United States District Court, District of Columbia
IN RE ENFORCEMENT OF PHILIPPINE FORFEITURE JUDGMENT AGAINST ALL ASSETS OF ARELMA, S.A., FORMERLY HELD AT MERRILL LYNCH, PIERCE, FENNER & SMITH, INCORPORATED, INCLUDING, BUT NOT LIMITED TO, ACCOUNT No. 165-07312, AND ALL INTEREST, INCOME OR BENEFITS ACCRUING OR TRACEABLE THERETO
MEMORANDUM OPINION [DKT. NOS. 5, 15, 17, 22]
RTCHARD J. LEON, UNITED STATES DISTRICT JUDGE
intervenors Jose Duran ("Duran") and Jenna Roxas
("Roxas, ') seek to intervene as of right
in this 28 U.S.C. § 2467 action brought by the United
States to enforce a forfeiture judgment entered in the
Philippines against $40 million in assets of a company,
Arelma, S.A., once controlled by ex-Philippine president
Roger Marcos ("the Arelma funds"). Duran represents
a class of human rights victims ("the Duran Class"
or "the Class") who have two judgments against the
Marcos estate and who have fought for years to seize these
Arelma funds in partial satisfaction of their judgments.
Likewise, Roxas represents her father's estate
("Roxas estate") and the Golden Budha [sic]
Corporation ("GBC"), which seek to seize the Arelma
funds in satisfaction of their own judgments against the
Marcos estate arising from Marcos's torture of
Roxas's father and theft of a treasure he discovered. The
Government does not oppose the Duran Class's motion to
intervene, although it reserves the right to challenge the
class's standing to raise certain arguments. The
Government does, however, oppose Roxas's intervention.
Duran filed a motion to change venue to the Southern District
of New York. The Government opposes this motion and would
like the case to remain in the District of Columbia.
motions to intervene and the motion to change venue are now
fully briefed and ripe for review. Upon consideration of the
parties' submissions and the entire record herein, I have
concluded that Duran's motion to intervene must be
GRANTED. In addition, Duran's motion to change venue is
GRANTED. The Roxas motion to intervene, however, is DENIED
without prejudice so that the judge assigned in the Southern
District of New York can decide its virtue. Accordingly, this
case is ordered transferred to the United States District
Court for the Southern District of New York.
delving into Duran's motions to intervene and change
venue, a little background on the pot of money at issue in
this case, the various parties jockeying to drain it, and how
they have attempted to do so would seem appropriate.
The Arelma Funds
for the Supreme Court, Justice Kennedy gave a succinct
history of the funds that are at issue here:
In 1972, Ferdinand Marcos, then President of the Republic [of
the Philippines], incorporated Arelma, S.A. (Arelma), under
Panamanian law. Around the same time, Arelma opened a
brokerage account with Merrill Lynch, Pierce, Fenner &
Smith Inc. (Merrill Lynch) in New York, in which it deposited
$2 million. As of the year 2000, the account had grown to
approximately $35 million.
Alleged crimes and malfeasance by Marcos during his
presidency became the subject of worldwide attention and
protest. . . . After Marcos fled the Philippines in 1986, the
[Philippine Presidential] Commission [on Good Governance]
asked the Swiss Government for assistance in recovering
assets-including shares in Arelma-that Marcos had moved to
Switzerland. In compliance the Swiss Government froze certain
assets and, in 1990, that freeze was upheld by the Swiss
Federal Supreme Court. In 1991, the Commission asked the
Sandiganbayan, a Philippine court of special jurisdiction
over corruption cases, to declare forfeited to the Republic
any property Marcos had obtained through misuse of his
office. . . .
The Swiss assets were transferred to an escrow account set up
by the Commission at the Philippine National Bank (PNB),
pending the Sandiganbayan's decision as to their rightful
owner. The Republic and the Commission requested that Merril
Lynch follow the same course and transfer the Arelma assets
to an escrow account at PNB. Merrill Lynch did not do so.
Facing claims from various Marcos creditors . . . Merrill
Lynch instead filed an interpleader action under 28 U.S.C.
Republic of Philippines v. Pimentel, 553 U.S. 851,
857-59 (2008). The United States District Court for the
District of Hawaii awarded the disputed Arelma funds to a
class of victims of the Marcos regime in partial satisfaction
of a judgment it previously entered in favor of the class.
See Id. at 858-60. The Supreme Court ultimately
overturned this award because the Republic of the Philippines
("the Republic") and the Commission- who claimed
sovereign immunity and did not participate in the
interpleader action-were necessary parties under Federal Rule
of Civil Procedure 19(b). See Id. at 872.
the Arelma funds were returned to Merrill Lynch. Swezey
v. Merrill Lynch, Pierce, Fenner & Smith,
Inc., 973 N.E.2d 703, 707 (N.Y. 2012). Two important
things happened next. First, the class of human rights
victims went to the New York state courts in an attempt to
enforce the $2 billion class judgment against the Arelma
funds in a state turnover proceeding. See Id. As
part of this proceeding, Merrill Lynch transferred the Arelma
funds to New York City's Commissioner of Finance pursuant
to a court order. Id. at 707 n.5. (The parties agree
that the New York City Department of Finance held the funds
from 2010 until 2017, when they were transferred to the New
York State Office of the State Comptroller, Office of
Unclaimed Funds. [Dkt. #1] ¶ 4; [Dkt. #5] ¶ 4;
[Dkt. #24-3]; [Dkt. #24-4] ¶ 3; [Dkt. #26] at 1.)
"'Second, the Sandiganbayan ruled that the funds
Marcos used to establish the Arelma account had been stolen
from the Republic and that the company's assets had
therefore been forfeited to the Republic."
Swezey, 973 N.E.2d at 707.
the U.S. Supreme Court, the New York Court of Appeals
ultimately ruled that the Republic was a necessary party to
the state turnover proceedings and ordered it dismissed
without prejudice. Id. at 711. Undeterred, the human
rights victims tried the New York courts again two years
later, but the New York Supreme Court Appellate Division
stayed the case pending an attempt by the Philippines to
enforce the Sandiganbayan's judgment in the United
States. Swezey v. Merrill Lynch, Pierce, Fenner &
Smith Inc., 997 N.Y.S.2d 45, 46-47 (N.Y.App.Div. 2014).
This action before me is that attempt.
The Duran Class
Duran is a member and representative of a class of 9, 539
Filipino human rights victims who seek to intervene in this
action. [Dkt. 5-2] ¶¶ 1-2. This is the same class
of victims who were awarded a roughly $2 billion judgment
against Ferdinand Marcos's estate in the District of
Hawaii. See Hilao v. Estate of Marcos, 103 F.3d 767,
772, 787 (9th Cir. 1996); [Dkt. 5-2] ¶ 5. The class
later secured a second judgment of over $350 million for
civil contempt after the Marcos estate improperly disposed of
estate assets. See In re Estate of Marcos Human Rights
Litig., 496 Fed.Appx. 759, 760 (9th Cir.
As I explained above, the Duran Class has attempted to
enforce its judgments against the Arelma funds both in Hawaii
and in New York. Crucially, after the Arelma Funds were
transferred back to Merrill Lynch following the Supreme
Court's 2008 decision in Pimentel, the Duran
Class levied the funds in New York. [Dkt. 5-2] ¶ 20;
[Dkt. 5-8] ¶ 2; [Dkt. 24-2] at 3.