First-Citizens Bank and Trust Company v. HSBC Holdings PLC, et al.

Background

First-Citizens Bank and Trust Company alleges that in March and April 2023, HSBC orchestrated a coordinated "raid" to recruit thirty-six First-Citizens employees, led by an individual identified as Mr. Sabow working with HBUS and six senior First-Citizens employees called the "Pillars." The thirty-six employees resigned on Easter Sunday, April 9, 2023. First-Citizens claims the departing employees took confidential client information and that none of it has been returned.

First-Citizens served document subpoenas (court orders requiring non-parties to produce documents) on all thirty-six former employees. The court had twice previously declined to enforce the subpoenas wholesale, instead limiting initial discovery to the personal devices of Mr. Sabow and the six since-dismissed individual defendants (the Pillars). The court directed First-Citizens to "curate" any follow-on subpoena requests based on what it learned from those first-phase productions.

The First-Phase Productions and the Current Dispute

Following the first-phase productions — which the defendants report totaled more than 66,000 pages of party documents and over 1,000 mobile communications — First-Citizens asked the court to enforce subpoenas against seven specific former employees: Matt Perlow, Alex Choy, Michael Hanewich, Lindsey Guinn, Jason Hughes, Jonathan Norris, and Sarah Storer. First-Citizens sought documents for the period March 10 through September 10, 2023, in three categories: (1) documents obtained through their SVB/First-Citizens employment and materials derived from them; (2) documents about their departure from First-Citizens and affiliation with HBUS; and (3) documents about SVB/First-Citizens clients.

First-Citizens argued the first-phase productions revealed a deliberate off-channel scheme: the Pillars assembled employees' personal contact information, stressed secrecy, redirected meetings away from company email, and set up relay chains through which certain employees passed instructions to others. Key specific evidence included: Mr. Perlow emailing a spreadsheet of SVB client information from his personal account to his HSBC account on April 16, 2023 (a week after he resigned); Mr. Choy texting a first-phase custodian three days after the resignations about meeting with a First-Citizens client on "a near term opportunity" to bring them to HSBC; an access log showing several former employees viewed confidential client information in the days before and on the day of the resignations; and evidence that Mr. Hanewich, after secretly committing to HSBC, photographed confidential information on his computer screen and emailed the photographs to himself.

The defendants and former employees agreed only to a search of Mr. Perlow's personal devices tied specifically to his transmission of the client spreadsheet, and opposed the rest.

Legal Standards

The court applied Federal Rule of Civil Procedure 26(b)(1), which allows discovery of any non-privileged matter relevant to a claim or defense and proportional to the needs of the case, along with Rule 45, which governs subpoenas to non-parties. Non-parties are entitled to greater protection than litigants themselves: requests must be narrowly tailored to specific needs, and the party serving the subpoena must take reasonable steps to avoid undue burden. The court framed the central question as whether First-Citizens had a particularized, evidence-based reason to believe each individual's personal accounts likely held unique, material evidence, and whether production was proportional given the individual's privacy interests as a non-party.

Rulings on Each Group

Mr. Perlow — Production Required

The court ordered Mr. Perlow to produce responsive documents. His self-transmission of a client spreadsheet from a personal account to his HSBC account — discovered only recently and disclosed by the defendants — provided a direct, individualized basis to conclude that all three document categories were likely to yield unique and material evidence. The court rejected the defendants' proposal to limit the search to the single spreadsheet transmission, finding the broader scope warranted because his personal accounts are not in any party's possession and material confined to those channels would not otherwise surface.

Mr. Choy — Production Required

The court ordered Mr. Choy to produce responsive documents. Two specific facts supported this: he accessed confidential client information hours before resigning on Easter Sunday, and three days later texted a first-phase custodian about meeting with a First-Citizens client to bring them to HSBC. The court rejected the defendants' argument that the text did not itself reference confidential information, noting that argument goes to the merits (liability), not to the discovery question of whether his personal accounts likely hold unique, material evidence about use of client information and diversion of business.

Mr. Hanewich — Production Required

The court ordered Mr. Hanewich to produce responsive documents. After secretly committing to HSBC, he photographed confidential information on his computer screen and emailed the photographs to himself — a method the first-phase productions showed participants used precisely because it leaves no forensic trail. The court noted that an entitlement to view information does not explain screen photography plus self-transmission, and cited case law holding that conduct "inconsistent with" an employee's prior work — such as mass file-opening followed by device-wiping — supports an inference of improper acquisition sufficient to warrant discovery.

Ms. Guinn, Mr. Hughes, Mr. Norris, and Ms. Storer — Denied Without Prejudice

The court denied the request without prejudice as to these four. The only evidence particular to them was the access log showing they viewed confidential client information in the days before the resignations — access that occurred within the scope of their jobs. There was no evidence tied to them individually of any download, photograph, off-network transmission, relay role, client solicitation, or post-departure use. The court held that mere group membership plus routine access to work systems is not enough to compel searches of non-parties' personal accounts. However, the court acknowledged competing considerations: the timing of their access — on the eve or day of resignations they had secretly coordinated — supports an inference of purposeful acquisition, and if the thirty-six were truly directed to keep the plan off company channels, departure communications would exist only on personal accounts. Balancing these factors, the court found the marginal benefit of discovery from these four speculative on the current record. First-Citizens may test its theories in depositions and use the ordered productions to develop a person-specific showing for any future request.

Other Former Employees — Denied Without Prejudice

The request was also denied without prejudice as to the remaining former employees beyond the seven identified.

Scope and Protocol

The order compels document production only — it does not authorize forensic imaging, mirroring, or direct inspection of any device or account. Category three (documents regarding SVB/First-Citizens clients) was narrowed by the court: instead of all documents regarding such clients, production is limited to documents concerning those clients that reflect solicitation or transition of clients to HBUS, or the use of or derivation from SVB or First-Citizens information. Categories one and two were adopted as proposed.

Counsel must meet and confer within fourteen days on search parameters, using the first-phase protocol as the model. Production must be substantially complete within sixty days of the order and is subject to the existing protective order. All thirty-six former employees must continue to preserve potentially responsive documents. The order does not limit party discovery or depositions.

What Was Not Decided

The court expressly declined to decide issues related to a party custodian's mobile phone (HBUS CEO Michael Roberts), noting those preservation concerns were disputed and not properly presented for decision in the current letter brief.