Odebrecht Secures Protective Order and Defeats Motion to Compel in Securities Class Action

September 24, 2021

Cleary Gottlieb represented Odebrecht S.A. (Odebrecht) and certain of its affiliates in a securities fraud action pending in the U.S. District Court for Southern District of New York.

On September 24, 2021, Cleary obtained a protective order preventing the compelled production of a highly restricted accounting system that was the subject of multiple foreign leniency agreements, the disclosure of which could have resulted in severe civil and criminal penalties.

In December 2016, Odebrecht entered into a leniency agreement with Brazilian prosecutors and admitted to participating in the well-publicized “Lava Jato” international bribery scheme.

DoubleLine Capital L.P. (DoubleLine), among others, brought suit against Odebrecht in June 2017 under federal securities laws and pendent state laws. Relevant to Cleary’s recent victory, DoubleLine requested Odebrecht produce “shadow accounting systems” used to track the various bribe payments made as part of the Lava Jato scheme. In December 2020, Odebrecht moved for a protective order, principally on the basis that its leniency and cooperation agreements with the Brazilian government, along with other governments around the world, prevented Odebrecht from producing the system. In support of the motion for a protective order, Cleary attorneys worked with Odebrecht to obtain foreign attorney declarations supporting Odebrecht’s position that it would face civil and criminal consequences if the system was produced. Odebrecht also worked with Brazilian prosecutors to obtain an order from a Brazilian court confirming production would violate Odebrecht’s obligations under its leniency agreement and various court orders.

On September 23, 2021, Magistrate Judge Barbara Moses granted Odebrecht’s motion for a protective order finding the comity analysis weighed in Odebrecht’s favor. The decision afforded great weight to the Brazilian court order and foreign attorney declarations, and rejected DoubleLine’s arguments because they were “unsupported by the testimony of any qualified Brazilian lawyer or legal scholar.”