Attorney Sanctioned for Failing to Produce Russian Documents
We’ve blogged before legal translation services associated with obtaining translation of foreign documents during discovery. In the case below, Markus v. Rozhkov, an attorney was personally sanctioned for willfully disregarding the court’s order to obtain documents from his client’s foreign agents in response to a subpoena in a bankruptcy proceeding.
Background on Debtor/Russian Citizen.
The appellant/debtor (“debtor”), Larisa Markus, was a Russian citizen who had served as the president of one of Russia’s largest banks. In 2016, the bank was declared insolvent and filed for bankruptcy in Russia. In 2017, the appellant/debtor was convicted of organizing a criminal enterprise that consisted of the bank’s employees for the purpose of stealing significant funds from the bank. The debtor was then sentenced to eight and a half years in prison.
After the Russian bank was declared to be insolvent, one of the debtor’s creditors applied to commence a bankruptcy proceeding against her. The Moscow Arbitration Court granted the motion, appointed the debtor a financial administrator, and began liquidating the debtor’s assets through the financial administrator.
Russian Administrator Files Bankruptcy Petition on Behalf of Former Bank President.
In 2019, the administrator/foreign representative (“foreign representative”), filed a petition in the U.S. Bankruptcy Court for the Southern District of New York in which the representative stated that he intended to conduct discovery as to assets which might belong to the debtor in the United States. The U.S. Bankruptcy Court approved the petition and entered an order granting Chapter 15 bankruptcy recognition of the insolvency proceeding against the debtor.
Discovery began and counsel for the debtor’s foreign representative requested a conference with the court. The day before the conference, an attorney filed an appearance on behalf of the debtor and advised the court that he planned to move to vacate the bankruptcy recognition order and request a stay of proceedings. The debtor’s attorney argued that the court lacked jurisdiction over the matter and that the debtor had suffered due process violations. However, since the parties were before the court for a discovery hearing, the court ordered certain parties to produce documents and declined to address the jurisdictional arguments.
Thereafter, the foreign representative served a subpoena on the debtor and her attorney commanding the production of certain Russian documents regarding “what happened to the two billion dollars that she pled guilty to embezzling.” The debtor’s attorney failed to take any action to produce the requested documents. At a court hearing, the judge admonished the debtor’s attorney to produce the subpoenaed Russian documents and, when counsel refused to do so, entered an order compelling him to produce the requested Russian documents by a specific date and time.
Bankruptcy Court Sanctions Attorney For Failing to Produce Debtor’s Foreign Documents.
The bankruptcy court held a conference in August of 2019 and the court inquired whether the subpoena for documents had been translated into Russian yet. The debtor’s counsel replied that he had sent it to a translation service but was waiting for the Russian to English document translation to be completed.
At a subsequent court hearing, the foreign representative informed the court that he had still not received a single responsive document. When the court inquired of the debtor’s counsel why he still had not produced any documents, the debtor’s counsel responded that he was supposed to fly to Russia and meet with the debtor’s Russian attorneys, which he had not done, but in any event it was his understanding that the scope of discovery under Chapter 15 excluded “documents in foreign countries.”
Consequently, the court invited the foreign representative to bring a motion for contempt of court and asked the debtor’s counsel to affirmatively indicate whether any of the debtor’s attorneys or agents outside of the United States had any documents responsive to the subpoena. At the contempt hearing, the bankruptcy judge asked the debtor’s counsel whether he had produced any documents from the debtor’s attorneys in England, France, or Latvia and counsel responded that they had refused to cooperate and provide any documents. The judge then sanctioned the debtor’s counsel personally and awarded the foreign representative $60,000 in attorney’s fees for the counsel’s “willful disregard” for the court’s discovery orders.
Debtor’s Counsel Appeals Sanctions Ruling; U.S. District Court Affirms and Vacates in Part.
The debtor’s counsel appealed the bankruptcy court’s sanctions order and award of attorney’s fees to the U.S. district court. The district court affirmed in part and vacated in part the court’s ruling. Specifically, the district court affirmed the Bankruptcy Court’s Sanctions Order to the extent it exercised inherent authority to sanction the debtor’s counsel for noncompliance with discovery orders but remanded the sanctions order entirely so that the Bankruptcy Court could determine the sum of the per diem sanctions that should be imposed. The district court also held that the lump sum retroactive sanctions were improperly criminal in nature, and therefore vacated.
The district court found that the debtor’s attorney had received ample warnings that his noncompliance would result in the imposition of sanctions and that the bankruptcy court had the authority to impose such sanctions.
The case is Larisa Invanovna Markus v. Yuri Vladimirovich Rozhkov, decided on April 3, 2020 in the United States District Court for the Southern District of New York.
Get in touch with legal translators at All Language Alliance, Inc. to comply with foreign document production order. We provide certified translation of legal documents, including international e-Discovery, from Russian, Chinese, French, Norwegian, Portuguese, Italian, German, Dutch, and other languages.
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