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In re Bank of New York Mellon Corp. Forex Transactions Litigation

United States District Court, S.D. New York

November 10, 2014

In re: BANK OF NEW YORK MELLON CORP. FOREX TRANSACTIONS LITIGATION.
v.
THE BANK OF NEW YORK MELLON, et ano., Defendants This document relates to: All Actions; UNITED STATES OF AMERICA, Plaintiff,

Page 407

For United States of America, Plaintiff: Pierre G. Armand, Lawrence H. Fogelman, Jeffrey K. Powell, Arastu K. Chaudhury, Rebecca S. Tinio, Assistant United States Attorneys, PREET BHARARA, UNITED STATES ATTORNEY.

For Customer Class, Plaintiffs: Elizabeth J. Cabraser, Daniel P. Chiplock, Daniel E. Seltz, Michael J. Miarmi, LIEFF CABRASER HEIMANN & BERNSTEIN, LLP, Joseph H. Meltzer, Sharan Nirmul, Shannon O. Braden, Daniel Mulveny, Sekou Campbell, KESSLER TOPAZ MELTZER & CHECK, LLP.

For The Bank of New York Mellon, Defendant: Reid M. Figel, Rebecca A. Beynon, David L. Schwarz, Derek T. Ho, Gregory G. Rapawy, Andrew C. Shen, Joshua D. Branson, Andrew E. Goldsmith, KELLOG HUBER HANSEN TODD EVANS & FIGEL, PLLC.

For David Nichols, Defendant: Stephen Fishbein, Daniel H.R. Laguardia, Christopher LaVigne, Jeffrey J. Resetarits, SHEARMAN & STERLING, LLP.

Page 408

MEMORANDUM OPINION

Lewis A. Kaplan, United States District Judge.

The plaintiffs in most of these actions are or were customers of the Bank of New York Mellon (" BNYM" or the " Bank" )[1] that contracted with BNYM to execute certain foreign exchange transactions on their behalf. They now allege that the Bank is liable for breaches of fiduciary duties, contract, and the implied covenant of good faith and fair dealing, as well as conversion, unjust enrichment, and certain violations of state business law for assigning fictitious foreign currency exchange rates to the plaintiffs' purchases and sales of foreign securities in violation of contractual guarantees. The Department of Justice and several other groups of private plaintiffs also have sued BNYM for civil penalties or alleged damages stemming from its foreign exchange practices.[2]

The matter now is before the Court on the motion of the Customer Class Plaintiffs (" Plaintiffs" ) for an order compelling the Bank to produce in unredacted form a document (the " Robeco document" ) that contains a legal memorandum (the " Groom Memo" ) originally prepared for BNYM but that the Bank later forwarded to some third-party investment managers, including Robeco Investment Management (" Robeco" ), that were associated with BNYM's pension plan.[3] The nub of the dispute is whether the Groom Memo is protected by the attorney-client privilege or the work product doctrine, notwithstanding that dissemination, by virtue of the common interest doctrine.

The Bank argues that the Groom Memo is " protected from disclosure by the attorney-client privilege and work product doctrine" and that " BNYM did not waive the privilege by sharing the Memo with its existing investment managers." [4] Plaintiffs, on the other hand, assert (1) that the

Page 409

Bank forfeited the protection of the attorney-client privilege when it circulated the Groom Memo to third parties with whom it shared no common legal strategy,[5] and (2) that the Groom Memo is not work product because there is no evidence that it was prepared " in connection with active or contemplated litigation." [6]

Facts

On June 10, 2009, André e St. Martin, an attorney at the Groom Law Group and thus among the Bank's outside counsel, sent the Groom Memo to BNYM.[7] In broad strokes, the memo discusses the Bank's standing instruction foreign exchange (" FX" ) transactions business -- the business at the heart of this litigation -- vis-a-vis compliance with the Employee Retirement Income Security Act of 1974 (" ERISA" ).[8] On July 1, 2009, a BNYM employee named Nicholas Rotunno sent the Groom Memo to representatives of four of the BNYM pension plan's investment management companies, including Robeco.[9] He asked the recipients to review the Groom Memo, to confirm that their companies " can comply with the[] conditions" therein and to understand " that compliance with this ...


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