The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court
Order Denying Respondent's Appeal of Magistrate Judge McCurine's Order
Respondent William Powers and the "Ecuadorian Plaintiffs" (collectively "Respondents")*fn1 appeal Magistrate Judge McCurine's August 27, 2010 order requiring Powers to produce documents and give deposition testimony in response to Applicant Chevron Corporation's subpoena duces tecum issued pursuant to 28 U.S.C. § 1782. The Court finds the appeal appropriate for submission without oral argument and previously vacated the September 9, 2010 hearing. For the reasons explained herein, the Court DENIES Respondents' appeal.
Chevron's application for discovery under 28 U.S.C. § 1782 sought documents and deposition testimony for use in two pending foreign proceedings to which Chevron is a party. One of the proceedings is a suit filed against Chevron in 2003 in the Provincial Court of Justice of Sucumbios in Nueva Loja, Ecuador (the "Lago Agrio Litigation"). The court in the Lago Agrio Litigation appointed a neutral expert witness, Richard Stalin Cabrera Vega ("Cabrera"), to assess damages against Chevron. In 2008, Mr. Cabrera submitted a report (the "Cabrera Report") opining damages should be assessed against Chevron in the amount of $27.4 billion. Chevron now believes the Cabrera Report was in fact based on, or copied wholesale from, the work of the Ecuadoran Plaintiffs' U.S. Consultants, including E-Tech International and William Powers.
Chevron filed its application in this Court on May 27, 2010, seeking authorization under 28 U.S.C. § 1782 to serve subpoenas for documents and deposition testimony upon both Mr. Powers and E-Tech International. The proposed subpoenas, unsigned and undated, were attached to the application, which was sent by UPS next day delivery to both Mr. Powers and E-Tech International. [Doc. No. 1, Exhibits A and B to Declaration of Andrea Neuman; Doc. No. 4.] Magistrate Judge McCurine held a telephonic status conference on June 11, 2010, at which time he set a timetable for Respondents to file a motion to quash setting forth their reasons opposing the subpoenas. [Doc. No. 8.] Nonetheless, on June 24, 2010, the day before Respondents were ordered to file their motion to quash, Respondents filed a status report arguing the subpoenas had never been properly served and requesting the deadline for their motion be extended. [Doc. No. 10.] In response to Respondents' filing, Chevron re-served signed and dated copies of the subpoenas, by filing the subpoenas as exhibits to a memorandum filed through the Court's electronic filing system. [Doc. No. 11.] Respondents filed yet another memorandum on June 25, 2010, objecting that the signed and dated subpoenas had not been properly served pursuant to the Federal Rules of Civil Procedure. [Doc. No. 12.]
The docket does not reflect any ruling on Respondents' motion to extend the time to file its motion to quash, and Respondents in fact filed their motion on June 26, 2010, as previously ordered by Magistrate Judge McCurine. [Doc. No. 18.] In their motion, Respondents renewed their argument that the subpoenas were not properly served. In addition, Respondents argued application was improper as to E-Tech International because it did not reside in the Southern District of California, that the documents and testimony sought from William Powers were privileged, and that the subpoenas were a misuse of the process under 28 U.S.C. § 1782.
The parties fully briefed the issues presented by Chevron's initial application and Respondents' motion to quash over the course of the next 60 days. Magistrate Judge McCurine held a hearing on Respondents' motion to quash on August 27, 2010. After reviewing all of the parties' arguments, Magistrate Judge McCurine ruled orally, denying Respondent Powers' motion to quash and ordering him to provide documents and sit for deposition. [Doc. No. 54, Transcript of August 27, 2010 hearing, pp. 49-61.] Magistrate Judge McCurine first found Chevron had satisfied the factors necessary to support discovery under 28 U.S.C. § 1782, as set forth in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004). [Id. at pp. 50-54.] Magistrate Judge McCurine also found the subpoena had been properly served upon Powers in compliance with the Federal Rules of Civil Procedure, and that the documents and testimony sought by the subpoena was not privileged. [Id. at pp. 54-57.] To the extent any of the documents or testimony was privileged, Magistrate Judge McCurine found the privilege waived when the material was transmitted to Mr. Cabrera, the court expert in the Lago Agrio Litigation. Alternatively, Magistrate Judge McCurine found the crime-fraud exception justified disclosure. [Id., at pp. 56-69.] Magistrate Judge McCurine held in abeyance the subpoena request and motion to quash as to E-Tech pending resolution of Chevron's § 1782 motion in the District Court in New Mexico where E-Tech is located. [Id. at pp. 61-62.] Magistrate Judge McCurine ordered Powers to produce documents requested by the subpoena by September 2, 2010, and to make himself available to give deposition testimony by September 8, 2010. [Id. at p. 63.]
On Tuesday, August 31, 2010, Respondents filed a motion questioning Magistrate Judge McCurine's authority to issue a final order on their motion to quash, and asking that he issue a report and recommendation for de novo review by the District Judge. [Doc. No. 39.] During a telephonic hearing on that date, Magistrate Judge McCurine declined to issue a report and recommendation. [Doc. No. 55, pp. 16-17.]*fn2
At 4:33 p.m. on September 2, 2010, the date on which Magistrate Judge McCurine ordered Powers to produce documents in compliance with Chevron's subpoena, Respondents filed a motion to stay, requesting time to brief the issue of the magistrate judge's authority to issue a final order on the motions under § 1782. [Doc. No. 43.] The Court granted Powers' motion to allow him an opportunity to file any appeal of Magistrate Judge McCurine's order, staying the order until noon on September 7, 2010. [Doc. No. 44.] The Court denied a motion by Chevron to lift the stay, and extended the stay briefly to allow an opportunity to review the transcript of the August 27, 2010 hearing at which Magistrate Judge McCurine issued his oral ruling. [Doc. Nos. 49 and 56.] By order filed September 7, 2010, the Court lifted the stay of Magistrate Judge McCurine's order, finding Respondent had not demonstrated he was entitled to a stay pending appeal. [Doc. No. 58.] Having received briefing from the parties, the Court now rules on the appeal.
Legal Standard for Review of Magistrate Judge McCurine's Order
As an initial matter, Respondents continue to object to Magistrate Judge McCurine's order, arguing Chevron's motion to conduct discovery under 28 U.S.C. § 1782, and his subsequent motion to quash the subpoena, are dispositive matters which may only be referred to a magistrate judge for the issuance of a report and recommendation under 28 U.S.C. § 636(b)(1)(B) and Fed. R. Civ. P. 72(b). Pursuant to § 636(b)(1)(A), [A] judge may designate a magistrate judge to hear and determine any pretrial matter pending before the court, except a motion for injunctive relief, for judgment on the pleadings, for summary judgment, to dismiss or quash an indictment or information made by the defendant, to suppress evidence in a criminal case, to dismiss or to permit maintenance of a class action, to dismiss for failure to state a claim upon which relief can be granted, and to involuntarily dismiss an action.
Any matter referred to a magistrate judge for hearing order under § 636(b)(1)(A) may be reconsidered by the district judge "where it has been shown that the magistrate judge's order is clearly erroneous or contrary to law."
Where a "dispositive" matter, as defined in § 636(b)(1)(A) is referred to a magistrate judge to conduct hearings, the magistrate judge must file proposed findings of fact and recommendations for disposition of the matter. 28 U.S.C. § 636(b)(1)(B). Thereafter, the parties may file objections to the findings and recommendations and the district judge must review de novo those specified portions of the findings and recommendations to which objection has been made. 28 U.S.C. § 636(b)(1).
Courts disagree over whether a motion under 28 U.S.C. § 1782 is a dispositive matter requiring the magistrate judge to issue a report and recommendation. See Four Pillars Enterprises Co., Ltd. v. Avery Dennison Corp., 308 F.3d 1075, 1078 (9th Cir. 2002) (Taiwanese company's application for assistance in conducting discovery in a foreign proceeding under § 1782 was referred to a magistrate judge as a non-case-dispositive discovery matter, and the appellate court reviewed the magistrate judge's rulings under abuse of discretion standard without discussing issue of magistrate judge's authority); In re Clerici, 481 F.3d 1324, 1331 (11th Cir. 2007) (standard of review for discovery ordered under § 1782 "is identical to that used in reviewing the district court's ordinary discovery rulings"); but see Phillips v. Beierwaltes, 466 F.3d 1217, 1221-22 (10th Cir. 2006) (questioning whether motions for discovery in aid of foreign litigation under § 1782 could ...