UNITED STATES OF AMERICA v. Standard Chartered Bank

Background

Brutus Trading, LLC, the relator in this qui tam action, moved to take a deposition of Daniel S. Alter in support of its expected opposition to the United States’ motion to dismiss the complaint. A deposition is sworn testimony taken before trial. The United States, Standard Chartered Bank and the other defendants, and Alter’s former employer, the New York State Department of Financial Services, opposed the request.

The opinion described two approaches used by federal appeals courts to review the government’s request to dismiss a qui tam action. One approach generally treats the government’s decision like a decision not to prosecute and gives it broad discretion. The other requires the government to identify a valid purpose and a rational connection between dismissal and that purpose, after which the relator may challenge the dismissal as fraudulent, arbitrary and capricious, or illegal.

Ruling

The court expressly did not decide which review standard applies in the Second Circuit. It held that, even under the more demanding approach, Brutus Trading had not shown why Alter’s non-privileged testimony was warranted or appropriate on the motion to dismiss. The court found the deposition unnecessary at that stage because it could evaluate whether there was a basis to challenge the government’s stated reason for dismissal without Alter’s testimony.

Judge Engelmayer denied Brutus Trading’s motion to depose Alter, without prejudice to renewing the request if the complaint survives the United States’ motion to dismiss. The Clerk of Court was directed to terminate the motion at docket 36.