Wednesday, November 18, 2009

Pimentel P.S. -- and an update!

Last year, the Supreme Court decided the case of Republic of Philippines v. Pimentel, 128 S. Ct. 2180 (2008) in which it held that the government of the Philippines and a government entity were necessary parties to an interpleader action.  Merrill Lynch had filed the action regarding assets that it held from a shell corporation that Ferdinand Marcos had set up to hide money during his reign as president of the Philippines.  The government entities were unavailable due to sovereign immunity, and the Supreme Court held that the case should be dismissed under Rule 19(b) because it could not proceed without these parties.

The case provided fresh material to anyone teaching mandatory joinder of parties, interpleader, or the FSIA.  And although the Supreme Court might have spoken, the fight over the money continues, the Associated Press reports that the Ninth Circuit has "rebuked" the district judge who was handling the assets for Merrill Lynch, accusing him of lax oversight.

There have also been developments at the state court level (H/T Kevin Clermont).  Some of the human rights judgment claimants have filed a petition in New York state court to enforce the judgment and have Merrill Lynch turn over the Arelma assets.  The Philippine National Bank and Arelma moved to intervene, and then to dismiss the complaint because the Republic and the Commission were not joined.  In a November 6, 2009 opinion (available here: Download 09-104734 decision seq. 02), the NY trial judge granted the intervention but refused to dismiss the case because the governmental parties were not joined. 

The opinion is interesting on a few fronts.  First, the question of mandatory joinder of parties proceeds somewhat differently under the CPLR, as the question relates to the provisions for turnover of assets and enforcement of judgments, rather than a specific rule that addresses mandatory joinder of parties.  It contains a res judicata issue concerning the U.S. Supreme Court's ruling on the Rule 19 joinder issue.  Second, it addresses two changed circumstances since the Supreme Court decision, (1) that the Philippino court has found that the assets should revert to the government of the Philippines (although judgment is not final; and (2) The government of the Philippines has waived sovereign immunity in a similar action in Singapore, indicating a willingness to waive sovereign immunity under certain circumstances.  The trial judge then held that the action should continue without the government parties.  It also ruled that the judgment from the District of Hawaii had not lapsed.

All in all, a virtual treasure trove of procedural issues from federal and state courts. 

I guess that the Marcos family is the gift that keeps on giving.


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