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Consistent Refusal to Produce Materials Deemed Sufficiently Culpable to Warrant Adverse Inference Instruction

Posted in CASE SUMMARIES

Lyondell-Citgo Refining, LP v. Petroleos de Venezuela, S.A., 2005 WL 1026461 (S.D.N.Y. May 2, 2005)

In the course of hearing the parties’ discovery disputes, the magistrate judge ordered defendant to “‘make all Board minutes and related Board documents available in hard copy, and electronic database, for review by plaintiff’s counsel.’” Defendant subsequently informed the magistrate that it would be unable to comply with the order on the grounds that Venezuelan law prohibited it from granting access to the materials. In response, the magistrate ordered an adverse inference, finding that the material was relevant and that defendant’s refusal to allow access to the material was sufficiently culpable. The magistrate noted that defendant continued to argue that the material was irrelevant, despite the prior rulings establishing relevancy, and that there was no proof that the Ministry was properly informed of the court’s rulings on the subject. Citing Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99 (2nd Cir. 2002), the district court affirmed the magistrate’s order. The court observed that the defendant had consistently refused to produce the Board materials despite repeated orders to do so, and that the adverse inference “restore[d] the evidentiary balance.”