Amicus Curiae Brief — Republic of Philippines v. Pimentel

Supreme Court brief2008

Ask Donna

What actually matters in this document.

Text

WORT? Noceim | ooo: "

In the Supreme Court of the United States —

REPUBLIC OF THE PHILIPPINES, ET AL., PETITIONERS

VU.

MARIANO J. PIMENTEL, ET AL.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONERS

PAUL D. CLEMENT

Solicitor General

Counsel of Record

JEFFREY S. BUCHOLTZ

Acting Assistant Attorney

General

EDWIN S. KNEEDLER

Deputy Solicitor General

DOUGLAS HALLWARD-DRIEMEIER

Assistant to the Solicitor

General

reyes S. oo

JOHN B. BELLINGER, III SARANG VIJAY DAMLE

Legal Adviser Attorneys |

Department of State Department of Justice

Washington, D.C. 20520 Washington, D.C. 20530-0001

(202) 514-2217

QUESTIONS PRESENTED

1. Whether a foreign sovereign that is a necessary

party to a lawsuit under Federal Rule of Civil Procedure

19(a) and has successfully invoked sovereign immunity

is, under Federal Rule of Civil Procedure 19(b), an

indispensable party to an action brought in the courts of

the United States to settle ownership of assets claimed

by that sovereign.

2. Whether the Philippines and its Presidential

Commission on Good Government (PCGG), having been

dismissed from the interpleader action based on their

successful assertion of sovereign immunity, had the

right to appeal the district court’s determination that

they were not indispensable parties under Federal Rule

of Civil Procedure 19(b); and whether the Philippines

and its PCGG have the right to seek this Court’s review

of the court of appeals’ opinion affirming the district

court.

(I)

TABLE OF CONTENTS

Interest of the United States .....................--0005- 1

ee ee i nek sian ne winlendawews an 1

UE INO oo. ccc cccccnvccevecsscecececs 8

Argument:

I. The Republic was entitled to seek review of the

Rule 19(b) determination, as were Arelma and PNB. .. 10

II. In light of the Republic’s immunity and pending

forfeiture proceeding in the Philippines, the action

should have been dismissed or stayed pursuant to

MMR AA EA otk chicettacesecethmchesdrwacscss 19

A. An absent party’s sovereign immunity should

weigh heavily in the Rule 19(b) analysis .......... 20

B. Under a proper Rule 19(b) analysis, the action

should have been dismissed or stayed ........... 23

RANE -odecdcakatvnceecerenadatiasGedbheonseasien 33

TABLE OF AUTHORITIES

Cases:

Ashley Creek Phosphate Co. v. Chevron USA, Inc.,

315 F.3d 1245 (10th Cir.), cert. denied, 540 U.S. 820

ds wane blccddadenwiinddtees ecbebaedeasss 12

Briscoe v. Fine, 444 F.3d 478 (6th Cir. 2006) ........... 12

Bryant v. Yellen, 447 U.S. 352 (1980) ................. 14

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

SE Gis bkcdrwe his dekusbahs p cotieseneaderntec 15

Cascade Natural Gas Corp. v. El Paso Natural Gas

Se PEED. Sa vbD cba ccnvesnedescecdacs 11

(111)

FL. eT te WR Tt es A Sree ee eee

Pe Py RT ET OCS, OE STE yl eR EN ey EE ee TP Ie

Cases—Continued: Page

Chicago v. Atcheson, Topeka & Santa Fe Ry.,

gE SS a rere ey eee ae ee 18

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

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

sae Gh uatC savin melbesnececa ce dds cese' 25, 30, 31

Devlin v. Scardelletti, 586 U.S. 1 (2002) ............ 11, 13

Disher v. Information Res., Inc., 873 F.2d 136 (7th

EE St ete ee ay Leech ewabes'eee’ 12

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

883 F.2d 890 (10th Cir. 1989) ................00008- 21

Farmer v. McDaniel, 98 F.3d 1548 (9th Cir. 1996),

cert. denied, 520 U.S. 1188 (1997) .................. 12

Fitzgerald v. Unidentified Wrecked & Abandoned

Vessel, 866 F.2d 16 (1st Cir. 1989) .................. 15

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

542 (2d Cir.), cert. denied, 502 U.S. 818 (1991) ....... 21

FMC v. South Carolina Ports Auth., 535 U.S. 743

DE SW Ua Gaui ASN, Ceska SCs acc ewes Voces 24

Forney v. Apfel, 524 U.S. 266 (1998) .............0008. 12

H.R. Techs., Inc. v. Astechnologies, Inc., 275 F.3d

I ai case ews ccceneet 12

Hagood v. Southern, 117 U.S. 52 (1886) ............2.. 18

Hanson v. Denckla, 357 U.S. 235 (1958) ............ 10, 18

Heckman v. United States, 224 U.S. 413 (1912) ........ 22

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

EE Gc citee cuanubseae bind o4 cesn ne Sedecceses 1,2

Hilton v. Guyot, 159 U.S. 113 (1895) ... 2... 2c 28

Idaho ex rel. Evans v. Oregon, 444 U.S. 380 (1980) ..... 22

Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) ....... 31

Cases—Continued: - Page

Lac Du Flambeau Band of Lake Superior Chippewa

Indians v. Norton, 422 F.3d 490 (7th Cir. 2005) ...... 15

Marino v. Ortiz, 484 U.S. 301 (1988) .................. 13

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

GD dicwksnevecascewenieanenetaaveuniisesss 21, 24

Minnesota v. Northern Sec. Co., 184 U.S. 199 (1902) .... 17

Minnesota v. United States, 305 U.S. 382 (1989) .... 16,21

Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) ... 18

Provident Tradesmens Bank & Trust Co. v.

Patterson, 390 U.S. 102 (1968) ............-... passim

- Republic of the Phil. v. Honorable Sandiganbayan,

G.R. No. 152154 (Phil. 2008) ...................245. 2

Roxas v. Marcos, 969 P.2d 1209 (Haw. 1998) .......... 2,3

Salton, Inc. v. Philips Domestic Appliances & Pers.

Care B.V., 391 F.3d 871 (7th Cir. 2004) ............. 15

Sea-Land Serv., Inc. v. Department of Transp., 137

F.3d 640 (D.C. Cir. 1998) ..... ccc ccccccccccccees 12

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

(2d Cir. 2004), cert. denied, 126 S. Ct. 2351 (2006) .... 31

Southwest Ctr. for Biological Diversity v. United

States Bureau of Reclamation, 143 F.3d 515 (9th

CR NE ss ves pceuedoeubeceueeneemawerstectaas 15

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

GUE Aiciaprckcceckcehadecechecuucnteesioenessen 31

United Airlines, Inc. v. McDonald, 432 U.S. 385

SS ck bs evcheccshéstabeendsueasbuncessel 14

United Keetoowah Band of Cherokee Indians v.

United States, 480 F.3d 1318 (Fed. Cir. 2007) ....... 15

’ » 7 ° -. soy

° ; : 7 ’ fee Lon . a he, « Liv “ ee ee eas ee ae eee _ Mat & de Df rd “ eo

es ee a pe eS Le Pee ee Fe, te SO Se Nn TERN EP ee ee Lg nt PE See, ee be em PT a ee ee Me Pe ee eee Ye

ae at

; VI

Cases—Continned: Page

‘ United States v. Minnesota, 95 F.2d 468 (8th Cir.

4 1938), aff'd, 305 U.S. 382 (1989) ............ ee eee. 16

{ United States ex rel. Hall v. Tribal Dev. Corp., 100 !

q F.3d 476 (7th Cir. 1996) ..........0...00e ee 25, 30, 31 |

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

: SMI ciikcekdcends ccovecsczae 21, 22, 24, 31 :

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

A denied, 546 U.S. 1173 (2006) ..........-.2020005 25, 29

: Constitution, treaties, statutes and rules: |

: ESS SACLE TET IETS 18 |

. Treaty on Mutual Legal Assistance in Criminal

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

Treaty Doe. No. 18, 104th Cong., Ist Sess. (1995) .... 27

fe United Nations Convention Against Corruption, G.A.

Res. 5814 (Oct. 31, 2003):

E eas depnenodnis 27

i: etal ss dussencepereves 27

oe,

Convention Against Torture and Other Cruel,

Inhuman or Degrading Treatment or Punishment,

Dec. 10, 1984, Art. 14, 1465 U.N.T.S. 85............. 32

ti nlws teapehacevesetveccccevesveges 5

EE cuinccovocsessccoveccesevevescoseses 4

io adcdccecbnpensechosennacecceness 27

ER Rirlinbedencesdcccecccercesesecevecsios 4

NEED bo ccvcccecccssescdvedccccccvcsce 13

28 U.S.C. 2467(b)(1)(C) (2000 & Supp. V 2005) ......... 29

LO ee

” en ie Os > 44," Loyd’). antigln# GS Ft by ‘ b a »

ee yet, Aerh: ~ aes Me . is

Me re Dy Ue FARR WN Don See EO arte ee So Sov ee SOP ee

ee ee ES ae cea fe RT Pe er Dane eee eee

Vil

Statutes and rules—Continued:

28 U.S.C. 2467(d)(1)(D) (2000 & Supp. V 2005) .........

METAL RR SEL TS

N.Y. C.P.L.R. § 213 (McKinney Supp. 2007) .........

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

EA: SNE TS Am ee A SRR ere

“\ ies eden gdéeeedades divimeeons

Fed. R. Civ. P.:

Miscellaneous:

136 Cong. Rec. 36193 (1990)... 2... cee cece cece eee

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

Charles A. Wright et al., Federal Practice and

Procedure:

chiigvicdusecccantchdonescegs 21, 30, 31

PER PEMENED coccccusceesevensscsevas

;

In the Supreme Court of the Anited States

No. 06-1204

REPUBLIC OF THE PHILIPPINES, ET AL., PETITIONERS

vz.

MARIANO J. PIMENTEL, ET AL.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONERS

INTEREST OF THE UNITED STATES

This case concerns the proper indispensable-party

analysis under Federal Rule of Civil Procedure 19(b)

when a necessary party is absent due to its sovereign

immunity. At the Court’s invitation, the Solicitor Gen-

eral filed an amicus curiae brief at the petition stage of

this case.

STATEMENT

1. Ferdinand Marcos was President of the Republic

of the Philippines (Philippines) for nearly 20 years. As

numerous courts have documented, Marcos engaged in

widespread abuses of power, including human rights

abuses and misappropriation of vast amounts of money

and property. See, e.g., Hilao v. Estate of Marcos, 103

(1)

ree Pe ee ee en ee ee Ie ee ee eee

; 4

F.3d 789 (9th Cir. 1996); Roxas v. Marcos, 969 P.2d 1209

(Haw. 1998); C.A. E.R. 597 (ER) (Republic of the Phil. ©

v. Honorable Sandiganbayan, G.R. No. 152154 (Phil.

2003)).

In 1972, Marcos created Arelma, S.A. (Arelma) under

the laws of Panama and opened an account in its name

at Merrill, Lynch, Pierce, Fenner & Smith, Inc. (Merrill

Lynch) in New York. Pet. App. 45a. The funds placed

into that account were allegedly obtained by Marcos

through misuse of his public office. Jd. at 2a. Ownership

of Arelma is represented by two bearer share certifi-

cates that are held in escrow by the Philippine National

Bank (PNB), after being transferred there by an order

of the Swiss Federal Supreme Court. /d. at 45a-46a,

49a.

The assets in the Merrill Lynch account are the sub-

ject of this interpleader action. Arelma claims the as-

sets based on its ownership of the account; PNB’s claim

is based on its custody of the Arelma shares. The Philip-

pines and the Philippine Presidential Commission on

Good Government (PCGG) (together the Republic) claim

the funds under a Philippine statute (Rep. Act. No. 1379,

51:9 O.G. 4457 (June 18, 1955)) providing that any prop-

erty 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 Lillion judgment against the Marcos estate in Feb-

ruary 1995. See Hilao v. Estate of Marcos, supra. The

Pimentel claimants seek to execute that judgment

against the Merrill Lynch account, claiming that Arelma

was a shell created to hide Marcos’s personal assets. Br.

in Opp. 3, 5."

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

ernment created PCGG to recover Marcos’s illegitimate

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

ippines. 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,

ordering them held until judgment had been reached in

Philippine courts as to their ownership. ER 288, 313.

The Swiss Federal 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 jurisdiction over political corruption cases, based

3 on the Philippine forfeiture statute. ER 174-251.

In late 1997 and early 1998, while the forfeiture ac-

| tion was pending, the Swiss Federal Supreme Court

: transferred the frozen assets, including the Arelma

| shares, to an escrow account at PNB pending a final

ownership determination by the Sandiganbayan. ER

289, 347-385. After that transfer, PCGG asked Merrill

Lynch to transfer the assets it held for Arelma to the

PNB account. Merrill Lynch declined, noting that the

transfer of the Arelma shares to PNB was provisional

only, and that there were other claimants to the fund.

ER 393-395.

On September 19, 2000, the Sandiganbayan granted

PCGG’s motion for partial summary judgment, holding

' Other claimants, the Estate of Roger Roxas and Golden Budha

Corporation, are judgment creditors of Marcos’s wife. Roxas, 969 P.2d

at 1231-1233. Their petition for a writ of certiorari, No. 06-1039,

remains pending.

that the assets at issue in the motion were forfeited to

the Philippines under Philippine law. ER 254-283. Al-

though the Sandiganbayan later reversed its own deci-

sion, the Philippine Supreme Court reinstated the par-

tial judgment in the Philippines’ favor on July 15, 2003.

ER 597-696.

3. On September 14, 2000, Merrili Lynch commenced

this interpleader action in federal district court in Ha-

waii to settle competing claims to the Arelma account’s

assets. ER 34. As required by 28 U.S.C. 1335(a),

Merrill Lynch deposited all $35 million in assets with the

court. Pet. App. 46a.

The Republic asserted sovereign immunity under the

Foreign Sovereign Immunities Act (FSIA). 28 U.S.C.

1604. The Republic, Arelma, and PNB also all moved to

dismiss the interpleader action, contending that the Re-

public was an indispensable party. ER 50-61, 970, 993;

Pet. App. 3l1a-32a; Fed. R. Civ. P. 19(b). The district

court instead dismissed the Republic’s claims on the

merits, without addressing its assertion of immunity.

Pet. App. 32a.

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

interlocutory appeal, that the Republic was immune.

Pet. App. 36a-39a. The court also found the Republic to

be a necessary party under Rule 19(a), since “{w]ithout

the Republic” as a party, its “interests in the subject

matter are not protected.” Jd. at 40a. While the court

noted that the Republic’s unavailability militated in fa-

vor of dismissal under Rule 19(b), it also recognized that

the Pimentel claimants and Merril! Lynch had compet-

ing interests. Jd. at 41a. Rather than resolve that con-

flict, the court ordered a stay of the interpleader suit

pending resolution of the Philippine litigation. /d. at

42a. The court noted that “later developments may ren-

Ie Pe eS ee ee mee 5

A el te pe Oe eh

der 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 Republic’s immunity

status. /bid.

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

concluding that the outcome of the proceedings before

the Sandiganbayan would have no bearing on the inter-

pleader action because the district court had exclusive

jurisdiction over the Arelma assets. ER 697-699. The

court certified its order under 28 U.S.C. 1292(b), and

the Republic, Arelma, and PNB appealed. The Ninth

Circuit affirmed. J.A. 26-27.

On August 14, 2003, while that appeal was pending,

the district court denied the motions to dismiss the case

under Rule 19(b). Pet. App. 55a-60a. The court held

that the Republic did not have a “legally protectible

claim” that would be impaired by the interpleader be-

cause any claim it might have would be barred by the

New York statute of limitations. Jd. at 57a-59a. The

court also rejected the contention that the disputed as-

sets were covered by the forfeiture proceeding in the

Philippines. The court found that the petition for forfei-

ture filed in 1991 did not “seek[]} forfeiture of the assets

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

Philippine Supreme Court’s decision made no mention

of Arelma. /d. at 56a.” The court concluded that, in any

event, the Arelma share certificates were irrelevant

because Arelma was itself a party to the interpleader

action. /d. at 57a.

? The forfeiture petition does refer to Arelma and its Merrill Lynch

account, though not in the context of a specific prayer for relief. ER

234, 249-250. As discussed below, the Republic specifically moved the

Sandiganbayan for judgment regarding those assets in July 2004.

‘

The district court then held a bench trial, and on

July 12, 2004, awarded the entirety of the Arelma assets

to the Pimentel claimants. Pet. App. 43a-54a. The court

concluded that because Arelma was merely the “alter

ego” of Marcos, it could “reverse” pierce the corporate

veil and award the assets to Marcos’s creditors. /d. at

52a, 54a.

4. On July 19, 2004, the Republic filed a motion with

the Sandiganbayan, in the forfeiture proceedings begun

in 1991, claiming that the “ARELMA account is now

ripe for forfeiture.” See C.A. Request for Judicial No-

tice, Ex. A at 9. It prayed that “judgment be rendered

declaring the funds, properties, shares in and interests

of ARELMA, wherever they may be located, as ill-

gotten assets and forfeited in favor of the Republic of

the Philippines.” /bid. That motion remains pending.

5. The Republic appealed the district court’s final

judgment, urging that its absence required dismissal of

the entire suit pursuant to Rule 19(b). Arelma and PNB

filed a separate appeal challenging the award to the

Pimentel claimants as well as the ruling on the Repub-

lic’s indispensability. See Arelma C.A. Br. 42-44.

The court of appeals affirmed. Pet. App. la-lla. It

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 ac-

tion.” /d. at 6a. However, it concluded that while preju-

dice to a foreign state was a “powerful consideration,” it

was outweighed by other factors. /d. at 7a.

The court held that the Republic’s failure to obtain

a judgment in the Philippines concerning ownership of

the assets, even though the Arelma shares had been in

escrow at PNB since 1995, was “an equitable consider-

ation * * * to be taken into account.” Pet. App. 7a.

The court recognized that “[ijn practical effect, a judg-

ment in this action will deprive the Republic of the

Arelma assets.” Jd. at 9a. But the court concluded that

the Republic would not be prejudiced because “[a]s a

practical matter, it is doubtful that the Republic has any

likelihood of recovering the Arelma assets.” Jd. a: 7a.

The court reasoned that any action by the Republic

against Merrill Lynch in New York would be barred by

the six-year statute of limitations for actions based on

misappropriation of public property. Jd. at 8a-9a (citing

N.Y. C.P.L.R. § 213 (McKinney Supp. 2007)).

Responding to the Republic’s contention that “it

could obtain a judgment regarding the ownership of

these assets in the Philippines where it is relieved of any

statute of limitations,” 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 Philippine court issued such a judg-

ment, a court in this country “would not be bound to

give it effect.” Jd. at Ta-8a.

In considering the adequacy of the judgment in the

absence of the Republic, the court found that the award

would have“symbolic significance” to the “victims of the

former president of the Republic.” Pet. App. 9a. Al-

though most of the Pimentel claimants were Philippine

citizens who “should find redress from their own govern-

ment,” that consideration was “outweighed by the fact

that the Republic has not taken steps to compensate

these persons who suffered outrage from the extra-legal

acts of a man 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 con-

cluded that “[n]Jo injustice” would be done to the Philip-

pines “if it now loses what it can never effectually pos-

sess.” Pet. App. 10a.

SUMMARY OF ARGUMENT

1. The question whether the Republic is an indis-

pensable party was properly before the court of appeals

and is properly before this Court. The Republic ap-

peared in the district court, in response to a summons,

and moved for two forms of relief: (1) dismissal as a de-

fendant based on its immunity, and (2) dismissal of the

entire action because the Republic is an indispensable

party. Although the court of appeals recognized the Re-

public’s immunity, the district court thereafter denied

the Republic’s broader request for dismissal under Rule

19(b).

The Republic satisfies both requirements for taking

an appeal from that order: standing and “party” status.

The court of appeals acknowledged that, “[iJn practical

effect, a judgment in this action will deprive the Repub-

lic of the Arelma assets.” Pet. App. 9a. The Republic

therefore has standing to appeal.

Nor does the fact that the Republic was dismissed as

immune deprive it of party status for purposes of ap-

peal. It is self-evident that the Republic would be a

party to an appeal challenging dismissal of the Republic

based on its immunity. It is likewise a “party” for pur-

poses of appealing an order adverse to it. This Court

has, in other contexts, recognized that a party that is

not bound by a judgment, but is adversely affected by it,

may intervene for purposes of taking an appeal. And

many lower courts have allowed immune parties to in-

tervene for the limited purposes of raising a Rule 19(b)

objection. That rule reflects the common sense reality

that, especially in an interpleader action, the failure to

dismiss the action may deprive the sovereign’s immunity

of much of its practical effect. Here, because the Re-

public was already a party, it had no need to intervene.

In any event, even if the Republic could not appeal

the Rule 19(b) order, Arelma and PNB could. They also

moved to dismiss under Rule 19(b), and this Court has

recognized that any defendant has standing to appeal on

the ground the district court lacked jurisdiction over an

indispensable party.

2. The lower courts’ Rule 19(b) analysis failed to

afford adequate weight to the Republic’s immunity.

This Court has recognized that, under Rule 19(b), some

considerations can be “compelling by themselves.”

Provident Tradesmens Bank & Trust Co. v. Patterson,

390 U.S. 102, 119 (1968) (Provident Bank). Sovereign

immunity is such a consideration. It is not merely a

technical defect in the court’s ability to reach the party,

but reflects an overriding policy judgment that the

party should not have to defend itself in court. The ab-

sent party’s immunity, therefore, leaves little to be bal-

anced under the other Rule 19(b) factors. Here, the Re-

public’s immunity should have been given even greater

weight because of the significant nature of its inter-

ests—recovering the vast sums that Marcos misappro-

priated through abuse of his office.

The court of appeals’ error pervaded its consider-

ation of each of the Rule 19(b) factors. Analyzing the

first factor, the court’s conclusion that the Republic

would not be prejudiced depended almost exclusively on

its determination that the Republic’s claim was time-

barred and therefore lacked merit. That analysis—

which was, in any event, incorrect—effectively deprived

i ae eo. ey

4 ae ae eS ee es Poe el OD ee

. eee Se ON ae Ee »! * 2 alfa a —

eae ee

i i,

the Republic of its immunity by adjudicating its claim in

its absence.

The court of appeal’s analysis of the other factors

was similarly flawed. Because the parties have mutually

inconsistent claims to a limited fund, the Republic’s in-

terests cannot be protected in its absence. To the extent

the court suggested that prejudice was mitigated be-

cause the Republic could sue Merrill Lynch for a second

recovery, it only highlighted the extent to which this

litigation cannot serve the fundamental purpose of both

interpleader and Rule 19: to resolve disputes by

wholes. Finally, the court’s analysis of the fourth fac-

tor—which attached great weight to concerns that re-

spondents would have no forum for relief—ignores the

fact that that is a necessary consequence of the policy

judgment to recognize a party’s immunity.

ARGUMENT

I. THE REPUBLIC WAS ENTITLED TO SEEK REVIEW OF

THE RULE 1%b) DETERMINATION, AS WERE ARELMA

AND PNB.

A. Although the Republic successfully asserted its

sovereign immunity, the district court denied its

broader request to dismiss the entire suit under Rule

19(b) because it was an indispensable party. That order

prejudiced the Republic’s interests, and it was entitled

to appeal from it. As discussed below, see p. 18, infra,

this Court has made clear that any defendant may take

an appeal to raise the absence of an indispensable party,

see Hanson v. Denckla, 357 U.S. 235, 244-245 (1958),

and Arelma and PNB therefore had standing to raise

that issue on appeal. When, as here, the “absent” party

is an immune sovereign that has appeared in the /itiga-

tion to assert its immunity and to seek dismissal under

Rule 19(b), there is no reason why it—the party whose

interests are most directly at stake—should not also be

permitted to raise the Rule 19(b) issue on appeal for

itself.

In its order granting certiorari, the Court directed

the parties to address the additional question whether

the Republic could seek review of the district court’s

and court of appeals’ Rule 19(b) determinations, after it

had been dismissed as immune. That question raises

two distinct issues: (1) whether the Republic has stand-

ing to appeal; and (2) whether it is a “party” for pur-

poses of taking an appeal. See Devlin v. Scardelletti,

536 U.S. 1, 7 (2002). The Republic satisfies both re-

quirements.

1. The adverse consequences of the judgment on the

Republic easily satisfy the requirements of prudential

standing to appeal the district court’s Rule 19(b) ruling.

See Devlin, 536 U.S. at 7. The Republic seeks to protect

its own interests in the Arelma assets and in meaningful

immunity from suit; those interests are unique to it, not

generalized grievances; and the Republic is within the

zone of interests protected by Rule 19(b) and the FSIA.

Indeed, on an earlier appeal, the court of appeals recog-

nized that “[w]ithout the Republic and the PCGG as par-

ties in this interpleader action, their interests in the

subject matter are not protected,” and they were there-

fore necessary parties under Rule 19(a). Pet. App. 40a.

That same determination would support a non-party’s

intervention as of right. See Fed. R. Civ. P. 24(a)(2)

(intervention as of right if “disposition of the action may

as a practical matter impair or impede the applicant’s

ability to protect its interest”); Cascade Natural Gas

Corp. v. El Paso Natural Gas Co., 386 U.S. 129, 134 n.3

(1967) (noting that Rules 19(a) and 24(a) are “counter-

‘

;

. . bbe’: PH

Saat Ys ee A

“yp °° 4a”) = SS re a

part(s}”). That interest is also sufficient to satisfy the

requirements for standing to take an appeal.

Although the lower courts granted the Republic par-

tial relief—dismissal of it as a party on immunity

grounds—that does not mean that it was not adversely

affected by the denial of its request to dismiss the entire

suit under Rule 19(b). Indeed, the Rule 19(b) ruling

deprived the immunity ruling of much of its practical

force. As the court recognized, “[i]n practical effect, a

judgment in this action,” entered in the Republic’s ab-

sence, “will deprive the Republic of the Arelma assets.”

Pet. App. 9a.

This Court has recognized that a party that has ob-

tained “some, but not all, of the relief [it] requested”

from the district court is an “aggrieved” party entitled

to take an appeal. Forney v. Apfel, 524 U.S. 266, 271

(1998). Although in Forney the aggrieved party was the |

plaintiff, ibid., the same rule applies to a defendant that |

has obtained only partial success, such as dismissal of |

the plaintiff's claim without prejudice when it sought

dismissal with prejudice. As one leading treatise ob-

serves, it is “obvious|]” that “a defendant must be al-

lowed to appeal” in such circumstances. 15a C. Wright

et al., Federal Practice and Procedure § 3914.6 (3d ed.

2001) (Wright). And the courts of appeals have repeat-

edly so held. See, e.g., Briscoe v. Fine, 444 F.3d 478,

495-496 (6th Cir. 2006); Ashley Creek Phosphate Co. v.

Chevron USA, Inc., 315 F.3d 1245, 1263-1264 (10th

Cir.), cert. denied, 540 U.S. 820 (2003); H.R. Techs, Inc.

v. Astechnologies, Inc., 275 F.3d 1378, 1382-1384 (Fed.

Cir. 2002); Sea-Land Serv., Inc. v. Department of

Transp., 137 F.3d 640, 647 n.4 (D.C. Cir. 1998); Farmer

v. McDaniel, 98 F.3d 1548, 1549, 1553-1554 (9th Cir.

1996), cert. denied, 520 U.S. 1188 (1997); Disher v. In-

formation Res., Inc., 873 F.2d 136, 139 (7th Cir. 1989).

The district court’s refusal to dismiss the interpleader

action entirely, as the Republic requested, prejudiced

its ability to protect its interest in the Arelma assets,

and it therefore has standing to appeal that order.

2. The Republic also satisfies the requirement that

“only parties to a lawsuit, or those that properly become

parties, may appeal an adverse judgment.” Marino v.

Ortiz, 484 U.S. 301, 304 (1988) (per curiam). Indeed,

although in Devlin the Court made clear that it has

“never * * * restricted the right to appeal to named

parties,” 536 U.S. at 7 (allowing appeal by non-named

class member), in this case the Republic satisfies even

that more stringent standard.

The Republic was named as defendant in the com-

plaint, J.A. 14, and, as required by the FSIA, 28 U.S.C.

1608(a)(3), the district court served the complaint and

summons upon it. See ER 954-955, 957. The Republic

appeared and moved to have the suit dismissed as

against the Republic, on the ground of immunity, and in

its entirety, on the ground that the Republic was indis-

pensable See ER 482-485. The district court denied

both forms of relief, and the Republic appealed. Pet.

App. 32a-33a. Although the Ninth Circuit recognized

the Republic’s immunity, id. at 37a-39a, it deferred res-

olution of the indispensability question, id. at 4l1a-42a.

When, on remand, the district court finally denied the

Rule 19(b) motions, the Republic remained a party to

that motion (indeed, the Republic had filed such a mo-

tion) and as such was entitled to appeal the order deny-

ing it.

Even after a defendant has successfully obtained

dismissal of the claims against it, the defendant remains

a “party” to the litigation until the conclusion of any

;

’

appeal. That fact is self-evident when, for example, the

plaintiff appeals the dismissal order. The defendant

would be a “party” to the litigation entitled to notice of

the appeal and to appear as appellee. See F.R.A.P. 3(d)

(notice of the appeal to be served upon “each party’s

counsel of record”) (emphasis added). If the dismissed

defendant remains a “party” for purposes of defending

against an appeal by the plaintiff, there is no reason why

the dismissed defendant is not also a “party” for pur-

poses of appealing an order that is adverse to it.

This Court’s cases upholding intervention for pur-

poses of appeal likewise make clear that even though a

party is not technically bound by the district court’s

merits judgment—as is true of a defendant whose im-

munity has been recognized—its interests may be suffi-

ciently implicated to warrant permitting it to take an

appeal. In United Airlines, Inc. v. McDonald, 432 U.S.

385 (1977), the respondent sought to intervene after

judgment in order to appeal the denial of class certifica-

tion (without which the judgment could not bind her).

Id. at 390. The district court denied intervention. On

the respondent’s appeal, the court of appeals reversed.

Ibid. This Court affirmed that the would-be intervenor

was a proper party to take an appeal. /d. at 394-395.

Moreover, the Court made clear that the rule permitting

intervention for purposes of appeal extends to “litiga-

tion that is not representative in nature, and in which

the intervenor might therefore be thought to have a less

direct interest in participation in the appellate phase.”

Id. at 395 n.16. See Bryant v. Yellen, 447 U.S. 352, 366-

368 (1980) (upholding intervention for appeal by

farmworkers whose ability to purchase excess land was

undermined by district court’s ruling).

Many lower courts have, in fact, approved of limited

intervention under Rule 24(a) as a way for a person not

subject to the court’s jurisdiction to assert a Rule 19(b)

objection. See United Keetoowah Band of Cherokee

Indians v. United States, 480 F.3d 1318, 1323 (Fed. Cir.

2007) (noting Tribe’s “limited intervention” to seek dis-

missal under Rule 19(b); reversing on merits of Rule

19(b) analysis); Lac Du Flambeau Band of Lake Supe-

rior Chippewa Indians v. Norton, 422 F.3d 490, 495 (7th

Cir. 2005) (same; affirming dismissal on other grounds);

Salton, Inc. v. Philips Domestic Appliances & Pers.

Care B.V., 391 F.3d 871, 875, 878 (7th Cir. 2004) (same

regarding Hong Kong corporation; reversing on merits

of Rule 19(b) analysis); Southwest Ctr. for Biological

Diversity v. United States Bureau of Reclamation, 143

F.3d 515, 519-520, 522 (9th Cir. 1998) (same regarding

States; affirming denial of motion as moot); Fitzgerald

v. Unidentified Wrecked & Abandoned Vessel, 866 F.2d

16, 17-18 (1st Cir. 1989) (same regarding Puerto Rico;

affirming dismissal), overruled on other grounds, Cali-

fornia v. Deep Sea Research, Inc., 523 U.S. 491 (1998).

That rule reflects the common sense reality that Rule

19(b), especially in an interpleader action, operates to

protect the interests of absent parties. In this case,

there was no need for the Republic to intervene spe-

cially to seek dismissal under Rule 19(b), as it had al-

ready been made a party to the litigation and raised its

Rule 19(b) motion in that capacity.

Depriving a foreign nation of its ability to seek not

just its own dismissal on sovereign immunity grounds,

but dismissal of the entire action under Rule 19(b)

would be particularly anomalous. Denial of the Rule

19(b) dismissal, at least in an interpleader action, de-

prives the sovereign immunity holding of much of its

eEN 2 eee

’

= es ee ee Pe Oe Oe eo e btw . et [a = vase ™ “. a eT Se OS See ee

- .

practical force. A sovereign may have little choice but

to waive its immunity if Rule 19(b) dismissal does not

follow the assertion of immunity, and it would under-

mine the purpose of sovereign immunity to deprive the

sovereign of a means to vindicate its obvious interest in

the Rule 19(b) question.

3. This Court has previously exercised jurisdiction

when the United States appealed in similar circum-

stances. In Minnesota v. United States, 305 U.S. 382

(1939), the State sued in state court to condemn ijand of

Indian allottees held in trust by the United States. Jd.

at 383. The complaint named the United States and the

allottees as defendants. Jd. at 383-384. The United

States removed to federal court, where it appeared spe-

cially, asserted its sovereign immunity, and moved to

dismiss the action in its entirety. Jd. at 384. The dis-

trict court refused to dismiss the whole suit, finding

“that the United States is not a necessary party” be-

cause Congress had consented to suit against the Indian

allottees directly. /bid. After final judgment, the Unit-

ed States appealed. United States v. Minnesota, 95

F.2d 468, 469 (8th Cir. 1938); see 305 U.S. at 384. The

court of appeals denied a motion to dismiss the appeal,

95 F.2d at 469, and reversed, holding that because the

judgment affected the United States’ interests “directly

and substantially,” the action could not be maintained

without the United States’ consent to suit against it. /d.

at 470,472.

This Court affirmed. The Court held that “(the

United States is an indispensable party defendant to the

condemnation proceedings” against property in which it

has an interest, 305 U.S. at 386, and that the suit had to

be dismissed because the court lacked jurisdiction over

the United States, id. at 388-389. Although the Court

}

: 4

ag ely ee Se eee &

~~ Fre,

did not specifically address the question of the United

States’ authority to appeal, the case illustrates that ap-

peal by an immune sovereign from the denial of a Rule

19(b) motion may be necessary to protect the very inter-

ests that the government’s immunity and Rule 19(b)

were intended to serve.

B. Even if the Republic itself could not appeal on the

Rule 19(b) issue, that issue would still be properly be-

fore this Court. Arelma and PNB were also named as

defendants to the interpleader action, J.A. 13; ER 457-

458, were never dismissed, and have independent stand-

ing to raise the Rule 19(b) issue.

This Court has recognized that, due to an absent

party’s general inability to protect itself, and the risk

that those present in the litigation may not advarce the

absent party’s interests, the indispensability rule “may

be enforced by the court, swa sponte, though not raised

by the pleadings or suggested by the counsel.” Minne-

sota v. Northern Sec. Co., 184 U.S. 199, 235 (1902). See

Provident Bank, 390 U.S. at 111 (“When necessary,

* * * a court of appeals should, on its own initiative,

take steps to protect the absent party.”). But while the

court can raise the issue itself, the advisory committee

notes reflect a recognition that the court will generally

have to rely on those defendants that are present to

bring another party’s absence to the court’s attention.

See Fed. R. Civ. P. 19 advisory committee notes (1966).

A present defendant might “seek[] dismissal in order to

protect himself against a later suit by the absent per-

son” or “vicariously to protect the absent person against

a prejudicial judgment.” J/bid.; Provident Bank, 390

U.S. at 110 n.4 (quoting same). Thus, whether Arelma

and PNB sought to protect their own interests or those

of the Republic, they were proper parties to raise a Rule

_ Se ee ee se, oe ee eae ee oe oe ee ee a en ee) a en

19(b) objection in the district court, as they did. See ER

970, 993.

Having moved to dismiss the action under Rule

19(b), Arelma and PNB were also entitled to appeal the

district court’s denial of that motion. In Hanson, the

Court specifically rejected an argument that “appellants

lack standing to complain of a defect in [personal] juris-

diction over the nonresident trust companies, who have

made no appearance.” 357 U.S. at 244-245. The Court

explained that, because under state law the trustee “is

an indispensable party to litigation involving the validity

of the trust,” and the suit would therefore have to be

dismissed, “any defendant affected by the court’s judg-

ment has that ‘direct and substantial personal interest

in the outcome’ that is necessary to challenge whether

that jurisdiction was in fact acquired.” /d. at 245 (quot-

ing Chicago v. Atchison, Topeka & Santa Fe Ry., 357

U.S. 77, 83 (1958)). See Phillips Petroleum Co. v.

Shutts, 472 U.S. 797, 805-806 (1985) (quoting Hanson)

(allowing defendant to appeal finding of personal juris-

diction over plaintiff class members); see also Hagood v.

Southern, 117 U.S. 52, 71 (1886) (directing dismissal of

complaint upon request of defendant-appellant state

officials for failure to join State, which had Eleventh

Amendment immunity).

Therefore, even if the Republic could not raise the

Rule 19(b) issue on appeal, Arelma and PNB were enti-

tled to do so, as well as to bring the issue before this

Court.

* oe te

je. a. oe _— ao 2

a “ae

ot ei Mis ns

;

Il. IN LIGHT OF THE REPUBLIC’S IMMUNITY AND PEND-

ING FORFEITURE PROCEEDING IN THE PHILIP-

PINES, THE ACTION SHOULD HAVE BEEN DISMISSED

OR STAYED PURSUANT TO RULE 19%b)

Rule 19 provides for mandatory joinder of persons

“needed for just adjudication.” Rule 19(a) describes

persons who must be joined 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 * * * as a prac-

tical matter impair or impede the person’s ability to pro-

tect that interest,” that person must be joined if feasi-

ble. Fed. R. Civ. P. 19(a)(2)(i).

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

a party for some reason, the court must determine, un-

der 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 being thus re-

garded as indispensable.” Rule 19(b) provides that the

“factors” to be considered in making that determination

“include” the following four:

[F ]irst, 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 provisions in the judgment, by the

shaping of relief, or other measures, the prejudice

can be lessened or avoided; third, whether a judg-

ment rendered in the person’s absence will be ade-

quate; fourth, whether the plaintiff will have an ade-

* All quotations to the federal rules are to the version in effect at the

time of the lower courts’ decisions.

quate remedy if the action is dismissed for non-

joinder.

Fed. R. Civ. P. 19(b). “The decision whether to dismiss

* * * must be based on factors varying with the differ-

ent cases, some such factors being substantive, some

procedural, some compelling by themselves, and some

subject to balancing against opposing interests.” Provi-

dent Bank, 390 U.S. at 118-119.

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

held that the Republic is immune under the FSIA. Pet.

App. 30a-39a. The court further held that the Republic

should be joined if feasible, and that it was “difficult to

see how this interpleader action can proceed in [its] ab-

sence.” /d. at 40a-4la. Having recognized that the Re-

public was an absent, but necessary, party, the court of

appeals entered a stay pending future proceedings in

the Philippines. /d. at 42a.

On subsequent appeal, however, the court of appeals

concluded that the Republic’s absence did not require

dismissal or a stay under Rule 19(b). Pet. App. 6a-10a;

J.A. 27. That ruling fails to give appropriate weight to

the Republic’s immunity and reflects a misunderstand-

ing of the Rule 19(b) factors, especially as applied when

the absent party is a sovereign entitled to immunity.

Under a proper analysis, the litigation should have been

dismissed without prejudice, or at least stayed, pending

a final judgment in the Philippine courts in the forfei-

ture proceeding.

A. An Absent Party’s Sovereign Immunity Should Weigh

Heavily In The Rule 19(b) Analysis

This Court has recognized the importance of sover-

eign immunity to the indispensable-party analysis in

cases where the United States is the absent party. In

4 !

-* Pe ey ee ae a oP ay Me,

Minnesota v. United States, for example, the Court held

that the suit must be dismissed because it was a “pro-

ceeding against property in which the United States has

an interest,” and the United States had not consented to

suit. 305 U.S. at 386, 388-389. In Mine Safety Appli-

ances Co. v. Forrestal, 326 U.S. 371 (1945), the Court

similarly held that where “the suit is essentially one

designed to reach money which the government owns,”

the “government is an indispensable party.” Jd. at 375.

The Court did not, in those cases, weigh the United

States’ interests against the plaintiffs interest in a fo-

rum or other countervailing considerations. Rather, as

the Court observed in Provident Bank, some factors

can, in an appropriate case, be “compelling by them-

selves,” 390 U.S. at 119, and sovereign immunity is such

a factor. Other courts of appeals have recognized that

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 them-

selves.” Enterprise Mgmt. Consultants, Inc. v. United

States, 883 F.2d 890, 894 (10th Cir. 1989) (quotation

marks omitted); see Wichita & Affiliated Tribes v.

Hodel, 788 F.2d 765, 777 n.13 (D.C. Cir. 1986) (same);

Fluent v. Salamanca Indian Lease Auth., 928 F.2d 542,

548 (2d Cir.) (recognizing the “paramount importance

accorded the doctrine of sovereign immunity under

[rJule 19”), cert. denied, 502 U.S. 818 (1991); see also 7

Wright § 1617, at 254 (“No doubt because of the sover-

eign-immunity concept, the application of Rule 19 in

cases involving the government reflects a heavy empha-

sis on protecting its interests.”).

That sovereign immunity will often be compelling in

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

matically indispensable. For instance, in certain cir-

cumstances, the interests of the absent sovereign may

be adequately protected by another party that may

properly represent its interests, cf. Heckman v. United

States, 224 U.S. 413, 444-445 (1912) (interests of absent

Indian grantors adequately represented by the United

States), or relief might be structured so as not to preju-

dice the absent sovereign, see /daho ex rel. Evans v.

Oregon, 444 U.S. 380, 386-391 (1980). Nonetheless, sov-

ereign immunity is different from other considerations.

When an interested party is absent because of its sover-

eign immunity, it is not the same as “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 [the defendant]

from suit without” its consent. Wichita & Affiliated

Tribes, 788 F.2d at 777.

Thus, a court must be especially mindful of the sig-

nificance of the absent party’s sovereign immunity—not

only as a compelling factor in its own right, but also as

it considers the other factors under Rule 19(b). That

approach is necessary to ensure that the court does not

subvert the purposes for which the immunity was

granted. See, e.g., 4 J. Moore et al., Moore’s Federal

Practice § 19.05[2|[c], at 19-93 (2007) (“[CJourts are re-

luctant to require the absentee to protect its own inter-

est if intervention would result in the absentee’s waiving

an immunity to suit.”). Thus, even though the Repub-

lic’s immunity did not obviate the need to consider the

four factors identified in Rule 19(b), it should have re-

ceived far greater weight than it did. This is especially

so in an interpleader action, when the difficulties of pro-

tecting absent parties while vindicating the underlying

purposes of interpleader are particularly acute.

As explained below, under a proper analysis of those

factors, giving appropriate consideration to the Repub-

lic’s immunity, this case should have been dismissed or

stayed. The Ninth Circuit’s failure to do so was espe-

cially problematic because the suit impairs the Repub-

lic’s critical sovereign interest in repatriating funds ille-

gally obtained by its former president’s misuse of his

office. The significance of that sovereign interest is re-

flected in the extent of international cooperation the

Republic has received, including the transfer of the

Arelma shares and other assets from Switzerland to the

Philippines, so that the Republic’s forfeiture claim re-

garding Arelma could be heard by the Sandiganbayan.

The impact of the Ninth Circuit’s ruling on that interna-

tional cooperation and the Republic’s critical sovereign

interests has in turn led to complications in the United

States’ foreign relations. See Pet. App. 65a-66a; Pet.

Cert. Reply App. la-2a. Those further considerations

reinforce the conclusion that the Republic’s sovereign

immunity, together with a proper analysis of the four

factors identified in Rule 19(b), required dismissal or

stay of this suit. See Fed. R. Civ. P. 19(b) advisory com-

mittee notes (1966) (listed factors “are not intended to

exclude other considerations”).

B. Under A Proper Rule 19(b) Analysis, The Action Should

Have Been Dismissed Or Stayed

1. The first factor under Rule 19(b) is the prejudice

that would result from adjudicating the case in a party’s

absence. Under that banner, the court of appeals pro-

ceeded to adjudicate the merits of the Republic’s claims,

finding that the Republic would not be prejudiced be-

cause it had “no practical likelihood of obtaining the

Arelma assets.” Pet. App. 10a. In particular, the court

“1

“id

Se oF, A ee

RxSelerre

concluded that any claim by the Republic to the assets

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

tations for misappropriation of public funds. Jd. at

8a-9a (citing N.Y. C.P.L.R. § 213 (McKinney Supp.

2007)). That was a serious misapplication of the first

factor. By resting its analysis so heavily on its assess-

ment of the merits of the Republic’s claims, the court in

effect deprived it of the benefit of its sovereign immu-

nity. See Mine Safety Appliances, 326 U.S. at 375 (“the

government’s liability can not be tried behind its back”)

(quotation marks omitted).

Although there may be circumstances in which it is

appropriate to give some consideration to the underly-

ing merits in determining the extent of prejudice to an

absent party from adjudication without its participation,

see Provident Bank, 390 U.S. at 115 (noting that it

would have been proper to explore the likelihood that

claims against the absent party would result in recover-

ies 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 absence is due to its sovereign immunity. The

immune party would either have to participate in the

litigation (thereby forfeiting a considerable benefit of its

immunity) in order to argue the merits of its claim, or

risk the possibility that the court will, as here, underes-

timate the strength of the party’s interest. See Wichita

& Affiliated Tribes, 788 F.2d at 776 (“It is wholly at

odds with the policy of [sovereign] immunity to put the

[sovereign] to th{e] Hobson’s choice between waiving its

immunity or waiving its right not to have a case proceed

without it.”); see also FMC v. South Carolina Ports

Auth., 535 U.S. 743, 762-764 (2002).

_—

Consideration of the first factor should, instead, par-

allel the inquiry into whether the foreign state is a nec-

essary party under Rule 19(a). See Wilbur v. Locke, 423

F.3d 1101, 1114 (9th Cir. 2005), cert. denied, 546 U.S.

1173 (2006); Davis ex rel. Davis v. United States, 343

F.3d 1282 (10th Cir. 2003), cert. denied, 542 U.S. 937

(2004); United States ex rel. Hall v. Tribal Dev. Corp.,

100 F.3d 476, 479 (7th Cir. 1996). That inquiry concerns

only the absent party’s “claimed interest.” Fed. R. Civ.

P. 19(a)(2){ii). See Davis, 343 F.3d at 1289 (Tribe a nec-

essary party because its claim was “neither fabricated

nor frivolous”). Under the first prong of the Rule 19(b)

analysis, then, the court must be careful not to prejudge

the meriis of the absent party’s interest, especially

where the absent party is immune from the court’s ju-

risdiction.

The court of appeals’ approach was directly to the

contrary. After recognizing the Republic’s interests as

sufficient to make it a necessary party, Pet. App. 40a,

the court proceeded to disregard those interests based

on the court’s own assessment of the merits of its claim,

id. at 8a-10a. That was inappropriate; and the court’s

assessment of the Republic’s claim was, moreover, seri-

ously mistaken.

Contrary to the court of appeals’ assumption, the

Philippines would not have to sue Merrill Lynch in a

New York court to establish that Marcos misappropri-

ated the Arelma assets. That claim, which arises under

a Philippine law providing that property misappropri-

ated by public officers through abuse of their office is

forfeited to the Philippines from the moment it is ob-

tained, Rep. Act. No. 1379, 51:9 O.G. 4457 (June 18,

1955), is presently being litigated against the Marcos

estate in a special Philippine court—the Sandigan-

- = ; : . oe = hen ao J ra EL

Pe ot Ee, ee ee ee i ee ee ee

a eh Ne aisle Ti a a MT STN Rl a ee Sinai a Ea Ce

NE he

bayan—vested with authority to adjudicate disputes

under that statute. A motion for summary judgment

with respect to those assets is pending in that court.

See C.A. Request for Judicial Notice, Ex. A at 9.

If the Sandiganbayan awards the Arelma shares and

assets to the Republic, there is no reason to assume that

the Republic would have to sue Merrill Lynch to obtain

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

the Republic, either directly or through Arelma, would

simply request that Merrill Lynch transfer the assets in

Areima’s account to an account in the Philippines. If

Merrill Lynch were to refuse, Arelma could bring suit

based on the parties’ contract. Neither Arelma nor the

Republic, its owner, would need to sue on the underlying

claim (already adjudicated by the Sandiganbayan) that

Marcos obtained the original assets illegally. They thus

could seek legal redress without relitigating (subject to

New York’s statute of limitations) the merits of the un-

derlying public corruption claim, as the court of appeals

presumed the Republic would have to do.

The court of appeals believed that “a court of this

country would not be bound to give * * * effect” toa

judgment by the Sandiganbayan regarding ownership of

the Arelma account and its assets because “a court sit-

ting 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 regard-

ing that issue, which would be better evaluated in actual

litigation to which the Republic is a party, and in which

the court has before it an actual Philippine court judg-

ment. It is unnecessary for this Court to decide

whether a court in the United States would always be

obligated to give effect to such a foreign judgment of

forfeiture. It is sufficient to recognize that the court of

appeals’ categorical rule that United States courts

would never do so 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 in this country. Indeed, a federal statute specifi-

cally provides for enforcement of foreign forfeiture

judgments in certain circumstances. See 28 U.S.C.

2467(c) (upon certification by the Attorney General, “the

United States may file an application on behalf of a for-

eign nation in [a] district court of the United States

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

Treaty Doc. No. 18, 104th Cong. Ist Sess. (1995)

(MLAT), and Chapters IV and V of the United Nations

Convention Against Corruption (Oct. 31, 2003, GA Res.

58/4) contemplate cooperation by the two countries on

proceedings related to asset forfeiture. The MLAT, for

example, provides for 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 in Philippine courts over assets

located in the United States, and vice versa. And, in

fact, Congress has specifically granted courts in the

United States jurisdiction in civil forfeiture proceedings

over property located outside the United States. See 28

U.S.C. 1355(b)(2) (“Whenever property subject to forfei-

ture under the laws of the United States is located in a

foreign country, * * * an action or proceeding for for-

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

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

Columbia.”) (footnote omitted).

Even assuming arguendo, however, that the Philip-

pine courts could not adjudicate ownership of the actual

assets held in the Merrill Lynch account, it is undis-

puted that the Philippine courts have jurisdiction to de-

termine the ownership of Arelma itself, as the share

certificates are being held in escrow in the Philippines.

If ownership of Arelma were awarded to the Republic

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.

Finally, the court of appeals’ analysis failed to take

into account the logical priority of the Republic’s claims

over those of the Pimentel claimants. The Pimentel

claimants do not assert that they are the rightful owners

of the Arelma account assets. Rather, they ask the

court to award those assets to them in partial satisfac-

tion of their judgment in a separate proceeding against

the Marcos estate. Pet. App. 52a. In contrast, the Re-

public claims that the funds are the proceeds of public

corruption and that these very funds were therefore

forfeited to the Philippines, under Philippine law, at the

time Marcos obtained them. If the Sandiganbayan were

to find that Arelma and its assets are the rightful prop-

erty of the Republic, the claims of the Pimentel claim-

ants against those assets would be vitiated. They would

OE NE ee or ee EE, ee ee ee, Oe ee eee

* If the Philippine judgment did not qualify for enforcement under

Section 2467(c), there would be a further question whether the judg-

ment would qualify for recognition under principles of international

comity. See Hilton v. Guyot, 159 U.S. 113, 163-164 (18965).

Se ae! ”6hPh ty > . ? .

- ra eR Ki se en ae

re ¥ é bs pre Se ja Soy 7 = -

iil

then be seeking to execute a judgment that they possess

vis-a-vis Marcos against assets of the Republic.

2. The court of appeals’ erroneous conclusion that

the Philippines would not be prejudiced by the inter-

pleader action (because of the asserted weakness of the

Republic’s claims on the merits) led it to give no consid-

eration to the second Rule 19(b) factor: “the extent to

which, by protective provisions in the judgment, by the

shaping of relief, or other measures, the prejudice can

be lessened or avoided.” Pet. App. 9a. In fact, the na-

ture of this case means that the second factor points

strongly towards dismissal. This case involves mutually

exclusive claims to a common fund: the Republic claims

the fund as property of the Republic, and the Pimentel

claimants’ judgment far exceeds the value of the Arelma

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

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

impossible to shape relief so as to avoid harm to the ab-

sent parties. See Provident Bank, 390 U.S. at 115. Nor,

plainly, can the prejudice be lessened by requiring the

immune parties to intervene, as that would defeat their

immunity. See Wilbur, 423 F.3d at 1114. It therefore

seems likely that an immune sovereign will almost al-

° In their Supplemental Brief in Opposition (at 8), respondents

argued, citing 28 U.S.C. 2467(b)(1(C), that a Philippine judgment of

forfeiture would not be entitled to recognition because respondents

could not participate in proceedings before the Sandiganbayan. But

there is no reason to believe that the inability of judgment creditors to

participate in a forfeiture proceeding, assuming they could not, would

render the judgment unenforceable under Section 2467(d)(1)(D). The

Pimentel claimants have an interest in the Arelma assets if, but only if,

they are assets of the Marcos estate. The proceedings in the

Sandiganbayan will resolve the prior question whether the assets are

those of Marcos or the Republic.

ways be entitled to dismissal under Rule 19(b) in an in-

terpleader action such as this.

3. The court of appeals also misapprehended the

third Rule 19(b) factor—“whether a judgment rendered

in the person’s absence will be adequate.” That factor

“refer[s] to the public stake in settling disputes by

wholes, whenever possible.” Provident Bank, 390 U.S.

at 111; see Davis, 343 F.3d at 1292-1293. It “promotes

judicial economy by avoiding going forward with actions

in which the court may end up rendering hollow or in-

complete relief because of the inability to bind persons

who could not be joined.” 7 Wright § 1608, at 114.

The court of appeals, however, considered only

whether the judgment would be adequate to the “victims

of the former president of the Republic,” by satisfying

at least a small portion of their $2 billion judgment. Pet.

App. 9a. But as other courts have noted, the interests

of the parties before the court “cannot be given

dispositive weight when the efficacy of the judgment

would be at the cost of the absent parties’ rights to par-

ticipate in litigation that critically affect[s] their inter-

ests,” Hall, 100 F.3d at 480, especially when a party’s

absence reflects its right to insist on its immunity from

suit.

It is clear, moreover, that the judgment under re-

view here would not satisfy “the public stake in settling

disputes by wholes.” Indeed, the court of appeals recog-

nized that, because “any judgment entered in this action

cannot bind the Republic” due to its immunity, the Re-

public “would remain free to sue for the Arelma assets

in a forum of its choice,” Pet. App. 8a, and suggested

that “the Republic might seek the equivalent of the as-

sets from their present holder, Merrill Lynch, in New

York where they were invested.” /d. at 8a-9a.

‘

;

: ‘

That reasoning directly contravenes the purposes of

both Rule 19 and interpleader. See Illinois Brick Co. v.

Illinois, 431 U.S. 720, 737-738 (1977) (noting that in

“common fund” suits one interest supporting compul-

sory joinder is “the interest of the defendant in avoiding

multiple liability for the fund”); 7 Wright § 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.”); 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 in-

terpleader” was one where the stakeholder was “faced

with conflicting but mutually exclusive claims to a pol-

icy”). If the court of appeals is correct that the Republic

could sue Merrill Lynch, despite the interpleader judg-

ment, then the whole point of the interpleader action is

undermined and Merrill Lynch is clearly prejudiced. If

the Republic could not, then that underscores the preju-

dice to the Republic of adjudication in its absence.

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

that a party is absent due to its sovereign immunity

largely obviates consideration of the fourth Rule 19(b)

factor—“whether the plaintiff will have an adequate

remedy if the action is dismissed for nonjoinder.”

“(T Jhe plaintiff’s inability to obtain relief in an alterna-

tive forum is not as weighty a factor when the source of

that inability is a public policy that immunizes the ab-

sent 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);

Hall, 100 F.3d at 480-481; Wichita & Affiliated Tribes,

788 F.2d at 777. That is especially so in this case, be-

cause the Pimentel claimants assert an interest only as

judgment creditors, not as persons claiming an owner-

ship interest in the assets, and because the vast major-

ity of the Pimentel claimants are Philippine citizens

who, as the court of appeals recognized, ordinarily

“should find redress from their own government” for

their injuries. Pet. App. 9a.°

When the Rule 19(b) factors are analyzed with a

proper appreciation of the importance of the Republic’s

sovereign immunity, it is clear that the Republic is an

indispensable party, and that the action should have

been dismissed without prejudice or stayed pending the

final judgment of the Sandiganbayan in the forfeiture

action.

* In their Supplemental Brief in Opposition (at 3-4), respondents

contended that the United States has a duty under the Convention

against Torture and Other Cruel, Inhuman or Degrading Treatment or

Punishment, Art. 14, 1465 U.N.T.S. 85 (Dee. 10, 1984), to provide a

forum for respondents’ claims. However, the Senate ratified the

Convention with the understanding that a private right of action is

required “only for acts of torture committed in territory under the

jurisdiction of that State Party.” 136 Cong. Rec. 36193 (1990).

: } CONCLUSION

9 The judgment of the court of appeals should be re-

Respectfully submitted.

PAUL D. CLEMENT

; Solicitor General

z JEFFREY S. BUCHOLTZ

x Acting Assistant Attorney

a General

EDWIN S. KNEEDLER

Deputy Solicitor General

4 DOUGLAS HALLWARD-DRIEMEIER

Assistant to the Solicitor

ze General

JOHN B. BELLINGER, III MICHAELS. RAAB

" Legal Adviser SARANG VIJAY DAMLE

a Department of State Attorneys

JANUARY 2008 :

| A

$ ;

¢ :

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.