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Arab Bank Ordered to Pay $1.3M for Discovery 'Failures'
New York Law Journal
Eastern District of New York Judge Nina Gershon has ordered Arab Bank to pay $1.3 million for "failure to comply with its discovery obligations" in a lawsuit where victims of terrorist attacks in Israel and their families are seeking to hold the bank liable for its purported facilitation of the attacks. After the judge awarded "a variety of sanctions" against the bank in July 2010 for instances of discovery noncompliance, she determined legal fees and expenses for the plaintiffs in an order filed on Monday in Linde v. Arab Bank, 04-cv-2799. Gershon noted plaintiffs attorneys "spent massive amounts of time and money" to depose bank witnesses in Jordan. The witnesses, however, were told by their counsel not to answer questions on foreign bank secrecy grounds that had been rejected by Gershon and Magistrate Judge Viktor Pohorelsky.
The bank argued the witnesses answered numerous questions and only a small number went unanswered. But Gershon said the bank's "percentage-of-questions analysis" does not tell the whole story. "In light of the potential significance of the account information, and the fact that, had the witnesses been allowed to answer by the Bank's counsel, there undoubtedly would have been substantial follow-up," she said, adding that plaintiffs counsel prepared for depositions on issues that witnesses did not address.
In April, the judge ruled the plaintiffs could proceed to trial with their liability claim against the bank for "knowingly" offering financial services to Hamas leadership and others. The bank insists the plaintiffs cannot present any evidence that links its financial services with the attacks.
In a statement Monday the bank said it acted in good faith and that the sanction is unwarranted. "Arab Bank produced more than 200,000 documents ... and the only records it did not produce were those that would have subjected it to criminal prosecution for violating financial privacy laws of sovereign states." The bank noted plaintiffs are suing under the Alien Tort Statute for injuries resulting from foreign conduct and that the U.S. Supreme Court in April in Kiobel v. Royal Dutch Petroleum said district courts lack subject matter jurisdiction over such claims.