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United States District Court, S.D. New York

December 8, 2004.


The opinion of the court was delivered by: CONSTANCE MOTLEY, Senior District Judge


Defendant requests that this court set aside Magistrate Judge Peck's October 1, 2004 privilege ruling regarding document PDV 122351. 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

  During the course of document production, defendant produced document PDV 122351 to plaintiff. Defendant subsequently asked plaintiff to return the document on the grounds that it was protected by attorney-client privilege and had been produced inadvertently. On September 9, 2004, plaintiff submitted a letter to Magistrate Judge Peck challenging defendant's claim that the document was protected by attorney-client privilege. At a hearing on September 13, 2004, Magistrate Judge Peck set the following schedule to address the dispute: plaintiff was instructed to submit a privilege challenge by September 15, 2004, defendant was instructed to respond by September 22, 2004, and plaintiff was instructed to reply by September 24, 2004. See 9/13/04 Tr. at 52.

  During a telephone conference on September 23, 2004, Magistrate Judge Peck indicated that based on what defendant had submitted thus far, he was not prepared to find that the document was attorney-client privileged. See 9/23/04 Tr. at 19. He provided defendant an opportunity, however, to submit additional information in support of its attorney-client privilege claim by September 29, 2004. Id. at 21-22.

  On September 29, 2004, defendant submitted a Declaration of Ms. Dolores Dobarro, an attorney currently employed by defendant and formerly employed by the Venezuelan Ministry of Energy and Mines (MEM), which stated that the contents of the document in question did indeed contain legal advice. Declaration of Dolores Dobarro of 9/29/04. At a hearing on October 1, 2004, Magistrate Judge Peck ruled that the document PDV 122351 was not protected by attorney-client privilege, and that it was therefore discoverable by the plaintiff. Specifically, Magistrate Judge Peck noted that the burden was on the defendant to establish such privilege, and found that the Declaration of Ms. Dolores Dobarro was insufficient to support such a finding. In explaining this finding, Magistrate Judge Peck stated:

The burden is on the defendant. . . . This document, which could be legal advice or could be business advice, you have not upheld the privilege with respect to it. . . . I gave you at the last conference an opportunity to, since this is a serious matter, come up with an affidavit from the author, the recipient, or somebody at PDVSA involved in the situation who could say that it was or wasn't and what the intent was . . . To have somebody merely because they are an MEM employee say, . . . I can read this and I know what must have been going on, is insufficient to uphold the privilege. . . . While force majeure is a legal sounding term, there are obviously business implications. This memo could very well be, and almost sounds like . . . we want the MEM to declare force majeure, let's go lobby the MEM because that is going to be good for our business, that's at least one interpretation of this memo, and absent something that throws it over clearly into the legal side and not the business side, the privilege is not sustained.
See 10/1/04 Tr. at 17-19.

  Defendant objects to this ruling on the grounds that PDV 122351 is a confidential communication between the former deputy general counsel of PDVSA and an executive of PDVSA, written for the purpose of rendering legal advice to PDVSA. As such, defendant argues, the document is protected by attorney-client privilege.

  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 nondispositive 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

  This court must determine whether Magistrate Judge Peck's privilege ruling as to document PDV 122351 was clearly erroneous or contrary to law. As Magistrate Judge Peck noted during the October 1, 2004 hearing, there were several possible interpretations of document PDV 122351. Defendant was given an opportunity to provide additional support for the position that the document provided legal, as opposed to business, advice, and that it was therefore protected by attorney-client privilege. Based on the additional material provided by defendant, Magistrate Judge Peck found that defendant did not meet its burden in proving that the document contained legal advice, and that the document was therefore not privileged.

  As noted above, where there are two possible and competing views of the evidence, a finding of one of those views over the other cannot be clearly erroneous. Magistrate Judge Peck was clearly acting within his discretion in ruling as he did.

  V. Conclusion:

  Based on the broad discretion afforded magistrate judges when resolving discovery disputes, this court finds that Magistrate Judge Peck was well within his discretion by resolving the instant discovery dispute as he did. At minimum, this court finds that Magistrate Judge Peck was not clearly erroneous in ruling as he did with respect to document PDV 122351. Magistrate Judge Peck's privilege ruling regarding document PDV 122351 of October 1, 2004, is therefore hereby affirmed over defendant's objection.



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