## Facts

- Plaintiffs sued a Chinese commercial bank under the Antiterrorism Act (ATA), alleging the bank provided financial services that materially supported a terrorist bombing in Tel Aviv that killed Daniel Wultz and injured Yekutiel Wultz.
- By the time of the decision, only an ATA claim for direct liability remained; other theories had been dismissed, and aiding-and-abetting liability under the ATA was unavailable in the circuit.
- The case was in discovery; plaintiffs filed a third motion to compel production of documents located in China that the bank withheld as attorney-client privileged and/or work product.
- The withheld materials consisted largely of internal communications among bank personnel in China (including in-house legal/compliance staff and management) regarding accounts and the bank’s response to threatened and filed U.S. litigation.
- The Wultz family sent the bank a demand letter on January 28, 2008; disputed documents were created both before and after that date.
- Plaintiffs argued Chinese privilege law should apply because the documents were created, stored, and primarily circulated in China, and that Chinese law did not provide protections comparable to U.S. attorney-client privilege or work product.

## Issues

1. Which jurisdiction’s law governs privilege and work-product claims for China-located communications involving a Chinese bank: U.S. law or Chinese law?
2. Under the applicable law, do the withheld documents qualify for attorney-client privilege and/or work-product protection?
3. Did the bank meet its burden to substantiate privilege claims and provide adequate privilege-log detail under applicable local rules?
4. Are communications involving in-house “legal” staff protected where the bank did not show the participants were licensed attorneys acting in a legal capacity?
5. For any qualifying work product, did plaintiffs show substantial need sufficient to justify production?

## Decision

- The court applied the Second Circuit “touch base” test, using the law of the jurisdiction with the predominant interest in the confidentiality of the communications.
- Chinese law governed documents that “touched base” with China (including many pre-demand, China-centric internal communications and post-demand communications not directed to U.S. litigation).
- Because Chinese law did not provide an evidentiary attorney-client privilege or work-product protection that would bar disclosure in this setting, the court ordered production of documents governed by Chinese law.
- U.S. privilege law governed documents that “touched base” with the United States, principally post-demand communications created because of, or in response to, anticipated or ongoing U.S. litigation.
- As to U.S.-law documents, many privilege assertions were not sustained on the existing record due to vague entries and failure to identify licensed attorneys or legal-advice purpose; the bank was permitted to amend privilege logs to cure deficiencies.
- The motion to compel was granted in large part, with production required for nonprivileged categories and further support required for any continued withholding under U.S. privilege law.

## Legal Principles

- In transnational discovery disputes, privilege is determined by the “touch base” approach: the governing law is that of the jurisdiction with the predominant interest in the confidentiality of the specific communication.
- The party asserting attorney-client privilege bears the burden to show (i) a communication, (ii) between privileged persons (including a licensed attorney acting as counsel), (iii) made in confidence, (iv) for the purpose of seeking or providing legal advice; business or compliance communications are not privileged merely because legal staff are copied.
- Privilege logs must provide sufficient information—such as the identity and role of attorneys and the basis for withholding—to allow evaluation of the privilege claim; conclusory labels are insufficient.
- Work-product protection applies to materials prepared because of anticipated litigation, not documents created in the ordinary course of business or regulatory compliance; the proponent must substantiate the litigation-driven purpose.
- Where foreign law governs and does not recognize an evidentiary privilege comparable to U.S. privilege, documents are not withheld on privilege grounds in U.S. civil discovery solely due to involvement of lawyers.

## Conclusion

The court compelled production of many China-based documents after applying the “touch base” choice-of-law test, holding that Chinese law governed numerous communications and did not supply an evidentiary privilege barring disclosure, while any continued withholding of U.S.-litigation-related materials required properly supported attorney-client or work-product showings and adequate privilege logs.


Wultz v. Bank of China Ltd., 979 F. Supp. 2d 479 (S.D.N.Y. 2013)