United States District Court, E.D. Louisiana
SECTION:
“I” (5)
ORDER AND REASONS
MICHAEL B. NORTH UNITED STATES MAGISTRATE JUDGE
Pursuant
to this Court's Order of January 4, 2017 (rec. doc. 85)
and two subsequent Minute Entries dated March 6, 2017 (rec.
doc. 124) and March 10, 2017 (rec. doc. 126), Pershing has
(finally) produced to the Court privilege logs and associated
documents for in camera review. Along with and as
part of that production, Pershing submitted its “Brief
Accompanying Incident Reports and Log for In Camera
Review” (rec. doc. 116), in which it argues that the
Incident Reports are protected from disclosure by the
Suspicious Activity Report (“SAR”) privilege
under federal law.
The
Court has reviewed multiple rounds of briefing submitted by
the parties on the issue; entertained oral argument; held
numerous status conferences; reviewed the statutes,
regulations and case law germane to the invocation of the SAR
privilege; and reviewed the subject documents in
camera and considering all of the foregoing, concludes
that some, but not all, of the previously withheld documents
should be produced.
THE
PRODUCTION OF DOCUMENTS FOR IN CAMERA
REVIEW
In an
unnecessarily drawn-out saga, three separate productions of
two “types” of documents have finally been
accomplished. And within those productions, the Court has
been provided both redacted and un-redacted
documents.[1] In its first production, Pershing provided
the Court with 74 tabbed “Incident Reports, ”
accompanied by a privilege log. Despite the fact that the
discovery requests giving rise to the present motion sought
documents from January 1, 2005 through the date the FINRA
statement of claim - June 13, 2013 - Pershing's
production inexplicably included documents only
through February 2009. Accordingly, the Court convened a
status conference and ordered Pershing to produce any
additional responsive documents dated between February 17,
2009 and June 13, 2013. (Rec. doc. 124).
Following
issuance of the aforementioned order, Pershing produced
another set of documents, this time denominated as
“Summary Reports.” These 14 documents were also
accompanied by a privilege log. There were two notable
differences between the documents in this second production
and those in the first production. First, the Summary Reports
contained the same type of information as the Incident
Reports, but also contained follow-up notes that were not
reflected in any of the documents originally produced.
Second, portions of the Summary Reports were redacted by
counsel.
The
Court was forced by these anomalies to convene yet another
status conference, during which it ordered Pershing to: (1)
produce the Summary Reports that coincided with Tabs
68-74[2] of the Incident Reports originally
produced to the Court for in camera review and (2)
produce to the Court un-redacted versions of all documents so
that the Court could determine whether the information
redacted was actually subject to the SAR privilege. (Rec.
doc. 126). This last ordered production was accomplished on
March 14, 2017.
The
Court has now reviewed and cross-referenced all of the
documents produced by Pershing and is prepared to rule on
their production.
ANALYSIS
AND PRODUCTION ORDER
A.
Application of the SAR Privilege to the Documents
The
Incident Reports produced by Pershing are described by it as
“document[s] at Pershing related to the
potential filing of Suspicious Activity
Reports” and that it “uses Incident Reports to
begin its process of internally
investigating potential suspicious activity. (Rec.
doc. 89-1 at pp. 1, 8)(emphasis added). Standing alone,
Pershing's own description of the purpose of the
documents tends to establish two important facts: First, they
are clearly documents created in the ordinary course of
business, albeit as an ordinary function of Pershing's
“process of internally investigating potential
suspicious activity.”[3] Second, the potential
link between Incident Reports in general and the creation of
an actual SAR is too tenuous to implicate the privilege,
which protects documents that would reveal the existence or
nonexistence of a SAR. See 31 C.F.R. §
1023.320(e)(1)(i). While it may be possible for certain
Incident Reports to fall within the protection of the
privilege, that would depend on what the report actually said
on its face. Here, none of the Incident Reports reviewed by
the Court qualify for protection under the SAR privilege
because they are devoid of any information by which the
reader can determine whether the matter identified therein
progressed beyond the making of the report, much less whether
an actual SAR was ever created. They are not subject to the
SAR privilege.
The
Summary Reports are somewhat different animals, as they
generally contain the same narrative information as their
counterpart Incident Reports but also contain certain
follow-up information. Pershing believes that some of this
information is subject to the SAR privilege and, as
a consequence, it redacted those portions it thought
privileged. Now that the Court has been provided with the
un-redacted language and had an opportunity to review it
against the applicable law, it agrees with Pershing that the
redacted language is privileged and should not be disclosed
pursuant to 31 C.F.R. § 1023.320(e)(1)(i). As to the
un-redacted portions of the Summary Reports produced by
Pershing and reviewed in camera, the Court finds
they are not subject to the SAR privilege.
B.
Discoverability of ...