UNITED STATES DISTRICT COURT 

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) 

RESPONSE TO 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 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); and (v) Puerto Rico Electric Power Authority (“PREPA”) (Bankruptcy Case No. 17 BK 4780-LTS) 

(Last Four Digits of Federal Tax ID: 3747) (Title III case numbers are listed as Bankruptcy Case numbers due to 

software limitations).

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TABLE OF CONTENTS

Page

INTRODUCTION ......................................................................................................................... 1

STANDARD OF REVIEW........................................................................................................... 4

I. JUDGE DEIN CORRECTLY CONCLUDED THAT CERTAIN 

MATERIALS COULD BE WITHHELD FROM PRODUCTION ON 

DELIBERATIVE PROCESS PRIVILEGE GROUNDS, SUBJECT TO 

CATEGORICAL LOGGING. ............................................................................... 5

A. Respondents Have Provided and Will Continue to Provide Factual 

Materials Underlying the Certified Commonwealth Fiscal Plans. ............ 7

B. The Privilege Applies Between The Oversight Board and 

Commonwealth Agencies. ......................................................................... 9

C. The Privilege Extends to Deliberations Involving the Government 

and the Oversight Boards’ Consultants.................................................... 11

D. Judge Dein’s Decision to Honor the Deliberative Process Privilege 

over Fiscal Plan Deliberations was not Clearly Erroneous...................... 12

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

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TABLE OF AUTHORITIES

Page(s)

Cases

Ambac Assurance Corp. v. Commonwealth of Puerto Rico, et al.,

No. 17-00159-LTS, Dkt. No. 156 (D.P.R. Feb. 27, 2018).......................................................13

Carter v. U.S. Dep’t of Commerce,

307 F.3d 1084 (9th Cir. 2002) ...................................................................................................5

Dept. of Interior v. Klamath Water Users Protective Ass’n,

532 U.S. 1 (2001).............................................................................................................5, 6, 11

Dipace v. Goord,

218 F.R.D. 399 (S.D.N.Y. 2003) ...............................................................................................9

Fox News Network, LLC v. U.S. Dep’t of The Treasury,

739 F. Supp. 2d 515 (S.D.N.Y. 2010)......................................................................................10

Goldenson v. Steffens,

2013 WL 145587 (D. Me. Jan. 14, 2013)..................................................................................5

Hunton & Williams LLP v. U.S. Envtl. Protection Agency,

248 F. Supp. 3d 220 (D.D.C. 2017)...........................................................................................9

In re Eagle-Picher Indus.,

169 B.R. 130 (Bankr. S.D. Ohio 1994)......................................................................................7

In re Franklin Nat’l Bank Sec. Litig,

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

In re Pittsburgh Corning Corp.,

Case No. 00-22876 (JKF) (Bankr. W.D. Pa.) (Feb. 19 Tr. )......................................................7

Jud. Watch, Inc. v. U.S. Dep’t of the Treasury,

796 F. Supp. 2d 13 (D.D.C. 2011).............................................................................................6

Lead Indus. Ass’n, Inc. v. Occupational Safety & Health Admin.,

610 F.2d 70 (2d Cir. 1979).........................................................................................................8

McKesson Governmental Entities Average Wholesale Price Litig., 

264 F.R.D. 595 (N.D. Cal. 2009).............................................................................................12

Melendez-Colon v. United States

56 F. Supp. 2d 142 (D.P.R. 1999)............................................................................................12

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TABLE OF AUTHORITIES

(continued)

Page(s)

iii

Nat’l Wildlife Fed’n v. U.S. Forest Serv.,

861 F.2d 1114 (9th Cir. 1988) ...................................................................................................6

New Hampshire Right to Life v. U.S. Dept. of Health and Hum. Services,

778 F.3d 43 (1st Cir. 2015)........................................................................................................6

PowerShare, Inc. v. Syntel, Inc.,

597, F.3d 10 (1st Cir. 2010)...................................................................................................4, 5

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

918 F.2d 552 (1st Cir. 1992)......................................................................................................8

Shell Oil Co. v. I.R.S.,

772 F. Supp. 202 (D. Del. 1991)..............................................................................................12

Soghoian v. Office of Management and Budget,

932 F. Supp. 2d 167 (D.D.C. 2013).......................................................................................8, 9

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

60 F.3d 867 (1st Cir. 1995)..................................................................................................6, 12

Tigue v. U.S. Dep’t of Justice,

312 F.3d 70 (2d Cir. 2002).......................................................................................................11

United States v. Rhode Island,

2016 U.S. Dist. LEXIS 123088 (D.R.I. Sept. 12, 2016)............................................................4

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

42 F. Supp. 3d 319 (D.P.R. 2014)..............................................................................................6

Statutes

28 U.S.C. § 636................................................................................................................................4

PROMESA § 101(c)(1)................................................................................................................3, 9

PROMESA § 106(e) ..................................................................................................................1, 13

PROMESA § 201(f).......................................................................................................................10

PROMESA § 315(b)........................................................................................................................1

Rules

Fed. R. Civ. P. 72(a) ........................................................................................................................4

Fed. R. Bankr. P. 2004.................................................................................................................2, 5

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The Commonwealth of Puerto Rico (the “Commonwealth”), as a Title III Debtor, by and 

through the Financial Oversight and Management Board for Puerto Rico (the “Oversight 

Board”), as the Commonwealth’s representative pursuant to section 315(b) of the Puerto Rico 

Oversight, Management, and Economic Stability Act (“PROMESA”), and the Puerto Rico Fiscal 

Agency and Financial Advisory Authority (“AAFAF,” and together with the Commonwealth and 

Oversight Board, “Respondents”), respond to the Objections of Assured Guaranty Corp., 

Assured Guaranty Municipal Corp. and National Public Finance Guarantee Corporation to the 

Magistrate Judge’s February 26, 2018 Order. ECF No. 2707 (the “Objection”). 

INTRODUCTION

Respondents have produced extensive materials regarding the Commonwealth’s financial 

condition to the public and to creditors, and Respondents have committed to producing a robust 

set of documents and information regarding the new Commonwealth Fiscal Plan, once it is 

certified. Nonetheless, Assured Guaranty Corp., Assured Guaranty Municipal Corp., and 

National Public Finance Guarantee Corporation (“Objectors”) have consistently demanded every 

interim draft and working paper, and every communication between the Government, the 

Oversight Board, and their respective advisors concerning the development of the 2017 

Commonwealth Fiscal Plan (which is now obsolete) and the 2018 Commonwealth plan still in 

development. Objectors’ demands show no regard for the cost and burden to the Commonwealth 

and no respect for the critical policy interest in preserving full and frank deliberations between 

and among the Commonwealth, the FOMB and their respective advisors on matters of 

indisputable public import.2 

 

2 Objectors also disregard the fact that this entire discovery dispute is occurring within the unique context of Fiscal 

Plans whose certifications cannot be contested as provided by PROMESA § 106(e). See Opinion and Order 

Granting the Motion to Dismiss Plaintiff’s Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(1) and (b)(6), 

Adv. Proc. No. 17-159 (ECF No. 156), at 20. Any action to contest the 2017 Commonwealth Fiscal Plan and the 

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Judge Dein properly rejected Objectors’ demands, her order should be sustained, and the 

Objection overruled. Specifically, on February 26, 2018, Judge Dein issued an order holding 

that certain materials created by Respondents were properly protected by the deliberative process 

privilege. The order balanced creditors’ demands for information with other competing policy 

objectives, including efficiency and the conservation of scarce resources. While Judge Dein 

allowed a Rule 2004 examination as to particular Rule 2004 requests, the Court found some of 

Objectors’ requests invaded Respondents’ legitimate interest in protecting the fiscal plan 

deliberations. The Court held that “[t]hose 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.” ECF No. 2590 at 5 (“February 26 Order”). Judge Dein 

ordered Respondents to produce a categorical privilege log including these materials, and 

adopted a procedure proposed by the parties earlier in the proceeding for resolution of any 

disputes arising out of the privilege log. Id. at 5-6, 12. Respondents are currently undergoing 

the time-consuming process of categorizing over a years’ worth of documents regarding such 

deliberations to satisfy the order, and have agreed with the moving parties on the Rule 2004 

Requests—the Ad Hoc Group of General Obligation Bondholders, Ambac Assurance 

Corporation, the Mutual Fund Group, and the Objectors (collectively, “Movants”)3— to produce 

a log by March 30, 2018. 

Rather than engage in good faith in the process ordered by Judge Dein, Objectors want 

this Court to compel disclosure of all of the Oversight Board and the Commonwealth’s 

 

still-developing 2018 Commonwealth Fiscal Plan would be met with an early dispositive motion to dismiss for lack 

of subject matter jurisdiction before any discovery is taken. Accordingly, while Respondents believe no discovery is 

appropriate in respect of the 2017 and 2018 Commonwealth Fiscal Plans because Congress clearly intended to put 

them outside the permissible universe of litigable issues, the Board is not appealing Judge Dein’s ordering of some 

discovery in respect of the plans, but also is not waiving the fact that the discovery ordered need not have been 

ordered.

3 Some of the Movants on the Renewed Joint Requests are not parties to the Objection. The term “Objectors” refers 

to the parties to the Objection. The term “Movants” refers to the moving parties on the Renewed Joint Requests. 

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deliberations leading up to the obsolete 2017 Commonwealth Fiscal Plan, and the entirety of 

ongoing deliberations with respect to the 2018 Commonwealth Fiscal Plan still in development. 

See Objection, ECF No. 2707. Objectors raise four principal objections to Judge Dein’s 

decision, each of which fails. 

First, Objectors erroneously contend that Judge Dein’s order applies the deliberative 

process privilege to purely factual materials and demand that Respondents conduct a burdensome 

document-by-document review to segregate any factual materials from their deliberations. Not 

so. Judge Dein found that pre-decisional materials leading up to the published fiscal plans could 

be withheld from production, subject to categorical logging. This finding was not erroneous 

(much less “clearly erroneous” as would be required to disturb her decision under First Circuit 

law). 

Second, Objectors claim, without supporting authority, that Judge Dein erred by holding 

that the deliberative process privilege covers communications between the Government and 

Oversight Board. Objectors posit that the privilege could never apply between the Oversight 

Board and the Government because they are distinct legal entities with differences of opinion 

during Fiscal Plan development. This is incorrect for two reasons. First, under PROMESA the 

Oversight Board is part of the government of Puerto Rico. PROMESA § 101(c)(1). Applicable 

law is clear — communications between separate government agencies are covered by the 

deliberative process privilege. Second, Objectors’ argument would gut the privilege. The 

privilege exists to foster frank deliberations on policy issues, including deliberations where the 

participants disagree. 

Third, Objectors contend that Judge Dein erred by applying the deliberative process 

privilege to communications between Respondents and their consultants, reasoning that 

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Respondents had not demonstrated that their consultants were actively involved in the 

deliberative process. This is both wrong on the merits and wrong on timing. The Objection 

concedes the consultants’ integral participation in the Fiscal Plan development process. And it is 

premature: Respondents will shortly produce a categorical privilege log demonstrating their 

consultants’ involvement in deliberations. 

Fourth, Objectors contend that Judge Dein erred in applying the deliberative process 

privilege to Fiscal Plan deliberations because creditors’ interest in disclosure purportedly 

overrides the privilege. Objectors’ make only vague references to “transparency” to support this 

claim. While Respondents are committed to transparency with respect to post-decisional 

materials, they have a strong interest in preserving full and frank deliberations supporting public 

policy decisions of enormous consequence. Disclosing all communications between the 

Government, the Oversight Board, and their respective advisors would chill deliberations, and 

hinder cooperation between the Government and the Oversight Board, injecting inefficiencies 

and even more cost into these proceedings. Accordingly, Judge Dein’s application of the 

privilege to Fiscal Plan deliberations was not clearly erroneous. 

For these reasons, as set forth more fully below, Respondents respectfully request that the 

Objection be overruled. 

STANDARD OF REVIEW

Judge Dein’s order, which is a non-dispositive pretrial matter, must be sustained unless it 

“is clearly erroneous or is contrary to law.” 28 U.S.C. § 636; Fed. R. Civ. P. 72(a); PowerShare, 

Inc. v. Syntel, Inc., 597, F.3d 10, 15 (1st Cir. 2010). Courts in the First Circuit apply the “clearly 

erroneous” standard to a magistrate judge’s discovery orders, including those involving privilege 

issues. See, e.g., United States v. Rhode Island, 2016 U.S. Dist. LEXIS 123088, *3–4 (D.R.I. 

Sept. 12, 2016) (“District courts review discovery rulings by a magistrate judge under the clearly 

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erroneous standard.”); Goldenson v. Steffens, 2013 WL 145587, *9 (D. Me. Jan. 14, 2013) 

(concluding that the clearly erroneous standard applies to evaluation of attorney-client privilege 

claim).4 

While this Court should review Judge Dein’s decision under the “clearly erroneous” 

standard, the ruling satisfies any applicable standard of review.

I. JUDGE DEIN CORRECTLY CONCLUDED THAT CERTAIN MATERIALS 

COULD BE WITHHELD FROM PRODUCTION ON DELIBERATIVE 

PROCESS PRIVILEGE GROUNDS, SUBJECT TO CATEGORICAL LOGGING.

In their Rule 2004 discovery requests, Movants demand production of all internal 

communications and documents exchanged between and among the Commonwealth, AAFAF 

and the Oversight Board, and their respective advisors, regarding both the March 2017 

Commonwealth Fiscal Plan and the ongoing development of the new Fiscal Plans. Judge Dein’s 

determination that “[t]he internal communications leading up to [the final 2017 and 2018 

Commonwealth Fiscal Plans], as well as the drafts preceding the final plans, fall squarely within 

the deliberative process privilege” (February 26 Order, ECF No. 2590 at 5) was neither clearly 

erroneous nor contrary to law.

The deliberative process privilege “rests on the obvious realization that officials will not 

communicate candidly among themselves if each remark is a potential item of discovery and 

front page news, and its object is to enhance the quality of agency decisions by protecting frank 

discussions among those who make them within the Government.” Dept. of Interior v. Klamath 

Water Users Protective Ass’n, 532 U.S. 1, 8–9 (2001) (internal citations and quotation marks 

omitted). “The purpose of [the] privilege is to allow agencies freely to explore possibilities, 

engage in internal debates, or play devil’s advocate without fear of public scrutiny.” Carter v. 

 

4 While Objectors argue that “questions regarding privilege are questions of law” subject to de novo review, the case 

they cite for this proposition involved construction of an arbitration clause, not any issues regarding privilege. 

PowerShare, 597 F.3d 10; Objection, ECF No. 2707 at 3.

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U.S. Dep’t of Commerce, 307 F.3d 1084, 1089 (9th Cir. 2002). The deliberative process 

privilege facilitates government decision making by: “(1) assuring subordinates will feel free to 

provide uninhibited opinions, (2) protecting against premature disclosure of proposed 

government policies, and (3) preventing confusion among the public that may result from 

releasing various rationales for agency action.” New Hampshire Right to Life v. U.S. Dept. of 

Health and Hum. Services, 778 F.3d 43, 52 (1st Cir. 2015). The privilege applies to 

communications that are “(1) predecisional, that is, ‘antecedent to the adoption of agency 

policy,’ and (2) deliberative, that is, actually ‘related to the process by which policies are 

formulated.’” Texaco P.R., Inc. v. Dep’t of Consumer Affairs, 60 F.3d 867, 884 (1st Cir. 1995) 

(quoting Nat’l Wildlife Fed’n v. U.S. Forest Serv., 861 F.2d 1114, 1117 (9th Cir. 1988)).5 

While certified Fiscal Plans, raw data, models, underlying data, formulae, and inputs (all 

of which have been or will be made available to Movants) are not necessarily subject to the 

privilege, communications between and among the Commonwealth, AAFAF and the Oversight 

Board, as well as the deliberative materials used to create fiscal plans and drafts thereof, are 

textbook examples of materials covered by the privilege which are immune from disclosure. See 

Klamath, 532 U.S. at 8 (deliberative process covers “deliberations comprising part of a process 

by which governmental decisions and policies are formulated”); Jud. Watch, Inc. v. U.S. Dep’t of 

the Treasury, 796 F. Supp. 2d 13, 31 (D.D.C. 2011) (post-decisional “documents properly fall 

under the deliberative process privilege when they recount or reflect pre-decisional 

deliberations” and documents “generated as part of a continuous process of agency decisionmaking” were protected by the deliberative process privilege). Permitting discovery of all drafts, 

internal memoranda, and communications between and among the Commonwealth, AAFAF, and 

 

5 The deliberative process privilege is the federal counterpart of Puerto Rico’s official information privilege. See W 

Holding Co. v. Chartis Ins. Co. of P.R., 42 F. Supp. 3d 319, 324 (D.P.R. 2014) (characterizing Puerto Rico’s official 

information privilege and federal deliberative process privilege as “essentially co-extensive”).

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the Oversight Board leading up to the submission, review and certification of the 2017 Fiscal 

Plan and the revised Fiscal Plan being developed would undermine the essential interests the 

privilege is intended to protect. 

Moreover, application of the deliberative process here is fully consistent with case law 

under the Bankruptcy Code, which has long held that draft bankruptcy plans are not 

discoverable. See In re Eagle-Picher Indus., 169 B.R. 130, 134 (Bankr. S.D. Ohio 1994) (“A 

creditor has no right to see the draft of a plan before its completion...”) (denying Rule 2004 

motion); In re Pittsburgh Corning Corp., Case No. 00-22876 (JKF) (Bankr. W.D. Pa.) (Feb. 19, 

2004 Tr. at 64) (“Prior drafts of the plan are not discoverable, they’re not admissible, they’re 

wholly irrelevant....”). 

A. Respondents Have Provided and Will Continue to Provide Factual Materials 

Underlying the Certified Commonwealth Fiscal Plans.

Objectors claim Judge Dein’s order improperly extends the deliberative process privilege 

to cover purely factual materials. Objection, ECF No. 2707 at 3–6. This is incorrect: Judge Dein 

never held that purely factual materials are privileged. In fact, Respondents have made the 

factual materials underlying the 2017 Commonwealth Fiscal Plan available and have agreed to 

do the same with respect to the 2018 Commonwealth Fiscal Plan once it is certified. See ECF 

No. 1928 at 22–23, 28–33. Movants have raised no issue with this production of factual 

materials. See February 26, 2018 Order, ECF No. 2590 at 6 (“Movants have reported that they 

have received information sufficient to respond to the requests for Fiscal Plan Development 

Materials relating to the 2017 Plan, and have requested similar information related to the 2018 

Plan.”). 

Even though they have (or will have) sufficient factual information to evaluate the new 

fiscal plan, Objectors want to force Respondents to compile every scrap of paper used in the 

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development of the Fiscal Plans and engage in a costly review of those documents to segregate 

deliberative comments from underlying facts. Objection, ECF No. 2707 at 6, n.5. Judge Dein 

correctly determined that this burden was unjustified. See February 26, 2018 Order, ECF No. 

2590 at 5 & n.6 (finding demand that Respondents be ordered to include the number of 

documents that fall within each category in a privilege log would be unduly burdensome). 

Moreover, the stated motivation for this demand is to discover “which data was relied on 

and which data was left on the cutting room floor.” ECF No. 2223 at 5. But Objectors cannot 

eviscerate the deliberative process under the guise of seeking “factual” materials. As the Second 

Circuit has held: 

Once again, instead of merely combing the documents for “purely factual” 

tidbits, the court should have considered the segments in the context of the 

whole document and that document’s relation to the administrative process 

which generated it. If the segment appeared in the final version, it is already 

on the public record and need not be disclosed. If the segment did not appear 

in the final version, its omission reveals an agency deliberative process: for 

some reason, the agency decided not to rely on that fact or argument after 

having been invited to do so. It might indeed facilitate LIA’s attack on the 

standards if it could know in just what respects the Assistant Secretary 

departed from the staff reports she had before her. But such disclosure of the 

internal workings of the agency is exactly what the law forbids.

Lead Indus. Ass’n, Inc. v. Occupational Safety & Health Admin., 610 F.2d 70, 86 (2d Cir. 1979) 

(internal citations omitted; emphasis added); see also Providence Journal Co. v. U.S. Dep’t of 

Army, 918 F.2d 552, 562 (1st Cir. 1992) (“Even when requested material is found to be factual, 

the courts have held it exempt where they were convinced that disclosure would expose an 

agency’s decisionmaking process . . . .”) (internal quotation marks omitted); Soghoian v. Office 

of Management and Budget, 932 F. Supp. 2d 167, 183 (D.D.C. 2013) (“Forcing the agency to 

identify differences between drafts and final versions would undermine the protection afforded 

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by the deliberative process privilege, as it would grant requesters the right to review agency 

employees’ suggestions that are then rejected in favor of alternatives.”) (citing Lead Industries).

Accordingly, Respondents should not be required to divert resources already stretched 

thin to the exercise of reviewing the entirety of their Fiscal Plan deliberations to attempt 

segregate purely factual materials. See Soghoian, 932 F. Supp. 2d at 183 (declining to order 

defendant to review its privilege withholdings to segregate post-decisional information).

B. The Privilege Applies Between The Oversight Board and Commonwealth 

Agencies.

Objectors argue that the deliberative process privilege cannot attach to fiscal plan 

deliberations between the Commonwealth and AAFAF, on the one hand, and the Oversight 

Board on the other. First, Objectors attempt to cast the Oversight Board as an unrelated “third 

party” such that the Commonwealth’s disclosure of pre-decisional information to it would 

destroy the privilege. See Objection, ECF No. 2707 at 7-8. Objectors point to the fact that the 

Commonwealth, AAFAF, and the Oversight Board are distinct legal entities to suggest the 

privilege could not apply deliberations between them. Id. at 7. To put it mildly, this point is 

poorly taken. While the Oversight Board, the Commonwealth and AAFAF are separate legal 

entities for some purposes, the Oversight Board (like the other two Respondents) is “an entity 

within the territorial government” of Puerto Rico. PROMESA § 101(c)(1). The deliberative 

process privilege attaches to deliberations between governmental entities. See, e.g., Hunton & 

Williams LLP v. U.S. Envtl. Protection Agency, 248 F. Supp. 3d 220, 247 (D.D.C. 2017) (“The 

deliberative process can—as it did here—span between two different agencies.”); Dipace v. 

Goord, 218 F.R.D. 399, 403 (S.D.N.Y. 2003) (“The privilege applies to both intra-agency and 

inter-agency communications.”). 

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Second, Objectors contend that the privilege cannot apply to Fiscal Plan deliberations 

between the Commonwealth and the Oversight Board because PROMESA supposedly dictates 

that they “are not intended to act as a unit with respect to the development, negotiation and 

certification of fiscal plans.” Objection, ECF No. 2707 at 7. Objectors misread PROMESA. 

PROMESA contemplates various paths for the development of a fiscal plan, including that the 

Governor (through his designees, including AAFAF) and the Oversight Board may jointly 

develop a fiscal plan. See Section 201(f) (providing for joint development of the fiscal plan). 

Stripping applicable privileges from any communications between the Oversight Board and other 

Commonwealth Government agencies would thwart the very cooperation that PROMESA 

encourages. 

Third, Objectors contend that because the Commonwealth and its instrumentalities have, 

at times, had “divergent interests” from the Oversight Board the privilege could not apply. 

Objection, ECF No. 2707 at 7–8. Objectors point to the evolution of the terms of the 

Commonwealth Fiscal Plan over the course of the Commonwealth and Oversight Board’s 

deliberations as somehow negating the deliberative process privilege. Id. at 8. Unsurprisingly, 

Objectors cite no legal authority whatsoever to support their suggestion that participants in a 

deliberative process must be in full agreement at all times for their deliberations to be protected 

from disclosure. Cf. Fox News Network, LLC v. U.S. Dep’t of The Treasury, 739 F. Supp. 2d 

515, 540, n.5 (S.D.N.Y. 2010) (noting that deliberative process would apply between 

government agencies “even if [one agency’s] employees were representing separate interests or 

taking policy positions different than those of [another agency’s] employees” and that “the 

interests of various agencies often diverge based on their different areas of responsibility and 

expertise.”). Indeed, such a rule would undermine the purpose of the privilege—to protect full 

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and frank deliberations by participants expressing different points of view and engaging in 

debate in order to achieve the best policy result.

C. The Privilege Extends to Deliberations Involving the Government and the 

Oversight Boards’ Consultants.

Objectors concede that outside consultants fall within the scope of the deliberative 

process when they are active participants in the deliberation. Objection, ECF No. 2707 at 9 

(citing Klamath); see also e.g., Tigue v. U.S. Dep't of Justice, 312 F.3d 70, 77 (2d Cir. 2002) 

(“[The Second] Circuit has recognized that agencies may require assistance from outside 

consultants formulating policy, and has held that ‘nothing turns on the point that . . . reports were 

prepared by outside consultants . . . rather than agency staff.’”); Klamath 532 U.S. at 10 

(deliberative process privilege extends to outside consultants who “played essentially the same 

part in an agency’s process of deliberation as the documents prepared by agency personnel might 

have done”). 

Objectors complain nonetheless that the deliberative process privilege should not attach 

to communications involving consultants on the theory that Movants have not demonstrated that 

the consultants participated in the Fiscal Plan deliberations. This contention is baseless. 

Objectors are fully aware that Respondents’ consultants are integral to development of the fiscal 

plans. Indeed, Objectors use DevTech as an example of a consultant who they claim falls 

outside the privilege, but admit that DevTech is actively involved in the deliberative process of 

creating the Fiscal Plan. Id. at 10 (“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.”). Moreover, Objectors gloss over the fact that Judge Dein ordered the Respondents to 

produce a categorical privilege log, which will cover consultant deliberations, and that she 

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adopted a dispute resolution protocol regarding the forthcoming log. Cf. Objection, ECF No. 

2707 at 9 & n.8.6

D. Judge Dein’s Decision to Honor the Deliberative Process Privilege over Fiscal 

Plan Deliberations was not Clearly Erroneous.

The decision to honor an assertion of the deliberative process privilege is “a discretionary 

one” based on the court’s weighing of competing interests. Texaco, 60 F.3d at 885. These can 

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.” Objection, ECF No. 2707 

at 11 (quoting Texaco, 60 F.3d at 885). Additional factors include “(i) the relevance of the 

evidence sought to be protected; (ii) the availability of other evidence; (iii) the seriousness of the 

litigation and the issues involved; (iv) the role of the government in the litigation; and (v) the 

possibility of future timidity by government employees who will be forced to recognize that their 

secrets are violable.” In re Franklin Nat’l Bank Sec. Litig, 478 F. Supp.577, 583 (E.D.N.Y. 

1979) (internal citations and quotation marks omitted) (cited in Texaco, 60 F.3d at 885). Against 

this framework, Objectors have not demonstrated that Judge Dein’s decision to honor the 

privilege was clearly erroneous. 

Respondents indisputably have a compelling interest in protecting against “the possibility 

of future timidity by government employees who will be forced to recognize that their secrets are 

violable” in regard to the development of fiscal plans. Franklin, 478 F. Supp. at 583. The fiscal 

plan development process inevitably involves nothing less than creating a blueprint for Puerto 

Rico’s economic future. The end result of that blueprint and all of the underlying data will be 

 

6 The cases cited in the Objection are distinguishable. Cf. Shell Oil Co. v. I.R.S., 772 F. Supp. 202, 203 (D. Del. 

1991) (finding waiver because of prior public disclosure of information); McKesson Governmental Entities Average 

Wholesale Price Litig., 264 F.R.D. 595, 599-600 (N.D. Cal. 2009) (finding waiver due to failure to assert privilege 

claim and voluntary production in litigation); Melendez-Colon v. United States 56 F. Supp. 2d 142, 145 (D.P.R. 

1999) (document at issue already produced to a third party in response to a Freedom of Information Act Request). 

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made public. However, public officials and their professional advisors must make countless 

difficult decisions to revitalize the Commonwealth. Making every utterance and email 

underlying those deliberations into litigation fodder would have a chilling effect on the candid 

discussion that is critical and central to the Fiscal Plan development process. 

Objectors have not articulated any defensible need for the deliberative materials they 

demand. Respondents have made extensive information regarding the Commonwealth’s 

financial information available to the public, and have made the formulae, inputs, and other 

factual information underlying the certified 2017 Commonwealth Fiscal Plan available to the 

Movants. They did not dispute this. With respect to the 2018 Commonwealth Fiscal Plan in 

development, AAFAF published the drafts submitted to the Oversight Board on its website, and 

has provided underlying models for those drafts. The only conceivable use of the remaining 

deliberative materials that Objectors demand would be to allow creditors to leverage differences 

between interim drafts, or statements made in the confidence of deliberation, in order to mount a 

challenge to the Fiscal Plan. See ECF No. 2223 at 5–6. Invasion of the Respondents’ 

deliberative process, not to mention the inordinate cost of collection and production, for this 

purpose is not justified. See Ambac Assurance Corp. v. Commonwealth of Puerto Rico, et al., 

No. 17-00159-LTS, Dkt. No. 156 at 20 (D.P.R. Feb. 27, 2018) (dismissing one of Objectors’ 

claims challenging the fiscal plans for lack of jurisdiction under PROMESA Section 106(e)). 

CONCLUSION

Objectors have no legitimate interest production of the fiscal plan deliberative materials, 

much less one that would justify the chilling effect it would have on ongoing fiscal plan 

deliberations, or the significant cost of production. For the reasons stated above, Respondents 

respectfully request that the Court overrule the Objection.

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Dated: March 23, 2018

San Juan, Puerto Rico

/s/ Martin J. Bienenstock

Martin J. Bienenstock 

Stephen L. Ratner

Timothy W. Mungovan

Paul V. Possinger 

(Admitted Pro Hac Vice)

PROSKAUER ROSE LLP

Eleven Times Square

New York, NY 10036

Tel: (212) 969-3000

Fax: (212) 969-2900

Attorneys for the Financial Oversight and 

Management Board and as representative of 

the Commonwealth

/s/ Hermann D. Bauer

Hermann D. Bauer (USDC No. 215205)

O’NEILL & BORGES LLC

250 Muñoz Rivera Ave., Suite 800

San Juan, PR 00918-1813

Tel: (787) 764-8181

Fax: (787) 753-8944

Co-Attorneys for the Financial Oversight and 

Management Board and as representative of 

the Commonwealth

Respectfully submitted,

/s/ John J. Rapisardi

John J. Rapisardi 

Peter Friedman

Elizabeth L. McKeen

(Admitted Pro Hac Vice) 

O’MELVENY & MYERS LLP 

7 Times Square 

New York, NY 10036 

Tel: (212) 326-2000 

Fax: (212) 326-2061 

Attorneys for the Puerto Rico Fiscal 

Agency and Financial Advisory Authority

/s/ Luis C. Marini-Biaggi

Luis C. Marini-Biaggi

USDC No. 222301 

Email: lmarini@mpmlawpr.com

s/ Carolina Velaz-Rivero 

Carolina Velaz-Rivero

USDC No. 300913

E:mail: cvelaz@mpmlawpr.com

MARINI PIETRANTONI MUÑIZ LLC

MCS Plaza, Suite 500

255 Ponce de León Ave.

San Juan, Puerto Rico 00917

Tel: (787) 705-2171

Fax: (787) 936-7494

Co-Attorneys for the Puerto Rico Fiscal 

Agency and Financial Advisory Authority

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