Foley v. Union De Banques Arabes Et Francaises

Background

The plaintiffs are thirty victims and family members of victims of terrorism allegedly sponsored by Syria. Each had obtained a final judgment against Syria for damages. They sued Union de Banques Arabes et Françaises (UBAF), described in the opinion as a French financial institution, alleging that UBAF worked with Syria to evade United States sanctions and prevented the plaintiffs from reaching Syrian assets to satisfy their judgments.

The complaint asserted New York claims for constructive and actual fraudulent conveyance and claims seeking turnover of property under New York law and the Terrorism Risk Insurance Act. In an earlier order, the court dismissed the fraudulent-conveyance claims but allowed the turnover claims to continue. The remaining claims concern assets allegedly in UBAF’s possession and require, among other things, determining whether relevant account holders are connected to the Syrian government and whether alleged blocked assets entered the United States.

The plaintiffs moved to compel UBAF to produce documents. UBAF opposed the motion and cross-moved for a protective order and attorney’s fees. The disputed materials covered account-holder information, payments and transfers, documents provided to the Office of Foreign Assets Control (OFAC), and transaction records involving Syria or Syrian-sanctioned entities.

Rulings on the Motion to Compel

The court denied the motion to compel as to all challenged requests: requests 1–3, 5, 7, 9–11, and 13–18.

The plaintiffs argued that the Terrorism Risk Insurance Act treated UBAF as holding blocked assets even if those assets had later been transferred. The court declined to compel discovery based on that theory because it was not alleged in the complaint and was inconsistent with the complaint’s distinction between fraudulent-conveyance claims involving transferred assets and turnover claims involving assets currently in UBAF’s possession. The court also stated that the theory was inconsistent with Second Circuit authority and the court’s prior opinions.

For the account-holder requests, the court concluded that the discovery was not proportional to the needs of the case. UBAF had produced information identifying accounts, categories of account holders, currencies, and approximate balances, and had offered stipulations about whether entities were owned by the Syrian government, designated under Syrian sanctions regulations, or listed by the plaintiffs as Syrian-sanctioned entities. The court found that this proposal, together with the earlier guidance about privately owned entities, was sufficient for the plaintiffs’ remaining turnover claims without requiring UBAF to violate French law.

For the OFAC requests, the court found that the plaintiffs’ additional requests were not relevant to the remaining turnover claims because they were largely based on the rejected theory that UBAF could be charged with assets it no longer controlled. The plaintiffs had not identified specific evidence undermining UBAF’s assertion that it had produced the relevant transaction documents and that additional materials concerned matters such as its compliance program. The court also found the request for all documents and communications provided to OFAC too broad.

For transaction request 7, the court denied the motion because the plaintiffs’ demand for records from 2011 through the present relied on the new legal theory and records after 2013 were not relevant to the existing turnover claims. For request 13, the court found the request too broad and concluded that the requested contracts and transaction records were not needed to determine the issues relevant to the turnover claims. The court also accepted that some electronic information existed only on backup drives in France, was not reasonably accessible, and would be burdensome and costly to restore. The plaintiffs had not shown good cause for requiring production of that information.

Protective Order and Attorney’s Fees

The court denied UBAF’s motion for a protective order. Although UBAF argued that the plaintiffs’ motion relied on an unsupported legal theory, the court found that the motion also sought discovery related to the plaintiffs’ existing turnover claims and that a protective order was unnecessary because the court’s order adequately protected UBAF’s interests.

The court also denied UBAF’s request for attorney’s fees. UBAF first raised that request in a reply filing, and the court stated that arguments generally may not be raised for the first time in a reply. The court additionally stated that it was disinclined to award fees on the record before it.

Disposition

The court denied the plaintiffs’ motion to compel UBAF to produce documents responsive to requests 1–3, 5, 7, 9–11, and 13–18. It also denied UBAF’s motions for a protective order and attorney’s fees. The parties were directed to appear for a conference on April 16, 2025.