Pretrial Discovery

• Author: International Law Group

In December 1995, the U.S. Commodity Futures Trading Commission (CFTC) subpoenaed Sumitomo of Japan requiring it and its U.S. subsidiary to provide details about their copper trades and to turn over various types of documents dealing with those trades. Sumitomo hired the U.S. law firm of Paul, Weiss, Rifkind, Wharton & Garrison (PW) to represent it. The following month, the U.K. Securities and Investment Board (SIB) also began looking into Sumitomo's copper trading. PW also represented Sumitomo in this inquiry.

Between 1985 and 1996, a Mr. Hamanaka was working for Sumitomo of Japan as head of a team trading on the copper cash and futures markets. In June 1996, Hamanaka confessed that his unauthorized trading had caused Sumitomo to lose $2,600,000,000. Soon after the Hamanaka confession, investors brought a class action against Sumitomo in New York. All in all, Sumitomo, either as plaintiff or defendant, became party to at least 24 civil actions in the U.S., the U.K. and Japan arising out of Hamanaka's activities. These regulatory and judicial proceedings involved delving into Sumitomo's copper trading activities and into the aid that third parties may have given to Hamanaka in the execution and camouflaging of his alleged schemes.

Both before and after the confession, PW was gathering some 6,900,000 pages of documentation, mostly in Japanese. Aided by translators, a PW legal team spent many months going through these documents and imaged about 4% of the total into a PW litigation database as potentially relevant to regulatory and litigation proceedings. Part of the attorneys' review process involved deciding to make refined translations of about 5,000 higher priority documents, consisting of about 30,000 pages or 0.4% of the whole.

Since October 1998, Ashursts (Sumitomo's British law firm) chose about twenty Japanese documents for translation into English by a Mr. Sugiyama, a senior assistant solicitor with that firm. In addition to some overlap with the PW translations, there were new translations. Ashursts also sent five Japanese documents to PW for translation. This activity presumably related to the pending U.K. lawsuit brought by Sumitomo in July 1999 against Credit Lyonnais Rouse Ltd. (CLR).

Plaintiff charged that defendant had acted as clearing house and furnished credit for many of Hamanaka's unlawful transactions in 1993 thus aiding him in breaching his employment contract. This series of actions allegedly caused $247,000,000 in...