UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
In the Matter of the Arbitration under the North
American Free Trade Agreement (NAFTA)
between
INTERNATIONAL THUNDERBIRD
GAMING CORPORATION
Petitioner,
vs.
THE UNITED MEXICAN STATES,
Respondent.
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Civil Action No. 06-00748 (HHK/AK)
PETITIONER INTERNATIONAL THUNDERBIRD GAMING CORPORATION’S
OPPOSITION TO MOTION FOR LEAVE TO FILE SUPPLEMENTAL REPLY IN
SUPPORT OF UNITED MEXICAN STATES’ MOTION TO COMPEL DISCOVERY
AND FOR SANCTIONS AGAINST PETITIONER INTERNATIONAL THUNDERBIRD
GAMING CORPORATION
Intent on obtaining post-judgment discovery and sanctions against International
Thunderbird Gaming Corporation (“Thunderbird”) and its counsel whatever the facts or the law,
Respondent United Mexican States (“Mexico”) now seeks to show in a “supplemental reply” that
recent “developments” support its quest. But the opposite is true. Having reconsidered the
requirements of the North American Free Trade Agreement (“NAFTA”), Thunderbird submits
that those requirements bar Mexico from obtaining the discovery it seeks while this matter is
pending before the Court of Appeals. The plain language of NAFTA, the supreme law of the
land, requires that Mexico’s Motion and its request to compel discovery and for sanctions be
denied.
STATEMENT OF FACTS
On August 3, 2007, without complying with LCvR 7(m), Mexico filed its Motion to
Compel Discovery and for Sanctions Against Petitioner International Thunderbird Gaming
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Corporation. In it, Mexico seeks to compel discovery purportedly in aid of execution of the
arbitral award now on appeal, and requests sanctions against both Thunderbird and its counsel.
On August 17, 2007, Thunderbird filed its Opposition To Respondent United Mexican
States’ Motion To Compel Discovery and for Sanctions (“Opposition”). In it, Thunderbird
showed that Mexico’s Motion is unripe and should be dismissed for failure to comply with
LCvR 7(m)’s requirement that “counsel shall discuss the anticipated motion with opposing
counsel, either by person or by telephone” and that the movant “shall include in its motion a
statement that the required discussion occurred, and a statement as to whether the motion is
opposed.” See Opposition at 5-6.1 Thunderbird also showed that, just as Mexico’s counsel was
advised before he filed his Motion, Mexico’s request for sanctions against counsel is frivolous
because counsel never advised any objectionable conduct on the part of Thunderbird, and the
record confirms this. See Thunderbird’s Opposition at 2-5.2
In Thunderbird’s Opposition, Thunderbird, upon the advice of counsel, did assert that
“Thunderbird recognizes the importance of responding to Mexico’s written discovery requests,
and commits to doing so within 30 days,” and that “Thunderbird also commits to producing a
Rule 30(b)(6) deponent at a mutually convenient time and place.” See Opposition at 6. On
September 18, 2007, Mexico’s counsel, Mr. Becker, sent an email to Thunderbird’s counsel, Mr.
Mahoney, copying Thunderbird’s San Diego counsel Mr. Crosby, stating that “[w]e have not
received the responses or otherwise heard from you regarding them. Please confirm my
understanding that the responses are not being provided.” See Motion at 3.
1 Mexico’s August 24, 2007 Reply In Support of Its Motion To Compel Discovery and For
Sanctions (“Reply”) does not address this argument or explain why Mexico did not comply with
LCvR 7(m).
2 In the face of this record, Mexico is left to complain merely that the “formerly attorney-client
privileged” emails that undermine its request for sanctions against counsel were not “previously
disclosed to Mexico.” Reply at 5. Of course they weren’t, but Mexico’s counsel was advised
previously that any request for sanctions against counsel was entirely without basis. And as
Thunderbird showed, had Mexico’s counsel complied with LCvR 7(m) and discussed his request
for sanctions against counsel with opposing counsel in person or by telephone, this fact would
have been made clear to him, and would have dispensed with the need to respond to a baseless
request. See Opposition at 6. Mexico’s Reply does not address this point either.
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The next day, in compliance with LCvR 7(m), Mr. Becker telephoned Mr. Mahoney to
inquire regarding Thunderbird’s discovery responses and to seek Thunderbird’s consent to the
filing of Mexico’s Motion For Leave to File Supplemental Reply. See Exhibit A, attached
hereto. Mr. Mahoney advised that he was waiting to hear back from Mr. Crosby on the status of
Thunderbird’s discovery responses and that he would convey Mr. Becker’s request for consent to
Mr. Crosby. Id. Mr. Mahoney immediately did so. Id.
After the matter was discussed with Thunderbird, two days later, Mr. Mahoney advised
Mr. Becker that Thunderbird, at its own initiative and not at the direction of counsel, had
reconsidered its earlier position and would not provide discovery responses. Specifically, by
email dated September 21, 2007, Mr. Mahoney informed Mr. Becker that
I have been advised by my client, International Thunderbird
Gaming Corporation, that it has reconsidered its earlier position
and, notwithstanding the statement previously made on page 6 of
its opposition to your motion to compel (which you reference in
your email), the client now does not intend to provide responses to
Mexico's discovery requests. After reconsidering its earlier
position, it is now the client's position that under NAFTA Article
1136, a disputing party such as Mexico may not seek enforcement
of a final award until a court has dismissed an application to set
aside or annul the award and there is no further appeal. The
client's position is that by entering into NAFTA, Mexico expressly
consented to the procedures contained in NAFTA and, thus, agreed
that it may not seek enforcement of the arbitration award until a
court has dismissed an application to set aside the award and there
is no further appeal. The client's position now is that Mexico's
discovery requests, which were purportedly propounded "in aid of
execution" of the District Court's judgment, are inappropriate
because Thunderbird has appealed that judgment and,
consequently, the award is not yet binding on Thunderbird and it is
premature for Mexico to begin proceedings aimed at enforcing the
award. Indeed, Thunderbird is investigating what remedies may be
available under NAFTA for such treaty violations. Be advised that
Thunderbird has directed that its outside counsel represent that this
reconsidered position is taken at the direction of Thunderbird and
not at the behest of its outside counsel.
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See Exh. 2 to Mexico’s Motion. That same day, Mr. Mahoney telephoned Mr. Becker and left a
voicemail message indicating that Thunderbird did not consent to the filing of Mexico’s Motion.
ARGUMENT
Although brief, Mexico’s Motion is replete with invective, asserting that Thunderbird has
“verified” that its earlier position on August 17, 2007 was “disingenuous,” that “Thunderbird is
unrepentant in flouting the authority of this Court,” and that Thunderbird’s reconsidered position
is “unjustifiable.” Motion at 4. Mexico is wrong on all counts.3
A. Reconsidering An Earlier Position Does Not Make That Position
“Disingenuous”
In its August 17, 2007 Opposition, Thunderbird, upon the advice of counsel, did
represent that it intended to respond to Mexico’s discovery requests, which were propounded
purportedly in aid of execution of the NAFTA arbitral award now on appeal. At the time it was
made, that commitment was genuine, and Mexico provides no evidence to the contrary. Instead,
it merely suggests that by reconsidering its position, Thunderbird “verified” that its earlier
position was “disingenuous.” But Mexico’s conclusion does not follow from its premise. Just
because Thunderbird reconsidered its position does not mean that its earlier position was
disingenuous at the time it was stated. It was genuine then, but has since merely been
reconsidered. This change has no bearing on whether Thunderbird’s earlier commitment was
genuine when it was made. Mexico’s unfounded assumption otherwise is just that, and hardly
amounts to “compelling circumstances supporting the entry of an order compelling production
and imposing sanctions.” Motion at 4.
B. Thunderbird’s Position Does Not “Flout the Authority of This Court”
Similarly, there is no basis for Mexico’s cryptic charge that “Thunderbird is unrepentant
in flouting the authority of this Court.” Motion at 4. This Court has not compelled Thunderbird
3 Because Mexico’s Motion to Compel Discovery and For Sanctions should be denied for failure
to comply with LCvR 7(m), the instant Motion For Leave To File Supplemental Reply should
also be denied.
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to respond to Mexico’s discovery requests; consequently, Thunderbird’s reconsidered decision
not to provide discovery responses does not “flout the authority of this Court.”
Mexico seems to argue that because the Court denied Thunderbird’s May 7, 2007 Motion
to Stay Execution of Judgment and for Protective Order--which similarly argued that under
NAFTA Article 1136(3)(b)(ii), efforts to enforce the arbitral award are premature until “there is
no further appeal”--Thunderbird is somehow precluded from asserting its reconsidered position
on Mexico’s motion to compel. Again, Mexico is wrong.
While the Court did issue a summary denial of Thunderbird’s Motion to Stay Execution
of Judgment and for Protective Order, that summary order did not compel Thunderbird to
respond to Mexico’s discovery requests. Fed. R. Civ. P. 26(c) provides that if a motion for
protective order is denied, “the court may, on such terms and conditions as are just, order that
any party or other person provide or permit discovery.” Here, the Court’s June 20, 2007
summary denial did not include an order that Thunderbird provide discovery responses.
Thunderbird’s reconsidered position on Mexico’s motion to compel, therefore, does not flout the
Court’s earlier summary denial of Thunderbird’s request for a stay and protective order.
In any event, even if the Court were to consider Mexico’s motion to compel and for
sanctions and then grant it, the issue of whether NAFTA bars Mexico’s efforts to enforce an
arbitral award currently on appeal ultimately will be decided by the Court of Appeals. By
asserting that NAFTA does bar such efforts, Thunderbird is not “flouting the authority of this
Court” but rather preserving its appellate rights should this Court disagree. Again, such prudent
conduct hardly amounts to “compelling circumstances supporting the entry of an order
compelling production and imposing sanctions.” Motion at 4.
C. NAFTA Precludes Efforts To Enforce An Arbitral Award That Is On Appeal
Finally, Mexico is wrong to assert that the position now taken by Thunderbird is
“unjustifiable.” That position is fully supported by the plain text of NAFTA. As Thunderbird
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asserted previously,4 and as Mexico notes in its Motion, by entering into NAFTA, Mexico
expressly consented to the procedures set forth in NAFTA Chapter 11, Section B.5 Thus,
Mexico agreed that it “may not seek enforcement of a final award until . . . a court has dismissed
or allowed an application to revise, set aside or annul the award and there is no further appeal.”
NAFTA Article 1136(3(b)(ii) (emphasis added). Because Thunderbird has appealed this Court’s
February 14, 2007 Order confirming the arbitration award, Mexico may not renege on its
NAFTA obligations by beginning proceedings to enforce that award, and may not seek to
compel discovery purportedly in aid of execution of that award.
“The words of the treaty delineate the extent of [the contracting parties’] agreement;
without prejudice to their existing rights and practices, they bound themselves to comply with
any request for judicial assistance that did comply with the treaty’s procedures.” Societe
Nationale Industrielle Aerospatiale v. U.S. District Court for the Southern District of Iowa, 482
U.S. 522, 538 (1987). As this Court has observed, both international treaties and the Federal
Rules of Civil Procedure are part of “the supreme law of the land” under the United States
Constitution and, absent a direct conflict, the court’s duty is to enforce them both. Laker
Airways Ltd. v. Pan American World Airways, 103 F.R.D. 42, 49 (D.D.C. 1984) (citations
omitted). See also, United States v. Decker, 600 F.2d 733, 737 (9th Cir. 1979) (“It is the role of
the judiciary to interpret international treaties and to enforce domestic rights arising from
them.”).6
4 See Memorandum of Law in Support of Petitioner International Thunderbird Gaming
Corporation’s Motion To Stay Execution of Judgment and For Protective Order at 4.
5 NAFTA Article 1122(1) provides that “[e]ach party consents to the submission of a claim to
arbitration in accordance with the procedures set out in this Agreement.” See Exhibit A to
Memorandum of Law In Support of Petitioner International Thunderbird Gaming Corporation’s
Motion to Stay Execution of Judgment and For Protective Order.
6 The Court’s duty is also rooted in comity, which “refers to the spirit of cooperation in which a
domestic tribunal approaches the resolution of cases touching the laws and interests of other
sovereign states. . . . Nothing would be more inconvenient, in the promiscuous intercourse and
practice of mankind, than that what was valid by the laws of one place, should be rendered of no
effect elsewhere, by a diversity of law. . . .” Societe National Industrielle Aerospatiale, 482 U.S.
at 544 n.27.
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Here, NAFTA Article 1136(3)(b)(ii), part of the supreme law of the land, does not
directly conflict with Fed. R. Civ. P. 69(a) and, thus, this Court’s duty is to enforce both
provisions. This would allow Mexico, under Fed. R. Civ. P. 69(a), to seek discovery in aid of
execution of the arbitral award, but only after “there is no further appeal” of that award, as set
forth in NAFTA Article 1136(3)(b)(ii). To compel Thunderbird to respond to Mexico’s
discovery requests while the appeal of the award is pending would render NAFTA Article
1136(3)(b)(ii) nugatory. However, “[t]reaties should be construed so as to effect their
purposes, . . . and to be consistent, insofar as possible, with coexisting statutes.” Laker Airways
Ltd., 103 F.R.D. at 49.
Indeed, insofar as NAFTA and the Federal Rules of Civil Procedure are both the supreme
law of the land under the Constitution, ordinarily “no paramount authority is given to one over
the other” but “the last expression of the sovereign will must control.” In re the Matter of
Fotochrome, Inc., 377 F. Supp. 26, 31 (E.D.N.Y. 1974) (quoting The Chinese Exclusion Case,
130 U.S. 581, 600 (1889)). As the supreme law of the land, therefore, subsequent treaty
provisions “may supersede prior inconsistent acts of Congress.” Swearingen v. United States,
565 F. Supp. 1019, 1021 (D. Colo. 1983). See also Cook v. United States, 288 U.S. 102, 118
(1933) (“The Treaty, being later in date than the Act of 1922, superseded, so far as inconsistent
with the terms of the Act, the authority which had been conferred by [the Act].”). As the
Fotochrome, Inc. court observed in ruling that an international treaty’s provisions superseded an
earlier statute (the 1938 Bankruptcy Act),
International trade is so important to our economy and to the peace
and welfare of the world that our law is justified in assuaging other
nations’ suspicions by the firm enforcement of treaties we find
applicable. . . . “The expansion of American business and industry
will hardly be encouraged if, notwithstanding solemn contracts, we
insist on a parochial concept that all disputes must be resolved
under our laws and in our courts. . . .” International commerce has
grown too large and the world too small for American courts to
disregard the law of nations, even in favor of the Bankrutpcy Act.
In re the Matter of Fotochrome, Inc., 377 F. Supp. at 32 (citations omitted).
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Congress approved NAFTA in 1993, long after the 1970 amendment to Fed. R. Civ. P.
69(a) that allowed “discovery” in aid of execution. Xerox Corp. v. United States, 423 F.3d 1356,
1358 (Fed. Cir. 2005). Presumably, Congress was aware of the discovery provision of Rule
69(a) when it subsequently approved NAFTA Article 1136(3)(b)(ii)’s requirement that no effort
be made to enforce an arbitral award “until . . . there is no further appeal.” Thunderbird submits
that both the treaty and the statute can be read in harmony to allow discovery in aid of execution
but only after Thunderbird’s pending appeal is resolved. To the extent the statute conflicts with
the treaty, the treaty is “the last expression of the sovereign will” and, therefore, must control. In
either case, Mexico is precluded from seeking discovery in aid of execution of an arbitral award
that is now on appeal. Its Motion to Compel Discovery and For Sanctions, therefore, as well as
its Motion For Leave To File Supplemental Reply, should be denied.
CONCLUSION
For the foregoing reasons, Thunderbird respectfully requests that the Court deny
Mexico’s Motion For Leave To File Supplemental Reply, and that the Court deny Mexico’s
Motion To Compel Discovery and For Sanctions.
Date: October 2, 2007
Respectfully submitted,
/s/ Christopher W. Mahoney
Christopher W. Mahoney (D.C. Bar No. 394416)
Duane Morris LLP
1667 K Street, NW Suite 700
Washington, DC 20006
Telephone: (202) 776-7867
Facsimile: (202) 776-7801
/s/ James D. Crosby
James D. Crosby
13400 Sabre Springs Parkway, Suite 200
San Diego, California 92128
Telephone: (858) 486-0085
Facsimile: (858) 486-2838
Attorneys for Petitioner
International Thunderbird Gaming Corporation
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CERTIFICATE OF SERVICE
I hereby certify that on this 2nd day of October 2007, Petitioner International Thunderbird
Gaming Corporation’s Opposition to Motion for Leave to File Supplemental Reply in Support of
United Mexican States’ Motion to Compel Discovery and for Sanctions Against Petitioner
International Thunderbird Gaming Corporation and Proposed Order were served via this Court’s
ECF system and served via First Class Mail, postage prepaid, on the following:
Stephan E. Becker
Pillsbury Winthrop Shaw Pittman LLP
2300 N Street, N.W.
Washington, DC 20037-1122
/s/ Christopher W. Mahoney
Case 1:06-cv-00748-HHK Document 30 Filed 10/02/2007 Page 10 of 10
