Reply Brief — Hilao v. Revelstoke Investment Investment Investment Corp., Inc. (No. 08-1019)

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upreme Court. US. J

FILED

MAR 1 7 2008

No. 08-1019

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OFFICE OF THE CLERK

In The

Supreme Court of the Anited States

CELSA HILAO, DANILO DE LA FUENTE,

RENATO PINEDA, ADORA DEVERA, RODOLFO

BENOSA, JOSE DURAN, JOSEFINA FORCADILLA,

ARTURA REVILLA AND CHRISTOPHER SORIA,

Petitioners,

Vv.

REVELSTOKE INVESTMENT CORPORATION, INC.,

Respondent.

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

PETITIONERS’ REPLY BRIEF

ROBERT A. SWIFT

Counsel of Record

CRAIG W. HILLWIG

KOHN, SWIFT & GRAF, P.C.

One South Broad Street

Suite 2100

Philadelphia, PA 19107

(215) 238-1700

SHERRY P. BRODER

JON M. VAN DYKE

841 Bishop Street

Suite 800

Honolulu, HI 96813

(808) 531-8411

Counsel for Petitioners

COCKL.E LAW BRIEF PRINTING CO (800) 225-6964

OR CALL COLLECT (402) 342-2831

TABLE OF CONTENTS

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Il.

ITT.

IV.

Deferral of Decision on this Petition Is

Appropriate Until the Hawaii Supreme

Court Decides the Certified Question.........

Petitioners Raised All of the Proposed

Questions in the Courts Below....................

The Ninth Circuit Decision Conflicts with

Borer, Jalapeno and Home Port Rentals.....

The Ninth Circuit’s Fundamental Error in

Ignoring the Date the Rule 58 Judgment

Was Entered Warrants Vacating and Re-

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TABLE OF AUTHORITIES

Page

FEDERAL CASES

Banco Nacional de Cuba v. Sabbatino, 376 U.S.

Neen oo cesiesainshedsaccdssienscosceess 6

Borer v. Chapman, 119 U.S. 587 (1887)........... 2,6, 7,8

Home Port Rentals, Inc. v. International Yachting

Group, Inc. , 252 F.3d 399 (5th Cir. 2001)........... 6, 7,8

In re Estate of Ferdinand E. Marcos Human

Rights Litigation, 536 F.3d 980 (9th Cir.

el, «, saccsnewdesnusecesveroeeccscesoees 6

Jalapeno Prop. Mgmt., LLC v. Dukas, 265 F.3d

cn sc anscescsenssvnccecsscccses 6, 7,8

United States v. Indrelunas, 411 U.S. 216

Neen c. snsuaamaimbaccascesccesscvesc 8

United States v. Wurts, 303 U.S. 414 (1938)................ 7

Yee v. City of Escondido, 503 U.S. 519 (1992).............. 5

STATE CASES

Estate of Roxas v. Marcos, ___ P.3d __., 2009

WL 352878 (Haw. int. App. Feb. 12, 2009).............. 2

International Savings & Loan Ass’n, Ltd. vu.

Wag, 921 P-2d 117 (Haw. 1996)............................. 1,2

TABLE OF AUTHORITIES — Continued

Page

FEDERAL STATUTES AND RULES

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STATE STATUTES

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PETITIONERS’ REPLY BRIEF

The central question presented by the Petition is

whether federal law, not state law, determines when a

federal judgment on a federal cause of action accrues

for sunsetting purposes. Thousands of federal judg-

ments on federal causes of action are entered by

federal courts each year. Because of the conflict

among the circuits there is no certainty as to the

length of time federal judgments may be enforced,

and judgment creditors and debtors are left to guess.

This Court should grant certiorari in this case to

resolve the conflict.

ARGUMENT

I. Deferral of Decision on this Petition Is

Appropriate Until the Hawai’i Supreme

Court Decides the Certified Question

The Supreme Court of Hawai'i accepted the

certified question for decision, Pet.App.3la, and the

briefing in that Court is now complete. The Supreme

Court of Hawai’i, well aware of the Ninth Circuit’s

opinion in this case, would not have accepted the

question for decision had it believed that its decision

in International Savings & Loan Ass’n, Ltd. v. Wiig,

921 P.2d 117 (Haw. 1996) — which the Ninth Circuit

relied upon — answered the question. Revelstoke tries

to exploit the reservation in that Court’s order (that it

has not yet conclusively decided whether to answer

the certified question), but such a reservation is

common among state high courts adjudicating certi-

fied questions from federal courts.’

Since this Petition was filed, the Hawai’i Inter-

mediate Court of Appeals issued a divided opinion

interpreting Haw. Rev. Stat. § 657-5. Estate of Roxas

v. Marcos, __ P.3d __, 2009 WL 352878 (Haw. Int.

App. Feb. 12, 2009).’ Although a two-judge majority

held that the ten year period of Haw. Rev. Stat. § 657-

5 accrued upon entry of a state court judgment, a

vigorous dissent contended that this Court’s decision

in Borer v. Chapman, 119 U.S. 587 (1887) mandated

the conclusion that the ten year period did not accrue

until after all appeals were resolved. Neither the

majority nor the dissent could cite any definitive

decision of the Supreme Court of Hawaii on the

issue. Therefore, the decision of the Supreme Court of

Hawai'i on the certified question will be the first

authoritative interpretation of the meaning of Section

657-5.

' At page 11 of its Brief in Opposition, Revelstoke omitted

the first two words in the quote from the Supreme Court of

Hawai’i’s order which stated “without conclusively determin-

ing whether this court will answer the question ... ” (emphasis

added). Pet.App.32a.

* The majority opinion casts doubt on the Ninth Circuit’s

interpretation of Hawai'i Supreme Court precedent. It stated

that International Savings & Loan Ass’n, Ltd. v. Wiig, 921 F.3d

117 (Haw. 1996) — relied upon by the Ninth Circuit — was limited

to the “narrow issue” of interpreting the first sentence of H.R.S.

§ 657-5, not the third sentence. 2009 WL 352878 at 4. The Ninth

Circuit applied Wiig to the third sentence.

Revelstoke implies some impropriety on the part

of the federal district court for certifying a question to

the Supreme Court of Hawai’i. When the issue of

interpretation of H.R.S. § 657-5 arose a second time

in MDL 840, a consolidated proceeding, it was en-

tirely appropriate for the district court to propose, sua

sponte, certification of the issue to the state court.

The certification was a proper exercise of fed-

eral/state comity to ask the state’s highest court for

an authoritative interpretation on an issue the fed-

eral court could only predict. Counsel for all parties

were present or participated by telephone.’ All coun-

sel participated in drafting a proposed order and

submitting it to the court for approval. No one ap-

pealed the order. Certainly Revelstoke was not disad-

vantaged. It intervened before the Supreme Court of

Hawai'i and filed an extensive amicus brief in sup-

port of the Marcos Estate.

II. Petitioners Raised All of the Proposed

Questions in the Courts Below

The question whether federal or state law con-

trolled the sunsetting of the Class’s judgment was the

central issue in both the district court and court of

appeals. The district court ruled that federal law

* In 1991, certain class counsel were appointed by the court

as lead and liaison counsel for all the consolidated cases in MDL

840, including the Sison/Piopongco cases. So the presence and

participation of class counsel at the hearing was routine and

proper.

applied to the expiration of a federal judgment on

a federal cause of action, and that the judgment

was not final until the court of appeals issued its

mandate after affirming the judgment for the Class.

Pet.App.23a. Before the Ninth Circuit, Petitioner

specifically raised in its Opposition Brief, in the

“Questions Presented On Appeal,” the issue of when a

federal judgment accrues for sunsetting purposes:

In the alternative, whether the District

Court ruled correctly that any statute of

limitations applicable to Judgment of the

Class of Human Rights Victims did not start

until after this Honorable Court affirmed the

lower court’s rulings (on December 17, 1996)

and returned the mandate to the District

Court (on January 8, 1997)?

Appellees’ Br. at 5 (Aug. 25, 2006). The court of ap-

peals reversed the district court’s application of

federal law, concluded that state law determined

when the time period of a sunsetting statute begins,

and then predicted how the Hawai’i statute should be

interpreted, even though no authoritative interpreta-

tion had been made by any state appellate court.

Pet.App.1-21a.

The question of when a Rule 58 final judgment

was entered was always before the courts below,

because a time period and a start date are essential

before enforcement of a judgment may be held to

have expired. The district court did not originally

determine when the Rule 58 judgment had been

entered because it ruled that the operative date for

the beginning of the running of a sunsetting statute

was when the mandate was returned by the court of

appeals. Subsequently, the district court ruled that

the Rule 58 final judgment was entered on December

6, 1995. Pet.App.29a. The court of appeals reversed

but never addressed the date the final judgment was

entered. As a result, the question was raised specifi-

cally in a petition for rehearing.

Certification of a question to the Supreme Court

of Hawai'i was proposed by Petitioners in their re-

hearing petition in the Ninth Circuit. This Petition

does not claim error on the part of the court of ap-

peals for not certifying the question, but now that the

issue has been certified and now that the Supreme

Court of Hawai’i has accepted the issue for decision,

it is appropriate for this Court to defer decision on

this Petition until that Court rules.

Therefore, Petitioners raised in the courts below

all the questions in this Petition. In the very case

cited by Revelstoke, Yee v. City of Escondido, 503 U.S.

519, 534-35 (1992), this Court stated:

Once a federal claim is properly presented, a

party can make any argument in support of

that claim; parties are not limited to the pre-

cise arguments they made below (citations

omitted)

* * *

A litigant seeking review in this Court of a

claim properly raised in the lower courts

thus generally possesses the ability to frame

the question to be decided in any way he

chooses, without being limited to the manner

in which the question was framed below.

III. The Ninth Circuit Decision Conflicts with

Borer, Jalapeno and Home Port Rentals

The question of whether state law controls the

accrual of a federal judgment was described by the

Ninth Circuit as “novel,” Jn re Estate of Ferdinand E.

Marcos Human Rights Litigation, 536 F.3d 980, 982

(9th Cir. 2008), but Revelstoke nonetheless argues

that the Ninth Circuit’s conclusion is based on a “well-

settled principle.” Opp.Br. at 22. Tellingly, Revelstoke

cannot cite any case to support this “well-settled

principle” except for the Ninth Circuit’s opinion

below. Nor can the Ninth Circuit decision be recon-

ciled with this Court’s decision in Borer or the Fifth

and Sixth Circuit’s decisions in Horne Port Rentals

and Jalapeno.

In Borer, this Court stated the general common

law principle that a state sunsetting statute does not

begin to run on a federal judgment until all appeals

are completed. The principle stated in Borer cannot

be limited to the specific facts of that case as

suggested by Revelstoke. “Principles formulated by

federal judicial law have been thought by this Court

to be necessary to protect uniquely federal interests.”

Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398,

426 (1964). Borer has been cited in later decisions of

this Court and has never been limited or overruled.

The adoption of Rule 69(a) did not, sub silentio,

undermine the Borer principle, and this Court has

cited Borer after adoption of Rule 69(a). See United

States v. Wurts, 303 U.S. 414 (1938). Furthermore,

the federal registration statute, 28 U.S.C. § 1963,

employs the principle embodied in Borer by providing

that a judgment is not ripe for transfer from one

district to another until “the judgment has become

final by appeal or expiration of the time for appeal.”

Revelstoke is incorrect in contending that Home

Port Rentals, Inc. v. International Yachting Group,

Inc., 252 F.3d 399 (5th Cir. 2001) and Jalapeno Prop.

Mgmt., LLC v. Dukas, 265 F.3d 506 (6th Cir. 2001)

did not employ a federal accrual date for the running

of the state sunsetting periods. In Home Port Rentals,

the Fifth Circuit found that the ten-year prescriptive

period under South Carolina law did not commence

until after appeals were complete on the federal

judgment even though the South Carolina statute

would have commenced running upon entry of the

trial court’s judgment. 252 F.3d at 406. In doing so, it

applied federal common law by looking to the stan-

dard set forth in Section 1963. Likewise in Jalapeno,

the Sixth Circuit reversed the district court which,

applying state law, had ruled that the ten-year pre-

scription period commenced after the federal judg-

ment was first entered. 265 F.3d at 510. The Sixth

Circuit applied federal common law in concluding

that “the ten-year [Tennessee] statute of limitations

did not begin to run until after this court had issued

its second mandate.” Jd. at 514.

Accordingly, the Ninth Circuit’s decision is in

direct conflict with Borer, Home Port Rentals and

Jalapeno.

IV. ‘The Ninth Circuit’s Fundamental Error in

Ignoring the Date the Rule 58 Judgment

Was Entered Warrants Vacating and Re-

manding

The Petition conclusively demonstrates that, as

later held by the district court, Pet.App.29a, a Rule

58 judgment was not entered until December 6, 1995,

less than 10 years before the judgment was trans-

ferred to Texas. The Ninth Circuit simply ignored this

and assumed that the February 1995 order was the

Rule 58 judgment. But docket entries do not lie. The

arguments raised by Revelstoke exalt form over

substance. It contends that the title on a court order

or the clerk’s stamp at the top of a court order renders

it a Rule 58 judgment. Opp.Br. at 26. This cannot be

or else all orders having the word “judgment” in their

title would automatically become Rule 58 judgments.

That outcome would render superfluous Rule 54(b)

and this Court’s opinion in United States v. Indrelu-

nas, 411 U.S. 216 (1973), where this Court inter-

preted Rule 58 to require that “every judgment shall

be set forth on a separate document” signed and

entered on the docket by the clerk. Jd. at 222. Rev-

elstoke offers no explanation as to what purpose or

meaning the December 6, 1995 entry serves if not as

a Rule 58 final judgment. Rather, it simply wishes

this Court to ignore the docket entries and the single

judgment entry of December 6, 1995 signed by the

clerk which constitutes the final Rule 58 judgment in

the consolidated litigation.

Revelstoke also argues that in the months be-

tween February and December 1995 Petitioners took

action based on the February 1995 “judgment” order

and that the Marcos Estate filed an appeal from the

February 1995 order. Parties do not determine what

is a Rule 58 final judgment, docket entries do. What

Revelstoke fails to mention is that the Estate, like

other appellants, filed successive appeals as posttrial

motions were resolved to ensure that its appellate

rights would be protected. The Ninth Circuit only had

appellate jurisdiction from a final judgment, which

was the December 6, 1995 judgment. Whatever

confusion existed in the period leading up to Decem-

ber 1995 as to the finality of judgment orders under

Rules 54(b) and 58(b) entered in the consolidated

cases, the entry of the Rule 58(b) order by the clerk

on December 6, 1995 resolved the issue.

Because ii is incontrovertible on this record that

a Rule 58 final judgment was entered less than 10

years before the judgment was transferred to Texas,

the judgment registered in Texas was valid, enforce-

able and began a new enforcement period under

Texas law. The Texas judgment, not the Hawai'i

judgment, was the only one which affected Rev-

elstoke. For that reason, Revelstoke had no Rule 24

property interest whatsoever in the Hawai’i judgment

and its intervention was improper. Accordingly, the

Ninth Circuit’s opinion in this matter should be

vacated and the matter remanded to the Ninth Cir-

cuit with instructions to affirm the district court’s

decision.

CONCLUSION

For all the foregoing reasons Petitioners respect-

fully urge this Court (1) to defer consideration of this

Petition until the Hawai'i Supreme Court has ruled

on the certified question of state law central to this

appeal, and (2) then grant certiorari to review the

issues presented. In the alternative, this Court

should vacate the Ninth Circuit’s opinion and remand

the case with instructions to affirm the decision of the

district court.

Respectfully submitted,