COMPARELLI

v.

REPUBLICA BOLIVARIANA DE VENEZUELA

Plaintiffs, Carmina and Julio Comparelli, filed three Motions to Compel Jurisdictional Discovery, for Contempt of Court and the Imposition of Sanctions, against each of the Defendants: the Republic of Venezuela (the “Republic”), Petroquimica de Venezuela, S.A. (“Pequiven”) and International Petrochemical Sales, Ltd. (“IPSL”) (hereafter, the “Motions to Compel” or “Motions”). (ECF Nos. 204, 205, 206). The Motions are nearly identical; they ask this Court to compel each Defendant to serve better responses to two sets each of requests for production of documents, interrogatories, and requests for admission, that Plaintiffs served on Defendants, and to impose on Defendants a host of sanctions, which are detailed below. (Id.). Defendants filed memoranda in response to the Motions, (ECF Nos. 212, 213), and Plaintiffs filed an omnibus reply. (ECF No. 224). On July 15, 2021, I heard oral argument on the Motions (the “hearing”). The Court and counsel discussed many issues at that time, and at the conclusion of the hearing I denied Plaintiffs’ Motions to Compel. I write this Order to more fully explain why I find that

Defendants do not have possession, custody or control over documents and other information responsive to Plaintiffs’ discovery requests located in Venezuela and controlled by representatives of the Maduro regime.¹

I. Background

The central events described in this lawsuit took place in Venezuela over the course of years, beginning in 2008. Plaintiffs, who lived in Venezuela at all relevant times, owned and operated businesses there. Plaintiffs sue for damages that arise from Defendants’ alleged expropriation of Plaintiffs’ businesses and property, without compensation, in violation of international law, and the laws of Venezuela and this country. (Am. Compl., ECF No. 85).

a. Subject matter jurisdiction The Foreign Sovereign Immunities Act (“FSIA”) provides that foreign states, and their agencies or instrumentalities – which, according to the Amended Complaint, includes Pequiven and IPSL – are immune from the jurisdiction of United States courts, unless one of FSIA’s exceptions applies. 28 U.S.C. §§ 1604, 1605. Plaintiffs have the burden of

Defendants timely served responses to those discovery requests.³ Although all Defendants produced some responsive documents and answered some interrogatories, that information was limited and came from sources other than those controlled by the Maduro

c. The Venezuelan presidential crisis Venezuela has been in turmoil for years, causing its people great suffering. Of significance here, is the outcome of the May 2018, presidential election. Then-President Nicolas Maduro claimed victory in that election and thus a second term as President. Evidence of electoral fraud, however, led the democratically elected Venezuelan National

Assembly to declare the election invalid and to appoint its Speaker, Juan Guaido, as Interim President of Venezuela, and Guaido was sworn-in as President on January 23, 2019. The same day, the United States recognized Guaido as the legitimate leader of Venezuela. Many other nations have done the same. While both Guaido and Maduro continue to claim the Presidency, Maduro has the support of the National Armed Forces, and control of

Assembly authorized President Guaido to appoint a Special Attorney General, and he did so. The Special Attorney General is empowered to safeguard Venezuelan interests abroad, to include appointing counsel to represent the Republic and its entities in litigation in other countries. The National Assembly also appointed an Administrative Ad-Hoc Board of Directors of Pequiven, which is tasked with representing its interests and those of its associated companies, to include IPSL. The law firm of Hogan Lovells has represented Pequiven and IPSL in this action since 2015. Both Defendants retained the firm during Maduro’s first presidential term. In April 2019, the Guaido administrations’ Special Attorney General decided that Hogan Lovells should continue to represent the companies. The Ad-Hoc Board of Pequiven confirmed this in January 2021. (ECF No. 213 at 5). Earlier in this action, the law firm of GST, LLP represented the Republic. In 2019 the Special Attorney General selected the law firm of Arnold & Porter to assume that representation, on behalf of the Guaido administration. Consistent with this country’s recognition of the Guaido government, the Republic thus moved to substitute Arnold &

Porter as its counsel. (ECF No. 134). On behalf of its client, the Maduro regime, GST, LLP

IPSL, are subject to the authority of the Guaido government, and answer only to it, while the Maduro regime controls their facilities, assets and information that are located in Venezuela. The difficulty this places on the discovery process is obvious.

II. The Motions to Compel

Plaintiffs urge this Court to: (1) overrule Defendants’ objections and issue an order compelling Defendants to fully respond to its document requests and interrogatories; (2) find Defendants in contempt of this Court’s Scheduling Order – which directed Defendants to respond to discovery no later than March 31, 2021 – and allow them to purge the contempt by producing the information Plaintiffs seek; (3) punish the contempt with entry of a default judgment; and (4) order Defendants to pay Plaintiffs for the attorneys’ fees they incurred bringing their Motions and conferring with Defendants to try to resolve this dispute. Underlying all of Plaintiffs’ claims for relief is their argument that the Court should overrule Defendants’ Objection, that they are unable to access information controlled by the Maduro regime. Plaintiffs argue broadly that “Venezuela is one country”, (ECF

No. 224 at 3), and that “[t]here is no Guaido’s Venezuela and Maduro’s Venezuela; there is just one republic with control over discovery materials and internal struggles should not prejudice Plaintiffs’ right to justice.” (Id. at 6). Plaintiffs are really making two arguments here. The first is that this Court should ignore the reality of the divided and competing governments in Venezuela, which of course it cannot do. And second, Plaintiffs argue that the Court should penalize Defendants for their inability to access information controlled by the Maduro government by compelling them to produce what they cannot produce, then finding them in contempt of that order and ultimately entering a default judgment against Defendants for their noncompliance with their discovery obligations. The Court cannot do this either. a. Defendants are unable to access information Maduro controls The Court rejects Plaintiffs’ first argument. The records before this Court demonstrate that the Guaido administration, which this country and Court recognizes, and which represents Defendants in this case, cannot access information the Maduro regime controls – which includes information Plaintiffs seek in discovery. Rule 34(a) of the Federal Rules of Civil Procedure, provides that a party responding to a request for production must produce documents and information in that party’s

“possession, custody or control.” Fed. R. Civ. P. 34(a).⁶ The Eleventh Circuit Court of Appeals addressed this standard in Searock v. Stripling, 736 F. 2d 650 (11th Cir. 1984). There, the Court reversed a trial court’s dismissal of a counterclaim as a sanction for the counterclaimant’s (Stripling’s) failure to produce discovery. In the discovery process, Stripling had offered to get documents from third parties with whom he had done business;

those third parties, however, did not cooperate. The Court wrote that control, in Rule 34,

Klesch & Co. v. Liberty Media Corp., 217 F.R.D. 517, 520 (D. Colo. 2003)).⁸ While the Guaido administration presumptively has the legal right to obtain information in Venezuela that Plaintiffs seek in discovery, the record here is clear that it does not have the ability to enforce that right.

11. It is also impossible for members of Guaido Administration to request documents from Maduro personnel at this time. The mere

12. In any event, we have no reason to believe that Maduro or his officials would cooperate in any way with a request from the Office of the Special Attorney General or from anyone else in the Guaido Administration to provide access to documents or information, because they arbitrarily ignore the Guaido Administration’s authority.

13. The Office of the Special Attorney General has taken all reasonable steps to comply with the plaintiffs’ discovery requests in these very difficult circumstances.

(Id. ¶¶ 3, 5, 10-13).10 Aguilar’s sworn statement specifically and concretely explains Defendants’ inability to secure information located in Venezuela that is possessed and controlled by the Maduro government. Aguilar’s statements are corroborated by publicly available and verified information about Maduro’s control of the physical facilities and records of Venezuela’s government and its agencies, and his refusal to share that information with the

Plaintiffs acknowledged in their Motions when they wrote: “no matter how much time Venezuela and other defendants associated with the Republic are given, they will not be able to fulfill their pre-trial obligations including discovery.” (ECF No. 206 at 10; 204 at 9; 205 at 9). This is the unfortunate truth: Defendants do not have possession or control over documents and information held by the Maduro government.

In sum, I find that Defendants do not have possession of, nor the ability to enforce their legal right to obtain, information controlled by the Maduro government. I further find that Defendants have satisfied the good faith requirement set out in Searock, 736 F. 2d at 654. No court can compel someone to produce something it does not have and cannot get. The Court must deny Plaintiffs’ Motions to Compel.

From this premise, Plaintiffs urge the Court to find Defendants in contempt of the Court’s Amended Scheduling Order on Jurisdictional Discovery, that ordered that Defendants serve their responses and objections to Plaintiffs’ discovery requests no later than March 31, 2021. See (ECF No. 201). Defendants served their responses and objections on that date, and there is no basis to find Defendants in contempt of that Order. Plaintiffs go further and ask this Court to enter a default judgment against Defendants if they do not produce the discovery possessed and controlled by the Maduro government. Plaintiffs have provided no justification for the Court to enter such an order.¹⁴ Last, Plaintiffs ask the Court to order Defendants to pay Plaintiffs’ attorneys’ fees incurred bringing their Motions to Compel and conferring with Defendants in an effort to resolve this dispute. Given the Court’s denial of Plaintiffs’ Motions, there is no basis to provide Plaintiffs such an award. See Fed. R. Civ. P. 37(a)(5)(A).

III. Conclusion

As noted at the outset, Plaintiffs have the burden to prove the applicability of the FSIA expropriation exception and thus subject matter jurisdiction. In resolving these

fo’ ( Lis WAT Atala² [...]

CHRIS MCALILEY

UNITED STATES MAGISTRATE JUDGE cc: The Honorable Kathleen M. Williams Counsel of record

'S Tt may also compromise Defendants’ ability to defend against Plaintiffs’ assertion of the FSIA exception.