Osuna v. CitiGroup Inc.

Background

Plaintiff OSA, described as a Mexican oil services company, and Plaintiff Yafiez, described as its former chief executive officer, brought this action against the Citi Defendants and others. The claims included alleged breaches of three contracts arising from accusations that the plaintiffs had committed fraud involving Petróleos Mexicanos, the Mexican national oil company.

The court previously granted the defendants’ motion to dismiss. It concluded that the plaintiffs failed to state a contract-breach claim under Federal Rule of Civil Procedure 12(b)(6), which addresses legally insufficient claims, and that the plaintiffs’ remaining tort claims against the Citi Defendants were more conveniently litigated in Mexico. After the court denied reconsideration and an alternative request to amend the complaint, the defendants agreed to conditions for litigation in Mexico. Those conditions included consenting to be sued there, waiving a statute-of-limitations defense there, consenting to enforcement of a final Mexican judgment, and making relevant documents and witnesses available within their control, subject to the stated limits of the Federal Rules of Civil Procedure.

The court then dismissed the action and entered judgment. The plaintiffs appealed, but no party requested a stay. The court’s dismissal order retained jurisdiction for the limited purpose of enforcing the defendants’ production of discovery under the earlier order.

Motion and arguments

The plaintiffs moved for sanctions against Citigroup Inc., Citibank, N.A., and Citigroup Global Markets, Inc. They argued that the defendants violated the conditions of dismissal by refusing discovery requests made after judgment was entered. The plaintiffs sought discovery before re-filing and serving the defendants in Mexico and also argued that sanctions should involve reconsideration of the court’s forum-selection decision.

The defendants denied the discovery requests pending the re-initiation of the action in Mexico. After the sanctions motion was filed, the defendants notified the court that the plaintiffs had filed a similar complaint in Mexico City, but the defendants had not yet been served in that matter.

Court’s analysis

The court held that it retained authority to enforce its own orders during the appeal because no stay had been issued. But it rejected the plaintiffs’ interpretation of the discovery condition. The condition concerned relevant documentary evidence, and the court reasoned that evidence must be relevant to litigation. The court found no basis for recognizing a right to discovery when no action was pending before any court.

Disposition

Judge Richard J. Sullivan denied the plaintiffs’ sanctions motion without prejudice to renewal if the defendants refuse to comply with relevant discovery requests after the lawsuit is re-initiated in Mexico and the defendants are served there. The Clerk of Court was directed to terminate the motion at document number 91.