Republic Of The Phillipines v. Pimentel

553 U.S. 851 (2008)


Ferdinand Marcos incorporated Arelma, S. A. (Arelma), under Panamanian law. Arelma opened a brokerage account with Merrill Lynch, Pierce, Fenner & Smith Inc. (Merrill Lynch) in New York, in which it deposited $2 million. As of the year 2000, the account had grown to approximately $35 million. Crimes and misfeasance by Marcos during his presidency of the Philippines became the subject of worldwide attention and protest. A class action by and on behalf of some 9,539 of his human rights victims was filed against Marcos and his estate. The class action was tried in the United States District Court for the District of Hawaii and resulted in a $2 billion judgment for the class. The Pimentel class claims a right to enforce its judgment by attaching the Arelma assets held by Merrill Lynch. The Republic and a Philippine Commission (Commission) are also attempting to recover this, and other Marcos property under a 1955 Philippines law providing that property derived from the misuse of public office is forfeited to the Republic from the moment of misappropriation. When Marcos fled the Philippines in 1986, the Commission was created to recover any property he wrongfully took. Swiss assets were tracked and sequestered into escrow until litigation could be completed in the Philippines. The Republic and the Commission wanted Merrill Lynch to transfer its assets to the same escrow. Merrill Lynch did not do so. Merrill filed an interpleader action under 28 U. S. C. §1335. The named defendants in the interpleader action were, among others, the Republic and the Commission, Arelma, PNB, and the Pimentel class. The Republic and the Commission asserted sovereign immunity under the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U. S. C. §1604. They moved to dismiss pursuant to Rule 19(b) because they reasoned that the action could not proceed without them. Arelma and PNB also moved to dismiss pursuant to Rule 19(b). The court rejected the request by the Republic and the Commission and the Court of Appeals reversed. It held the Republic and the Commission are entitled to sovereign immunity and that under Rule 19(a) they are required parties (or “necessary” parties under the old terminology). The Court of Appeals entered a stay pending the outcome of the litigation over the escrow assets. It was then determined that that pending litigation could not determine entitlement to the Arelma assets. The judge vacated the stay, allowed the action to proceed, and awarded the assets to the Pimentel class. The Republic, the Commission, Arelma, and PNB appealed the District Court’s judgment in favor of the Pimentel claimants. The Court of Appeals affirmed. Dismissal was not warranted under Rule 19(b) because, though the Republic and the Commission were necessary parties under Rule 19(a), and their claim had so little likelihood of success on the merits that the interpleader action could proceed without them. The action on the escrow assets would be barred by New York’s 6-year statute of limitations for claims involving the misappropriation of public property. The court further found it relevant that allowing the interpleader case to proceed would serve the interests of the Pimentel class, which, at this point, likely has no other available forum in which to enforce its judgment against property belonging to Marcos. The Supreme Court granted certiorari.