MERRILL LYNCH AMICUS BRIEF ON ARELMA

IN THE Supreme Court of the United States

REPUBLIC OF THE PHILIPPINES, PHILIPPINE
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT,
PHILIPPINE NATIONAL BANK, AND ARELMA, INC.,
Petitioners,

v.
MARIANO J. PIMENTEL, THE ESTATE OF ROGER ROXAS,
AND GOLDEN BUDHA CORP.,
Respondents.

On Writ of Certiorari to the United States
Court of Appeals for the Ninth Circuit
BRIEF OF MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED AS
AMICUS CURIAE IN SUPPORT
OF NEITHER PARTY
CARTER G. PHILLIPS A. ROBERT PIETRZAK
RICHARD D. KLINGLER DANIEL A. MCLAUGHLIN*
SIDLEY AUSTIN LLP SIDLEY AUSTIN LLP
1501 K Street, N.W. 787 Seventh Avenue
Washington, D.C. 20005 New York, NY 10019

(202) 736-8000 (212) 839-5300
Counsel for Amicus Curiae
Merrill Lynch, Pierce, Fenner & Smith Incorporated

January 24, 2008 *Counsel of Record

[Additional Counsel Listed on Inside Cover]
DANIEL R. SPECTOR
OFFICE OF GENERAL COUNSEL
MERRILL LYNCH, PIERCE, FENNER

& SMITH INCORPORATED
222 BroadwayNew York, NY 10038
RULE 29.6 CORPORATE DISCLOSURE
STATEMENT
The parent corporation of amicus curiae Merrill
Lynch, Pierce, Fenner & Smith, Incorporated is
Merrill Lynch & Co., Inc., a publicly traded
corporation. No publicly held corporation, other than
Merrill Lynch & Co., Inc. owns 10% or more of the
stock of Merrill Lynch, Pierce, Fenner & Smith,
Incorporated. No publicly held corporation owns 10%
or more of the stock of Merrill Lynch & Co., Inc.

(i)

TABLE OF CONTENTS
Page

RULE 29.6 CORPORATE DISCLOSURE

STATEMENT ……………………………………………. i
TABLE OF AUTHORITIES …………………………… iv
INTEREST OF AMICUS CURIAE…………………. 1
STATEMENT OF THE CASE………………………… 3
SUMMARY OF ARGUMENT ………………………… 8
ARGUMENT………………………………………………… 11
I. MERRILL, AS STAKEHOLDER, HAS NO
ADEQUATE REMEDY IF THIS ACTION
IS DISMISSED………………………………………. 11
II. PCGG’S SOVEREIGN STATUS SHOULD
NOT ELIMINATE OR OUTWEIGH THE
EQUITABLE INTERESTS OF MERRILL
AND THE COURTS……………………………….. 17
A. PCGG’s Sovereign Status Should NotPreclude Consideration Of The Other
Rule 19(b) Factors………………………………. 17
B. A Defendant’s Assertion Of Sovereign
Immunity Does Not Preclude A FullAnalysis Of The Practical Interests
Involved …………………………………………….. 20
C. The Relevant Prejudice Is To PCGG’s
Right To Choose The Time And VenueTo File Suit In The Courts Of The
United States …………………………………….. 21
D. Prejudice To PCGG’s Right To Sue In A
Different Venue Is Limited………………….. 25
E. A Judgment Here Would Be Adequate …. 29
CONCLUSION …………………………………………….. 31
(iii)

iv
TABLE OF AUTHORITIES
CASES Page

AmSouth Bank v. Miss. Chem. Corp., 465

F. Supp. 2d 1206 (D.N.M. 2006) ……………. 14
Baena v. Woori Bank, 515 F. Supp. 2d 414
(S.D.N.Y. 2007)……………………………………. 26
Cloverleaf Standardbred Owners Ass’n v.
Nat’l Bank of Wash., 699 F.2d 1274 (D.C.
Cir. 1983)……………………………………………11, 13

Curley v. Brignoli, Curley & Roberts
Assocs., 915 F.2d 81 (2d Cir. 1990)………… 12
Dole Food Co. v. Patrickson, 538 U.S. 468
(2003)…………………………………………………. 4

Extra Equipamentos E Exportacao Ltda. v.
Case Corp., 361 F.3d 359 (7th Cir. 2004) .. 13

Fleet Nat’l Bank v. Kaplan, No. 02-11175,
2002 U.S. Dist. LEXIS 22781 (D. Mass.
Oct. 11, 2002) ……………………………………… 14

GTE Sylvania Inc. v. Consumer Prod.
Safety Comm’n, 598 F.2d 790 (3d Cir.
1979), aff’d, 447 U.S. 102 (1980) …………… 12

Horizon Bank & Trust Co. v. Flaherty, 309

F. Supp. 2d 178 (D. Mass.), appeal
dismissed as moot, 391 F.3d 48 (1st Cir.
2004) ………………………………………………….. 14
Ins. Corp. of Hannover, Inc. v. Latino
Americana de Reaseguros, S.A., 868 F.
Supp. 520 (S.D.N.Y. 1994) ……………………. 23

Ins. Corp. of Ir., Ltd. v. Compagnie Des
Bauxites de Guinee, 456 U.S. 694 (1982) .. 20
John J. Kassner & Co. v. City of New York,
415 N.Y.S.2d 785 (N.Y. 1979)……………….. 27
Koster v. Automark, 640 F.2d 77 (7th Cir.
1981) ………………………………………………….. 28
v

TABLE OF AUTHORITIES – continued
Page

Land v. Dollar, 330 U.S. 731 (1947),
overruled on other grounds, Larson v.
Domestic & Foreign Commerce Corp.,
337 U.S. 682 (1949)……………………………… 20

Nat’l City Bank v. Rep. of China, 348 U.S.
356 (1955) …………………………………………… 22

Norex Petroleum, Ltd. v. Access Indus.,
Inc., 416 F.3d 146 (2d Cir. 2005) …………… 28
In re Oil Spill by the Amoco Cadiz, 491 F.
Supp. 161 (N.D. Ill. 1979) …………………….. 23

Organizacion JD Ltda. v. U.S. Dep’t of
Justice, 18 F.3d 91 (2d Cir. 1994)………….. 30
Owens-Illinois, Inc. v. Lake Shore Land
Co., 610 F.2d 1185 (3d Cir. 1979) ………….. 12
Powerex Corp. v. Reliant Energy Servs.,
Inc., 127 S. Ct. 2411 (2007)…………………… 19
Prescription Plan Serv. Corp. v. Franco,
552 F.2d 493 (2d Cir. 1977) ………………….. 12

Provident Tradesmens Bank & Trust Co. v.
Patterson, 390 U.S. 102 (1968) ………….. passim
Rep. of Arg. v. Weltover, Inc., 504 U.S. 607
(1992)…………………………………………………. 21
Rep. of Austria v. Altmann, 541 U.S. 677
(2004)…………………………………………………. 19
Rep. of China v. Am. Express Co., 195 F.2d
230 (2d Cir. 1952)………………………………… 23
Robinson v. Gov’t of Malay., 269 F.3d 133
(2d Cir. 2001)………………………………………. 21
Saudi Arabia v. Nelson, 507 U.S. 349
(1993)…………………………………………………. 21
State v. Fenton, 414 N.Y.S.2d 58 (3d Dep’t1979) ………………………………………………….. 27
State Farm Fire & Cas. Co. v. Tashire, 386

U.S. 523 (1967)……………………………………15, 22

TABLE OF AUTHORITIES – continued
Page

Tellabs, Inc. v. Makor Issues & Rights,

Ltd., 127 S. Ct. 2499 (2007) ………………….. 20
Texas v. Florida, 306 U.S. 398 (1939)……….. 16
Walsh v. Centeio, 692 F.2d 1239 (9th Cir.

1982) ………………………………………………….. 13
STATUTES

Civil Asset Forfeiture Reform Act of 2000,
Pub. L. No. 106-185, 114 Stat. 202………… 24

28 U.S.C. § 1330(a)…………………………………. 18
§ 1335 ……………………………… 14, 15, 18
§ 1397 …………………………………….. 18
§ 1441(d)…………………………………. 18
§ 1603(b)(2) …………………………….. 16
§ 1605(a)(1) …………………………….. 2, 23
§ 1607 …………………………………….. 2, 23
§§ 1607-1611 …………………………… 18
§§ 1609-1611 …………………………… 19
§ 2361 …………………………………….. 18
§ 2467 (2007)…………………………… 24
§ 2467 …………………………………….. 24
RULES

Fed. R. Civ. P. 19 (2007) ……………………… passim
19 (1966) …………………………. 12
22 (2007) …………………….. 7, 14, 23
N.Y. C.P.L.R. § 202 (2005) ……………………….
26
§ 213………………………………… 26, 27
§ 214(2) …………………………….. 26
§ 5303……………………………….. 28
§ 5304………………………………. 28, 30
§ 5305……………………………….. 28

vii

TABLE OF AUTHORITIES – continued
LEGISLATIVE HISTORY Page

H.R. Res. 1658, 106th Cong. (2000)………….. 24
SCHOLARLY AUTHORITIES

Stefan D. Cassella, The Civil Asset
Forfeiture Reform Act of 2000: Expanded
Government Forfeiture Authority and
Strict Deadlines Imposed on All Parties,
27 J. Legis. 97 (2001) …………………………… 24

7 Charles Alan Wright, Arthur R. Miller &
Mary Kay Kane, Federal Practice &
Procedure (3d ed. 2001)……………………….. 13, 16

4 James Wm. Moore et al., Moore’s Federal
Practice (3d. ed. 2007)…………………… 12, 13, 24

John W. Reed, Compulsory Joinder of
Parties in Civil Actions, 55 Mich. L. Rev.
327 (1957) …………………………………………… 12

OTHER AUTHORITIES

Restatement (Third) of Foreign RelationsLaw of the United States (1987)……………. 28
INTEREST OF AMICUS CURIAE1

Merrill Lynch, Pierce, Fenner & Smith
Incorporated (“Merrill”) is a securities broker-dealer.
As a financial custodian of millions of accounts in the
names of individuals, families, retirement plans andcorporate and other entities, Merrill has an interestin the continuing viability of the interpleader processas a mechanism for resolving disputes between
competing claimants for assets (including assets thatmay at some point be claimed by foreign sovereignsor their instrumentalities) without exposing the
custodians of those assets to multiple liabilities. The
equitable balancing test of Federal Rule of CivilProcedure 19(b) requires courts to consider theinterests of the stakeholder-plaintiff in not
dismissing an interpleader on the grounds that aclaimant who is unavailable is an indispensable
party. As set forth below, Merrill believes that the
standard proposed by Petitioners gives undue weightto the interests of foreign sovereign claimants in
foreclosing use of the interpleader process byinnocent stakeholders and thus threatens the
viability of the interpleader process.

Merrill initially filed this interpleader action in
2000 in its capacity as a disinterested stakeholderwith no claim against the assets at issue and no
interest in their ultimate disposition. Merrill has

1 Pursuant to this Court’s Rule 37.6, amicus curiae states that
no counsel for any party authored this brief in whole or in part,
and no person or entity other than amicus curiae made a
monetary contribution to the preparation or submission of the
brief.

Pursuant to Rule 37.3, amicus curiae states that petitioners
and respondents have consented to the filing of this brief, andwritten consents have been filed with the Court.
2
since been discharged by the district court and is no
longer a party to this action. Merrill remains neutral
as to the rightful ownership and disposition of the
assets, and takes no position as to whether the Court
should affirm the Ninth Circuit or remand for further
consideration, and no position as to whether
petitioners have the right to appeal. Merrill files this
brief solely to address the adverse consequences to it
as stakeholder if this action is dismissed.

Specifically, Merrill’s paramount interest is in a
final resolution of this dispute that avoids duplicative
litigation or inconsistent claims against Merrill.
Dismissal would put Merrill back where it started:
holding assets subject to dispute without anypractical means available to resolve the competing
claims. Petitioners the Republic of the Philippines(“the Republic”), and the Philippine PresidentialCommission On Good Government (“PCGG”)2 – who
created this impasse by successfully asserting
sovereign immunity under the Foreign Sovereign
Immunities Act (“FSIA”) – would still need to file suit
in a U.S. court to obtain the relief PCGG seeks. Bydoing so, PCGG would waive its immunity under theFSIA’s waiver and counterclaim provisions, 28 U.S.C.
§§ 1605(a)(1) & 1607(b)-(c), thus permitting Merrill to
initiate a new interpleader in which PCGG would
then participate. But such a ‘do-over’ would come at
the cost of delay and duplication of this entire
process, which has already consumed more thanseven years of litigation. Moreover, in that event,
Merrill would face continuing uncertainty while itawaited such a filing by a party that has known of its

2 Because PCGG is the instrumentality charged with
prosecuting the Republic’s interests and those interests are
identical, this brief will refer to them collectively as “PCGG.”
3
interests in the subject assets for two decades and
has yet to file suit in the United States.

By contrast, a final judgment by the district courtbinding on the remaining parties is adequate to
relieve Merrill of responsibility for the assets and
formally discharge it from liability to any claimantother than PCGG. That would end the dispute unless
and until PCGG were to file suit against Merrill. As
discussed below, such a lawsuit would be subject todismissal on numerous legal and equitable grounds,
and thus PCGG could not seek money damagesagainst Merrill.

While this is an imperfect resolution, it is the least
inequitable to the parties. Merrill would have a
discharge and the burden of defending only a singlepotential lawsuit of dubious merit. The other
claimants, including petitioners Arelma Inc.
(“Arelma”) and the Philippine National Bank
(“PNB”), have had their day in court and were not
prejudiced by the absence of PCGG. And anyprejudice to PCGG would be of its own making,
having sat out the interpleader on sovereignimmunity grounds in favor of relying on the right toinstitute affirmative litigation against a party who
has done nothing but comply with all applicable court
orders and follow the course outlined in the Federal
Rules for resolving precisely this kind of dispute.

STATEMENT OF THE CASE

This case arises from a dispute over the ownership
of assets held in a brokerage account at Merrill inNew York in the name of Arelma, a Panamanian
corporation. Pet. App. 43a, 45a. The Arelma account
was opened in 1972 with a deposit in the amount of$2 million, which had grown to $35 million by the
time Merrill filed this action in 2000. Id. at 45a-46a.
4
Merrill claims no interest in these assets, and
accordingly instituted an interpleader in the UnitedStates District Court for the District of Hawaii to
permit the various claimants to come forward andassert their own claims.3

In understanding the competing claims, it is
important to distinguish between (1) ownership and
control of shares of Arelma (the “Arelma shares”) and

(2) the assets held in Arelma’s name at Merrill (the
“Arelma assets”). It is the Arelma assets that were
held by Merrill and were deposited by Merrill with
the district court pursuant to 28 U.S.C. § 1335(a)(1).4
Thus, the question before the district court was who
was entitled to the Arelma assets: (a) Arelma and/or
the party controlling Arelma, or (b) a party with avalid claim against Arelma. In the absence of a valid
claim against Arelma, Arelma’s authorized corporate
representative would ordinarily have the right, as theholder of the account, to direct Merrill concerning
how to dispose of its assets. However, because the
shareholders of a corporation own the corporationand not its assets,5 Merrill could not safely direct theassets to the corporation’s shareholders in the face of
3 Merrill was discharged by the district court on July 3, 2003
(JA 22-24) and was no longer a party when the district court
issued its findings of fact and conclusions of law. Merrill did not
participate in the subsequent appeal to the Ninth Circuit.

4 Federal law provides both for statutory interpleader under
28 U.S.C. § 1335 and “Rule interpleader” under Rule 22 of the
Federal Rules of Civil Procedure. While Merrill invoked both
the statute and the Rule, it is § 1335 that provides federalsubject matter jurisdiction for interpleader actions where there
is minimal diversity, which is present here.

5 This is a “basic tenet of American corporate law,” Dole Food
Co. v. Patrickson, 538 U.S. 468, 474-75 (2003), and the
claimants have not cited Panamanian law to the contrary.
5
a valid claim against the corporation or the assets
themselves. Moreover, Merrill could not safely follow
the direction of Arelma’s authorized corporaterepresentative if there were a significant dispute over
who had that authority. Accordingly, the districtcourt needed to determine the ownership of theArelma shares, but as an ancillary (not necessarily
dispositive) question to its determination of the
ownership of the Arelma assets.

While many claimants were named in the
interpleader, only five remain relevant:

1. PCGG contends that the Arelma assets were
misappropriated from the Philippine government by
then-President Ferdinand Marcos, and therefore that
any subsequent transfers of those assets were void ab
initio under Philippine law. Pet. Br. at 1-3. After the
fall of the Marcos government in 1986, the Republicestablished its instrumentality PCGG to pursue andrecover assets misappropriated by the Marcos family.
Early on in this process, the Republic and PCGGidentified Arelma as holding assets potentiallyrecoverable by PCGG, and in litigation with Marcos
in 1987 the Republic obtained a court order in New
York freezing the Arelma account at Merrill. See Pet.
App. 47a. PCGG has pursued affirmative litigationin both Switzerland and the Philippines to recoupassets from Marcos, but Merrill has never been a
party to any of those actions.
While the claimants continue to dispute precisely
when and how these foreign lawsuits identifiedArelma and its assets,6 the Arelma shares have been
held in escrow on PCGG’s behalf since 1995 at PNB,
which obtained them from Swiss authorities. Pet.

6 Compare Pet. at 4-5 & Pet. Cert. Reply at 7 n.6, with Resp.
Cert. Opp. at 4 & n.3.
6
App. 7a, 46a, 49a-50a. PCGG represents that it is
presently pursuing litigation in the Sandiganbayan, a
Philippine court charged with handling such cases.
Pet. Br. at 6. A decision of the Sandiganbayan wouldbe appealable to the Philippine Supreme Court. See
id. at 5-6.

On May 8, 2000, PCGG notified Merrill thatinstructions concerning the Arelma assets would beforthcoming. CA9 E.R. 0285. On July 12, 2000,
PCGG requested that Merrill transfer the Arelma
assets to an escrow account with PNB. Id. at 0162.
Merrill responded by letter on July 19, citingcompeting claims over the ownership of the Arelmashares as a basis for refusing PCGG’s request. Id. at
0163-65.

The Ninth Circuit in 2002 concluded that PCGG
was a necessary party and at PCGG’s request briefly
stayed this action pending the resolution of thelitigation in the Sandiganbayan, a move Merrill didnot oppose at the time as an alternative to dismissal.
Pet. App. 39a-42a.7 More than five years later,
however, there has been no decision from the

7 Rule 19(a) deems a party’s joinder to be “required” (also
referred to as a “necessary party”) if, among other things:

(B) that person claims an interest relating to the subject of
the action and is so situated that disposing of the action inthe person’s absence may:
(i) as a practical matter impair or impede the person’sability to protect the interest; or
(ii) leave an existing party subject to a substantial riskof incurring double, multiple, or otherwise inconsistentobligations because of the interest.
Fed. R. Civ. P. 19(a)(1)(B). All cites to Rules 19 and 22 herein
are to the revised Rules adopted as of December 1, 2007. The
revisions to the rule were technical and “intended to be stylistic
only.” Fed. R. Civ. P. 19 & 22, advisory committee’s notes
(2007).
7

Sandiganbayan. It is Merrill’s understanding thatthe Philippine litigation is solely between PCGG and
the Marcos estate and Marcos-related interests. Pet.
at 24 n.10, 27; Pet. App. 56a, 59a. The Philippine
courts have asserted that they have in rem
jurisdiction over the Arelma shares (see Pet. at 18
n.7; Pet. App. 61a), but because the Arelma assets arein the United States, any judgment against theMarcos interests in the Sandiganbayan would be
entered without in rem jurisdiction over the Arelmaassets and without the participation of any of the
parties to this litigation.

2. PNB’s only claim to the Arelma assets is in itsrole as escrow agent for the Arelma shares. Pet. Br.
at 4-9 & n.7. PNB and Arelma both participated inthe interpleader litigation, while objecting to theabsence of PCGG. See Pet. App. 50a-54a; Pet. Br. at7-8 & n.7. The district court found that PNB’s claim
to the Arelma assets, to the extent it could exercise
the rights of a shareholder of Arelma, was derivative
of Arelma’s claim and rejected it on that basis. Pet.
App. 52a.
3. Arelma’s claim to the Arelma assets is based
on the corporation’s direct ownership of the account.
The district court, applying federal common law,
disregarded the corporate form of Arelma on thegrounds that it was an alter ego of Ferdinand Marcos,
and concluded that its assets could be used to satisfy
judgments against Marcos’ estate. Pet. App. 51a-52a,
54a.
4. Respondent Mariano Pimentel represents theinterests of a class of victims of human rights abusesby the Marcos regime (the “Pimentel Class”), which
obtained a judgment against the Marcos Estate in theDistrict of Hawaii in 1996. Pet. App. 53a. The
Pimentel Class filed a lawsuit against Merrill in that

court, seeking the assets in the Arelma account to
satisfy that judgment, on September 6, 2000. CA9

S.E.R. 01-05. That lawsuit, combined with the other
claims against the Arelma assets or for control ofArelma, led Merrill to file this action five days later.
The district court awarded the Arelma assets to the
Pimentel Class on the alter ego theory, as judgmentcreditors of the Marcos estate. Pet. App. 53a-54a.
5. Respondents the Estate of Roger Roxas and
Golden Budha Corporation (collectively, “Roxas”) also
claimed the Arelma assets as individual victims of
the Marcos regime. The district court rejected those
claims on the theory that Roxas’s judgment was
against Marcos’s wife Imelda, not Marcos himself.
Pet. App. 54a.
Merrill takes no position on the propriety of the
district court’s disposition. The outcome of
Petitioners’ appeal, however, presents two choices:
dismissal of the entire action, or a judgment by thedistrict court binding on the parties to the
interpleader. In either event, Merrill is exposed to
the possibility of further litigation by PCGG, but a
dismissal would also expose it to litigation by theother claimants, without a mechanism to resolve the
claims in a single forum.

SUMMARY OF ARGUMENT

1. Rule 19(b) establishes a four-factor test of”equity and good conscience” for determining whether
a case should proceed in the absence of a party
deemed by the court to be “necessary” under Rule
19(a). The standard for evaluating this and other
Rule 19(b) factors is abuse of discretion.
In an interpleader action, the fourth factor,
“whether the plaintiff would have an adequate
9
remedy if the action were dismissed for nonjoinder,”
refers to the interest of the stakeholder who files the
action rather than the interests of competing
claimants. Here, Merrill would not have an adequateremedy if this action were dismissed after sevenyears of litigation: it would be left without direction
as to the proper disposition of the Arelma assets, andwithout protection from duplicative litigation overthose assets. The absence of any alternative forum to
resolve all the competing claims is a powerful factorcounseling against dismissal, and doubly so on appeal
from a fully litigated judgment.

2. The first Rule 19(b) factor is “the extent to
which a judgment rendered in the [necessary party’s]
absence might prejudice that person.” The Court
should not accord dispositive weight to PCGG’ssovereign status; instead, the potential prejudice toPCGG should be evaluated as a practical matter,
taking full account of the equitable considerationsembedded in the Rule 19(b) factors. In weighingthose factors, a court should examine the nature of
the interests asserted by a foreign sovereign and the
available alternatives. Congress, in enacting Rule19(b), the interpleader statute and rules, and theFSIA, did not provide any unique exception from the
usual Rule 19(b) analysis for actions in which a
foreign sovereign is a necessary party. A preliminaryinquiry touching on the merits of the case is nodifferent from, and no more intrusive than, other
preliminary inquiries ordinarily permitted or
required under the FSIA.
Because this case involves a dispute over assetslocated in the United States, PCGG would need to file
suit affirmatively in U.S. courts in order to recover
any assets. Thus, the relevant prejudice here is notto PCGG’s immunity from suit per se, but to PCGG’s
10

right to use that immunity as both a sword and a
shield to choose the timing and venue in which it mayfile suit in U.S. courts. If PCGG did file such a suit,
it would then waive its immunity from joinder in an
interpleader action. Accordingly, for purposes of the
first Rule 19(b) factor, PCGG should be held to the
consequences of deliberately choosing not to
participate in an interpleader when it had the
opportunity. The equities do not and should not favorsuch a litigant.

Prejudice to PCGG is further lessened becausecertain of its theories of relief are derivative of
Arelma’s, and are properly foreclosed, while anyclaims it could have brought directly against Merrill
in U.S. courts would in any event be time-barred. To
the extent that PCGG would be prejudiced in itsability to recover on future remedies, that prejudice
must be weighed against the significant costs of delay
in bringing such claims, the self-inflicted nature of
the prejudice from its strategic decision to delay filing
suit, and the obstacles that such lawsuits would
themselves face.

The third Rule 19(b) factor, “whether a judgment
rendered in the person’s absence would be adequate,”
refers to the public stake in resolving controversiesefficiently and this additionally favors upholding thedistrict court’s disposition of this case. Whereas a
dismissal would reopen the entire controversy, the
judgment of the district court would limit the disputeto one in which the remaining claims PCGG couldbring against Merrill would be contingent on
uncertain future events and unlikely as a practicalmatter to proceed beyond the pleading stage.
11

ARGUMENT

I. MERRILL, AS STAKEHOLDER, HAS NO
ADEQUATE REMEDY IF THIS ACTION IS
DISMISSED.
The absence of a “necessary” party whose interestsmay be impaired does not automatically compeldismissal of an action. Rule 19(b) instead requirescourts to apply an equitable, rather than a legal test,
considering a non-exclusive list of four factors to”determine whether, in equity and good conscience,
the action should proceed among the existing parties
or should be dismissed.” Fed. R. Civ. P. 19(b). Anyanalysis of the equities in this case must consider the
fact that dismissal would leave Merrill, as
stakeholder-plaintiff, exposed to multiple lawsuits
with no relief in sight.

The Rule 19(b) analysis begins with the fact that”the plaintiff has an interest in having a forum” tobring “the same action, against the same parties”
plus the absent party; “before trial, the strength ofthis interest obviously depends upon whether asatisfactory alternative forum exists.” Provident
Tradesmens Bank & Trust Co. v. Patterson, 390 U.S.
102, 109, 112, 116 (1968).8 The absence of any
alternative forum is a powerful argument againstdismissal; “where a plaintiff will not have an
adequate remedy elsewhere . . . district courts shouldordinarily retain the case and not dismiss it pursuantto Rule 19(b).” Cloverleaf Standardbred Owners
Ass’n v. Nat’l Bank of Wash., 699 F.2d 1274, 1279

(D.C. Cir. 1983) (R. Ginsburg, J., joined by Scalia, J.)
8 The fourth Rule 19(b) factor is “whether the plaintiff would
have an adequate remedy if the action were dismissed for
nonjoinder.” Fed. R. Civ. P. 19(b)(4).
12
(quotation omitted).9 The drafters of the Federal
Rules counseled courts to “consider whether there is
any assurance that the plaintiff, if dismissed, could
sue effectively in another forum where better joinderwould be possible.” Fed. R. Civ. P. 19, advisorycommittee’s note (1966).10

The plaintiff’s interest is especially compelling on
appeal from a final judgment. “On appeal . . . [the]
interest in preserving a fully litigated judgmentshould be overborne only by rather greater opposingconsiderations than would be required at an earlierstage” when the “only concern” was which forum tochoose. Provident, 390 U.S. at 110, 112. This
interest is closely associated with the public interest
in judicial economy embodied in the third Rule 19(b)
factor; “[a]fter trial, considerations of efficiency ofcourse include the fact that the time and expense of a
trial have already been spent.” Id. at 111.11 This is

9 Accord Curley v. Brignoli, Curley & Roberts Assocs., 915
F.2d 81, 90 (2d Cir. 1990); Prescription Plan Serv. Corp. v.
Franco, 552 F.2d 493, 497 (2d Cir. 1977).

10 See also John W. Reed, Compulsory Joinder of Parties in
Civil Actions, 55 Mich. L. Rev. 327, 336-37 (1957) (possibility
that dismissal for absence of indispensable party could forecloseplaintiff’s claim entirely “is a factor which should prompt the
court to proceed to a hearing and determination of the case if it
possibly can do so.”), cited in Provident, 390 U.S. at 111 n.9, as
an example of commentary on the problems leading to the 1966revisions of Rule 19.

11 See also Curley, 915 F.2d at 91-92; Owens-Illinois, Inc. v.
Lake Shore Land Co., 610 F.2d 1185, 1191 (3d Cir. 1979); GTE
Sylvania Inc. v. Consumer Prod. Safety Comm’n, 598 F.2d 790,
798 (3d Cir. 1979), aff’d, 447 U.S. 102 (1980); 4 James Wm.
Moore et al., Moore’s Federal Practice § 19.02[4][b] (3d. ed. 2007)
(after judgment “there is less interest in an alternative forumand greater public interest in preserving a valid judgment . . .
even though some prejudice might result from failure to join the
13

especially the case in an interpleader, the entire point
of which is to serve “the public stake in settling
disputes by wholes, whenever possible.” Id. at 111.

District judges have “substantial discretion” inbalancing the equitable Rule 19(b) factors, and “theRule does not call for . . . ordering [them] by rank.”
Cloverleaf, 699 F.2d at 1279 & n.11. See also
Provident, 390 U.S. at 120-21, 126 (citing Elmendorf

v. Taylor, 23 U.S. (10 Wheat.) 152, 166-68 (1825)
(Marshall, C.J.)); 4 Moore, supra, § 19.05 (“whether toproceed or dismiss is vested in the sound discretion of
the district judge”). Accordingly, courts of appeals
generally review Rule 19(b) findings under the abuseof discretion standard. See Cloverleaf, 699 F.2d at
1276 (“de novo balancing should not occur on appeal;
instead, the district court’s application of Rule 19(b)’s‘equity and good conscience’ test should be reviewedunder an ‘abuse of discretion’ standard.”).12
Rule 19(b) speaks of the “remedy” available to “the
plaintiff” in the event of a dismissal. The parties and
the Ninth Circuit appear to assume that “theplaintiff” refers to the Pimentel Class.13 But the
logical reading of this language, in an interpleaderaction, is that the “plaintiff” is the stakeholder who
initiates the action and seeks a discharge, rather
than one of several claimants. It is the stakeholder

absentee.”); 7 Charles Alan Wright, Arthur R. Miller & MaryKay Kane, Federal Practice & Procedure § 1618, at 283 (3d ed.
2001) (A “court’s concern for the expense and time that has beenexpended is a good illustration of the use of pragmatic
considerations not specifically mentioned in Rule 19″).

12 Accord Extra Equipamentos E Exportacao Ltda. v. Case
Corp., 361 F. 3d 359, 361 (7th Cir. 2004) (Posner, J.) (collectingcases); Walsh v. Centeio, 692 F.2d 1239, 1242 (9th Cir. 1982).

13 See Pet. App. 9a-10a; Pet. Br. at 45-47; Resp. Cert. Opp. Br.
at 12-13.
14
who files the complaint and names the parties to bejoined. This is consistent with the plain language of28 U.S.C. § 1335 (requiring “the plaintiff” to depositthe funds with the court) and Rule 22 (“[p]ersons with
claims that may expose a plaintiff to double or
multiple liability may be joined as defendants”) Fed.

R. Civ. P. 22(a)(1) (emphasis added). Lower courts
have generally treated the stakeholder as the
plaintiff for Rule 19(b) purposes, and this Courtshould do so as well.14
Merrill has no adequate remedy if this action isdismissed for nonjoinder due to PCGG’s assertion of
sovereign immunity. The Arelma assets, currently on
deposit with the district court, would presumably be
returned to Merrill, there being no enforceable orderdirecting a different disposition. Merrill would be left
without guidance from the courts as to the properdisposition of those assets (or who properly controls
the Arelma account), and could potentially be forced –
after years of litigation over a res in which Merrill
has never claimed any interest – to defend lawsuitsby the various claimants in different jurisdictions,
possibly leading to inconsistent judgments. The
interpleader remedy, created to resolve precisely suchdilemmas, would be unavailable to Merrill unless and
until PCGG chose to file suit and thus waive its
immunity. Particularly given that Merrill is a mere
disinterested stakeholder and no party has alleged
any misconduct by Merrill, this would be deeplyinequitable.

14 See, e.g., AmSouth Bank v. Miss. Chem. Corp., 465

F. Supp. 2d 1206, 1211 (D.N.M. 2006); Horizon Bank & Trust
Co. v. Flaherty, 309 F. Supp. 2d 178, 196-97 (D. Mass.), appeal
dismissed as moot, 391 F.3d 48 (1st Cir. 2004); Fleet Nat’l Bank
v. Kaplan, No. 02-11175, 2002 U.S. Dist. LEXIS 22781, at *3 (D.
Mass. Oct. 11, 2002).

15
Petitioners do not explain how dismissal of this
action could possibly provide Merrill with the relief itsought when it filed this case. They frankly assertthat “the unavailability of a forum is a consequence ofthe Republic’s immunity,” and urge dismissal in favor
of litigation in the Philippines. Pet. Br. at 15, 47.
The Philippine court, however, has still not ruled
more than seven years after this case was filed, andeven if it did, it lacks the power to discharge Merrill
from competing claims, and lacks the power to orderdistribution of the Arelma assets without
confirmation of that judgment in an American court.
Dismissal, as discussed infra, likely would result in anew interpleader action if the Sandiganbayan rules
in favor of PCGG and if that ruling is upheld by the
Philippine Supreme Court and if PCGG then files
suit in the United States, thus waiving its immunity
from joinder in essentially the same interpleader allover again. As this Court observed in Provident, this
is cold comfort:

In short, the net result of dismissal here would
presumably have been a diversity action
identical with this one, except that [the plaintiff]
would have been compelled to wait upon the
convenience of plaintiffs over whom it had no
control, and would have been dependent upon a
victory by those plaintiffs in [another lawsuit].

Provident, 390 U.S. at 127 (emphasis added).

“Equity and good conscience” do not supportshifting the burden of one claimant’s purposefulunavailability onto a disinterested custodian of assets
that itself seeks no independent judicial relief. The
federal interpleader statute, 28 U.S.C. § 1335, “is
remedial and [should] be liberally construed.” State
Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 533
(1967). Interpleader is an ancient equitable remedy
16
dating back many centuries, protecting stakeholdersagainst “the risk of loss ensuing from the demands in
separate suits of rival claimants to the same debt orlegal duty.” Texas v. Florida, 306 U.S. 398, 405-06
(1939). See also 7 Wright, Miller & Kane, supra,
§ 1701, at 524-25. In the modern, interconnected
world of global investing, interpleader is more
important than ever for financial institutions beset
by geographically disparate claimants. With the
proliferation of investments by sovereign entities or
entities with sovereign investors or business
partners, or by entities that may for one reason or
another come under the regulatory scrutiny of foreign
governments, the potential for one claimant out ofseveral to be a foreign sovereign within the meaningof the FSIA increases. See 28 U.S.C. § 1603(b)(2)
(“foreign state” includes corporations majority-ownedby foreign states). The test proposed by Petitioners,
under which the assertion of sovereign immunity by a
foreign sovereign claimant is a showstopper, would
cripple the interpleader process and subject innocentstakeholder financial institutions to unfair and
unpredictable litigation, uncertainty and delay.

Accordingly, the Court should prefer this litigation,
however imperfect, to the complete absence of aforum for resolution of the conflicting claims
confronting Merrill. In the event that the Court does
not affirm the decision of the Ninth Circuit, it should
not order a dismissal but instead should remand with
instructions to consider the weighty equitableinterests of Merrill in receiving a discharge.
17
II. PCGG’S
SOVEREIGN STATUS SHOULD
NOT ELIMINATE OR OUTWEIGH THE
EQUITABLE INTERESTS OF MERRILL
AND THE COURTS.
The first Rule 19(b) factor is “the extent to which ajudgment rendered in the [necessary party’s] absence
might prejudice that person.” Fed. R. Civ. P. 19(b).
Petitioners argue that, where a foreign sovereignentity is the absent necessary party, that fact alone is
dispositive, precluding a case-by-case examination ofthe nature of the prejudice to the foreign sovereignentity or a balancing of its interests against the other
equitable Rule 19(b) factors. This reading of Rule19(b) is inconsistent with this Court’s decision in
Provident and the structure of Rule 19, and reads
into the Rule an exception not found in the FSIA,
Rule 19 or the interpleader statutes and rules.

A. PCGG’s Sovereign Status
Should Not
Preclude Consideration Of The Other
Rule 19(b) Factors.
Because it is invoked only when an absent party isfound to be necessary under Rule 19(a), the
indispensable party inquiry under Rule 19(b) alwaysinvolves some party whose rights will be affected orwhose absence affects the rights of the remaining
litigants, and presupposes that the equities may
counsel continuing on with the remaining parties,
especially if the alternatives would be worse. Thus,
this Court has rejected formalistic indispensabilityrules, stressing that the equities relevant under Rule
19(b)

can only be determined in the context of
particular litigation . . . [and] must be based on
factors varying with the different cases, some
such factors being substantive, some procedural,
18
some compelling by themselves, and some
subject to balancing against opposing interests.
Rule 19 does not prevent the assertion ofcompelling substantive interests; it merelycommands the courts to examine each
controversy to make certain that the interestsreally exist. To say that a court “must” dismissin the absence of an indispensable party and that
it “cannot proceed” without him puts the matterthe wrong way around: a court does not knowwhether a particular person is “indispensable”
until it has examined the situation to determine
whether it can proceed without him.

Provident, 390 U.S. at 118-19. Petitioners’ insistence
that foreign sovereign immunity is always per se a
compelling interest pretermits this fact-bound,
equitable inquiry. If Rule 19(b) had been intended to
“create[] a federal, common-law, substantive right in
a certain class of persons” such as foreign sovereigns,
it easily could have been written to do so. Id. at 119.
Instead, the Rule provides a single standard, andcourts are instructed that the four Rule 19(b) factors
“must be examined in each case” and cannot be short-
circuited by the contention that some interests have”substantive” weight as “a substitute for the analysis
required by that Rule.” Id. at 109, 118-25 (emphasisadded).

Congress has nowhere granted a per se right to aforeign sovereign entity to quash an interpleader by
its refusal to participate. Both the FSIA and the
interpleader statute are complex and detailed
statutory schemes, with provisions governing subjectmatter jurisdiction, venue, and attachment and otherremedial powers. See, e.g., 28 U.S.C. §§ 1330(a),
1335(a), 1397, 1441(d), 1607-1611, & 2361. The FSIA
specifically precludes, in certain specified circum

19
stances, attachment of assets under the sovereign’s
control, even to satisfy valid judgments, see 28 U.S.C.
§§ 1609-1611, but neither statute makes any similar
provision to protect the foreign sovereign entityagainst interpleader to resolve the sovereign’sunliquidated causes of action against assets in thecustody of domestic individuals or businesses. In the
absence of any statutory exception to the normaloperation of interpleader and Rule 19, the logicalconclusion is that Congress intended that when anecessary party is absent from an interpleader due toforeign sovereign immunity, the district court shouldengage in the usual case-by-case balancing of the
equities. See Powerex Corp. v. Reliant Energy Servs.,
Inc., 127 S. Ct. 2411, 2420 & n.5 (2007) (declining tocreate “implicit FSIA exception” to rule barring
appeals of remands, despite “undesirable [policy]
consequences in the FSIA context,” where FSIA did
not amend appeal statute).15

15 Petitioners’ invocation of policy considerations (Pet. Br. at
27-34) and citation to cases involving the United States or
Native American Tribes ignores the distinct nature of the
immunities involved. The U.S. and tribal governments enjoy
sovereign immunity in U.S. courts as an adjunct to actual
sovereignty, and its protections are broadly construed to
effectuate the sovereign’s right, in appropriate cases, to take
direct executive or legislative action or to limit remedies tospecially constituted tribunals. A foreign sovereign, by contrast,
has no ability to assert sovereign power within the territorialUnited States; its immunity is a creature of statute granted byCongress as a matter of comity. The FSIA displaced the prior
common law approach to such immunity, including the morerestrictive approach that prevailed before 1952. See Rep. of
Austria v. Altmann, 541 U.S. 677, 688-91 (2004).
20

B. A Defendant’s Assertion Of Sovereign
Immunity Does Not Preclude A FullAnalysis Of The Practical Interests
Involved.
Petitioners characterize the lower courts’
examination of the practical barriers to the remedies
available to PCGG – specifically, the statute oflimitations applicable to any claims PCGG mightbring in American courts – as itself an undue
intrusion on PCGG’s sovereignty. Pet. Br. at 8, 3436,
39-40. This ignores the practical need of federal
courts to conduct preliminary inquiries before
dismissing a case on procedural grounds.

As a general rule, federal courts have the power to
conduct basic factfinding in determining their
jurisdiction.16 Here, the district court did not require
PCGG to present affirmative evidence or participate
in discovery; it merely analyzed the legal issuespresented on the pleadings for purposes of thepractical inquiry required by Rule 19(b).17 A
pragmatic evaluation of what alternative lawsuitscould feasibly be filed by the parties and what otherforums remain open to hear the dispute is always a
part of the court’s “examin[ation of] the actualinterest of the nonjoined person” including “the
actual threat of relitigation” by the absent party.
Provident, 390 U.S. at 116, 122. Requiring a foreign

16 See, e.g., Ins. Corp. of Ir., Ltd. v. Compagnie Des Bauxites de
Guinee, 456 U.S. 694, 704-09 (1982); Land v. Dollar, 330 U.S.
731, 734-35 & n.4 (1947), overruled on other grounds, Larson v.
Domestic & Foreign Commerce Corp., 337 U.S. 682 (1949).

17 The district court took note of prior judicial proceedings,
which are subject to judicial notice on a motion on the pleadings.
See, e.g., Tellabs, Inc. v. Makor Issues & Rights, Ltd., 127 S. Ct.
2499, 2509 (2007).
21
sovereign to brief the Rule 19(b) issue in conjunction
with a motion to dismiss under the FSIA is neither
uncommon nor unduly burdensome and is necessary
to enable the district court’s informed decision on a
request for the drastic remedy of dismissal of the case
in its entirety.18

C. The Relevant Prejudice Is To PCGG’sRight To Choose The Time And VenueTo File Suit In The Courts Of The
United States.
Much of Petitioners’ argument for dismissal hingeson the premise that PCGG has an absolute right torefuse to appear in American courts. This ignores
“the pragmatic consideration of the effects of the
alternatives of proceeding or dismissing” required byRule 19(b). Provident, 390 U.S. at 118 n.12. In fact,
because the assets are located in the United States
and subject to conflicting claims here, PCGG would
sooner or later need to appear in a U.S. court toprosecute its claim – at which time it would waive its
immunity from an interpleader. Thus, the relevant
“prejudice” to PCGG’s rights is not an intrusion on itsright to claim the assets without waiving immunity,
but rather on PCGG’s right to choose the time andthe venue to waive and pursue affirmative litigation.
In weighing the equities, that interest can and should
be subordinate to Merrill’s right to finality andcertainty and the public interest in speedy andefficient resolution of the controversy.

18 See, e.g., Saudi Arabia v. Nelson, 507 U.S. 349, 356-60
(1993) (examining factual allegations to determine availabilityof exception to sovereign immunity); Rep. of Arg. v. Weltover,
Inc., 504 U.S. 607, 615-19 (1992) (same); Robinson v. Gov’t of
Malay., 269 F.3d 133, 141 & n.7 (2d Cir. 2001) (discussingburden-shifting procedures and evaluation of evidence on
motion to dismiss under FSIA).
22
An interpleader involving a single, disputed res in
the possession of a disinterested stakeholder is
functionally not so much a claim against the
claimants as an invitation for all potential claimants
to appear and press their case. See State Farm, 386

U.S. at 534-35 (where disinterested stakeholderdeposits fund and files interpleader, “the fund itself isthe target of the claimants” and “marks the outer
limits of the controversy”). In that sense, requiring a
foreign sovereign entity to choose between appearingto pursue its claim and abandoning its practicalability to recover on that claim is no more of an
imposition on the foreign sovereign than compliance
with any other procedural rule regarding venue,
personal or subject matter jurisdiction, the statute oflimitations, or the discovery rules. Any plaintiff inthe U.S. court system, sovereign or otherwise, must
abide by such rules in order to obtain relief through
American courts.19 While the FSIA gives a foreignsovereign claimant who has not filed suit a right –
unavailable to private litigants – to refuse to
participate, that right is not without cost: bychoosing not to sue, it forgoes the possibility of
recovering the assets. What the FSIA does not giveforeign sovereigns is a preemptive veto over anylitigation by U.S. litigants over assets located in the
United States in which the foreign sovereign mightsomeday come forward to claim an interest.
If PCGG were to sue Merrill to recover the Arelma
assets, its appearance would waive its immunity from

19 This Court has previously recognized the distinction
between “an attempt to bring a recognized foreign government
into one of our courts as a defendant” and “a foreign governmentinvoking our law” that “wants our law, like any other litigant,
but it wants our law free from the claims of justice.” Nat’l City
Bank v. Rep. of China, 348 U.S. 356, 361-62 (1955).
23
related claims and expose it to the commencement of
an interpleader action by Merrill, either as a
counterclaim for defensive interpleader or as a
separate action. See 28 U.S.C. §§ 1605(a)(1) (waiver
exception to immunity), 1607(b) (providing that inany action brought by a foreign state in federal or
state court, the foreign state waives immunity to anycounterclaim “arising out of the transaction or
occurrence that is the subject matter of the claim ofthe foreign state”); Fed. R. Civ. P. 22 (allowingdefendant to obtain interpleader by making a cross-
claim or counterclaim and stating that statutoryinterpleader actions under 28 U.S.C. § 1335 shall be
conducted in accordance with the rule’s provisions).
This would follow even if PCGG sued to enforce a
judgment rendered in a Philippine court. See, e.g.,
Ins. Corp. of Hannover, Inc. v. Latino Americana de
Reaseguros, S.A., 868 F. Supp. 520, 523, 526

(S.D.N.Y. 1994) (foreign claimant seeking to enforce
Panamanian judgment permitted to intervene in
interpleader action). An interpleader by Merrill of
claimants to the disputed res would clearly besufficiently connected to a PCGG suit over the same
assets to implicate the FSIA’s waiver and
counterclaim provisions. See, e.g., In re Oil Spill by
the Amoco Cadiz, 491 F. Supp. 161, 166-68 (N.D. Ill.
1979) (foreign sovereign entities waived immunityfrom third party claims and counterclaims arising out
of the same oil spill as claims brought by the
sovereign entities in a multidistrict litigation). See
also Rep. of China v. Am. Express Co., 195 F.2d 230,
233-34 (2d Cir. 1952) (pre-FSIA case; in action to
recover a deposit, foreign sovereign waived immunity
from counterclaim interpleading adverse claimant to
deposited funds). Accordingly, for purposes of thebalancing of the equities required under Rule 19(b),
PCGG is no different from a private non-intervening

24
litigant that chose not to participate in the
interpleader action. The equities do not and should
not favor such a litigant. See 4 Moore, supra,
§ 19.05[2][c] (“An absentee’s refusal to intervene may
be considered in calculating prejudice should the case
proceed without the absentee.”).

The fact that PCGG seeks to vindicate public
interests against official corruption (Pet. Br. at 47-52)
does not alter this analysis. Such aims should be
accomplished through the policymaking branches of
government, not through ad hoc rewriting of theFederal Rules of Civil Procedure. As Petitioners note,
Congress has provided express authority to the
Executive Branch, in appropriate cases, to obtain
judicial assistance for the law enforcement efforts of
foreign sovereigns in repatriating misappropriated orotherwise forfeit assets. See 28 U.S.C. § 2467(c); Pet.
Br. at 41 n.18.20 This mechanism, unlike a bare
dismissal under Rule 19(b), provides a variety ofprocedural protections: a final, non-appealablejudgment from the foreign court (§ 2467(b)(1)(B)-(C)),
assurances that such court had jurisdiction and gavenotice to affected parties (§ 2467(b)(1)(C) & (d)), and a
policy determination by the Attorney General to
assist the foreign government (§ 2467(b)(1)-(2)). Such
procedures, if timely invoked, would presumablypreempt other claims to the seized assets; certainly
other claimants could not sue a financial institution

20 28 U.S.C. § 2467 was enacted in 2000 as part of the Civil
Asset Forfeiture Reform Act of 2000, Pub. L. No. 106-185, 114
Stat. 202, “to encourage international cooperation in asset forfeiture
cases.” Stefan D. Cassella, The Civil Asset Forfeiture
Reform Act of 2000: Expanded Government Forfeiture Authority
and Strict Deadlines Imposed on All Parties, 27 J. Legis. 97,
115-16 (2001); see 28 U.S.C. § 2467 (2007); H.R. Res. 1658, 106th
Cong. (2000).
25
for complying with a district court’s forfeiture orderunder § 2467. Nor does the text of § 2467
contemplate that the Attorney General would seekcivil damages against a custodian that had disposed
of the assets in accordance with a prior court order.
The contrast to the consequences of a dismissal hereis stark.

D. Prejudice To PCGG’s Right To Sue In ADifferent Venue Is Limited.
To determine what an absent party will actually
lose if the case proceeds in its absence, a court must
look beyond the formalistic assertion of competing
interests that animate Rule 19(a) and “examine eachcontroversy to make certain that the interests really
exist.” Provident, 390 U.S. at 119. Here, that means
considering what PCGG could have accomplished by
suing Merrill.21

As the district court and the Ninth Circuit found,
any claim to the Arelma assets would have to be
brought in New York, the location of the res and of

21 Petitioners, citing out of context statements made byMerrill before the full extent of the dispute over the Arelmaassets became apparent, contend that “had it not been for this
litigation, there is every reason to believe that Merrill Lynch
would have transferred the Arelma assets to the Philippines inresponse to a favorable ruling of the Sandiganbayan.” Pet. Br. at6 n.5 & 39-40. This ignores the fact that it was Merrill thatinstituted this litigation. Merrill would gladly have abided by a
domesticated Philippine judicial order giving PCGG control ofArelma if there were no other competing claimants, but that is
not the situation Merrill faced. With multiple parties seekingcontrol of Arelma and its assets, guidance from a court with theability to resolve the largest number of competing claims at once
was and is essential.
26

Merrill’s headquarters. See Pet. App. 8a-9a, 57a.22
Petitioners suggest three possible causes of action
against Merrill; none would provide a viable basis to
survive a motion to dismiss:

1. PCGG’s asserted right to the assets arises from
Marcos’s misappropriation of public funds, under a
Philippine statute providing that “assets derived from
misuse of public office are forfeit to the Republic fromthe moment they are appropriated.” Pet. Br. at 3.
Petitioners note that this statute contains no
limitations period. See id. at 40. But this would not
end the inquiry. New York’s “borrowing statute”
applies to time-bar claims filed in New York courts
where the cause of action accrued to a non-New York
resident outside of New York, if the claim would be
untimely under the shorter of the New York orforeign limitations period – even when the claims areasserted under the statutory law of a foreign country.
See N.Y. C.P.L.R. § 202 (2005); Baena v. Woori Bank,
515 F. Supp. 2d 414, 422 (S.D.N.Y. 2007).
The analogous limitations period under New Yorklaw would be for actions by the state “based upon thespoliation or other misappropriation of public
property,” for which a six-year statute of limitations
begins to run upon “discovery by the state of the facts
relied upon.” N.Y. C.P.L.R. § 213(5).23 PCGG
discovered Marcos’ misappropriation of the Arelma

22 Merrill will thus discuss the obstacles to recovery underNew York law. Petitioners have never suggested at any stage ofthis case any alternative forum that would present lesserobstacles.

23 The only alternative limitations periods would be the three-
year limitations period for statutory claims and the default six-
year limitations period. See N.Y. C.P.L.R. §§ 213(1), 214(2);
Baena, 515 F. Supp. 2d at 422.
27

assets no later than 1987. See Pet. App. 47a. Thus,
any claim under the Philippine statute would havebeen time-barred by 1993.

2. To the extent that Petitioners contend that
PCGG could have sued Merrill on a breach of contract
theory by virtue of its control of the Arelma shares,24
such a claim would encounter at least two obstacles.
First, Merrill has no contract with anyone other thanthe holder of the account – Arelma. Any claim by
PCGG to Arelma’s assets by virtue of its control of the
Arelma shares is derivative of Arelma’s own rights,
which were adequately protected in the interpleaderby Arelma’s participation in the interpleader action.
Second, the New York statute of limitations for
breach of contract actions is six years. See N.Y.

C.P.L.R. § 213(2). A claim for breach of contract
accrues upon the defendant’s refusal to perform an
obligation due under the contract, which here wouldbe the non-payment of the Arelma assets.25 Anyclaim of breach of contract thus accrued no later than
July 2000, when PCGG requested that Merrilltransfer the Arelma assets to the PNB and Merrill
refused. CA9 E.R. 0162-65. The limitations periodhas come and gone and no action was ever institutedby PCGG on that demand. Petitioners cite no
authority for reviving an expired limitations period
by re-making the same request after the limitations
period has run. See Pet. Br. at 40.
3. Petitioners claim that a judgment in thePhilippines would be enforceable in New York courts
24 See Pet. Br. at 40-41; Pet. at 18 n.7.

25 See, e.g., John J. Kassner & Co. v. City of New York, 415
N.Y.S.2d 785, 788-89 (N.Y. 1979); State v. Fenton, 414 N.Y.S.2d
58, 59 (3d Dep’t 1979) (claim for unpaid tuition accrued whenpayments due).
28
against Merrill. Pet. Br. at 40-41. This, too, fails for
several reasons. First, Merrill was not named as a
party to the Philippine litigation, which is betweenthe Republic and the Marcos estate. Section 5303 of
the C.P.L.R. only allows for recognition and
enforcement of a foreign country’s money judgment
that “is conclusive between the parties.” N.Y. C.P.L.R.
§ 5303 (emphasis added). Petitioners would likewise
need to show that the Philippine court had personal
jurisdiction over Merrill. See id. §§ 5304(2) & 5305.26

To the extent that such a judgment is to be enforced
against the assets themselves, while the Philippine
court has apparently asserted in rem jurisdiction overthe shares of Arelma, it is at best uncertain whether
such assertion of jurisdiction would be recognized by

U.S. courts as being over the Arelma assets, giventhat they were held in the United States at the timethe action commenced in the Sandiganbayan. See
Restatement (Third) of Foreign Relations Law of theUnited States § 421(2) (1987) (a foreign “state’sexercise of jurisdiction to adjudicate with respect to aperson or thing is reasonable if . . . the person or
thing is present in the territory of the state, other
than transitorily”).
Thus, in the absence of the interpleader, the solefeasible options for PCGG would be to register a
judgment against the Marcos estate and either seekto attach Arelma’s assets as a judgment creditor ofthe Marcos estate (the approach taken by the

26 Accord Restatement (Third) of the Foreign Relations Law ofthe United States § 482 (setting forth circumstances under
which U.S. courts “need not” recognize a foreign judgment,
including, inter alia, lack of personal jurisdiction). See also, e.g.,
Norex Petroleum, Ltd. v. Access Indus., Inc., 416 F.3d 146, 16062
(2d Cir. 2005); Koster v. Automark, 640 F.2d 77, 81 (7th Cir.
1981).
29
Pimentel Class), or to ask the Attorney General toinitiate the forfeiture procedure set forth in 28 U.S.C.
§ 2467. As discussed above, either option iscontingent upon a series of future events that have
yet to come to pass years after the district court’s
judgment, and the former would trigger a defensive
interpleader by Merrill. The prejudice to PCGG fromits refusal to participate in the interpleader must
thus be weighed not against any present alternativebut against a contingent future claim – and
Petitioners do not suggest any realistic alternative for
what Merrill was or is supposed to do to insulateitself from the competing claims in the intervening
years.

E. A Judgment Here Would Be Adequate.
The third Rule 19(b) factor is “whether a judgment
rendered in the person’s absence would be adequate.”
Fed. R. Civ. P. 19(b)(3).27 This factor implicates “theinterest of the courts and the public in complete,
consistent, and efficient settlement of controversies.”
Provident, 390 U.S. at 111. Here, despite Petitioners’suggestion to the contrary, a judgment that istechnically not binding on PCGG would nonethelessresolve this controversy as a practical matter. Thus,
even if “[i]t might have been preferable, at the triallevel, if there were a forum available in which [all theclaimants] could have been made defendants, todismiss the action and force the plaintiffs to goelsewhere” – and there was no such forum – there is
now “no reason . . . to throw away a valid judgment

27 The second Rule 19(b) factor, “the extent to which any
prejudice could be lessened or avoided” through remedial orders
of the court, is not contested here; no party has suggested anyprotective measures to balance the competing claims or to
provide a globally binding release for Merrill.
30
just because it [does] not theoretically settle the
whole controversy.” Id. at 116.

If the district court’s judgment is affirmed by this
Court or by the Ninth Circuit on remand, the Arelma
assets will be distributed to the Pimentel Class, and
all parties appear to agree that this cannot beundone. Even if PCGG subsequently filed suit fordamages against Merrill, its claims would be barredby the obstacles set forth above; PCGG’s only remedy
would be to attach assets that Merrill deposited with
the district court more than seven years ago andcannot get back.28 Accordingly, the district court’s
judgment here is the most adequate and equitableresolution possible under these circumstances.

28 If the district court’s judgment is affirmed, any effort toenforce a Philippine judgment in New York would then be
further barred as “conflict[ing] with another final and conclusive
judgment.” N.Y. C.P.L.R. § 5304(5). Such a judgment would
also further preclude any breach of contract action againstMerrill for damages, as the doctrine of impossibility excuses a
party’s contractual obligation where prohibited by judicial order.
See, e.g., Organizacion JD Ltda. v. U.S. Dep’t of Justice, 18 F.3d
91, 95 (2d Cir. 1994).
31

CONCLUSION

For the reasons set forth above, this Court should
not order dismissal of this action.

Respectfully submitted,

CARTER G. PHILLIPS A. ROBERT PIETRZAK
RICHARD D. KLINGLER DANIEL A. MCLAUGHLIN*
SIDLEY AUSTIN LLP SIDLEY AUSTIN LLP
1501 K Street, N.W. 787 Seventh Avenue
Washington, D.C. 20005 New York, NY 10019

(202) 736-8000 (212) 839-5300
DANIEL R. SPECTOR
OFFICE OF GENERAL
COUNSEL

MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED

222 BroadwayNew York, NY 10038

Counsel for Amicus Curiae
Merrill Lynch, Pierce, Fenner & Smith Incorporated

January 24, 2008 *Counsel of Record

IN THE Supreme Court of the United States

REPUBLIC OF THE PHILIPPINES, PHILIPPINE
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT,
PHILIPPINE NATIONAL BANK, AND ARELMA, INC.,
Petitioners,

v.
MARIANO J. PIMENTEL, THE ESTATE OF ROGER ROXAS,
AND GOLDEN BUDHA CORP.,
Respondents.

On Writ of Certiorari to theUnited States
Court of Appeals for the Ninth Circuit
BRIEF OF MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED AS
AMICUS CURIAE IN SUPPORT
OF NEITHER PARTY
CARTER G. PHILLIPS A. ROBERT PIETRZAK
RICHARD D. KLINGLER DANIEL A. MCLAUGHLIN*
SIDLEY AUSTIN LLP SIDLEY AUSTIN LLP
1501 K Street, N.W. 787 Seventh Avenue
Washington, D.C. 20005 New York, NY 10019

(202) 736-8000 (212) 839-5300
Counsel for Amicus Curiae
Merrill Lynch, Pierce, Fenner & Smith Incorporated

January 24, 2008 *Counsel of Record

[Additional Counsel Listed on Inside Cover]
DANIEL R. SPECTOR
OFFICE OF GENERAL COUNSEL
MERRILL LYNCH, PIERCE, FENNER

(i)

TABLE OF CONTENTS
Page

RULE 29.6 CORPORATE DISCLOSURE

iv
TABLE OF AUTHORITIES
CASES Page

AmSouth Bank v. Miss. Chem. Corp., 465

Curley v. Brignoli, Curley & Roberts
Assocs., 915 F.2d 81 (2d Cir. 1990)………… 12
Dole Food Co. v. Patrickson, 538 U.S. 468
(2003)…………………………………………………. 4

Extra Equipamentos E Exportacao Ltda. v.
Case Corp., 361 F.3d 359 (7th Cir. 2004) .. 13

Fleet Nat’l Bank v. Kaplan, No. 02-11175,
2002 U.S. Dist. LEXIS 22781 (D. Mass.
Oct. 11, 2002) ……………………………………… 14

GTE Sylvania Inc. v. Consumer Prod.
Safety Comm’n, 598 F.2d 790 (3d Cir.
1979), aff’d, 447 U.S. 102 (1980) …………… 12

Horizon Bank & Trust Co. v. Flaherty, 309

TABLE OF AUTHORITIES – continued
Page

Land v. Dollar, 330 U.S. 731 (1947),
overruled on other grounds, Larson v.
Domestic & Foreign Commerce Corp.,
337 U.S. 682 (1949)……………………………… 20

Nat’l City Bank v. Rep. of China, 348 U.S.
356 (1955) …………………………………………… 22

Norex Petroleum, Ltd. v. Access Indus.,
Inc., 416 F.3d 146 (2d Cir. 2005) …………… 28
In re Oil Spill by the Amoco Cadiz, 491 F.
Supp. 161 (N.D. Ill. 1979) …………………….. 23

U.S. 523 (1967)……………………………………15, 22

TABLE OF AUTHORITIES – continued
Page

Tellabs, Inc. v. Makor Issues & Rights,

Ltd., 127 S. Ct. 2499 (2007) ………………….. 20
Texas v. Florida, 306 U.S. 398 (1939)……….. 16
Walsh v. Centeio, 692 F.2d 1239 (9th Cir.

1982) ………………………………………………….. 13
STATUTES

Civil Asset Forfeiture Reform Act of 2000,
Pub. L. No. 106-185, 114 Stat. 202………… 24

vii

TABLE OF AUTHORITIES – continued
LEGISLATIVE HISTORY Page

H.R. Res. 1658, 106th Cong. (2000)………….. 24
SCHOLARLY AUTHORITIES

7 Charles Alan Wright, Arthur R. Miller &
Mary Kay Kane, Federal Practice &
Procedure (3d ed. 2001)……………………….. 13, 16

4 James Wm. Moore et al., Moore’s Federal
Practice (3d. ed. 2007)…………………… 12, 13, 24

John W. Reed, Compulsory Joinder of
Parties in Civil Actions, 55 Mich. L. Rev.
327 (1957) …………………………………………… 12

OTHER AUTHORITIES

Restatement (Third) of Foreign RelationsLaw of the United States (1987)……………. 28
INTEREST OF AMICUS CURIAE1

STATEMENT OF THE CASE

In understanding the competing claims, it is
important to distinguish between (1) ownership and
control of shares of Arelma (the “Arelma shares”) and

While many claimants were named in the
interpleader, only five remain relevant:

7 Rule 19(a) deems a party’s joinder to be “required” (also
referred to as a “necessary party”) if, among other things:

court, seeking the assets in the Arelma account to
satisfy that judgment, on September 6, 2000. CA9

SUMMARY OF ARGUMENT

ARGUMENT

9 Accord Curley v. Brignoli, Curley & Roberts Assocs., 915
F.2d 81, 90 (2d Cir. 1990); Prescription Plan Serv. Corp. v.
Franco, 552 F.2d 493, 497 (2d Cir. 1977).

especially the case in an interpleader, the entire point
of which is to serve “the public stake in settling
disputes by wholes, whenever possible.” Id. at 111.

12 Accord Extra Equipamentos E Exportacao Ltda. v. Case
Corp., 361 F. 3d 359, 361 (7th Cir. 2004) (Posner, J.) (collectingcases); Walsh v. Centeio, 692 F.2d 1239, 1242 (9th Cir. 1982).

14 See, e.g., AmSouth Bank v. Miss. Chem. Corp., 465

Provident, 390 U.S. at 127 (emphasis added).

As the district court and the Ninth Circuit found,
any claim to the Arelma assets would have to be
brought in New York, the location of the res and of

Merrill’s headquarters. See Pet. App. 8a-9a, 57a.22
Petitioners suggest three possible causes of action
against Merrill; none would provide a viable basis to
survive a motion to dismiss:

22 Merrill will thus discuss the obstacles to recovery underNew York law. Petitioners have never suggested at any stage ofthis case any alternative forum that would present lesserobstacles.

assets no later than 1987. See Pet. App. 47a. Thus,
any claim under the Philippine statute would havebeen time-barred by 1993.

CONCLUSION

For the reasons set forth above, this Court should
not order dismissal of this action.

Respectfully submitted,

CARTER G. PHILLIPS A. ROBERT PIETRZAK
RICHARD D. KLINGLER DANIEL A. MCLAUGHLIN*
SIDLEY AUSTIN LLP SIDLEY AUSTIN LLP
1501 K Street, N.W. 787 Seventh Avenue
Washington, D.C. 20005 New York, NY 10019

(202) 736-8000 (212) 839-5300
DANIEL R. SPECTOR
OFFICE OF GENERAL
COUNSEL

MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED

222 BroadwayNew York, NY 10038

Counsel for Amicus Curiae
Merrill Lynch, Pierce, Fenner & Smith Incorporated

January 24, 2008 *Counsel of Record

Martial Law Files

A History Of Resistance

MERRILL LYNCH AMICUS BRIEF ON ARELMA

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