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Reprinted with permission from the April 6, 2009 edition of National Law Journal ΒΈ 2009 Incisive Media Properties, Inc. All rights reserved. Further duplication without permission is prohibited.

6 April 2009

Insight into court's thinking paid off
National Law Journal

Sometimes one has to travel a long way to go a short distance.

A dispute for control of millions of dollars stolen by former Philippines President Ferdinand Marcos set the Republic of the Philippines at odds with thousands of its citizens who had been victims of torture and political reprisal by Marcos. And they had won a $2 billion judgment against the Marcos estate.

The issue Mayer Brown needed to get before the U.S. Supreme Court on behalf of the Philippine National Bank and the Philippine government was a little more esoteric. Republic of the Philippines v. Pimentel, 128 S. Ct. 2180 (2008).

Merrill Lynch & Co., the brokerage holding $35 million in assets from a Marcos shell company in Panama, had asked a federal court via an interpleader action in Hawaii who should get the money β€” the victims or the Philippines government, which also lay claim to the money. The government asserted sovereign immunity to remove itself from the Merrill case.

The Philippine National Bank, which held some assets in escrow, also asserted a claim, as did 10,000 victims of Marcos' martial law policies.

The first and toughest hurdle for Mayer Brown's appellate team was to get the Supreme Court's attention in a case presenting no circuit conflicts. They started by turning to Switzerland for help. The reason, said Mayer Brown's special counsel in Washington, Charles Rothfeld, who has argued 23 cases before the high court, was that one of the things he knew that the court cares about is whether a case has international implications.

"We went to another country that had an interest in the issue," Switzerland, and asked that government to send a note to the U.S. government expressing that interest, he said.

Some of the Marcos assets had been held at one point in Switzerland. The Swiss government's concern was how the United States would handle such disputes, and the Swiss expressed it to the U.S. government, according to Rothfeld.

Backing up Rothfeld was a team gathered at Mayer Brown to handle the briefs: Kenneth Geller, Elizabeth Oyer and Brian Netter.

"We also positioned our petition in such a way to suggest [the court] should care what the U.S. government thought and ask the solicitor general," he said. "We posed the issue in such a way that it had foreign relations overtones."

It appeared to do the trick. The court granted review and Rothfeld went into the case with the solicitor general's office on his side.

Essential party

The Philippines government had argued that Marcos had stolen the money and spirited it out of the country. It maintained a claim to the assets under Philippines law; that its sovereign immunity placed it outside the reach of U.S. courts; and that it was an essential party to the dispute and the courts could not proceed without it and had to dismiss the case.

The 9th U.S. Circuit Court of Appeals agreed it had sovereign immunity and dismissed it from the case, but rejected the claim that the Philippine government was an essential party under Rule 19(b) of the Federal Rules of Civil Procedure.

The Supreme Court ultimately disagreed and dismissed the interpleader action by Merrill Lynch.

The court became interested in the foreign political implications and on that point "got a full-court press from the solicitor general," said Robert Swift, who represented Mariano Pimentel and the other human rights victims. "Mayer Brown does a high quality job and was straightforward in reciting the facts. They didn't round off the corners."

Confronting the money damages claim in the face of 10,000 victims of human rights abuse trying to recover damages would require sensitivity from the Mayer Brown team.

"You always want to position your client in a sympathetic position," Rothfeld said. "One challenge was to make clear we were not the Marcos family. We were the Philippine government. There is now a democratic government and they are trying to use the Marcos assets for the broader public interest."

Swift believed that the question the Supreme Court should have asked was why was the Philippines government trying to stop its own citizens from recovering $35 million and deprive them of a judgment in the United States. But that was not the court's focus.

The legal issue the justices decided β€” can you litigate in U.S. courts the interests of a foreign government β€” was the bigger international question, according to Rothfeld. The answer was "No."


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