218 F.R.D. 348 (D.Mass. 2003), Civ. A. 00-11589-PBS, In re Lernout & Hauspie Securities Litigation

Docket Nº:CIV.A. 00-11589-PBS, CIV.A. 02-10302-PBS, CIV.A. 02-10303-PBS, CIV.A. 02-10304-PBS.
Citation:218 F.R.D. 348
Opinion Judge:COLLINGS, United States Magistrate Judge.
Party Name:In re LERNOUT & HAUSPIE SECURITIES LITIGATION. v. Jo Lernout, et al. Gary B. Filler, et al., Stonington Partners, Inc., et al., v. Carl L. Dammekens, et al., Paul G. Bamberg, et al., v. Jo Lernout, et al., Janet Baker, et al., v. KPMG LLP, et al.
Attorney:Bruce A. Baird,Jason A. Levine, William D. Iverson, Paul W. Schmidt, Covington & Burling, Washington, DC, William Shields, Day, Berry & Howard, Boston, MA, Jonathan I. Handler, Day, Berry & Howard LLP, Boston, MA, for Microsoft Corporation. James P. Bonner, Shalov, Stone & Bonner, New York City, ...
Case Date:November 13, 2003
Court:United States District Courts, 1st Circuit, District of Massachusetts
 
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218 F.R.D. 348 (D.Mass. 2003)

In re LERNOUT & HAUSPIE SECURITIES LITIGATION.

Gary B. Filler, et al.,

v.

Jo Lernout, et al.

Stonington Partners, Inc., et al.,

v.

Carl L. Dammekens, et al.,

Paul G. Bamberg, et al.,

v.

Jo Lernout, et al.,

Janet Baker, et al.,

v.

KPMG LLP, et al.

Nos. CIV.A. 00-11589-PBS, CIV.A. 02-10302-PBS, CIV.A. 02-10303-PBS, CIV.A. 02-10304-PBS.

United States District Court, D. Massachusetts.

November 13, 2003

Bruce A. Baird,Jason A. Levine, William D. Iverson, Paul W. Schmidt, Covington & Burling, Washington, DC, William Shields, Day, Berry & Howard, Boston, MA, Jonathan I. Handler, Day, Berry & Howard LLP, Boston, MA, for Microsoft Corporation.

James P. Bonner, Shalov, Stone & Bonner, New York City, Curtis L. Bowman, W. ToddVer Weire, Cauley, Geller, Bowman & Coates, LLP, Little Rock, AR, Glen DeValerio, Michael G. Lange, Berman DeValerio Pease, Tabacco Burt & Pucillo, Boston, Marvin L. Frank, Rabin, Murray & Frank LLP, New York City, for Sandra Balan.

Michael P. Carroll, Sean C. Knowles, William Fenrich, Iris Gafni-Kane, Iris Gafni-Kane, Julian J. Moore, Diem-Suong T. Nguyen, Reshma M. Saujani, Michael L. Simes, Amy Stoken-Dunn, Davis, Polk & Wardwell, New York City, Kevin J. Lesinski, Seyfarth Shaw, LLP, Boston, MA, Arnold P. Messing, Choate, Hall & Stewart, Boston, MA, for KPMG LLP.

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Donald Chase, Morrison, Cohen, Singer & Weinstein, LLP, New York City, Michael A. Collora, David M. Osborne, Dwyer & Collora, LLP, Boston, MA, Peter D. Weinstein, Franklin R. Weissberg, Morrison, Cohen, Singer & Weinstein, LLP, New York City, for L & H Investment Company N.V., Nico Willaert, and Pol Hauspie.

James S. Dittmar, Goodwin Procter LLP, Boston, MA, Sanjit S. Korde, Korde & Associates, Chelmsford, MA, Jay R. Speyer, Morrison, Cohen, Singer & Weinstein LLP, New York City, for Nico Willaert and Pol Hauspie.

Michael P. Connolly, Murtha Cullina LLP, Boston, MA, Tara J. Holubar, Frank Rozzano, Dickstein, Shapiro, Morin & Oshinsky, LLP, Washington, DC, for Ellen Spooren.

James O. Fleckner, Goodwin Procter LLP, Gordon M. Jones, Robert P. Sherman, Nixon Peabody, LLP, Boston, MA, for Pol Hauspie.

Thomas J. Gallitano, Conn, Kavanaugh, Rosenthal, Peisch & Ford, LLP, Boston, MA, for Dirk Cauwelier and Marc DePauw.

Amy M. McNamer, Steven M. Salky, Roger E. Zuckerman, Zuckerman Spaeder LLP, Washington, DC, Andrew Good, Silverglate & Good, Boston, MA, for Louis H. Verbeke.

Ellen D. Marcus, John B. Missing, Herbert Thomas, Debevoise & Plimpton, Washington, DC, for Dirk Cauwelier, Fernand Cloet, Gerard VanAcker, Hubert Detremmerie, Jan Coene, and Marc DePauw.

William R. Moorman, Stephen Wald, Craig & Macauley, P.C., Boston, MA, for Gaston Bastiaens.

David A. Piedra, Morrison, Cohen, Singer & Weinstein, LLP, New York City, for L & H Investment Company N.V. and Pol Hauspie.

MEMORANDUM AND ORDER ON PLAINTIFFS' MOTION TO COMPEL DISCOVERY FROM DEFENDANT KLYNVELD PEAT MARWICK GOERDELER BEDRIJFSREVISOREN (# 471 IN 00CV11589, # 232 IN 02CV10302, # 205 IN 02CV10303 & # 237 IN 02CV10304)

COLLINGS, United States Magistrate Judge.

I. Introduction

The plaintiffs have moved to compel a large scale production of documents by defendant Klynveld Peat Marwick Goerderler Bedrijrsrevisoren (" KPMG-B" ), a Belgian entity. In support of their motion, the plaintiffs submitted a memorandum of law (# 474), a Declaration of Professor Matthias Edward Storme (# 473) and an Affidavit of Patrick L. Rocco (# 472). To date, KPMG-B has produced only a few selected documents to the plaintiffs, has opposed the plaintiffs' motion to compel (# 491) and has submitted a Declaration of Professor Pierre Van Ommeslaghe (# 493) and a Declaration of Chris Engels (# 492). In response, the plaintiffs filed a reply memorandum of law (# 499) and a reply Declaration of Professor Matthias Edward Storme (# 525). With the motion having been fully briefed and a hearing having been held on October 24, 2003, the issue is in a posture for resolution.

II. Brief Summary of the Relevant Facts and the Law 1

The plaintiffs have been seeking to obtain documents from KPMG-B since the Summer of 2002 to no avail. Recently, the plaintiffs have become civil claimants in the criminal proceedings against KPMG-B pending in Belgium. 2 As such, the plaintiffs have been given access by the Belgian prosecutors to

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between 25 and 30 boxes of KPMG-B audit work papers for the years 1998-2001.3 While the plaintiffs' counsel were permitted to review these documents, they were not allowed to make or obtain copies of them. These audit work papers are a subset of the very same documents that the plaintiffs are seeking from KPMG-B.

The law that drives the decision on the instant motion is not itself particularly convoluted or complex. However, the expert relied on by the plaintiffs and the ones relied on by KPMG-B 4 vary drastically in their interpretations of the relevant law and its exceptions. What is not in dispute is that Article 458 of the Belgian Criminal Code (" Article 458" ) is the relevant statutory provision. That article provides that:

Physicians, surgeons, health officers, pharmacists, midwives and all other persons whose state or profession renders them depositaries of the secrets entrusted to them and who, other than in cases in which they are called on to render testimony in legal proceedings or before a parliamentary committee and those where the law obliges such secrets to be made known, shall have disclosed same shall be liable to a punishment comprising imprisonment of from one week to six months and a fine of between one hundred francs and five hundred francs.

(# 551, Tab 1) Article 458 was made applicable to auditors by Article 27 of the Act of July 22, 1953 on the Establishment of the Institute of Auditors which provides that:

Section 458 of the Belgian Criminal Code is applicable to auditors, trainees and persons for whom they are accountable. In addition to the exceptions provided for in this article, this duty is not applicable in the case of a written permission of the corporation to communicate a certificate or a confirmation and in the case such certificate or confirmation is directed to an auditor or person who performs a similar duty pursuant to foreign law....

(# 551, Tab 1) Article 20 of the Act of July 22...

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