UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

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:

In re: :

:

THE FINANCIAL OVERSIGHT AND : PROMESA

MANAGEMENT BOARD FOR PUERTO RICO, : Title III

:

as representative of : Case No. 17-BK-3283 (LTS)

:

THE COMMONWEALTH OF PUERTO RICO, et al., :

:

(Jointly Administered)

Debtors.1:

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:

In re: :

:

THE FINANCIAL OVERSIGHT AND : PROMESA

MANAGEMENT BOARD FOR PUERTO RICO, : Title III

:

as representative of : Case No. 17-BK-4780 (LTS)

:

PUERTO RICO ELECTRIC POWER AUTHORITY, :

:

Debtors. :

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1. The Debtors in these Title III cases, along with each Debtor’s respective Title III case number and the last 

four (4) digits of each Debtor’s federal tax identification number, as applicable, are the (i) Commonwealth 

of Puerto Rico (Bankruptcy Case No. 17-BK-3283 (LTS)) (Last Four Digits of Federal Tax ID: 3481); (ii) 

Puerto Rico Sales Tax Financing Corporation (“COFINA”) (Bankruptcy Case No. 17-BK-3284 (LTS)) 

(Last Four Digits of Federal Tax ID: 8474); (iii) Puerto Rico Highways and Transportation Authority 

(“HTA”) (Bankruptcy Case No. 17-BK-3567 (LTS)) (Last Four Digits of Federal Tax ID: 3808); (iv) 

Employees Retirement System of the Government of the Commonwealth of Puerto Rico (“ERS”) 

(Bankruptcy Case No. 17-BK-3566 (LTS)) (Last Four Digits of Federal Tax ID: 9686); (v) Puerto Rico 

Electric Power Authority (“PREPA”) (Bankruptcy Case No. 17-BK-4780 (LTS)) (Last Four Digits of 

Federal Tax ID: 3747); and (vi) Puerto Rico Public Buildings Authority (“PBA”) (Bankruptcy Case No. 

19-BK-5233 (LTS)) (Last Four Digits of Federal Tax ID: 3801) (Title III case numbers are listed as 

Bankruptcy Case numbers due to software limitations).

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TABLE OF CONTENTS

Page

PRELIMINARY STATEMENT............................................................................................. 1

RELEVANT BACKGROUND.............................................................................................. 2

A. Mr. Brownstein’s Testimony...................................................................................... 3

B. Mr. Skeel’s Testimony................................................................................................ 9

ARGUMENT....................................................................................................................... 13

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TABLE OF AUTHORITIES

Page(s)

Cases

Berckeley Inv. Grp., Ltd. v. Colkitt,

455 F.3d 195 (3d Cir. 2006)..................................................................................... 13, 14

Engineered Prods. Co. v. Donaldson Co.,

313 F.Supp.2d 951 (N.D. Iowa 2004)............................................................................ 14

Galaxy Computer Servs., Inc. v. Baker,

325 B.R. 544 (E.D. Va. 2005)........................................................................................ 14

Hays v. Equitex, Inc. (In re RDM Sports Grp., Inc.),

277 B.R. 415 (Bankr. N.D. Ga. 2002) ........................................................................... 13

In re MSTG, Inc.,

675 F.3d 1337 (Fed. Cir. 2012)................................................................................ 14, 15

In re Residential Capital, LLC,

491 B.R. 63 (Bankr. S.D.N.Y. 2013)............................................................................. 14

United States v. Bilzerian,

926 F.2d 1285 (2d Cir. 1991)......................................................................................... 13

United States v. Workman,

138 F.3d 1261 (8th Cir. 1998) ....................................................................................... 13

Statutes

11 U.S.C. § 1122(a) ............................................................................................................... 3

PROMESA § 314(b)(6) & (7)................................................................................................ 3

Other Authorities

Fed. R. Civ. P. 26(a)(2)(C) .................................................................................................... 3

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OFFICIAL COMMITTEE OF UNSECURED CREDITORS’

MOTION IN LIMINE TO PRECLUDE TESTIMONY FROM DAVID

BROWNSTEIN AND DAVID SKEEL AT THE CONFIRMATION

HEARINGS AS TO MATTERS OVER WHICH THE OVERSIGHT BOARD

ASSERTED PRIVILEGE DURING THEIR DEPOSITIONS

To the Honorable United States District Judge Laura Taylor Swain:

The Official Committee of Unsecured Creditors of all Title III Debtors (the 

“Committee”),2 moves to preclude witnesses David Brownstein and David Skeel from 

testifying at the upcoming July 2023 confirmation hearing (“Confirmation Hearing”) as to 

matters on which they refused to answer questions in their depositions based on a “mediation 

privilege” or attorney-client privilege and states as follows:

PRELIMINARY STATEMENT

In accordance with the Court’s scheduling order for plan confirmation discovery, the 

Committee and other parties-in-interest took the depositions of Messrs. Brownstein and 

Skeel. Both witnesses refused to answer certain questions based on the instructions of their 

counsel that doing so would disclose information covered by the “mediation privilege” 

and/or would reveal attorney-client communications.

Specifically, at his May 16, 2023 deposition taken in preparation for the 

Confirmation Hearings (the “Brownstein Deposition”, Exhibit 1), Mr. Brownstein repeatedly 

invoked the “mediation privilege” and refused to answer (or was instructed not to answer) 

numerous questions regarding his anticipated testimony as proffered in the Oversight 

Board’s expert disclosures, including testimony relating to the negotiations leading to the 

settlements with National and the Fuel Line Lenders. When directly asked, Mr. Brownstein 

2. The Committee is the official committee of unsecured creditors for all Title III Debtors, other than PBA 

and COFINA.

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conceded that he, along with the Oversight Board, might decide to testify at the Confirmation 

Hearing on the very same issues that he refused to answer during his deposition based on a 

claim of mediation privilege. 

Mr. Skeel also refused to answer certain questions during his deposition relating to 

the negotiation of the National settlement on the grounds of the purported mediation 

privilege. Similarly, he declined to answer certain questions regarding the basis for his belief 

that the Oversight Board’s settlement with the Fuel Line Lenders is not unfairly 

discriminatory to other creditors on the grounds that doing so would violate the attorneyclient privilege. Notwithstanding these refusals to answer, Mr. Skeel intends to provide 

testimony at the Confirmation Hearing concerning these matters. 

Axiomatically, neither the Oversight Board nor its witnesses may invoke a privilege 

as both a shield and a sword. The Oversight Board (and any other party) should therefore 

be precluded from offering Mr. Brownstein’s and Mr. Skeel’s testimony at the Confirmation

Hearings as to issues on which the Committee and other interested parties were prevented 

from obtaining discovery.

RELEVANT BACKGROUND

1. On March 3, 2023, this Court entered the Amended and Restated Order

Establishing, Among Other Things, Procedures and Deadlines Concerning Objections to 

Confirmation and Discovery in Connection Therewith [Dkt. No. 3305]

3

(the “Amended and 

Restated Procedures Order”).Pursuant to the Amended and Restated Procedures Order, on 

March 11, 2023, the Financial Oversight and Management Board for Puerto Rico (the 

3. Unless otherwise specified, references to the docket are to Case No. 17-04780-LTS. 

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“Oversight Board” and as representative of PREPA, the “Debtor”), filed its Preliminary List 

of Witnesses to Be Offered in Support of Confirmation of Plan of Adjustment [Dkt. No. 3329]

(the “FOMB Witness List”).

2. Among others, the FOMB Witness List identified Mr. Brownstein, managing 

director of Citigroup Global Markets Inc., and Mr. Skeel, Chairman of the FOMB, as fact 

witnesses in support of confirmation. The FOMB also listed Mr. Brownstein as a witness 

who may “offer opinion testimony pursuant to Fed. R. Civ. P. 26(a)(2)(C).” See FOMB 

Witness List, at 3-4.

A. Mr. Brownstein’s Testimony

3. The FOMB Witness List described the topics about which Mr. Brownstein

“will testify” as follows:

David Brownstein*: Managing Director, Citigroup Global Markets Inc.: May 

provide testimony showing the Plan complies with the provisions of 

PROMESA sections 314(b)(6)4and 314(b)(7)5and Bankruptcy Code section 

1122(a).6 Mr. Brownstein may also provide testimony about facts showing (i) 

some or all of the Plan Settlements are reasonable, (ii) the releases provided 

in the Plan are reasonable and appropriate, integral to the Plan, and constitute 

an essential component of the compromises identified above and in the Plan, 

(iii) the Plan’s structuring and consummation fees and professional 

reimbursement fees are fair and reasonable, (iv) the terms and structure of the 

New Bonds and CVI, and (v) the calculation of creditor recoveries.

Id. at 3. 

4. Section 314(b)(6) concerns considerations as to whether PREPA’s plan “is feasible and in the best interests 

of creditors.” PROMESA § 314(b)(6). 

5. Section 314(b)(7) concerns considerations as to whether PREPA’s “plan is consistent with the applicable 

Fiscal Plan certified by the Oversight Board under title II.” Id. § 314(b)(7). 

6. Of course, § 1122(a) requires a debtor to classify similar claims in the same class. See 11 U.S.C. § 1122(a). 

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4. Consistent with the Amended and Restated Procedures Order, on April 28, 

2023, the Oversight Board submitted Debtor’s Opening Expert Report and Disclosures [Dkt. 

No. 3418] (the “Expert Disclosures”) in support of confirmation. The Expert Disclosures 

identified Mr. Brownstein as an important expert witness who would testify on an extensive 

variety of critical issues, as set forth in the disclosure. Expert Disclosures, at 2-5. These 

disclosures are set forth in five categories. Focusing on just as to two of the five topics of 

testimony, topics (iv)7and (v),

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for the purpose of this Motion:

Mr. Brownstein is expected to testify concerning the National PSA and Fuel 

Line Lenders PSA. Mr. Brownstein is expected to testify, to the extent 

consistent with mediation privilege, as to the nature of the negotiations that 

took place between the parties leading to those settlements, as well as the 

terms of the settlements, the benefits that they provide to PREPA, and the 

risks to PREPA were it to lose any of the disputes that are resolved through 

these settlements. Mr. Brownstein will also testify concerning the fees and 

other amounts proposed to be reimbursed or paid to National and the Fuel 

Line Lenders, as well as the releases provided for by the settlement and 

proposed to be effectuated by the Plan. Mr. Brownstein is also expected to 

testify the fess and other amounts proposed to be paid pursuant to these 

settlements are fair and reasonable in light of the obligations, responsibilities, 

and efforts undertaken by the proposed fee recipients, the relative magnitude 

of the fee payments compared to PREPA’s overall debt, and the use and 

magnitude of such fees in comparable cases. Mr. Brownstein will base this 

testimony on his personal participation in the negotiation of the National 

PSA and Fuel Line Lender PSA, his personal participation in, or supervision 

of, communications between and among advisors to the Oversight Board, and 

his significant expertise and experience in the municipal bond market and 

with Title III restructurings.

More specifically, with respect to the Fuel Line Lenders PSA, Mr. 

Brownstein is expected to testify regarding the key benefits the Oversight 

7. Topic (iv) is “the negotiation of the nation PSA and Fuel Line Lenders PSA, including the benefits of those

settlements . . ..”

8. Topic (v) is “the basis of the releases and professional fees provided in connection with those settlements 

in the Plan.”

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Board took into account in approving the settlement, including, among 

other things, its resolution of the litigation filed by the Fuel Line Lenders 

regarding the asserted priority of the Fuel Line Lenders’ claims. Regarding 

the release called for by the settlement, Mr. Brownstein may testify as to how 

such release’s proposed terms provide flexibility for the Oversight Board to 

enter into subsequent agreements with other parties.

As to the National Settlement, Mr. Brownstein is expected to testify that its 

structure, including its use of a trust commutation, is consistent with other 

settlements approved by this Court in other Title III plan confirmations, as 

well as prior municipal bond structures in which Mr. Brownstein has been 

involved. Mr. Brownstein may also address the National Reimbursement 

Claim, including its particular features. Further, Mr. Brownstein may also 

testify about the work done by National’s professional advisors relating to 

the structure of the Series B Bonds, and how such efforts provide a benefit to 

creditors who may enter into future settlements.

Id. at 4-5 (emphasis added).

5. On May 16, 2023, several interested parties, including the UCC, deposed Mr. 

Brownstein, as an expert and corporate representative of the Oversight Board, in anticipation 

of the Confirmation Hearing. 

6. More than 20 times during his deposition, Mr. Brownstein claimed the 

mediation privilege and refused to answer (or the Debtor, through the Oversight Board, 

asserted the mediation privilege and instructed the witness not to answer). The Oversight 

Board Counsel drew a “bright line,” indicating that it would invoke the mediation privilege 

as to the “process” leading to the settlement that forms part of Mr. Brownstein’s anticipated 

testimony.9 Specifically, counsel inquired:

[I]f I were to ask additional questions about the process as between the 

oversight board and the fuel line lenders and mediation that led to the 

9. See, e.g., Brownstein Dep. Tr. 93:4-23.

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agreement to the fuel line lenders’ PSA, is it fair to say that you’ll instruct 

the witness not to answer those process questions?

Mr. MERVIS: Probably. . .. One bright line, I will say, in terms of 

what went back and forth, yeah, that, I’m going to instruct him not to 

answer.

Brownstein Dep. Tr. 93:13-94:9.

7. The following table includes a sample of questions challenged on the basis of 

the mediation privilege:

EXCERPTS

What information, if any, did you provide to board members concerning proposals to the 

fuel line lenders?

A All proposals to and from the fuel line lenders were reviewed and approved by the board.

Q How many rounds of back-and-forth proposals and counterproposals were there?

MR. MERVIS10: I think I have to instruct the witness not to answer that question on the 

basis of mediation confidentiality.11

Q When did negotiations toward the National PSA beg[i]n?

A During mediation.

Q Early in mediation, middle in mediation, toward the end?

A Early to in the middle.

 . . . .

Q And was the mediation team involved in those negotiations?

MR. MERVIS: That one, I’m going to instruct the witness not to answer that question.12

Q My question is just whether the package of terms that you agreed to with National on its 

bond claim, is that same or different from the offer of settlement that was made to all 

PREPA bondholders under the terms of the plan of adjustment?

10. Mr. Mervis, of the Proskauer Rose LLP law firm, appeared on behalf of the Oversight Board, as 

representative for PREPA. 

11 Brownstein Dep. Tr. 91:6-19.

12 Brownstein Dep. Tr. 133:23-134:12.

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A Right. And what I’m saying to you is, in my view, that answer to that question 

incorporates things that are mediation privilege. So I can’t answer.

Q I don’t know how that could be. But we’ll move on.13

Q Now, in the same paragraph, it says, "Mr. Brownstein will base this testimony on his 

personal participation in the negotiation of the National PSA and fuel line lender PSA." 

My question is, was that negotiation as to either one of those PSAs outside of the mediation 

context?

A No.

Q So is it your belief that your personal participation in the negotiation of those two PSAs 

would also be encompassed by the mediation privilege?

MR. MERVIS: Object to the form.

A Well, those agreements are now in the public domain.

Q Correct.

A So it changes to some extent, not in full, but what we could talk about. I mean the dialogue 

we had with National along the way is something I’d be concerned about. The negotiations 

of the agreement and the deliberations by the board, I’d be concerned about. But explaining 

what the agreement is, is no longer mediation privileged. It’s in the public domain. 

Q Why would you be concerned about the dialogue with National?

MR. MERVIS: I object to the form.

A Well, again, as I said, this is something we’re going to have to talk with people about and 

get sign-offs on. I’m not going to make my own decision as to what we can and can’t do 

without talking to people who also are impacted by it.14

Q You can’t answer without revealing mediation privilege why the oversight board in its 

plan of adjustment did not offer to all PREPA bondholders the same exchange ratio that it 

offered and agreed to with National?

A Correct.

. . . . 

Q What is the basis on which you plan to testify that the National settlement is fair and 

reasonable when all PREPA bondholders were offered only a 50 percent exchange ratio 

under the plan of adjustment?

. . . . 

13 Brownstein Dep. Tr. 149:17-151:6. 

14 Brownstein Dep. Tr. 366:15-368:6.

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A I just don’t know how to not say it’s mediation privilege. So I can walk it through with 

you.15

Q . . . Do you think that proposals that are made in mediation are relevant to any issues 

concerning whether this plan should be confirmed?

. . . .

A I think that the challenge we have is that in order to properly answer those questions, I 

would need to be able to describe what happened in mediation. And I don't know how to 

split the two. I wish I could, so that we could come up with an answer to your question. I'm 

trying to avoid going out of school on mediation which I really need to be very cautious 

about.16

8. Mr. Brownstein took an expansive view of the mediation privilege, 

contending that it would apply to negotiations, proposals, counterproposals and other 

communications between the mediating parties during the “mediation process,” irrespective 

if it was during a mediation session. (Brownstein Dep. Tr. 354:6-356:19). He defined the 

“mediation process,” as the period that commenced with the “first mediation” until an 

impasse or settlement. (Id. at 356:6-13). He further testified that “any negotiations with 

creditors, any proposals made to them, any responses we receive from them in the mediation 

process” would “remain privileged.” (Id. at 355:3-10).

9. At his deposition, Mr. Brownstein was asked if he intended to waive the 

mediation privilege at all when called to testify at the confirmation hearing. (Id. at 356:22-

25). He answered that “I can’t answer that today.” (Id. at 357:14). When asked when he 

could answer it, he testified “When I’ve had discussions with both the mediators and my 

lawyers and other parties.” (Id. at 357:18-20). 

15 Brownstein Dep. Tr. 141:10-142:25. 

16 Brownstein Dep. Tr. 210:22-211:12. 

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10. Thus, at Mr. Brownstein’s deposition, the Oversight Board prevented the 

Committee and others from discovering information concerning negotiations and proposals 

leading to the fuel line lenders’ plan settlement agreement, negotiations and proposals 

concerning the settlement with National Public Finance Guarantee Corporation (“National”), 

the reasonableness of any settlement with the Fuel Line Lenders and National. 

B. Mr. Skeel’s Testimony

11. The FOMB Witness List described the topics about which Mr. Skeel “will 

testify” as follows:

May provide fact testimony showing the Plan complies with the provisions 

of PROMESA section 314(b)(1), including, without limitation, that it 

complies with the provisions of Bankruptcy Code sections 1122(a), 

1122(b), 1123(a)(1), 1123(a)(2), 1123(a)(3), 1123(a)(4), 1123(a)(5), 

1123(b)(1), 1123(b)(2), 1123(b)(3), 1123(b)(5), 1123(b)(6), 1123(d), 

1129(a)(2), 1129(a)(3), 1129(a)(6), 1129(a)(8) (if applicable), 1129(a)(10), 

1129(b)(1), and 1129(b)(2), PROMESA section 314(b)(2), 314(b)(3), 

314(b)(4), 314(b)(5), 314(b)(6), and 314(b)(7). Mr. Skeel may also provide 

testimony about facts showing (i) the Fuel Line Lender PSA, the National 

PSA, the Vitol Settlement Agreement, and Uninsured Bondholder 

Settlement Agreement (collectively, the “Plan Settlements”) are 

reasonable, (ii) the releases, injunctions, and exculpation provisions 

provided in the Plan are reasonable and appropriate, integral to the Plan, 

and constitute an essential component of the compromises identified above 

and in the Plan, and (iii) certain of the Commonwealth statutes the Oversight 

Board contends are preempted, or portions thereof, are inconsistent with 

PROMESA.

See FOMB Witness List, at 2-3. Importantly, section 1129(b)(1) of the Bankruptcy Code 

provides, among other things, that the plan must not “discriminate unfairly” against any 

impaired class of creditors not accepting the plan.

12. On May 3, 2023, the Committee and various other interest parties took Mr. 

Skeel’s deposition (the “Skeel Deposition”, Exhibit 2). During the deposition, Mr. Skeel 

confirmed that he intends to testify at the Confirmation Hearing on the matters set forth in 

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the FOMB Witness List, including the reasonableness of the plan settlements, and the plan’s 

compliance with section 1129(b)(1) of the Bankruptcy Code.

17

13. When questioned on these matters, however, Mr. Skeel at times declined to 

answer on grounds of privilege. For example, when asked whether the mediation was used 

to broker the FOMB’s settlement with National, he refused to answer the question based 

upon the purported mediation privilege:

Q Is it your testimony that the mediation was involved in brokering the 

settlement with National?

MR. FIRESTEIN: I'm going to object and instruct on the grounds that that 

invades first mediation process and the communications that would have 

occurred --

MR. KIRPALANI: No, sir. You cannot use a reference to the mediation 

process as a sword to defend the good-faith of an unfairly discriminatory 

settlement and then prevent me from asking about that.

MR. FIRESTEIN: Who says that that's what the intention is going to be? A 

mediation process includes not only involvement of the mediators, but also 

other directors --

MR. KIRPALANI: Now you're testifying.

MR. FIRESTEIN: If you're going to make a statement, then I'm going to 

tell you what I think. If you're going to tell me what I can't do, I'm going to 

tell you why I can.

MR. KIRPALANI: I'm going to tell you. We're going to bring Mr. Skeel 

back to answer this question if you instruct him.

MR. FIRESTEIN: You could do what you wish relative to that.

MR. KIRPALANI: That's fine. So just to be clear, you're instructing the 

witness not to answer a question about whether the mediation team was 

involved in the settlement with National?

MR. FIRESTEIN: That's not what the sentence says.

17 See, Skeel Dep. Tr. 281:18-282:25.

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MR. KIRPALANI: I'm asking you a question.

MR. FIRESTEIN: Yes. The answer is yes.

Skeel Dep. Tr. 250:13-252:9 (emphasis added).

14. Mr. Skeel also invoked the attorney-client privilege when asked why he 

believes it is fair for the plan of adjustment to treat the Fuel Line Lenders differently from 

other unsecured creditors (i.e., the exact issue on which he proposes to offer testimony at the 

confirmation hearing in relation to section 1129(b)(1) of the Bankruptcy Code). Mr. Skeel 

initially testified in his deposition that, when determining the fairness of the plan’s treatment 

of particular creditors, the FOMB needs to consider such creditor’s legal entitlements. See 

id. at 294:11-295:7 (“[O]ne of the things that we look at, what is their claim, are there legal 

infirmities with the claim and things of that sort.”). However, when asked to explain whether 

the Fuel Line Lenders have greater legal entitlements on their claims than other unsecured 

creditors, he refused to answer based on the attorney-client privilege: 

Q Setting aside those other considerations, are you aware of any reason why 

a fuel line lender's claim would have a greater legal entitlement to payment 

from PREPA as compared to another general unsecured claim that is also a 

current expense claim?

MR. FIRESTEIN: I'm going to instruct him not to answer that question. 

You're expressly asking for a legal conclusion. It's clearly invading 

attorney-client privilege because you excluded his answer that he gave you 

before. So I don't know how it could be anything but.

MR. BASSETT: I don't know how he's able to sit here and testify to the 

reasonableness of a settlement if he's not able to explain the basis for how 

he gets that.

MR. FIRESTEIN: You could argue that sometime if you'd like. But he's 

already articulated for you what his reasonable basis is.

Q You're not going to answer the question?

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MR. FIRESTEIN: He's going to follow my advice.

MR. KIRPALANI: I'd like to add an objection to your instruction. If this 

witness tries to put any testimony in, in support of settlements that you've 

prohibited him to answer questions about, we're going to move to exclude 

that testimony on the basis of your instruction today.

MR. FIRESTEIN: I don't understand that objection. But to the extent that 

he provides testimony that is consistent with what he's already -- what he's 

already said today, you have your rights. And we have ours. You would 

have had it tomorrow if you hadn't said it today.

MR. KIRPALANI: No. I want to be very clear that your instruction is 

jeopardizing his ability to testify fully about the reasons that the board 

entered into a settlement. I want to make sure that you're doing that 

knowingly because we're going to take that position.

MR. FIRESTEIN: Okay. I reject that characterization. The question that 

was posed of him was what are the legal reasons for why it is that you would 

do something. That question in its form has -- is absolutely directed at 

attorney-client communication because he has testified at some length today 

about the reasons why he thinks the settlements are fair or not fair or 

reasonable or not reasonable.

MR. KIRPALANI: We will see if that's sufficient.

MR. FIRESTEIN: I agree with that.

MR. BASSETT: I join in the objection. He testified earlier that he 

understands that in determining whether or not a plan is fair and reasonable, 

a creditor's legal entitlements have to be considered. He also testifies that 

he believes the settlements are reasonable. If he's not able to provide the 

basis for how he gets there using those underlying principals, how can he 

offer that testimony? 

MR. FIRESTEIN: That's not true. He can offer facts. And lawyers are 

empowered to use those facts and apply the law to them. And that's what 

lawyers do. And that's what you'll hear at confirmation. A witness is not 

obligated to give you facts and his legal opinion on things.

Skeel Dep. Tr. 330:25-335:7. As to the “facts,” if any, of which Mr. Skeel is aware that 

support his position regarding the fairness of the Fuel Line Lender settlement, he said he 

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believes the Fuel Line Lenders have a “strong claim” to priority treatment under the trust 

agreement for the PREPA bonds. Id. at 334:24-335:7. But when asked to elaborate on the 

basis for this position (including to explain how the trust agreement could possibly give the 

Fuel Line Lenders priority over non-bondholder creditors, including other current expense 

claimants), Mr. Skeel again hid behind the attorney-client privilege. Id. at 336:23-337:12 

(“My understanding [of why the Fuel Line Lenders have a strong argument] is based on our 

conversations with our lawyers”).

15. By raising these objections and refusing to provide answers the Committee’s 

questions, the Oversight Board and Mr. Skeel frustrated the Committee’s ability to fully 

explore the topics on which Mr. Skeel has said he intends to testify.

ARGUMENT

The Oversight Board and Messrs. Brownstein and Skeel made a strategic choice to 

employ broad privileges at their depositionsto refuse to answer numerous, relevant questions 

concerning matters that were identified in the FOMB’s witness disclosures. This choice had 

the obvious effect of denying the Committee (and other interested parties) relevant 

discovery. Prejudicially, the Oversight Board sought to suppress this testimony during 

discovery while retaining the right to solicit that same evidence for the first time during the 

witnesses’ testimony at the Confirmation Hearing. 

Evidentiary privileges may not be used as both “a shield and a sword.” See, e.g., 

United States v. Workman, 138 F.3d 1261, 1264 (8th Cir. 1998); United States v. Bilzerian, 

926 F.2d 1285, 1292 (2d Cir. 1991) (providing that the attorney-client privilege may not be 

used as both a sword at trial and a shield in discovery); Berckeley Inv. Grp., Ltd. v. Colkitt, 

455 F.3d 195, 221 n.24 (3d Cir. 2006); Hays v. Equitex, Inc. (In re RDM Sports Grp., Inc.), 

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277 B.R. 415, 437 (Bankr. N.D. Ga. 2002) (applying the “sword and shield” concept to an 

asserted mediation privilege); In re MSTG, Inc., 675 F.3d 1337, 1348 (Fed. Cir. 2012).

Accordingly, the Oversight Board cannot invoke the mediation privilege during the 

Brownstein Deposition to thwart discovery by the Committee and others, only to then seek 

to waive that privilege and testify on those very same, previously-secreted topics and issues:

The weight of authority indicates that to permit [the witness] to testify to 

issues which she refused to testify to during her deposition based on privilege 

would allow the Defendants to use . . . privilege as both a shield and a sword. 

Thus, [the witness] may only testify at trial within the scope of her deposition.

Galaxy Computer Servs., Inc. v. Baker, 325 B.R. 544, 559 (E.D. Va. 2005).

18

The rationale for this rule — which applies in full force in bankruptcy proceedings 

— is rooted in notions of fundamental fairness: “A party may not use the privilege to 

prejudice his opponent’s case or to disclose some selected communications for self-serving 

purposes.” In re Residential Capital, LLC, 491 B.R. 63, 68 (Bankr. S.D.N.Y. 2013) (quoting 

Trouble v. The Wet Seal, Inc., 179 F. Supp. 2d 291, 304 (S.D.N.Y. 2001)). 

The Oversight Board should be precluded from now redefining the mediation and 

attorney-client privileges to offer testimony that it withheld in discovery. The MSTG decision 

highlights the unfairness inherent in the tactic the Oversight Board adopted here. In MSTG,

the Court of Appeals for the Federal Circuit evaluated whether to overturn the district court’s

order compelling party (MSTG) to produce certain discovery (testimony and documents) 

that related to settlement negotiations that ultimately resulted in an executed settlement. 

18. See also Berckeley Inv. Grp., Ltd. v. Colkitt, 455 F.3d 195, 221 n.24 (3d Cir. 2006) (“[W]e remind the 

parties that the . . . privilege cannot be used as both a ‘shield’ and a ‘sword’: Berckeley cannot rely upon 

the legal advice it received [to] negat[e] its scienter without permitting Colkitt the opportunity to probe the 

surrounding circumstances and substance of that advice.’”). Engineered Prods. Co. v. Donaldson Co., 313 

F.Supp.2d 951, 1022-23 (N.D. Iowa 2004) (barring party’s introduction of testimony at trial on issues for 

which opposing party denied full exploration at deposition by asserting privilege).

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MSTG, 675 F.3d at 1339-40. The MSTG Court observed that the party’s expert relied on 

information about the settlement discussions in rendering his expert opinion that was not 

contained in the parties’ settlement documents.19 The MSTG Court declined to overrule the 

district court and highlighted that “as a matter of fairness MSTG cannot at one and the same 

time have its expert rely on information about the settlement negotiations and deny discovery 

as to those same negotiations.” MSTG, 675 F.3d at 1348 (emphasis added).

As discussed above, the same notions of fairness are at play in conjunction with the 

Confirmation Hearing and the Oversight Board’s assertion of privilege at the depositions of 

Messrs. Brownstein and Skeel. Specifically, with respect to Mr. Brownstein, having used 

the mediation privilege to shield from relevant discovery at his deposition, the Oversight 

Board should be precluded from referring to any matters supposedly subject of the mediation 

privilege at the Confirmation Hearing to show that: (a) PREPA’s proposed plan of 

adjustment complies with the provisions of PROMESA §§ 314(b)(6) and 314(b)(7) and 

Bankruptcy Code section 1122(a); (b) some or all of the plan settlements are reasonable; (c)

the releases provided in the Plan are reasonable and appropriate, integral to any plan; (d) 

PREPA’s proposed plan’s structuring and consummation fees and professional 

reimbursement fees are fair and reasonable; or (e) any other matter or topic about which Mr. 

Brownstein may be called to testify, whether as a Rule 30(b)(6) designee or an expert. 

Similarly, the Oversight Board should not be permitted to introduce testimony from Mr. 

Skeel (i) on topics covered by a mediation privilege relating to the negotiation of the National 

19

. The district court ordered production of materials relating to negotiations “because they might contain 

information showing that the grounds [the expert] relied on to reach his conclusion are erroneous” and to 

permit the alleged infringer “the ability to test the accuracy of [the expert's] opinions and assumption.” 

MSTG, 675 F.3d at 1348 (citation omitted).

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settlement or (ii) as to the basis for his belief that the Fuel Line Lenders have strong 

arguments supporting the Oversight Board’s decision to provide the Fuel Line Lenders with 

greater treatment than general unsecured creditors under the plan of adjustment.

WHEREFORE, the Committee respectfully requests that the Court grant this motion, 

limit the Oversight Board from offering testimony at the Confirmation Hearing as requested 

in this motion, and grant such other and further relief as the Court deems necessary. 

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Dated: June 2, 2023 /s/ John Arrastia

John Arrastia, Esq. (Pro Hac Vice)

Jesus M. Suarez, Esq. (Pro Hac Vice)

Angelo M. Castaldi, Esq. (Pro Hac Vice)

CONTINENTAL PLLC

255 Alhambra Cir, Suite 640, 

Miami, FL 33134

Tel: (305) 677-2707

jarrastia@continentalpllc.com

jsuarez@continentalpllc.com

acastaldi@continentalpllc.com

Special Litigation Counsel to the Official 

Committee of Unsecured Creditors

- and -

/s/ Juan J. Casillas 

CASILLAS, SANTIAGO & TORRES LLC

Juan J. Casillas Ayala, Esq. (USDC - PR 218312) 

Israel Fernández Rodríguez, Esq. (USDC - PR 

225004) 

Juan C. Nieves González, Esq. (USDC - PR 

231707)

Cristina B. Fernández Niggemann, Esq. (USDC -

PR 306008) 

PO Box 195075 

San Juan, PR 00919-5075 

Tel.: (787) 523-3434 

Fax: (787) 523-3433

jcasillas@cstlawpr.com 

ifernandez@cstlawpr.com 

jnieves@cstlawpr.com 

cfernandez@cstlawpr.com 

Local Counsel to the Official Committee of 

Unsecured Creditors

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