Martin Nicholas John Trott v. Deutsche Bank, AG

Background

Martin Nicholas John Trott and Christopher James Smith filed the discovery request solely as Madison Asset LLC’s foreign representatives and joint official liquidators. They sought a conference and briefing concerning Deutsche Bank’s withholding of Suspicious Activity Information Forms (SAIFs) relating to Madison or its affiliates, based on Deutsche Bank’s assertion of confidentiality for Suspicious Activity Reports (SARs). They also challenged Deutsche Bank’s request to claw back 10 deposition exhibits, more than 50 pages of deposition testimony, and other documents that Deutsche Bank said had been produced inadvertently.

The court heard oral argument on May 2, 2024. The plaintiffs moved to reopen discovery and compel production of the SAIFs. Deutsche Bank asked the court to require the plaintiffs to return or destroy the disputed documents, allow redactions to deposition testimony referring to those documents, and deny the plaintiffs’ request for additional documents.

Reopening Discovery

Under Federal Rule of Civil Procedure 16(b)(4), a party seeking to reopen discovery must show good cause. The court considered factors including whether trial was imminent, whether the request was opposed, possible prejudice, the moving party’s diligence, whether the need for discovery was foreseeable, and whether the discovery was likely to produce relevant evidence.

The court found that at least four factors favored the plaintiffs. No trial date had been scheduled. The plaintiffs sought only a limited set of documents and did not seek new depositions, expert reports, or delays to pending motions or orders. The court also noted Deutsche Bank’s representation that it had already identified and collected the full set of relevant SAIFs. The plaintiffs had shown diligence in trying to obtain the documents from Deutsche Bank and then pursuing relief from the court. Finally, SAIFs concerning Madison were highly relevant to what Deutsche Bank knew about Madison’s allegedly fraudulent conduct.

The court therefore found good cause to reopen limited discovery and granted the plaintiffs’ request.

SAR Privilege

The court next considered whether SAIFs were covered by SAR privilege, meaning the confidentiality protection for SARs and information that would reveal that a SAR exists. The Bank Secrecy Act authorizes reporting of suspicious transactions, and regulations require national banks to file SARs in specified circumstances. Those regulations protect SARs and information that would reveal their existence, but expressly exclude the underlying facts, transactions, and documents on which a SAR is based.

The court reviewed sealed deposition testimony and a sealed sample SAIF. The evidence showed that a SAIF was an internal tool used to evaluate whether activity might be suspicious enough to send to Deutsche Bank’s SAR team. The SAIF could be closed if the activity was found not suspicious. If the activity was considered suspicious, the SAR team would review the materials and decide whether to file a SAR or conclude that no SAR should be filed.

The court found that the SAIF contained facts about potentially suspicious banking transactions but did not specifically discuss SAR requirements, analyze whether a SAR should be filed, or indicate whether a SAR had actually been filed. The court concluded that the SAIFs did not differ in relevant character from underlying documents on which a SAR is based and did not reveal the existence of a SAR.

The court rejected Deutsche Bank’s reliance on interpretive language accompanying the regulations. That language suggested that confidentiality might apply in appropriate circumstances to materials prepared during a bank’s process for detecting and reporting suspicious activity, whether or not a SAR was ultimately filed. The court agreed with other decisions that this language was too tentative and qualified to prohibit disclosure of the SAIFs. Neither the regulation nor the interpretive language created a categorical bar to producing documents prepared during a bank’s investigation of suspicious activity.

Disposition

The plaintiffs’ motion to reopen discovery and compel production of the SAIFs was GRANTED. Deutsche Bank’s request to require the plaintiffs to return or destroy the disputed documents, permit redactions to deposition testimony, and deny the plaintiffs’ request for additional documents was DENIED. The court also stated that the plaintiffs’ motion was GRANTED and Deutsche Bank’s motion was DENIED. The court ordered Deutsche Bank to produce all the SAIFs at issue within ten days of the order.