Opinion
No. 13 Civ. 1917 (CM)
06-03-2015
BERNARDUS HENRICUS FUNNEKOTTER, et al. Plaintiffs, v. AGRICULTURAL DEVELOPMENT BANK OF ZIMBABWE, et al., Defendants.
MEMORANDUM DECISION AND ORDER DENYING PLAINTIFFS' MOTION TO PRECLUDE; GRANTING IN PART AND DENYING IN PART ZB BANK'S MOTION TO DEEM ADMITTED; AND DENYING ZB BANK'S MOTION FOR SUMMARY JUDGMENT
:
Plaintiffs are judgment creditors of the Republic of Zimbabwe ("Zimbabwe"). They filed this action seeking a declaratory judgment that (1) Defendants in this action (other than Zimbabwe itself) are alter egos of Zimbabwe; and (2) the assets of Defendants located in the United States should be treated as property used for commercial purposes against which Plaintiffs may enforce their judgment. Currently before the court are three motions filed by the parties: (1) Docket #128, Plaintiffs' motion to preclude defendants other than Zimbabwe and ZB Bank Limited ("ZB Bank") from denying that they are alter egos of Zimbabwe; (2) Docket #137, Defendant ZB Bank's motion for summary judgment dismissing the complaint as against it; and (3) Docket #172, Defendant ZB Bank's motion to deem certain paragraphs of its Rule 56.1 Statement admitted by Plaintiffs. For the following reasons, the motions are disposed of as follows:
- Plaintiffs' motion to preclude is DENIED as made, but alternate sanctions are imposed, including precluding the non-ZB Bank Defendants from relying on certain documents and directing that an adverse inference be drawn about the contents of those documents;
- ZB Bank's motion to deem admitted is GRANTED IN PART and DENIED IN PART; and
- ZB Bank's motion for summary judgment is DENIED.
BACKGROUND
I. Factual Background
This relatively simple case has been marred by extensive delays and numerous procedural disputes. Plaintiffs are Dutch nationals who held direct or indirect investments in commercial farms located in Zimbabwe. Between 1992 and 2001 the Zimbabwean government expropriated the farms and, as a result, Plaintiffs lost their investments. Plaintiffs then commenced an arbitration against Zimbabwe before the International Centre for the Settlement of Investment Disputes. The arbitral tribunal ruled that Zimbabwe had violated a bilateral investment treaty between itself and the Netherlands, and awarded Plaintiffs damages in the amount of €8,220,000.
Plaintiffs then filed a lawsuit (the "related action") in this court seeking to confirm the arbitral award in their favor pursuant to 22 U.S.C. § 1650a. See Petition to Confirm Arbitration, Funnekotter v. Republic of Zimbabwe, 09 Civ. 8168 (S.D.N.Y. Sept. 24, 2009), ECF #1. Plaintiffs obtained a default judgment in their favor against Zimbabwe confirming the arbitral award. See Judgment, Funnekotter v. Republic of Zimbabwe, 09 Civ. 8168 (S.D.N.Y. Sept. 24, 2009), ECF #11. The court entered judgment in the amount of $25,170,171.33, comprising the amount of the original arbitral award plus interest and costs. Id.
Zimbabwe did not pay.
II. Procedural History
Plaintiffs filed this action seeking to satisfy their judgment against Zimbabwe with Defendants' assets. Plaintiffs seek a declaratory judgment that Defendants - all of whom bear some relationship to the country of Zimbabwe or to its government - are alter egos of the Zimbabwean government, and that their assets in the United States may therefore be used to satisfy Plaintiffs' judgment against Zimbabwe obtained in the related action.
Aside from Zimbabwe itself - which is named is a defendant in this action but has unsurprisingly failed to enter an appearance - the Defendants fall into two groups. The first group consists of ZB Bank Limited ("ZB Bank"). The second group comprises Defendants Agricultural Development Bank of Zimbabwe, Minerals Marketing Corporation of Zimbabwe, Zimbabwe Mining Development Corporation, and Zimare Holdings Limited (collectively "non-ZB Bank Defendants"). All the non-ZB Bank Defendants are represented by the same counsel and have litigated the lawsuit together. ZB Bank has its own counsel. All defendants assert similar defenses.
Before the court held an initial Rule 26 conference, ZB Bank filed a motion to dismiss, asserting both that the court lacked subject-matter jurisdiction because ZB Bank was entitled to sovereign immunity and that the complaint failed to state a claim under Twombly/Iqbal. (Docket #24.) At the initial pre-trial conference I denied ZB Bank's motion without prejudice to renew following the close of discovery. (Docket #29.) The court ordered discovery to be completed within 120 days. (Docket #29.) Slightly more than a month after the initial conference, the non-ZB Bank Defendants filed a motion to dismiss, asserting that they too were entitled to sovereign immunity and that the complaint failed to state a claim under Twombly/Iqbal. (Docket #37.)
While the non-ZB Bank Defendants' motion was still pending, the parties engaged in a series of discovery disputes related primarily to Plaintiffs' contention that all Defendants were failing to timely respond to Plaintiffs' discovery requests. Plaintiffs, citing Defendants' failure to produce requested documents, filed a motion to preclude Defendants from denying that they were alter egos of Zimbabwe (effectively granting Plaintiff judgment on its first request for declaratory relief) or in the alternative to extend the discovery deadline. (Docket #48.) I referred the motion to preclude to Magistrate Judge Ellis. (Docket #53.)
Magistrate Judge Ellis ordered Defendants to produce various documents and extended the discovery deadline by two months. (Docket #55.) The court then denied the non-ZB Bank Defendants' motion to dismiss without prejudice to renew after the close of discovery. (Docket #68.) A month later, Magistrate Judge Ellis issued another order requiring the non-ZB Bank Defendants to comply fully with outstanding discovery requests by the discovery deadline and striking as untimely several objections to discovery requests interposed by the non-ZB Bank Defendants. (Docket #74.) Magistrate Judge Ellis did not, however, rule on Plaintiffs' motion to preclude at that time. Plaintiffs renewed their motion to preclude several times with respect to the various Defendants before Magistrate Judge Ellis ruled on it. (Docket ##57 (ZB Bank), 58 (non-ZB Bank), 69 (all Defendants), 73 (all Defendants), 75 (non-ZB Bank), 80 (ZB Bank), 81 (non-ZB Bank), 103 (ZB Bank)). In each case, Plaintiffs pointed to allegedly ongoing refusal to comply with court orders concerning discovery and to produce requested documents.
ZB Bank filed a motion for summary judgment several months after the end of the 120-day time period set for discovery close of discovery. (Docket #112.) I declined to decide the motion for summary judgment until after Magistrate Judge Ellis ruled on the motion to preclude. (Docket ##116, 117.) I did, however, set a briefing schedule under which Plaintiffs were given 21 days to respond to the summary judgment motion after Magistrate Judge Ellis ruled on the motion to preclude. (Docket #118.)
Magistrate Judge Ellis ruled on Plaintiffs' motion to preclude on September 11, 2014. (Docket #124.) The Magistrate Judge granted Plaintiffs' motion to the extent of requiring the non-ZB Bank Defendants to produce minutes and resolutions from meetings of their respective Boards of Directors. Otherwise, Magistrate Judge Ellis denied the motion to preclude. (Docket #124.) Although Magistrate Judge Ellis's opinion chastised Defendants for their dilatory behavior, he held that Defendants had not willfully violated any discovery orders and that the harsh sanction of preclusion was unwarranted.
Almost immediately, on September 24, 2014, Plaintiffs filed a new motion to preclude as to the non-ZB Bank Defendants only. (Docket #128.) This motion was predicated on the non-ZB Bank Defendants' failure to produce minutes and resolutions from their Boards of Directors meetings as required by Magistrate Judge Ellis's September 11 order. In the alternative, Plaintiffs request that the non-ZB Bank Defendants be ordered to show cause why they should not be adjudged in contempt for failing to produce the required documents.
In their reply to the motion to preclude, the non-ZB Bank Defendants filed a cross-motion to dismiss for lack of jurisdiction. I denied that motion during a telephone conference with the parties. (See Minute Entry of October 28, 2014.)
On September 25, 2014, Plaintiffs also filed objections to Magistrate Judge Ellis's order denying their first motion to preclude. (Docket #31.) That same day I deemed ZB Bank's motion for summary judgment withdrawn and ordered ZB Bank to refile the motion on October 1, 2014, subject to a new briefing schedule. (Docket #130.) ZB Bank did so, and its motion for summary judgment is now fully briefed. (Docket #137.)
I denied Plaintiffs' appeal from Magistrate Judge Ellis's order on October 10, 2014 and affirmed the Magistrate Judge's order denying Plaintiffs' initial motion to preclude. (Docket #146.) Hoping to move the case more quickly, I also withdrew the order of reference to the Magistrate Judge for supervision of discovery and in effect I thus ordered a discovery "do over"; I would reconsider all of Defendants' objections to the various requests for discovery but also stated that Defendants were to produce any documents to which they did not object by October 24, 2014. (Docket #151.) I specifically warned Defendants that, "Failure to comply with this court's order to produce will be prima facie evidence of bad faith on the part of the non-producing defendant and will result in the entry of the very preclusion order that plaintiffs unsuccessfully sought from Judge Ellis." (Docket #146 at 2.) I ruled on the non-ZB Bank Defendants' objections to discovery requests on October 15, 2014. (Docket #155.)
On November 25, 2014, the same date on which ZB Bank filed its reply in support of its motion for summary judgment, ZB Bank filed a separate motion for the court to deem every paragraph of its Rule 56.1 statement of undisputed material facts admitted by Plaintiffs. (Docket #172.) That motion must be decided in conjunction with ZB Bank's motion for summary judgment.
DISCUSSION
I. Plaintiffs' Motion to Preclude
Plaintiffs' motion at Docket #128 seeks to preclude the non-ZB Bank Defendants from denying that they are alter egos of Zimbabwe on the grounds that they have failed to comply with the court's December 10, 2013 and September 11, 2014 orders. Specifically, Plaintiffs argue that the non-ZB Bank Defendants failed to produce minutes and resolutions of their Boards of Directors. (Docket #128.) Plaintiffs did not file a memorandum of law in support of this motion, instead supplying only the declaration of Charles R. Jacob, which states that Plaintiffs had not received the resolutions or minutes of Defendants' Boards. The non-ZB Bank Defendants did not file a memorandum in response to this motion and they did not discuss the issue in any of their papers opposing Plaintiffs' appeal of Magistrate Judge Ellis's ruling on the earlier motion to preclude.
This motion to preclude the non-ZB Bank Defendants from denying alter ego status is DENIED; however, sanctions (including preclusion from relying on withheld documents and an adverse inference about the contents of those documents) must and will be imposed.
Federal Rule of Civil Procedure 37(b)(2) permits a court to sanction a party that "fails to obey an order to provide or permit discovery" by "directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims [or] prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence . . .." "A district court has wide discretion in imposing sanctions, including severe sanctions, under Rule 37(b)(2)." Daval Steel Prods., a Div. of Franco steel Corp. v. M/V Fakredine, 951 F.2d 1357, 1365 (2d Cir. 1991). The district court's decision what if any sanctions to impose is guided by several factors: "(1) the willfulness of the non-compliant party or the reason for noncompliance; (2) the efficacy of lesser sanctions; (3) the duration of the period of noncompliance, and (4) whether the non-compliant party had been warned of the consequences of noncompliance." Agiwal v. Mid Island Mortgage Corp., 555 F.3d 298, 302-03 (2d Cir. 2009) (quoting Nieves v. City of New York, 208 F.R.D. 531, 535 (S.D.N.Y. 2002) (internal alterations omitted)); see also Sentry Ins. A Mut. Co. v. Brand Mgmt., Inc., 295 F.R.D. 1, 5 (E.D.N.Y. 2013).
Although "Strong sanctions should be imposed only for serious violations of discovery orders" their imposition is "justified . . . when the failure to comply with a court order is due to willfulness or bad faith, or is otherwise culpable." Id. at 1367. In particular, "Before the extreme sanction of preclusion may be used by the district court, a judge should inquire more fully into the actual difficulties which the violation causes, and must consider less drastic responses." Outley v. City of New York, 837 F.2d 587, 591 (2d Cir. 1988); see also Hawley v. Mphasis Corp., 302 F.R.D. 37, 51 (S.D.N.Y. 2014). Further, "a sanction so drastic as striking an answer or entering a default judgment is not ordinarily imposed unless the disobedience has been willful, or in bad faith, or otherwise culpable . . .." Luft v. Crown Publishers, Inc., 906 F.2d 862, 865 (2d Cir. 1990). "Nevertheless, a court should not shrink from imposing harsh sanctions where they are clearly warranted." Lopez v. City of New York, No. 05-CV-3624 ARR KAM, 2007 WL 2743733, at *7 (E.D.N.Y. Sept. 18, 2007) (quoting Jones v. Niagara Frontier Transp. Auth., 836 F.2d 731, 735 (2d Cir. 1987) (internal quotation marks and alterations omitted)).
The basis for Plaintiffs' latest motion to preclude is fairly narrow. As noted above, Plaintiffs filed an earlier motion to preclude on October 7, 2012 and renewed that motion throughout the following year, arguing that the non-ZB Bank Defendants repeatedly violated discovery orders and failed to produce required documents. Magistrate Judge Ellis denied that motion, including the renewals, on September 11, 2014. Thus, Plaintiffs' current motion to preclude is limited to a single issue: the non-ZB Bank Defendants' failure to produce minutes and resolutions of their Boards of Directors. They filed this motion less than two weeks after the learned Magistrate Judge issued his order directing production.
I agree with Plaintiffs that by not producing these documents the non-ZB Bank Defendants have violated several court orders. First, on December 10, 2013, Magistrate Judge Ellis ordered "[t]he Non-ZB Bank Defendants . . . to fully comply with the outstanding discovery requests by December 12, 2013." (Docket #74 at 3.) Second, on September 11, 2014 the Magistrate Judge granted Plaintiffs' motion "to compel with respect to the Non-ZB Bank Defendants' minutes and Resolutions of their Board[s] of Directors" and ordered the non-ZB Bank Defendants to produce those documents. (Docket #124 at 23, 26-27.) Third and most important (though not cited by Defendants in their motion papers, which were filed before I took over supervision of discovery from Judge Ellis), I specifically ordered the non-ZB Bank Defendants to produce the minutes and resolutions of their Boards as part of the discovery "do over." (Docket #155 at 2 (overruling objections to the discovery request for such documents).) Indeed, my order was quite explicit that the non-ZB Bank Defendants had only a short time to produce these documents:
The court is not aware that any documents responsive to Request 1 have been produced. If I am in error, please direct my attention to those documents by October 21. If I am not directed to such documents by October 21 at 12:00 noon, it will be established for purposes of this lawsuit that no such documents have been produced through that date. (Docket #155 at 2.)The court received no such submission indicating that resolutions or minutes of the non-ZB Bank Defendants' Boards have been produced. Rather, two submissions by Plaintiffs dated October 28, 2014 (Docket #167) and December 2, 2014 (Docket #176) state that the non-ZB Bank Defendants have not produced any additional documents since October 2014.
On October 28, 2014, at a telephone conference, I gave the parties two weeks to conclude all discovery and stated that Defendants would be precluded from relying on any documents not produced by that time to show that they are not alter egos of the Zimbabwean government.
So it is clear that Defendants have now violated a court order (several in fact) to produce discovery; violation of a court order is more serious than merely delaying production of requested documents. Furthermore, this non-production has been repeated and ongoing, beginning at least in September 2014 and extending - as far as the court is aware - through the present. The non-ZB Bank Defendants have offered not the slightest justification for their failure to produce these documents; they seem to believe that it is their right to ignore a direct order of this court and to do so without explaining themselves. In my book, that demonstrates the willfulness needed to impose a strong sanction.
The question is what that sanction ought to be. Plaintiffs want the court to resolve the issue. I believe that to be too extreme, given Second Circuit precedent; lesser sanctions will suffice.
At a conference held on October 28, 2014, I stated that Plaintiffs had managed to satisfy their burden to produce some evidence that supported an inference of alter-ego status, which, in the ordinary course of civil litigation, shifts the burden to the non-ZB Bank Defendants to produce some evidence tending to establish that they are not alter egos of Zimbabwe. (Minute entry of October 28, 2014.) By not producing the Board resolutions or minutes, the non-ZB Bank Defendants have forfeited their right to introduce them in this case; put otherwise, they are precluded from relying on them. Furthermore, this court believes it appropriate that the trier of fact should draw an adverse inference about the contents of those documents; namely, that had they been produced, they would have supported Plaintiffs' argument and undermined the non-ZB Bank Defendants' argument that they are in fact not alter-egos of the Government of Zimbabwe. I will not preclude the non-ZB Bank Defendants from offering other evidence of non-alter ego status, as long as that evidence is produced to Plaintiffs within thirty calendar days of the date of this order. If no such evidence is produced, then the non-ZB Bank Defendants will be precluded from offering any evidence on the subject of alter ego status (beyond the scant evidence already produced to Plaintiffs) - which will pretty much end this lawsuit as far as they are concerned.
II. ZB Bank's Motion for Summary Judgment
A. The Court Possesses Subject-Matter Jurisdiction
ZB Bank argues that summary judgment should be granted dismissing the complaint as against it because the court lacks subject-matter jurisdiction over ZB Bank. ZB Bank bases its argument on the Foreign Sovereign Immunities Act ("FSIA"), which "is the sole source for subject matter jurisdiction over any action against a foreign state." Kensington Int'l Ltd. v. Itoua, 505 F.3d 147, 153 (2d Cir. 2007) (quoting Cabiri v. Gov't of the Republic of Ghana, 165 F.3d 193, 196 (2d Cir. 1999)). The FSIA provides that (subject to treaty obligations) "a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 of this chapter." 28 U.S.C. § 1604. A defendant seeking to invoke § 1604 immunity bears the initial burden of showing that it is a "foreign state" entitled to immunity under the act; the burden then shifts to the plaintiff to show that an exception applies. Kensington Int'l Ltd., 505 F.3d 147 at 153.
A "foreign state," as the term is used in the FSIA, "includes a political subdivision of a foreign state or an agency or instrumentality of a foreign state . . .." 28 U.S.C. § 1603(a). An "agency or instrumentality of a foreign state" is in turn defined as "any entity . . . a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof . . .." Id. § 1603(b).
If a defendant is an instrumentality of a foreign state (and therefore is a foreign state as defined by the FSIA) and an exception to sovereign immunity does not apply then the court lacks subject-matter jurisdiction and the suit against ZB Bank can proceed no further. If, however, an entity is an instrumentality of a foreign government, then it is entitled to sovereign immunity and the court lacks subject-matter jurisdiction unless an enumerated exception in the FSIA applies. Thus, I address this issue first.
In Dole Food Co. v. Patrickson, 538 U.S. 468 (2003), the Supreme Court considered the application of the FSIA to entities that were indirectly owned by foreign states. The Court held that "a subsidiary of an instrumentality is not itself entitled to instrumentality status." Id. at 473. In so holding, the Court emphasized that an entity is not an instrumentality merely because its operations are controlled by a foreign state; rather, the foreign state must have a direct majority ownership interest an entity in order for the entity to be deemed an instrumentality: "Control and ownership, however, are distinct concepts. . . . Majority ownership by a foreign state, not control, is the benchmark of instrumentality status. Id. at 477 (emphasis added; internal citations omitted). Thus, in Dole Food Co., the Court concluded that an entity was not an instrumentality of the State of Israel, even though the majority of the entity's shares were owned, at various times, by companies that in turn were owned by Israel. Id. at 475.
Since Dole Food Co. was handed down, other courts in this district have also concluded that subsidiaries of instrumentalities of foreign states are not themselves instrumentalities of those states. See, e.g., Ocean Line Holdings Ltd. v. China Nat. Chartering Corp., 578 F. Supp. 2d 621, 625-27 (S.D.N.Y. 2008); accord, Allen v. Russian Fed'n, 522 F. Supp. 2d 167, 184 (D.D.C. 2007).
Applying Dole Food Co., it is clear that ZB Bank is not an instrumentality of Zimbabwe. ZB Bank is owned by ZB Financial Holdings Limited. (Def. 56.1 ¶ 5.) ZB Holdings may be owned by the Zimbabwean government, but were that true, only ZB Financial Holdings would be an instrumentality of Zimbabwe - not ZB Bank, which is a subsidiary of ZB Financial Holdings. Under Dole Food Co., Zimbabwe's indirect ownership of ZB Bank does not render the bank an "instrumentality" of Zimbabwe, and so ZB Bank is not a "foreign state" for purposes of the FSIA. For that reason, ZB Bank may not, therefore, invoke that statute's immunity provisions to deprive the court of subject-matter jurisdiction over it. See 28 U.S.C. §§ 1603(b), 1604. It is not necessary to reach the separate question of whether ZB Bank falls into one of the numerous exceptions to sovereign immunity even for instrumentalities of foreign governments; we never need to get there, because ZB Bank does not clear the first hurdle for invoking sovereign immunity.
ZB Bank does not dispute this logic in its reply brief - indeed it would be hard-pressed to do so, since the reasoning of Dole Food Co. leaves no room for any doubt. Instead, ZB Bank notes that Plaintiffs alleged in their complaint that ZB Bank is (along with all the other alter ego defendants) an instrumentality of Zimbabwe. (Compl. ¶ 9.) According to ZB Bank, that allegation in the complaint constitutes a judicial admission, which Plaintiffs are now estopped to deny.
"[T]he allegations in the . . . Complaint are judicial admissions by which [Plaintiffs are] bound throughout the course of the proceeding." Official Comm. of Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d 147, 167 (2d Cir. 2003); see also 30B Wright & Miller, Fed. Prac. & Proc. Evid. § 7026 (2014 ed.). However, only statements of fact can be judicial admissions; legal arguments in a complaint are not statements by which a plaintiff can be bound. New York State Nat. Org. for Women v. Terry, 159 F.3d 86, 97 n.7 (2d Cir. 1998); see also Ancile Inv. Co. v. Archer Daniels Midland Co., No. 08 CV 9492 KMW, 2011 WL 3516128, at *2 (S.D.N.Y. Aug. 3, 2011).
If the allegation that ZB Bank is an instrumentality of Zimbabwe were an allegation of fact, it could not be denied by Plaintiffs in the context of this lawsuit. But it is settled as a matter of law that ZB Bank is not an instrumentality of Zimbabwe, because it is not directly owned by Zimbabwe. Furthermore, the issue on which ZB Bank seeks to estop Plaintiffs is whether subject-matter jurisdiction exists under the FSIA; whether subject matter jurisdiction exists is a question of law, and one that cannot be waived by a party on any basis whatsoever. Adler v. Fed. Republic of Nigeria, 107 F.3d 720, 723 (9th Cir. 1997).
The obvious conclusion is that the allegation about the juridical status of ZB Bank is not a statement of fact, but is instead a legal conclusion - and an incorrect one at that. ZB Bank's status under 28 U.S.C. § 1603(b) - that is, whether it is or is not an "instrumentality" within the meaning of the statute ~ presents a question of law for the court to decide. The facts relevant to that question of law (which could constitute judicial admissions) are not pleaded in the complaint. Plaintiffs do not allege that ZB Bank is directly owned by the Republic of Zimbabwe, so there is no judicial admission of fact that estops Plaintiffs from opposing the motion to dismiss for lack of subject matter jurisdiction.
B. ZB Bank's Motion to Deem Admitted is Denied
I turn next to ZB Bank's motion to deem certain matters to be admitted. Although this motion was filed after the motion for summary judgment, I must resolve it first in order to determine which facts I may rely upon in deciding the latter motion.
There was absolutely no need to file a separate motion to deal with this issue. It could and should have been addressed in the Defendant's reply papers.
Local Rule 56.1 requires a party moving for summary judgment to "annex[] to the notice of motion a separate, short and concise statement, in numbered paragraphs, of the material facts as to which the moving party contends there is no genuine issue to be tried." S.D.N.Y. Local R. 56.1(a). Further, a party opposing a motion for summary judgment must submit "a correspondingly numbered paragraph responding to each numbered paragraph in the statement of the moving party . . .." Id. R. 56.1(b). "Each statement by the movant or opponent . . . must be followed by citation to [admissible] evidence." Id. R. 56.1(d). The Local Rules specifically provide that each paragraph in the moving party's 56.1 statement "will be deemed to be admitted for purposes of the motion unless specifically controverted by a correspondingly numbered paragraph in the statement required to be served by the opposing party." Id. R. 56.1(c). It is thus well-established that district courts have the authority to deem admitted facts in a movant's 56.1 statement not controverted by an opposing party's statement. Gadsden v. Jones Lang Lasalle Americas, Inc., 210 F. Supp. 2d 430, 438 (S.D.N.Y. 2002).
Despite the seemingly mandatory language of Local Rule 56.1(c), "district courts have broad discretion to excuse failures to comply with local court rules." Farook v. Bailey, No. 05 CIV. 3785 LTS DF, 2007 WL 2076764, at *2 (S.D.N.Y. July 16, 2007). Thus, the Second Circuit has held that "while a court is not required to consider what the parties fail to point out in their Local Rule 56.1 statements, it may in its discretion opt to conduct an assiduous review of the record even where one of the parties has failed to file such a statement." Holtz v. Rockefeller & Co., 258 F.3d 62, 73 (2d Cir. 2001) (internal quotation marks and citation omitted). Furthermore, the Circuit Court has noted that,
The purpose of Local Rule 56.1 is to streamline the consideration of summary judgment motions by freeing district courts from the need to hunt through voluminous records without guidance from the parties. The local rule does not absolve the party seeking summary judgment of the burden of showing that it is entitled to judgment as a matter of law, and a Local Rule 56.1 statement is not itself a vehicle for making factual assertions that are otherwise unsupported in the record. Id. at 74.Although supported and uncontroverted facts may be deemed admitted, assertions of fact "cannot be deemed true simply by virtue of their assertion in a Local Rule 56.1 statement." Id. at 73. There must be support for them in the evidentiary record.
This motion is GRANTED IN PART and DENIED IN PART.
ZB Bank is of course correct that Plaintiffs have admitted the truth of certain paragraphs of ZB Bank's 56.1 statement. Specifically, Plaintiffs admit without qualification the assertions in paragraphs 1, 2, 4, 5. The court also finds support in the record for this case (or by taking judicial notice of judgments and orders filed in the related action confirming the arbitration award) for each of these paragraphs. These basic background facts are relatively unimportant to the resolution of any disputed legal question.
Plaintiffs also admit the truth of the statements contained in paragraphs 9, 10, 11, 12, 15, 19, 20, 21, 22, and 23. Plaintiffs argue that these statements are either irrelevant or not dispositive of an issue in dispute. As to some of these statements, Plaintiffs provide additional context to show that the statement does not support a broader claim by ZB Bank.
By doing so, Plaintiffs miss the point of the Rule 56.1 statement. Rule 56.1 submissions, as noted above, help the court decide a motion for summary judgment. If a statement is supported by the record and is not in dispute, then a Rule 56.1 statement is not the place to contextualize or dispute the relevance of the statement. The brief is.
I have reviewed the evidence cited by ZB Bank in support of each of these paragraphs, which consists either of an affidavit from ZB Bank's Company Secretary or minutes from ZB Bank Board meetings. I find that this evidence adequately supports the statements contained in each paragraph, so as to justify deeming the precise assertion of fact to be admitted. That says nothing whatever about the probative value of the admitted facts, in any particular context or in the absence of context.
ZB Bank's motion to deem admitted is granted as to paragraphs 1, 2, 4, 5, 9, 10, 11, 12, 15, 19, 20, 21, 22, and 23.
Paragraphs 6, 7 and 8, which address ZB Bank's claimed sovereign immunity under the FSIA, are not deemed admitted, because they state legal conclusions rather than material facts, and so should not have been included in the Rule 56.1 statement. As to these three paragraphs, ZB Bank's motion to deem admitted is denied.
That leaves paragraphs 3, 13, 14, 16, 17, 18, 24, 25, 26, and 27.
Paragraph 3 asserts that ZB Bank is a commercial banking corporation organized under the laws of Zimbabwe. Plaintiffs respond that ZB Bank is not a "commercial banking corporation" in the ordinary sense of the term because it is controlled by Zimbabwe. This merely begs the question that this lawsuit is intended to resolve. Nothing in the assertion by ZB Bank suggests anything about who controls the Bank; I would not draw any inference about independence or control from the fact that the Bank is a commercial bank. Plaintiffs do not contest the fact of ZB Bank's incorporation or the fact that it engages in commercial banking activity. Therefore, Paragraph 3 is deemed admitted.
Paragraph 13 claims that Zimbabwe has no say in ZB Bank's day-to-day operations. The support for this claim is a word-for-word identical sentence in the affidavit of ZB Bank's Company Secretary, Charles Kathemba. Plaintiffs respond that Zimbabwe directly nominates members of ZB Bank's board, lobbies on its behalf, and was previously a large depositor at the bank. Those facts are sufficient to contest Zimbabwe's day-to-day control over ZB Bank, particularly with ZB Bank providing so little evidence of its independence. The fact that Zimbabwe has such an intimate relationship with ZB Bank and its directors raises a reasonable inference that it can control the Bank's day-to-day affairs, notwithstanding Mr. Kathemba's affidavit. Paragraph 13 is not deemed admitted.
Paragraph 14 claims that no current ZB Bank directors, officers or senior executives hold any position or office with the Zimbabwean Government. This statement too is supported only by the Kathemba affidavit. Plaintiffs respond by noting that ZB Bank's current chairman spent his entire previous career in Zimbabwean Government and was a close confidant of Zimbabwe's "President," Robert Mugabe, and that former ZB Bank officials simultaneously held political office and office within the Bank. Plaintiffs' assertions are supported by evidence in the record. However, they prove nothing about the present, only about the past. The fact that the current ZB officers and directors are not Government officials does not automatically mean that the Bank cannot be found to be an alter ego of the Zimbabwean Government. But the only thing asserted in Paragraph 14 is the fact of who is presently on the Bank's Board. Plaintiff offers no evidence to controvert ZB Bank's evidence. Paragraph 14 is thus deemed admitted.
Paragraph 15 claims that Zimbabwe is not a shareholder or account holder with ZB Bank. Once again, Plaintiffs argue that the past and present do not align, noting that ZB Bank was a former account holder at the Bank and that it ceased to be an accountholder only as a result of U.S. sanctions imposed in 2008. As was the case with paragraph 14, Plaintiffs' assertions do not controvert the asserted facts, though they might tend to diminish the probative value of the asserted facts. Paragraph 15 is deemed admitted.
Paragraph 16 claims that ZB Bank observes all corporate formalities distinguishing it from ZB Financial Holdings Limited. ZB Bank cites only the Kathemba affidavit in support of this claim. Plaintiffs respond by noting that ZB Bank and ZB Financial Holdings have almost entirely overlapping boards and that both companies are Specially Designated Nationals subject to sanctions (on which more below). Plaintiffs' argument on this point is sufficient to deem its response a denial, not an admission, of the asserted facts. ZB Bank argues that Plaintiffs have not cited admissible evidence supporting their response, but the evidence of overlapping boards is uncontroverted and the court can take judicial notice that ZB Bank and its parent company are Specially Designated Nationals. Paragraph 16 is not deemed admitted.
Paragraph 17 asserts that ZB Bank and its parent company hold separate Board meetings. Plaintiffs respond that the boards of ZB Bank and ZB Financial Holdings are nearly identical and thus argues that any board meetings cannot be considered "separate." Plaintiffs' inference is a reasonable one; what are nominally ZB Bank Board meetings may be meetings at the behest of and concerning the business of ZB Financial Holdings or its owner, the Zimbabwean government, because of the overlap in boards. Paragraph 17 is not deemed admitted.
Paragraph 18 asserts that ZB Bank's Board meeting minutes show it is a distinct entity and conducts business separately from its parent company. This assertion cannot be deemed admitted for three reasons. First, ZB Bank does not cite the minutes themselves, but Kathemba's declaration, which refers to the minutes; Kathemba's declaration is hearsay. Second, this paragraph confuses claim with proof. The fact ZB Bank seeks to assert is that it is a distinct entity conducting separate business. One can admit that fact or the evidence supporting it, but a connection between evidence and admission is not itself a fact amenable to admission in a Rule 56.1 statement. Third, as noted above, Plaintiffs have offered evidence challenging the independence of ZB Bank's board. Paragraph 18 is not deemed admitted.
Paragraph 24 asserts that ZB Bank makes payment to its parent company in the form of dividends only if and when formally declared by the Bank's Board. Paragraph 25 asserts that ZB Bank maintains books and records separate from its parent company. ZB Bank cites the Kathemba Affidavit to establish both facts. Plaintiffs respond to both paragraphs by pointing to the lack of documentary evidence supporting Kathemba's assertions. Plaintiffs have not cited evidence to the contrary; we have looked at Plaintiffs' requests for production of documents and for third party subpoenas and can find no request for the production of documents from ZB Financial Holdings that would tend to support or refute Kathemba's statement. Thus, for purposes of ZB Bank's motion for summary judgment paragraphs 24 and 25 are deemed admitted.
Paragraph 26 asserts that neither Zimbabwe nor ZB Financial Holdings hires or fires ZB Bank employees or otherwise manages ZB Bank day-to-day. Paragraph 27 asserts that ZB Bank employees are paid solely by ZB Bank. Plaintiffs respond that, as discussed in their responses to paragraphs 16-18, ZB Bank is not independent of ZB Financial Holdings. That is a purely conclusory statement; it is not an assertion of fact and it is not evidence tending to show that the asserted facts are themselves untrue. There are genuine issues of fact about whether ZB Financial Holdings dominates ZB Bank's affairs but ZB Bank could still hire, fire and pay its own employees even if it were dominated by its parent at the corporate level. I am, therefore, willing to deem it admitted for purposes of the motion that ZB Bank hires and fires and pays its own employees. However, the addition of the words "or otherwise manages ZB Bank day-to-day" inserts the ultimate conclusion that ZB Bank wants me to draw into the mix. I do not deem that conclusory statement to be admitted.
C. Summary Judgment as to ZB Bank's Alter Ego Status
Finally, I turn to the meat of ZB Bank's motion - its argument that it is entitled to summary judgment dismissing the complaint as against it because Plaintiffs cannot show that ZB Bank is an "alter ego" of Zimbabwe.
Both sides assume that the question whether ZB Bank is an alter ego of Zimbabwe is governed by the Supreme Court's opinion First National City Bank v. Banco Para El Comercio Exterior de Cuba (Bancec), 462 U.S. 611 (1983). Bancec recognized a "presumption" that an instrumentality of a foreign government "is to be accorded separate legal status." Id. at 628. A plaintiff may overcome this presumption, and show that an instrumentality is actually an alter ego of a foreign government, in two ways. First, "where a corporate entity is so extensively controlled by its owner that a relationship of principal and agent is created, we have held that one may be held liable for the actions of the other." Id. at 629. Second, "the doctrine of corporate entity, recognized generally and for most purposes, will not be regarded when to do so would work fraud or injustice." Id. (internal quotation marks and citation omitted). This test has been applied repeatedly by the Second Circuit and by courts in this district. See, e.g., De Letelier v. Republic of Chile, 748 F.2d 790 (2d Cir. 1984); Minpeco, S.A. v. Hunt, 686 F.Supp. 427 (S.D.N.Y. 1988).
Of course, Bancec discusses the circumstances under which one can hold a non-immune "instrumentality" liable for a foreign country's defalcations, and as held above, ZB Bank is not an instrumentality of Zimbabwe. The defendant in Bancec - an alleged alter ego of the Cuban government - was concededly an instrumentality of Cuba, and the Bancec Court's reasoning is flush with references to government "instrumentalities." Indeed, the Court describes the case as setting the standard for applying alter ego status to "instrumentalities." 462 U.S. at 626-27. Here, we must decide whether an entity that is not an "instrumentality" qualifies as an "alter ego." This court has not located any opinions applying Bancec's alter ego test to non-instrumentalities affiliated with foreign governments, or any case in which alter ego status has been conferred on an entity that is not an "instrumentality" of a foreign government.
But like the parties (who did not even bother to address the issue), I conclude that Bancec's test for alter ego status - a presumption of separateness that can be overcome by showing either total control by a parent or injustice an injustice worked by respecting the corporate form - applies whether the entity asserted to be an alter ego is an instrumentality or not. The test is grounded in equitable principles and federal common law. Its origins and purpose do not depend on the alleged alter ego's being an instrumentality of a foreign state. Instrumentality status relates only to the presence or absence of subject-matter jurisdiction - specifically, to whether an entity can invoke a foreign state's sovereign immunity - not to anything relating to alter ego status. "The language and history of the FSIA clearly establish that the Act was not intended to affect the substantive law determining the liability of a foreign state or instrumentality, or the attribution of liability among instrumentalities of a foreign state." Bancec, 462 U.S. at 620. The House Report on the FSIA made the same point:
The bill is not intended to affect the substantive law of liability. Nor is it intended to affect either diplomatic or consular immunity, or the attribution of responsibility between or among entities of a foreign state; for example, whether the proper entity of a foreign state has been sued; or whether an entity sued is liable in whole or in part for the claimed wrong. H.R. REP. NO. 94-1487, at 12 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6610.Predicating alter ego liability on instrumentality status would thus contravene Congress's intent in passing the FSIA. Congress intended sovereign immunity to be a prior and analytically distinct issue to be decided before courts turned to substantive liability issues.
Moreover, in formulating the alter ego test, the Bancec court did not rely on the fact that the defendant in that case was found to be a Cuban instrumentality. Rather, the court relied on general principles of corporate law, which afford both private and government corporations limited liability on the basis that third parties understand and appreciate legal separation among entities. Bancec, 462 U.S. at 626.
To be sure, the Court also emphasized the need to respect foreign sovereigns by respecting both the distinctions between foreign sovereigns and their instrumentalities and the ends foreign sovereigns hope to achieve by structuring their activities through legally separate entities. Bancec, 462 U.S. at 626-27. That is one reason to presume that instrumentalities are distinct from the governments that create them. But while that principle surely applies to instrumentalities of foreign government, it does not depend on the fact that the distinct entities established or controlled by foreign sovereigns are instrumentalities as defined by the FSIA. Rather, respecting the distinction between foreign sovereigns and their legally separate entities promotes respect for foreign sovereigns and their goals whether or not the entities are instrumentalities. If anything, the presumption of separateness would seem to have greater weight when an entity does not qualify as an instrumentality, but is instead removed by an additional level of ownership, as is the case here.
In sum, the legislative history of the FSIA clearly shows that Congress did not intend to conflate the questions whether a party was entitled to invoke a foreign state's sovereign immunity and whether a party could be held liable for the actions of a foreign state on an alter ego theory. A close reading of Bancec shows that the Supreme Court was faithful to Congress's intent. The determination that a party is an alter ego of a foreign state - to whom the foreign state's liability may be attributed - does not depend on whether that party is an instrumentality of the foreign state. Rather, it depends on traditional doctrines of corporate law and the general respect the law affords to legally separate entities.
Applying that test, I conclude that Plaintiffs have pointed to sufficient evidence in the record from which a reasonable factfinder could infer that ZB Bank is an alter ego of the Zimbabwean Government. Thus, Plaintiffs are entitled to proceed to trial against ZB Bank.
Bancec begins with a presumption that an entity's separate legal status should be respected. Plaintiffs argue that they have overcome this presumption as to ZB Bank because of a separate presumption - that an entity designated by the Treasury Department's Office of Foreign Assets Control ("OFAC") as a Specially Designated National ("SDN") is presumed to be an alter ego of the government with which it is associated.
This requires explanation. On March 6, 2003, the President issued an executive order blocking the transfer of any assets associated with certain Zimbabwean officials, on the grounds that those persons were undermining Zimbabwean democracy and contributing to the breakdown of the rule of law in Zimbabwe. Exec. Order No. 13,288, 68 Fed. Reg. 11,457 (Mar. 6, 2013). The officials whose assets were blocked under that Order and under subsequent regulations and Executive Orders are known as SDNs. In 2005, the 2003 Executive Order was broadened and superseded by another executive order targeting additional Zimbabwean officials.
In 2008, the President issued yet another executive order, which "added new designation criteria to target senior officials of the Government of Zimbabwe, entities owned or controlled by the Government of Zimbabwe, human rights abuses related to political repression and public corruption by senior officials of the Government." Office of Foreign Assets Control, Zimbabwe Sanctions Program, Updated December, 18 2013, http://www.treasury.gov/resource-center/sanctions/Programs/Documents/zimb.pdf. In particular, that Executive Order blocks the assets of any entity found by the Treasury Department "to be owned or controlled by, directly or indirectly, the Government of Zimbabwe or an official or officials of the Government of Zimbabwe." Exec. Order 13,469, 734 Fed Red. 43,841 (July 25, 2008).
The same day the 2008 Executive Order was issued, OF AC announced it was blocking the assets of "a number of Zimbabwean parastatals and entities that are owned or controlled by the Government of Zimbabwe." Treasury Designates Zimbabwean Parastatals & Companies Supporting the Mugabe Regime, Treas. HP-1097 (July 25, 2008). ZB Bank was on that list.
OF AC continues to maintain a list of SDNs, which it describes as:
[A] reference tool providing actual notice of actions by OF AC with respect to Specially Designated Nationals and other persons (which term includes both individuals and entities) whose property is blocked, to assist the public in complying with the various sanctions programs administered by OFAC. See Office of Foreign Assets Control, Specially Designated Nationals and Blocked Persons List, May 22, 2015, http://www.treasury.gov/ofac/downloads/tllsdn.pdf.ZB Bank's assets remain blocked to this day.
Plaintiffs' argument is that the OFAC designation establishes a presumption that an SDN is an alter ego of the sanctioned government to which it is related. As authority, Plaintiffs rely on a single opinion, written by my colleague, Judge Forrest. See In re 650 Fifth Ave. (650 Fifth), No. 08 CIV. 10934, 2013 WL 2451067 (S.D.N.Y. June 6, 2013). 650 Fifth is a civil forfeiture case brought in the first instance by the Government, in order to determine whether certain properties - including 650 Fifth Avenue - were assets belonging to an "instrumentality" of Iran, which could be used to satisfy a judgment against Iran pursuant to the Terrorism Risk Insurance Act ("TRIA"). TRIA requires plaintiffs to show that the entity owning the assets is an instrumentality of a terrorist sponsor (or an instrumentality of an instrumentality). The defendants, who owned the property, were at one time substantially owned by an Iranian instrumentality, Bank Melli, and Iran itself was a terrorist sponsor. OF AC had designated the defendants as SDNS, stating in a notice to defendants that their assets were being blocked, based on OFAC's determination "that [defendants are] controlled by, act[] for or on behalf of, and had provided financial support for, and services in support of Bank Melli." Id. at *4.
Judge Forrest's opinion concerned the defendants' status as "instrumentalities" for purposes of TRIA, not for purposes of the FSIA. The 650 Fifth defendants could not be "instrumentalities" for FSIA purposes because they were not directly owned by the Iranian government. See 2013 WL 2451067 at *5 n.7
The defendants argued that OFAC's designation did not establish that they were in fact "instrumentalities" of Iran within the meaning of TRIA, which was necessary to a judgment against them. Judge Forrest disagreed. With respect to the defendants' designation by OFAC, she explained:
While the SDN listing is not dispositive as a general matter, in this case the OFAC determination, as presented by the SDN list, the OFAC press release, and the Blocking Notice letter, is specific and entitled to deference. . . . According to OFAC, the Assa Defendants are nothing but alter egos of Bank Melli and thus instrumentalities of Iran....These findings are entitled to deference. OFAC has been delegated the authority to administer the SDN listing regime, and the Court must therefore give effect to its informal adjudications, unless they are "plainly inconsistent" with the relevant statutes and OFAC regulations. Given OFAC's unique expertise in matters of terrorist finance and the sensitive nature of the investigations upon which OFAC makes its determinations, it is entitled to deference even greater than that afforded an administrative agency statutory interpretation under Chevron. Id. at *5-6.Because the defendants presented no evidence tending to contradict OFAC's designation, Judge Forrest held that the OFAC designation alone was sufficient for the plaintiffs to meet their burden under TRIA.
Plaintiffs read this opinion as presenting them with a winning hand - if SDN designation made the defendants in 650 Fifth "instrumentalities," it is enough to establish ZB Bank's status as an alter ego of Zimbabwe, or at least to create a presumption to that effect. I believe they read too much into the opinion. Judge Forrest emphatically stated that OFAC's SDN designation in and of itself was "not dispositive" of the ultimate question - in that case, whether defendants were Iranian instrumentalities. That designation was entitled to substantial deference, given OFAC's expertise; but an entity on OFAC's list can offer evidence to this court to demonstrate that the designation is incorrect. It was because the defendants in 650 Fifth failed to offer any evidence to counter the inference drawn from OFAC's SDN designation that Judge Forrest concluded that plaintiffs should prevail.
Judge Forrest has entered final judgment in favor of the government and against several defendants and the case is currently on appeal - an appeal that may well address the order cited by Plaintiffs. In re 650 Fifth Ave., No. 08 CIV. 10934 KBF, 2013 WL 5178677, at *5 (S.D.N.Y. Sept. 16, 2013); see Order and Clerks Rule 54(b) Judgment, In re 650 Fifth Ave., No. 08 Civ. 10934 KBF (May 27-28, 2014), ECF ## 1151-1152; Notices of Appeal, In re 650 Fifth Ave., No. 08 Civ. 10934 KBF (June 6, 2014), ECF ## 1158-1159. --------
Moreover, OFAC can designate a national as an SDN and apply blocking regulations for several reasons. OFAC may block the assets of Zimbabwean persons, for example, if they are "owned or controlled by, directly or indirectly, the Government of Zimbabwe or an official or officials of the Government of Zimbabwe," are "engaged in, or to have engaged in, activities facilitating public corruption by senior officials of the Government of Zimbabwe," or even if they "have materially assisted, sponsored, or provided financial, material, logistical, or technical support for, or goods or services in support of, the Government of Zimbabwe." Exec. Order 13,469, 734 Fed Red. 43,841 (July 25, 2008).
Ultimately, there is nothing in 650 Fifth, in any other opinion I have located, or in the blocking regulations themselves to suggest a presumption - whether conclusive or rebuttable -that entities whose assets are blocked by OFAC are presumed to be alter egos of an associated government. Rather, the OFAC SDN designation is one kind of (potentially very persuasive) evidence tending to show alter ego status. That is how Judge Forrest treated the OFAC designation in 650 Fifth and it is how I treat the designation here.
In this case, the Treasury Department issued a press release explaining the designation of ZB Bank and the reason for blocking its assets: the Bank and the other designated entities were "owned or controlled by the Government of Zimbabwe." Treasury Designates Zimbabwean Parastatals & Companies Supporting the Mugabe Regime, Treas. HP-1097 (July 25, 2008). The press release further explains that "Robert Mugabe, his senior officials, and regime cronies have used these entities to illegally siphon revenue and foreign exchange from the Zimbabwean people." Id. That designation has never been revoked. Although the record does not disclose the complete membership of ZB Bank's Board before and after sanctions were imposed, at least some members of the board left their positions after sanctions were imposed. For example, Richard Chemist Hove, who was a senior official in the Zimbabwean Government and Chairman of ZB Bank's Board left his position with the Bank at some point after the 2008 sanctions.
Deferring to OFAC's expertise, I find that ZB Bank's continuing designation as an SDN is some evidence that it is an alter ego of the Zimbabwean government. The press release makes clear that each entity designated, including ZB Bank, was a tool used by the Zimbabwean government and its officials to achieve nefarious ends and - in OFAC's view - undermine that country's democratic institutions. For purposes of this motion, the ends (though tragic in themselves) are less important than the means: The Zimbabwean government treats ZB Bank as an instrument for the ends of its incumbent regime.
ZB Bank makes much of the fact that an entity can be designated not only for being "controlled" by Zimbabwe - which would indeed suggest alter ego status - but also for merely being "owned" by Zimbabwe (which ZB Bank is, albeit indirectly). While this may be true, it is irrelevant: Treasury's statement, though brief, indicates that ZB Bank was more intimately involved with and controlled by the Zimbabwean government than ZB Bank here asserts. The press release contains scant detail (as was the case in 650 Fifth), but OFAC is not required to make detailed factual findings in order to entitle its determinations to deference. The question how much deference depends on what evidence goes the other way - an issue that will not be resolved in this case short of trial.
Unlike the defendants in 650 Fifth, however, ZB Bank offers some evidence of independence: it argues that it is separated by Zimbabwe by a layer of intermediate ownership - ZB Financial Holdings (which is itself publicly traded) - and that it repeatedly struggled to maintain deposits related to government agencies and to stop government regulations that might harm its business - concerns it claims would not exist if it were indeed a government alter ego. It also argues that the evidence on which Plaintiffs rely - especially evidence relating to ownership and interlocking directorates - are not dispositive of alter ego status as a matter of law.
All this means is that there is evidence on both sides of the question. This is not a matter that can be resolved on a motion for summary judgment.
CONCLUSION
For the foregoing reasons, ZB Bank's motions for summary judgment is DENIED and its motion to deem admitted statements in its 56.1 statement is GRANTED IN PART and DENIED IN PART. Plaintiffs' motion to preclude is DENIED but the non-ZB Bank Defendants are precluded from relying on documents they failed to produce and the fact-finder will be directed to draw an adverse inference be drawn about the contents of those documents.
The Clerk of the Court is directed to remove Docket ##128, 137, and 172 from the Court's list of pending motions. Dated: June 3, 2015
/s/_________
U.S.D.J.
BY ECF TO ALL COUNSEL