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In re Application of Martinez Sampedro

United States District Court, D. Connecticut

December 27, 2019

In re Application of LUIS JAVIER MARTINEZ SAMPEDRO for an Pursuant to 28 U.S.C. § 1782 to Conduct Discovery for Use in a Foreign Proceeding



         Petitioner Luis Javier Martinez Sampedro objects ([Doc. # 142]) to Magistrate Judge Robert M. Spector's ruling ([Doc. # 133]) on Petitioner's Emergency Motion to Compel Withheld Documents ([Doc. # 99]). Respondents Silver Point Capital, L.P., Contrarian Capital Management, LLC, David Reganato, and Normal Raul Sorensen Valdez (together, "Respondents") object ([Doc. # 223]) to Judge Spector's ruling (Doc. # 217]) on several motions by Petitioner and Respondents. For the reasons that follow, both objections are overruled.

         I. Background

         The Court assumes the parties' familiarity with the underlying facts of this case. Petitioner filed an Emergency Motion to Compel Production of Improperly Withheld Documents ([Doc. # 99]), which this Court referred to Judge Spector for ruling. Petitioner alleged that Respondents had improperly withheld documents on the basis of claimed attorney-client privilege and that Respondents' privilege logs were untimely and deficient, and thus he sought an order compelling the Respondents to produce certain documents. Judge Spector granted Petitioner's request as to pre-January 12, 2018 communications between the Codere Board and G3M which did not include any representative of Linklaters, but denied Petitioner's request as to the Board's communications with Linklaters, including those involving representatives of G3M, and as to post-January 12, 2018 communications with G3M. (Ruling on Emergency Mot. to Compel [Doc. # 133]). Petitioner now argues that this ruling was in error, urging the Court to order the Respondents to produce all withheld documents. (Pet's Obj. [Doc. # 142] at 1.)

         Separately, Petitioner moved for permission to provide discovery obtained through this action to the Comision Nacional del Mercado de Valores (the "CNMV"), a Spanish regulatory agency to which Petitioner submitted a complaint about Codere ([Doc. # 198]), and Respondents moved for a protective order prohibiting Petitioner from sharing confidential materials with the CNMV ([Doc. # 206]). Judge Spector granted Petitioner's motion to provide discovery to the CNMV, and denied Respondents' motion for protective order. (Ruling on Mots, for Permission and Protective Order [Doc. #217].) Respondents now argue that this ruling was in error, urging the Court to prohibit Petitioner from providing discovery obtained through this action to the CNMV. (Resps.' Obj. [Doc. # 223] at 1.) Respondents also moved for a stay of that ruling pending resolution of their objection. (Mot. to Stay [Doc. # 218].)

         II. Discussion

         A district court may modify or set aside a magistrate judge's decision on "[n]ondispositive [m]atters" only if "clearly erroneous or contrary to law." Fed.R.Civ.P. 72(a). Findings of fad "are reviewed for clear error" but conclusions of law "are reviewed de novo." Mobil Shipping & Transp. Co. v. Wonsild Liquid Carriers Ltd., 190 F.3d 64, 67 (2d Cir. 1999). Under that standard, the reviewing district court may not modify the magistrate judge's decision "simply because [it] would have decided the case differently" and instead "must ask whether, on the entire evidence, it is left with the definite and firm conviction that a mistake has been committed." Easley v. Cromartie, 532 U.S. 234, 242 (2001) (internal quotations omitted). "Matters concerning discovery generally are considered 'nondispositive' of the litigation." Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522, 525 (2d Cir. 1990). Thus such decisions of magistrate judges under § 1782 are generally reviewed by district courts under the clearly erroneous standard. See, e.g., In re XPO Logistics, Inc., 2017 WL 6343689 (S.D.N.Y. 2017) (reviewing for clear error the magistrate judge's decision to grant in part petitioner's request for discovery under § 1782).

         A. Continued Availability of Section 1782 Discovery

         Respondents argue that Petitioner is no longer entitled to any Section 1782 discovery in this action. They contend that "Petitioner cannot meet the burden of establishing that he is in a position to use the evidence from these proceedings in a Spanish action," (Resps.' Opp. to Pet.'s Obj. [Doc. # 151] at 10 (internal quotations omitted)), because the court in the Spanish litigation, which formed the basis for Petitioner's Section 1782 request, "unequivocally denied Petitioner's ability to use Respondents' discovery [in that litigation], holding that 'the admission of more documentary evidence is not appropriate'" during a January 2019 hearing, (Resps.' Obj. at 13 (quoting Aff. of Felix J. Montero [Doc. # 152] ¶ 35)). Therefore, Respondents argue, any evidence obtained through these Section 1782 proceedings is no longer "for use in" the Spanish litigation, and the statutory requirements of Section 1782 discovery are no longer satisfied. See 28 U.S.C. § 1782 (requiring, among other things, that discovery be "for use in a foreign proceeding or international tribunal").

         According to Respondents, this development renders Petitioner's objection regarding withheld documents moot, because he is no longer entitled to any additional discovery from Respondents under Section 1782. (Resps.' Opp. to Pet.'s Obj. at 1). Respondents also contend that the ruling regarding the provision of discovery to the CNMV was legal error, arguing that Judge Spector should have found good cause to prohibit Petitioner from providing Section 1782 discovery to the CNMV because the requirements of Section 1782 are no longer met. (Resps.' Obj. at 13-14.)

         Respondents' argument relies on their contention that Petitioner is no longer able to "use" any discovery obtained through these proceedings in the Spanish litigation as a result of the Spanish Court's January 2019 ruling. But as Judge Spector noted, the "for use" requirement of Section 1782 is not as narrow as Respondents suggest. In ruling on applications under Section 1782, district courts "should not consider the admissibility of evidence in the foreign proceeding." Brandi-Dohrn v. IKB Deutche Industriebank AG, 673 F.3d 76, 82 (2d Cir. 2012). Instead, courts should focus "on the practical ability of an applicant to place a beneficial document-or the information it contains-before a foreign tribunal." In re Accent Delight Int'l Ltd., 869 F.3d 121, 131 (2d Cir. 2017). In the Section 1782 context, the Second Circuit has "relied on the plain meaning of 'use' as indicating 'something that will be employed with some advantage or serve some use in the proceeding-not necessarily something without which the applicant could not prevail.'" Id. at 132 (internal citation omitted).

         Judge Spector concluded that "the Spanish Court's ruling that the § 1782 discovery is inadmissible does not foreclose Petitioner from using the discovery" in that proceeding because Petitioner has the opportunity to place the information contained in that discovery before the Spanish Court by using those documents to, for example, "prepare witnesses, craft questions, and present his case." (Ruling on Mots, for Permission and Protective Order at 8). In light of the Second Circuit's clear indication that the "for use in" a foreign proceeding requirement is not an admissibility requirement, Respondents have not demonstrated that Judge Spector's ruling on this question was in error.

         Respondents also argue that even if the statutory requirements of Section 1782 discovery are met, the Court nonetheless should use its discretion to decline to permit continued discovery because the Spanish Court is not receptive to U.S.-based discovery. (Resps.' Opp. to Pet.'s Obj. at 10-11.) Courts may use discretion to deny "[S]ection 1782 applications where, although the statutory requirements of [S]ection 1782 were met, the twin goals of the statute were not." Brandi-Dohrn, 673 F.3d at 83. And in using that discretion, a "court presented with a § 1782(a) request may take into account... the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance." Intel Corp. v. Advanced Micro Devices, Inc., 541 U.S. 241, 264 (2004). But in ruling on Petitioner's initial Section 1782 application, this Court already considered that factor and rejected Respondents' argument absent any specific indication that the Spanish Court is unreceptive to "discovery gathered abroad." (Ruling on Resps.' Mot. to Quash and Pet.'s Mot. to Compel [Doc. # 55] at 8.) Because the January 2019 statement of the Spanish Court does not specifically address that court's receptivity to foreign discovery, the Court declines to reconsider its weighing of the Intel factors.[1]

         Thus the January 2019 statements of the Spanish Court indicate neither that Petitioner's objection regarding the withheld documents is moot, nor that Judge Spector's finding that Respondents had not demonstrated good cause why documents should not be shared with the CNMV was in error.

         B. Production of Withheld Documents

         Following efforts to meet and confer to resolve pending discovery disputes, Petitioner moved for an order compelling Respondents to produce certain documents. Petitioner objects to Judge Spector's ruling on that motion on several grounds. First, he argues that Judge Spector "erred when he declined to hold that respondents had failed to perfect their privilege claims, because their privilege log was untimely and deficient." (Pet's Obj. at 1.) Second, Petitioner argues that "Judge Spector erred as a matter of law when he declined to rule that respondents had failed to discharge their burden to demonstrate that the withheld documents were privileged" because "the privilege log did not include any detail establishing that the withheld documents were created for the purpose of rendering legal advice." (Id.) Third, Petitioner argues that even if Respondents' privilege logs and claims were sufficient, "they should have been ordered to produce two categories of documents as a matter of law": 1) the "Director Documents," which consist of "communications between Codere directors and attorneys at Linklaters, who rendered advice to directors of Codere concerning board matters (including respondents), as well as withheld communications involving other Codere advisors and employees"; and 2) the "G3M Documents," which consist of "respondents' communications with G3M (a third-party consulting firm retained by Codere as an independent contractor)" after January 12, 2018. (Id. at 2.)

         1. Timeliness ...

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