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CTOBER TERM, 2007

REPUBLIC OF PHILIPPINES V. PIMENTEL

SUPREME COURT OF THE UNITED STATES

REPUBLIC OF PHILIPPINES et al. v. PIMENTEL, temporary administrator of ESTATE OF


PIMENTEL, DECEASED, et al.

certiorari to the united states court of appeals for the ninth circuit

No. 061204.Argued March 17, 2008Decided June 12, 2008

A class action by and for human rights victims (Pimentel class) of Ferdinand Marcos,
while he was President of the Republic of the Philippines (Republic), led to a nearly
$2 billion judgment in a United States District Court. The Pimentel class then sought
to attach the assets of Arelma, S. A. (Arelma), a company incorporated by Marcos,
held by a New York broker (Merrill Lynch). The Republic and a Philippine commission
(Commission) established to recover property wrongfully taken by Marcos are also
attempting to recover this and other Marcos property. The Philippine National Banc
(PNB) holds some of the disputed assets in escrow, awaiting the outcome of
pending litigation in the Sandiganbayan, a Philippine court determining whether
Marcos property should be forfeited to the Republic. Facing claims from various
Marcos creditors, including the Pimentel class, Merrill Lynch filed this interpleader
action under 28 U. S. C. 1335, naming, among the defendants, the Republic, the
Commission, Arelma, PNB (all petitioners here), and the Pimentel class (respondents
here). The Republic and the Commission asserted sovereign immunity under the
Foreign Sovereign Immunities Act of 1976, and moved to dismiss pursuant to
Federal Rule of Civil Procedure 19(b), arguing that the action could not proceed
without them. Arelma and PNB also sought a Rule 19(b) dismissal. The District Court
refused, but the Ninth Circuit reversed, holding that the Republic and the
Commission are entitled to sovereign immunity and are required parties under Rule
19(a), and it entered a stay pending the Sandiganbayan litigations outcome.
Finding that that litigation could not determine entitlement to Arelmas assets, the
District Court vacated the stay and ultimately awarded the assets to the Pimentel
class. The Ninth Circuit affirmed, holding that dismissal was not warranted under

Rule 19(b) because, though the Republic and the Commission were required parties,
their claim had so little likelihood of success on the merits that the action could
proceed without them. The court found it unnecessary to consider whether
prejudice to those entities might be lessened by a judgment or interim decree in the
interpleader action, found the entities failure to obtain a judgment in the
Sandiganbayan an equitable consideration counseling against dismissing the
interpleader suit, and found that allowing the interpleader case to proceed would
serve the Pimentel class interests.

Held:

1. Because Arelma and PNB also seek review of the Ninth Circuits decision, this
Court need not rule on the question whether the Republic and the Commission,
having been dismissed from the suit, had the right to seek review of the decision
that the suit could proceed in their absence. As a general matter any party may
move to dismiss an action under Rule 19(b). Arelma and PNB have not lost standing
to have the judgment vacated in its entirety on procedural grounds simply because
they did not appeal, or petition for certiorari on, the underlying merits ruling
denying them the interpleaded assets. Pp. 79.

2. Rule 19 requires dismissal of the interpleader action. Pp. 920.

(a) Under Rule 19(a), nonjoinder even of a required person does not always
result in dismissal. When joinder is not feasible, the question whether an action
should proceed turns on nonexclusive considerations in Rule 19(b), which asks
whether in equity and good conscience, the action should proceed among the
existing parties or should be dismissed. The joinder issue can be complex, and the
case-specific determinations involve multiple factors, some substantive, some
procedural, some compelling by themselves, and some subject to balancing against
opposing interests, Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U. S.
102, 119. Pp. 910.

(b) Here, Rule 19(a)s application is not contested: The Republic and the
Commission are required entities. And this Court need not decide the proper
standard of review for Rule 19(b) decisions, because the Ninth Circuits errors of law
require reversal. Pp. 1019.

(1) The first factor directs the court to consider, in determining whether the
action may proceed, the prejudice to absent entities and present parties in the
event judgment is rendered without joinder. Rule 19(b)(1). The Ninth Circuit gave
insufficient weight to the sovereign status of the Republic and the Commission in
considering whether they would be prejudiced if the case proceeded. Giving full
effect to sovereign immunity promotes the comity and dignity interests that
contributed to the development of the immunity doctrine. See, e.g., Verlinden B. V.
v. Central Bank of Nigeria, 461 U. S. 480, 486. These interests are concrete here.
The entities claims arise from historically and politically significant events for the
Republic and its people, and the entities have a unique interest in resolving matters
related to Arelmas assets. A foreign state has a comity interest in using its courts
for a dispute if it has a right to do so. Its dignity is not enhanced if other nations
bypass its courts without right or good cause. A more specific affront could result if
property the Republic and the Commission claim is seized by a foreign court decree.
This Court has not considered the precise question presented, but authorities
involving the intersection of joinder and the United States governmental immunity,
see, e.g.,Mine Safety Appliances Co. v. Forrestal, 326 U. S. 371, 373375, instruct
that where sovereign immunity is asserted, and the sovereigns claims are not
frivolous, dismissal must be ordered where there is a potential for injury to the
absent sovereigns interests. The claims of the Republic and the Commission were
not frivolous, and the Ninth Circuit thus erred in ruling on their merits. The privilege
of sovereign immunity from suit is much diminished if an important and
consequential ruling affecting the sovereigns substantial interest is determined, or
at least assumed, by a federal court in its absence and over its objection. The
Pimentel class interest in recovering its damages is not discounted, but important
comity concerns are implicated by assertion of foreign sovereign immunity. The
error is not that the courts below gave too much weight to the Pimentel class
interests, but that they did not accord proper weight to the compelling sovereign
immunity claim. Pp. 1116.

(2) The second factor is the extent to which any prejudice could be lessened
or avoided by relief or measures alternative to dismissal, Rule 19(b)(2), but no
alternative remedies or forms of relief have been proposed or appear to be
available. As to the third factorwhether a judgment rendered without the absent
party would be adequate, Rule 19(b)(3)adequacy refers not to satisfaction of
the Pimentel class claims, but to the public stake in settling disputes by wholes,
whenever possible, Provident Bank, supra, at 111. Going forward with the action in
the absence of the Republic and the Commission would not further this public
interest because they could not be bound by a judgment to which they were not
parties. As to the fourth factorwhether the plaintiff would have an adequate
remedy if the action were dismissed for nonjoinder, Rule 19(b)(4)the Ninth Circuit

made much of the tort victims lack of an alternative forum. But Merrill Lynch, not
the Pimentel class, is the plaintiff as the stakeholder in the interpleader action. See
28 U. S. C. 1335(a). The Pimentel class interests are not irrelevant to Rule 19(b)s
equitable balance, but the Rules other provisions are the relevant ones to consult. A
dismissal on the ground of nonjoinder will not provide Merrill Lynch with a judgment
determining entitlement to the assets so it could be done with the matter, but it
likely would give Merrill Lynch an effective defense against piecemeal litigation by
various claimants and inconsistent, conflicting judgments. Any prejudice to Merrill
Lynch is outweighed by prejudice to the absent entities invoking sovereign
immunity. In the usual course, the Ninth Circuits failure to give sufficient weight to
the likely prejudice to the Republic and the Commission would warrant reversal and
remand for further determinations, but here, that error plus this Courts analysis
under Rule 19(b)s additional provisions require the actions dismissal. Pp. 1720.

464 F. 3d 885, reversed and remanded.

Kennedy, J., delivered the opinion of the Court, in which Roberts, C. J., and Scalia,
Thomas, Ginsburg, Breyer, and Alito, JJ., joined, in which Souter, J., joined as to all
but Parts IVB and V, and in which Stevens, J., joined as to Part II. Stevens, J., and
Souter, J., filed opinions concurring in part and dissenting in part.

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irkpatrick & Co. v. Evtl. Tectonics, 493 U.S. 400 (1990)

W.S. Kirkpatrick & Co., Inc. v. Environmental

Tectonics Corporation, International

No. 87-2066

Argued No.v 27, 1989

Decided Jan. 17, 1990

493 U.S. 400

Syllabus

According to respondent's complaint, petitioners obtained a construction contract


from the Nigerian Government by bribing Nigerian officials. Nigerian law prohibits
both the payment and the receipt of such bribes. Respondent, an unsuccessful
bidder for the contract, filed an action for damages against petitioners and others
under various federal and state statutes. The District Court ruled that the suit was
barred by the act of state doctrine, which, in its view, precluded judicial inquiry into
the motivation of a sovereign act that would result in embarrassment to the
sovereign, or constitute interference with the conduct of United States foreign
policy. The court granted summary judgment for petitioners because resolution of
the case in favor of respondent would require imputing to foreign officials an
unlawful motivation (the obtaining of bribes), and accordingly might embarrass the
Executive Branch in its conduct of foreign relations. The Court of Appeals reversed
and remanded the case for trial, holding that on the facts of this case the doctrine
of sovereign immunity did not apply because no embarrassment of the Executive in
its conduct of foreign affairs was evident.

Held: The act of state doctrine does not apply because nothing in the present suit
requires a court to declare invalid the official act of a foreign sovereign. See, e.g.,
Ricaud v. American Metal Co.,246 U. S. 304. It does not suffice that the facts
necessary to establish respondent's claim will also establish that the Nigerian
contract was unlawful, since the contract's legality is simply not a question that the
District Court must decide. American Banana Co. v. United Fruit Co.,213 U. S. 347,
213 U. S. 357-358 (Holmes, J.) distinguished. Nor does it suffice that judgment in
favor of respondents will require the court to impute to foreign officials improper
motivation in the performance of official acts. To say that international comity,
respect for the sovereignty of foreign nations, and the avoidance of embarrassment

to the Executive Branch in its conduct of foreign relations are the policies underlying
the act of state doctrine is not to say that the doctrine is applicable whenever those
policies are implicated. The doctrine is not a rule of abstention which prohibits
courts from deciding properly presented cases or controversies simply because the
Executive's conduct of foreign relations may be adversely

Page 493 U. S. 401

affected; it is a rule of decision which requires that, in the process of deciding, the
acts of foreign sovereigns taken within their own jurisdictions be deemed valid. Pp.
493 U. S. 404-410.

847 F.2d 1052 (CA3 1988), affirmed.

SCALIA, J., delivered the opinion for a unanimous Court.

Official Supreme Court case law is only found in the print version of the United
States Reports. Justia case law is provided for general informational purposes only,
and may not reflect current legal developments, verdicts or settlements. We make
no warranties or guarantees about the accuracy, completeness, or adequacy of the
information contained on this site or information linked to from this site. Please
check official sources.