EIG ENERGY FUND XIV, L.P. et al v. PETROLEO BRASILEIRO S.A

Memorandum in opposition to re MOTION to Stay

D.D.C.November 6, 2018

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA EIG ENERGY FUND XIV, L.P., EIG ENERGY FUND XIV-A, L.P., EIG ENERGY FUND XIV-B, L.P., EIG ENERGY FUND XIV (CAYMAN), L.P., EIG ENERGY FUND XV, L.P., EIG ENERGY FUND XV-A, L.P., EIG ENERGY FUND XV-B, L.P., EIG ENERGY FUND XV (CAYMAN), L.P., and EIG MANAGEMENT COMPANY, LLC, Plaintiffs, - against - PETRÓLEO BRASILEIRO S.A., et al. Defendants. : : : : : : : : : : : : : : : : : : : Case No. 1:16-cv-333-APM PLAINTIFFS’ MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT’S MOTION TO STAY Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 1 of 23 i Table of Contents Page Preliminary Statement ..................................................................................................................... 1 Relevant Facts ................................................................................................................................. 4 Argument ........................................................................................................................................ 6 I. This Court Lacks Authority to Grant the Motion to Stay ....................................... 6 II. Petrobras Fails In Any Event to Demonstrate That a Stay is Warranted ................ 8 A. Petrobras Will Not Suffer Irreparable Harm if a Stay is Denied .............. 10 B. Petrobras is Unlikely to Prevail on its Petition ......................................... 12 C. The Interests of the Public at Large Do Not Favor a Stay ........................ 15 D. The Funds Would be Prejudiced if the Stay is Granted ............................ 16 III. This Court Should Order Petrobras to Answer the Complaint and Set a Rule 16 Scheduling Conference at Its Earliest Convenience ................................ 16 Conclusion .................................................................................................................................... 17 Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 2 of 23 ii Table of Authorities Federal Cases Page(s) Al-Sharbi v. Bush, 430 F. Supp. 2d 1 (D.D.C. 2006) .............................................................................................12 *Atlantica Holdings Inc. v. Sovereign Wealth Fund Samruk-Kazyna, 813 F.3d 98 (2d Cir. 2016).........................................................................................3, 5, 13, 14 Baker v. Socialist People’s Libyan Arab Jamahirya, 810 F. Supp. 2d 90 (D.D.C. 2011) .......................................................................................9, 16 BNSF Ry. Co. v. O'Dea, No. CV-07-137-BLG-CSO, 2009 WL 10701773 (D. Mont. Nov. 17, 2009) ..........................16 Cementos Guadalajara v. United States, 727 F. Supp. 614 (Ct. Int’l Trade 1989) ..............................................................................7, 11 Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290 (D.C. Cir. 2006) .............................................................................................9, 10 Conkright v. Frommert, 556 U.S. 1401 (2009) (Ginsberg, J., in chambers) ..................................................................12 EIG Energy Fund XIV, L.P. v. Petroleo Brasileiro S.A., 246 F.Supp.3d 52 (D.D.C. 2017) ...............................................................................................4 *EIG Energy Fund XIV, L.P. v. Petroleo Brasileiro S.A., 894 F.3d 339 (D.C. Cir. 2018) .......................................................................................3, 4, 5, 6 Fed. Trade Comm'n v. Boehringer Ingelheim Pharm., Inc., 241 F. Supp. 3d 91 (D.D.C. 2017) .............................................................................................9 Hamdan v. Rumsfled, 548 U.S. 557 (2006) .................................................................................................................12 Hicks v. Bush, 397 F. Supp. 2d 36 (D.D.C. 2005) .....................................................................................12, 16 Indep. Living Ctr. of S. California v. Shewry, No. CV 08-3315 CAS, 2010 WL 11520551 (C.D. Cal. Mar. 17, 2010) .................................13 Jungquist v. Sheikh Sultan Bin Khalifa Al Nahyan, 115 F.3d 1020 (D.C. Cir. 1997) .................................................................................................7 Mann v. Washington Metro. Area Transit Auth., 185 F. Supp. 3d 189 (D.D.C. 2016) (Mehta, J.) ...............................................................8, 9, 10 Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 3 of 23 iii McCammon v. United States, 588 F. Supp. 2d 43 (D.D.C. 2008) .............................................................................................9 McMillan v. DeKalb Cty., Georgia, No. 1:04-CV-3039-BBM, 2007 WL 9700671 (N.D. Ga. July 17, 2007) ................................13 Mitchell v. Forsyth, 472 U.S. 511 (1985) ...................................................................................................................7 NAACP v. Trump, 321 F. Supp. 3d 143 (D.D.C. 2018) ..................................................................................12 n. 2 Nken v. Holder, 556 U.S. 418 (2009) ...................................................................................................................9 In re Petrobras Sec. Litig., Mem. Ord., No. 1:14-cv-09662-JSR, ECF No. 834 (S.D.N.Y. Jun. 25, 2018) .......................11 Republic of Argentina v. Weltover, Inc., 504 U.S. 607 (1992) .................................................................................................................14 Sletten v. Navallier Series Fund, No. 03:00-CV-0167-LRH (VPC), 2006 WL 2335566 (D. Nev. Aug. 10, 2006) ......................8 *Sovereign Wealth Fund Samruk-Kazyna JSC v. Atlantica Holdings, Inc. 137 S. Ct. 493 (2016) ....................................................................................................... passim Sovereign Wealth Fund Samruk-Kazyna JSC v. Atlantica Holdings, Inc., No. 16-2011, 2016 WL 4363497 (Aug. 10, 2016)...................................................................15 *Studiengesellschaft Kohle, mbH v. Novamont Corp. 578 F.Supp. 78, 79 (S.D.N.Y. 1983) ..........................................................................................7 In re Stumes, 681 F.2d 524 (8th Cir. 1982) .....................................................................................................8 Sussman v. Jenkins, 642 F.3d 532 (7th Cir. 2011) ...................................................................................................12 In re Time Warner Cable, Inc., 470 F. App’x. 389 (5th Cir. 2012) (unpublished decision) ........................................................8 U.S. v. Lentz, 352 F.Supp.2d 718 (E.D. Va. 2005) ..........................................................................................8 William A. Graham Co. v. Haughey, 794 F.Supp.2d 566 (E.D. Pa. 2011) .......................................................................................7, 8 Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 4 of 23 iv Wisconsin Gas Co. v. F.E.R.C., 758 F.2d 669 (D.C. Cir. 1985) .............................................................................................9, 10 Federal Statutes 28 U.S.C. § 1291 ..............................................................................................................................7 *28 U.S.C. § 2101(f) .............................................................................................................. passim Rules D.C. Cir. Rule 41 .........................................................................................................................2, 5 Fed. R. App. P. 41(b) ...................................................................................................................2, 5 Fed. R. Civ. P. 16 .................................................................................................................4, 16, 17 Foreign Sovereign Immunities Act, 28 U.S.C. § 1330 et. seq. .............................................. passim Other Authorities Supreme Court: The Statistics, 131 Harv. L. Rev. 403, 410 tbl.II (B)(2017), available at: https://harvardlawreview.org/2017/11/supreme-court-2016-term- statistics/ ...................................................................................................................................13 Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 5 of 23 1 Plaintiffs EIG Energy Fund XIV, L.P., EIG Energy Fund XIV-A, L.P., EIG Energy Fund XIV-B, L.P., EIG Energy Fund XIV (Cayman), L.P., EIG Energy Fund XV, L.P., EIG Energy Fund XV-A, L.P., EIG Energy Fund XV-B, L.P. and EIG Energy Fund XV (Cayman), L.P. (“Plaintiffs” or “the Funds”) and EIG Management Company, LLC respectfully submit this memorandum of law in opposition to the motion by defendant Petróleo Brasileiro S.A. (“Defendant” or “Petrobras”) to stay discovery pending the filing by Petrobras of a petition for certiorari with the United States Supreme Court to review a decision of the Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”). Preliminary Statement Not surprisingly, Petrobras seeks to stay the litigation of this case for as long as possible. On September 26, 2018, Petrobras entered into a non-prosecution agreement with the Department of Justice, Criminal Division, Fraud Section (the “Fraud Section”) and the United States Attorney’s Office for the Eastern District of Virginia (the “Office”) in which it admitted that it had engaged in criminal violations of the U.S. Foreign Corrupt Practices Act and agreed to pay a criminal fine of $853,200,000 (the “Criminal Agreement”). See Ex. A at 2, 6.1 Petrobras admitted in the Criminal Agreement that “[i]n or around and between at least 2004 and 2012, Petrobras executives and managers . . . facilitated massive bid-rigging and bribery schemes that, among other things, allowed contractors to obtain contracts from Petrobras through non- competitive means and caused Petrobras to remain in favor of many of Brazil’s politicians and political parties.” Id. at A-4, ¶ 14. Petrobras further admitted that contractors paid bribes of about one to three percent of the value of contracts with Petrobras, which were then “typically split among certain Petrobras executives, Brazilian politicians, Brazilian political parties, and 1 References to “Ex.” are to the exhibits submitted by Plaintiffs with this opposition, as described in the accompanying Declaration of Daniel B. Goldman, dated November 6, 2018. Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 6 of 23 2 other individuals who helped facilitate the payment of the bribes.” Id. at A-4, ¶ 15. Through these admissions, Petrobras has effectively admitted Plaintiffs’ allegations against Petrobras in this case. On October 2, 2018, Brazilian prosecutors released a video tape of the deposition of Antonio Palocci, who was the chief of staff to Luiz Inácio Lula da Silva (“Lula”), the former president of Brazil. Palocci testified that in early 2010, Lula, Dilma Rousseff, who was the Chair of Petrobras’ board and who succeeded Lula as president of Brazil, and José Sergio Gabrielli, who was the chief executive of Petrobras, entered into a secret pact in which Brazil would build twenty-eight drill ships with Brazilian “companion” companies, who would pay hundreds of millions of dollars in bribes to the Workers’ Party of Brazil, which would fund four to five future presidential elections for the Workers’ Party. Out of this agreement was born Sete Brasil Participações (“Sete”), the company in which plaintiffs invested. See Ex. B at 19-23, 25-31, 76- 77. Now, Petrobras seeks to delay further this case in the form of its motion to stay before this Court. Yet, the motion is too late and directed to the wrong court. After the D.C. Circuit denied Petrobras’ petition for rehearing or rehearing en banc, pursuant to a July 3, 2018 order of the D.C. Circuit, Rule 41(b) of the Federal Rules of Appellate Procedure and D.C. Cir. Rule 41, Petrobras had seven days to petition the D.C. Circuit to stay the issuance of the mandate pending Petrobras’ petition for certiorari to the Supreme Court. Yet, Petrobras missed that deadline and failed to seek a stay of the D.C. Circuit’s mandate. The D.C. Circuit thus issued the mandate, and now, under 28 U.S.C. § 2101(f), Petrobras is barred from seeking a stay of the mandate from this Court. Its attempt to stay the mandate must be directed to the court that issued Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 7 of 23 3 it, the D.C. Circuit, or to the Supreme Court. For this reason alone, Petrobras’ motion should be denied. But even assuming that this Court should reach the merits of Petrobras’ motion, which it should not, Petrobras cannot satisfy its heavy burden to obtain the extraordinary remedy of a stay. It cannot possibly demonstrate a likelihood that the Supreme Court will accept its petition for certiorari. In its petition for rehearing en banc to the D.C. Circuit, Petrobras raised the exact same arguments as it does here -- there is a supposed split of authority among the circuits of this country relevant to the issues decided by the D.C. Circuit. Nine judges of the D.C. Circuit rejected Petrobras’ petition. In its decision affirming this Court’s ruling under the Foreign Sovereign Immunities Act (“FSIA”), the D.C. Circuit expressly followed Atlantica. See EIG Energy Fund XIV, L.P. v. Petroleo Brasileiro S.A., 894 F.3d 339, 345, 347-48 (D.C. Cir. 2018). Yet, in 2016, the Supreme Court denied the petition for certiorari on the Second Circuit’s Atlantica decision. Sovereign Wealth Fund Samruk-Kazyna JSC v. Atlantica Holdings, Inc., 137 S. Ct. 493 (2016) (denying certiorari). There is no reason to think that the Supreme Court would accept certiorari here. Petrobras’ argument that it would be irreparably harmed by the mere commencement of discovery in this Court is belied entirely by its conduct in other actions in this country. To wit, Petrobras defended a securities class action in the Southern District of New York, took an appeal to the Second Circuit Court of Appeals in that action and settled it for close to $3 billion. Yet, it willingly assented to jurisdiction in this country and never once raised an argument that it is immune to jurisdiction under the FSIA. Under the Criminal Agreement, Petrobras willingly accepted jurisdiction in this country to reach an agreement with the Fraud Section and the Office, and it agreed to a continuing three years of jurisdiction for the purposes Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 8 of 23 4 of further cooperation, compliance and remedial action. By failing to petition the D.C. Circuit to stay the mandate pending its petition for certiorari, any harm that Petrobras suffers in this litigation is due to its own inaction. Taken to its logical end, Petrobras seems to argue that there should be an automatic stay of a mandate from a circuit court pending the resolution of a petition for certiorari to the Supreme Court on an issue related to FSIA jurisdiction. Petrobras has not and cannot cite to any cases for this sweeping proposition. And, if Congress had intended this result, it could have legislated it into the FSIA. It did not do so. This Court should deny Petrobras’ motion, and it should schedule a conference under Rule 16 of the Federal Rules of Civil Procedure at the Court’s earliest convenience. Plaintiffs have been delayed for over two years from even commencing discovery. It is time to begin. Relevant Facts Relevant Procedural History On March 30, 2017, this Court denied Defendant’s motion to dismiss the Funds’ claims for fraud and aiding and abetting fraud, finding in relevant part that it has jurisdiction to hear this dispute under the direct effect clause of the commercial activity exception to the FSIA. EIG Energy Fund XIV, L.P. v. Petroleo Brasileiro S.A., 246 F.Supp.3d 52, 71-73 (D.D.C. 2017). Defendant appealed this Court’s opinion insofar as it denied Petrobras’ motion to dismiss for lack of subject matter jurisdiction under the FSIA. Initial Brief for Appellant, EIG Energy Fund XIV, L.P. v. Petroleo Brasileiro, S.A., 894 F.3d 339 (D.C. Cir. 2018) (Dkt. No. 1691260). On July 3, 2018, the D.C. Circuit affirmed this Court’s order, concluding that Petrobras was not immune from jurisdiction in the United States, as its fraud caused a direct effect in this country. EIG Energy Fund XIV, L.P. v. Petroleo Brasileiro, S.A., 894 F.3d 339, Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 9 of 23 5 349 (D.C. Cir. 2018) (“EIG II”). The D.C. Circuit followed the Second Circuit’s decision in Atlantica Holdings Inc. v. Sovereign Wealth Fund Samruk-Kazyna, 813 F.3d 98 (2d Cir. 2016) (“Atlantica”). As the court held: We believe EIG has made out a prima facie case for jurisdiction by alleging that Petrobras specifically targeted U.S. investors for Sete; that Petrobras intentionally concealed the ongoing fraud at Petrobras and at Sete; and that money invested in Sete was used to pay bribes and kickbacks. See Atlantica Holdings Inc. v. Sovereign Wealth Fund Samruk-Kazyna, 813 F.3d 98, 110 (2d Cir. 2016) (defendant’s misrepresentations about investment cause direct effect in United States when defendant “contemplated investment by United States person” and “at least some investors . . . suffered an economic loss in this country as a result of those misrepresentations.”) Id. at 345 (internal record citations and emphasis omitted). Also on July 3, 2018, the D.C. Circuit “on the court’s own motion,” ordered that “the Clerk withhold issuance of the mandate herein until seven days after disposition of any timely petition for rehearing or petition for rehearing en banc.” Id. (Dkt. No. 1738942). The Court cited Fed R. App. P. 41(b) and D.C. Cir. Rule 41. Id. On August 2, 2018, Petrobras filed a petition for a panel rehearing or rehearing en banc with the D.C. Circuit. Petition for Rehearing or Rehearing En Banc, EIG II (Dkt. No. 1743780). On October 1, 2018, the D.C. Circuit issued two orders: one by the Panel that denied the petition for panel rehearing; and another by nine judges of the D.C. Circuit (Judges Henderson, Rogers, Tatel, Griffith, Srinivasan, Millett, Pillard, Wilkins and Katsas (Chief Judge Garland and Judge Kavanaugh did not participate)) that denied the petition for rehearing en banc. Id. Dkt. Nos. 1753304, 1753305. In its memorandum of law in support of its Petition for Panel Rehearing or Rehearing En Banc, Petrobras raised the exact same substantive arguments as it does on the present motion concerning the D.C. Circuit’s decision. There, as here, Petrobras Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 10 of 23 6 argued that there is a supposed split of authority among circuits on the issues decided by the D.C. Circuit under the FSIA. See Ex. C at 12-15. After the D.C. Circuit denied Petrobras’ motions for rehearing and en banc review, pursuant to the court’s order of July 3, 2018, Federal Rules of Appellate Procedure and D.C. Circuit rules, Petrobras had seven days to file a motion for a stay of the issuance of the mandate. Yet, Petrobras failed to do so. Accordingly, the D.C. Circuit issued its mandate on October 9, 2018. EIG II (Dkt. No. 1754257). Although Petrobras’ answer to the Amended Complaint was due fourteen days after such issuance, on October 23, 2018, Petrobras simply ignored that deadline. Instead, it filed this motion. Argument I. This Court Lacks Authority to Grant the Motion to Stay At its core, Petrobras seeks to stay the mandate issued by the D.C. Circuit pending resolution of a petition for certiorari that it has yet to file with the United States Supreme Court. Petrobras, however, failed to petition the D.C. Circuit to stay its mandate. Now, 28 U.S.C. § 2101(f) bars Petrobras from seeking a stay from this Court. Section 2101(f) of Title 28 of the United States Code provides that a party seeking a stay from a “final judgment or decree . . . to enable the party [] to obtain a writ of certiorari from the Supreme Court,” must seek the stay from “a judge of the court rendering the judgment or a decree by a justice of the Supreme Court.” 28 U.S.C. § 2101(f). As an initial matter, the D.C. Circuit’s order and mandate in which it found that jurisdiction exists over Petrobras in the United States under the FSIA is properly considered a “final judgment or decree.” For the purposes of jurisdiction of Courts of Appeals, claims appealable under the collateral order doctrine, including FSIA sovereign immunity claims, are considered “final decisions.” See Mitchell v. Forsyth, 472 U.S. 511, 524-30 (1985) (under Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 11 of 23 7 collateral order doctrine, immunity orders are appealable “final decision” within the meaning of 28 U.S.C. § 1291 notwithstanding the absence of a final judgment); Jungquist v. Sheikh Sultan Bin Khalifa Al Nahyan, 115 F.3d 1020, 1025 (D.C. Cir. 1997) (explaining that appeal from denial of dismissal on FSIA grounds is part of small class of collateral order doctrine cases and is appealable as “final order” under § 1291). There can be no question, then, that a decision by a court of appeals on a “final decision” under the collateral order doctrine concerning FSIA jurisdiction is itself a final decision. Of course, Petrobras would not be petitioning the Supreme Court to grant certiorari if that were not the case. Accordingly, as Petrobras seeks a stay from a final decree of the D.C. Circuit concerning jurisdiction under the FSIA, Petrobras must seek a stay from the D.C. Circuit, which it failed to do, or the Supreme Court. Simply put, as the court in Studiengesellschaft Kohle, mbH v. Novamont Corp. made clear, it is not “an appropriate function of [a district court] to pass on the likelihood that the ruling of a higher court will be accepted for review by the Supreme Court. 578 F.Supp. 78, 79 (S.D.N.Y. 1983). That function is properly performed, as contemplated by section 2101(f) by the court of appeals or the Supreme Court.” That is particularly so, as “[the district court] was not privy to the arguments of the parties concerning the appeal itself, the motion for rehearing or the suggestion for rehearing en banc.” Cementos Guadalajara v. United States, 727 F. Supp. 614, 619 (Ct. Int’l Trade 1989) (“Since it is the decision of the Federal Circuit that will be contested in this petition for certiorari, that court is in the best position to address the merits of plaintiffs’ stay application”) (citation omitted); William A. Graham Co. v. Haughey, 794 F.Supp.2d 566, 569 (E.D. Pa. 2011) (explaining that “[i]t is simply not the proper role of a district court to decide whether a judgment of a higher court should be stayed pending possible review by the Supreme Court” and emphasizing that like in the case at hand “[t]he Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 12 of 23 8 defendants will be asking the Supreme Court to overturn the judgment of the Court of Appeals, not that of the district court.”); see also In re Stumes, 681 F.2d 524, 525 (8th Cir. 1982) (explaining that only an Eighth Circuit judge or a Supreme Court justice “is empowered by 28 U.S.C. Section 2101(f) to stay the execution or enforcement of [the Eighth Circuit’s] judgment.”); In re Time Warner Cable, Inc., 470 F. App’x. 389, 390 (5th Cir. 2012) (unpublished decision) (citations omitted) (recognizing that “Congress has only authorized the court of appeals or a Justice of the Supreme Court to stay the execution or enforcement of the court of appeals’ judgment pending a petition for certiorari”); Haughey, 794 F.Supp.2d at 568-69 (holding that, consistent with a “great majority” of courts to have considered Section 2101(f), a district court lacks jurisdiction to stay a circuit court’s decision pending a petition for Supreme Court review); Sletten v. Navallier Series Fund, No. 03:00-cv-0167-LRH, 2006 WL 2335566, at *1 (D. Nev. Aug. 10, 2006) (collecting cases) (determining that the “only authority to issue a stay pending appeal to the Supreme Court arises out of 28 U.S.C. § 2101(f),” which “excludes district courts from issuing such a stay” and explaining that “it is the Ninth Circuit or the Supreme Court that must issue the [stay], not this court”); U.S. v. Lentz, 352 F.Supp.2d 718, 726 (E.D. Va. 2005) (“[T]he great weight of recent, reasoned authority has concluded that § 2101(f) does not permit a district court to exercise jurisdiction to stay a circuit court’s final judgment pending filing or resolution of a certiorari petition.”). Petrobras must petition the D.C. Circuit or the Supreme Court for a stay. It directs this motion to the wrong court. The motion should be denied. II. Petrobras Fails In Any Event to Demonstrate That a Stay is Warranted Even if this Court could address the merits of Petrobras’ stay motion, which it should not, Petrobras’ motion should be denied. “A stay pending appeal is an extraordinary remedy.” Mann v. Washington Metro. Area Transit Auth., 185 F. Supp. 3d 189, 194–95 (D.D.C. Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 13 of 23 9 2016) (Mehta, J.) (internal quotation and citation omitted). Petrobras, as the moving party, “carries a heavy burden to demonstrate that the stay is warranted.” McCammon v. United States, 588 F. Supp. 2d 43, 47 (D.D.C. 2008) (internal quotation and citation omitted). See also Nken v. Holder, 556 U.S. 418, 433-34 (2009) (“The party requesting a stay bears the burden of showing that the circumstances justify an exercise of [the court’s] discretion.”) (citations omitted). This heavy burden can only be satisfied if the movant shows “that the balance of the following four factors weigh in favor of a stay: (1) the likelihood that the party will prevail on the merits of the appeal; (2) the likelihood that the party will be irreparably harmed absent a stay; (3) the prospect that others will be harmed if the court grants the stay; and (4) the public interest in granting the stay.” Fed. Trade Comm’n v. Boehringer Ingelheim Pharm., Inc., 241 F. Supp. 3d 91, 97 (D.D.C. 2017), aff’d, 892 F.3d 1264 (D.C. Cir. 2018) (citation omitted). As Petrobras acknowledges, “[t]hese factors are typically evaluated on a sliding scale, and a strong showing of one factor may excuse a relatively weaker showing on another.” Baker v. Socialist People’s Libyan Arab Jamahirya, 810 F. Supp. 2d 90, 97 (D.D.C. 2011). However, as Petrobras fails to acknowledge, “the first two factors are the most critical. The moving party must make a strong showing on at least one of these two factors and some showing on the other.” Id. (citations omitted). Moreover, if a party cannot show irreparable harm, the court may dispose of the motion for a stay without analyzing the other factors. Wisconsin Gas Co. v. F.E.R.C., 758 F.2d 669, 674 (D.C. Cir. 1985) (“We believe that analysis of the second factor disposes of these motions and, therefore, address only whether the petitioners have demonstrated that in the absence of a stay, they will suffer irreparable harm”); see Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290, 297 (D.C. Cir. 2006) (“A movant’s failure to show any irreparable harm Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 14 of 23 10 is therefore grounds for refusing to issue a preliminary injunction, even if the other three factors entering the calculus merit such relief”). A. Petrobras Will Not Suffer Irreparable Harm if a Stay is Denied By failing to demonstrate irreparable harm, Petrobras’ motion for a stay does not even make it out of the starting blocks. The D.C. Circuit has explained that for harm to be considered irreparable, “the injury must be both certain and great; it must be actual and not theoretical.” Wisconsin Gas Co., 758 F.2d at 674. Monetary loss is insufficient unless it “threatens the very existence of the movant’s business.” Id. “For economic loss to constitute irreparable harm, legal remedies after the fact must be inadequate to restore the party seeking a stay to the status quo ante.” Mann, 185 F. Supp. 3d at 195 (quotation and citation omitted). Knowing that any monetary loss to Petrobras – standard litigation and discovery expenses for a finite period – will fall far short of irreparable, Petrobras re-couches its “harm” as the commencement of discovery before the Supreme Court has an opportunity to consider the propriety of U.S. jurisdiction. Petrobras’ argument, if accepted, however, would engraft into FSIA jurisprudence an automatic stay for petitions for certiorari where none exists. If Congress had intended for there to be an automatic stay pending a petition for Supreme Court review, it would have enacted this right. Nor is there any judicial precedent for this sweeping expansion of the FSIA. In any event, Petrobras’ actions speak much louder than its arguments. It cannot possibly claim irreparable harm, as Petrobras has routinely and recently agreed to jurisdiction in this country. In the securities class action in the Southern District of New York, which arose from Petrobras’ involvement in the massive “Lava Jato” corruption scandal and which Petrobras settled on February 1, 2018 for close to $3 billion, Petrobras participated in “more than three Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 15 of 23 11 years of litigation . . . extensive fact and expert discovery (including 68 depositions and review of more than 25 million pages of documents), preparations for trial, a substantial Second Circuit appeal, and a fully briefed petition for certiorari.” In re Petrobras Sec. Litig., Mem. Ord., No. 1:14-cv-09662-JSR, ECF No. 834, at 7 (S.D.N.Y. Jun. 25, 2018). Yet, Petrobras readily assented to U.S. jurisdiction and never claimed that it was immune from suit in this country. On September 26, 2018, Petrobras entered into the Criminal Agreement. By doing so, Petrobras agreed to jurisdiction in the United States. Petrobras further agreed that it would have continuing obligations of cooperation, monitoring, disclosure and remedial action for a term of three years on a going-forward basis. Ex. A at 4-6, C-1. During the multi-year investigation by the Fraud Section and the Office, Petrobras shared “real-time facts discovered during the internal investigation [conducted by Petrobras]” made “regular factual presentations to the Fraud Section and the Office,” facilitated “interviews of and information from foreign witnesses” and voluntarily collected, analyzed and organized “voluminous evidence and information for the Fraud Section and the Office in response to requests, including translating key documents.” Id. at 1-2. Petrobras further instituted eleven separate actions as a plaintiff in the U.S. Plaintiffs’ Memorandum of Law in Opposition to the Motion to Dismiss at 34 and Ex. T (ECF Nos. 62 and 62-24). To the extent that Petrobras suffers any harm from the commencement of discovery in this case, it is Petrobras’ own fault, as it failed to petition the D.C. Circuit for a stay of the mandate pending the resolution of its petition for certiorari. See e.g. Cementos, 727 F. Supp. at 619 (“any hardship the decision of this Court bestows upon plaintiffs” results from their failure to seek a stay of the Federal Circuit’s mandate pending certiorari). Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 16 of 23 12 The cases on which Petrobras relies are readily distinguishable, as each involves potential deprivations of individuals’ liberty. For example, Petrobras cites to Hicks v. Bush, 397 F. Supp. 2d 36 (D.D.C. 2005) and Al-Sharbi v. Bush, 430 F. Supp. 2d 1 (D.D.C. 2006), both of which involve prisoners at Guantanamo Bay. See Petrobras’ Motion to Stay (“Petrobras Br.”) at 4-5. In those cases, the court considered a stay because the Supreme Court had already granted certiorari in a related case of Hamdan v. Rumsfled, 548 U.S. 557 (2006), which involved the same jurisdictional issues. B. Petrobras is Unlikely to Prevail on its Petition Petrobras must demonstrate that its petition for certiorari is likely to be granted and that the Supreme Court is likely to reverse the D.C. Circuit’s decision in order to establish the “success” prong of the four-factor stay analysis. Sussman v. Jenkins, 642 F.3d 532, 533 (7th Cir. 2011) (describing success as “obtaining a grant of certiorari and reversal of th[e] [appellate] court’s decision”).2 See also Conkright v. Frommert, 556 U.S. 1401, 1402 (2009) (Ginsberg, J., in chambers) (explaining that for a justice of the Supreme Court to grant a stay, the applicant must persuade the court that there is “a fair prospect that a majority of the Court will conclude that the decision below was erroneous”). It cannot do so. As this Court well knows, the Supreme Court denies the vast majority of pending petitions. For example, it granted only 1.2% of all petitions in the 2016 Term, including just 2 Because Petrobras is unable to demonstrate that the other three factors “strongly favor a stay,” it is incorrect to suggest that it need only show a “serious legal question on the merits.” Petrobras Br. at 7. In support of this claim, Petrobras relies upon NAACP v. Trump, 321 F. Supp. 3d 143, 146 (D.D.C. 2018). That case involved the status of the Deferred Action for Childhood Arrivals (DACA) program. In granting a stay, the court emphasized the “the significant confusion and uncertainty that currently surrounds the status of the DACA program, which is now the subject of litigation in multiple federal district courts and courts of appeals,” and found “that confusion would only be magnified if the Court’s order regarding initial DACA applications were to take effect now and later be reversed on appeal . . . as plaintiffs themselves suggest.” Id. at 146. That case is nothing like the present one. Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 17 of 23 13 4.6% of petitions from the appellate docket (which consisted of only paid cases). See Supreme Court: The Statistics, 131 Harv. L. Rev. 403, 410 tbl.II (B)(2017), available at: https://harvardlawreview.org/2017/11/supreme-court-2016-term-statistics/; McMillan v. DeKalb Cty., Georgia, No. 1:04-CV-3039-BBM, 2007 WL 9700671, at *1–2 (N.D. Ga. July 17, 2007) (noting that petitions for writs of certiorari are “very rarely granted,” declining to grant stay where “[d]efendants [] simply failed to convince the court that their petition [wa]s likely to be granted by the Supreme Court” and emphasizing that “[d]efendants [] had the opportunity to argue their position to both this court and to the Court of Appeals without success, and they . . . failed to show this court that the Supreme Court will view the matter in a different light”). Making a grant of certiorari even more unlikely here, the Supreme Court recently denied a petition for certiorari to review the Second Circuit’s decision in Atlantica, which the D.C. Circuit expressly followed in holding that the direct effect clause of the commercial activity exception to the FSIA applies here. Atlantica Holdings, Inc., 137 S. Ct. 493 (2016) (denying certiorari). It is highly unlikely that the Supreme Court will grant a petition on nearly the exact same issue that it so recently declined to review. See Indep. Living Ctr. of S. California v. Shewry, No. CV 08-3315 CAS (MANx), 2010 WL 11520551, at *2 (C.D. Cal. Mar. 17, 2010) (denying stay where the Supreme Court had recently declined to review similar legal issues). In arguing that the Supreme Court is likely to grant certiorari, Petrobras tries to manufacture circuit splits where none exist. These are the exact same arguments it made to the D.C. Circuit in support of its petition for a panel rehearing or rehearing en banc, which nine judges of the D.C. Circuit denied. Ex. C at 12-15. Yet, Petrobras persists in its assertion that “three other circuits” – citing cases from the Fifth, Second and Tenth Circuits – have “declined to find that a plaintiff as distant from Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 18 of 23 14 the locus of the tort as this one . . . suffered a ‘direct effect’ sufficient to confer jurisdiction.” Petrobras Br. at 8. As Plaintiffs pointed out to the D.C. Circuit in its opposition to Petrobras’ petition for rehearing and en banc review, the cases upon which Petrobras relies for the so-called circuit split are largely inapplicable contract cases, including a 1989 Second Circuit case, which predates Atlantica by twenty-seven years. See Response in Opposition to Petition for Panel Rehearing or Rehearing En Banc, Ex. D, at 10-15. Atlantica, a tort case, is, in fact, the only decision from another circuit similar to this one where a defendant targeted U.S. investors to invest in a fraudulent enterprise. See id. at 2, 10-13. Petrobras again asserts that the D.C. Circuit’s decision conflicts with “four” other circuits, which, according to Petrobras, hold that any direct effect in the U.S. must be a product of “legally significant acts.” Petrobras Br. at 8. But, Petrobras actually only cites cases from three circuits, the Second, the Ninth and Seventh, in support of this proposition. In its petition for rehearing, Petrobras also included the Tenth Circuit in its list, but as Plaintiffs highlighted in opposition, the Tenth Circuit has expressly disavowed the “legally significant acts” test. Ex. D at 14. The Second Circuit, moreover, has abandoned the “legally significant acts” test, as Atlantica does not even mention it; the Seventh Circuit’s decision upon which Petrobras relies conflicts with the Supreme Court’s subsequent decision in Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 611 (1992); and to the extent the Ninth Circuit adheres to the test, the D.C. Circuit Panel’s decision is consistent with that Circuit’s formulation. In any event, Weltover does not adopt this test and there is no reason to believe the Supreme Court would do so now. See Ex. D at 2-3, 13-15. Notably, the petitioner in Atlantica also argued that there was a circuit split on how to interpret the direct effect clause of the commercial activity exception to the FSIA when it Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 19 of 23 15 filed its petition for certiorari in August 2016 on similar issues. Petition for a Writ of Certiorari, Sovereign Wealth Fund Samruk-Kazyna JSC v. Atlantica Holdings, Inc., No. 16-2011, 2016 WL 4363497, at *30 (Aug. 10, 2016). Given that the Supreme Court found that proposition unpersuasive two years ago and Petrobras cites no intervening cases, it is highly unlikely to have a change of heart today. C. The Interests of the Public at Large Do Not Favor a Stay In a strained attempt to demonstrate that public policy favors granting a stay, Petrobras advances the unsupported contention that permitting discovery to move forward before the Supreme Court has had an opportunity to opine on the jurisdictional issue at hand would “eliminate [] entirely” the principles behind foreign sovereign immunity. Petrobras Br. at 6. In doing so, Petrobras ignores the fact that the propriety of U.S. jurisdiction was carefully considered by this Court, affirmed by a three-judge panel of D.C. Circuit judges, and an opportunity to reconsider the issue was put before the entire bench of the D.C. Circuit. Despite Petrobras’ suggestion to the contrary, it is not necessary for parties to reach the Supreme Court to have their interests vindicated, and Supreme Court review is not necessary to protect every public interest. The parade of horribles Petrobras advances – that if this proceeding is not stayed, “[o]ther countries might respond in turn, forcing U.S. government agencies through their court systems even before their high courts have had a chance to intervene” – is similarly unpersuasive. See Petrobras Br. at 7. There is simply no basis to believe that foreign courts only assert jurisdiction over U.S. government agencies or instrumentalities after their highest courts have had an opportunity to weigh in. Moreover, a foreign sovereign’s immunity is not absolute, as Petrobras suggests. By enacting the FSIA, Congress carved out specific exceptions to such immunity, including like in the case at hand. Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 20 of 23 16 Because the United States maintains an important interest in adjudicating fraudulent acts directed at this country, the public interest factor favors the Funds. See also Baker, 810 F. Supp. at 100 (in a terrorism case, the public interest weighed against granting a stay because “[b]y enacting § 1605(A), Congress has clearly communicated its intent that state sponsors of terrorism should be held liable for the deaths and injuries of U.S. citizens caused by the terrorist attacks that those states have sponsored.”). In addition, “the public interest almost always lies in prompt resolution of disputes on the merits,” which counsels against a stay here. BNSF Ry. Co. v. O'Dea, No. CV-07-137-BLG-CSO, 2009 WL 10701773, at *4 (D. Mont. Nov. 17, 2009) (denying motion for stay). D. The Funds Would be Prejudiced if the Stay is Granted Despite Petrobras’ argument to the contrary, the delay it seeks constitutes more than just a “‘minor logistical reshuffling.’” See Petrobras Br. at 5 (citing Hicks, 397 F. Supp. 2d at 43). This case has been on the Court’s docket for over two years (by February 2019, it will have been pending for three), and the Funds have yet to have had the opportunity to develop the factual record beyond what is publicly available, let alone put on their case. Petrobras attempts to understate the delay it urges this Court to grant as likely to be resolved “as early as February.” Petrobras Br. at 5-6. But Petrobras does not and cannot know the schedule the Supreme Court will follow in considering its petition for certiorari. III. This Court Should Order Petrobras to Answer the Complaint and Set a Rule 16 Scheduling Conference at Its Earliest Convenience Petrobras’ Answer to the Amended Complaint was due on October 23, 2018, fourteen days from the date the mandate issued. Rather than comply with its obligations, Petrobras filed the pending motion for a stay. This delay tactic should be rejected. Plaintiffs request that this Court set a Rule 16 Scheduling Conference at its earliest convenience. Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 21 of 23 17 Conclusion For the foregoing reasons, (i) Petrobras’ motion to stay these proceedings pending resolution by the United States Supreme Court should be denied, and (ii) the Court should set a Rule 16 Scheduling Conference at its earliest convenience. COBURN & GREENBAUM PLLC KRAMER LEVIN NAFTALIS & FRANKEL LLP By: /s/ Barry Coburn Barry Coburn, D.C. Bar No. 358020 1710 Rhode Island Avenue, NW Washington, D.C. 20036 Tel: (202) 657-4490 By: /s/ Daniel B. Goldman Daniel B. Goldman, admitted pro hac vice Kerri Ann Law, admitted pro hac vice Sam M. Koch, admitted pro hac vice 1177 Avenue of the Americas New York, New York 10036 Tel: (212) 715-9100 Dated: November 6, 2018 Attorneys for Plaintiffs Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 22 of 23 CERTIFICATE OF SERVICE I hereby certify that on this 6th day of November 2018, I caused to be delivered a true and accurate copy of the foregoing Memorandum of Law in Opposition to Petrobras’ Motion to Stay, along with all attachments and exhibits thereto, the Declaration of Daniel B. Goldman, and the Proposed Order Denying Petrobras’ Motion to Stay Proceedings on all counsel of record via ECF. /s/ Barry Coburn Barry Coburn Case 1:16-cv-00333-APM Document 88 Filed 11/06/18 Page 23 of 23