USActive 41997856.11

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF PUERTO RICO 

IN RE: 

THE FINANCIAL OVERSIGHT AND MANAGEMENT 

BOARD FOR PUERTO RICO, 

as representative of 

THE COMMONWEALTH OF PUERTO RICO, et al., 

Debtors.1

PROMESA 

Title III 

No. 17 BK 3283-LTS 

(Jointly Administered) 

OBJECTIONS OF ASSURED GUARANTY CORP., ASSURED GUARANTY 

MUNICIPAL CORP. AND NATIONAL PUBLIC FINANCE GUARANTEE 

CORPORATION TO THE MAGISTRATE JUDGE’S FEBRUARY 26, 2018 ORDER 

 

1

 The Debtors in these Title III cases, along with each Debtor’s respective Title III case 

number listed as a bankruptcy case number due to software limitations and the last four (4) digits 

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

Puerto Rico (“Commonwealth”) (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); and (v) Puerto Rico Electric Power 

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

ID: 3747). 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 1 of 21
USActive 41997856.11

TABLE OF CONTENTS 

PAGE 

TABLE OF AUTHORITIES .......................................................................................................... ii 

INTRODUCTION ...........................................................................................................................2

OBJECTION ....................................................................................................................................3

A. Factual Information In The Pre-Decisional Fiscal Plan Documents 

Is Not Protected By The Deliberative Process Privilege .............................3

B. Pre-Decisional Fiscal Plan Documents Communicated Between 

The Commonwealth, AAFAF, The Oversight Board And Their 

Professionals Are Not Protected By The Deliberative Process 

Privilege .......................................................................................................6

C. The Interests Of The Creditors And The Public Outweigh The 

Interests Of The Commonwealth, AAFAF, And The Oversight 

Board In Shielding The Pre-Decisional Fiscal Plan Documents ...............10

RESERVATION OF RIGHTS ......................................................................................................12

CONCLUSION ..............................................................................................................................13

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 2 of 21
USActive 41997856.11 -iiTABLE OF AUTHORITIES 

PAGE(S) 

CASES: 

Bhatia Gautier v. Roselló Nevares, 

2017 TSPR 173, 2017 WL 4975587 (P.R. 2017) ................................................................4, 11 

Corporacion Insular de Seguros v. Garcia, 

709 F. Supp. 288 (D.P.R.), appeal denied, 

876 F.2d 254 (1st Cir. 1989) ....................................................................................................11 

Dep’t of Interior v. Klamath Water Users Prot. Ass’n, 

532 U.S. 1 (2001) ......................................................................................................... 6-7, 9, 12 

In re Franklin Nat’l Bank Sec. Litig., 

478 F. Supp. 577 (E.D.N.Y. 1979) ......................................................................................4, 12 

In re McKesson Govtl. Entities Average Wholesale Price Litig., 

264 F.R.D. 595 (N.D. Cal. 2009) ...............................................................................................9 

In re Methyl Tertiary Butyl Ether (“MTBE”) Prod. Liab. Litig., 

898 F. Supp. 2d 603 (S.D.N.Y. 2012) ......................................................................................13 

In re Rivastigmine Patent Litig., 

No. 05 MD 1661, 2005 WL 2319005 (S.D.N.Y. Sept. 22) (Francis, M.J.), aff’d, 

2005 WL 3159665 (S.D.N.Y. Nov. 22, 2005) (Baer, J.) ...........................................................8 

Melendez-Colon v. U.S., 

56 F. Supp. 2d 142 (D.P.R. 1999) ........................................................................................9, 11 

P.R. Tel. Co. v. Reyes-Davila, 

No. CV 07-2167, 2008 WL 11357912 (D.P.R. Sept. 26, 2008) ................................................3 

PowerShare, Inc. v. Syntel, Inc., 

597 F.3d 10, 15 (1st Cir. 2010) ..................................................................................................3 

Providence J. Co. v. U.S. Dep’t of Army, 

981 F.2d 552 (1st Cir. 1992) .................................................................................................. 3-4 

Rivera Cortes v. Airport Catering Servs. Corp., 

386 F. Supp. 2d 14 (D.P.R. 2005) ..............................................................................................3 

Shell Oil Co. v. IRS, 

772 F. Supp. 202 (D. Del. 1991) ................................................................................................9 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 3 of 21
USActive 41997856.11 -iiiPAGE(S) 

Texaco P.R., Inc. v. Dep’t of Consumer Affairs, 

60 F.3d 867 (1st Cir. 1995) ..............................................................................................6, 7, 11 

U.S. v. Paredes-Reyes, 

992 F. Supp. 2d 56 (D.P.R. 2014) ..............................................................................................3 

W Holding Co. v. Chartis Ins. Co. of P.R., 

42 F. Supp. 3d 319 (D.P.R. 2014). .................................................................................4, 10, 11 

Wal-Mart P.R., Inc. v. Zaragoza-Gomez, 

152 F. Supp. 3d 67 (D.P.R. 2016) ............................................................................................12

Williams v. City of Bos., 

213 F.R.D. 99 (D. Mass. 2003) (Dein, M.J.) ...........................................................................13 

STATUTES & OTHER AUTHORITIES: 

PROMESA: 

§ 101(c)(1) .................................................................................................................................7 

§ 201(a) ......................................................................................................................................7 

§ 201(c)(2) .................................................................................................................................7 

§ 201(c)(3) .................................................................................................................................7 

§ 405(m)(1) ..............................................................................................................................12 

Fed. R. Civ. P. 72(a) ........................................................................................................................3 

L.Cv.R. 72(c) ...................................................................................................................................3 

Act No. 2-2017 § 4...........................................................................................................................7 

H.R. Rep. No. 114-602, pt. 1 (2016)..............................................................................................12 

6 James Wm. Moore, Moore’s Fed. Prac.: Civil § 26.52[5] (3d ed. 2016) .....................................4 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 4 of 21
USActive 41997856.11

To the Honorable United States District Judge Laura Taylor Swain: 

Assured Guaranty Corp., Assured Guaranty Municipal Corp. and National Public Finance 

Guarantee Corporation (collectively, “Objectors”) respectfully submit these objections to the 

Order of Magistrate Judge Judith Gail Dein (the “Magistrate Judge”), entered on February 26, 

2018 (ECF No. 2590),1 attached hereto as Exhibit A, resolving outstanding issues from the 

Urgent Renewed Joint Motion by the Ad Hoc Group of General Obligation Bondholders, Ambac 

Assurance Corporation, Assured Guaranty Corp., Assured Guaranty Municipal Corp., the 

Mutual Fund Group, and National Public Finance Guarantee Corporation for Order 

Authorizing Rule 2004 Examination (ECF No. 1870) pursuant to Rule 72(a) of the Federal Rules 

of Civil Procedure (the “Federal Rules”) and Rule 72(c) of the Local Rules for the United States 

District Court for the District of Puerto Rico (the “Local District Court Rules”). 

Objectors object to the portion of the 2004 Order finding that “communications among 

the Commonwealth, AAFAF, the Oversight Board and their professionals, as well as other 

materials relating to the creation of the 2017 and 2018 Plans” are subject to the deliberative 

process privilege. 2004 Order at 4; see also 2004 Order at 2 (collectively, “Pre-Decisional Fiscal 

Plan Communications”). Objectors also object to the portion of the 2004 Order finding that: 

The internal communications leading up to those [post-decisional] 

documents, however, as well as the drafts preceding the final 

plans, fall squarely within the deliberative process privilege. . . . 

Those communications or documents which led to the creation of 

the final 2017 and 2018 Plans are subject to the deliberative 

process privilege and may be withheld from production. 

2004 Order at 5 (citations omitted) (collectively and with the Pre-Decisional Fiscal Plan 

Communications, “Pre-Decisional Fiscal Plan Documents”). As to the remaining findings in the 

2004 Order, Objectors either do not object or, as set forth herein, reserves their rights to object. 

 

1

 “ECF No.” refers to docket entries in Case No. 17 BK 3283-LTS, unless otherwise noted. 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 5 of 21
USActive 41997856.11 -2- 

INTRODUCTION 

Throughout the Title III cases, Respondents2 have repeatedly relied on the deliberative 

process privilege to withhold highly relevant materials from Objectors and other parties.3 In 

response to Movants’ request for the production of certain categories of documents pursuant to 

Federal Rule of Bankruptcy Procedure 2004 (“Rule 2004”), Respondents asserted a blanket 

objection that entire swaths of highly relevant documents are somehow shielded from disclosure 

by the deliberative process privilege. See ECF No. 2154 at 3; ECF No. 2274 at 7-10. These 

documents are responsive to Movants’ Document Requests Numbers 8, 16 and 17 because they 

relate to the development and negotiation of prior and ongoing fiscal plans. Such documents 

also contain communications by and between the Commonwealth, AAFAF, the Oversight Board 

and their professionals relating to the development and negotiation of such fiscal plans. 

As argued before the Magistrate Judge, the deliberative process privilege is far more 

limited than asserted by Respondents. See ECF No. 2223 at 7; ECF No. 2302 at 6-7. In finding 

that Pre-Decisional Fiscal Plan Documents are subject to the deliberative process privilege, the 

Magistrate Judge incorrectly sanctioned an overly broad application of the deliberative process 

privilege. For the reasons set forth herein, Objectors respectfully request that the Court modify 

the 2004 Order and enter the Proposed Order, which is attached hereto as Exhibit B. 

 

2

 “Respondents” refers to the Federal Oversight and Management Board for Puerto Rico (the 

“Oversight Board”), the Commonwealth of Puerto Rico (the “Commonwealth”), and the Puerto 

Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”). “Movants” refers to Assured 

Guaranty Corp., Assured Guaranty Municipal Corp., National Public Finance Guarantee 

Corporation, the Ad Hoc Group of General Obligation Bondholders, Ambac Assurance 

Corporation, and the Mutual Fund Group. 

3

 E.g., The Puerto Rico Fiscal Agency and Financial Advisory Authority Objection to AMBAC 

Assurance Corporation Bankruptcy Rule 2004 Motion, ECF No. 1908 at 6-9; Debtors’ Omnibus 

Objection to Motions for Orders Authorizing Rule 2004 Discovery, ECF No. 1345 at 29-33. 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 6 of 21
USActive 41997856.11 -3- 

OBJECTION 

Federal Rule 72(a) and Local District Court Rule 72(c) permit a party to serve and file 

objections to an order of a magistrate judge within 14 days after service of the order. Fed. R. 

Civ. P. 72(a); L.Cv.R. 72(c). In determining objections to an order of a magistrate judge, the 

district judge “‘shall make a de novo determination of those portions of the report or specified 

proposed findings or recommendations to which objection is made.’” U.S. v. Paredes-Reyes, 

992 F. Supp. 2d 56, 59 (D.P.R. 2014) (citation omitted); P.R. Tel. Co. v. Reyes-Davila, No. CV 

07-2167, 2008 WL 11357912, at *4 (D.P.R. Sept. 26, 2008); Rivera Cortes v. Airport Catering 

Servs. Corp., 386 F. Supp. 2d 14, 17 (D.P.R. 2005). Because questions regarding privilege are 

questions of law, the correct standard of review is de novo. See PowerShare, Inc. v. Syntel, Inc., 

597 F.3d 10, 15 (1st Cir. 2010). Following this review, “‘[a] judge of the court may accept, 

reject, or modify, in whole or in part, the findings or recommendations made by the magistrate.’” 

Paredes-Reyes, 992 F. Supp. 2d at 59 (citation omitted). 

A. Factual Information In The Pre-Decisional Fiscal Plan Documents Is Not 

Protected By The Deliberative Process Privilege 

Objectors object to the 2004 Order to the extent the 2004 Order finds that factual 

information in the Pre-Decisional Fiscal Plan Documents is protected by the deliberative process 

privilege. The Pre-Decisional Fiscal Plan Documents are a subset of the documents requested in 

Document Requests Nos. 8, 16 and 17. The Pre-Decisional Fiscal Plan Documents clearly 

contain factual information regarding the fiscal plans, which is not protected by the deliberative 

process privilege. 

The First Circuit has stated that a “pre-decisional” document will be protected under the 

deliberative process privilege if “it (i) formed an essential link in a specified consultative 

process, (ii) ‘reflect[s] the personal opinions of the writer rather than the policy of the agency,’ 

and (iii) if released, would ‘inaccurately reflect or prematurely disclose the views of the 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 7 of 21
USActive 41997856.11 -4- 

agency.’” Providence J. Co. v. U.S. Dep’t of Army, 981 F.2d 552, 559 (1st Cir. 1992). In 2014, 

the Court described the requirements for information to be protected by the deliberative process 

privilege: 

The [deliberative process] privilege must be asserted by the head 

of the department that has control over the requested information 

after personally considering the material, with an explanation of 

the need for preserving the material’s confidentiality, and a 

detailed explanation of each withheld document. A document 

must be both “predecisional” and “deliberative” to qualify for the 

deliberative process privilege. 

W Holding Co. v. Chartis Ins. Co. of P.R., 42 F. Supp. 3d 319, 324 (D.P.R. 2014) (McGiverin, 

M.J.) (citations omitted). 

The Supreme Court of Puerto Rico has found that the deliberative process privilege does 

not cover factual matters and objective materials. See Bhatia Gautier v. Roselló Nevares, 2017 

TSPR 173 (P.R. 2017) (citing 6 James Wm. Moore, Moore’s Fed. Prac.: Civil § 26.52[5] at 26-

412.8 (3d ed. 2016)) (a certified translation of Bhatia Gautier is attached hereto as Exhibit C); In 

re Franklin Nat’l Bank Sec. Litig., 478 F. Supp. 577, 585 (E.D.N.Y. 1979). Factual information 

is entirely different from pre-decisional, deliberative, intra-agency communications that the 

deliberative process privilege is intended to protect. See Providence J., 981 F.2d at 559. Factual 

portions of privileged documents therefore are discoverable if their production does not comprise 

deliberative information entitled to protection. W Holding, 42 F. Supp. 3d at 324. Accordingly, 

any documents or communications containing in whole or in part data, figures, financial reports, 

forecasts or other factual information underlying the fiscal plans are not protected by the 

deliberative process privilege. 

The Pre-Decisional Fiscal Plan Documents are requested in Document Request Numbers 

8, 16 and 17, which clearly seek factual information: 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 8 of 21
USActive 41997856.11 -5- 

 Request Number 8 seeks “[i]tems not produced (both methodological and 

inputs) with respect to the DevTech models or codes that generate 

anticipated inflation and GNP, including but not limited to information 

regarding the meaning and method of calculation of any undefined 

variables.” ECF No. 1870, Schedule A. 

 Request Number 16 seeks: “[t]o the extent not already produced or 

requested above, any inputs, calculations, or formulae underlying (i) the 

Fiscal Plan for Puerto Rico certified on March 13, 2017, and the Puerto 

Rico Electric Power Authority Fiscal Plan certified on April 28, 2017, (ii) 

revisions to either of such fiscal plans, and (iii) forthcoming fiscal plans 

for the Commonwealth, PREPA, PRASA, and any instrumentality when 

and as submitted (and/or resubmitted) to the Oversight Board, together 

with copies of such forthcoming fiscal plans when and as submitted 

(and/or resubmitted) to the Oversight Board.” Id. 

 Request Number 17 seeks: “[a] fully functional model or workbook (in 

native format) showing how the Reconciliation Adjustment discussed on 

Page 15 of the Fiscal Plan for Puerto Rico certified on March 13, 2017 

was calculated including but not limited to any backup or linked 

spreadsheets and all data run through such model(s) or workbook(s), and 

analysis or documents sufficient to show how the Reconciliation 

Adjustment is reflected in the budgets for the Commonwealth, any agency 

or instrumentally therefor and the FOMB including, but not limited to, any 

analysis prepared to compare or “bridge” each line item in the 2014, 2015, 

or 2016 preliminary or final audits to that Fiscal Plan.” Id. 

There can be no dispute that the fiscal plans are largely, if not entirely, made up of factual 

information, including data, projections and assumptions. For instance, attached hereto as 

Exhibit D, is the “New Fiscal Plan for Puerto Rico,” dated January 24, 2018 (“January 2018 

Fiscal Plan”).4 The January 2018 Fiscal Plan is over 90 pages and is made up of graphs, charts, 

historical data, projections and assumptions. Factual information within the January 2018 Fiscal 

Plan and, thus, drafts of January 2018 Fiscal Plan and communications related thereto, are 

simply not the type of information that the deliberative process privilege is intended to protect. 

The same is true for drafts of other fiscal plans and communications related to those fiscal plans. 

 

4

 The January 2018 Fiscal Plan has not been certified by the Oversight Board. 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 9 of 21
USActive 41997856.11 -6- 

To find that the Pre-Decisional Fiscal Plan Documents are protected by the deliberative process 

privilege would be an improper expansion of the deliberative process privilege. 

For these reasons, the Court should modify the 2004 Order and find that the deliberative 

process privilege does not protect factual information in the Pre-Decisional Fiscal Plan 

Documents.5

B. Pre-Decisional Fiscal Plan Documents Communicated Between The 

Commonwealth, AAFAF, The Oversight Board And Their Professionals Are 

Not Protected By The Deliberative Process Privilege 

Objectors object to the 2004 Order because it finds that “communications among the 

Commonwealth, AAFAF, the Oversight Board and their professionals, as well as other materials 

relating to the creation of the 2017 and 2018 Plans” are subject to the deliberative process 

privilege. 2004 Order at 4. Pre-Decisional Fiscal Plan Documents communicated between 

(i) the Commonwealth, AAFAF and/or their respective professionals, on one side, and (ii) the 

Oversight Board and/or its professionals, on the other side, are not protected by the deliberative 

process privilege. Moreover, Pre-Decisional Fiscal Plan Documents communicated by and 

between (i) the Commonwealth and its professionals, (ii) AAFAF and its professionals, or 

(iii) the Oversight Board and its professionals are not protected, unless Respondents can show 

that the deliberative process privilege applies to each professional. 

As the First Circuit has held, and the Magistrate Judge recognized in the 2004 Order, the 

deliberative process privilege protects “the intra-governmental exchange of thoughts that actively 

contribute to the agency’s decisionmaking process[.]” Texaco P.R., Inc. v. Dep’t of Consumer 

Affairs, 60 F.3d 867, 884-85 (1st Cir. 1995); 2004 Order at 4; Dep’t of Interior v. Klamath Water 

 

5

 In the alternative, the Court should order that drafts of fiscal plans be produced redacting 

information purportedly protected by the deliberative process privilege. Communications 

regarding the fiscal plan also should be ordered to be produced redacting information 

purportedly protected by the deliberative process privilege. 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 10 of 21
USActive 41997856.11 -7- 

Users Prot. Ass’n, 532 U.S. 1, 9 (2001) (acknowledging the deliberative process privilege exists 

to “enhance the quality of agency decisions” by promoting candid conversations between agency 

officials.). Accordingly, “[e]ven if a document satisfies the criteria for protection under the 

deliberative process privilege, nondisclosure is not automatic. The privilege ‘is a qualified one’, 

and ‘is not absolute.’” Texaco, 60 F.3d at 885 (citations omitted). 

The 2004 Order, however, finds communications among the Commonwealth, AAFAF, 

the Oversight Board and their professionals are subject to the deliberative process privilege. 

There can be no credible dispute that the Commonwealth, AAFAF, and the Oversight Board are 

distinct entities with different roles and divergent interests. PROMESA expressly establishes the 

Oversight Board as an “entity,” meaning that the Board is a distinct legal person. 

See PROMESA § 101(c)(1) (emphasis added). Similarly, AAFAF was created by Act No. 

2-2017 as a “public corporation,” meaning that it, too, is a distinct legal person. See Act No. 

2-2017 § 4. Indeed, the Oversight Board sent a letter to Congress on March 12, 2018, attached 

hereto as Exhibit E, in which they stated “the Commonwealth and its instrumentalities, including 

PREPA, have retained their own counsel and other advisors for the Title III proceedings, on the 

grounds that the Commonwealth and its instrumentalities often have divergent interests from 

those of the [Oversight Board].” Id. (emphasis added). 

Moreover, the Commonwealth, AAFAF, and the Oversight Board are not intended to act 

as a unit with respect to the development, negotiation and certification of fiscal plans. The 

Commonwealth is required to propose a fiscal plan on a schedule established by the Oversight 

Board. PROMESA §§ 201(a), 201(c)(2). The Oversight Board is then required to review and 

approve or reject that fiscal plan. PROMESA § 201(c)(3). As a result, with respect to the fiscal 

plans, the Oversight Board is a third party who is engaged in arm’s-length discussions and 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 11 of 21
USActive 41997856.11 -8- 

negotiations with the Commonwealth and AAFAF.6 Their interests are not identical or aligned 

in the sense envisioned by courts applying the deliberative process privilege. Instead, their 

relationship better resembles that between regulated entities and their regulator, where the 

regulator’s duty is to monitor and enforce compliance. 

Indeed, the Commonwealth, AAFAF, the Oversight Board and their professionals have 

plainly engaged in communications in which they are not aligned. For instance, the fiscal plan 

released by the Commonwealth in February 2017 provided that approximately $1.164 billion of 

debt service per year would be paid to creditors (or $2.775 billion per year if federal health care 

funding was restored). See Proposed Commonwealth Fiscal Plan, dated Feb. 28, 2017, at 89, 

excerpt attached as Exhibit F. By contrast, the fiscal plan that was later certified by the 

Oversight Board in March 2017 provided that only approximately $787 million per year in debt 

service would be paid to creditors. See Certified Commonwealth Fiscal Plan, dated March 13, 

2017, at 28, excerpt attached as Exhibit G. Clearly, the Commonwealth, AAFAF, the Oversight 

Board and their professionals were not aligned as to the earlier fiscal plan.7 Creditors have the 

right to the complete production of these types of communications, which are highly relevant 

 

6

 On several occasions in these proceedings, the Commonwealth, AAFAF, and the Oversight 

Board have taken adversarial positions. For example, the Oversight Board brought a motion to 

appoint a Chief Transformation Officer to oversee PREPA, which the Commonwealth and 

AAFAF opposed. See Urgent Motion of Financial Oversight and Management Board for Puerto 

Rico for Entry of Order Confirming Appointment and Authority of Chief Transformation Officer, 

PREPA, Case No. 17-04780-LTS, ECF No. 361. Indeed, consistent with the Oversight Board’s 

role with regard to the Commonwealth, the Oversight Board has sued the Commonwealth 

government to enforce compliance with a fiscal plan. See Financial Oversight & Mgmt. Bd. for 

P.R. v. Rosselló Nevares, Adv. Proc. No. 17-250-LTS. 

7

 By comparison, the common interest privilege would not be applied to communications 

between the Commonwealth, AAFAF, and the Oversight Board regarding the fiscal plan because 

their respective interests are not aligned. See, e.g., In re Rivastigmine Patent Litig., No. 05 MD 

1661, 2005 WL 2319005, at *4 (S.D.N.Y. Sept. 22) (Francis, M.J.), aff’d, 2005 WL 3159665 

(S.D.N.Y. Nov. 22, 2005) (Baer, J.). 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 12 of 21
USActive 41997856.11 -9- 

evidence regarding the development and negotiation of the fiscal plans. The 2004 Order 

incorrectly allows the Respondents to shield the Pre-Decisional Fiscal Plan Documents from 

disclosure. 

Additionally, the 2004 Order appears to find that all Pre-Decisional Fiscal Plan 

Documents by and with professionals retained by the Commonwealth, AAFAF, and the 

Oversight Board are protected by the deliberative process privilege. Such a finding 

impermissibly broadens the deliberative process privilege. Contrary to this finding, the 

deliberative process privilege does not protect communications and documents shared with third 

parties, including professionals. Shell Oil Co. v. IRS, 772 F. Supp. 202, 207 (D. Del. 1991) 

(acknowledging “strong case law supporting the broad waiver rule” to hold that the disclosure of 

Air Force interagency documents to a third party destroyed deliberative process privilege); 

see also In re McKesson Govtl. Entities Average Wholesale Price Litig., 264 F.R.D. 595, 599 

(N.D. Cal. 2009) (finding state agency waived deliberative process privilege); Melendez-Colon 

v. U.S., 56 F. Supp. 2d 142, 145 (D.P.R. 1999) (holding that disclosure of a report waived 

deliberative process privilege). Even when a consultant falls within the deliberative process 

privilege, it is limited to situations in which “[the] consultants played essentially the same part in 

[the] agency’s process of deliberation” as the agency’s own personnel. Klamath, 532 U.S. at 10. 

Respondents did not even attempt to show that their respective professionals “played 

essentially the same part in the agency’s deliberative process” as the Commonwealth, AAFAF, 

or the Oversight Board. Indeed, Respondents have failed to disclose which professionals they 

claim are protected by the deliberative process privilege.8 There is no question that the 

 

8

 As of the date hereof, Objectors have not received a categorical privilege log that 

Respondents were ordered to produce in the 2004 Order. As a result, Objectors do not know 

which professionals received Pre-Decisional Fiscal Plan Documents. For the avoidance of 

doubt, Objectors reserve their rights to object to designations on Respondents’ privilege log, 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 13 of 21
USActive 41997856.11 -10- 

Commonwealth, AAFAF, and the Oversight Board have engaged a number of advisors, 

consultants, law firms and other professionals who are involved in the development and 

negotiation of the fiscal plans. For instance, DevTech Systems, Inc., a private consulting firm, is 

involved in preparing the fiscal plan or, at least, models underlying certain assumptions in the 

fiscal plans. An entity like DevTech should not be permitted to shield its communications using 

the deliberative process privilege. 

For these reasons, the Court should modify the 2004 Order and find that the deliberative 

process privilege does not protect (a) Pre-Decisional Fiscal Plan Documents communicated 

between (i) the Commonwealth, AAFAF and/or their respective professionals, on one side, and 

(ii) the Oversight Board and/or its professionals, on the other side, or (b) Pre-Decisional Fiscal 

Plan Documents communicated by and between (i) the Commonwealth and its professionals, 

(ii) AAFAF and its professionals, or (iii) the Oversight Board and its professionals, unless 

Respondents can show that the deliberative process privilege applies to each professional. 

C. The Interests Of The Creditors And The Public Outweigh The Interests Of 

The Commonwealth, AAFAF, And The Oversight Board In Shielding The 

Pre-Decisional Fiscal Plan Documents 

Objectors object to the 2004 Order because in finding that the Pre-Decisional Fiscal Plan 

Documents were protected by the deliberative process privilege, the 2004 Order appears to have 

found that the interests of the Commonwealth, AAFAF, and the Oversight Board weighed in 

favor of shielding the disclosure of the Pre-Decisional Fiscal Plan Documents from creditors and 

the public. The reverse is true. The interests of the creditors and the public in being provided 

 

including that documents and communications do not fall within the scope of the deliberative 

process privilege or that it was waived. Objectors further reserves their rights to request 

additional information from Respondents if the privilege log does not provide sufficient 

information on which to make such objections (see W Holding, 42 F. Supp. 3d at 324) and, if 

necessary, to request an in camera inspection of documents being withheld. 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 14 of 21
USActive 41997856.11 -11- 

the Pre-Decisional Fiscal Plan Documents far outweigh the interests of the Commonwealth, 

AAFAF, and the Oversight Board from blocking disclosure of such documents. 

The deliberative process privilege is not an absolute privilege and it must be weighed 

against the right of the person seeking the information. See Bhatia Gautier, 2017 TSPR 173 (Ex. 

C). The government must “prove in a precise and unequivocal manner the applicability of the 

privilege.” Id.; W Holding, 42 F. Supp. 3d at 324. The First Circuit has held that “[e]ven if a 

document satisfies the criteria for protection under the deliberative process privilege, 

nondisclosure is not automatic.” Texaco, 60 F.3d at 885; see also Corporacion Insular de 

Seguros v. Garcia, 709 F. Supp. 288, 299 (D.P.R.) (holding that the deliberative process privilege 

does not apply when a plaintiff’s “‘need for materials and the need for accurate fact finding 

overrides the government’s interest in non-disclosure’”) (citation omitted), appeal denied, 876 

F.2d 254 (1st Cir. 1989). Factors to consider include “the interests of the litigants, society’s 

interest in the accuracy and integrity of factfinding, and the public’s interest in honest, effective 

government.” Texaco, 60 F.3d at 885. 

Applying this balancing test, the scales tip decidedly in favor of disclosure of the 

Pre-Decisional Fiscal Plan Documents. At the first day hearing in these Title III proceedings, the 

Court stated that “transparency is important in these proceedings. . . . [A] method that . . . will 

make the steps and the issues as transparent as possible is appropriate from my perspective.” 

May 17, 2017 Hr’g Tr., ECF No. 207 at 63:6. Drafts of fiscal plans and communications 

regarding their development and negotiation are central to the disputes in the Title III 

proceedings and unavailable from other sources. Indeed, the Pre-Decisional Fiscal Plan 

Documents can be obtained only from Respondents. See Melendez-Colon, 56 F. Supp. 2d at 146 

(despite claim of deliberative process privilege, court ordered production because “Defendant is 

the only party with [the relevant] information and evidence”). 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 15 of 21
USActive 41997856.11 -12- 

The interests of the creditors as well as the public in having access to the Pre-Decisional 

Fiscal Plan Documents far outweigh the Respondents’ undefined interest in blocking disclosure 

of the Pre-Decisional Fiscal Plan Documents. Congress specifically identified “lack of financial 

transparency” as one of the primary factors leading to Puerto Rico’s financial difficulties. 

PROMESA § 405(m)(1). It is wrong for the Oversight Board, in particular, to claim a strong 

interest in preventing disclosure when a key part of the Oversight Board’s Congressional 

mandate is precisely to “bring order and transparency” to Puerto Rico. H.R. Rep. No. 114-602, 

pt. 1 at 40 (2016) (emphasis added); see also Wal-Mart P.R., Inc. v. Zaragoza-Gomez, 152 F. 

Supp. 3d 67, 73 (D.P.R. 2016) (in the context of the bank-examiner privilege, stating that “‘when 

the public’s interest in effective government would be furthered by disclosure . . . the 

justification for [a qualified] privilege is attenuated.’”) (quoting In re Franklin, 478 F. Supp. at 

582). 

For these reasons, the Court should modify the 2004 Order and find that any remaining 

information being withheld in the Pre-Decisional Fiscal Plan Documents is not protected by the 

deliberative process privilege because the interests of the creditors and the public in being 

provided the Pre-Decisional Fiscal Plan Documents outweigh the interests of the 

Commonwealth, AAFAF, and the Oversight Board. 

RESERVATION OF RIGHTS 

Objectors further reserve their rights to later argue that the deliberative process privilege 

has been waived with regard to the Pre-Decisional Fiscal Plan Documents. Like any other 

privilege, the deliberative process privilege can be waived. As discussed above, the deliberative 

process privilege can be waived by disclosure to third parties, including professionals. 

See Klamath, 532 U.S. at 10. The deliberative process privilege also can be waived when a party 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 16 of 21
USActive 41997856.11 -13- 

attempts to use privilege as both a sword and a shield or the information being withheld is the 

subject of litigation. In re Methyl Tertiary Butyl Ether (“MTBE”) Prod. Liab. Litig., 898 F. 

Supp. 2d 603, 610 (S.D.N.Y. 2012) (holding that because New Jersey’s “claims put directly at 

issue its own deliberations” the state therefore “waived the deliberative process privilege with 

regard to those documents”); Williams v. City of Bos., 213 F.R.D. 99, 102 (D. Mass. 2003) 

(Dein, M.J.) (deliberative process privilege is inapplicable where “the ‘decision-making process 

itself is the subject of the litigation[.]’”) (citation omitted). 

At this time, Objectors do not have sufficient information regarding the Pre-Decisional 

Fiscal Plan Documents to assert that a waiver of the deliberative process privilege, or any other 

privilege, has occurred. However, there can be no question that the fiscal plans are already the 

subject of litigation and will likely be the subject of future contested matters and other litigations. 

The development and negotiation of the fiscal plans will almost certainly be the focus of such 

contested matters and litigations. If it is, Respondents should not be permitted to withhold the 

Pre-Decisional Fiscal Plan Documents. See Williams, 213 F.R.D. at 102. Therefore, Objectors 

reserves their rights to later argue that the deliberative process privilege has been waived with 

regard to the Pre-Decisional Fiscal Plan Documents. 

CONCLUSION 

For the foregoing reasons, Objectors respectfully request that the Court enter the 

Proposed Order modifying the 2004 Order as follows: 

(1) The deliberative process privilege does not protect factual information set 

forth in the Pre-Decisional Fiscal Plan Documents; 

(2) The deliberative process privilege does not protect Pre-Decisional Fiscal 

Plan Documents communicated between (i) the Commonwealth, AAFAF and/or their 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 17 of 21
USActive 41997856.11 -14- 

respective professionals, on one side, and (ii) the Oversight Board and/or its 

professionals, on the other side; 

(3) The deliberative process privilege does not protect Pre-Decisional Fiscal 

Plan Documents communicated by and between (i) the Commonwealth and its 

professionals, (ii) AAFAF and its professionals, or (iii) the Oversight Board and its 

professionals, unless Respondents can show that the deliberative process privilege applies 

to each respective professional; and 

(4) The deliberative process privilege does not protect any remaining 

information being withheld in the Pre-Decisional Fiscal Plan Documents because the 

interests of the creditors and the public in being provided the Pre-Decisional Fiscal Plan 

Documents outweigh the interests of the Commonwealth, AAFAF, and the Oversight 

Board. 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 18 of 21
USActive 41997856.11 -15- 

Dated: San Juan, Puerto Rico 

 March 12, 2018 

CASELLAS ALCOVER & BURGOS P.S.C. 

By: /s/ Heriberto Burgos Pérez 

Heriberto Burgos Pérez 

USDC-PR 204809 

Ricardo F. Casellas-Sánchez 

USDC-PR 203114 

Diana Pérez-Seda 

USDC-PR 232014 

P.O. Box 364924 

San Juan, PR 00936-4924 

Telephone: (787) 756-1400 

Facsimile: (787) 756-1401 

Email: hburgos@cabprlaw.com 

 rcasellas@cabprlaw.com 

 dperez@cabprlaw.com 

Attorneys for Assured Guaranty Corp. and 

Assured Guaranty Municipal Corp. 

CADWALADER, WICKERSHAM & TAFT 

LLP 

By: /s/ Howard R. Hawkins, Jr. 

Howard R. Hawkins, Jr.* 

Mark C. Ellenberg* 

Ellen V. Holloman* 

Ellen M. Halstead* 

Gillian Groarke Burns* 

Thomas J. Curtin* 

Casey J. Servais* 

200 Liberty Street 

New York, NY 10281 

Telephone: (212) 504-6000 

Facsimile: (212) 406-6666 

Email: howard.hawkins@cwt.com 

mark.ellenberg@cwt.com 

ellen.holloman@cwt.com 

ellen.halstead@cwt.com 

gillian.burns@cwt.com 

thomas.curtin@cwt.com 

casey.servais@cwt.com 

* Admitted pro hac vice

Attorneys for Assured Guaranty Corp. and 

Assured Guaranty Municipal Corp. 

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 19 of 21
USActive 41997856.11 -16- 

ADSUDAR MUñOZ GOYCO SEDA & 

PÉREZ-OCHOA, PSC, P.S.C. 

By: /s/ Eric Pérez-Ochoa 

Eric Pérez-Ochoa 

USDC-PR No. 206,314 

Luis A. Oliver-Fraticelli 

USDC-PR NO. 209,204 

208 Ponce de Leon Ave., Suite 1600 

San Juan, PR 00936 

Telephone: (787) 756-9000 

Facsimile: (787) 756-9010 

Email: epo@amgprlaw.com 

 loliver@amgprlaw.com 

Attorneys for National Public Finance 

Guarantee Corporation

WEIL, GOTSHAL & MANGES LLP 

By: /s/ Jared R. Friedmann 

Marcia Goldstein* 

Jonathan Polkes* 

Gregory Silbert* 

Jared R. Friedmann* 

767 Fifth Avenue 

New York, New York 10153 

Telephone: (212) 310-8000 

Facsimile: (212) 310-8007 

Email: marcia.goldstein@weil.com 

 jonathan.polkes@weil.com 

 gregory.silbert@weil.com 

 jared.friedmann@weil.com 

* Admitted pro hac vice

Attorneys for National Public Finance 

Guarantee Corporation

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 20 of 21
USActive 41997856.11

CERTIFICATE OF SERVICE 

I hereby certify that I filed this document electronically with the Clerk of the Court using 

the CM/ECF System, which will send notification of such filing to all parties of record in the 

captioned case. Further, I directed that the following counsel of record be served by U.S. Mail: 

Office of the United States Trustee for Region 21

Edificio Ochoa 

500 Tanca Street, Suite 301 

San Juan, PR 00901-1922 

Gerardo J. Portela Franco 

Puerto Rico Fiscal Agency and Financial 

Advisory Authority (AAFAF) 

De Diego Ave. Stop 22 

San Juan, Puerto Rico 00907 

John J. Rapisardi, Esq. 

O’Melveny & Myers LLP 

7 Times Square 

New York, New York 10036 

Andrés W. López, Esq. 

Law Offices of Andrés W. López 

902 Fernández Juncos Ave. 

San Juan, PR 00907 

Martin J. Bienenstock, Esq. 

Proskauer Rose LLP 

Eleven Times Square 

New York, New York 10036-8299 

Hermann D. Bauer, Esq. 

O’Neill & Borges LLC 

250 Muñoz Rivera Ave., Suite 800 

San Juan, PR 00918-1813 

Nancy A. Mitchell, Esq. 

Greenberg Traurig LLP 

200 Park Avenue 

New York, New York 10166 

Arturo Diaz-Angueira, Esq. 

Cancio, Nadal, Rivera & Diaz, P.S.C. 

403 Muñoz Rivera Ave. 

San Juan (Hato Rey), PR 00918-3345 

Luc A. Despins, Esq. 

Paul Hastings LLP 

200 Park Avenue 

New York, New York 10166 

Juan. J. Casillas Ayala 

Casillas, Santiago & Torres LLC 

El Caribe Office Building 

53 Palmeras Street, Suite 1601 

San Juan, PR 00901-2419 

Robert Gordon, Esq. 

Jenner & Block LLP 

919 Third Avenue 

New York, New York 10022 

A.J. Bennazar-Zequeira 

Bennazar, Garcia & Milian, C.S.P. 

Edificio Union Plaza PH-A piso 18 Avenida 

Ponce de Leon #416 

Hato Rey, PR 00918 

At San Juan, Puerto Rico, this 12th day of March, 2018. 

By: /s/ Howard R. Hawkins, Jr. 

Howard R. Hawkins, Jr.* 

* Admitted pro hac vice

Case:17-03283-LTS Doc#:2707 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc: Main

Document Page 21 of 21