The Litigation Daily
January 29, 2015
Over the objections of defense lawyers at Dorsey & Whitney and Squire Patton Boggs, Bank of China Ltd. has been ordered to turn over internal records that could help plaintiffs tie the bank to a 2006 Palestinian terrorist attack.
In a ruling unsealed this week, U.S. Magistrate Judge Gabriel Gorenstein in Manhattan ordered BOC to turn over some 1,600 documents related to an internal investigation into BOC accounts formerly held in the name of an alleged Islamic Jihad leader, Said al-Shurafa, and his wife Reem. Plaintiffs in the six-year-old case hope the documents will buttress their claims that BOC deliberately turned a blind eye to accounts it knew were being used to funnel money to terrorist operatives in Gaza.
The decision counts as a victory for the parents and family of Daniel Wultz, a 16-year-old who was killed in an restaurant bombing in Tel Aviv for which Islamic Jihad claimed responsibility. The Wultz family is represented by David Boies and Lee Wolosky of Boies, Schiller & Flexner. The case was orignally brought by Brooklyn-based solo practitioner Robert Tolchin and the Israeli legal action center Shurat HaDin.
The plaintiffs have been trying for years to get the bank to hand over the cache; they expect the bank’s lawyers to appeal the order to U.S. District Judge Shira Scheindlin, who is overseeing the case.
In his Jan. 21 ruling, Gorenstein rejected arguments by BOC’s lawyers that the documents were protected by attorney-client privilege. In opposing the discovery, the bank had argued that the internal communications were related to litigation advice it received from outside lawyers at K&L Gates.
Gorenstein was unpersuaded, finding that “while BOC has made vague claims about the ‘involvement’ of outside counsel in the investigation, it has provided no evidence whatsoever that counsel ever directed that the information reflected in specific documents at issue here be prepared.” And, he wrote, the bank hadn’t shown that it wouldn’t have investigated the accounts in question absent the threat of a suit.
“The BOC has provided virtually no evidence on the question of what BOC ‘would have’ done had it learned of the. . . allegations under circumstances where the knowledge was not coupled with the threat of litigation,” the judge wrote. “For this reason alone, BOC has not met its burden of showing that the materials are protectable as work product.”
The Wurtz’s lawyers, by contrast, offered evidence that the bank might have flagged the accounts as suspicious even without the litigation threat.
Things haven’t all gone the plaintiffs’ way so far in the litigation. The bank got some unexpected help last July, when the Israeli government, in a turnaround, successfully blocked a subpoena of a former Israeli intelligence officer whose testimony was viewed as central the Wultz’s case. The officer, Uzi Shaya, was expected to testify that he gave Chinese authorities specific information in 2005 about Palestinians laundering money through BOC accounts. In 2013, plaintiffs lawyers say, the Israeli government changed its tune and blocked the testimony at the direction of Prime Minister Binyamin Netanyahu, who had just visited China to boost trade relations.
The Wultz’ lawyers are still hoping Shaya may ultimately be allowed by Israel to testify about his knowledge after he left Israeli government employment. They’re also seeking cooperation from the U.S. Department of State in pressing Belgian authorities compel Said and Reem al-Shurafa to testify in the case.
Lawyers for Bank of China, led by Lanier Saperstein of Dorsey & Whitney and Mitchell Berger of Squire Patton Boggs, did not respond to emailed requests for comment.
The case is the leading edge of nearly two dozen federal and New York state lawsuits filed against Bank of China by U.S. and Israeli victims of Palestinian attacks. Tolchin is representing the victims and their families in those other suits as well. It’s also one of at least four parallel terror finance cases against international banks currently moving forward in New York courts. Last year, the U.S. Court of Appeals for the Second Circuit reinstated similar terror finance claims against National Westminster Bank PLC, noting that a bank could be liable if it showed “deliberate indifference” to information that suggested that its accounts were being used to support terrorists.
Meanwhile, as we’ve reported, a bellwether damages trial in a terror finance case against Arab Bank is set for May. In an earlier phase of the case, Linde v. Arab Bank, a jury found last September that that bank is liable to more than a dozen American family members and victims of Hamas attacks in Israel.