Bank Of China’s Subpoena In Terrorism Suit Gets Tossed

By Dan Prochilo
Law360

Sued for allegedly helping a Palestinian terrorist group execute an attack, Bank of China Ltd. saw its subpoena of an Israeli bank quashed Tuesday by a New York federal judge, who said the request placed too great a burden on a bank that wasn’t involved in the case.

Lawsuit charges Bank of China knowingly assisted terrorist group that murdered American teenager Daniel Wultz in 2006.

Lawsuit charges Bank of China knowingly assisted terrorist group that murdered American teenager Daniel Wultz in 2006.

Accused of supporting Palestine Islamic Jihad by processing wire transfers for the organization despite a warning from Israeli intelligence officials, BOC subpoenaed Bank Hapoalim BM for information BOC hoped would show that Israeli authorities had not raised a red flag about the transactions. But U.S. Magistrate Judge Gabriel Gorenstein ruled that BOC’s request would have required Hapoalim to go to unreasonable lengths to send one of its employees to New York for a deposition.

“Here, there is no evidence disputing Hapoalim’s contention that none of its employees who live and work in New York have any knowledge of the information sought by the subpoena,” Judge Gorenstein said. “Thus, in order to produce a knowledgeable designee for the deposition, Hapoalim would presumably have to send an employee from Israel to New York, a distance much greater than 100 miles, a result plainly barred by case law.”

According to their February 2011 suit against the BOC, plaintiffs Sheryl, Yekutiel, Amanda and Abraham Wultz alleged that the bank provided material support to PIJ by processing numerous transactions for the group that enabled it to carry out an April 17, 2006, suicide bombing in Israel.

The PIJ-orchestrated bombing of a Tel Aviv restaurant killed 11 people, including Yekutiel and Sheryl Wultz’s 16-year-old son Daniel, and left Yekutiel Wultz and roughly 59 others with serious injuries.

BOC carried out “dozens of wire transfers totaling several million dollars” to a senior PIJ operative, Said al-Shurafa, and the funding was used to facilitate the bombing, the complaint said.

But the bank says the bereaved family has no evidence it permitted those transfers knowing they had any connection to the jihadist group, and it is therefore not liable for the tragedy. The Wultzes, however, say Israeli counterterrorism officials met with bank representatives a year before the attack, to alert them that wire transfers were being made into al-Shurafa’s BOC account.

In an effort to prove it never received such a heads-up from the intelligence community, BOC subpoenaed Hapoalim for any documents relating to transactions it might have processed involving al-Shurafa.

BOC was hoping that its document request would turn up evidence showing the Israeli government didn’t forewarn Hapoalim that it was likely processing transactions for PIJ, reasoning that if counterterrorism officials in Israel weren’t warning banks on their own soil, they probably weren’t letting Chinese banks know about similar suspicious activity either, Judge Gorenstein’s order stated.

After Hapoalim turned over transaction records, BOC filed another subpoena, which like the first one was served on the bank’s New York office. BOC asked Hapoalim for a large amount of additional information, such as an explanation of the circumstances around transactions involving al-Shurafa that Hapoalim had carried out, a detail of any communications Hapoalim had with the Israeli government about the transfers, and an explanation of how the Israeli government communicates information on terrorist groups to Hapoalim.

But on Aug. 12 the Israeli bank moved to quash the second subpoena, saying the transactions in question had no connection to its New York branch and employees there had no knowledge of and couldn’t testify about bank policies in Israel or exchanges of information between bank personnel and the Israeli government. Hapoalim also urged the court to toss the discovery request because it would compel the bank to hand over information in violation of Israel’s confidentiality laws.

Judge Gorenstein sided with Hapoalim, saying the request would require the bank to send an employee from Israel to New York to be deposed, violating a federal rule designed to prevent nonparties to a lawsuit from being “subjected to excessive discovery burdens in litigation in which they have little or no interest.” Federal Rule of Civil Procedure 45(c) requires courts to quash subpoenas that would require third parties to travel more than 100 miles to fulfill the requests, the judge pointed out.

The judge also rejected BOC’s contention that Hapoalim should be required to “educate” someone in New York so he or she could answer the questions raised by the subpoena, saying “the topics that would be the subject of BOC’s proposed ‘education’ exercise have nothing to do with the New York branch,” are “extensive in scope” and would place an undue burden on the bank.

Representatives for the parties could not be immediately reached for comment Wednesday.

The Wultzes are represented by Lee S. Wolosky, Steven I. Froot, Marilyn C. Kunstler and Jaime Sneider of Boies Schiller & Flexner LLP.

BOC is represented by Mitchell R. Berger, Alan T. Dickey, James E. Tyrell Jr., and Elissa J. Glasband of Patton Boggs LLP.

Hapoalim is represented by Carol M. Goodman and Janice I. Goldberg of Herrick Feinstein LLP.

The case is Wultz et al. v. Bank of China Ltd., case number 1:11-cv-01266, in the U.S. District Court for the Southern District of New York.



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