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Pimentel v. Republic of the Philippines

Supreme Court of the United States · 2008 · Civil Procedure

Civil ProcedureRule 19Required JoinderInterpleaderForeign Sovereign ImmunityFRCP 19required partyjoinder

Facts

A Merrill Lynch account held assets in the name of Arelma, a Panamanian corporation created by Ferdinand Marcos, and those assets had grown to about $35 million. The Pimentel class, which had obtained a large judgment against Marcos and his estate, sought to reach those assets, while the Republic of the Philippines and its Presidential Commission on Good Governance claimed the assets belonged to the Republic under Philippine forfeiture law and related proceedings pending in the Sandiganbayan. Merrill Lynch filed an interpleader action naming, among others, the Republic, the Commission, Arelma, PNB, and the Pimentel class. The Republic and the Commission successfully asserted sovereign immunity and were dismissed, but the lower courts nevertheless allowed the interpleader to proceed without them.

Issue

When foreign sovereign entities are required parties under Rule 19(a), cannot be joined because they are immune from suit under the FSIA, and assert nonfrivolous claims to the property at issue, may an interpleader action proceed in their absence under Rule 19(b)? Also, may remaining parties seek review of the Rule 19(b) determination even if the sovereigns' own appellate status is uncertain?

Rule

Under Rule 19, when a required sovereign party cannot be joined because of sovereign immunity and its asserted claims are not frivolous, the court must give full effect to the sovereign immunity claim in the Rule 19(b) analysis. In that circumstance, where proceeding would prejudice the absent sovereign and the dispute cannot be adequately settled as a whole without it, dismissal is required; a court may not defeat that result by deciding or discounting the merits of the absent sovereign's nonfrivolous claims.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Summit Harbor Brokerage, based in Chicago, files a statutory interpleader in federal court over $18 million held in an account opened by a former minister from the nation of Arandia. Lena Ortiz, a judgment creditor of the minister, claims the funds, while Arandia claims they were forfeited to it under its anti-corruption law. Arandia is a required party under Rule 19(a), successfully asserts sovereign immunity, and refuses to participate further.

How should the federal court most likely rule on whether the interpleader may proceed without Arandia?

Explanation. The majority held that when a required foreign sovereign cannot be joined because of sovereign immunity and asserts a nonfrivolous claim, the court must give full effect to that immunity in the Rule 19(b) analysis. Where, as in an interpleader over disputed property, proceeding would prejudice the absent sovereign and would not settle the dispute as a whole, dismissal is required. (Derived from Pimentel v. Republic of the Philippines (n.d.).)