Legal Opinions - U.S. Supreme Court: June 30, 2008

Daily Record, The (Baltimore), Jun 30, 2008

The Court had not previously considered the precise question presented, but authorities involving the intersection of joinder and the United States' governmental immunity, see, e.g., Mine Safety Appliances Co. v. Forrestal, 326 U.S. 371, instruct that where sovereign immunity is asserted, and the sovereign's claims are not frivolous, dismissal must be ordered where there is a potential for injury to the absent sovereign's interests.

The claims of the Republic and the Commission were not frivolous, and the 9th Circuit thus erred in ruling on their merits.

The privilege of sovereign immunity from suit is much diminished if an important and consequential ruling affecting the sovereign's substantial interest is determined, or at least assumed, by a federal court in its absence and over its objection. The Pimentel class' interest in recovering its damages was not discounted, but important comity concerns were implicated by assertion of foreign sovereign immunity. The error was not that the courts below gave too much weight to the Pimentel class' interests, but that they did not accord proper weight to the compelling sovereign immunity claim.

The second factor is the extent to which any prejudice could be lessened or avoided by relief or measures alternative to dismissal, Rule 19(b)(2), but no alternative remedies or forms of relief have been proposed or appear to be available.

As to the third factor -- whether a judgment rendered without the absent party would be adequate, Rule 19(b)(3) -- "adequacy" refers not to satisfaction of the Pimentel class' claims, but to the "public stake in settling disputes by wholes, whenever possible," Provident Bank, supra, at 111. Going forward with the action in the absence of the Republic and the Commission would not further this public interest because they could not be bound by a judgment to which they were not parties.

As to the fourth factor -- whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder, Rule 19(b)(4) -- the 9th Circuit made much of the tort victims' lack of an alternative forum. But Merrill Lynch, not the Pimentel class, was the plaintiff as the stakeholder in the interpleader action. See 28 U.S.C. [section]1335(a).

The Pimentel class' interests were not irrelevant to Rule 19(b)'s equitable balance, but the Rule's other provisions were the relevant ones to consult. A dismissal on the ground of nonjoinder would not provide Merrill Lynch with a judgment determining entitlement to the assets so it could be done with the matter, but it likely would give Merrill Lynch an effective defense against piecemeal litigation by various claimants and inconsistent, conflicting judgments.

Any prejudice to Merrill Lynch was outweighed by prejudice to the absent entities invoking sovereign immunity. In the usual course, the 9th Circuit's failure to give sufficient weight to the likely prejudice to the Republic and the Commission would warrant reversal and remand for further determinations, but here, that error plus this Court's analysis under Rule 19(b)'s additional provisions required the action's dismissal.