Anwar v. Fairfield Greenwich Ltd., 2013 U.S. Dist. LEXIS 96721 (S.D.N.Y. July 8, 2013) [click for opinion]
This case was part of the multi-district litigation arising out of the Bernie Madoff scandal. Plaintiff sought to depose Renger Boonstra, a senior in-house lawyer at Citco Bank Netherland. Boonstra was educated as an attorney but was not licensed. Dutch law allows unlicensed attorneys to serve as in-house counsel. Citco's involvement in the litigation stemmed from its alleged supply of financial account services for the Fairfield Greenwich feeder funds.
During the deposition, counsel for Citco advised Boonstra not to answer certain questions on the ground of attorney-client privilege. Plaintiffs subsequently requested an order compelling Boonstra to answer the questions and to disclose emails to Citco, which had also been withheld on the basis of attorney-client privilege. The court granted the motion to compel.
The court first addressed a choice-of-law issue: whether Dutch or American privilege law applies. Plaintiffs argued for Dutch law, which does not afford attorney-client privilege to communications with unlicensed attorneys. Defendants argued for American law, which, though similar to the Dutch standard, recognizes an exception where a client reasonably believes he is communicating with a licensed attorney even if he is not.
To resolve this choice-of-law issue, the court applied the "touch base" analysis, which instructs the court to apply "the law of the country that has the predominant or most direct and compelling interest in whether [the] communications should remain confidential…." Predominant in this context refers to either "the place the allegedly privileged relationship was entered into" or "the place in which that relationship was centered at the time the communication was sent." The court surmised that American law would probably apply to communications regarding legal proceedings in the United States but ultimately found no need to resolve the question since the result would be the same under either country's laws.
With respect to Dutch law, the bright line rule denying privileged status to communications with unlicensed in-house counsel was dispositive. With respect to American law, Defendants could not fit within the narrow exception allowing for the client's reasonable belief to afford privilege to communications with an unlicensed attorney. Defendants could not credibly argue reasonable mistake as to Boonstra's licensure status because he has never been licensed in any jurisdiction, he never held himself out as licensed or performed tasks that suggested he was admitted in the Netherlands, in-house counsel in the Netherlands are frequently unlicensed, and Dutch law would have required Citco to sign a professional charter committing the company to honor Boonstra's independence if he was licensed.
Finally, the court noted that even if Defendants mistakenly believed Dutch law applied to the issue, the reasonable mistake exception would remain inapplicable. Defendants' mistake would be one of law; the reasonable belief exception, however, applies only to a mistake of fact.