Ross D. Andre, Compulsory [mis]joinder: the Untenable Intersection of Sovereign Immunity and Federal Rule of Civil Procedure 19

• Publication year: 2011

COMPULSORY [MIS]JOINDER: THE UNTENABLE INTERSECTION OF SOVEREIGN IMMUNITY AND FEDERAL RULE OF CIVIL PROCEDURE 19

ABSTRACT

Federal Rule of Civil Procedure 19 defines circumstances in which a court can (and must) override the plaintiff’s party structure to ensure that so-called necessary and required parties are before the court, as complete justice requires. Sovereign immunity protects classes of sovereigns and their political arms from accountability in other nations’ court systems. Although seemingly unrelated, conflict between these doctrines is increasingly precipitating incongruous outcomes in federal courts—as evident in a recent Supreme Court decision—eviscerating the goals of compulsory joinder and unreasonably enlarging the ambit of sovereignty’s protections to shield nonsovereign parties. The failure of courts to work solutions to the Rule 19/sovereign immunity conundrum risks recreating the systemic failures of the original version of Rule 19—foregoing the Rule’s intended pragmatism in favor of doctrinal adherence to labels and categorizations.

No single solution will make the conflicting aims of Rule 19 and sovereign immunity compatible in every instance. Rule 19, however, has never been amenable to universal conceptualizations or strict applications. It is quite the opposite: a rule grounded in pragmatism that commands a case-by-case application. To that end, courts need to turn unerringly to a pragmatic approach to Rule 19 and sovereign immunity, looking at a variety of solutions that exist to lessen the prejudice to sovereigns without closing the courthouse doors completely. Likewise, Congress and parties to disputes must each act to encourage outcomes that avoid complete dismissal of disputes with no alternative forum. Reformulating the status quo’s approach to Rule 19 vis-à- vis sovereign immunity is not without its difficulties, but remembering the broad aims of the two doctrines and attempting a workable permutation of both is the only way to keep the Rule responsive to the needs of claimants while appropriately circumscribing—but not imperiling—the shield of sovereign immunity.

INTRODUCTION 1160

1. THE DEVELOPMENT OF RULE 19 JURISPRUDENCE 1163

   1. The Foundations of the Compulsory Joinder Doctrine 1163

   2. Compulsory Joinder in the United States Prior to Rule 19 1164

   3. The Formation and Textual Evolution of Rule 19 Prior to

      1966 .......................................................................................... 1166

   4. Rule 19 in the Present Day 1168

   5. Supreme Court Rule 19 Jurisprudence from 1966 to 2008: Exploring the Foundational Cases 1169

2. THE DEVELOPMENT OF FOREIGN AND TRIBAL SOVEREIGN IMMUNITY 1173

   1. The Foundations of Foreign Sovereign Immunity in American

      Courts 1173

   2. Modern Foreign Sovereign Immunity in America Since 1950 . 1174

   3. Tribal Sovereign Immunity 1176

   4. Invocations of Sovereign Immunity in Lawsuits 1178

3. THE INTERSECTION OF RULE 19 AND SOVEREIGN IMMUNITY 1178

   1. Republic of the Philippines v. Pimentel 1179

      1. Facts and Background 1179

      2. The Supreme Court’s Rule 19 Analysis 1181

      3. Justice Stevens’s Dissent as a Case for Pragmatics 1185

   2. The Similar Difficulties Presented by Rule 19 and Tribal Sovereign Immunity 1186

      1. Citizen Potawatomi Nation v. Norton 1186

      2. United Keetoowah Band of Cherokee Indians in Oklahoma v. Kempthorne 1188

   3. Pimentel as Precedent and the Continued Difficulties of Sovereignty in Federal Courts: SourceOne Global Partners as

      an Example of the Ongoing Uncertainty 1190

   4. The Untenable Evisceration of Rule 19 and the Unintended Enlargement of Sovereign Immunity 1194

4. TACKLING THE RULE 19/SOVEREIGN IMMUNITY IMPASSE: A RETURN TO THE RULE’S VENERATED PRAGMATISM 1196

   1. The Dangers of Ignoring the Problem 1197

   2. Statutory Responses: Congress as an Actor 1198

   3. Judicial Responses: Courts and Their Participants as Actors . 1200

      1. Rethinking the Nature of Indispensability 1200

      2. Highlighting Areas of the Law to Cabin Sovereign Immunity: Contract as an Example 1202

      3. The Three Interests: Favoring Those Already Present 1204

      4. Encouraging Flexibility and Compromise by Parties to

         the Suit 1206

   4. Reflecting on Potential Solutions in Practice 1206

CONCLUSION 1208

Thus does this ghostly character [the indispensable party] haunt the halls of justice, an apparition whose suggested existence stays the hand of the law.1

INTRODUCTION

Rule 19 of the Federal Rules of Civil Procedure—joinder of “required” parties2—seeks to ensure that any party with an appreciable stake in the outcome of a lawsuit is adequately represented therein.3 The Rule protects three often-overlapping classes of interests: (1) the interests of parties already present in the litigation, (2) the interests of those not yet made a party, and (3) the interests of society in the efficient and complete resolution of disputes.4

The Supreme Court has addressed the general workings of Rule 19 in significant detail only a handful of times, most notably in two decisions: Provident Tradesmens Bank & Trust Co. v. Patterson5 and Temple v. Synthes Corp.6 In both cases, the Court overturned decisions in which the appellate courts dismissed lawsuits for failure to join an indispensable party. The Supreme Court’s Rule 19 jurisprudence evinces a forgiving approach to the

Rule, one that favors the continuation of lawsuits despite the reasoning of lower courts and the absence of various interested parties.

In 2008 the Supreme Court decided Republic of the Philippines v. Pimentel,7 its first significant Rule 19 case in decades. Pimentel arose out of litigation surrounding the brutal 1970s Marcos regime in the Philippines. A litany of parties sought to claim more than $30 million that Marcos deposited in the United States through a shell corporation in 1972.8 Merrill Lynch,

1. Geoffrey C. Hazard, Jr., Indispensable Party: The Historical Origin of a Procedural Phantom, 61 COLUM. L. REV. 1254, 1255 (1961).

2. Rule 19 is more commonly thought of as controlling joinder of “necessary” and “indispensable”

   parties, terms which appeared in the Rule prior to a series of changes in 2007, which replaced the word “necessary” with “required” and deleted the word “indispensable” altogether. See infra notes 50–51 and accompanying text.

3. See FED. R. CIV. P. 19 advisory committee’s note on 1966 amendments (“Whenever feasible, the

   persons materially interested in the subject of an action . . . should be joined as parties so that they may be heard and a complete disposition made.”).

4. John W. Reed, Compulsory Joinder of Parties in Civil Actions (pt. 1), 55 MICH. L. REV. 327, 330

(1957).

5 390 U.S. 102 (1968).

6 498 U.S. 5 (1990) (per curiam).

7 128 S. Ct. 2180 (2008).

8 Id. at 2185–86.

which held the disputed assets, filed an interpleader action to settle ownership; two parties invoked sovereign immunity and subsequently moved for dismissal pursuant to Rule 19(b) for failure to join each as an indispensible party.9 The district and appellate courts each denied the 19(b) motions; the Supreme Court reversed.10

Pimentel illuminated an oft-recurring problem emanating from a subset of Rule 19 decisions: the unintended expansion of sovereign immunity through the application of the Federal Rules of Civil Procedure, and the concurrent judicial distortion of Rule 19 and its goals as a result of strict adherence to unnecessarily rigid notions of sovereign protections.

Sovereign immunity protects foreign states and state-related entities from the jurisdiction of other countries’ national courts.11 Sovereign immunity functions as a prophylactic, allowing a nation-state and its political subdivisions to engage in self-governance without concern for the looming threat of judicial accountability outside of their own court systems.12 It is designed both to encourage complete autonomous decision making by nation- states and to evidence common respect for the domestic justice systems of foreign nations.13

Although sovereign immunity immunizes sovereigns,14 recent judicial treatment of Rule 19 has expanded sovereign immunity such that its emanations often protect nonsovereign entities from suits in which they would otherwise face liability.15 At the same time, the involvement of sovereigns in

Rule 19 cases stymies the effective application of the Rule, frustrating its overarching purpose and resulting in inequitable decisions that leave plaintiffs without recourse. Pimentel, though not the first decision to grapple with sovereigns as indispensable parties, ultimately fails to resolve the conflict between immunity and compulsory joinder in any meaningful way. It provides

9 Id.

10 Id. at 2186–87, 2194.

1. Nat’l City Bank of N.Y. v. Republic of China, 348 U.S. 356, 362 (1955) (noting that foreign sovereign immunity derives “from standards of public morality, fair dealing, reciprocal self-interest, and respect for the

   ‘power and dignity’ of the foreign sovereign”); GARY B. BORN & PETER B. RUTLEDGE, INTERNATIONAL CIVIL LITIGATION IN UNITED STATES COURTS 219 (4th ed. 2007).

2. THEODORE R. GIUTTARI, THE AMERICAN LAW OF SOVEREIGN IMMUNITY 3 (1970).

3. See Austria v. Altmann, 541 U.S. 677, 688–89 (2004) (describing sovereign immunity as a mutual understanding between nations that domestic jurisdiction has certain limitations).

4. A sovereign is “[a] person, body, or state vested with independent and supreme authority.” BLACK’S LAW DICTIONARY 1523 (9th ed. 2009).

5. See infra Part III.

   inarticulate precedent and seems to sanction, rather than to rectify, the unjust outcomes wrought by the interplay of the Rule and sovereign immunity.

   
   

   This Comment argues that many of the modern trends that stymie effective justice in Rule 19 sovereign immunity cases are the same problems that plagued courts applying the early inchoate version of the compulsory joinder doctrine. Just as judges of the early twentieth century became too focused on labels and formulae, tribunals of the twenty-first century forget the pragmatism Rule 19 demands. Instead, courts systematically bow to unnecessarily strict applications of doctrinal preconceptions—such as the inviolability of sovereign immunity—to the detriment of the Federal Rules. Modern...