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United States v. All Assets Held at Bank Julius Baer & Company, Ltd.

United States District Court, District of Columbia

September 20, 2017




         This case has been referred to the undersigned for the management of discovery. Currently ripe for resolution are (1) Claimant Pavel Lazarenko's (“Claimant”) motion for expenses and attorney's fees totaling $39, 718 for Plaintiff's Austrian Deposition [Dkt. 861]; and (2) Plaintiff's cross motion for costs in the amount of $7, 324.99 for the deposition in Austria [Dkt. 893].[1] Upon consideration of the parties' filings and the entire record herein, the Court will deny both motions. The Court's rationale follows.


         The factual background concerning this in rem asset forfeiture action has been set forth in multiple opinions by District Judge Paul L. Friedman. See, e.g., United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 772 F.Supp.2d 191 (D.D.C. 2011). This Court will not repeat that lengthy history here. Instead, the facts pertinent to the adjudication of the parties' cross motions are summarized below. While each party provides its own rendition of the events leading up to the instant motions, the underlying facts are, for the most part, undisputed.

         A. Plaintiff's Notice of Deposition

         On August 18, 2016, Plaintiff sought leave to shorten the period of time prescribed by Local Rule 30.1 for providing “reasonable notice” of a deposition to occur at least fifty miles outside Washington, D.C. from two weeks to eight days in order to depose Rafic Daou (“Daou”), a Lebanese national, at the U.S. Consulate in Vienna, Austria on August 26, 2016. See Pl. Letter [Dkt. 762-1]; see also LCvR 30.1 (permitting a court to “enlarge or shorten” the reasonable notice requirement “on application of a party for good cause shown”). To show good cause for its request, Plaintiff explained that: (1) Daou is a critical third-party witness; (2) Daou first confirmed his availability for the deposition on August 18, 2016, the day that Plaintiff made its request; (3) Daou said that he was unavailable on any other date in August and September; (4) travelling to Vienna was more practical and safer than travelling to Beirut, Lebanon, where Daou lived; and (5) Claimant's counsel could participate in the deposition by telephone if they could not travel on such short notice. Pl. Letter [Dkt. 762-1] at 1-2. Claimant objected to Plaintiff's request, arguing that travelling to Vienna on eight days' notice was unduly burdensome and provided insufficient time to prepare. See Cl. Aug. 19, 2016 Letter [Dkt. 766-2]. Additionally, Claimant asserted that Plaintiff overstated the importance of Daou's testimony and the urgency of taking Daou's deposition in August, referencing a document that Claimant's counsel received indicating that Daou “preferred to travel in September[, ] though August 26, 2016 could work” for his schedule. Id. at 1-2. According to Plaintiff, however, Daou later changed his mind regarding his availability, informing the government's counsel that he would only appear for a deposition on August 26, 2016. See Order [Dkt.765] at 2.[2]

         During an August 19, 2016 telephone conference, the Court ruled in Plaintiff's favor, and Claimant filed a letter brief requesting reconsideration of that decision. See Cl. Aug. 22, 2016 Letter [Dkt. 766-1] at 1. After reviewing Claimant's letter brief and Plaintiff's response, the Court issued an Order on August 22, 2016 affirming its decision to grant Plaintiff's request and allow the deposition to move forward in Vienna. See Order [Dkt. 765] at 5. In its Order, the Court highlighted a number of factors that weighed in favor of granting Plaintiff's request, including: (1) Daou's apparent unwillingness to sit for a deposition after August 26, 2016 based on the representations of Plaintiff; (2) the Court's inability to compel Daou, a foreign national, to attend a deposition abroad; (3) the mutual hardship that both parties would endure by having to prepare and travel for a deposition on such short notice; (4) the importance of Daou's testimony, according to Plaintiff; and (5) the option for Claimant's counsel to attend the deposition remotely. Id. at 4. The undersigned, however, recognized Claimant's concerns and noted that,

if [Claimant's] counsel attends the deposition and it does not go forward because the government fails to obtain the necessary approval from the Austrian government to take the deposition, the Court will be favorably disposed to granting a request from [Claimant] for reimbursement of his counsel's travel costs, his attorney's fees, and any other costs associated with expedited translation of deposition exhibits.

Id. at 5.

         B. Daou's First Deposition

         Pursuant to the Mutual Legal Assistance Treat (“MLAT”) between the United States and Austria and consistent with the long-standing practice between the Department of Justice and its Austrian counterpart, the Austrian government verbally informed Plaintiff that the government did not need to make a formal MLAT request to depose Daou in Vienna. See Cross. Mot. at 5. The government received written confirmation of such two days prior to the deposition, on August 24, 2016. Id.[3] Accordingly, on August 26, 2016, both parties and Daou appear for the deposition at the United States Consulate in Vienna. Smith Decl. [Dkt. 861-4] at 7. At the start of the deposition, counsel for Claimant placed on the record his objection that Plaintiff's counsel had not obtained proper authorization to take the deposition and that it was thus illegal under Austrian law. Id. at 8-9. Upon hearing this objection, Daou became concerned about potentially violating Austrian law, and an off-the-record discussion ensued. Id. at 2; see also Cross Mot. at 5-6.

         Claimant's counsel's objection was based on prior communications with an Austrian attorney who advised him that the deposition of Daou violated Austrian law. See Cross Mot. at 5; see also Cross Mot. Ex. 5 [Dkt. 895-3]; Smith Decl. [Dkt. 861-4] at 2, 12-13. The night before the deposition, the Austrian lawyer forwarded Claimant an email written in German from Alexandra Fialla, who Claimant describes as a “legal official” at the U.S. Consulate in Vienna, stating when translated that the “interrogation” could not take place on August 26, 2016 without the proper “Austrian approval.” See Smith Decl. [Dkt. 861-4] at 2, 12-13.[4] Claimant's counsel objected to the deposition based on this email. Id. at 2. When the parties went off the record, Claimant showed Daou a copy of the forwarded email and translated the relevant portions from German to English using Google's translation tool. Id. at 2. Claimant's counsel also claims that he showed a copy of the email to Plaintiff's counsel at the deposition. Id.

         Daou then asked whether the consulate employee who authored the email could explain what she meant, and Claimant's counsel claims that Plaintiff's counsel “refused” to make her available. Id. Instead, and in an effort to clarify any miscommunications, Plaintiff's counsel showed Daou a letter from the Austrian government purporting to establish that the United States had received permission to proceed with the deposition. See Id. at 2-3; see also Transcript [Dkt. 907] at 8:20-9:23. The letter, however, was written in German and pre-dates the email that Claimant's counsel received from the consulate employee. Smith Decl. [Dkt. 861-4] at 2-3. Claimant's counsel also contends that Plaintiff did not permit them to view this letter at the deposition. Id. at 3; see also Transcript [Dkt. 907] at 9:12-23.

         According to FBI 302's documenting the off-the-record discussion, Claimant's counsel repeated to Daou that Austria had not authorized the deposition and that his participation in it was illegal. See Cross Mot. Ex. 2 [Dkt. 895-1] at 1-2. The FBI reports also state that Claimant's counsel cautioned Daou that he did not represent the Austrian government and had no authority to prosecute Daou-statements that the reports indicate Claimant's counsel refused to make on the record-but that Daou nevertheless became concerned that he was breaking the law. Id. at 2. To be sure, Claimant's counsel contends that some of the allegations in these reports are not accurate-including the charges that Claimant's counsel would not state on the record that he did not represent the Austrian government and that he told Daou that ...

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