Opinion
No. 02 Civ. 0795 (CBM).
February 10, 2005
MEMORANDUM OPINION AND ORDER
Defendant requests that this court set aside Magistrate Judge Peck's November 30, 2004 order requiring defendant to produce for review by plaintiff's counsel Board of Director minutes and related Board documents, in hard copy and electronic database, for the period January 1, 1998 to December 31, 2002. For the reasons set forth below, defendant's request is DENIED.
I. The Parties
Plaintiff, Lyondell-Citgo Refining, LP ("LCR"), is a limited partnership with its principal place of business in Houston, Texas, where it owns a crude oil refinery. Defendant Petroleos de Venezuela, S.A. ("PDVSA"), is the national oil company of Venezuela, and defendant PDVSA-Petroleo, S.A. ("Petroleo"), is a wholly owned subsidiary of PDVSA.
II. Background
In response to a dispute concerning the discovery of Board of Director minutes, reports and presentations, Magistrate Judge Peck issued an order on October 1, 2004 requiring defendant to produce to plaintiff all Board of Director minutes, reports and presentations for the period January 1, 1998 to December 31, 2002. See 10/1/04 Tr. at 37. On October 15, 2004, Magistrate Judge Peck clarified the order, stating that he "was not ordering defendant to produce irrelevant — using `irrelevant' in a discovery sense — Board of Director minutes." Rather, because the court "could no longer rely on PDVSA or its counsel to search those board minutes," he gave plaintiff the "unusual opportunity" to search the minutes directly for relevant and responsive documents. See 10/15/04 Tr. at 2-3. Magistrate Judge Peck noted that he was providing such relief to plaintiff because defendant was responding to discovery requests "on the 11th hour, if not the 13th hour . . . that had been pending for months with respect to the board minutes." Id. at 3. Finally, Magistrate Judge Peck stated that "the whole purpose of this was that the Court could not trust defendant's review of this material and, therefore, it was giving the plaintiff the authority to review it and determine what was responsive to its document requests and relevant to the litigation and take only such material. I note that I never ordered copies of all material, as opposed to that material that plaintiffs decided was relevant, and that to the extent you disagreed with that, that issue could be brought before the Court's attention." Id. at 5 (emphasis added).
On October 14, 2004, defendant submitted an objection to Magistrate Judge Peck's order to this court on the grounds that it was overly broad and contrary to the principle of relevance as set forth in Federal Rule of Civil Procedure 26(b)(1). Defendant also argued that it had made a good faith effort to produce all relevant and responsive documents, and that it should not have to comply with the order as it will be subject to criminal penalties in Venezuela if the materials at issue are disclosed.
On November 19, 2004, this court affirmed Magistrate Judge Peck's discovery order of October 1, 2004 over defendant's objection. In light of the highly deferential standard of review for a Magistrate's ruling as to a non-dispositive matter, the liberal discovery regime as articulated by the Second Circuit, and the balancing test required to determine the reasonableness of foreign discovery, this court found that Magistrate Judge Peck did not clearly err in ruling as he did. See Lyondell-CITGO Refining, LP v. Petroleos de Venezuela, S.A. and PDVSA-Petroleo, S.A., 2004 WL 2698218 (S.D.N.Y. Nov. 19, 2004).
On November 22, 2004, in light of the November 19, 2004 opinion issued by this court, Magistrate Judge Peck ordered the parties to submit a joint letter proposal, or two different proposals if necessary, as to the appropriate next steps regarding review and production of PDVSA Board minutes and related documents by November 29, 2004. Each party submitted a proposal, and on November 30, 2004, Magistrate Judge Peck issued an order finding each proposal deficient and setting forth a plan by which PDVSA Board minutes and related documents would be reviewed and produced. Specifically, he ordered defendant to "make all Board minutes and related Board documents available in hard copy, and electronic database, for review by plaintiff's counsel." See 11/30/04 Order. He further stated, "Documents selected by plaintiff's counsel for copying shall be provided to plaintiff's counsel unless PDVSA's General Counsel (or more senior officer)and PDVSA's U.S. counsel certify that a document contains classified or national security information. Those documents will be placed in a sealed envelope(s) and brought before me for review." Id.
On December 15, 2004, defendant submitted an objection to Magistrate Judge Peck's order of November 30, 2004. Defendant's objection, the matter presently before the court, is very much like the objection submitted by defendant on October 14, 2004. Defendant argues that Magistrate Judge Peck's order forces it to grant plaintiff unrestricted access to classified information and state secrets that it is prohibited from disclosing under Venezuelan law. The court addresses this argument below.
III. Standard of Review
Rule 72(a) of the Federal Rules of Civil Procedure and the Federal Magistrates Act, 28 U.S.C. §§ 636(b)(1)(A) (2002) provide this court with the standard by which to review Magistrate Judge Peck's discovery-related ruling. Pretrial discovery matters are generally considered non-dispositive of the litigation. See Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522 (2d Cir. 1990). Both the rule and the statute state that, as to non-dispositive matters, a district court shall reverse a Magistrate Judge's order only where it has been shown that the order is "clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1)(A) (1988); Fed.R.Civ.P. 72(a). Elaborating on the "clearly erroneous" standard, the Supreme Court has held that a finding is "clearly erroneous" if the reviewing court is "left with the definite and firm conviction that a mistake has been committed." Easley v. Cromartie, 532 U.S. 234, 242 (2001) (quoting United States v. United Gypsum Co., 333 U.S. 364, 395 (1948)). Indeed, "[w]here there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous." Anderson v. City of Bessemer City, 470 U.S. 564, 574 (1985) (citing United States v. Yellow Cab Co., 338 U.S. 338, 342 (1949)). Pursuant to this highly deferential standard of review, a magistrate judge is "afforded broad discretion in resolving discovery disputes and reversal is appropriate only if their discretion is abused." Derthick v. Bassett-Walker Inc., 1992 WL 249951, at *8 (S.D.N.Y. Sept. 23, 1992). Thus, a party seeking to overturn or modify a discovery order bears a heavy burden.
IV. Discussion
Defendant asserts that Magistrate Judge Peck's discovery order of November 30, 2004 requires it to grant plaintiff access to documents that it is prohibited from disclosing because such documents are classified or contain national security information. As stated above, defendant's objection is very similar to its objection filed on October 14, 2004 regarding the same documents. In this court's November 19, 2004 opinion, issued in response to the October 14, 2004 objection, the court outlined the balancing test used to determine the reasonableness of foreign discovery as set forth by the Second Circuit in First Am. Corp. v. Price Waterhouse LLP, 154 F.3d 16 (2d Cir. 1998). After applying the balancing test to the instant case, this court found that the possibility of criminal penalties was not sufficiently strong to impede the production of the documents in question, and that at minimum, Magistrate Judge Peck was not clearly erroneous in ordering the production of Board minutes and related documents. See Lyondell-CITGO Refining, LP v. Petroleos de Venezuela, S.A. and PDVSA-Petroleo, S.A., 2004 WL 2698218, at *3-4 (S.D.N.Y. Nov. 19, 2004).
Defendant offers no new arguments in support of the instant objection. Defendant contends in its reply to plaintiff's opposition to defendant's current objection that it was not until October 15, 2004, after it submitted its objection of October 14, 2004 to the court, that it submitted letters and declarations demonstrating that some of the Board of Director materials contain classified and national security information. Def.'s Reply to Pl.'s Opp'n to Def.'s Objection to Magistrate Judge's Order at 2. But this court explicitly addressed one of those letters — a letter from the Venezuelan Minister of Mines — in the November 19, 2004 opinion, and the other document — the Declaration of Dr. Rodolfo Porro Aletti, the General Counsel of PDVSA — was included with defendant's original objection. The only notable difference between defendant's October 14, 2004 objection and the instant objection is that Magistrate Judge Peck has now provided a specific plan for reviewing and producing the Board of Director minutes and related documents at issue.
As this court previously stated, to sustain defendant's objection on the basis of general statements about the need to protect the national security and public interest of Venezuela, without providing any specific information about whether the documents being withheld contain such information, would be to give any government or government-related party an unfair advantage over its adversary. Indeed, in In re Grand Jury Subpoena Dated August 9, 2000, 218 F.Supp.2d 544 (S.D.N.Y. 2002), the court held that where a party asserts executive privilege, "The documents to be protected must be identified and described, and the agency must provide precise and certain reasons for asserting confidentiality over the requested information." Id. at 552 (internal quotations and citation omitted) (emphasis added). The court went on to state, "The party asserting the privilege bears the burden of proof. . . . The privilege ought to be strictly confined within the narrowest possible limits consistent with the logic of its principle."Id. at 554 (internal quotations and citation omitted) (emphasis added). Here, defendant has neither provided precise and certain reasons for asserting confidentiality, nor has it confined the assertion of privilege to a narrow set of documents.
Defendant has not provided the court with any additional information that might compel a finding different from the court's November 19, 2004 opinion issued in response to an almost identical objection by defendant. The court previously applied a balancing test to determine the reasonableness of foreign discovery, and concluded that the possibility of criminal penalties was not sufficiently strong to impede the production of the documents in question. The court has no reason to hold otherwise today.
Given the highly deferential standard of review applied to a Magistrate's non-dispositive discovery rulings, this court finds that Magistrate Judge Peck was not clearly erroneous in ordering the production of Board of Directors minutes and related documents, with the opportunity for review by Magistrate Judge Peck if defendant certifies that documents in question contain classified or national security information.
V. Conclusion
Defendant has failed to show, as it must, that Magistrate Judge Peck's November 30, 2004 order was "clearly erroneous" or "contrary to law." For the foregoing reasons, Magistrate Judge Peck's order of November 30, 2004, is hereby affirmed over defendant's objection.
SO ORDERED.