Amicus Curiae Brief — Republic of Philippines v. Pimentel

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‘ss.

Nos. 06-1039 & 06-1204.

In the Supreme Court of the United States

ESTATE OF ROGER ROXAS, ET AL., PETITIONERS

Vv.

MARIANO J. PIMENTEL, ET AL.

REPUBLIC OF THE PHILIPPINES, ET AL.,

PETITIONERS

Vv.

MARIANO J. PIMENTEL, ET AL.

ON PETITIONS FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

PAUL D. CLEMENT

Solicitor General

Counsel of Record

PETER D. KEISLER

Assistant Attorney General

EDWIN S. KNEEDLER

Deputy Solicitor General

DOUGLAS HALLWARD-DRIEMEIER

Assistant to the Solicitor

General

MICHAEL S. RAAB

JOHN B. BELLINGER, III SARANG V. DAMLE

/ Attorneys

Legal Adviser

Department of State Department of Justice

Washington DC 20520 Washington, D. ° 20530-0001

(202) 514-2217

QUESTIONS PRESENTED

This interpleader action was brought to settle ownership

of certain assets allegedly misappropriated by Ferdinand

Marcos when he was President of the Republic of the Philip-

pines. The assets are claimed by several parties, including

the Philippines (which under Philippine law is the owner of

property acquired through the misuse of public office by Phili-

ppine officials), a class of judgment creditors of the Marcos

estate, and a judgment creditor of Marcos’s wife, Imelda

Marcos.

In No. 06-1204, Republic of the Philippines v. Pimentel,

the question presented is: —

Whether a foreign sovereign that is a necessary party to

a lawsuit under Fed. R. Civ. P. 19(a) and has successfully in-

voked sovereign immunity is, under Rule 19(b), an indispens-

able party to an action brought in the courts of the United

States to settle ownership of assets claimed by that sovereign.

In No. 06-1039, Estate of Roxas v. Pimentel, the questions

presented are:

1. Whether the probate exception to federal court juris-

diction eliminated the district court’s jurisdiction over the

action.

2. Whether the district court should have dismissed the

case because the Estate of Ferdinand Marcos was an indis-

pensable party to the action.

3. Whether the district court lacked jurisdiction over the

action because the Pimentel claimants presented no owner-

ship or lien claim against the fund.

4. Whether the court of appeals violated petitioners’ right

to appeal by failing to address certain of petitioners’ argu-

ments.

(I)

TABLE OF CONTENTS

Page

ee 1

i a i ee Ce aeckadee 1

EERE BARA, See Oe en yar a Narn een ren 7

1. The court of appeals’ application of Rule 19(b) with

respect to immune absent parties warrants this

Se oe ecb eheebeukabseeweehebnrscoeces 8

A. The immunity of an absent party is a very

significant consideration in the analysis

EE ch cbc eed devecescwevovcceess 9

B. The court of appeals’ Rule 19(b) analysis

was flawed in other respects as well........... 11

C. The court of appeals’ decision threatens to

impair the Nation’s foreign policy interests .... 18

Il. The court of appeals correctly rejected the

arguments of the Roxas claimants ................ 19

| PROT Or CL e rT Teer TT UPT UTE TT TTT TTT 20

TABLE OF AUTHORITIES

Cases:

American Greyhound Racing, Inc. v. Hull, 305 F.3d

ED Mc backvdnton Knesset cebsonceee 18

California v. Arizona, 440 U.S. 59 (1979)... 6... eee. 10

California v. Deep Sea Research, Inc., 523 U.S. 491

Ee ere 9

Confederated Tribes of the Chehalis Indian

Reservation v. Lujan, 928 F.3d 1496 (9th Cir.

EE £40444 cad oan OE e EEE US bes n640 60 sk e00s 0 0t00s 18

Cory v. White, 457 U.S. 85 (1982)... 2... cece eee ee eee 9

Davis ex rel. Davis v. United States, 343 F.3d 1282

(10th Cir. 2003), cert. denied, 542 U.S. 937

SE 28 rewaakeneniecheen eased " eer 16, 17

Cases—Continued: Page

Dawavendewa v. Salt River Project Agric.

Improvement & Power Dist., 276 F.3d 1150

(9th Cir.), cert. denied, 537 U.S. 820 (2002) ......... 18

Dole Food Co. v. Patrickson, 538 U.S. 468 (2003) ........ 5

Enterprise Mgmt. Consultants, Inc. v. United States,

883 F.2d 890 (10th Cir. 1989) .................00.- 10

Fluent v. Salamanca Indian Lease Auth. , 928 F.2d

§42 (2d Cir.), cert. denied, 502 U.S. 818 (1991) ....... 10

Heckman v. United States, 224 U.S. 413 (1912) ........ 11

Hilao v. Estate of Marcos, 103 F.3d 789 (9th Cir.

PN ccein Gunes uawibdeletadaeek oeses sone 1

Hilton v. Guyot, 159 U.S. 113 (1895)... ee eee eee 14

Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) ....... 16

Marshall v. Marshall, 547 U.S. 293 (2006) ............ 19

Mine Safety Appliances Co. v. Forrestal, 326 U.S. 371

ED oe Ck eee RA ee eeu ee es culieceedes 10

Minnesota v. United States, 305 U.S. 382 (1939) ....... 10

Provident Tradesmens Bank & Trust Co. v.

Patterson, 390 U.S. 102 (1968) ............ 8, 11, 15, 16

Roxas v. Marcos, 969 P.2d 1209 (Haw. 1998) ........... 2

Seneca Nation of Indians v. New York, 383 F.3d 45

(2d Cir. 2004), cert. denied, 126 S. Ct. 2351 (2006) ... 17

State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523

EE atthe iwas Gada vahoed OFke EE eRe eee eso 17

Tennessee Student Assistance Corp. v. Hood, 541 US.

I Seba cena ckhek <a ks ee Ee CKENE b006 08009 i)

The Schooner Exchange v. McF addon, 11 US.

ce ee ee 18

aid

Cases—Continued: Page

United States v. BCCI Holdings (Lux.), S.A., 46 F.3d

1185 (D.C. Cir.), cert. denied 515 U.S. 1160 (1995) ... 15

United States ex rel. Hall v. Tribal Dev. Corp.,

Fe |. oR Re eee 17

Wichita & Affiliated Tribes v. Hodel, 788 F.2d 765

SE SED Ce datosdsbadecescbenees ess 10, 11, 17

Wilbur v. Locke, 423 F.3d 1101 (9th Cir. 2005),

cert. denied 546 U.S. 1173 (2006) .................. 18

Constitution, treaties, statutes and rule:

Se I EE oe oe abs keececdeues i)

Treaty on Mutual Legal Assistance in Criminal

Matters, Nov. 13, 1994, U.S.-Phil., Art. 16,

S. Treaty Doc. No. 18, 104th Cong., Ist Sess.

SS avenue copnededseeeeedessedivisedunesvians 13

United Nations Convention Against Corruption, G.A.

Res. 4, U.N. GAOR, 58th Sess., U.N. Doe.

A/RES/58/4 (2003):

Chap. IV, U.N. Doc. A/RES/58/4, at 22 .......... 13

Chap. V, U.N. Doe. A/RES/58/4, at 32 ........... 13

Foreign Sovereign Immunities Act of 1976, 28 U.S.C.

BED 5.5 jacbeddendsdessaneeataeesseenenennaa 3,9

Racketeer Influenced and Corrupt Organizations Act

(RICO), 18 U.S.C. 1961 et seg. .............00 ee eee 15

te | PTT ee 15

PAD ee £60400 00:ceKense tee eee 15

Se ED - 60-68 0 0000000000000 0e0Nes d e500 15

Gre DOD nx 6-650 055. 05000000%000000s Re 3

oF 3 | rer a 20

ee Oe 14

Statutes and rule—Continued: Page

Tene done 13, 14

N.Y. C.P.L.R. 213 (McKinney Supp. 2007) .......... 6, 11

Rep. Act No. 1379, 51:9 0.G. 4457 (June 18, 1955)

EE er en l

Fed. R. Civ. P.:

Ee ee ee 8,9

CE 3,8

eee ee ds ee ececseeeets X

Eh cokes esebeddnintedeesuseéunys passim

Miscellaneous:

4 James Wm. Moore et al., Moore’s Federal Practice

EEE en ee PLD ie ee ee 10, 15

7 Charles Alan Wright et al., Federal Practice and

es cn ec wedncsden once 10, 16, 17

INTEREST OF THE UNITED STATES

This brief is submitted in response to the order of this

Court inviting the views of the United States. In the United

States’ view, the petition for a writ of certiorari in No. 06-1204

should be granted, and the petition for a writ of certiorari in

No. 06-1039 should be held pending disposition of No. 06-1204.

STATEMENT

1. Ferdinand Marcos was President of the Republic of the

Philippines (Philippines) for nearly 20 years. In 1972, Marcos

created Arelma S.A. (Areima) under the laws of Panama. Pet.

App. 43a.' That same year, an account in the name of Arelma

was opened at Merrill, Lynch, Pierce, Fenner & Smith, Inc.

(Merrill Lynch) in New York. /d. at 45a. The funds placed

into that account were allegedly obtained by Marcos through

misuse of his public office. /bid.; ER 106, 174-251. Ownership

of Arelma is represented by two bearer share certificates that

are held in escrow by the Philippine National Bank (PNB),

after being transferred there by an order of the Swiss Fed-

eral Supreme Court. Pet. App. 43a, 46a, 49a.

The assets in the Merrill Lynch account are the subject of

this interpleader action. Arelma claims the assets based on

its ownership of the account; PNB’s claim is based on its cus-

tody of the Arelma bearer share certificates. The Philippines

and the Philippine Presidential Commission on Good Govern-

ment (PCGG) claim the funds under a Philippine statute (Rep.

Act. No. 1379, 51:9 O.G. 4457 (June 18, 1955)) providing that

any property acquired by a public officer through misuse of

his office is forfeited to the government ab initio.

Respondent Mariano Pimentel represents a class of human

rights victims (Pimentel claimants) who obtained a $2 billion

judgment against the Marcos estate in February 1995. See

Hilao v. Estate of Marcos, 103 F.3d 789 (9th Cir. 1996). The

' Unless otherwise noted, references to “Pet. App.” are to the appendix in

No. 06-1204. Arelma, S.A. is named in this action as Areima, Inc. Pet. App. 43a.

(1)

Pimentel claimants seek to execute that judgment against the

Merrill Lynch account, claiming that Arelma was a shell cre-

ated to hide Marcos’s personal assets. Br. in Opp. 3, 5.

Petitioners Estate of Roger Roxas and Golden Budha Cor-

poration (Roxas claimants) obtained a $19 million Hawaii

state court judgment against Imelda Marcos, Marcos’s wife,

in October 1996, based on claims of torture, imprisonment,

and theft of a treasure owned by Roxas. See Roxas v. Mar-

cos, 969 P.2d 1209, 1231-1233 (Haw. 1998). The Roxas claim-

ants seek to execute their judgment against the Arelma ac-

count, and further claim that the money used to fund the Arel-

ma account derives from the stolen Roxas treasure. Pet. App.

31a; 06-1039 Pet. App. 73a-77a.

2. After Marcos’s rule ended in 1986, the Philippine gov-

ernment created PCGG to recover Marcos’s illegitimate

wealth, much of which had been removed from the Philip-

pines. ER 110. In April 1986, PCGG made a request to the

Swiss government for mutual assistance, seeking return of

Marcos’s assets, including the Arelma shares. ER 288, 313.

The Swiss government froze those assets and the Swiss Fed-

eral Supreme Court upheld the freeze in 1990. ER 348-349.

In 1991, PCGG commenced a forfeiture proceeding against

Marcos in the Sandiganbayan, a Philippine court with juris-

diction over political corruption cases, based on the Philippine

statute providing for forfeiture of property obtained through

misuse of public office. ER 174-251.

In late 1997 and early 1998, while the forfeiture action was

pending, the Swiss Federal Supreme Court transferred the

frozen assets to an escrow account at PNB pending a final

ownership determination by the Philippine courts. ER 289,

347-385. After the Swiss assets were transfered to the PNB

escrow account, ER 157-160, PCGG asked Merrill Lynch to

transfer the assets it held for Arelma to that account, ER 162,

387. Merrill Lynch declined, noting that the transfer of the

Arelma shares to PNB was provisional only, and that there

were a number of other claimants to the fund. ER 393-395.

On September 19, 2000, the Sandiganbayan granted

PCGG’s motion for partial summary judgment, holding that

the assets at issue in the motion were forfeited to the Philip-

pines under Philippine law. ER 254-283. Although the Sandi-

ganbayan later reversed its own decision, the Philippine Su-

preme Court reinstated the partial judgment in the Philip-

pines’ favor on July 15, 2008. ER 597-696.

3. On September 14, 2000, Merrill Lynch commenced this

interpleader action in federal district court in Hawaii to settle

competing claims to the Arelma account’s assets. ER 34. As

required by 28 U.S.C. 1335(a), Merrill Lynch deposited the

account’s assets, $35 million, with the court. Pet. App. 46a.

The Philippines and PCGG asserted sovereign immunity

under the Foreign Sovereign Immunities Act (FSIA), 28

U.S.C. 1604, and moved to dismiss the interpleader action,

claiming that their unavailability required dismissal under the

rules for compulsory joinder. See Pet. App. 31a-32a; Fed. R.

Civ. P. 19(b). The district court instead dismissed the claims

of the Philippines and PCGG on the merits, without address-

ing their claim of sovereign immunity. Pet. App. 32a.

On October 31, 2002, the court of appeals held, on interloc-

utory appeal, that the Philippines and PCGG were immune

from suit in the interpleader proceedings under the FSIA.

Pet. App. 36a-39a. The court also found the Philippines and

PCGG to be necessary parties who should “be joined if feasi-

ble” under Rule 19(a), since “{w]Jithout the Republic and the

PCGG as parties in this interpleader action, their interests in

the subject matter are not protected.” /d. at 40a. While the

court noted that the Philippines’ and PCGG’s unavailability

militated in favor of dismissal under Rule 19(b), it also recog-

nized that the Pimentel claimants and Merrill Lynch had com-

peting interests. /d. at 41a. Rather than resolve that conflict,

the court noted that Merrill Lynch, the Philippines, and

PCGG had agreed to a stay of the interpleader suit pending

resolution of claims in the Philippines. /d. at 42a. The court

ordered entry of a stay, noting that “later developments may

render it more equitably feasible for proceedings to go for-

ward in this case,” such as “resolution of the litigation in the

Philippines” or a change in the parties’ immunity status. /bid.

On June 20, 2003, the district court vacated the stay, con-

cluding that the outcome of the proceedings before the San-

‘-diganbayan would not affect the interpleader action because

the district court had exclusive jurisdiction over the Arelma

assets. ER 697-699. On February 20, 2004, the court of ap-

peals affirmed the lifting of the stay. ER 779-782.

On August 14, 2003, while the appeal from the order lifting

the stay was pending, the district court denied the Philippines

and PCGG’s motion to dismiss the case under Rule 19(b). Pet.

App. 55a-60a. The court held that the Philippines and PCGG

did not have a “legally protectible claim” that would be im-

paired by the proceedings because any claim they might have

would be barred by New York’s statute of limitations. /d. at

57a-59a. The court also rejected the claim that the disputed

assets were implicated by the just-concluded forfeiture pro-

ceeding in the Philippines. The court found that the forfeiture

petition filed in 1991 did not “seek{] forfeiture of the assets in

the Arelma account at Merrill Lynch,” and that the Philippine

Supreme Court decision made no mention of Arelma or the

Arelma account at Merrill Lynch. /d. at 56a.° The court fur-

ther found a lack of proof that the Philippines and PCGG had

claimed ownership of the Arelma share certificates. /bid.

The court concluded that, in any event, “[o]wnership of the

Arelma share certificates is irrelevant to this proceeding since

Arelma is a party actively seeking control of the assets at

* The Philippines and PCGG contend that the 1991 forfeiture petition did in

fact seek forfeiture of the Arelma shares and its assets. 06-1204 Pet. 4. The

forfeiture petition does refer to Arelma and the Merrill Lynch account, though

not in the context of a specific request for forfeiture. F R 234.

issue and Arelma’s shareholders have no standing to pursue

assets allegedly belonging to the corporation.” Jd. at 57a.

The district court held a bench trial to adjudicate the re-

maining claims to the Arelma account, and on July 12, 2004,

awarded the entirety of the Arelma assets to the Pimentel

claimants. Pet. App. 43a-54a. The court noted that the

Pimentel claimants’ judgment was against Marcos personally,

rather than Arelma. /d. at 49a. However, the court found

that because Arelma was merely the “alter ego and instru-

mentality of Ferdinand E. Marcos,” it could “reverse” pierce

the corporate veil and find that the proceeds of the account

held at Merrill Lynch were in fact owned by Marcos. /d. at

52a, 54a. For the same reason, the court rejected the sepa-

rate claim of Arelma to the funds. /d. at 54a.

The district court also rejected the claims of the other

claimants. It found that PNB “lack{ed] standing” to claim the

assets in its capacity as escrow holder of the Arelma shares

because “{a]n individual shareholder, by virtue of ownership

of shares, does not owi the corporation’s assets.” Pet. App.

52a (quoting Dole Food Co v. Patrickson, 538 U.S. 468, 475

(2003)). The court also rejected the claim of the Roxas claim-

ants, finding that they had not proved that the assets in the

Arelma account derived from property stolen from Roxas, and

that their claims were, in any event, inferior to those of the

Pimentel claimants. /d. at 49a, 53a-54a; ER 944.

4. On July 19, 2004, the Philippines and PCGG filed a mo-

tion with the Sandiganbayan, as part of the forfeiture pro-

ceedings begun in 1991, claiming that the “ARELMA account

is now ripe for forfeiture.” See Request for Judicial Notice,

Ex. A at 9. It thus prayed that “judgment be rendered declar-

ing the funds, properties, shares in and interests of AREL-

MA, wherever they may be located, as ill-gotten assets and

forfeited in favor of the Republic of the Philippines.” /bid.

That motion is still pending before the Sandiganbayan.

5. The Philippines and PCGG appealed the denial of their

motion to dismiss under Rule 19(b). Arelma, PNB, and the

Roxas claimants appealed the award of the assets to the

Pimentel claimants. The court of appeals affirmed. Pet. App.

la-lla. The court acknowledged that in “the usual case of

interpleader” a sovereign party that cannot be joined due to

immunity “is indispensable and so can cause dismissal of the

action.” Jd. at 6a. Here, however, the court held that other

factors outweighed the Philippines’ and PCGG’s immunity.

The court of appeals found that the Philippines’ failure to

obtain a judgment in the Philippines as to the ownership of

the assets, even though the Arelma shares had been in escrow

at PNB since 1995, was “an equitable consideration * * * to

be taken into account.” Pet. App. 7a- The court recognized

that “[iJn practical effect, a judgment in this action wil! de-

prive the Republic of the Arelma assets.” /d. at 9a. But the

court concluded that the Philippines would not be prejudiced

by the interpleader action because “(als a practical matter, it

is doubtful that the Republic has any likelihood of recovering

the Arelma assets.” /d. at 7a. The court reasoned that any

action by the Philippines against Merrill Lynch would be

barred by New York’s six-year statute of limitations for ac-

tions based on misappropriation of public property. /d. at 8a-

9a (citing N.Y. C.P.L.R. 213 (McKinney Supp. 2007)).

Responding to the Philippines’ contention that “it could

obtain a judgment regarding the ownership of these assets in

the Philippines where it is relieved of any statute of limita-

tions,” the court of appeals concluded that the Philippine

courts “would lack jurisdiction to issue a judgment in rem

regarding the ownership of an asset located within the United

States.” Pet. App. 8a. Accordingly, if a Philippines court

issued such a judgment, a court in this country “would not be

bound to give it effect,” and the assets could not be “finally

disposed of except by judgment of a court in the United

States.” /d. at Ta-8a.

In considering the adequacy of the judgment in the ab-

sence of the Philippines and PCGG, the court found that the

award would have some “symbolic significance” to the “vic-

tims of the former president of the Republic.” Pet. App. 9a.

Although most of the Pimentel claimants were Philippine citi-

zens who “should find redress from their own government,”

the court found that consideration to be “outweighed by the

fact that the Republic has not taken steps to compensate

these persons who suffered outrage from the extra-legal acts

of agnan who was the[ir] president.” /d. at 9a-10a. The court

also concluded that the Pimentel claimants would have no

forum in the Philippines in which to raise their claims to the

Arelma assets. /d. at 10a.

After balancing the factors, the court of appeals concluded

that “[njo injustice” would be done to the Philippines “if it

now loses what it can never effectually possess.” Pet. App.

10a. The court therefore affirmed the award of the Arelma

assets to the Pimentel claimants, and also rejected claims of

error raised by the Roxas claimants. /d. at 10a-11la.

DISCUSSION

The Ninth Circuit’s indispensibility analysis under Rule

19(b) was flawed in significant respects. The court gave insuf-

ficient weight to the absent parties’ sovereign immunity from

suit, and improperly (and incorrectly) prejudged the merits of

the immune parties’ claims. The Ninth Circuit’s decision con-

flicts with decisions of this Court and other courts of appeals.

The decision also raises significant concerns with respect to

the Nation's foreign relations. It prejudices ongoing litigation

in the Philippines regarding a matter of great public concern

to that country, conflicts with an understanding between the

Philippines and Switzerland regarding adjudication of the

Marcos assets, and threatens to undermine the ability of the

United States to enforce its forfeiture judgments abroad as

well as to assert sovereign immunity in foreign courts in simi-

lar circumstances. The United States therefore recommends

that the certiorari petition filed by the Philippines and PCGG

(No. 06-1204) be granted, and that the petition in No. 06-1039

be heid pending disposition of No. 06-1204.

I. THE COURT OF APPEALS’ APPLICATION OF RULE 19(b)

WITH RESPECT TO IMMUNE ABSENT PARTIES WAR-

RANTS THIS COURT’S REVIEW

Federal Rule of Civil Procedure 19 provides for mandatory

joinder of persons “needed for just adjudication.” Rule 19(a)

describes persons who must be joined in an action if feasible.

For example, under Rule 19(a)(2)(i), if a person “claims an

interest relating to the subject of the action” and “disposition

of the action in the person’s absence may * * * asa practical

matter impair or impede the person’s ability to protect that

interest,” that person must be joined.

If a person described in Rule 19(a) cannot be made a party

for some reason, the court must determine, under Rule 19(b),

“whether in equity and good conscience the action should

proceed among the parties before it or should be dismissed,

the absent party thus being thus regarded as indispensabie.”

Rule 19(b) includes four “factors” to consider in such a case:

[F Jirst, to what extent a judgment rendered in the person’s

absence might be prejudicial to the person or those already

parties; second, the extent to which, by protective provi-

sions in the judgment, by the shaping of relief, or other

measures, the prejudice can be lessened or avoided; third,

whether a judgment rendered in the person’s absence will

be adequate; fourth, whether the plaintiff will have an ade-

quate remedy if the action is dismissed for nonjoinder.

“The decision whether to dismiss * * * must be based on

factors varying with the different cases, some such factors

being substantive, some procedural, some compelling by

themselves, and some subject to balancing against opposing

interests.” Provident Tradesmens Bank & Trust Co. v.

Patterson, 390 U.S. 102, 118-119 (1968) (Provident Bank).

In its first opinion in this case, the court of appeals held

that the Philippines and PCGG are immune from jurisdiction

under the FSIA. Pet. App. 30a-39a.* The court further held

that the Philippines and PCGG are parties that should be

joined if feasible, and that it was “difficult to see how this

interpleader action can proceed in their absence.” /d. at 40a-

4la. On that basis, the court of appeals entered a stay pend-

ing future proceedings in the Philippines. /d. at 42a.

Later, however, the court of appeals concluded that the

absence of the Philippines and PCGG did not require that the

interpleader action be stayed or dismissed under Rule 19(b).

Pet. App. 6a-10a. That decision failed to take appropriate

account of the fact that the Philippines’ and PCGG’s absence

is due to their immunity from suit, and was premised on other

legal errors as well. Its culing, which conflicts with the ap-

proach of other courts of appeals and interferes with signifi-

cant foreign policy interests, warrants this Court’s review.

A. The Immunity Of An Absent Party Is A Very Significant

Consideration In The Analysis Under Rule 19(b)

This Court has recognized the importance of sovereign im-

munity to the Rule 19 analysis in cases where the United

* Respondents do not challenge the determination that the Philippines and

PCGG have immunity to this interpleader action. We note that in Cory v.

White, 457 U.S. 85 (1982), the Court held that the Eleventh Amendment barred

an interpleader suit seeking “resolution of inconsistent tax claims by the

officials of two States.” /d. at 86,91. In two more recent cases, Tennessee

Student Assistance Corp. v. Hood, 541 U.S. 440 (2004), and Califernia v. Deep

Sea Research, Inc., 523 U.S. 491 (1998), the Court held that the Eleventh

Amendment did not bar a federal court from exercising in rem jurisdiction with

respect to a bankruptcy estate or a shipwrecked vessel. In both cases, how-

ever, the Court’s analysis emphasized the fact that the district court was

exercising in rem jurisdiction pursuant to a specific constitutional grant of

federal authority over the res. Hood, 541 U.S. at 446-451 (bankruptcy); Deep

Sea Research, 523 U.S. at 501, 506-507 (admiralty). Here, in contrast, there is

no specific constitutional grant of authority over the res, and the federal! court's

power to adjudicate the claims therefore stems solely from its jurisdiction over

the claimants, as to which a party may assert its immunity.

States is the absent party. See California v. Arizona, 440

U.S. 59 (1979); Mine Safety Appliances Co. v. Forrestal, 326

U.S. 371, 375 (1945); Minnesota v. United States, 305 U.S.

382, 386-388 (1939); see also 7 C. Wright et al., Federal Prac-

tice and Procedure § 1617, at 254 (2001) (Wright & Miller)

(“No doubt because of the sovereign-immunity concept, the

application of Rule 19 in cases involving the government re-

flects a heavy emphasis on protecting its interests.”); 4 J.

Moore et’al., Moore’s Federal Practice § 19.05[2|[c] at 19-91

(2006) (Moore’s) (“[C]ourts are reluctant to require the absen-

tee to protect its own interest if intervention would result in

the absentee’s waiving an immunity to suit.”).

Similarly, a number of courts of appeals have held that an

absent party’s sovereign status is entitled to special weight

under Rule 19(b). For example, in dismissing a suit where the

absent party was an Indian Tribe, the D.C. Circuit stated:

“This is not a case where some procedural defect such as

venue precludes litigation of the case. Rather the dismissal

turns on the fact that society has consciously opted to shield

Indian tribes from suit without congressional or tribal con-

sent.” Wichita & Affiliated Tribes v. Hodel, 788 F.2d 765, 777

(1986); see Fluent v..Salamanca Indian Lease Auth., 928

F.2d 542, 548 (2d Cir.) (recognizing the “paramount impor-

tance accorded the doctrine of sovereign immunity under

[rjule 19”), cert. denied, 502 U.S. 818 (1991); Enterprise

Mgmt. Consultants, Inc. v. United States, 883 F.2d 890, 894

(10th Cir. 1989) (where “a necessary party under Rule 19(a)

is immune from suit, there is very little room for balancing of

other factors set out in Rule 19(b), because immunity may be

viewed as one of those interests compelling by themselves”)

(internal quotation marks omitted).

That is not to suggest that an immune sovereign is auto-

matically indispensable. For instance, in some cases the in-

terests of the absent sovereign may be properly and ade-

quately protected by the parties remaining in the suit, and in

others relief may be structured so as not to prejudice the ab-

sent party. See, e.g., Wichita & Affiliated Tribes, 788 F.2d at

774; cf. Heckman v. United States, 224 U.S. 413, 444-445

(1912) (finding that interests of absent Indian grantors were

adequately represented by the United States). But even

though the Philippines’ and PCGG’s immunity was not in it-

self outcome determinative under Rule 19(b), it should have

received far greater weight than it did. Indeed, the court of

appeals recognized that its analysis conflicts with the ap-

proach of other courts of appeals on this issue. See Pet. App.

61a-62a.

B. The Court Of Appeals’ Rule 19(b) Analysis Was Flawed In

Other Respects As Well

1. Central to the court of appeals’ reasoning concerning

the first factor in Rule 19(b) was its conclusion that the Philip-

pines and PCGG would not be prejudiced by a judgment ren-

dered in their absence because they had “no practical likeli-

hood of obtaining the Arelma assets.” Pet. App. 10a. The

court found that any claim by the Philippines ta the assets

would be barred by New York’s six-year statute of limitations

for misappropriation of public funds. /d. at 8a-9a (citing N.Y.

C.P.L.R. 213 (McKinney Supp. 2007)). By resting its analysis

so heavily on its assessment of the merits of the Philippines’

and PCGG’s claims, the court in effect deprived them of the

benefit of their sovereign immunity.

While this Court has not ruled out consideration of the

underlying merits of a claim in the course of determining the

extent of prejudice to an absent party from adjudication with-

out his participation, see Provident Bank, 390 U.S. at 115

(noting that it would have been proper to explore the likeli-

hood that claims against the absent party would result in re-

coveries against him and therefore claims by him against the

fund), it is particularly problematic for a court to assess the

merits of an absent party’s own claim when the party’s ab-

sence is due to its sovereign immunity from the court’s juris-

diction. The immune party woulda either have to participate

in the litigation (despite its immunity) in order to argue the

merits of its claim, or risk the possibility that the court will,

as here, underestimate the strength of the party’s interest

and evaluate the absent sovereign’s claim based on the argu-

ments of the present and hardly disinterested other litigants.

In this case, moreover, the lower courts’ assessment of the

strength of the immune parties’ interests was mistaken. Con-

trary to the court of appeals’ assumption that the Philippines

would have to sue Merrill Lynch in New York court to litigate

its claim that Marcos obtained the assets illegally, that claim

by the Philippines can properly be litigated in a Philippine

court. The Philippines’ claim to Arelma and its assets is

based on Philippine law providing that property misappropri-

ated by public officers through abuse of their office is for-

feited to the Philippines from the moment it is obtained. Pet.

App. 2a-3a. A special Philippine court—the Sandiganbayan—

is .ested with authority to adjudicate disputes under that

statute. Indeed, the Philippines and PCGG are presently

seeking forfeiture of the Arelma shares and Arelma’s assets

in that court, and a fully briefed motion for summary judg-

ment with respect to those assets is pending before it.

If the Sandiganbayan awards the Arelma shares and assets

to the Philippines, there is no reason to assume that the Phil-

ippines would have to sue Merrill Lynch to obtain the assets

in Arelma’s Merrill Lynch account. Rather, the Philippines,

either directly or through Arelma, would simply request that

Merrill Lynch transfer the assets in Arelma’s account to an

account in the Philippines. If Merrill Lynch were to refuse,

the Philippines (or Arelma) might have to bring suit, but the

suit would be based on that new breach of contract, not on the

underlying claim (already adjudicated by the Sandiganbayan)

that Marcos obtained the original assets illegally.

The court of appeals believed that “a court of this country

would not be bound to give * * * effect” to a judgment by

the Sandiganbayan regarding ownership of the Arelma ac-

count and its assets because “a court sitting in the Philippines

would lack jurisdiction to issue a judgment in rem regarding

the ownership of an asset located within the United States.”

Pet. App. 8a. The court erred in announcing so categorical a

rule regarding a claim that would be better evaluated when a

U.S. court has before it an actual judgment by a Philippine

court. It is unnecessary for this Court to decide whether a

court in the United States would always be bound by a for-

eign court’s judgment of forfeiture. It is sufficient to recog-

nize that the court’s categorical rule that United States courts

would never enforce a foreign judgment of forfeiture relating

to assets located in the United States is erroneous.

There are without question instances in which. a foreign

judgment of forfeiture relating to assets located in the United

States may be recognized and enforced by a court here. In-

deed, a federal statute specifically provides for enforcement

of foreign judgments of forfeiture in certain circumstances.

See 28 U.S.C. 2467(c) (upon certification by the Attorney Gen-

_ eral, “the United States may file an application on behalf of a

foreign nation in [a] district court of the United States seek-

ing to enforce the foreign forfeiture or confiscation judgment

as if the judgment had been entered by a court in the United

States”). Further, the Treaty on Mutual Legal Assistance in

Criminal Matters (MLAT), Nov. 13, 1994, U.S.-Phil., Art. 16,

S. Treaty Doc. No. 18, 104th Cong., 1st Sess. (1995), and chap-

ters IV and V of the United Nations Convention Against Cor-

ruption, G.A. Res. 4 (LVIII), U.N. Doc. A/RES/58/4, at 22, 32

(2003), contemplate cooperation by the two countries on pro-

ceedings related to asset forfeiture.

The MLAT, for example, generally requires the parties, as

permitted by their domestic law, to assist each other when the

object of a forfeiture proceeding in one country is located

within the other country. The MLAT presupposes the exis-

tence of jurisdiction of Philippine courts over assets located

in the United States, and vice versa. And, in fact, courts in

the United States do sometimes exercise jurisdiction in civil

forfeiture proceedings over property located outside the

United States. See 28 U.S.C. 1355(b)(2) (“Whenever property

subject to forfeiture under the laws of the United States is

located in a foreign country, * * * an action or proceeding

for forfeiture may be brought as provided in paragraph (1), or

in the United States District [C]ourt for the District of Colum-

bia.”) (footnote omitted).

Moreover, even assuming arguendo that the Philippine

courts could not adjudicate ownership of the actual assets

held in the Merrill Lynch account, it is undisputed that the

Philippine courts have jurisdiction to determine the owner-

ship of Arelma itself, as the share certificates are being held

in escrow in the Philippines. If ownership of Arelma were

awarded to the Philippines by the Sandiganbayan, there is no

reason to assume, as the court of appeals did, that a court in

the United States would refuse to recognize that judgment.

The court of appeals’ analysis of the first Rule 19(b) factor

also failed to take into account the logical priority of the Phil-

ippines’ and PCGG’s claims over those of the Pimental claim-

ants. The Pimentel claimants do not assert that they are the

rightful owners of the assets in Arelma account. Rather, as

holders of a judgment against the Marcos estate, the Pimentel

claimants ask the court to ascribe the Arelma assets to the

Marcos estate through “‘reverse piercing’ of the corporate

veil,” and then to award those assets to them in partial satis-

faction of their judgment against the Marcos estate. Pet.

App. 52a. Thus, the Pimental claimants’ claim depends upon

a determination that the assets are really Marcos assets. If

the Sandiganbayan determines that Arelma and its assets are

* If the Philippine judgment did not qualify for enforcement under Section

2467(c), there would be a further question whether the judgment would qualify

for recognition under principles of international comity. See Hilton v. Guyot,

159 U.S. 113, 163-164 (1895).

forfeited under Philippine law, it would mean that those as-

sets have been owned by the Philippines since the time

Marcos first obtained them.’ The claims of the Pimentel

claimants against those assets would thereby be vitiated.

They would then be seeking to execute a judgment that they

possess vis-a-vis Marcos against assets of the Philippines.

2. The court of appeals’ erroneous conclusion that the Phil-

ippines would not be prejudiced by continuation of the inter-

pleader action led it to give no consideration to the second

Rule 19(b) factor: “the extent to which, by protective provi-

sions in the judgment, by the shaping of relief, or other mea-

sures, the prejudice can be lessened or avoided.” Pet. App.

Ya. This case involves mutually exclusive claims to a common

fund: the Philippines and PCGG claim the entire amount as

property of the Philippines, the Pimentel claimants’ judgment

far exceeds the value of the Arelma assets, and the Roxas

claimants’ judgment represents over half the amount of the

assets. In such a situation, as the court of appeals recognized

in its initial ruling, id. at 40a, it would be nearly impossible to

shape relief so as to avoid harm to the absent parties. See

Provident Bank, 390 U.S. at 115; see also 4 Moore’s § 19.05{3},

at 19-94 to 19-95 (noting possibility of partial distribution of

undisputed portion of fund or requiring that security be

posted for the disputed amount).

3. The court of appeals also misinterpreted the third Rule

19(b) factor—“whether a judgment rendered in the person's

absence will be adequate.” The third factor “refer[s] to the

* Such a ruling would be consistent with well established domestic forfeiture

law. The Racketeer Influenced and Corrupt Organizations Act (RICO), 18

U.S.C. 1961 et seq., for example, provides that “alll right, title, and interest in

|forfeited| property * * * vests in the United States upon the commission of

the act giving rise to forfeiture under this section.” 18 U.S.C. 1963(c). See also

18 U.S.C. 981(f); 21 U.S.C. 853(e). Congress, in RICO, “devised a statutory

remedial scheme that reaches back to the time of the criminal acts to forfeit

property to the United States.” l/nited States v. BCCI Holdings (Luz.), S_A.,

46 F.3d 1185, 1191 (D.C. Cir.), cert. denied, 515 U.S. 1160 (1995).

public stake in settling disputes by wholes, whenever possi-

ble.” Provident Bank, 390 U.S. at 111; see Davis ex rel. Davis

v. United States, 343 F.3d 1282, 1292-1293 (10th Cir. 2003),

cert. denied, 542 U.S. 937 (2004). That factor “promotes judi-

cial economy by avoiding going forward with actions in which

the court may end up rendering hollow or incomplete relief

because of the inability to bind persons who could not be

joined.” 7 Wright & Miller § 1608, at 114.

Rather than focusing on “the public stake in settling dis-

putes by wholes,” the court of appeals considered only whe-

ther the judgment would be adequate to the “victims of the

former president of the Republic” by satisfying a small por-

tion of their $2 billion judgment. Pet. App. 9a. But, it is clear

that the court’s judgment would not satisfy “the public stake

in settling disputes by wholes.” Indeed, the court of appeals

recognized that because “any judgment entered in this action

cannot bind the Republic,” the Philippines and PCGG “would

remain free to sue for the Arelma assets in a forum of [their]

choice.” Jd. at 8a. The court even suggested that “the Repub-

lic might seek the equivalent of the assets from their present

holder, Merrill Lynch, in New York where they were in-

vested.” /d. at 8a-9a.

That reasoning directly contravenes the purposes of both

Rule 19 and interpleader. This Court has noted that where

multiple parties “assert conflicting claims to a common fund,”

a suit by any one of those parties “implicates all three of the

interests that have traditionally been thought to support com-

pulsory joinder of absent and potentially adverse claimants:

the interest of the defendant in avoiding multiple liability for

the fund; the interest of the absent potential plaintiffs in pro-

tecting their right to recover for the portion of the fund allo-

cable to them; and the social interest in the efficient adminis-

tration of justice and the avoidance of multipie litigation.”

Illinois Brick Co. v. Illinois, 431 U.S. 720, 737-738 (1977); see

7 Wright & Miller § 1618, at 274-275 (“When a particular fund

or property right is involved in litigation, federal courts must

be especially sensitive to the danger of contradictory judicial

orders relating to that fund or right.”).

Interpleader is likewise intended to allow a party faced

with multiple claims to a res to avoid multiple liability by re-

solving the controversy in a single consolidated proceeding.

See State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 533

n.15, 534 n.16 (1967) (“the classic situation envisioned by the

sponsors of interpleader” was one where the stakeholder was

“faced with conflicting but mutually exclusive claims to a pol-

icy”); 7 Wright & Miller § 1702, at 534-535. As the court of

appeals recognized in its earlier decision, “[wJithout all signif-

icant claimants in an interpleader action, its nes is mate-

riaily frustrated.” Pet. App. 41a.

4. As a number of courts have recognized, the fact that a

party is absent due to its immunity from suit largely obviates

the fourth factor in the Rule 19(b) analysis—“whether the

plaintiff will have an adequate remedy if the action is dis-

missed for nonjoinder.” “{T)he plaintiff's inability to obtain

relief in an alternative forum is not as weighty a factor when

the source of that inability is a public policy that immunizes

the absent person from suit.” Davis, 343 F.3d at 1293-1294;

see Seneca Nation of Indians v. New York, 383 F.3d 45, 48

(2d Cir. 2004), cert. denied, 126 S. Ct. 2351 (2006); United

States ex rel. Hall v. Tribal Dev. Corp., 100 F.3d 476, 480-481

(7th Cir. 1996); Wichita & Affiliated Tribes, 788 F.2d at 777.

That is especially so in this case, because the Pimentel claim-

ants assert an interest only as judgment creditors, not as per-

sons claiming ownership of the assets, and because the vast

majority of the Pimentel claimants are Philippine citizens

who, as the court of appeals recognized, ordinarily “should

find redress from their own government.” Pet. App. 9a.

Indeed, the Ninth Circuit itself has repeatedly held that

the lack of an adequate alternative remedy for a plaintiff is

less significant when the absent party is immune from suit,

because the inability to bring suit is a “common consequence

of sovereign immunity, and the [immune party’s] interest in

maintaining their sovereign immunity outweighs the plain-

tiffs’ interest in litigating their claims.” American Grey-

hound Racing, Inc. v. Hull, 305 F.3d 1015, 1025 (2002); see

Wilbur v. Locke, 423 F.3d 1101, 1115 (2005), cert. denied, 546

U.S. 1173 (2006); Dawavendewa v. Salt River Project Agric.

Improvement & Power Dist., 276 F.3d 1150, 1162, cert. de-

nied, 537 U.S. 820 (2002); Confederated Tribes of the Chehalis

Indian Reservation v. Lujan, 928 F.2d 1496, 1500 (1991).

Here, the court of appeals acknowledged that sovereign

status of the absent party is a “powerful consideration” in

indispensability analysis. Pet. App. 7a. However, contrary to

its own circuit precedent, it placed heavy emphasis on the fact

the Pimentel claimants would have “no forum within the Phil-

ippines open to their claims,” id. at 10a, giving no consider-

ation to the competing interest of the Philippines and PCGG

in maintaining their sovereign immunity.

C. The Court Of Appeals’ Decision Threatens To Impair The

Nation’s Foreign Policy Interests

The court of appeals’ decision threatens to undermine sig-

nificant interests of the United States. The United States has

a strong interest in the proper application of principles of

foreign sovereign immunity, a matter of great sensitivity in

foreign relations both because of its impact on foreign states

and because of the United States’ own interests relating to

reciprocity. See The Schooner Exchange v. McFaddon, 11

U.S. (7 Cranch) 116, 137 (1812). More particularly, the United

States has an interest in ensuring that property to which it

has a significant claim will not be awarded to others by a for-

eign court that has no jurisdiction over the United States

because of sovereign immunity. And the United States has an

interest in cooperating with foreign governments in their

efforts to repatriate assets misappropriated by their former

leaders.

This case itself reflects such international cooperation in

the agreement of the Swiss government and courts to transfer

Marcos-related assets in Switzerland, including the Arelma

bearer share certificates, to PNB to hold in escrow pending a

determination by a Philippine court whether those assets are

ill-gotten, and therefore forfeited. For a court in the United

States, in effect, to nullify those proceedings by transferring

_ the Arelma assets to Marcos creditors, without awaiting a

determination whether the assets are, in fact, assets of the

estate or of the Philippine government, frustrates the cooper-

ative efforts of the Philippine and Swiss governments for an

orderly procedure to repatriate the wealth stolen from the

Philippines by its former leader. Indeed, the Swiss and Phil-

ippine governments have each expressed concern that the

court of appeals’ decision will undermine multilateral anti-

corruption cooperation. See Pet. App. 65a-66a; No. 06-1204

Pet. Reply App. la-2a. Those concerns provide additional

reason for this Court to review the court of appeals’ decision.

Il. THE COURT OF APPEALS CORRECTLY REJECTED

THE ARGUMENTS OF THE ROXAS CLAIMANTS

The Roxas claimants contend that the probate exception

divested the district court of jurisdiction to distribute the

Arelma assets once it found that they were the property of the

Marcos estate. But the probate exception has no application

here. As this Court recently explained, the probate exception

“precludes federal courts from endeavoring to dispose of

property that is in the custody of a state probate court” and

“reserves to state probate courts the probate or annulment of

a will and the administration of a decedent’s estate.” Mar-

shall v. Marshall, 547 U.S. 293, 311-312 (2006). Here, the

dis‘ rict court was not attempting to probate a will or adminis-

ter an estate, and the assets from the Arelma securities ac-

count at Merrill Lynch are not in the possession of a state

court, but are in the registry of the district court.

The Roxas claimants also contend that the district court

lacked jurisdiction over the interpleader action because the

Pimentel claimants were not “adverse” to the interpleaded

fund. 06-1039 Pet. 19-20. However, 28 U.S.C. 1335(a)(1) re-

. quires only “[t}wo or more adverse claimants” to the fund to

support jurisdiction. As the Roxas claimants acknowledge,

there are at least two adverse claimants to that fund. 06-1039

Pet. 22. Moreover, the argument that the Pimentel claimants

were not “adverse” to the fund because their claim is not

based on a “direct tie” to the money (id. at 20) is incorrect;

there is no need to establish a “direct tie” to have an “ad-

verse” claim to an interpleaded fund, and the Roxas claimants

do not cite any authority suggesting otherwise.

The Roxas claimants assert in passing that the Marcos

estate was an indispensable party to the interpleader proceed-

ing, and that therefore the case should be dismissed under

Rule 19(b). It does not appear that that argument was fully

briefed before the court of appeals. In any event, the premise

of the argument is incorrect: Imelda Marcos and the Marcos

estate were not absent within the meaning of Rule 19(b)—

both were served with the interpleader complaint, but neither

one made an appearance, and a default was entered against

them. Pet. App. 44a; ER 38.

Nonetheless, if the Court grants the petition for a writ of

certiorari in No. 06-1204, it should hold the petition in No. 06-

1039, because, if the Court holds that the interpleader suit

should be dismissed, reversal of the judgment below would

affect the Roxas claimants as well.

CONCLUSION

The petition for a writ of certiorari in No. 06-1204 should

be granted. The petition for a writ of certiorari in No. 06-1039

should be held pending disposition of No. 06-1204.

Respectfully submitted.

JOHN B. BELLINGER, III

Legal Adviser

Department of State

OCTOBER 2007