Despite a U.S. Supreme Court decision reaching the opposite result in a similar case, a state judge in Manhattan has ruled that a 10,000-member class can seek to recover $35 million located in New York to satisfy a $2 billion judgment it won in 1996 as compensation for human rights abuses committed by former Philippine President Ferdinand Marcos.
"The Supreme Court's interpretation of federal procedure, while informative, is not binding on New York courts," Justice Charles E. Ramos wrote in Swezey v. Merrill Lynch (pdf), 104734/09.
Ramos ruled that the class can proceed with a turnover action to recover the funds being held by Merrill Lynch, even though the class has failed to join the action by the Philippine government, which has a competing claim.
Both the Republic of the Philippines and its Presidential Commission on Good Government have refused to come into court, claiming sovereign immunity.
Ramos concluded that they cannot be forced to participate, but nevertheless held that New York's joinder statute, CPLR §1001, permitted the case to go forward without them.
Two years ago, the U.S. Supreme Court dismissed a federal interpleader action, started by Merrill Lynch itself, to win authority to distribute the contested funds.
In Republic of the Philippines v. Pimentel, 128 S.Ct. 2180 (2007), the Court held that a federal interpleader action had to be dismissed for failure to join both the government and the commission, finding them to be indispensable parties because their sovereign interest in having their own courts resolve the dispute is "concrete."
Joinder of a party under both state and federal law requires that it be both "necessary" and "indispensable" to the action.
Both Ramos and the U.S. Supreme Court found that the Philippine entities were necessary parties under parallel state and federal joinder rules.
But applying a complex statutory balancing, Ramos, unlike the U.S. Supreme Court, found that the parties were not "indispensable."
The class action plaintiffs are competing with the Philippine commission to recover funds that can be traced to Marcos, members of his family and top aides.
Robert A. Swift, lead counsel to class, said the Philippine government had resisted the class' efforts to recover on its judgment at every turn since it was entered in 1995.
"There is mean spiritedness to this," said Swift of Kohn Swift & Graf in Philadelphia. "The Philippine government doesn't want thousands of the Marcos regime's human rights victims to ever receive a cent or peso."
To date, he added, the class has recovered several million dollars over "staunch opposition" from the Philippine government.
Charles A. Rothfeld, of Mayer Brown, who is representing the Philippine National Bank, an intervenor, said that the Philippines had treated funds recovered from Marcos-era figures as "belonging generally to the government" and dedicated them to public purposes such as agrarian reform.
The good government commission was established in 1986, shortly after Marcos was deposed, to recover "ill-gotten wealth" accumulated by his regime. Since then, it has recovered $1.9 billion, according to Swift.
The class action, which represents persons who were tortured, maimed or killed during the 20 years Marcos ruled the country, won a $2 billion jury verdict in federal court in Hawaii in 1995.
The same $35 million is in dispute in both the interpleader action started in 2000 by Merrill Lynch in the U.S. District Court for the District of Hawaii and the turnover action started by the class plaintiffs this year before Ramos.