Petroleos Mexicanos v. Crawford Enterprises, Inc.

Citation826 F.2d 392
Decision Date10 September 1987
Docket NumberNos. 86-2750,86-2751,s. 86-2750
PartiesPETROLEOS MEXICANOS, Plaintiff-Appellant, v. CRAWFORD ENTERPRISES, INC., and Donald G. Crawford, et al., Defendants- Appellees. and UNITED STATES of America, Plaintiff, v. CRAWFORD ENTERPRISES, INC., and Donald G. Crawford, et al., Defendants- Appellees, v. PETROLEOS MEXICANOS, Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Kenneth R. Wynne, Alfredo R. Perez, Bracewell & Patterson, Houston, Tex., for plaintiff-appellant.

Kirkland & Ellis, James P. Cusick, Chicago, Ill., for IHC.

William H. Jeffress, Jr., Steve Braga, Herbert J. Miller, Jr., Miller, Cassidy, Larroca & Lewin, Washington, D.C., for Crawford, et al.

Appeals from the United States District Court for the Southern District of Texas.

Before GEE, JOHNSON and HILL, Circuit Judges.

ROBERT MADDEN HILL, Circuit Judge:

Petroleos Mexicanos (Pemex) appeals from an order of the district court finding Pemex in civil and criminal contempt of the court's orders and subpoenas. Pemex has allegedly failed to comply with the court's discovery orders and subpoenas, seeking the production of Pemex documents, issued in the criminal prosecution of Crawford Enterprises, Inc., and Donald G. Crawford. For the reasons stated below, we affirm in part and dismiss in part.

I.

On October 2, 1982, Crawford Enterprises, Inc., Donald G. Crawford (collectively Crawford), and six other individuals were indicted for multiple violations of the Foreign Corrupt Practices Act, 15 U.S.C. Sec. 78dd-2. The indictment alleged that Crawford and the other individuals had bribed certain officials of Pemex, the national oil company of Mexico, in order to obtain several multi-million dollar equipment contracts with Pemex. Crawford initially entered pleas of not guilty and denied any knowledge of improper payments to Pemex officials. In its defense Crawford claimed that the contracts had been awarded on the basis of Pemex's own competitive bidding process; that Pemex possessed documentation that would reflect this process; and that Crawford and the other defendants had been awarded the contracts because their bids were superior, not because of improper influencing of Pemex officials.

In October 1983, while the criminal proceeding against Crawford and the other defendants was pending in the Southern District of Texas, Pemex initiated a civil suit in the same district against Crawford and others. In its complaint Pemex sought several million dollars in both compensatory and punitive damages from Crawford and the other entities based upon the same conduct that was alleged in the criminal During the latter part of 1983, Crawford began its efforts to obtain the documents from Pemex that it claimed would be crucial to a defense of both the criminal and civil cases. In August 1983 Crawford persuaded the district court to send letters rogatory to Pemex requesting that it produce procurement, bidding process, and purchase order documentation relevant to the pending criminal matters. Four months elapsed and Crawford received no response from Pemex. Since the criminal proceeding was apparently moving toward an early trial, Crawford requested that the district court issue a subpoena directing Pemex to produce the documentation necessary for Crawford's defense. Pemex responded to this request by moving for a protective order claiming that the production request would be unduly burdensome. On December 20, 1983, the district court after a hearing on Crawford's request, issued a subpoena, pursuant to Fed.R.Crim.P. 17(c), directing production of several different categories of documents, including purchase orders, bid analyses, and procurement recommendations. The court ordered the production of the documents by February 6, 1984. 1

                indictment.  Pemex's suit was premised upon alleged violations of the Sherman Antitrust Act, 15 U.S.C. Sec. 1 et seq.; the Robinson-Patman Act, 15 U.S.C. Secs. 13(c), 14;  and the Racketeering Influenced and Corrupt Organizations Act, 18 U.S.C. Sec. 1961 et seq.    Pemex also asserted causes of actions based upon commercial bribery and common law fraud
                

Between January and April 1984 Pemex produced several thousand pages of documents mostly from its files in a Houston office. While many of the documents were responsive to the subpoena, the key documents involving the procurement and bidding process were noticeably absent. Crawford's counsel informed Pemex in two separate letters that the key documents had not been produced and requested that they be produced or an explanation given as to why they were not. Pemex did not respond to these letters. Faced with Pemex's lack of response, in June 1984 Crawford filed a motion to compel further compliance with the subpoenas. In its motion Crawford specified the types of documents not yet produced by Pemex and why they were important to Crawford's defense in both the criminal and civil action. Pemex filed no response to this motion. On July 17 the district court granted the motion and again ordered Pemex to "comply without further delay with this Court's previous order to produce all documents specified in the attachment to [Crawford's] Rule 17(c) subpoenas." From this date until February 1985, however, Pemex produced no further documents nor did it supply any reason why it did not respond or act. 2

With the criminal trial set for April 8, 1985, Crawford made a final effort to obtain the documents requested in the prior subpoenas and court orders. Crawford moved for an order for Pemex to show cause why it should not be held in contempt for failing to comply with the subpoenas and orders of the district court. Pemex opposed this motion by asserting that it had produced all of the subpoenaed documents in its possession that it had uncovered. Pemex also suggested that any failure to produce relevant documents should be attributable to the possibility that Crawford was involved with former Pemex employees in "covering their tracks." An order A hearing on the show cause motion was held on April 1, 1985. Crawford presented testimony and exhibits showing that the key documents they sought were prepared in the general course of Pemex's business and were usually retained in Pemex's file, that these documents were crucial to Crawford's defense in the criminal action and in Pemex's civil action, and that many of these key documents which had been specifically requested in the subpoenas had not been produced. 4 In response Pemex had witnesses testify that a search for relevant documents had been performed by Pemex officials, but on cross-examination the witnesses admitted to not having personal knowledge of the fact or scope of any search for the key documents. Pemex also asserted that a fire in 1982 had destroyed many of the documents sought by the subpoenas. While indicating that it believed at this point that Pemex had willingfully failed to comply with the court's orders, the district court did not hold Pemex in contempt, but directed Crawford to submit by the next day, April 2, a specific list of documents it needed and ordered Pemex to produce these documents by April 15. 5 Apparently thinking that it had finally resolved the discovery dispute, the district court adjourned the contempt hearing "without prejudice to the entry at a later date of an order imposing sanctions upon Pemex for failure to comply with this order and previous orders of this Court." On April 2 Crawford submitted the list ordered.

to show cause was issued by the district court on March 21, 1985. 3

On April 4, 1985, Crawford entered pleas of nolo contendere to the indictment specifically noting that they did so in part because they did not have the necessary documents to prepare their defense. On April 29 Pemex produced 2,731 pages of documents that were especially favorable to Crawford. In particular, Pemex produced an internal Pemex analysis of its contract procurements between 1977-79 (years covered within the indictment) that reflected the number of bidders on each contract, the amount of the bids, the specific promises made by the bidders, as well as explanations of why the winning bidder was chosen. Several key documents described in the subpoenas however were still not forthcoming from Pemex. Based upon Pemex's continued failure to produce key documentation, Crawford moved to reconvene the contempt hearing in August 1985, requesting that Pemex be held in both civil and criminal contempt of court. 6 The district court granted the request, and another hearing was finally scheduled for June 1986. 7

At the June 1986 hearing Crawford again presented evidence that the documents that had been so reluctantly surrendered to date by Pemex and the ones that had yet to be disclosed were documents ordinarily produced and kept by Pemex officials. Crawford also established that several of the documents had multiple copies and should be available from several sources within Pemex. Pemex sought to explain its failure to produce documents and its incremental disclosure of some documents. Pemex presented two officials who stated that a "good faith" effort had been made to discover the necessary documents. Both Pemex witnesses however explained that the documents had recently been discovered in a file cabinet in the office of one of the witnesses that had been previously searched. Pemex also attempted At the close of the evidence, the district court entered detailed findings of fact and conclusions of law. It found by clear and convincing evidence that the documents produced on April 29 and November 26, 1985 (with the exception of one document obtained from an outside engineering firm) did exist in Pemex's files in December 30, 1983, and continuously thereafter; that the documents were plainly called for by the subpoenas and court orders of December 30, 1983, and January 17 and July 17, 1984; that a conscientious search conducted in good faith would have located those documents;...

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