2014.08.13 Memorandum of Law in Support of Motion to Compel Tigris Third Parties

Case 1:13-cv-05032-ER-KNF Document 229 Filed 08/13/14 Page 1 of 10

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

VICTOR RESTIS and ENTERPRISES SHIPPING AND TRADING S.A. Plaintiffs,

Civil Action No. 13-cv-05032-ER-KNF

- v. AMERICAN COALITION AGAINST NUCLEAR IRAN, INC. a/k/a UNITED AGAINST NUCLEAR IRAN, MARK D. WALLACE, DAVID IBSEN, NATHAN CARLETON, and DOES 1-10, Defendants.

MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS’ MOTION TO COMPEL THE PRODUCTION OF DOCUMENTS FROM THOMAS KAPLAN, ANDREW SHAPIRO, AND TIGRIS FINANCIAL GROUP


I.

INTRODUCTION Plaintiffs Victor Restis and Enterprises Shipping and Trading S.A. (collectively,

“Plaintiffs”), pursuant to Federal Rule of Civil Procedure 45 and this Court’s Order of August 4, 2014 (Dkt. 215), submit this Memorandum in Support of their Motion to Compel Production of Documents Responsive to Plaintiffs’ Subpoena Duces Tecum served on third parties Thomas Kaplan, Andrew Shapiro, and Tigris Financial Group (collectively, the “Tigris Third Parties”). These third parties – who are represented by the same attorneys representing the Defendants – have refused to produce any documents in response to the subpoenas and refused to provide any evidence that they even searched for any documents, amid clear evidence that they did not. As a result, Plaintiffs respectfully move the Court to (a) compel production of all responsive documents; and (b) award Plaintiffs appropriate fees and costs related to this motion. II.

LEGAL STANDARD Parties may issue subpoenas for relevant information from third parties to an action under

Federal Rule of Civil Procedure 45. “Subpoenas issued under Rule 45 are subject to Rule 26(b)(1)’s overriding relevance requirement, which provides that ‘[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense.’” Koch v. Greenberg, No. 07-civ-9600, 2009 WL 2143634, at *2 (S.D.N.Y. July 14, 2009). If a non-party wishes to assert a privilege in responding to a subpoena, Rule 45(d)(2)(A) requires that it do so “expressly” and “describe the nature of the withheld documents . . . in a manner that . . . will enable the parties to assess the claim.” Fleisher v. Phoenix Life Ins. Co., No. 11-cv-8405, 2013 WL 42374, at *2 (S.D.N.Y. Jan. 3, 2013). Federal Rule 37(a)(2) permits a party to move for an order compelling disclosure or discovery from a non-party to an action. Rule 45(g) also permits the enforcing court to hold a

2


non-party in contempt for failure to obey the subpoena without adequate excuse. Of course, nonparties cannot be forced to produce documents that do not exist, but the court need not rely on a non-party’s assertion that such documents do not exist. See Zervos v. S.S. Sam Houston, 79 F.R.D. 593, 595 (S.D.N.Y. 1978) (ordering party to produce documents who claimed that he did not possess such documents); Golden Trade S.r.L. v. Lee Apparel Co., 143 F.R.D. 514, 525 n.7 (S.D.N.Y. 1992) (granting motion to compel, in part, when party “ma[d]e an adequate showing to overcome this assertion” that the non-moving party did not have documents in its possession). III.

ARGUMENT A. The Tigris Third Parties and UANI As recent news articles have detailed (attached as exhibits), the Tigris Third Parties are

individuals or entities that are deeply entwined with Defendants in this case. They appear to be among the primary benefactors of Defendants and, therefore, are enabling Defendants’ defamation campaign against Plaintiff, as well as this litigation.1

In addition, reports indicate

that Kaplan’s business interests may also be aligned with Defendants’ stated mission of “ending the economic and financial support of the Iranian regime by corporations, firms, entities and individuals” (see Declaration of Serine Consolino Exhibit 1 (“Ex. 1”)) such that he stands to profit from UANI’s “name and shame” campaigns. See Ex. 2. A recent news article about Kaplan pointed out that the companies he owns, for example, Tigris Financial Group (whose

1

UANI reported that it raised only $1,789,548 in contributions in 2012 for their entire operations, based on fund-raising expenses of only $26,131. Ex. 15 at 1. Plaintiffs have asked in discovery for information as to who is funding the defamation campaign and resulting litigation against them. Defendants have refused to provide that information.

3


CEO is Defendant Mark Wallace), actually gain financially by uncertainty in the Middle East. See id. (highlighting that a 2011 prospectus issued by a silver mining company owned by Tigris stated that “[in]vestment demand for silver exposure remains strong . . . driven in part by . . . unrest in the Middle East.”). As a result, UANI’s hard-line campaigns against Iran contribute to the very uncertainty that, in turn, benefits Kaplan, Tigris Financial Group, Wallace, and other Kaplan-controlled companies in which Wallace is involved. Thomas Kaplan is a billionaire investor who made his fortune by investing in gold and other natural resources. Ex. 3. He got his start with help from the family of Leon Recanati, a Greek-Israeli entrepreneur whose family owns and still operates Overseas Shipholding Group (“OSG”), a rival shipping company to Enterprises Shipping and Trading. See Exs. 4, 5. OSG operates oil tankers that compete directly with Mr. Restis’ tanker company, Golden Energy Maritime Corp., whose initial public offering had to be abandoned in 2013 when Defendants launched their defamation campaign that is at the heart of this litigation. See Am. Compl. ¶ 97. OSG would stand to profit if Mr. Restis and his companies were no longer able to operate. Kaplan married Leon Recanati’s daughter Dafna Recanati and was introduced to Israeli investor Avi Tiomkin, by Dafna Recanati’s mother. See Ex. 6. Kaplan and Tiomkin became partners and worked together until Kaplan decided to focus on other interests, including major bets in silver and gold. Id. Kaplan and his company Tigris Financial Group have extensive ties with UANI, although they have to date refused to produce a single document in response to subpoenas issued by Plaintiffs. Kaplan is believed to be a significant donor to UANI either directly or indirectly, but both UANI and Kaplan have refused to disclose this information, and this is currently being litigated. While he is not listed anywhere on UANI’s public disclosures or on the group’s

4


website, Kaplan has identified himself with, and acknowledged being a part of, UANI. In his acceptance speech for an award in April 2014, Kaplan stated that “as much as United Against Nuclear Iran may not have had Tomahawk missiles and aircraft carriers at its disposal, we’ve done more to bring Iran to heel than any other private sector initiative and most public ones.” Ex. 2 (emphasis added). There is also clear evidence that Kaplan supports UANI financially, if not directly, by employing a number of UANI’s employees. By providing salaries or other benefits to UANI’s officials or employees, Kaplan offsets expenses that UANI otherwise would have to pay. First and foremost, Defendant Mark Wallace, founder and CEO of UANI, serves as an officer and/or director of at least six of Kaplan’s companies (Tigris Financial Group, Silver Opportunity Partners, Niocan, Inc., Nio-Metals, Cougar Gold LLC, and Electrum Group). Wallace has not drawn a salary from UANI since 2009, so Wallace appears to be getting this financial benefit indirectly through UANI supporter Kaplan. Id. Additionally, Steven S. Drachman worked as the chief compliance officer of Electrum from January 2012 to March 2013. Since April 2013, he has also served as a “senior consultant” to UANI. Id. Kaplan also employed another UANI employee, Lara Pham, who served as a Mining and Metals Analyst at Electrum Group between 2009 and 2013, while also serving as the Director of Operations at UANI. Id. Eugene Kim was a summer intern at UANI from June to July 2009, and went on to work as an associate at Electrum from July 2011 to July 2014. Id.

5


Jonathan Powell, an Advisory Board member of UANI and The Institute for Strategic Dialogue2, was a college classmate of Kaplan’s and serves as a Senior Advisor to Tigris Financial Group. See Ex. 7.

In total, these arrangements provided UANI and its people the means by which to

defray the costs UANI would have on its own. Defendants have to date refused to disclose whether the Tigris Third Parties also contribute money directly to UANI to fund its campaigns and/or this litigation. In addition, other connections between Kaplan and UANI indicate that Kaplan provides financial and other support to UANI and its activities and campaigns, such as the one targeting Plaintiffs. As one example, Kaplan is a member of and donor to the International Council of Harvard University’s Belfer Center for Science and International Affairs. See Ex. 8. The Recanati-Kaplan Foundation (Kaplan’s and his wife’s family foundation) contributed $149,000 to the Belfer Center in 2012. See Ex. 9 In 2013, the Belfer Center appointed a new executive director, Gary Samore, who had just finished serving as an anti-proliferation advisor to the Obama administration. See Ex. 10. Shortly thereafter, Samore became UANI’s President. See Ex. 11. Additionally, ISD funds an ongoing series of visiting professorships at Oxford and Cambridge. See Ex. 12. In 2014, the Recanati-Kaplan Foundation provided ISD with the funds for its Visiting Professorship in Intelligence Studies at Oxford. Other indirect connections exist between Kaplan and UANI that assist UANI financially. UANI operates rent free out of offices in 45 Rockefeller Center, New York in office space

2

The Institute for Strategic Dialogue (“ISD”) is a London-based think tank that UANI has partnered with. The two groups share a common Advisory Board and are sometimes known as “UANI-ISD”. See Ex. 7.

6


donated by Continental Properties. See Ex. 13 at 9. Continental Properties’ managing director is Mark Fisch. See Ex. 14. Fisch and Kaplan jointly fund the Kaplan-Fisch Fellowship at the NYU Institute for Fine Arts. Id. Furthermore, Continental Properties employee Kim Hillman is also a director of UANI. See Ex. 15 at 7. As it turns out, Kaplan and UANI also share legal counsel in Brian Stack of Stack Fernandez Anderson & Harris P.A. (where UANI head and Defendant Mark Wallace worked for five years). Stack and his firm have and may still represent Thomas Kaplan and his family trusts in litigation and other matters. See Consolino Decl. ¶ 18. Kaplan’s relationships with and other indirect support of UANI raises the question of whether Kaplan – with his family’s interests as competitors of Plaintiffs – is directly or indirectly paying part or all of the litigation costs of this case. B. Tigris Third Parties have Thwarted Plaintiffs’ Attempts at Conducting Discovery On March 28, 2014, Plaintiffs served each of the Tigris Third Parties with subpoenas seeking seven categories of documents, including all communications relating to Plaintiffs, documents relating to Defendants’ defamatory publications, and documents relating to financial or other support given to Defendants. See Ex. 16. On April 14, 2014, Defendants’ counsel Brian Stack (also a UANI Board Member and Kaplan’s counsel in other matters) served Responses and Objections to the Subpoenas on behalf of the Tigris Third Parties, asserting boilerplate objections on the basis of, among other things, privilege, overbreadth and burden. See Ex. 17. The Tigris Third Parties then provided a single response for all categories of documents requested: “NonParty has no responsive documents within Non-Party’s personal possession, custody and control.” Id.

7


Plaintiffs knew that this was not true. On May 16, 2014, counsel for Plaintiffs wrote to Mr. Stack challenging the Tigris Third Parties’ responses that they had no responsive documents by pointing to an email chain produced by Defendant UANI itself that indicated that there ought to be responsive documents in the Tigris Third Parties’ possession. See Ex. 18. This email chain was authored by the Tigris Third Parties and related directly to Plaintiffs. See Ex. 19 (filed under seal). According to Plaintiffs’ letter, the Tigris Third Parties’ failure to produce these documents “suggests, at a minimum, that the search conducted by your clients was inadequate and that if a thorough search had been conducted, other responsive documents would have been discovered.” Ex. 18. Mr. Stack briefly responded on May 22, stating that he would not be able to respond substantively to Plaintiffs’ requests until after June 6, 2014, a delay of more than two weeks. Ex. 20. However, Mr. Stack never responded in any way to Plaintiffs’ requests. On June 20, 2014 counsel for Plaintiffs sent Mr. Stack a letter again requesting that he explain his client’s failure to produce clearly responsive documents. Ex. 21. On June 23, 2014, Mr. Stack responded that “I asked the non-parties to check again if they were in possession of any responsive documents. They have not located any additional responsive documents as of this date.” Ex. 22. As for the email chain authored by the Tigris Third Parties that Plaintiffs pointed out, Mr. Stack claimed that it “appears to be non-responsive” despite the fact that clearly pertained to Plaintiffs and directly responded to the Subpoena requests. This assertion then undercuts the response that there are no “responsive” documents. On June 24, 2014 counsel for Plaintiffs wrote Mr. Stack requesting specific information as to how the Tigris Third Parties conducted their search for responsive documents, which again appeared to be inadequate. See Ex. 23. As Plaintiffs pointed out in their letter, if the Tigris Third Parties had simply searched for the word “Restis,” this email chain and at least two other

8


iterations of it would have been found. Because they failed to produce any documents, it again appeared that the Tigris Third Parties had failed to conduct any search at all. As a result, the June 24 letter asked for additional information regarding which email accounts and databases were searched, what keywords were used in these searches, and whether any documents were being withheld under a claim of privilege. None of these questions would pose an undue burden on the Tigris Third Parties, since this information on the searches themselves is easily within the possession of counsel. Moreover, these are reasonable questions in light of the fact that counsel for Plaintiffs provided Mr. Stack with an illustrative sample of a responsive document that should have been produced, but was not. On June 27, 2014 Mr. Stack replied, but refused to answer any questions as to the scope and methods of the Tigris Third Parties searches, stating that the existence of a “single potentially responsive email” was not sufficient to accuse the Tigris Third Parties of failing to meet their obligations under Rule 45. See Ex. 24. Instead of answering Plaintiffs’ questions, Mr. Stack threatened to move for sanctions under Rule 45 if Plaintiffs’ challenged his failure to produce. Id.

While Defendants use the tactic of intimidation in their “name and shame”

campaigns, their counsel ought to know better and not rely on bluster and threats to avoid the simple fact that he was presented with a responsive document, refused to produce even that same responsive document, and is once again frustrating the discovery process with his tactics. Moreover, the media reports that now reveal various financial and other connections between UANI and Kaplan and the Tigris Third Parties also undercut the assertion that no responsive documents exist between the entities. It has now been almost three months since the Tigris Third Parties were served with the Subpoenas, but they have not produced a single document. Indeed, from their failure to produce

9


an e-mail which we identified for them, it appears that they have performed no search whatsoever for responsive documents, but have simply insisted that they have no responsive documents. Counsel for the Tigris Third Parties (also Defendants’ counsel) has consistently sought to delay production of documents and has repeatedly refused to substantively respond to Plaintiffs’ requests. Accordingly, Plaintiffs move to compel the Tigris Third Parties to produce documents in response to the Tigris Third Parties Subpoenas duces tecum.

IV.

CONCLUSION Based on the foregoing, the Court should grant Plaintiffs’ motion to compel the

production of documents by third parties Thomas Kaplan, Andrew Shapiro, and Tigris Financial Group and award Plaintiffs reasonable fees and costs.

Dated: August 13, 2014

Respectfully submitted, CHADBOURNE & PARKE LLP

Benjamin D. Bleiberg Serine Consolino 30 Rockefeller Plaza New York, NY 10112 (212) 408-5100 [email protected] [email protected] Counsel for Plaintiffs Victor Restis and Enterprises Shipping and Trading S.A.

By: /s/ Abbe David Lowell Abbe David Lowell Michael Bhargava Jeremy Siegel 1200 New Hampshire Avenue, N.W. Washington, DC 20036 (202) 974-5600 [email protected] [email protected] [email protected]

10

2014.08.13 Memorandum of Law in Support of Motion to Compel Tigris Third Parties

Recommend Documents