United States District Court, S.D. New York
OPINION AND ORDER
GARBRIEL W. CORENSTEIN, District Judge.
Plaintiffs Sheryl Wultz, Yekutiel Wultz, Amanda Wultz, and Abraham Leonard Wultz have brought suit against Bank of China Ltd. ("BOC") for claims arising out of a 2006 suicide bombing in Tel Aviv, Israel. They allege that a customer of BOC, Said al-Shurafa ("Shurafa"), was a senior operative of the terrorist group responsible for the bombing and that BOC assisted Shurafa by executing dozens of wire transfers on his behalf totaling several million dollars. See First Amended Complaint, filed Jan. 13, 2009 (Docket # 12), ¶¶ 69-76. Plaintiffs now seek to compel the production of documents relating to investigations conducted by BOC in 2008 into Shurafa's accounts prompted by a letter sent by plaintiffs' counsel informing BOC of their intention to file suit. BOC asserts the documents are protected from disclosure by the attorney-client privilege and the work product doctrine. For the reasons stated below, plaintiffs' motion is granted.
The following facts are undisputed, unless otherwise noted.
On January 23, 2008, Robert Tolchin, an attorney for plaintiffs, sent a letter to BOC's New York Branch ("BOC-NY") stating that he intended to file a lawsuit against BOC because of the assistance it gave to Shurafa. See Letter from Robert J. Tolchin, dated January 23, 2008 (annexed as Ex. 11 to Beebe Decl.) (the "Demand Letter"). The letter was entitled "Impending Legal Action in United States Courts Against Bank of China" and asserted that BOC "knowingly and intentionally" provided material assistance to terrorist groups that facilitated and caused terrorist attacks. Id. at 2 (emphasis omitted). It gave an account number of Shurafa at the BOC branch in Guanzhou and asserted that the account was used to fund terrorist operations. Id. at 2-3. Tolchin stated he was preparing a civil action that "will be filed in federal court within the next few weeks." Id. at 3. The letter invited BOC to advise Tolchin if it was interested in discussing settlement. Id. at 5. The letter concluded: "absent immediate confirmation that BOC is willing to enter into serious settlement negotiations, we will file suit with no further notice." Id. at 5. BOC-NY sent a fax to BOC's Head Office in Beijing ("BOC-HO") informing it of the Demand Letter. BOC Resp. No. 1; Pl. Resp. No. 1. In that fax, BOC-NY "offered to recommend external U.S. legal counsel to advise BOC with respect to the Demand Letter." Declaration of Geng Wei, dated Aug. 27, 2014 (annexed as Ex. 3 to Beebe Decl.) ("Geng Decl."), ¶ 3.
On January 24, 2008, "BOC-HO employee Wang Qi directed BOC-HO employee Geng Wei to conduct an investigation of the allegations in the Demand Letter" and prepare a report and recommendation. BOC Resp. No. 2; Pl. Resp. No. 4. At the time, "Wang Qi was the General Manager of BOC's Legal Compliance Department" and "Geng Wei was BOC's Chief Compliance Officer." BOC Resp. No. 2. Neither of these individuals is an attorney for purposes of the application of the work product doctrine or attorney-client privilege.
That same day, John Beauchemin, the Chief Compliance officer at BOC-NY "contacted the bank's outside U.S. counsel." Declaration of John Beauchemin, dated Feb. 20, 2013 (annexed as Ex. 14 to Beebe Decl.) ("Beauchemin Decl."), ¶ 4. Beauchemin, who is also not an attorney, was responsible for conducting BOC-NY's investigation into the letter's allegations. BOC Resp. No. 30. Beauchemin identifies one particular investigatory action - a search of a database - accomplished by BOC-NY's "Legal Department." Beauchemin Decl. ¶¶ 8-9. He also states that he broadened the search of that database "at the direction of counsel, " id. ¶ 10, though he does not identify who the counsel is or in what context that "direction" occurred. Beauchemin identifies other investigatory steps taken in February 2008 without reference to the involvement of counsel. Id . ¶¶ 12-20. Beauchemin also states that since receiving the Demand Letter, BOC-NY was "in constant contact with its outside U.S. counsel regarding this matter." Id . ¶ 22. However, he conspicuously omits to give any description of the nature of that content or the specific role of outside counsel in his investigation. He does not even state that he was communicating with outside counsel in order to obtain legal advice.
On or about January 25, 2008, BOC-NY provided BOC-HO with a preliminary assessment of the allegations in the Demand letter based on information it had collected. BOC Resp. No. 3. On January 28, 2014, Geng directed the "Overseas Institutions and AML Section of the BOC-HO Legal and Compliance Department" to send an email to BOC-NY requesting "additional" unspecified information. Geng Decl. ¶ 8. At some unspecified date thereafter (but apparently before January 29, 2008), Geng "directed" BOC-NY to "continue to investigate" the transactions and to "report their findings to the Head Office" so that BOC could assess the allegations in the Demand Letter and "develop BOC's litigation strategy if necessary." Id . ¶ 9. In other words, Geng suggests that he (not outside counsel in New York) "directed" BOC-NY's investigation and that the investigation's purpose was to apprise the Head Office (through Geng) of any findings. This is reinforced by Geng's statement that on January 29, 2008, the Legal Department of BOC-NY sent a fax addressed to Wang Qi, Geng's superior, and Geng seeking instruction on how to respond "should the American attorney contact them." Id . ¶ 10.
An investigation in China occurred at the same time as the investigation in New York. Geng "led BOC's initial investigation of the allegations in the Demand Letter." BOC Resp. No. 4. Geng was assisted by Li Jianyu and Yuan Fang, of the Overseas Institutions and AML Section of the BOC-HO Legal and Compliance Department, as well as several other BOC employees, to whom BOC-HO delegated responsibility for the collection of information. Id . Geng asserts that in light of the Demand Letter's threat to file a lawsuit within the next few weeks, his "expectation" in collecting information concerning the Demand Letter's allegations was that "external counsel would use and analyze the findings for the purposes of assessing the merits of the allegations in the Demand Letter and developing a litigation strategy if necessary." Geng Decl. ¶ 6. As already noted, however, there is no evidence that any external U.S. counsel actually directed or was otherwise consulted for legal advice regarding the investigation during this time period. Indeed, Geng never claims that he received direction from external U.S. counsel.
In the meantime, on January 28, 2008, BOC-HO sent a fax directing BOC's Guangdong Branch ("BOC-GD") to investigate and to report their findings to the Head Office. Id . ¶ 8. The investigation in Guangdong was led by Liu Hongbing, Deputy General Manager of BOC-GD's Legal and Compliance Department, and previously a Senior Manager in that department. BOC Resp. No. 6. Liu is not a lawyer. Id.
In January and February, "Liu Hongbing instructed employees of [BOC-GD] with respect to BOC-GD's collection of information related to the allegations in the Demand Letter for BOC-HO." Id . No. 7. "Liu Hongbing personally did not speak with BOC's U.S. outside counsel prior to September 2008...." Id . Rather, he "followed instructions from the Head Office to collection information and report back to the Head Office." Id . "The Head Office, under the supervision of Wang Qi and Geng Wei, continued to communicate with BOC-NY and BOC-GD as BOC-NY and BOC-GD gathered additional information concerning the allegations in the Demand Letter." Pl. Resp. No. 11.
On January 31, 2008, BOC-GD reported the findings of its preliminary investigation to BOC-HO. BOC Resp. No. 8. Geng states that BOC-GD "requested legal advice and recommended that BOC retain external U.S. legal counsel." Geng Decl. ¶ 11. In other words, BOC-GD did not believe at this time that there was existing U.S. legal counsel who could provide legal advice. Indeed, on February 3, 2008, BOC-HO sent a fax to BOC-NY asking that BOC-NY propose external legal counsel. Id . ¶ 12. Geng states that on February 6, BOC-NY stated that it was "already in contact with BOC's external U.S. regulatory Counsel Gary Lax, " although no information is given at all as to the nature of that contact. Id . Geng states that BOC-NY proposed that BOC retain Walter Loughlin of the U.S. law firm K&L Gates "for the purposes of assessing the merits of the allegations of the Demand Letter and developing a litigation strategy if necessary." Id . For its part, BOC-HO concurred with BOC-GD that it was necessary to retain outside counsel and asked that BOC-GD "decide whether it would like to retain" Loughlin. Id . ¶ 13.
"[O]n February 15, 2008, BOC-HO received a report from BOC-GD regarding its ongoing investigation into the allegations in the Demand Letter, requesting additional instructions from BOC-HO, and proposing that BOC's U.S. counsel handle communications with the U.S. regulators." BOC Resp. No. 9.
On February 18, 2008, as part of BOC-HO's investigation of the allegations in the Demand Letter, "the BOC-HO Legal and Compliance Department sent Li Jianyu and Yuan Fang to Guangzhou to investigate the Shurafa-related accounts and transactions." BOC Resp. No. 10. "At Geng Wei's direction, they met with personnel from the BOC-GD Banking Business Department, Personal Banking Department, and Legal and Compliance Department to collect additional information relating to the opening of the Shurafa accounts and the Shurafa transactions." BOC Resp. No. 10. "On February 20, 2008, they visited the Zhongshan Balu subbranch where accounts were opened and interviewed employees, including the tellers, of the subbranch." Id . "On February 21, 2008, at the request of the BOC-HO Legal and Compliance Department, Li Yingyue and Weng Shuping from the BOC-GD Zhongshan Balu sub-branch visited Said Shurafa's place of business at Fuli Business Building..., spoke with Said Shurafa, and took photographs." Geng Decl. ¶ 16. On March 14, 2008, "BOC employees Li Yingyue and Weng Shuping visited the Shurafa Business Office;" on March 21, 2008, "three BOC employees, Li Yingyue, Li Yongqing, and Huang Dachao, visited the Shurafa Business Office"; and on March 26, 2008, "BOC Employees visited the Shurafa Business Office." BOC Resp. No. 12. On March 31, 2008, "BOC employees Li Jingyue and Huang Dachao visited Said Shurafa's storage warehouse." Id.
On the issue of retaining counsel, on February 22, 2008, "BOC-HO notified BOC-NY that it agreed with BOC-NY's proposal to retain K&L Gates." Id . No. 11. BOC gives no information as to when it began communicating with Loughlin or K&L Gates about this matter. It states vaguely that Loughlin "was involved" in the investigation of the Demand Letter, Geng Decl. ¶ 18, but omits the actual dates of his involvement and does not describe the nature of his involvement, including omitting to state whether he directed or claims to have directed any aspect of the investigation. No affidavit is provided from Loughlin. For his part, Geng says that BOC "began to provide" information to Loughlin by March 2008 who by that time had "trips planned" to ...