt. 9.

On June 6, 2012, Okean issued a second subpoena, to which Chadbourne also objected, see Dkt. 16. Okean's second subpoena seeks production of all documents in Chadbourne's possession, custody, or control, or that of its agents, dating back to March 1, 2008, that are responsive to 16 additional requests. See Dkt. 16 Ex. 1 at 7. Specifically, the subpoena seeks, inter alia, all (1) " retainer or engagement letters or agreements" between Chadbourne and " Blakur, FLC West, Fradomna, Gold-Coast, Good Wing, Olympus, Poizanter, Salix, Smart-Holding, Templestowe, Wadan Holding, Wadan Yards, WYGAS, Yards Invest[,] Adamou, Blik, Hamberger, Jensen, Shamray, Shaposhnikov, Van Os, I. Yusufov and V. Yusufov," id.; (2) " [d]ocuments concerning the negotiation and drafting of, and performance under" various agreements, id.; (3) " [d]ocuments concerning the Extraordinary General Meeting of WYGAS" held on March 25, 2009 and December 4, 2009, id. at 7, 8; (4) documents concerning the appointment of Shaposhnikov to various boards, id. at 8; (5) documents concerning various aspects of the WYGAS bankruptcy proceedings, id.; and (6) " [d]ocuments concerning the content of the email exchanges, dated March 17, 2010-April 8, 2010, that included, among others, Konstantin Konstantinov and Anna Kelina of [Chadbourne's] Moscow office," id. at 9.

On July 6, 2012, Okean moved to compel Chadbourne to produce documents responsive to its subpoenas. Dkt. 24. On July 20, 2012, Chadbourne submitted a memorandum of law in opposition. Dkt. 29.

On July 31, 2012, this Court, sitting in Part I, heard argument. Following that argument, in a ruling from the bench, the Court held that Okean had satisfied three of the four so-called " discretionary Intel factors." [1] See Dkt. 35 (Transcript of July 31, 2012 conference (" 7/31/12 Tr." )) at 30-32. However, the Court declined to resolve, without a developed record, whether the fourth, and highly significant, Intel factor was met-- i.e., whether the discovery sought was unduly intrusive or burdensome. Id. at 32.

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As to that factor, the Court stated that it had no doubt that the subpoenas as then drafted, which sought wide-ranging electronic materials from a law firm, were unduly intrusive and burdensome. This was so both because of the scope of Okean's request, and because the request implicated privileged communications of multiple clients, and production of non-privileged materials would require creation of an extensive privilege log. See id. at 33 (" A very, very expensive process would be necessitated . . . . There are usually multiple levels of review to assure that the log is correct and to assure that the privilege determination has been fairly made. The expense here may be compounded because there may be foreign notions of privilege and there may also be multiple clients at issue here." ). In an attempt to reduce such burdens, the Court directed the parties to work together in good faith to narrow the areas in dispute. Id. The Court further stated that, absent concrete measures to reduce the subpoenas' intrusiveness and burden, the Court could not find the fourth Intel factor in favor of Okean, the § 1782 applicant. Id.

On September 7, 2012, the Court received a joint status letter from the parties informing the Court that both Okean and Blakur (through its court-appointed liquidator) had waived any attorney-client privilege they enjoyed with respect to Chadbourne. Dkt. 101. The letter also informed the Court that Blakur had instructed Chadbourne to produce Blakur-related documents to Okean. Chadbourne's other clients involved in the subject transactions, however, had not waived privilege. Id.

That waiver changed the scope of the documents potentially reachable by Okean's § 1782 application. Before the waiver, Okean's subpoena to Chadbourne stood (barring a basis to override attorney-client privilege) to yield only non-privileged documents in the law firm's possession, e.g., documents reflecting the provision by Chadbourne personnel of business, rather than legal, services and advice to its clients. With Okean's and Blakur's waivers, however, a much larger set of responsive materials held by Chadbourne now appeared, at least potentially, available to Okean. That is because the universe of responsive materials had broadened now to include, in addition to non-privileged materials, privileged materials as to which the privilege holder--Okean or Blakur--was Chadbourne's client.

On September 14, 2012, the Court held a second conference. A goal of the conference was to find whether there was a practical way to identify, within the large number of documents held electronically by Chadbourne, those responsive materials that were either non-privileged or as to which Okean and/or Blakur were the sole privilege holder(s). Dkt. 38 (Transcript of September 14, 2012 conference (" 9/4/12 Tr." )).

At the conference, the Court directed Chadbourne to take steps, including imaging of hard drives and collection of documents, to " discern the universe of . . . potentially relevant documents." Id. at 25. In its colloquy with counsel for Chadbourne, the Court also explored narrowing, for purposes of testing the burden imposed on Chadbourne as a non-party, the period of relevant electronic communications to a four- or eight-week period in early 2012. Id. at 17. Significantly, Chadbourne's counsel stated that the firm had identified six of its personnel in its Russian or Ukrainian offices as having dealt with Okean and Blakur. ...

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