Opposition Brief — Chuidian v. Superior Court
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Ail
Supreme Court, U.S,
EILE
(
———
(> MAR 14 (DBT
No. 86-1292 JOSEPH F. SPANIOL, JR,
CLERK
In The
Supreme Court of the United States
October Term, 1986
ft).
Vv
VINCENTE B. CHUIDIAN,
Petitioner,
VS.
SUPERIOR COURT OF THE
STATE OF CALIFORNIA, IN AND FOR
THE COUNTY OF SANTA CLARA,
Respondent,
ra’
Vv
PHILIPPINE EXPORT AND FOREIGN LOAN
GUARANTEE CORPORATION, Real Party in Interest
ray
Vv
BRIEF IN OPPOSITION TO
PETITION FOR WRIT OF CERTIORARI
ray
Vv
JoHn R. ReEse*
JAMES P. KLEINBERG
Betu H. Parker
Lesuiz G. Lanpau
Three Embarcadero Center
San Francisco, CA 94111
Telephone: (415) 393-2000
Attorneys for Respondent
*Counsel of Record
McCurcnHen, Dorie, Brown & ENERSEN
Of Counsel
COCKLE LAW BRIEF PRINTING CO., (800) 225-6964
or call collect (402) 342-2831
<
QUESTIONS PRESENTED
1. Should the Court review purported act of state
issues where:
a. The lower courts in this case have not yet de-
cided the issues;
b. The issues turn on factual determinations that
have not and cannot be made because there is no factual
record; and
ce. The issues sought to be reviewed are settled.
2. Should the Court review the propriety of a state
appellate court’s request for advice from the State De-
partment on act of state issues when there is no evidence
that the State Department ever responded and the state
court ultimately declined to consider those issues?
i
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED ........... eee eee on i
STATEMENT OF THE CASE ........ Siiideoateansepconbinn 1
SUMMARY OF ARGUMENT 5
REASONS FOR DENYING THE WRIT ... 7
I. THERE IS NO JURISDICTION UNDER SEC-
TION 1257 BECAUSE THE CALIFORNIA
COURTS HAVE NOT YET RULED ON THE
ISSUES SOUGHT TO BE REVIEWED .. 7
Il. THE ACT OF STATE ISSUES THIS CASE
PRESENTS ARE NOT UNRESOLVED =
TIONS OF LAW ... 10
A. A COURT MAY REVIEW THE MOTIVA-
TIONS OF A FOREIGN SOVEREIGN TO
DETERMINE WHETHER THE DOC-
TRINE, APPR Este 25d eee en 11
B. THE ACT OF STATE DOCTRINE DOES
NOT APPLY WHERE THE SOVEREIGN
ACTS ULTRA Vite 2 ae 12
C. THE RECORD IS INADEQUATE TO DE-
CIDE ANY ACT OF STATE ISSUE 14
D. THE ACT OF STATE DOCTRINE AP-
PLIES ONLY WHERE ADJUDICATION
WILL HINDER U.S. FOREIGN RELA-
TIONS anes tabled - 15
1. There Can Be No Effect on U.S. Foreign
Policy Because Marcos Is No Longer
Preqidiet quo cece eee cee, 17
There Is No Reason to Invoke the Doc-
trine Where, As Here, the Foreign En-
tity Submits to Adjudication by a U.S.
fe peleubieneanite til ssa ciceicinssera tad cece eiecaeee aoa 18
bo
lil
TABLE OF CONTENTS—Continued
Page
3. Refusal to Apply the Doctrine Here Will
Not Undermine Twenty Years of Philip-
Oo SRE ae 19
Iil. THIS COURT SHOULD NOT RENDER AN
ADVISORY OPINION ON THE COURT OF
APPEAL’S REQUEST FOR THE VIEWS OF
THE STATE DEPARTMENT 21
A. THE COURT OF APPEAL’S ACTION
DOES NOT PRESENT A JUSTICIABLE
CONDO Mawes . Zl
B. THE REQUEST ITSELF DOES NOT VIO-
LATE THE ACT OF STATE DOCTRINE .. 23
5 ESE He ET a 26
iv
TABLE OF AUTHORITIES
Page
CASES
Abney v. United States, 431 U.S. 651 (1977) ow. 10
Aetna Life Ins. Co. v. Haworth, 300 U.S. 227 (1937) ..... 22
Alfred Dunhill of London, Inc. v. Republic of
Cubes, 45 US. Ge O96) 12, 13, 14, 20
Allied Bank International v. Banco Credito
Agricola de Cartago, 757 F.2d 516 (2d Cir. 1985) ..... 24
Arango v. Guzman Travel Advisors Corp., 621
ee Se is NE ech chine oein 13
Association of Data Processing Service Oras.,
Tac. v. Camp, 397 U.S. 150 (1979) 21
Banco Nacional de Cuba v. Chase Manhattan Bank,
Boge Es Ba Ei EER eri eae ee 24
Banco Nacional de Cuba v. Sabbatino, 376 U.S.
BL.” Se Ree hee eee ens 11, 16, 17, 25
Banco de Espana v. Federal Reserve Bank, 114
re EE: Ce I = BN 2k a tile et alae pt; ae
Bank of America v. Superior Court, 20 Cal. 2d 697
RSS EAD es ot AER ae EN LAGI ysca tt x Misael oat eran 9
Bernstein v. Van Heyghen Freres Societe Anonyme,
163 F.2d 246 (2d Cir.), cert. denied, 332 U.S.
cig | gS ER or op nc Ar eecoROPOB See eae ne me 18
Bob Jones University v. United States, 456 U.S.
922 (1982) .....
Filartiga v. Pena-Irala, 630 F.2d 876 (2d Cir. 1980) ...... 12
Cohen v. Beneficial Industrial Loan Corp., 377 U.S.
Oe RN glide reheat pee Si eae Manesco cmncslrsecince 10
Construction Laborers v. Curry, 371 U.S. 542 (1962). 10
Continental Ore Co. v. Union Carbide & Carbon
Cr, re Mee CD ci 11,13
Cox Broadcasting Corp. v. Cohn, 420 U.S. 469 (1975) .. 10
¥
TABLE OF AUTHORITIES—Continued
Page
DeRoburt v. Gannett Co., 733 F.2d 701 (9th Cir.
1984), cert. denied, 469 U.S. 1159 (1985) 19
Department of Banking v. Pink, 317 U.S. 264 (1942) ..... 8
Dominicus Americana Bohio v. Gulf & Western
Industries, Inc., 473 F. Supp. 680 (S.D.N.Y. 1979) ...... 13
First Nat’l City Bank v. Banco Nacional de Cuba,
ON Cees AN CE bcectnecectgaceasn sence 16, 23, 24
Flynt v. Ohio, 451 U.S. 619 (1981) ............... 8, 10
Iran v. Boeing, — U.S. —, 106 S. Ct. 2243 (1986) ........... 25
Iron Arrow Honor Society v. Heckler, 464 U.S.
Or Cee eee ee 23
Jimenez v. Aristequieta, 311 F.2d 547 (Sth Cir.
1962), cert. denied sub nom., 373 U.S. 914 (1963) ..... 13
Kremens v. Bartley, 431 U.S. 119 (1977) oo... 23
Market Street R.R. Co. v. Railroad Comm’n., 324
Sy Ee Se RN wesc cetacean Gestion tee teamecuaes 8
Mills v. Alabama, 384 U.S. 214 (1966) cc ccccscccsssssseeee 10
National Socialist Party v. Skokie, 432 U.S. 43 (1977) 10
New York Land Co. v. Republic of Philippines,
634 F. Supp. 279 (S.D.N.Y.), aff’d sub nom.,
SOG Fe See Cane wikihisccceee eee 15
North Carolina v. Rice, 404 U.S. 244 (1971) ce 22
North Dakota Pharmacy Bd. v. Snyder’s Drug
Stores, Inc., 414 U.S. 156 (1973) 8
Occidental of UMM al Qaywayn, Inc. v. A Certain
Cargo of Petroleum, 577 F.2d 1196 (Sth Cir.
1978), cert. denied, 442 U.S. 928 (1979) css 24
Oetjen v. Central Leather Co., 246 U.S. 297 (1918) ........ 16
People v. Superior Court (Kizer), 155 Cal. App.
ee Dee SEOR? cine sae +
vi
TABLE OF AUTHORITIES—Continued
Page
Public Service Comm’n v. Wykoff, 344 U.S. 237 (1952) 21
Randone v. Appellate Department, 5 Cal. 3d 536 (1971) 9
Republic of Philippines v. Marcos, 806 F.2d 344
COE Coat I Knit cancentieeieiac nee 12, 14, 17, 18, 23, 24
Reynolds v. Superior Court, 64 Cal. 372 (1883) 0... 4
Sharon v. Time, Inc., 599 F. Supp. 538 (S.D.N.Y.
POET cnuamatiiiniaketees MA ea Rand oh 13
public of Nigeria, 647 F.2d 300 (2d Cir. 1981),
cert. denied, 454 U.S. 1148 (1982) _. R 16
Timberlane Lumber Co. v. Bank of America,
N.T. d S.A., 549 F.2d 597 (9th Cir. 1976) .............. 11
United States v. The Watchmakers of Switzer-
land Information Center, Inc., 1963 Trade Cas.
(CCH) {§ 70,600, at 77,456-57 (S.D.N.Y. 1962),
order modified, 1965 Trade Cas. (CCH) § 71,352
(TE Tics ha:: MIE. Acctemssicmaialionhimalsadiarmeamtaaaleande~ aa
Valley Forge Christian College v. Americans
United for Separation of Church and State, 454
U.S. 464 (1982) : 22
STATUTES AND CopEs
U.S. Const., Art. TT | 22
28 U.S.C. § 1257 5, 7,10
Cal. Civ. Proe. Code § 1086 9
Cal. Civ. Proce. Code § 1103 9
MISCELLANEOUS
MecManis, Questionable Corporate Payments
Abroad: An Antitrust Approach, 86 Yale L..J.
BD CRITE sncsnmsissieniapnishsneiiadiamnasiaaamateaiaa . 1
Restatement (Revised) of Foreign Relations Law
$469 (Tent. Draft No. 7, 1986) 11, 19, 24
a
No. 86-1292
In The
Supreme Court of the United States
October Term, 1986
ray
Vv
VINCENTE B. CHUIDIAN,
Petitioner,
Vs.
SUPERIOR COURT OF THE
STATE OF CALIFORNIA, IN AND FOR
THE COUNTY OF SANTA CLARA,
Respondent,
sy
mT
PHILIPPINE EXPORT AND FOREIGN LOAN
GUARANTEE CORPORATION, Real Party in Interest
ra
BRIEF IN OPPOSITION TO
PETITION FOR WRIT OF CERTIORARI
>.
Ww
STATEMENT OF THE CASE
Philippine Export and Foreign Loan Guarantee Cor-
poration (‘‘Philguarantee’’) moved to vacate a stipulated
judgment entered by the California Superior Court for
Santa Clara County on a settlement procured by fraud.
The ‘‘opinion’’ (Pet. at 2) of which petitioner Vincente B.
Chuidian seeks review is neither a decision on that motion,
nor an adjudication of Chuidian’s act of state defense; it
is only an order setting a hearing on Philguarantee’s mo-
tion to vacate. That hearing is currently scheduled for
April 7, 1987.
1
Philguarantee is a Philippine corporation, wholly-
owned by the Philippine government, which guarantees
loans for economic development in the Philippines. In late
1980, Chuidian and one of his companies, Asian Reliability
Co., Ine. (*‘ ARCI’’), applied for $25 million in loans, prom-
ising to use the loan proceeds for specific projects to de-
velop the Philippine semiconductor industry. Based on
that promise, Philguarantee guaranteed the loans. Chui-
dian did not use the money to develop the Philippine semi-
conductor industry. Instead, he purchased stock in several
Silicon Valley firms. ARCI and Chuidian defaulted on the
loans in 1984, and Philguarantee was forced to pay $25 mil-
lion plus interest on its guarantee.
In May 1985, Philguarantee filed suit against Chuidian
in California State Court to reeover the $25 million it paid
as guarantor on Chuidian’s fraudulently procured and il-
legally diverted loans. Soon after the lawsuit was filed,
however, then-President Ferdinand Marcos (through var-
ious emissaries) began conducting secret settlement nego-
tiations with Chuidian. Chuidian threatened to reveal evi-
dence damaging to Marcos and his family, and Marcos re-
sponded by pressuring Philguarantee to accede to Chui-
dian’s settlement demands.
The settlement agreement gave Chuidian an enormous
windfall. It required Philguarantee, the injured party, to
(1) guarantee a payment to Chuidian of $5.3 million; (2)
release its security interest in over two and a half million
shares of stock in the Silicon Valley companies Chuid‘an
had purchased; and (3) give up more than $25 million in
claims against Chuidian and the companies he controlled.
In “‘return,’’ in a secret side agreement never filed with
the state Court and signed only by Chuidian and Mareos’s
3
personal representative, Chuidian promised to execute an
affidavit denying the Marcos family’s secret financial in-
volvement in Chuidian’s companies and to suppress evi-
dence of it. At Chuidian’s insistence, the settlement agree-
ment (but not the secret side agreement) was presented to
the California Superior Court, which entered a stipulated
judgment on it.
After Marcos was deposed and forced to leave the Phil-
ippines in February 1986, Philguarantee moved to reopen
the case on the ground that the settlement agreements and
stipulated judgment had been procured through illegality,
duress and fraud. Chuidian opposed any inquiry into the
settlement, asserting among other things that the act of
state doctrine barred examination of Marcos’s motivation
in coercing the agreements. On May 16, 1986, the court set
a hearing date in June 1986 to address the motion.
It soon became clear that discovery delays —prineipally
due to the procedural difficulties of issuing letters rogatory
and securing deposition subpoenas for third party witnesses
in the Philippines—would make a June hearing impossible.
Accordingly, Philguarantee requested that the hearing be
taken off calendar to allow the necessary discovery.
On June 17, 1986, the parties attended a hearing on
Chuidian’s motion for writ of execution against Philguar-
untee based on the stipulated judgment. Philguarantee op-
posed the writ in part on the ground that the underlying
settlement agreements had been wrongfully procured, and
sought postponement of execution so that full discovery on
the issues could be taken. Chuidian opposed consideration
of this evidence on the basis of the act of state doctrine.
The court granted Chuidian’s motion for a writ of ex-
ecution against Philguarantee. The court stated that be-
4
cause Philguarantee’s motion to vacate the stipulated judg-
ment had been taken off calendar, there was no basis for
denying the writ. The court made no decision on the act of
state issue, noting that ‘‘at this point there is nothing be-
fore the Court that will permit the Court to enter into that
inquiry.’’ (App. A.4) It then rescheduled the hearing on
Philguarantee’s motion to vacate.’
Chuidian did not give the Superior Court an oppor-
tunity to address the merits of his act of state defense. On
August 6, 1986, he petitioned the State Court of Appeal for
various writs and requested an immediate stay of proceed-
ings in the Superior Court.2 The Court of Appeal granted
the stay before receiving Philguarantee’s papers. (App.
A-1, A-1.2) It then requested advice from the U.S. State
Department on the effect that adjudication of this case
would have on U.S. foreign policy. (App. B) The Court of
Appeal, however, acted on the petition without ever receiv-
ing a response from the State Department;’ after receiving
: The hearing has been postponed several times to allow the
time necessary for international discovery. The hearing cur-
rently is scheduled for April 7, 1987.
a His writ petition was untimely under the California rule
that writ petitions should be filed within the 60-day period that
would govern the filing of a notice of appeal if the issue were
appealable. See Reynolds v. Superior Court, 64 Cal. 372, 373
(1883); People v. Superior Court (Kizer), 155 Cal. App. 3d 932
(1984).
’ Counsel for Philguarantee has checked the files of the
Court of Appeal. The only communication from the U.S. govern-
ment is a letter from William Kanter of the Department of
Justice, who wrote that the Solicitor General’s office would
have to approve any statement and that no statement could be
sent within the time period requested by the court. Mr. Kanter
said he would let the court know if the U.S. government in-
tended to send a letter. No further communication is in the
Court's files.
5
Philguarantee’s papers, the court, without opinion, denied
the writ petitions and dissolved the stay. (App. A-2, A-3)
The California Supreme Court denied Chuidian’s peti-
tion for review on November 12, 1986, also without opinion.
Now Chuidian seeks review here.
SUMMARY OF ARGUMENT
1. Chuidian asks the Court to review whether the act
of state doctrine bars all inquiry into the validity of the
settlement agreement upon which the stipulated judgment
in this case is based. The Court should refuse to grant re-
view of this issue for two reasons:
a. ‘The Court does not have jurisdiction to review
this case now because there has been no ‘final judgment’’
(or indeed, any judgment) by the ‘‘highest court of [the]
state in which a decision could be had’’ on the act of state
issues. 28 U.S.C. § 1257. The ‘‘judgment”’ that Chuidian
seeks to have reviewed is, at most, a decision by a trial court
to set a hearing at which the act of state defense first will
be addressed. That hearing has not yet taken place and
neither the decision to set the hearing, nor the appellate
courts’ refusal to review that interlocutory decision by ex-
traordinary writ, satisfies the jurisdictional requirements
of 28 U.S.C, § 1257.
b. Because the California courts have not issued
a decision on the act of state issues, there is no conflict be-
tween a state court of last resort and decisions of this or
other federal courts. In fact, the legal issues he raises are
largely settled. The act of state doctrine was created to
6
preclude interference by the judiciary into U.S. foreign
affairs. It applies to bar adjudication only of public acts
committed by a sovereign while acting on behalf of the
government he is pledged to represent. Where, as here, the
sovereign involved no longer is in power and the present
acministration has consented to adjudication by the U.S.
courts, there is no reason to apply the doctrine. Moreover,
it is premature to decide the act of state issues because
there is no factual record by which a court could determine
whether the acts involved are actually acts of state.
2. Chnuidian asks the Court to review the propriety of
the California Court of Appeal’s request for a statement by
the U.S. State Department on the effect that ‘‘inquiry into
the circumstances surrounding the Chuidian-[ Philguaran-
tee] settlement and stipulated judgment may have on [the
government’s] foreign relations and ability to conduct its
foreign policy.’’ (App. B.1) The Court should not review
this issue for two reasons:
a. There is no justiciable controversy here. The
State Department never filed a statement with the Court
of Appeal, and the court denied Chuidian’s writ petition
without ever addressing the merits of the purported act of
state issues. Thus, there is nothing to review; Chuidian is
simply asking for an advisory opinion on a matter of no
consequence.
b. The Court of Appeal’s request does not violate
the policy concerns on which the act of state doctrine rests.
The court merely sought the State Department’s guidance
on whether the acts in question would undermine U.S.
foreign relations. Courts, including this one, often have re-
quested and considered such opinions, recognizing that the
7
views of the Executive Branch, while relevant, are not dis-
positive. Thus, the procedure employed would not have im-
paired judicial independence—even if it had been carried
out.
REASONS FOR DENYING THE WRIT
I. THERE IS NO JURISDICTION UNDER SEC-
TION 1257 BECAUSE THE CALIFORNIA
COURTS HAVE NOT YET RULED ON THE
ISSUES SOUGHT TO BE REVIEWED.
Chuidian invokes the Court’s jurisdiction under 28
U.S.C. § 1257(3). That section provides:
Final judgments or decrees rendered by the highest
court of a state in which a decision could be had, may
be reviewed by the Supreme Court as follows:
. (8) By writ of certiorari, where the validity of
a treaty or statute of the United States is drawn in
question or where the validity of a state statute is
drawn in question on the ground of its being repug-
nant to the Constitution, treaties or laws of the United
States, or where any title, right, privilege or immunity
is specially set up or claimed under the Constitution,
treaties or statutes of. or commission held or authority
exercised under, the United States.
28 U.S.C. § 1257(3). The ‘‘opinion’’ (Pet. at 2) Chuidian
wants reviewed is not a ‘‘final judgment or decree.’’ The
Court therefore has no jurisdiction to consider this case,
and Chuidian’s Petition should be denied.
To determine whether there is a ‘‘final judgment?’
under Section 1257, ‘‘the test is . . . whether the record
shows that the order of the appellate court has in fact
fully adjudicated rights and that the adjudication is not
subject to further review by a state court.’’ Department
of Banking v. Pink, 317 U.S. 264, 268 (1942); see also
Market Street R.R. Co. v. Railroad Comm’n., 324 US.
548, 551 (1945) (state court judgment ‘‘must be subject
to no further review or correction in any other state tri-
bunal; it must also be final as an effective determination
of the litigation and not of merely interlocutory or inter-
mediate steps therein. It must be the final word of the
final ecourt’’). The finality rule is designed to avoid the
‘‘mischief of economic waste and delayed justice,’’ North
Dakota Pharmacy Bd. v. Snyder’s Drug Stores, Inc., 414
U.S. 156, 159 (1973), that results from ‘‘piecemeal re-
view.’’? Flynt v. Ohio, 451 U.S. 619, 621 (1981). Moreover,
‘‘[t]his prerequisite to review derives added force when
the jurisdiction of this Court is invoked to upset the de-
cision of a state court.’’ North Dakota Pharmacy, above,
414 U.S. at 159.
There has been no ‘‘final word of the final court’’ on
Chuidian’s act of state defense. Market Street R.R.
Comm’n above, 324 U.S. at 551. Indeed, there has been no
word of any kind from any court on that issue. The June
17 hearing that Chuidian cites as the source of the Su-
perior Court’s ‘‘opinion’’ (Pet. at 2) concerned Chuidian’s
request for a writ of execution. The court granted that
writ because there was no basis for denying it. (App. A.5)
The court expressly declined to rule on the merits of
Philguarantee’s motion to vacate or on Chuidian’s act
of state defense, for they were not before the Court.
[A]t this point there is nothing before the Court that
will permit the Court to enter into [the act of state]
inquiry because [Philguarantee has] withdrawn [its]
request for relief in connection with the motion to
set aside the judgment based upon the fraudulent stip-
ulation.
(App. A. 4) The court then set a date for a hearing on
the motion and the act of state defense. (App. A.6-A.7)
An order scheduling a hearing to consider an issue
is not a decision or judgment on that issue, final or other-
wise, but that is all the court did and all there is for this
Court to review. Nor do Chuidian’s unsuccessful and pre-
mature writ petitions change the preliminary character of
the lower court’s action. If that were the law, the ‘‘final
judgment’’ requirement would be written out of Section
1257.
Extraordinary writs are easily filed but rarely granted
and the denial of such a writ may reflect only a concern
for orderly appellate review rather than any position on
the merits. Thus, under California law, review by extra-
ordinary writ is available only when the issues have been
decided below and cannot adequately be addressed on ap-
peal at the end of the case. See, e.g., Cal. Civ. Proc. Code
§$§ 1086, 1103 (writs of mandate and prohibition will only
issue ‘‘where there is not a plain, speedy, and adequate
remedy in the ordinary course of law’’); Randone v. Ap-
pellate Department, 5 Cal. 3d 536, 543 (1971) (mandamus
proper where interlocutory decision otherwise unreview-
able); Bank of America v. Superior Court, 20 Cal. 2d 697,
703 (1942) (‘‘eertiorari will not lie if the effect of the
order sought to be annulled can be reviewed and nullified
on an appeal from the final judgment’’). The more pre-
mature the petition or the more effective the appellate
option, the less likely it is that a writ will issue. The
state appellate courts here did not decide any issue on the
10
merits. They rendered simple orders declining review by
extraordinary writ. Surely that does not convert an order
that does nothing but set a hearing date into a ‘‘final
judgment.”’
Chuidian seeks premature and piecemeal review. There
has not yet been a ruling, nor even any hearing, on his
act of state defense.* The Court therefore has no jurisdic-
tion to review the case.
II. THE ACT OF STATE ISSUES THIS CASE PRE-
SENTS ARE NOT UNRESOLVED QUESTIONS
OF LAW.
On procedural grounds alone, this Court should deny
review. Even if the Superior Court’s dicta were construed
as a ruling, however, this Court still should not review this
ease. The issues Chuidian raises are largely settled issues
of law and turn on facts that have not yet been developed.
. This case is not within the narrow class of cases in which
the finality requirement of Section 1257 may be satisfied before
the termination of the action. Chuidian’s act of state defense
is central to the ongoing proceedings below; it is not a col-
lateral federal question that has been finally adjudicated. Na-
tional Socialist Party v. Skokie, 432 U.S. 43 (1977); Construction
Laborers v. Curry, 371 U.S. 542, 549 (1963); see also Cohen v.
Beneficial Industrial Loan Corp., 337 U.S. 541 (1949). Chuidian
will have a hearing on his defense and a right to appeal from
any adverse decision, so denial of review now will not deprive
him of a meaningful review later. Curry, 371 U.S. at 550. Nor
will it effectively dispose of any protected right in the meantime.
Mills v. Alabama, 384 U.S. 214, 217 (1966); Abney v. United
States, 431 U.S. 651, 657 (1977). Finally, the scheduling of a
hearing to address act of state issues does not threaten to under-
mine the federa! policy embodied by that doctrine. Flynt v.
Ohio, 451 U.S. 619 (1981); Cox Broadcasting Corp. v. Cohn, 420
U.S. 469 (1975). See § II1.A, below. In sum, to grant review here
would be to create an exception to the finality rule that would
“swallow the rule.” Flynt v. Ohio, 451 U.S. at 622.
11
Sup. Ct. Rule 17.1(c). Nor does the Superior Court’s pur-
ported ‘‘opinion’’ (Pet. at 2) conflict with any federal
law. Sup. Ct. Rule 17.1(b).
A. A COURT MAY REVIEW THE MOTIVATIONS
OF A FOREIGN SOVEREIGN TO DETERMINE
WHETHER THE ACT OF STATE DOCTRINE
APPLIES.
Chuidian first claims that to determine whether the
act of state doctrine applies here, a court must examine
the motivations of a foreign sovereign and that this exami-
nation itself is precluded by the doctrine. (Pet. at 12) He
then maintains that the California courts have ruled con-
_ trary to his version of the federal law. (/d.) Neither of
these arguments is correct.
The California courts have not yet ruled on this issue
at all, let alone ruled contrary to federal authority. (Pp.
7-10, above.) And the law is settled that the courts may
scrutinize the motivations of the foreign sovereign to see
if the challenged acts are actually acts of state. Restate-
ment (Revised) of Foreign Relations Law § 469 at 59
(Tent. Draft No. 7, 1986). In Banco National de Cuba v.
Sabbatino, 376 U.S. 398, 423 (1964) (‘‘Sabbatino’’), this
Court held that the act of state doctrine ‘‘does not irre-
vocably remove from the judiciary the capacity to review
the validity of foreign acts of state.’? See also Timber-
lane Lumber Co. v. Bank of America, N.T. & S.A. 549
F.2d 597, 606 (9th Cir. 1976), citing Continental Ore Co.
v. Union Carbide & Carbon Corp., 370 U.S. 690 (1962)
(‘the doctrine does not bestow a blank-check immunity
upon all conduct blessed with some imprimatur of a
foreign government’’).
12
Indeed, the law is clear that a court must examine
the facts of the foreign sovereign’s acts and motives to
determine whether denial of the defense would thwart its
underlying policy concerns. Thus, the party invoking the
defense must prove that the challenged acts were in fact
publie acts and ratified by the foreign sovereign. Re-
public of Philippines v. Marcos, 806 F.2d 344, 359 (2d Cir.
1986). If the facts suggest they were not, the act of state
doctrine does not apply. Alfred Dunhill of London v. Re-
public of Cuba, 425 U.S. 682, 694-95 (1976). Even if the
acts are public, a court may decline to apply the doctrine
if the foreign government involved is no longer in power
or if the foreign state has come into the U.S. courts to
seek adjudication of its controversies. Republic of Philip-
pines, 806 F.2d at 359. In short, Chuidian’s version of
how a court may apply the doctrine is dead wrong.
B. THE ACT OF STATE DOCTRINE DOES NOT
APPLY WHERE THE SOVEREIGN ACTS UL-
TRA VIRES.
Chuidian next urges this Court to grant certiorari to
resolve the allegedly undecided question of ‘‘when, if at
all, the private interest of third parties or personal interest
of foreign government officials may render the actions of
officials not official acts of state. ...’’ (Pet. at 15)
This is not an undecided question. To the contrary, it is
well settled that where the sovereign acts ultra vires
the act of state doctrine does not apply. Only when an
official acts in an official capacity will judicial review be
barred. Filartiga v. Pena-Irala, 630 F.2d 876, 889 (2d Cir.
1980) (‘‘{WJe doubt whether action by a state official in
violation of the Constitution and laws of the Republic of
Paraguay, and wholly unratified by that nation’s govern-
IBubinddterse ne
13
ment, could properly be characterized as an act of state’’) ;
Arango v. Guzman Travel Advisors Corp., 621 F.2d 1371,
1380 & n.11 (5th Cir. 1980); Jimenez, above, 311 F.2d at
597-58 (doctrine rejected where chief of state, accused of
embezzlement, fraud, and breach of trust, found to have
committed crimes in violation of his position, not in pur-
suance of it); Sharon v. Time, Inc., 599 F. Supp. 538, 544-
45 (S.D.N.Y. 1984) (‘‘The actions of an official acting
outside the scope of his authority as an agent of the state
are simply not acts of state. In no sense are such acts
designed to give effect to a State’s public interests’’) ;
Dominicus Amerwana Lohio, above, 473 F. Supp. at 690
(‘‘{E]ven an unrepudiated act of state may be scrutinized
by the courts if it resulted from the corruption of govern-
ment officials’’).
The doctrine bars adjudication only of formal acts of
the foreign government, such as legislative acts, regula-
tory decrees, or official pronouncements. Dunhill, above,
425 U.S. at 706; Jimenez v. Aristeguieta, 311 F.2d 547,
557-58 (Sth Cir. 1962). cert. denied sub nom., 373 U.S. 914
(1963); Dominicus Americana Bohio v. Gulf & Western
Industries, Inc., 473 F. Supp. 680, 689 (S.D.N.Y. 1979). In
such instances, the official acts with the knowledge and
approval of the state he or she is pledged to represent.
Another relevant factor is whether the foreign government
has ratified or tried to undo the challenged act. See, e.g.,
Continental Ore, above, 370 U.S. at 706-07 (doctrine in-
applicable where corporation acted through agent of
foreign government but without government’s official ap-
proval); MeManis, Questionable Corporate Payments
Abroad: An Antitrust Approach, 86 Yale L.J. 215, 236-37
(1976). Moreover, a private act does not become official
14
simply because the governmental actor covers his or her
tracks with sham documentation. See, e.g., United States
v. The Watchmakers of Switzerland Information Center,
Inc., 1963 Trade Cas. (CCH) {70,600 at 77,456-57 (S.D.
N.Y. 1962, order modified, 1965 Trade Cas. (CCH)
771,352 (S.D.N.Y. 1965).
The Second Circuit recently reaffirmed these settled
principles in a case virtually identical to this one, a case
Chuidian conspicuously fails to cite. In Republic of Philip-
pines, above, the Second Circuit upheld the district court’s
refusal to apply the doctrine to preclude judicial review
of illegal acts Marcos committed while President of the
Philippines. In so doing, it reiterated that for the doc-
trine to apply, the acts must be public acts of the sovereign.
806 F.2d at 358.
In sum, contrary to Chuidian’s claim (Pet. at 15), the
legal issues are resolved. Courts may examine the motiva-
tions of a sovereign official to determine whether the act
of state doctrine should apply. Drawing the distinction
between public and private acts may be difficult, but courts
have repeatedly done it. Dunhill, above, 425 U.S. at 695
(‘‘Distinguishing between the public and governmental
acts of sovereign states of the one hand and their private
and commercial acts on the other is not a novel approach’’).
And the guidelines for doing it are clear.
C. THE RECORD IS INADEQUATE TO DECIDE
ANY ACT OF STATE ISSUE.
There is no undecided issue of law here. But even if
there were, this is not the right case to review it. To
determine whether the act of state doctrine applies, a court
must decide whether the acts at issue are in fact acts of
15
state. This requires a developed factual record, which does
not exist here. At the time of the Superior Court’s alleged
‘‘opinion’’ (Pet. at 2), no discovery had yet taken place.
Indeed, Philguarantee had taken its motion to vacate off
calendar because there was not enough time to develop the
record before the hearing. Absent a complete factual
record, it is impossible to determine whether the fraudu-
lently obtained settlement agreement which Philguarantee
seeks to vacate was a public act of the predecessor Philip-
pine regime or effected by Marcos for his personal gain.
Because the Court cannot decide Chuidian’s motivation
issue in a vacuum, it should decline review. See New York
Land Co. v. Republic of Phitippines, 634 F. Supp. 279,
289 (S.D.N.Y.), aff’d sub nom., 806 F.2d 344 (1986) (recog-
nizing that development of further factual evidence was
necessary before it could decide whether the act of state
doctrine applied).
D. THE ACT OF STATE DOCTRINE APPLIES
ONLY WHERE ADJUDICATION WILL HIN-
DER U.S. FOREIGN RELATIONS.
Chuidian conjures up a parade of horribles to persuade
the Court to review this case. He claims that the Superior
Court’s setting of a hearing will lead to wholesale repudia-
tions by foreign nations of their commercial obligations.
(Pet. at 26) And he asks for a ruling ‘‘that the act of
state doctrine prevents repudiation of foreign debt on
political grounds by successor regimes.’’ (Pet. at 29)
Chuidian misses the point. Under this Court’s rulings, the
act of state doctrine only applies when adjudication will
hinder U.S. foreign relations or will cause disrespect for
foreign states. Chuidian’s convoluted analvsis misconstrues
£ .
_ 16
this policy, ignores well-established case law, and exag-
gerates the importance of this case.
The act of state doctrine was created to avoid judicial
interference with U.S. foreign affairs. First Nat’l City
Bank v. Lanco Nacional de Cuba, 406 U.S. 759, 765-66
(1972); Sabbatino, above, 376 U.S. at 425. It also was
intended to avoid disrespect for foreign governments with
the attendant risks of imperiling amicable relations and
vexing the peace of nations. Sabbatino, above, at 431-52;
Oetjen v. Central Leather Co., 246 U.S. 297, 394 (1918). In
accordance with this policy, to determine whether the
doctrine applies, a court must consider the impact of the
adjudication on foreign affairs.
Act of state analysis depends upon a careful case-
by-case analysis of the extent to which the separation
of powers concerns on which the doctrine is based
are implicated by the action before the court.
Texas Trading & Milling Corp. v. Federal Republic of Nv-
geria, 647 F.2d 300, 316 n.38 (2d Cir. 1981), cert. denied,
454 U.S. 1148 (1982). Where the issue is unlikely to affect
our foreign relations, the justification for applying the doe-
trine is considerably weakened. Sabbatino, above, 376 U.S.
at 428.
Consistent with these principles, the lower courts have
articulated factors that mitigate the need for act of state
treatment of even some official acts. There is no dispute
about the validity of this analysis, and thus no need for
this Court’s review.
——
17
1. There Can Be No Effect on U.S. Foreign Policy
Because Marcos Is No Longer President.
In Sabbatino, this Court stated that ‘‘in its traditional
formuiction’’ the act of state doctrine ‘‘ precludes the courts
of the United States from inquiring into the validity of the
public acts a recognized foreign sovereign committed within
its own territory.’’ 376 U.S. at 401 (emphasis added). The
Court further indicated that a change of regime may make
the act of state doctrine inapplicable:
The balance of relevant considerations may .. . be
shifted if the government which perpetrated the chal-
lenged act of state is no longer in existence ... for the
political interest of this country may, as a result, be
measurably altered.
Id. at 428.
There has been such a change of government in this
case. Marcos is no longer the President of the Philippines.
and the U.S. no longer has diplomatic relations with him.
Moreover, no act of the current Philippine government is at
issue. In fact, the present government supports the position
of Philguarantee challenging the former President. Thus,
the political interest of the United States has been ‘‘meas-
urably altered,’’ Sabbatimo, 376 U.S. at 428, and inquiry
into Marcos’s actions will not affeet U.S. relations with the
Philippines. The Second Cireuit came to this very con-
clusion only months ago. See Republic of Philippines,
above, 806 F.2d at 359 (‘| T]he danger of ixterference with
the Executive’s conduct of foreign policy is surely much
less than the typical case where the act of state is that of
the current foreign government.’’)
Chuidian ignores this case and the settled principles on
which it is based. He relies instead on two dated Second
Circuit opinions, Banco de Espana v. Federal Reserve
18
Bank, 114 F.2d 438 (2d Cir. 1940) and Bernstein v. Van
Heyghen Freres Societe Anonyme, 163 F.2d 246, 249 (2d
Cir.), cert. denied, 332 U.S. 772 (1947), which that Circuit
in considering this issue expressly disapproved. Republic
of Philippines, above, 806 F.2d at 359. Thus, the law is set-
tled that where, as here, the sovereign whose acts are
challenged no longer presides, the act of state doctrine
should not apply. There is therefore no issue that war-
rants this Court’s attention.
2. There Is No Reason to Invoke the Doctrine
Where, As Here, the Foreign Entity Submits
to Adjudication by a U.S. Court.
There is also no reason to apply the act of state doc-
trine where, as here, the foreign state asks the U.S. courts
to scrutinize its actions. Where the government consents to
the adjudication, the doctrine should not apply. See, e.g.,
Republic of Philippines, above, 806 F.2d at 359; McManis,
86 Yale L.J. at 235 (‘‘Of course, if the foreign government
itself brings the action, the act of state doctrine is an un-
tenable defense, for the government in effect is calling for
judicial inquiry’’).
Here, both Philguarantee and the present Philippine
government sought adjudication of their disputes with
Chuidian. In so doing, they acknowledged that their actions
would be subject to external examination. Philguarantee
filed its complaint against Chuidian in May 1985 seeking
damages for Chuidian’s wrongful conversion of $25 million
in loans, and in 1986 filed its motion to vacate the se tle-
ment agreements. The Presidential Commission on Good
Government, the arm of the current Philippine administra-
tion charged with investigating Marcos’s corruption, also
19
has approved judicial review. It requested the Superior
Court to extend the time before hearing so that the results
of its own investigations into the settlement could be in-
corporated into the evidence before the court.
Chuidian has cited no controlling contrary authority.
In neither DeRoburt v. Gannett Co., 733 F.2d 701 (9th Cir.
1984), cert. dented, 469 U.S. 1159 (1985), nor Banco de
Espana v. Federal Reserve Bank, 114 F.2d 438 (2d Cir.
1940), did the existing government initiate the action.
Thus, even if the trial court’s passing reference to the act
of state doctrine is treated as a ruling, it is not contrary to
any federal law. Moreover, Chuidian’s truncated citation
of the Restatement (Pet. at 19) seriously misleads the
Court. In a portion omitted by Chuidian, the Restatement
says:
When a state has expressly subjected certain kinds of
obligations to adjudication in the courts or arbitral
tribunals of another state, it may be said to have
acknowledged that its actions with respect to those ob-
ligations take place in the international arena and are
subject to international scrutiny, and in such cases the
justification for applying the act of state doctrine is
significantly weaker.
Restatement (Revised) of Foreign Relations Law § 469 at
56 (Tent. Draft No. 7, 1986) (emphasis added). There is
no need for this Court to articulate a different rationale.
3. Refusal to Apply the Doctrine Here Will Not
Undermine Twenty Years of Philippine Obli-
gations.
Finally, Chuidian argues that ‘‘[t]he publie policy in-
terest in the security of international debt, requires articu-
lation in act of state analysis by this Court.’’ (Pet. at 27)
20
He attempts to aggrandize this case, claiming that if the
act of state doctrine is found not to apply, it will invite
‘‘wholesale repudiation of foreign debt undertaken by the
Marcos government.’’ (Pet. at 24) He even implies that
unless the Court intervenes in the Superior Court’s decision
to set a hearing, other governments owing substantial sums
to U.S. interests will ignore their financial obligations.
(Pet. at 26)
These contentions are ludicrous. There is no threat to
undercut every ‘‘debt obligation undertaken by the Marcos
government during the more than twenty years of Marcos
rule.’’ (Pet. at 25) The present Philippine government has
not repudiated any commercial debt here. Rather, this case
involves Marcos’s relations with one individual, which re-
sulted in a secret, illegal, and fraudulently induced settle-
ment agreement. Thus, there is no reason to believe resolu-
tion of this action will affect any commercial obligations be-
tween the former Marcos government and U.S. entities.
Even if it did, a plurality of this Court already has indi-
cated that the act of state doctrine does not apply to com-
mercial debts. Dunhill, above, 425 U.S. at 695, 705.°
° Nor does this case call for an extension of the act of state
doctrine to preclude review of a successor government's efforts
to void a financial obligation of a prior administration. (Pet. at
29) Courts can walidate such actions under the rule of state
succession, a substantive principle of international law. That
rule should not be extended to bar adjudication at the outset
of the issues presented here. Courts should continue to decide
these issues by applying the substantive rule, if appropriate,
rather than abstaining from reviewing the question altogether
under an expanded interpretation of acts of state.
21
III. THIS COURT SHOULD NOT RENDER AN AD-
VISORY OPINION ON THE COURT OF AP.-
PEAL’S REQUEST FOR THE VIEWS OF THE
STATE DEPARTMENT.
A. THE COURT OF APPEAL’S ACTION DOES
NOT PRESENT A JUSTICIABLE CONTROVER.
SY.
Chuidian says that the Court of Appeal acted improp-
erly in requesting the views of the State Department on the
effect that adjudication of this case would have on U.S.
foreign relations. The court’s action was proper. But even
if it weren’t, nothing ever came of the court’s request.
Thus, in this Court’s words, ‘‘One naturally asks, ‘So
what?’ ’’ Public Service Comm’n v. Wykoff, 344 U.S. 237,
244 (1952). Despite Chuidian’s suggestions to the contrary
(Pet. at 30), the Court of Appeal acted before receiving a
response from the State Department, and as far as we
know, no response ever came. A non-existent response
could not have influenced the Court’s decision to deny
Chuidian’s request for extraordinary relief. In short, there
is nothing to review.®
Because there is no evidence that there ever was a
State Department response, Chuidian cannot claim that
‘“‘the challenged action [here, the Court of Appeal’s re-
quest for a State Department letter] has caused him injury
in fact.’’ Association of Data Processing Service Orgs.,
6 Chuidian challenges “the procedure employed by the
Californa Court of Appeals,” which he says was ‘validated by
the order of the California Supreme Court.’”” (Pet. at 31) This
misstates the facts. The so-called “procedure” consisted of a
request for advice that never came. Far from “validating” the
nonexistent “procedure,” the Supreme Court simply denied re-
view without comment.
22
Inc. v. Camp, 397 U.S. 150, 152 (1970). Nor can he say
that a favorable decision on this issue will provide him with
any meaningful redress. He therefore has no standing to
challenge the Court of Appeal’s action and review should
be denied. Valley Forge Christian College v. Americans
United for Separation of Chueh and State, 454 U.S. 464,
472 (1982) (‘tat an irreducible minimum, Article III re-
quires the party who invokes the court’s authority to
‘show that he personally has suffered some actual or
threatened injury as a result of the putatively illegal con-
duct of the defendant,’ and that the injury ‘fairly can be
traced to the challenged action,’ and ‘is likely to be re-
dressed by a favorable decision’’’) (citations omitted).
More fundamentally, there is no action to challenge
and therefore no ‘‘ease or controversy.’’ U.S. Const.,
Art. ITT.
A justiciable controversy is... distinguished from a
difference or dispute of a hypothetical or abstract
character; from one that is academic or moot...
It must be a real and substantial controversy ad-
mitting of specific relief through a decree of a con-
elusive character, as distinguished from an opinion
advising what the law would be on a hypothetical state
of facts.
Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41 (1937)
(citations omitted); see also North Carolina v. Rice, 404
U.S. 244, 246 (1971). Chuidian wants an opinion on
whether a Court may ask for the views of the federal
government, and the ‘‘weight’’ and ‘‘proper procedure to
be accorded expressions of opinion by the Executive” (Pet.
at 34) once they are received. Where there was no State
Department letter, let alone a decision based on it, the
23
issue is not ripe for adjudication, and the Court will not
give an advisory opinion. Even if the Court of Appeal’s
request for the letter initially presented a justiciable con-
troversy, its denial of the writ without opinion before
receiving a response made the issue moot. See Iron Arrow
Honor Society v. Heckler, 464 U.S. 67 (1983); Kremens v.
Bartley, 431 U.S. 119 (1977).
There never was a justiciable issue here. If there ever
were, it is now moot. There is nothing to review, and
Chuidian’s petition should be denied.
B. THE REQUEST ITSELF DOES NOT VIOLATE
THE ACT OF STATE DOCTRINE.
According to Chuidian, a court may never request the
views of the Executive Branch in reaching a decision that
concerns Executive Branch prerogatives. (Pet. at 30-35)
If Chuidian were correct, no court could ever seek briefs
of amici curiae to clarify act of state (or any other) issues.
Chuidian’s proposal is absurd on its face.
This Court has approved consideration of the Execu-
tive Branch’s views in resolving act of state issues. See,
e.g., First National City Bank v. Banco Nacional de Cuba,
406 U.S. 659, 768 (1972) (‘‘We conclude that where the
Executive Branch, charged as it is with primary respon-
sibility for the conduct of foreign affairs, expressly rep-
resents to the Court that application of the act of state
doctrine would not advance the interests of American for-
eign policy, that doctrine should not be applied by the
courts’’). The lower courts have followed suit. In Re-
public of Philippines, 806 F.2d at 356-57, 360, for instance,
the Second Circuit took into account the State Depart-
ment’s opinion that it would not fear embarrassment if the
24
U.S. courts adjudicated disputes between the Philippine
government and ex-President Marcos before scrutinizing
the acts in question. See also Allied Bank International
v. Banco Credito Agricola de Cartago, 757 F.2d 516 (2d
Cir. 1985) ; Occidental of UMM al Qaywayn, Inc. v. A Cer-
tain Cargo of Petroleum, 577 F.2d 1196, 1204 & n.14 (Sth
Cir. 1978), cert. denied, 442 U.S. 928 (1979) (‘‘it is none-
theless clear that whether the state department believes
that judicial action would interfere with its foreign rela-
tions is germane to whether a court may decide actions in-
volving foreign relations’’).
Considering the views of the Executive Branch does
no violence to the separation of powers policy on which
the act of state doctrine rests. The opinion of the Execu-
tive Branch is relevant to act of state issues, though not
dispositive. First National City Bank, above, 406 U.S. at
773 & n.4 (Douglas J., concurring in result); 7d. at 775-76
(Powell, J., concurring in judgment); see also Republic
of Philippines, above, 806 F.2d at 358; Banco Nacional
de Cuba v. Chase Manhattan Bank, 658 F.2d 875, 884 (2d
Cir. 1981). As the American Law Institute stated in the
Restatement (Revised) of Foreign Relations Law:
It seems that if the State Department issnes a letter
requesting that the courts not review the validity of
a particular act, such a letter will be highly persuasive
if not binding .... If the State Department issues a
letter stating that it has no objection on foreign rela-
tions grounds to adjudication of the validity of a given
act of a foreign state, U.S. courts will make their
own determination as to whether to apply the act of
state doctrine, taking the view of the Executive Branch
into account but not being bound by it.
Alin etme ha
Pe A ee
25
9 469 at 69. Thus, there is no threat that a request for
advice will hinder judicial independence in deciding these
issues.’
In requesting the views of the State Department, the
California Court of Appeal did not agree to be bound by
the Executive Branch’s position. It merely sought the
U.S. government’s views ‘‘[t]o aid its determination’’ on
issues which potentially could implicate U.S. foreign af-
fairs. (App. B-1) As it turned out, the court declined
review, so any advice was moot. Even if the advice were
relevant, however, the court’s action is no different from
requesting briefs of amici curiae, a practice recognized
and used by this Court. See, e.g., Iran v. Boeing, — U.S.
—, 106 S. Ct. 2243 (1986) (‘‘The Solicitor General is in-
vited to file a brief in this case expressing the views of
the United States’’); Bob Jones University v. United
States, 456 U.S. 922 (1982). In no way does the request
for advice require ‘‘an abandonment of judicial inde-
pendence.’’ (Pet. at 33) The court simply seeks guidance
from the Executive on the potential threat to foreign
relations the case may present.
L Nor, as Chuidian maintains (Pet. at 31), does this Court's
decision in Sabbatino suggest a different result. There, the
Court rejected the suggestion of amici curiae that when the
Executive Branch expressly stipulates that it does not wish a
court to adjudicate the issues presented, its views should be
dispositive. 376 U.S. at 436. It recognized, however, that the
opinion of the Executive may be a relevant factor to a court's
determination.
°
26
CONCLUSION
Chuidian wants to bypass the entire state court sys-
tem and try his act of state defense in this Court in the
first instance. This Court does not sit to try cases. Nor
does it sit to give advisory opinions. Here there is no
developed factual record, nor are there any reasoned de-
cisions by the California courts below. The Court should
deny Chuidian’s Petition.
Respectfully submitted,
JoHn R. Reese*
James P. KiLEINBERG
Betu H. Parker
Lesuiz G. Lanpau
Three Embarcadero Center
San Francisco, CA 94111
Telephone: (415) 393-2000
Attorneys for Respondent
*Counsel of Record
McCurtcHeEn, DoyLe, Brown & ENERSEN
Of Counsel
March 13, 1987
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