Comparelli v. Republica Bolivariana De Venezuela

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO: 14-24414-CIV-WILLIAMS/MCALILEY

CARMINA COMPARELLI, et al.,

Plaintiffs,

vs.

BOLIVARIAN REPUBLIC OF

VENEZUELA, et al.,

Defendants.

_________________________________/

ORDER DENYING PLAINTIFFS’

MOTIONS TO COMPEL

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

1 At the hearing I ruled on other ancillary issues the Motions raise and I denied the Motions in all

regards, with one exception: I found that to the extent Pequiven and IPSL’s banks have responsive

documents that Pequiven and IPSL have a right to demand from their banks, then they should ask

their banks for that information. They agreed to do so. Here, I address only the central issue,

identified above.

proving the applicability of a FSIA exception and thus subject matter jurisdiction.

Comparelli v. Republica Bolivariana de Venezuela, 891 F.3d 1311, 1319 (11th Cir. 2018).

Plaintiffs argue that FSIA’s expropriation exception applies here and therefore this Court

has jurisdiction over this suit. Defendants dispute jurisdiction and have filed motions to

dismiss this action on this basis.2

b. Jurisdictional discovery

The parties are engaging in jurisdictional discovery. Plaintiffs served Defendants

two sets each of requests for production, interrogatories, and requests for admission.

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

2 This Court previously dismissed this action for lack of jurisdiction. (ECF No. 75). While

Plaintiffs’ appeal of that decision was pending, the Supreme Court, in Bolivarian Republic of

Venezuela v. Helmerich & Payne Intern. Drilling Co., --- U.S. ----, 137 S. Ct. 1312 (2017), laid

out a new standard for a trial court’s evaluation of FSIA’s expropriation exception. In reliance on

Helmerich, Eleventh Circuit reversed and remanded. Comparelli, 891 F.3d 1311. In that opinion,

the Court of Appeals found that for Plaintiffs’ claims to fall within the exception they must show:

(1) that rights in property are at issue; (2) that property was taken; (3) that the taking was in

violation of international law; and (4) that at least one of the two statutory nexus requirements are

satisfied. Id. at 1319 (citations omitted). The nexus requirement is satisfied if the property in

question or any property exchanged for such property is either (a) present in the United States in

connection with a commercial activity carried on in the United States by the foreign state; or

(b) owned or operated by an agency or instrumentality of the foreign state and that agency or

instrumentality is engaged in a commercial activity in the United States. Id. (quotation marks and

citations omitted).

3 In Plaintiffs’ Motions to Compel Pequiven and IPSL, Plaintiffs claim that those Defendants did

not timely respond to the Requests for Admissions, and thus the Court should deem them admitted.

(ECF Nos. 204 at 7-8; 205 at 7-8). At the hearing I found that Defendants had timely responded to

the requests for admissions and therefore I denied Plaintiffs’ Motions in that regard.

government.4 All Defendants included in their objections a statement, in sum and

substance, that any responsive documents, information and witnesses located in Venezuela

are possessed and controlled by the Maduro regime, which will not allow Defendants and

their counsel access to that information and that for this reason Defendants are unable to

produce that information (herein, the “Objection”).

Plaintiffs’ central argument in their Motions to Compel is that this Objection is

without merit and should be overruled. Before turning to that argument, I briefly address

the ongoing crisis in Venezuela.

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

4 In their response memoranda, Defendants summarize the documents they did produce. See (ECF

Nos. 212 at 4-5; 213 at 7-8).

government ministries, their facilities, and State-owned enterprises, to include Pequiven

and thus IPSL.5

Guaido has nonetheless established his own government. In 2019, the National

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

5 The Amended Complaint alleges that IPSL is the international commercial arm of Pequiven that

is controlled by Pequiven and is its alter ego. (ECF No. 85 at 3 ¶ 5). Although a British Virgin

Islands corporation, IPSL is headquartered at Pequiven’s Venezuela headquarters. (Id.).

opposed the motion. (ECF No. 148). The Court allowed the substitution of counsel. (ECF

No. 178).

Thus, before this Court, the Republic, and its associated agencies Pequiven and

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,

6 Similarly, Defendants must also respond to interrogatories with information that is under its

control. Costa v. Kerzner Int’l Resorts, Inc., 277 F.R.D. 468, 471 (S.D. Fla. 2011) (collecting

authority for the principle that “Rules 33 and 34 are equally inclusive in their scope.” (quotation

marks and citation omitted).

“is defined not only as possession, but as the legal right to obtain the documents requested

upon demand.” Id. at 653 (emphasis added). The Court recognized that Stripling did not

have control over the third parties’ documents and then asked whether he nonetheless made

a good faith effort to obtain those documents and found that he did. Id. at 654. The Court

held that “[s]ince Stripling’s noncompliance with the production order was due to his

inability, after a good faith effort, to obtain these documents, the district court abused its

discretion in dismissing his counterclaim.” Id.

Here, there is no dispute that the Guaido administration does not have possession of

documents and information, nor access to knowledgeable individuals, that Plaintiffs seek

in discovery. The question then becomes whether it has the legal right to obtain this upon

demand. Courts have recognized that a legal right to obtain information is meaningful in

this context only if there is an ability to enforce compliance with that right. See Siegmund

v. Xuelian, No. 12-26539-CIV, 2016 WL 1359595, at *3 (S.D. Fla. Apr. 6, 2016)7 (quoting

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.

7 In Siegmund, the Court observed that “[a] former director’s apparent ability to request documents

from his former corporation … is not the same as the right to obtain those documents upon demand

or the ability to enforce compliance with that demand. Id.

8 See also Mamani v. De Lozada Sanchez Bustamante, Nos. 07-22459, 08-21063, 2017 WL

3456327, at *3 (S.D. Fla. Aug. 11, 2007) (former officer of corporation had neither the legal right

to obtain documents from the corporation nor the ability to enforce compliance with his demand

for those documents, and thus did not have control over those documents as recognized under Rule

34(a)(1)).

That record includes a declaration of Ramon Alfredo Aguilar, an attorney who

serves as the Director of the Special Attorney General’s Office, whose office has engaged

in the discovery process on Defendants’ behalf. (ECF No. 231-1 ¶¶ 7, 8). Aguilar notes

that Plaintiffs’ discovery requests include criminal files and internal federal and state

government records and communications, which his office does not have the “practical

ability” to obtain. (Id. ¶ 9).9 His declaration includes this information:

3. … Nicolas Maduro, with the support and control of the

National Armed Forces, continues to usurp authority and refuses to hand over

control of government ministries and State-owned enterprises. Maduro’s

tactics have included violence against and imprisonment of those who

challenge his control.

* * *

5. The Office of the Special Attorney General is an organ of the

Interim Government. However, it has no relation to the Maduro regime. To

the contrary, the Office of the Special Attorney General disagrees with

Maduro and the Office of the Attorney General about who has legal standing

to serve as the legitimate representative of the Republic and its

instrumentalities before U.S. courts and in international arbitration. See

Jimenez v. Palacios, C.A. No. 2019-0490-KSJM, 2019 WL 3526479 (Del.

Ch. Aug. 2, 2019).

* * *

10. The Guaido Administration lacks physical access to documents

and records. The Maduro regime has refused to surrender control of the

organs of government. Government ministries and offices, including the

offices that we believe have custody of the information requested by the

plaintiffs, remain under the forcible control of the Maduro regime. This

includes the archives of PDVSA, Pequiven, and judicial and police files.

11. It is also impossible for members of Guaido Administration to

request documents from Maduro personnel at this time. The mere

9 Plaintiffs ask Defendants to produce, among other things, internal government records and

communications about Venezuela’s allegedly unlawful search and confiscation of Plaintiffs’

property, government records of its efforts to prosecute Plaintiffs, Venezuelan communications

with INTERPOL about Plaintiffs, and licenses Venezuelan agencies issued for Plaintiffs’ property.

See (ECF No. 212 at 4) (providing summary of discovery Defendants cannot produce and citations

to Plaintiffs’ discovery requests).

identification of those who provide services to the Interim Government

would expose those individuals, their families, and their property to reprisals

from the Maduro regime. Indeed, many of the employees and officials of the

Guaido Administration are currently based outside of Venezuela, due to fears

for their safety, including the Special Attorney General and myself.

Likewise, during 2020, the homes in Venezuela of personnel who worked for

the Special Attorney General were the subject of illegal police raids, after

those individuals had been identified as personally acting for the Republic in

an international arbitration.

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

10 Defendants also attached to their responses to Plaintiffs’ Requests for Production of Documents,

correspondence they sent to request information responsive to Plaintiffs’ discovery requests that,

like Aguilar’s sworn statement, further documents Defendants’ inability to engage with the

Maduro regime to access that information. See (ECF No. 206-7 at 4, 18) (the Republic’s Response

to Plaintiffs’ first and second document requests); (ECF No. 204-7 at 4, 19-26) (IPSL’s Response

to Plaintiffs’ first document requests); (ECF No. 204-8 at 4, 17-24) (IPSL’s Response to Plaintiffs’

second document request); (ECF No. 205-7 at 4, 18-25) (Pequiven’s Response to Plaintiffs’ first

document request); (ECF No. 205-8 at 4, 15-22) (Pequiven’s Response to Plaintiffs’ second

document request).

Guaido government.11 Aguilar’s assertion that Maduro uses violence and imprisonment

against those who challenge his control, finds support in the recent 2020 Report of the

United Nations Human Rights Council, which documented evidence of unlawful

executions, enforced disappearances and arbitrary detentions and torture in Venezuela

since 2014, linked to Maduro and his loyalists. UN News, Venezuela abuses amounted to

crimes against humanity: UN-appointed panel (Sept. 16, 2020),

https://news.un.org/en/story/2020/09/1072512.

Moreover, other courts have recognized that “Guaido’s regime does not have

meaningful control over Venezuela or its principal instrumentalities such as PDVSA.”12

Crystallex Int’l. Corp. v. Bolivarian Republic of Venezuela, 932 F.3d 126, 135 n.2 (3d Cir.

2019); see also Red Tree Investments, LLC v. Petroleos de Venezuela, S.A., No. 19-CV-

2519, 2020 WL 209290, at *2-3 (S.D.N.Y. Jan. 14, 2020) (Maduro has control over

operations of the Venezuelan government and government-owned entities, the Guaido

11 In their Reply, Plaintiffs acknowledge as much when they write that “[m]any of Guaido’s

officials remain in exile; their power and supporters within Venezuela are weak”, citing a March

10, 2021 report of the Congressional Research Service. (ECF No. 224 at 4). That report includes

the following: “The Venezuelan opposition is weak and divided, with many of its leaders in exile.

Although Guaido challenged Maduro’s authority in 2019, his support has since faded. After

Norway-led negotiations stalled in mid-2019, the Maduro government increased persecution of

Guaido’s supporters. Since March 2020, restrictions put in place to combat the spread of [COVID]

have limited Guaido’s ability to convene protests. Guaido also lost support after reports emerged

that he condoned a plan that ended in a botched raid against Maduro in May 2020. Guaido and

other opposition legislators now face prosecution by judicial authorities, who assert the legislators

no longer have immunity since their legislative terms ended in January 2021.” Clare Ribando

Seelke, Venezuela: Political Crisis and U.S. Policy, (updated Mar. 10, 2021),

https://fas.org/sgp/crs/row/IF10230.pdf.

12 PDVSA – Petroleos de Venezuela, S.A. – is the state-owned Venezuelan oil and natural gas

company.

government is unable to access that information, “and it is not clear that any amount of

additional time will allow them access to the information they seek”).

In the face of concrete evidence that Defendants are unable to access responsive

discovery in the hands of the Maduro government, Plaintiffs have done nothing to show

Aguilar’s sworn declaration, and Defendants’ Objection, are false.13 When I asked

Plaintiffs’ counsel, at the hearing, what more Defendants should do, he replied that they

could send a letter to Maduro’s representatives and demand the documents. When pressed,

however, Plaintiffs’ counsel conceded that this would most likely be futile; something

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.

13 As the party seeking discovery, Plaintiffs have the burden to establish that the opposing party

has control over documents held by an affiliate. Costa, 277 F.R.D. at 473 n.2 (citing United States

v. Int’l Union of Petroleum and Indus. Workers, 870 F.2d 1450, 1452 (9th Cir. 1989)).

b. Sanctions are not warranted

As noted above, in their reply memorandum, Plaintiffs argue that Venezuela’s

“internal struggles should not prejudice Plaintiffs’ right to justice.” (ECF No. 224 at 6).

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

14 Another Court faced a similar request and found that this would “risk[] the district court’s

assumption of jurisdiction where it may, in fact, have been lacking, something the court was not

empowered to do, particularly where, as here, alternative sanctions are available.” Funk v.

Belneftekhim, 861 F.3d 354, 358 (2d Cir. 2017) (reversing trial court’s decision to strike

defendant’s FSIA defense as a sanction for their failure to provide discovery).

Motions, the Court is fully aware that the parties’ inability to access information located in

Venezuela may leave Plaintiffs unable to prove that this Court has jurisdiction (if, in fact,

it does).!° I thus acknowledge that Plaintiffs, as they fear, may be prejudiced by

Defendants’ inability to produce the desired discovery. This remains to be seen. The point

here is that the possibility of such an unfortunate outcome does not empower the Court to

issue the orders Plaintiffs request. To state the obvious: there are many unfair and

unfortunate circumstances for which the law does not have a remedy. This may be one of

them.

DONE and ORDERED in Miami, Florida, this 10th day of August 2021.

fo’

( Lis WAT Atala 2 □□

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.

14