RESPONDENT: Jerry S. Pimentel, temporary administrator of the Estate of Mariano J. Pimentel, et al.
LOCATION: Marion County Superior Court: Criminal Division
DOCKET NO.: 06-1204
DECIDED BY: Roberts Court (2006-2009)
LOWER COURT: United States Court of Appeals for the Ninth Circuit
CITATION: 553 US 851 (2008)
GRANTED: Dec 03, 2007
ARGUED: Mar 17, 2008
DECIDED: Jun 12, 2008
Charles A. Rothfeld - on behalf of the Petitioner
Edwin S. Kneedler - on behalf of the United States, as amicus curiae, supporting the Petitioner
Robert A. Swift - on behalf of the Respondents
Facts of the case
The case arises from competing claims to more than $30 million, the rewards of an investment former Philippine President Ferdinand Marcos made with Merrill Lynch and subsequently misappropriated. A Philippine agency charged with recovering the funds, several Marcos family creditors, and human rights victims who had already secured a judgment against Marcos' estate each laid claim to the money, prompting Merrill Lynch to file an interpleader action to settle all of the claims in one case. The Philippine government, acting in concert with the recovery agency, claimed that it had sovereign immunity from suit and, because it was an indispensable party to the suit under Federal Rule of Civil Procedure 19(b), justice required that the case be stayed and brought before a special Philippine court established to return such misappropriated funds to the public treasury. However, the district court continued to adjudicate the case, eventually awarding the assets to the creditors.
The Ninth Circuit upheld the award, noting that the government's claim was barred by the applicable Philippine statute of limitations. The Ninth Circuit further held that the "equity and good conscience" requirements of Federal Rule of Civil Procedure 19(b) did not require the Philippine government's participation in the case. In its petition for certiorari, the Philippine government argued that the award of assets undermined the comity principles of the Foreign Sovereign Immunities Act and violated Federal Rule of Civil Procedure 19(b) by not including the government as an indispensable party.
Did the U.S. Court of Appeals for the Ninth Circuit err in approving the award of assets to creditors of former Philippine President Ferdinand Marcos when the Philippine government, claiming rightful ownership of the assets, excluded itself from the proceedings based on sovereign immunity?
Media for Republic of Philippines v. PimentelAudio Transcription for Oral Argument - March 17, 2008 in Republic of Philippines v. Pimentel
Audio Transcription for Opinion Announcement - June 12, 2008 in Republic of Philippines v. Pimentel
Anthony M. Kennedy:
A common problem in litigation and this is discussed in this case which is 06-1204, a common problem of litigation is the question of which persons or entities must be joined in an action before the case can proceed.
And suppose there are persons who should be made parties, but who cannot be made to join, does this mean the case must be dismissed or may the litigation proceed without them?
These questions of joinder in civil cases in federal court are addressed in Rule 19 of the Federal Rules of Civil Procedure.
In this case, it determines on -- turns on the interpretation of proper application of Rule 19 in the particular context of sovereign immunity.
This interpleader action was commenced to determine the ownership of property, the property was held by Merrill Lynch, it wanted to know who the owner was so it commenced this interpleader suit.
It was property allegedly stolen by Ferdinand Marcos when he was President of the Republic of the Philippines.
Alleged crimes and misfeasance by Marcos during his presidency became the subject of world wide attention and protest.
A class action by and on behalf of over 9,000 of his human rights victims was filed against Marcos and his estate among others and that was filed in the United States courts.
These parties are called the Pimentel class.
The Pimentel class obtained a judgment for nearly $2 billion and the interpleader suit that the Pimentel class wants to execute on the property in question, property held by Merrill Lynch in partial satisfaction of that judgment.
Two other entities were named in the interpleader suit and they invoked sovereign immunity.
Now, those entities were the Republic of the Philippines and the Philippine Presidential Commission on Good Governance and we refer to these in the opinion as the Republic and the Commission.
They, too, claim a right to these assets and litigation on their claim is also pending in the Philippine courts.
Now, the assets here in question here were last valued at about $35 million.
In the early stages of the interpleader’s case, the Republic and the Commission were dismissed as parties, but the action proceeded without the sovereign entities.
That interpleader action resulted in a ruling that the Pimentel class could levy on the assets and the Court of Appeals affirmed.
It held that under Rule 19, it was proper to allow the interpleader action to proceed even though the sovereign entities were not parties.
In this Court, the Republic of the Philippines together with other petitioners who were parties to the suit claimed it was error to allow the action to go forward without the sovereign entities.
In their view, once it was determined that the Republic and the Commission could not be joined, the action should have been dismissed.
We agree and we reverse the judgment of the Court of Appeals for the Ninth Circuit.
There is an -- an initial question whether the sovereign entities are properly in this Court when they were dismissed from the suit in the trial court.
Other parties, however, who were in the suit and who appealed the judgment joined the sovereign entities as petitioners in the case now before us.
We hope that they can pursue the matter, they can raise the objections made by the sovereign entities for if the interpleader action should not have continued then all of the petitioners here will be relieved of an adverse judgment.
Now, that brings us to the Rule 19 question.
Now, the rule has various factors to be considered in determining whether an action can proceed without required persons and the opinion discusses these factors.
Here it suffices to say that the first factor weighs heavily in favor of the Republic and the Commission.
That factor considers the extent to which the absent entities are prejudiced by a judgment if the case proceeds without them.
The Court of Appeals found little or no prejudice to the Republic or to the Commission and in its view they would not prevail on the merits.
We conclude that whether or not the sovereign entities would prevail, their claim was not a frivolous one and it was error for the Court of Appeals to consider that claim when the sovereign entities were in the suit.
But the Court of Appeals to make this ruling was itself a violation of the sovereign immunity that the Republic and the Commission assert.