CIRO Energy Partners, LLC v. Torres-Torres et al

Filing 241

ORDER denying 91 Motion to Strike. Signed by US Magistrate Judge Bruce J. McGiverin on November 4, 2013. (McGiverin, Bruce)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
CIRO ENGERY PARTNERS, LLC,
Plaintiffs,
v.

Civil No. 12-1917 (GAG/BJM)

ROBERTO TORRES TORRES, et al.,
Defendants.
ORDER
Plaintiff CIRO Energy Partners, LLC (“CIRO”) filed this case against defendants
Roberto Torres Torres, José Pérez-Canabal, and others, claiming violations of the
Racketeer Influenced and Corrupt Organizations Act (“RICO”), damages under the
Puerto Rico Civil Code, breach of contract, and unjust enrichment. Docket No. 20. On
March 15, 2013, CIRO filed an urgent motion to freeze defendants’ assets. Docket No.
30. Defendants Roberto Torres Torres and others (“Torres”) opposed the motion. Docket
No. 46. Before the court is CIRO’s motion to strike Torres’s opposition, on the basis that
it includes inadmissible evidence of a settlement offer. Docket No. 91 (“Mot.”). Torres
opposed the motion to strike, and CIRO replied. Docket Nos. 124, 132. The motion was
referred to me for disposition. Docket No. 92. For the reasons set forth below, plaintiff’s
motion to strike is DENIED.
CIRO contends that defendants in their opposition to the asset freeze motion
repeatedly reference a settlement offer that CIRO extended at the beginning of these
proceedings, in violation of Rule 408 of the Federal Rules of Evidence (“FRE”).1 Mot. 2.
CIRO also argues that the introduction of such evidence is barred by a “settlement
privilege.” Mot. 7. But CIRO failed to address a preliminary question—whether the
1

The rule prohibits the introduction of settlement offers or statements made during
settlement negotiations “to prove or disprove the validity or amount of a disputed claim.” Fed. R.
Evid. 408. However, such evidence is admissible for purposes other than to prove or disprove
validity or amount. Id.

CIRO Energy Partners, LLC v. Torres Torres, Civil No. 12-1917 (GAG/BJM)

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FRE apply to evidence submitted in support of pre-trial motions, as in this case.
Although the question has not been definitively settled, a majority of circuit courts,
including this circuit, have found that evidence otherwise inadmissible at trial under the
FRE is admissible during preliminary injunction proceedings. Mullins v. City of New
York, 626 F.3d 47, 52 (2d Cir. 2010) (finding that six circuit courts “have permitted
district courts to rely on hearsay evidence for the limited purpose of determining whether
to award a preliminary injunction”); Asseo v. Pan Am. Grain Co., Inc., 805 F.2d 23, 26
(1st Cir. 1986) (stating with approval, “[a]ffidavits and other hearsay materials are often
received in preliminary injunction proceedings”). Policy considerations also support
limiting the FRE’s applicability in pretrial proceedings. Notably, the FRE are designed to
protect against misuse of information by juries, not judges; requests for preliminary
injunctions are intended to be resolved swiftly, without the need for a full trial on the
merits; and Fed. R. Civ. P. 65(a) seems to contemplate inadmissible evidence would be
considered during a preliminary injunction proceeding. Stephen A. Saltzburg et al.,
Federal Rules of Evidence Manual § 1101.02[8] (10th ed. 2011). Thus, the better view
appears to preclude strict application of the evidence rules during proceedings for a
preliminary injunction.
Here, CIRO’s motion to freeze assets is in the nature of a request for a preliminary
injunction. In the proposed order, CIRO asks the court to “hereby enjoin” defendants
“from directly or indirectly selling, liquidating, transferring . . . or disposing of any funds,
real, or personal property, or other assets.” Docket No. 30-1, at 2. The order is intended
to direct or restrain defendants’ conduct, which is the essence of injunctive relief. See
Charlesbank Equity Fund II v. Blinds To Go, Inc., 370 F.3d 151, 157 (1st Cir. 2004)
(“[F]reeze orders directed at unspecified assets typically are in the nature of preliminary
injunctions”). Therefore, Rule 408, barring use of settlement offers as evidence, simply
does not apply to the present motion. The court will, however, use the FRE as a guide in
determining the weight and probative value of that evidence. Mullins, 626 F.3d at 52.

CIRO Energy Partners, LLC v. Torres Torres, Civil No. 12-1917 (GAG/BJM)

Accordingly, plaintiffs’ motion to strike is DENIED.
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 4th day of November, 2013.
S/Bruce J. McGiverin
BRUCE J. MCGIVERIN
United States Magistrate Judge

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