Andes Petroleum Ecuador Ltd. v. Occidental Exploration and Production Company

Background

After an arbitration proceeding in Ecuador, the Republic of Ecuador agreed to pay Occidental Exploration and Production Company (OEPC) and its parent, Occidental Production Company (OPC), nearly $1 billion to settle claims related to an oil exploration project. Andes claimed under a contract with OEPC that it was entitled to 40% of OEPC’s interest in that settlement. Andes prevailed in a New York arbitration, and the court confirmed the arbitration award on December 2, 2021. The resulting judgment was $558 million.

Andes stated that it could not satisfy the judgment because the entire settlement amount had been paid to and retained by OPC. The court had ordered OEPC to produce documents and had authorized Andes to subpoena relevant current or former officers and employees concerning OEPC’s assets, financial condition, and other relevant matters.

Motions to Quash and for a Protective Order

Andes noticed depositions for nine individuals and a corporate representative of non-party OPC. The challenged witnesses included Stephen Chazen, Marcia Backus, Rick Callahan, Karen Lippe, Altaf Prasla, Megan Wetterauer, and Jennifer Kirk. OPC and the witnesses moved to quash, meaning cancel, the deposition subpoenas, and sought a protective order, which would limit or prevent discovery.

The movants argued that the subpoenas were procedurally defective, violated the rule limiting depositions to locations within 100 miles of a witness’s residence, employment, or regular in-person business location, improperly targeted high-ranking executives, gave the witnesses too little preparation time, and sought burdensome, cumulative, or duplicative information.

The court rejected these arguments. It held that federal discovery rules applied and that the 100-mile limit concerned where compliance would occur, not where a subpoena could be served. Because the court had ordered remote depositions, the witnesses would not have to travel, and Andes’s counsel had offered to travel to Texas and Minnesota if necessary.

The court also found that the witnesses had relevant, direct, or specialized knowledge. The opinion identified evidence that Chazen signed the settlement agreement for OEPC and OPC; that Callahan and Kirk held or had recently held roles with OEPC; that Backus was involved in negotiating the settlement and in OEPC’s decision to withhold the settlement amount; and that Prasla, Lippe, and Wetterauer had knowledge of the companies’ accounting and financial information. The court further found that Andes had offered to extend the preparation timeline and minimize cumulative or duplicative questioning.

The motions to quash and for a protective order were denied. The depositions were ordered to proceed remotely or within 100 miles of the witnesses’ residences, unless the parties agreed otherwise, and to be completed by September 2, 2022, or a later date agreed by the parties.

Registration of the Judgment

Andes separately moved under 28 U.S.C. § 1963 to register the federal judgment in California, Texas, and Minnesota. Registration would allow the judgment to be filed in another federal district for enforcement purposes. Although the judgment was not yet final because a notice of appeal had been filed, the court found good cause to permit registration in another district.

The court found that Andes had shown insufficient assets in the Southern District of New York and had reasonably inferred that OPC might have property in California because OPC was incorporated there and had received the settlement amount. The court found no basis for registration in Texas or Minnesota.

The motion to authorize registration of the judgment was granted in part and denied in part. Andes was permitted to register the judgment in a federal district in California, but not in Texas or Minnesota. The court terminated the three motions identified as ECF Nos. 51, 54, and 60.