CITGO v. Pharo Gaia Fund

• Court: Supreme Court of Delaware
• Decided: October 4, 2021
• Docket: 299, 2021
• Status: Published

Opinion

IN THE SUPREME COURT OF THE STATE OF DELAWARE

CITGO PETROLEUM § CORPORATION and PDV § HOLDING INC., § No. 299, 2021 § Non-Parties Below, § Court Below—Superior Court Appellants, § of the State of Delaware § v. § C.A. Nos. N21M-06-085 and § N21M-06-086 PHARO GAIA FUND LTD. and § PHARO MACRO FUND, LTD., § § Plaintiffs Below, § Appellees. § §

Submitted: September 20, 2021 Decided: October 4, 2021

Before VAUGHN, TRAYNOR, and MONTGOMERY-REEVES, Justices.

ORDER

Upon consideration of the notice of interlocutory appeal and the exhibits

attached thereto, it appears to the Court that:

(1) The appellants, CITGO Petroleum Corporation and PDV Holding Inc.,

have petitioned this Court, pursuant to Supreme Court Rule 42, to accept an

interlocutory appeal from the Superior Court’s bench ruling and implementing order

denying their motion to quash.

(2) In September 2020, the United States District Court for the Southern

District of New York (“the District Court”) entered a $149 million judgment in favor of the appellees, Pharo Gaia Fund, Ltd. and Pharo Macro Fund, Ltd. (collectively,

“Pharo”), against the Bolivarian Republic of Venezuela. Pharo sought post-

judgment discovery from non-parties CITGO and PDV, Delaware entities and

subsidiaries of a Venezuelan state-owned oil company. Pharo originally served

CITGO’s New York registered agent with a subpoena issued by the District Court,

but withdrew the subpoena following CITGO’s objection to the District Court’s

jurisdiction.

(3) On June 14, 2021, Pharo asked the Superior Court Prothonotary to issue

subpoenas to CITGO and PDV. The requests included subpoenas issued by the

District Court to CITGO and PHV. Following issuance and service of the subpoenas

in Delaware, CITGO and PDV filed a motion to quash. They argued that: (i) the

subpoenas were facially invalid because the Delaware Uniform Interstate

Depositions and Discovery Act, 10 Del. C. § 4311 (“DUIDDA”) does not apply to

discovery initiated by litigants in federal court proceedings; and (ii) even if properly

issued, the subpoenas did not seek relevant information. Pharo opposed the motion

to quash.

(4) After oral argument, the Superior Court denied the motion to quash in

a bench ruling. The Superior Court concluded that DUIDDA permitted not just the

issuance of subpoenas based on subpoenas issued by other state courts, but also

subpoenas issued by federal courts within other states. The Superior Court also

2 found that the subpoenas sought relevant discovery under an alter ego theory. The

Superior Court issued a written order denying the motion to quash on August 23,

2021.

(5) CITGO and PDV filed a timely application for certification of an

interlocutory appeal of the Superior Court’s decision. Pharo opposed the

application. On September 20, 2021, the Superior Court denied the application for

certification.

(6) As an initial matter, the Superior Court concluded that its decision did

not decide a substantial issue of material importance because it related to discovery,

not the merits of the parties’ dispute. As to the Rule 42(b)(iii) criteria, the Superior

Court found that none of the criteria weighed in favor of certification. The Superior

Court acknowledged that the decision resolved an issue of first impression (Rule

42(b)(iii)(A)), but found that CITGO and PDV’s novel arguments lacked support.

The Superior Court also recognized that the decision resolved the construction of a

Delaware statute (Rule 42(b)(iii)(C)), but found that immediate consideration and

resolution of the issue was not required because the proposed construction by

CITGO and PDV lacked support, and the decision did not affect the merits of the

parties’ dispute.

(7) We agree that interlocutory review is not warranted in this case.

Applications for interlocutory review are addressed to the sound discretion of the

3 Court.1 In the exercise of its discretion and giving great weight to the trial court’s

view, this Court has concluded that the application for interlocutory review does not

meet the strict standards for certification under Supreme Court Rule 42(b).

Exceptional circumstances that would merit interlocutory review of the Superior

Court’s interlocutory opinion do not exist in this case,2 and the potential benefits of

interlocutory review do not outweigh the inefficiency, disruption, and probable costs

caused by an interlocutory appeal.3

NOW, THEREFORE, IT IS ORDERED that the interlocutory appeal is

REFUSED.

BY THE COURT:

/s/ Gary F. Traynor Justice

1 Supr. Ct. R. 42(d)(v). 2 Supr. Ct. R. 42(b)(ii). 3 Supr. Ct. R. 42(b)(iii). 4