Global Gaming Philippines, LLC v. Razon, Jr.

Background

On April 18, 2022, Magistrate Judge Sarah Netburn granted Global Gaming Philippines, LLC’s motion for a protective order. The order barred Bloomberry Resorts and Hotels Inc. and Sureste Properties, Inc., together called the “Debtor Defendants,” from questioning witnesses about allegations of fraud committed in connection with the arbitration.

The Debtor Defendants objected to that order. They argued that it did not identify or establish adequate justification for the protective order and did not conduct an individualized assessment of the discovery’s scope, relevance, and proportionality.

Review standard

The district court treated the protective order as a ruling on a nondispositive matter, meaning a discovery matter that does not finally resolve the case. Under Federal Rule of Civil Procedure 72(a), the court could modify or set aside the order only if it was clearly erroneous or contrary to law. A finding is clearly erroneous when the reviewing court, after considering the entire record, has a firm conviction that a mistake was made. An order is contrary to law when it fails to apply or misapplies relevant statutes, precedent, or procedural rules. The court also stated that magistrate judges receive substantial deference on nondispositive matters.

Court’s reasoning

The April 18 order incorporated the reasoning from two earlier orders. In one, Judge Netburn denied a motion to compel documents related to the Debtor Defendants’ fraud defense. In the other, this court overruled the Debtor Defendants’ objections to that ruling. The court found that the current objections sought to permit depositions about the same fraud defense and were governed by substantially the same reasoning.

The court explained that confirming an arbitration award is a summary proceeding that converts an already-final arbitration award into a court judgment. Discovery in that proceeding should likewise be limited to avoid undermining arbitration’s goals of resolving disputes efficiently and avoiding lengthy and expensive litigation.

Disposition

The court overruled the Debtor Defendants’ objections to the April 18, 2022, order. It held that the protective order was not clearly erroneous or contrary to law, so the order barring the specified fraud-related witness questioning remained in effect.