DoubleLine Capital LP et al v. Odebrecht Finance, Ltd et al
OPINION AND ORDER: For the reasons stated above, defendants' protective order motion as to RFP 5 (Dkt. No.130)is GRANTED. Plaintiffs' letter-motion for an order compelling discovery (Dkt. No. 167) is DENIED as moot, as the relief reque st has already been granted. The Clerk of Court is respectfully directed to file this Opinion and Order under seal, at the "selected parties" viewing level, such that only the attorneys appearing for the parties, and court personnel, may view it. By separate order, the Court will give the parties an opportunity to submit proposed redactions before this Opinion and Order is filed in public view. (Signed by Magistrate Judge Barbara C. Moses on 9/23/2021) (rro)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
DOUBLELINE CAPITAL LP, et al.
-againstODEBRECHT FINANCE, LTD., et al.,
17-CV-4576 (GHW) (BCM)
OPINION AND ORDER
BARBARA MOSES, United States Magistrate Judge.
Before the Court are: (1) a motion filed by defendants Construtora Norberto Odebrecht,
S.A. (CNO), Odebrecht Engenharia E Construção S.A. (OEC), and Odebrecht, S.A. - Em
Recuperação Judicial (OSA) (collectively Odebrecht), dated November 12, 2020 (Def. Mot.) (Dkt.
No. 130), seeking a protective order with respect to plaintiffs' discovery requests for documents
and data from two file systems called "Drousys" and "MyWebDay" (sometimes rendered
"Mywebday B"); and (2) a letter-motion filed by plaintiffs DoubleLine Capital LP, DoubleLine
Income Solutions Fund, and DoubleLine Funds Trust (collectively DoubleLine), dated January 5,
2021 (Pl. Ltr.) (Dkt. No. 167), seeking an order compelling the production of documents
responsive to certain other discovery requests.
In their brief in support of their protective order motion (Def. Mem.) (Dkt. No. 131),
defendants argue that they cannot produce documents or data from Drousys or MyWebDay
because "doing so would violate applicable foreign law, including Defendants' ongoing obligations
to multiple foreign prosecutors and decisions of Brazilian courts." Def. Mem. at 1. In their lettermotion to compel, plaintiffs argue that defendants have failed to produce to them any of the other
documents they previously provided to law enforcement agencies in the United States and
elsewhere, despite a previous order from this Court compelling them to do so. Pl. Ltr. at 1.
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For the reasons that follow, defendants' protective order motion will be granted, and
plaintiffs' motion to compel will be denied.
This securities fraud action had its genesis in a long-running, international bribery scheme,
during which defendants bribed "government officials in Brazil and at least 12 other countries in
order to influence the award of large construction contracts" to themselves. Third Amend. Compl.
(TAC) (Dkt. No. 61) ¶ 62. Defendants have since admitted their criminal conduct in multiple
jurisdictions. The sections below describe the parties involved, and recount the ongoing foreign
investigations, only to the extent relevant to the pending motions.
Defendant OSA is a Brazilian corporation that "through various subsidiaries and operating
entities, conducts business in the construction, engineering, infrastructure, chemicals, utilities and
real estate businesses in Brazil and throughout 27 other countries, including the United States."
TAC ¶ 30. Defendant CNO, an OSA affiliate, was Latin America's "largest engineering and
construction company," and it was also "one of the largest such companies in the world." Id. ¶ 36.
Defendant OEC, an "integral subsidiary of Odebrecht," became the "'direct controller' of CNO on
March 31, 2015," and since then, "CNO has essentially become an empty shell and OEC
substituted itself in as the replacement to CNO in all respects." Id. ¶¶ 39-40.
Plaintiffs – a group of affiliated investment advisors and funds formed under the laws of
Delaware and Massachusetts – purchased a "significant quantity of two bonds" issued by OSA at
prices close to par between May 2013 and March 2015. TAC ¶¶ 12-14, 25-26, 230.
The Underlying Bribery Scheme
In or around 2006, defendants created a standalone division of OSA called the "Division
of Structured Operations," which plaintiffs allege "was created for the sole purpose of functioning
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as a 'bribe department' that made illicit payments to governmental officials in exchange for the
receipt of lucrative public contracts by CNO." TAC ¶ 64. The then-CEO of OSA, Marcelo
Odebrecht, later admitted that "between 0.5% and 2.0% of [OSA's] revenue was directed to illicit
bribes." Id. ¶¶ 66-67.
The Division of Structured Operations was able to conceal these "massive illicit payments"
by omitting them from CNO's and OSA's formal accounting records, where they would have been
reflected in their financial results and also would have been reported to external auditors. TAC
¶¶ 68-69. Instead, it "tracked these expenses on two 'shadow' systems that could only be accessed
by members of the Division." Id. One such system, called MyWebDay, "was used for making
payment requests, processing payments and generating spreadsheets tracking all illicit bribe
payments." Id. The other system was called Drousys and "allowed members of the Division of
Structured Operations to communicate with each other and other co-conspirators using secure
emails and instant messages." Id.
Lava Jato Investigation and the Brazilian Leniency Agreement
In or around 2014, Brazilian authorities began investigating suspected corruption of
another Brazilian multinational corporation called Petróleo Brazileiro S.A., better known as
Petrobras. TAC ¶ 81. The investigation, initially covert, was called "Lava Jato," which translates
to "Operation Carwash," and "did not originally focus on Odebrecht or CNO." Id. 1
On December 1, 2016, Odebrecht and the Ministério Público Federal do Brasil, which is
Brazil's Federal Prosecutor's Office (MPF), entered into a Termo de Acordo de Leniência
Though not initially the target of the corruption investigations, OSA was directly embroiled in
the bid-rigging scheme involving Petrobras. Between 2004 and 2012, OSA made illicit "payments
to, and for the benefit of, foreign officials, including Brazilian politicians and Petrobras executives
and employees, in order to secure contracts with Petrobras." See Plea Agreement, United States v.
Odebrecht, S.A., No. 16-CR-643 (RJD) (E.D.N.Y. Dec. 21, 2016), ECF No. 10, Ex. 1, ¶ 33. More
specifically, OSA met with other construction companies in order "to evaluate and divide up future
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(Leniency Agreement or Agreement), Kessler Decl. (Dkt. No. 133) Ex. 1 (Dkt. No. 133-1),
intended to "preserve the company's existence" while "preventing the occurrence of illicit acts"
and assisting prosecutors to pursue "other suspected natural and legal persons." Leniency Ag. at
1. The Agreement required Odebrecht to make various factual admissions related to the bribery
scheme (which appear in annexes to the Agreement), provide relevant materials to the MPF,
identify participants in the scheme, describe the roles of those participants, and cooperate with the
MPF in its ongoing investigations. Id. at 4-5. 2 The Agreement specifies that its content (and all
statements and documents produced in connection with it) are "of restricted access." Id. at 14. The
Agreement "may be terminated" if Odebrecht fails to comply. Id. at 15.
The rules provide, among other things, that
contracts for Petrobras projects" among themselves. Id. ¶ 34. Once it was decided which company
or companies would be responsible for a given project (and the price Petrobras felt was
appropriate), it was agreed among the co-conspirators that only that company would "present a
qualifying bid," while the other companies "would present proposals that would ensure the
predetermined company's winning bid." Id.
The Leniency Agreement was "part of a global agreement coordinated by the competent
authorities of the Brazilian, American and Swiss jurisdictions," pursuant to which Odebrecht
agreed to pay, globally, the equivalent of R$3,828,000,000 (approximately $743 million USD).
Leniency Ag. at 7. All of the Brazilian documents submitted to this Court by defendants (as well
as documents from other non-English speaking jurisdictions) are accompanied by certified
translations. Plaintiffs have raised no objection to the authenticity of the documents or to the
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Odebrecht's Other Agreements with Foreign Prosecutors
In addition to the MPF, Odebrecht entered cooperation agreements with several other
foreign authorities in connection with the bribery scheme. For example, it entered into a
Cooperation Agreement with the Fiscalía General del Estado (the General Prosecutor of Ecuador),
in which the General Prosecutor was granted access to the Systems. Vinueza Op. (Dkt. No. 138)
¶¶ 4-6. According to Ecuadorian attorney Emiliano Javiar Donoso Vinueza, "all information
contained in the Cooperation Agreement, along with all information [Odebrecht] provided to the
General Prosecutor of Ecuador as a result of the Cooperation Agreement, is confidential according
to Ecuadorian law and must not be published, shared or used for any reason other than furthering
the Cooperation Agreement." Id. ¶ 4. In particular, Vinueza explains, Article 494 of Ecuador's
Criminal Code provides that "all actions related to effective cooperation must be kept secret and
kept out of judicial proceedings." Id. ¶ 7. Vinueza further asserts that any violation could result in
"harsh consequences, including termination of the Cooperation Agreement and its protections, and
criminal prosecutions." Id. ¶ 4.
Odebrecht also entered into a cooperation agreement with the Ministério Público del Perú,
(Public Ministry) which is the public prosecution office of Peru. In a letter addressed to CNO,
written by Peruvian prosecutors, they say that the information provided to the Public Ministry as
part of the "special effective collaboration process" is confidential (based on a "court ruling"), and
that in order to access that confidential information, "the specific international judicial cooperation
mechanisms would have to be operated – by the relevant central authority – for the competent
court to determine whether or not the submission of what is requested by the judicial authority of
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the United States [is] within the orders of our domestic law." Kessler Decl. Ex. 2 (Dkt. No. 1332) at 2.
In addition, Odebrecht entered into a leniency agreement with the Procuradoría General
de la República, which is the prosecutor's office in the Dominican Republic. See Valdez Decl.
(Dkt. No. 136) ¶ 3. According to Dominican attorney and law professor Robert Valdez, "there are
several restrictions in the Dominican Republic that prevent Defendants from providing . . . any
information originated from the Drousys and/or MyWebDay systems and/or the evidence provided
by Odebrecht related to the Leniency Agreement to third parties, including the Plaintiffs in this
matter," which are "mainly set forth in articles 290 and 291 of the Dominican Republic Criminal
Procedure Code." Id. ¶ 4.
Finally, Odebrecht entered into an agreement with prosecutors in Mozambique. See Rocha
Decl. (Dkt. No. 137) ¶ 4. Mozambican Attorney Paula Duarte Rocha asserts that "there are
restrictions in Mozambique that prevent Defendants from providing the Drousys and/or
MyWebDay systems to third parties, including the Plaintiffs in this matter," as "set forth in an
agreement between certain of the Defendants and the General Attorney Office." Id. Producing
these file systems would result in a "material risk that they would face harsh consequences." Id.
Brazilian Court Decisions
In their protective order motion, defendants rely on a series of decisions by Brazilian courts
directly relating to Odebrecht's Leniency Agreement with the MPF. Below I summarize the
Brazilian judicial decisions most relevant to the motion.
Decision by the Brazilian Federal Supreme Court dated May 30, 2017
In 2017, parties affiliated with Odebrecht requested that the Brazilian Federal Supreme
Court (the highest court in Brazil) "extend the secrecy imposed on [testimony and corroborating
evidence] linked to plea bargaining agreements, on the grounds that restricting the disclosure of
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their contents is necessary for the viability of new agreements that would be entered into with
foreign authorities." Kessler Decl. Ex. 3 (Dkt. No. 133-3) at 1. On May 30, 2017, because of the
"possibility of concrete damage to the negotiations" with foreign officials should the evidence "
rendered in the respective plea bargaining agreements [be] made public," the court granted
Odebrecht's request "to keep under secrecy the terms of [the testimony and corroborating evidence]
rendered in the plea bargaining agreements signed with the Federal Prosecutor's office, as of June
1, 2017, until further deliberation according to the content of the replies from the foreign
authorities regarding measures related to the ascertainment of the narrated facts." Id. at 2.
Decisions of the Curitiba Court
Proceedings conducted before the 13th Federal Court of Curitiba in Brazil (the Curitiba
Court) and the decisions rendered by that court are central to the issues raised in defendants'
protective order motion,
See Sealing Mot. (Dkt. No. 129) at
2; Barros Pimentel Op. (Dkt. No. 140) ¶ 5; Supp. Kessler Decl. (Dkt. No. 146) Ex. 4 (Dkt. No.
146-1) (March 26, 2010 directive), at 7. Caio Farrah Rodriguez and Bruno Andre Bredda Carrara,
who are partners at the Brazilian law firm Barros Pimentel Alcantara Gil & Rodriguez (which
assisted Odebrecht entities in negotiating the Leniency Agreement), explain that
Barros Pimentel Op.
¶ 5. The relevant orders of the Curitiba Court, discussed below, were filed in this Court under seal,
viewable only by the parties and by Court personnel.
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Sealed Kessler Decl. Ex. A (Dkt. No. 135-1).
Supp. Sealed Kessler Decl. (Dkt. No. 148) Ex. L (Dkt. No.
Following this Court's order scheduling defendants' protective order motion (Dkt. No. 122),
Kessler Decl. Ex. F (Dkt. No. 135-6).
Id. at 4-5.
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Sealed Kessler Decl. Ex. G (Dkt. No.
135-7), at 2.
Id. at 3.
see Sealed Kessler Decl. Ex.
H (Dkt. No. 135-8),
Id. at 3. 3
Summing up the decisions of the Brazilian Supreme Federal Court and the Curitiba Court,
Barros Pimentel opines that Odebrecht is "prevented from providing to [plaintiffs in this action],
directly or indirectly, access to the contents of its copy of the Systems, either for generic or specific
searches, including information and evidences contained therein, for any purpose other than
compliance with the obligations and prerogatives of [Odebrecht] set forth in the Leniency
Agreement itself, under the penalty of violation thereof." Barros Pimentel Op. at 7-8.
U.S. Plea Agreement
On December 21, 2016, OSA entered into a plea agreement in the Eastern District of New
York. TAC ¶ 272. "Pursuant to the Plea Agreement, OSA: 1) pleaded guilty to violating the anti-
Sealed Kessler Decl. Ex. H, at 3-4.
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bribery provisions of the Foreign Corrupt Practices Act (15 U.S.C. § 78dd-3); 2) agreed to an
independent compliance monitor to oversee its operations; and 3) agreed to pay a massive criminal
penalty of $2.6 billion." TAC ¶ 272. The Plea Agreement included a stipulated "Statement of
Facts" (SOF) outlining the bribery scheme, which OSA agreed not to challenge. TAC ¶¶ 273-74;
see Plea Agreement, U.S. v. Odebrecht, ¶ 28; id. Ex. 1 (SOF) at 1. In the Statement of Facts, OSA
admitted that it (together with its co-conspirators) "paid approximately $788 million in bribes in
association with more than 100 projects in twelve countries." SOF ¶ 20. In return, OSA and its coconspirators received "ill-gotten benefits" of "approximately $3.336 billion." Id. ¶ 23.
In the TAC, plaintiffs allege that OSA actually paid more than $788 million – as much as
$3.3 billion – in bribes from 2006 through 2014, relying on the testimony of Hilberto Mascarenhas
Silva (head of Odebrecht's Division of Structured Operations) to Brazilian prosecutors. TAC ¶ 72.
Relevant Procedural History
Plaintiffs commenced this action on June 16, 2017, alleging violations of the federal
securities laws and pendent state law. Specifically, they alleged that when defendant CNO sold the
bonds at issue, it portrayed itself in the Offering Memoranda used to sell the bonds and in the
accompanying financial statements (as well as in other public statements) as being "extraordinarily
successful in obtaining . . . large public contracts based on its business skills, expertise and
efficiencies," when in reality, its "success" was grounded in an illegal bribery scheme. Compl.
(Dkt. No. 1) ¶¶ 3-4. Unaware of the bribery scheme, plaintiffs bought a substantial number of OSA
bonds. Id. ¶ 5.
After plaintiffs amended their complaint twice, on September 1, 2017 (Dkt. No. 26) and
November 21, 2017 (Dkt. No. 41), defendants moved to dismiss. (Dkt. No. 49.) On August 8,
2018, the Hon. Gregory H. Woods, United States District Judge, granted in part and denied in part
defendants' motion, while granting plaintiffs leave to replead those claims that he dismissed.
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DoubleLine Capital LP v. Odebrecht Fin., Ltd., 323 F. Supp. 3d 393, 446 (S.D.N.Y. 2018)
(DoubleLine I). Plaintiffs filed the TAC on September 7, 2018. Defendants again moved to dismiss
pursuant to Fed. R. Civ. P. 12(b)(6) (Dkt. No. 75), and on September 23, 2019, Judge Woods
granted in part and denied in part that motion. DoubleLine Capital LP v. Construtora Norberto
Odebrecht, S.A., 413 F. Supp. 3d 187, 208 (S.D.N.Y. 2019) (DoubleLine II). Plaintiffs' remaining
claims include federal securities fraud claims pursuant to § 10(b) of the Exchange Act and Rule
10b-5 against CNO and OEC; a claim pursuant to § 20(a) of the Exchange Act against OSA; and
state law claims for fraud and negligent misrepresentation. Id.
On October 28, 2019, Judge Woods referred the case to me for general pretrial
management. (Dkt. No. 87.) Since then, the parties have been engaged in fact discovery.
On September 1, 2020, plaintiffs filed a letter-motion requesting a pre-motion conference
regarding their contemplated motion to compel the production of documents. (Dkt. No. 114.)
Specifically, they sought an order directing defendants to produce documents responsive to
plaintiffs' Requests for Production (RFPs) 1, 3, 4, and 5. RFP 1 sought "production of all
documents provided to the United States Department of Justice or the United States Attorney's
Office for the Eastern District of New York in connection with their investigation of the
Defendants." (Id. at 2.) RFPs 3 and 4 sought "production of all documents provided to 'any
governmental or other regulatory agency or panel in connection with any investigation performed
by those entities of any of the [defendants], including but not limited to the 'Lava Jato' investigation
by the Federal Police of Brazil.'" (Id. at 3.) Finally, RFP 5 sought production of all documents
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stored on the Drousys system concerning "any payments made to political parties, foreign officials
or corporate executives (or their representatives or agents)." (Id.)
Defendants responded on September 4, 2020, that as to RFPs 1, 3, and 4, they had not
"refused to produce responsive documents," and were willing to do so, as long as they were not
required to "specifically identify which documents were provided to the Department of Justice or
other regulators, as requested by the U.S. Attorney's Office." (Dkt. No. 115, at 2.) As to RFP 5,
however, defendants objected to production entirely, because "the relevant information sought by
Plaintiffs was already admitted to in connection with Defendants' 2016 guilty plea and related
statement of facts, as well as the answer filed in this case, and, critically, because production of
the Drousys system would be in violation of applicable Brazilian law or orders and/or Defendants'
leniency agreement with Brazilian or other applicable authorities." (Id. at 3.)
On October 9, 2020, the parties filed a joint letter (Dkt. No. 120), enclosing correspondence
from the Brazilian Federal Prosecutor's Office dated August 21, 2020 (Dkt. No. 120-1). The MPF
wrote: "We hereby confirm that 'Drousys' and 'Mywebday B' systems were delivered to the MPF
for custody in virtue of the Leniency Agreement signed with company Odebrecht S/A. The
information and documents concerning the systems are kept confidentially and can only be
accessed to support investigations conducted by competent authorities, including to avoid
jeopardizing ongoing investigations, in Brazil and abroad. The Leniency Agreement provides for
a specific procedure for sharing such information with other authorities." (Id.)
After a discovery conference on October 13, 2020, I issued an order on October 14, 2020
(October 14 Order) (Dkt. No. 122), directing defendants to produce all nonprivileged documents
responsive to RFPs 1, 3, and 4 (as narrowed by plaintiffs), but specifying that defendants "need
not make this production separately from their production in response to plaintiffs' remaining
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RFPs, and need not specifically identify which documents are responsive to" RFPs 1, 3, and 4.
Oct. 14 Order at 1. As to RFP 5, I directed defendants to file a protective order motion supported
by "information of sufficient particularity and specificity to allow the Court to determine whether
the discovery sought is indeed prohibited by foreign law." Id. at 2.
On October 27, 2020, defendants filed a letter-motion (Oct. 27 Ltr.) (Dkt. No. 125)
requesting that the October 14 Order be "revised" to "expand the scope of Defendants' forthcoming
motion for a protective order" to include plaintiffs' RFPs 1, 3, and 4. Oct. 27 Ltr. at 1. Defendants
explained that after the October 13 discovery conference, and "in the course of preparing the
Protective Order Motion," they "received further clarification from Brazilian counsel that
applicable Brazilian law, including binding precedent from Brazil's Supreme Federal Court, which
prevents Defendants from producing materials related to potential misconduct that occurred in
foreign countries (i.e., outside Brazil), applies broadly to encompass documents previously
produced to the United States Department of Justice and other government regulators and
prosecutors." Id. at 1.
Plaintiffs opposed the letter-motion (which they correctly construed as a motion for
reconsideration), arguing that defendants did not meet the standard for reconsideration set out in
Local Civil Rule 6.3. (Dkt. No. 126.) Largely agreeing with plaintiffs, I denied the letter-motion.
(Dkt. No. 127.)
Defendants filed their motion for a protective order on November 12, 2020, accompanied
by their memorandum of law; three declarations signed by Thomas S. Kessler, one of their
attorneys in this action, attaching the Leniency Agreement, various orders of the Curitiba Court,
and related documents; the Valdez and Rocha Declarations; the Vinueza and Barros Pimentel
Opinions; and a statement by Brazilian attorney and law professor Marta Saad (Saad Stmt.) (Dkt.
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No. 142), who opines that if defendants were forced to produce the Systems or their contents to
plaintiffs in this action, defendants would face "serious consequences, including the breach of the
Leniency Agreement and civil and criminal proceedings," and that "the Brazilian public interest
would be hindered." Saad Stmt. at 4. 4
Also on November 13, 2020, defendants filed a letter (Nov. 13 Ltr.) (Dkt. No. 144)
confirming that although they were "prepared to commence production" of certain documents
responsive to RFPs 1, 3, and 4, they were "unable to comply with the remainder of the Court's
Order in respect of the RFPs without violating applicable Brazilian and other foreign law,
including binding decisions of the Brazilian Federal Supreme Court" and other foreign
jurisdictions. Nov. 13 Ltr. at 1. According to defendants,
Id. at 2.
On December 2, 2020, plaintiffs filed a letter-motion (Dkt. No. 150) suggesting that
defendants had failed to comply with this Court's orders requiring them to produce all documents
Sealed Kessler Decl. Ex. H, at 3-4, Odebrecht filed
those orders – along with the unredacted version of its brief and the unredacted versions of the
declarations and opinions discussing the Curitiba Court orders – under seal. Redacted versions of
the sealed documents, with the confidential portions excised, were simultaneously filed in public
view. The parties followed the same convention when filing their opposition and reply papers.
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 15 of 31
responsive to RFPs 1, 3, and 4. Because that letter-motion did not request any specific relief (and
otherwise failed to comply with my individual practices), I denied it. (Dkt. No. 153.)
On December 14, 2020, plaintiffs filed a memorandum of law (Pl. Opp.) (Dkt. No. 160) in
opposition to defendants' motion for a protective order. Plaintiffs did not submit any analyses or
opinions from foreign lawyers or experts as to the interpretation, reach, or implications of the
Leniency Agreement or the Brazilian court decisions upon which defendants rely.
On January 5, 2021, plaintiffs filed their letter-motion "to compel the production of all
documents responsive to Plaintiffs' Requests for Production Nos. 1, 3, and 4." Pl. Ltr. at 1.
Plaintiffs seek an order from this Court (1) "enforcing the Court's October 14, 2020 and October
30, 2020 Orders," and (2) "compelling production of all documents responsive to Plaintiffs' RFP
Nos. 1, 3, and 4." Id.
On January 8, 2021, defendants filed a reply brief (Def. Reply) (Dkt. No. 171) in further
support of their protective order motion. On the same day, they filed a letter in opposition to
plaintiffs' letter-motion (Def. Opp.) (Dkt. No. 172), asserting that plaintiffs do not seek "any new
or additional relief beyond that which the Court has already provided," and reiterating that they
are "unable" to fully comply with this Court's October 14 Order. Def. Opp. at 1-2. Plaintiffs filed
a reply letter (Pl. Reply) (Dkt. No. 176) on January 12, 2021.
I heard oral argument on both motions on January 25, 2021. 5
Fact discovery is currently set to conclude on November 1, 2021, with all discovery to be
completed by June 1, 2022. (Dkt. No. 185.)
The parties did not file the transcript of the oral argument (Tr.) on the electronic docket of this
action, but the Court was furnished a copy by the Southern District Reporters and has filed it under
seal. (Dkt. No. 188.).
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Defendants' Protective Order Motion
In support of their protective order motion, defendants argue that disclosure of the Drousys
and MyWebDay systems "would violate applicable foreign law, Brazilian judicial decisions and
cooperation agreements, including the Leniency Agreement" with Brazilian prosecutors, the May
30, 2017 Brazilian Federal Supreme Court decision, and the decisions of the Curitiba Court
summarized in Part I(E)(2) of this Opinion. Def. Mem. at 9, 12. Thus, they say, there is a "true
conflict" between domestic and foreign law as to the discoverability of the Systems. Id. at 9. The
remaining comity factors, according to defendants, also weigh in favor of precluding production
in this action because, among other things: any additional information to be gained from
production of the Systems "would be either cumulative or irrelevant"; plaintiffs' requests are
overbroad; the Systems originate outside the United States; production would violate important
Brazilian interests and could have a "chilling effect on future cooperation with foreign authorities";
defendants would run a substantial risk of civil and criminal liability (as well as liquidation) should
they fail to comply with Brazilian law; and there is no dispute as to defendants' good faith. Id. at
In their opposition brief, plaintiffs maintain that there is no "true conflict" between
American law and that of foreign jurisdictions, as required to trigger a comity analysis, because
such a conflict only occurs "when compliance with the regulatory laws of both countries would
be impossible." Pl. Opp. at 4 (emphasis added). Here, the conflict arises from what plaintiffs
characterize as defendants' less weighty "contractual" obligations to foreign prosecutors. Id. at 5.
Even assuming, arguendo, the existence of a true conflict, plaintiffs continue, the remaining
comity factors favor production of the Systems in this action because: "the information contained
in the Systems is directly probative of plaintiffs' claims"; the RFPs at issue are "narrow and
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specific"; although "the information did not originate in the U.S., neither did it originate in Brazil";
defendants fail to offer any "alternative means by which plaintiffs could obtain the Systems";
Brazil's interests are diminished by the fact that "no statute would be violated by the production,
and the alleged privacy requirements are purely contractual in nature"; there is no showing that the
supposed risks are "likely"; and plaintiffs did act in bad faith, in that they initially failed to mention
that they still possess a copy of the MyWebDay system. Id. at 12-24.
Plaintiffs' Letter-Motion to Compel
Plaintiffs, for their part, seek an order compelling the production of all non-privileged
documents responsive to RFPs 1, 3, and 4. They explain that on October 14, 2020, this Court
ordered defendants to produce the documents they previously produced to the DOJ and foreign
authorities; that on October 30, 2020, this Court denied defendants' motion for reconsideration;
but that defendants have taken the position, ever since November 12, 2020, that they are unable to
comply with the October 14 Order because Brazilian law supposedly forbids the production of any
documents (not just the Systems) previously provided to the MPF (including the documents also
provided to the DOJ). Pl. Ltr. at 1-2. Plaintiffs add that although defendants made an initial
production of documents in December 2020, they failed to produce "even a single document"
responsive to RFPs 1, 3, and 4. Id. at 3.
Defendants do not dispute plaintiffs' basic contention that they have failed to comply with
the October 14 Order regarding RFPs 1, 3, and 4. Rather, they argue, plaintiffs' request (seeking
an order compelling production) is duplicative of the relief plaintiffs already sought and received
when the Court issued that October 14 Order and then denied defendants' reconsideration motion.
Def. Opp. at 1-2. However, defendants assert that their December production was both extensive
(nearly 700,000 pages) and responsive, at least in part, to RFPs 1, 3, and 4, in that it included
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documents previously produced to the Receita Federal do Brazil, which they describe as the
"Brazilian IRS." Id. at 3. What they cannot do, they say, is provide plaintiffs with the same
documents they produced to the DOJ or to "other government regulators and prosecutors," as such
production is prohibited under Brazilian law. Id.
"[W]here the alleged obstacle to production is foreign law, the burden of proving what that
law is and demonstrating why it impedes production falls on the party resisting discovery." S.E.C.
v. Gibraltar Glob. Securities, Inc., 2015 WL 1514746, at *2 (S.D.N.Y. Apr. 1, 2015). To satisfy
this burden, "the party resisting discovery must provide the Court with information of sufficient
particularity and specificity to allow the Court to determine whether the discovery sought is indeed
prohibited by foreign law." Wultz v. Bank of China Ltd., 298 F.R.D. 91, 96 (S.D.N.Y. 2014)
(citations omitted). Among other things, that party must identify "the provisions of the foreign law,
the basis for its relevance, and the application of the foreign law to the facts of the case." Id.
(internal quotation marks and citation omitted).
While courts in the United States have "no legal obligation to give effect or deference to
the orders or holdings of a court of a foreign country, absent a specific treaty or legislative rule,"
they may do so "on the basis of comity." Exp.-Imp. Bank of U.S. v. Asia Pulp & Paper Co., 2009
WL 1055673, at *2 (S.D.N.Y. Apr. 17, 2009). Comity "is the recognition which one nation allows
within its territory to the legislative, executive or judicial acts of another nation, having due regard
both to international duty and convenience, and to the rights of its own citizens or of other persons
who are under the protection of its laws." In re Maxwell Comm'n Corp., 93 F.3d 1036, 1046 (2d
Cir. 1996) (quoting Hilton v. Guyot, 159 U.S. 113, 163-64 (1895)) (emphasis added); accord Exp.Imp. Bank of U.S., 2009 WL 1055673, at *2; see also Black's Law Dictionary 324 (10th ed. 2014)
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 19 of 31
(defining "comity" as "[a] practice among political entities (as countries, states, or courts of
different jurisdictions), involving esp[ecially] mutual recognition of legislative, executive, and
Federal courts, including in this district, view foreign court orders – as well as foreign
statutory or regulatory enactments – through the lens of comity. See, e.g., United States v. Portrait
of Wally, 663 F. Supp. 2d 232, 248-49 (S.D.N.Y. 2009) ("International comity requires recognition
of foreign actions, decrees, and proceedings that do not conflict with the interests or policies of the
United States." (quoting United States v. Portrait of Wally, 2002 WL 553532, at *9 (S.D.N.Y. Apr.
12, 2002)); Exp.-Imp. Bank of U.S., 2009 WL 1055673, at *1-2 (applying comity analysis to
Indonesian court's temporary, provisional injunction, which prevented defendants from "providing
statements or information regarding their respective assets");; Lindner Fund, Inc. v. Polly Peck
Int'l PLC, 143 B.R. 807, 809 (S.D.N.Y. 1992) ("It is settled that federal law recognizes decisions
of foreign courts on the basis of international comity."); Air-Prods. & Chemicals, Inc. v. InterChemical, Ltd., 2005 WL 196543, at *7 (E.D. Pa. Jan. 27, 2005) ("Cases involving comity issues
most often arise where a party seeks to enforce a final monetary judgment obtained in a foreign
jurisdiction in the United States. However, a judicial act need not be a final judgment to be granted
If the foreign law conflicts with domestic law, the court must perform a comity analysis
"to determine the weight to be given to the foreign jurisdiction’s law." Laydon v. Mizuho Bank,
See also In re Commodity Exchange, Inc., Gold Futures and Options Trading Litig., 2019 WL
1988525, at *4 (S.D.N.Y. May 6, 2019) (applying comity analysis to the "common law of England
and Wales" as it bears on the disclosure of certain information); cf. Bodner v. Banque Paribas, 114
F. Supp. 2d 117, 129-30 (E.D.N.Y. 2000) (concluding that recommendations contained within a
report issued by a French "informal historic commission" do not "provide a conflicting judicial,
legislative or executive act to which this Court could reasonably defer").
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 20 of 31
Ltd., 183 F. Supp. 3d 409, 413 (S.D.N.Y. 2016) (quotation marks and citations omitted).
Conversely, in the absence of a "true conflict," a comity analysis is "unnecessary." Gibraltar Glob.
Securities, 2015 WL 1514746, at *4.
"When evaluating a motion for a protective order to prevent discovery of documents and
information 'in the face of objections by foreign states,'" Strauss v. Credit Lyonnais, S.A., 249
F.R.D. 429, 438 (E.D.N.Y. 2008) (quoting Societe Nationale Industrielle Aerospatiale v. U.S. Dist.
Ct. for the Southern Dist. Of Iowa, 482 U.S. 522, 544 n.28 (1987)), courts follow the Restatement
(Third) of Foreign Relations Law § 442(1)(c), and consider the following factors:
the importance to the investigation or litigation of the documents or other
the degree of specificity of the request;
whether the information originated in the United States;
the availability of alternative means of securing the information; and
the extent to which noncompliance with the request would undermine important
interests of the United States, or compliance with the request would undermine the
important interests of the state where the information is located.
Laydon, 183 F. Supp. 3d at 419-20; Wultz, 298 F.R.D. at 96; Royal Park Invs., SA/NV v. Deutsche
Bank Nat'l Tr. Co., 2017 WL 7512815, at *10 (S.D.N.Y. Dec. 29, 2017). Courts in the Second
Circuit consider two additional factors:
the hardship of compliance on the party or witness from whom discovery is sought;
the good faith of the party resisting discovery.
Laydon, 183 F. Supp. 3d at 420; Wultz, 298 F.R.D. at 96; Royal Park Invs., 2017 WL 7512815, at
*10. The court may also consider "whether the person resisting discovery is a party to the
litigation," and whether the requirements of another country's privacy laws are "absolute." Laydon,
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 21 of 31
183 F. Supp. 3d at 420 (citing Tansey v. Cochlear Ltd., 2014 WL 4676588, at *2 (E.D.N.Y. Sept.
Production of the MyWebDay System is Moot and Not an Appropriate
Subject of the Protective Order
At the outset, the Court notes that defendants made a protective order motion as to all
documents requested in RFPs 5 and 6, which call for documents stored on the Drousys and
MyWebDay file systems, respectively. However, the Court's October 14 Order neither required
production of the MyWebDay system nor authorized a protective order motion with respect to it.
Moreover, the question of producing documents or data stored in MyWebDay is moot, because
the encryption keys needed to access the system have been destroyed. See Doubleline Capital LP
v. Odebrecht Finance, Ltd., 2021 WL 1191527, at *10 (S.D.N.Y. Mar. 30, 2021) (imposing Rule
37(e)(1) sanctions for defendants having intentionally destroyed the encryption keys).
Consequently, I evaluate the comity question only with respect to RFP 5.
Production of the Drousys System Conflicts with Specific Foreign Court
Defendants are correct that this case presents "a true conflict between domestic and foreign
law," Aerospatiale, 482 U.S. at 555; Gibraltar Glob. Securities, 2015 WL 1514746, at *4, as to
whether they may (or must) produce documents and data from the Drousys file system in this civil
litigation. As an initial matter, and as explained above, the fact that the conflict stems primarily
from a series of Brazilian court decisions – rather than a statute or regulation – does not mean that
there is no "true" conflict, nor that comity does not attach. Similarly, the fact that the foreign court
decisions on which defendants rely arose out of the Leniency Agreement (which plaintiffs
characterize as a "contractual agreement into which [defendants] willingly entered," Pl. Opp. at 4,
while defendants liken it to a "plea agreement" with the government, entitled to "special
solicitude," Tr. at 10) does not detract from the deference owed those decisions.
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 22 of 31
The language in the Leniency Agreement itself is somewhat difficult to parse and its
meaning may have been lost in translation at times. However,
Id.; see also Barros
Pimentel Op. ¶¶ 11, 15, 18, 26, 28(c), 30-31; Saad Stmt. ¶ 30 ("All [court] decisions confirm the
general understanding expressed in the previous sections that no parties with access to sensitive
information in the Leniency Agreement (including, therefore, Odebrecht) should grant access to
third parties to sensitive cooperation evidence outside the cases provided for in the agreement."). 7
In response, plaintiffs offer nothing but their own (American) lawyers' argument that the
Leniency Agreement was not intended, or should not be interpreted, to restrict Odebrecht's ability
to disclose documents and data from the copy of the Drousys system that remains in its physical
possession. See Pl. Opp. at 9
id. at 10 (arguing that although
Unsurprisingly, plaintiffs' interpretation of
which would as
a practical matter render Odebrecht's duty of confidentiality meaningless, is unsupported by the
As an exception to this rule, Odebrecht is permitted to "use the information to negotiate
agreements similar to the Leniency Agreement with foreign government authorities." Saad Stmt.
¶ 24 (citing § 5, cl. 21 of the Leniency Agreement). That exception does not apply here.
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 23 of 31
testimony of any qualified Brazilian lawyer or legal scholar. 8 Moreover, there is no dispute that
plaintiffs here have not gone through the procedures required by the Brazilian courts to request
access to the Drousys system. See Tr. at 34-35. Consequently, there is a direct conflict between
defendants' discovery obligations in the action before me and the court decisions in Brazil
restricting access to the discovery plaintiffs seek.
Although not necessary to the resolution of defendants' motion, I also note that production
of the Drousys system may run afoul of other foreign statutes and common law. For example,
articles 290 and 291 of the Dominican Republic Criminal Procedure Code may prohibit production
of documents disclosed to the Dominican Republic authorities during their criminal investigation.
Valdez Decl. ¶¶ 4, 6, 12. 9
The Comity Analysis Weighs Against Production
Because defendants have demonstrated the existence of a true conflict of law, the Court
turns to the comity analysis governed by § 442(1)(c) of the Restatement (Third) of Foreign
"Determination of a foreign country's law is an issue of law." Itar-Tass Russian News Agency v.
Russian Kurier, Inc., 153 F.3d 82, 92 (2d Cir. 1998); see also In re Vitamin C Antitrust Litig., 810
F. Supp. 2d 522, 540 (E.D.N.Y. 2011); Kim v. Co-op. Centrale Raiffeisen-Boerenleebank B.A.,
364 F. Supp. 2d 346, 349 (S.D.N.Y. 2005). In determining foreign law, however, courts "may
consider any relevant material or source," Fed. R. Civ. P. 44.1, including expert testimony, which,
although not required in every case, "remains the 'basic mode of proving foreign law.'" Jonas v.
Est. of Leven, 116 F. Supp. 3d 314, 330 (S.D.N.Y. 2015) (quoting Bigio v. Coca–Cola Co., 2010
WL 3377503, at *4 (S.D.N.Y. Aug. 23, 2010), aff'd, 675 F.3d 163 (2d Cir. 2012), and relying on
the testimony of defendants' Panamanian law expert to determine the effect of Panama's veilpiercing statute). See also, e.g., Royal Park Invs., 2017 WL 7512815, at *1 (noting that the parties
submitted "competing declarations from Belgian law experts" as to whether Belgian and European
Union privacy laws precluded the discovery sought). Here, as in Jonas, only defendants submitted
expert testimony to assist this Court in determining the foreign country's law.
It is unclear to the Court whether any court decision or statute in Mozambique actually prohibits
disclosure of the Systems. Attorney Rocha states broadly that "there are restrictions in
Mozambique that prevent Defendants from providing the Drousys and/or MyWebDay systems to
third parties," but cites nothing beyond a clause in the agreement between "certain of the
Defendants" and the Mozambican Attorney General's Office stating that the provisions of that
agreement shall remain confidential. Rocha Decl. ¶¶ 4-7 & Ex. A.
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 24 of 31
Relations Law. The first factor – the importance of the information sought to the litigation – weighs
in favor of production, though not as heavily as plaintiffs believe.
The information that plaintiffs seek is relevant to their claims and could be important to
the litigation, as is evident from Judge Woods's decisions on defendants' motions to dismiss. In
their brief, plaintiffs highlight several examples. For instance, when plaintiffs broadly alleged (in
their Second Amended Complaint (SAC) (Dkt. No. 41)) that defendants had paid nearly $800
million in bribes over a 15-year period, Judge Woods held that they failed to "sufficiently allege
that CNO's public statements" violated relevant accounting standards because they had not pled
"facts showing that CNO had any reason to believe that losses related to the bribery scheme were
more than a remote possibility at the time the company filed its financial statements." DoubleLine
I, 323 F. Supp. 3d at 446. In order to overcome this deficiency, the TAC specifies the dollar amount
of bribes paid per year, TAC ¶¶ 101, 115, and alleges that such a "widespread and dramatically
escalating scheme could not evade the notice of regulators indefinitely and was 'more likely than
not' to be exposed." TAC ¶ 102. The district judge found that these new allegations were sufficient
to remedy the deficiency and "adequately demonstrate that company officials thought the
possibility of detection was more than remote by 2009, triggering their obligation to footnote the
liability in any of the covered reporting periods." DoubleLine II, 413 F. Supp. 3d at 208.
The district judge also concluded, in DoubleLine I, that the SAC did not "identify which
illegally obtained contract revenues were reported in those financial statements and the
corresponding bribe payments that should have been reported as expenses," and therefore "fail[ed]
to plead with particularity CNO's violation" certain accounting standards. DoubleLine I, 323 F.
Supp. 3d at 447. In their TAC, plaintiffs corrected this deficiency by listing various bribes by year
and amount, including, for example, a "$23 million bribe to the former director of Supply and
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 25 of 31
Refining of Petrobras, Paulo Roberto Costa," paid in 2010 "to obtain the construction contract for
the Abreu e Lima Refinery in Brazil." TAC ¶ 75. In DoubleLine II, Judge Woods concluded that
this satisfied plaintiffs' pleading burden because – in contrast to the SAC, which provided only "an
aggregate amount of bribe payments made between 2001 and 2016" – the TAC "identifies at least
one $23 million payment in 2010 that CNO made in 2010 to a specific individual to secure a
construction contract for Brazil's Abreu e Lima Refinery." DoubleLine II, 413 F. Supp. 3d at 209. 10
Plaintiffs further note that the allegations contained in the SAC (including those that Judge
Woods found insufficient) largely came from the SOF, to which defendants stipulated in the
Eastern District. See Tr. at 35:10-17. The additional allegations in the TAC (which Judge Woods
found sufficient) came from "news reports based on what was going on in the Brazilian
investigation and things like that," Tr. at 35:18-22, which will likely not be admissible at trial.
During oral argument, plaintiffs explained more broadly that the "larger the scheme" they are able
to show, the stronger their case will be, both as to the accounting improprieties they allege and as
to scienter. See Tr. at 36, 40-41. Consequently, they argue, it may be crucial to their case to be able
to prove that Odebrecht paid $3.3 billion in bribes, as alleged, as opposed to $788 million, as
admitted in the SOF. Id. at 41-42.
Plaintiffs also point to Judge Woods's conclusion that the SAC "fail[ed] to identify which, if
any, revenue derived from unlawfully obtained contracts during the periods for which CNO's
financial figures were disclosed." DoubleLine I, 323 F. Supp. 3d at 447. In order to cure that
deficiency, plaintiffs alleged in the TAC that "governmental investigations and investigative news
reports have identified a number of contracts that CNO illicitly obtained through the Bribery and
Kickback Scheme, including CNO's construction contracts with Petrobras," TAC ¶ 107, and
included a chart of revenue received from the Petrobras contracts for each year from 2009 through
2013. Id. The district judge found this "more than adequate," explaining that plaintiffs had
"clarified that CNO obtained all of the Petrobras contracts through bribery," that they "listed CNO's
yearly revenue from those contracts between 2009 and 2013," and that the chart "clearly indicate[s]
the five years in which the contract yielded revenue that ought to have been separately reported in
CNO's financial disclosures." DoubleLine II, 413 F. Supp. 3d at 208-09.
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 26 of 31
Defendants do not deny that access to the Drousys system could assist plaintiffs in
establishing a more detailed picture of the bribes paid by defendants. Moreover, although
defendants offered a stipulation on this point, 11 plaintiffs found the language of the proposed
stipulation "kind of convoluted," explaining that they were not convinced that the jury would
understand it, and wondering aloud, during oral argument "why wouldn't they just stipulate to the
$3.3 billion[?]" Tr. at 37. I agree with plaintiffs that, while the proposed stipulation may ameliorate
the difficulties posed to plaintiffs' case by the unavailability of the Drousys system, it does not
eliminate them. Consequently, I conclude that the information contained in the Drousys system is
relevant to plaintiffs' claims and (depending on their ability to develop other sources for the
specific bribe amounts paid) potentially important to this civil litigation.
The second factor – the degree of specificity of the request – weighs slightly in favor of
defendants. Although RFP 5 (which seeks the production of all documents stored on the Drousys
system concerning "any payments made to political parties, foreign officials or corporate
executives (or their representatives or agents)") requests a "specific, discrete source of
information," see Gucci Am., Inc. v. Curveal Fashion, 2010 WL 808639, at *3 (S.D.N.Y. Mar. 8,
2010), the request is not "narrowly tailored" to obtain the information plaintiffs claim they actually
need. See Strauss, 249 F.R.D. at 440-41. In particular, rather than narrowly focus their requests on
the factual issues they are concerned about proving – for example, the specific bribes paid to
identified recipients – they asked for what is effectively the entire Drousys system, which
apparently consists of "terabytes" of data. Def. Reply at 8.
Defendants offered to stipulate that, inter alia, they would "not raise any claim or defense in this
action (or otherwise assert that any element of any claim asserted in Plaintiffs' complaint was not
met), on the basis [that] the total amount of the bribe payments during the relevant period was
anything less than $3.3 billion." Def. Mem. at 8.
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 27 of 31
The third factor – whether the information originated in the United States – weighs against
compelled production, as it is undisputed that Drousys (and MyWebDay) were hosted "on servers
owned by external service providers located in Switzerland and/or Sweden." Saad Stmt. ¶ 9.
Plaintiffs point out that the Systems were not hosted in Brazil, but they do not cite any authority
suggesting that this is a relevant consideration when evaluating the third comity factor.
The fourth factor – the availability of alternative means of securing the information – is
difficult for the Court to evaluate at this time. Defendants argue, with some force, that plaintiffs
have not yet attempted to seek the "underlying information" about the bribes from alternative
sources, such as testimony from "the recipients of alleged bribes, testimony from knowledgeable
former employees or third-party witnesses, and the myriad purported evidence referenced in the
operative complaint." Def. Reply at 7; see also Tr. at 14 ("plaintiffs have not served a single thirdparty subpoena in this case"). Plaintiffs respond, not unreasonably, that third-party subpoenas are
"in our plans" but "we were hoping to get the documents first." Tr. at 44. They add that, while
"other foreign governments" have copies of Drousys, they too will likely claim that their plea
arrangements with Odebrecht are confidential, and, in any event, "there's no place that we could
get it that would have less burden than Odebrecht to produce it." Id. at 44-45.
Defendants are correct, however, that the question is not whether plaintiffs can secure
Drousys itself from an alternative source; it is whether there are "alternative means of securing the
information." Wultz, 298 F. R.D. at 96 (emphasis added). Those means could include depositions
of individual Odebrecht witnesses; organizational depositions pursuant to Fed. R. Civ. P. 30(b)(6);
interrogatories or requests for admission; third-party document or deposition subpoenas; and,
potentially, a more helpful stipulation or series of stipulations from defendants, who assert that
they have "offered to discuss alternative methods of eliminating" the factual disputes to which the
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 28 of 31
information in the Drousys system would be relevant. Def. Reply at 7. Thus, on the relatively slim
record presented to the Court on the protective order motion, I conclude that the fourth factor
favors neither plaintiffs nor defendants.
The fifth factor, which goes to the heart of the international comity concerns underlying
the doctrine, weighs strongly against production. Whether or not plaintiffs agree with the public
policy choices made by the Brazilian authorities, it is clear from the Leniency Agreement itself,
(Dkt. No. 135-7 at 3.) Likewise, as Barros Pimentel explained, respecting the
confidentiality of the evidence submitted as part of the investigation is "imperative, especially so
[Odebrecht has] the means to conclude negotiations for executing agreements in other jurisdictions
and meeting their obligations of continuous cooperation and confidentiality assumed with foreign
authorities in the scope of agreements executed abroad, an objective recognized by the Federal
Prosecution as [a] public interest of Brazil." Barros Pimentel Op. ¶ 13.
In addition, as explained by attorney Saad, the Brazilian public interests at stake include,
most notably, "evidentiary leverage for the civil and criminal prosecution [by Brazilian authorities]
of other people involved in corruption." Saad Stmt. ¶¶ 15, 21. If Odebrecht were to disclose the
contents of the Drousys system to plaintiffs in this action, they would likely be required to do so
repeatedly, which would "jeopardize the investigative process and adversely affect the Brazilian
government's ability to pursue the malefactors and fight corruption in the country." Id. ¶ 51(c).
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 29 of 31
This would also have repercussions beyond the Odebrecht case, as it would "inform the entire
Brazilian business community that consensual solutions to corruption issues are unreliable," which
could cause "resistance to similar agreements in the future." Id. ¶ 51(a). In addition, Saad adds,
"every evidence of cooperation of the Leniency Agreement also matters directly to the seventyseven plea agreements." Id. ¶ 19; see also id. ¶ 51(d). 12
Likewise, the sixth factor – the hardship of compliance upon Odebrecht – weighs in
defendants' favor. Defendants have offered persuasive evidence, through the attestations of
Brazilian attorneys, that producing the Drousys system to plaintiffs in this action would risk
triggering civil and criminal liability and – perhaps – force Odebrecht into liquidation. For
example, attorney Saad opines that breaching the Leniency Agreement by violating its secrecy
clause "could result in termination of the agreement and Odebrecht would be subject to hundreds
of new litigations, in addition to bankruptcy liquidation." Saad Stmt. ¶ 51(b). 13 Saad further
explains that because the "content of the Systems refers to third parties . . . which are not signatories
to leniency agreements or similar agreements," sharing such information with plaintiffs could also
trigger tort liability to those third parties. Id. ¶ 51(e). Finally, there may be criminal consequences
for any of defendants' executive officers "responsible for deciding and/or making the delivery of
the Systems." Id. ¶ 51(f). Saad surmises, based on a similar case, that "the conviction of such
individuals would be likely." Id. Likewise, attorney Valdez opines that there is a "material risk"
The seventy-seven plea agreements were executed, confidentially, by "members and former
members of the Odebrecht Group" as part of the ongoing investigations. Kessler Decl. Ex. 3 at 2;
Saad Stmt. ¶ 51(d).
Barros Pimentel expands on this point, explaining that termination of the Leniency Agreement
"would subject [Odebrecht] to a set of sanctions and indemnifications that could cause it to be
bankrupt, including but not limited to . . . indemnity being charged by authorities that signed or
adhered to the agreement in amounts in excess of those provided by the agreement . . . injunctive
freezing of assets . . . penalties set forth by Law 8.429/1992 . . . declaration of unreliability for
bidding or entering into contracts with Brazilian public administration." Barros Pimentel Op. ¶ 42.
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 30 of 31
that defendants would "face harsh consequences" in the Dominican Republic, including civil
damages and possible criminal prosecution of the company and its former executives. Valdez Decl.
¶¶ 5, 14. Attorney Rocha asserts that the same would be true in Mozambique. Rocha Decl. ¶ 4.
Although plaintiffs contend that the chances of those consequences are "unlikely," they do not
offer any evidence, expert or otherwise, to support their conclusory statement. Consequently, the
Court is persuaded that production of the Drousys system to plaintiffs would put defendants, and
their personnel, at risk for significant hardship.
The seventh and last factor – the good faith of the party resisting discovery – also weighs
against production. There can be no real dispute that defendants, who apprised this Court more
than a year ago that RFP 5 sought production of documents in violation of Brazilian law (Dkt. No.
115), have acted in good faith in withholding the production of the Drousys system on that ground.
The fact that defendants are in possession of an (inaccessible) copy of the MyWebDay system,
and that they were (arguably) late in disclosing that fact, see Pl. Opp. at 22-23, is simply not
relevant to RFP 5 or to the motion for a protective order, which solely concern the Drousys system.
Weighing all of the comity factors, as I must, I find that the scales tip in favor of granting
the protective order sought by plaintiffs with respect to RFP 5.
Plaintiffs' Letter-Motion to Compel
Defendants are correct that plaintiffs' letter-motion to compel production of documents
responsive to RFPs 1, 3, and 4 "does not seek any new or additional relief beyond that which the
Court has already provided." Def. Opp. at 1. In their reply letter, plaintiffs confirm that the "specific
relief" they request is an order "compelling Defendants to produce all documents responsive to
Plaintiffs' RFP Nos. 1, 3, and 4." Pl. Reply at 2, 3. I issued that order pursuant to Fed. R. Civ. P.
37(a) on October 14, 2020, refused to reconsider it on October 30, 2020, and see no need to issue
Case 1:17-cv-04576-GHW-BCM Document 194 Filed 10/06/21 Page 31 of 31
In the last sentence of their reply letter, plaintiffs add a request for "sanctions," including
their attorneys' fees incurred in making the motion and "that a default judgment be granted against
defendants for failing to comply" with this Court's prior orders. Pl. Reply at 3. A party may not,
however, use a reply brief (or letter) to make a different motion – this one, presumably, pursuant
to Fed. R. Civ. P. 37(b) – or otherwise request relief not identified in its moving papers. See
Charles v. United States, 2019 WL 1409280, at *4 n.1 (S.D.N.Y. Mar. 28, 2019) (refusing to
construe defendant's Rule 12(b)(1) motion as a Rule 12(b)(6) motion based on arguments made
for the first time on reply, which would be "unfair and prejudicial to plaintiff"); see generally
Rowley v. City of New York, 2005 WL 2429514, at *5 (S.D.N.Y. Sept. 30, 2005) (collecting cases).
For the reasons stated above, defendants' protective order motion as to RFP 5 (Dkt. No.
130) is GRANTED. Plaintiffs' letter-motion for an order compelling discovery (Dkt. No. 167) is
DENIED as moot, as the relief request has already been granted.
The Clerk of Court is respectfully directed to file this Opinion and Order under seal,
at the "selected parties" viewing level, such that only the attorneys appearing for the parties,
and court personnel, may view it. By separate order, the Court will give the parties an
opportunity to submit proposed redactions before this Opinion and Order is filed in public view.
Dated: New York, New York
September 23, 2021
United States Magistrate Judge
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