First American Corp. v. Price Waterhouse LLP

184 F.R.D. 234, 1998 U.S. Dist. LEXIS 20205, 1998 WL 909882
CourtDistrict Court, S.D. New York
DecidedDecember 23, 1998
DocketNo. M8-85 RWS
StatusPublished
Cited by12 cases

This text of 184 F.R.D. 234 (First American Corp. v. Price Waterhouse LLP) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
First American Corp. v. Price Waterhouse LLP, 184 F.R.D. 234, 1998 U.S. Dist. LEXIS 20205, 1998 WL 909882 (S.D.N.Y. 1998).

Opinion

OPINION

SWEET, District Judge.

Price Waterhouse-United Kingdom (“PW-UK”) has moved pursuant to Rule 45(c)(2)(B) of the Federal Rules of Civil Procedure for the reimbursement of costs in the amount of $210,990.67 incurred in obtaining the United Kingdom (“UK”) and Cayman court orders lifting the various foreign legal restrictions preventing production of documents responsive to the subpoena issued by this Court. First American Corporation (“FAC”) has. moved for a determination of the reasonableness of PW-UK’s redaction costs, which PW-UK incurred pursuant to an order issued by the Cayman court. For the reasons set forth below, PW-UK’s motion is granted in part and denied in part — specifically, FAC shall reimburse PW-UK in the amount of $75,-[236]*236000 — and FAC’s motion is denied for lack of jurisdiction.

Parties

FAC is a Virginia corporation with its principal place of business in Washington D.C. During the events which led to the DC Action (defined below), FAC was a privately held bank holding company wholly owned by Credit and Commerce American Holdings Co. N.V. (“CCAH”).

PW-UK is an English partnership set up under the Partnership Act (1890) of England. It is located and operates principally in the United Kingdom.

Facts and Prior Proceedings

The facts and prior proceedings were set forth in detail in three prior opinions, familiarity with which is assumed. See First American Corp. v. Price Waterhouse LLP, 988 F.Supp. 353 (S.D.N.Y.1997) [hereinafter First American I ]; First American Corp. v. Price Waterhouse LLP, No. M8-85, 1998 WL 148421 (S.D.N.Y. Mar. 27, 1998) [hereinafter First American II ]; Price Waterhouse LLP v. First American Corp., 182 F.R.D. 56 (S.D.N.Y.1998). Facts relevant to the instant motion are set forth below.

FAC is the plaintiff in an action, which has now largely settled, in the District Court for the District of Columbia, captioned First American Corp., et at. v. Sheikh Zayed Bin Sultan al-Hahuan, et al, 93 Civ. 1309 and 95 Civ. 9877 (JUG/PJA) (the “DC Action”). The DC Action was just one proceeding of many spawned by the largest bank fraud in world history perpetrated by the Bank of Credit and Commerce International (“BCCI”). During BCCI’s growth to an organization of international proportions, it created fictitious loans, stole deposits, incurred hundreds of millions of dollars in losses from reckless trading operations, accepted illicit funds from drug launderers and corrupt dictators, and blatantly violated banking and criminal laws in virtually every jurisdiction in which it operated. The result was a $10.5 billion bank failure, and the loss of billions of dollars of depositors’ savings.

The Price Waterhouse firms were auditors of BCCI (Overseas) Limited, a Cayman Islands bank, and the efforts of separate Price Waterhouse firms were coordinated by PW-UK. As part of its coordination of worldwide audits, PW-UK would instruct and direct the efforts of accounting firms in those territories where BCCI subsidiaries carried on material business.

In August 1997, FAC served a subpoena (the “Subpoena”) requesting documents from PW-UK related to BCCI and any services performed by Price Waterhouse for BCCI. The Subpoena was objected to. On September 30, 1997, FAC brought an application by ex parte order to show cause compelling discovery. The petition was heard in Part I before this Court on October 28, 1997. In First American I, this Court enforced the Subpoena and granted FAC’s motion to compel discovery as to PW-UK.

On April 3, 1998, PW-UK was found to be in contempt of court for its failure to comply with the Subpoena enforced by First American I and First American II. PW-UK was ordered to pay $1,000 per day as a sanction, but pursuant to stipulation by the parties, the sanction was stayed pending the appeal of First American I, First American II, and the contempt order to the Second Circuit.

On June 23, 1998, the Second Circuit affirmed First American I, First American II, and the contempt order. See First American Corp. v. Price Waterhouse LLP, 154 F.3d 16 (2d Cir.1998) [hereinafter First American III ].

On July 2, 1998, the sanction for noncompliance of the document subpoena was increased to $5,000 per day.

Both this Court and the Second Circuit recognized that PW-UK’s compliance with the Subpoena was complicated by the existence of various foreign legal impediments preventing disclosure of a majority of the responsive documents. See First American III, 154 F.3d at 21-23; First American I, 988 F.Supp. at 365-66. These impediments included: (1) customer injunctions; (2) banker/customer confidentiality considerations; (3) the implied undertaking as to the use of the documents obtained on discovery in the English BCCI litigation; (4) section 4 of the Cayman Islands Confidential Relationships (Preservation) Law (1995 Revision) (“Cay[237]*237man Confidentiality Law”); (5) section 82 of the UK Banking Act of 1987; and (6) public interest immunity concerns.

Following the affirmance by the Second Circuit, PW-UK engaged the efforts of its English and Cayman counsel towards lifting the above impediments. By July 9, 1998, three of the relevant legal impediments had been resolved without judicial intervention. Regarding the public interest immunity concerns, PW-UK determined that such concerns would not prevent production of documents, and FAC agreed that documents subject to either the implied undertaking on discovery or section 82 of the UK Banking Act of 1987 need not be produced..

The remaining impediments required either the consent of interested parties or judicial resolution. According to PW-UK, because obtaining the multitude of required consents before the August 11, 1998, discovery deadline would be impossible, PW-UK prepared to make expedited applications to the UK and Cayman courts.

Proceedings in the UK and Cayman courts commenced in July 1998. On July 24, 1998, the UK court entered an order permitting PW-UK to disclose documents responsive to' the Subpoena, notwithstanding the confidentiality restrictions, contingent upon (1) PW-UK’s redaction of all information in such documents relating to the affairs of persons other than the record shareholders of CCAH, and (2) FAC’s undertaking to seek protective orders from this Court and the DC district court prohibiting FAC and other parties to the DC Action from using or disclosing such information for any purpose other than the DC Action.

The Cayman court likewise ruled that PW-UK would be permitted to disclose information otherwise subject to confidentiality restrictions pursuant to the Subpoena.

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184 F.R.D. 234, 1998 U.S. Dist. LEXIS 20205, 1998 WL 909882, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-american-corp-v-price-waterhouse-llp-nysd-1998.