Source: http://www.mddefensecounsel.org/cases/crystallex_international_corp_petroleos_de_venezuela.html
Timestamp: 2017-11-22 23:34:57
Document Index: 319082505

Matched Legal Cases: ['§ 1292', '§ 1301', '§ 1602', '§ 1292', '§ 1292', '§ 1292', '§ 1292', '§ 1292', '§ 1292', '§ 1609', '§ 1304']

Delaware Federal Court Examines Requirements for Interlocutory Review
Case No. 15-1082-LPS (United States District Court for the District of Delaware, December 27, 2016)
http://www.ded.uscourts.gov/sites/default/files/opinions/lps/2016/december/15-1082.pdf
Crystallex International Corp. v. Petróleos de Venezuela, S.A., et al. involved a Defendant’s motion requesting that the U.S. District Court for the District of Delaware (“the Court”) certify the Court’s order denying the Defendant’s motion to dismiss the Plaintiff’s Complaint for interlocutory review, pursuant to 28 U.S.C. § 1292(b). The Court concluded that the order addressed a “controlling question of law” as to which there was “substantial ground for difference of opinion,” and that an immediate appeal “may materially advance the ultimate termination of the litigation.” Accordingly, the Court granted the Defendant’s motion and certified the order for interlocutory review.
By way of factual background, on November 23, 2015, Plaintiff Crystallex International Corporation (“Crystallex” or “Plaintiff”) filed a Complaint against Defendants, Petróleos de Venezuela, S.A. (“PDVSA”) and its subsidiary, PDV Holding, Inc. (“PDVH”). Plaintiff alleged that PDVSA “was an alter ego of the Bolivarian Republic of Venezuela (“Venezuela”),” and accused PDVSA of “carrying out a scheme to monetize and repatriate Venezuelan interests that had been held in the United States in order to evade potential arbitration creditors,” including Plaintiff. Plaintiff sought relief under Delaware’s Uniform Fraudulent Transfer Act, 6 Del. C. § 1301 et seq. (“DUFTA”).
On February 3, 2016, PDVH moved to dismiss the Complaint. PDVH contended that the Complaint failed to state a DUFTA claim on which relief could be granted and, even if that were not the case, that Crystallex’s DUFTA claim was barred by the Foreign Sovereign Immunities Act, 28 U.S.C. § 1602 et seq. (“FSIA”). On September 30, 2016, the Court issued a Memorandum Opinion and Order on the motion to dismiss, holding that the Complaint “adequately stated a DUFTA claim as to PDVH,” and that “PDVH failed to show that FSIA bars the action in its entirety.”
On October 28, 2016, PDVH filed a notice of appeal with respect to the Court’s FSIA holding. In its appeal, PDVH cited Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949), and contended that the Court’s FSIA holding was immediately appealable under the collateral order doctrine, regardless of whether the Court also certified the issue for interlocutory review under 28 U.S.C. § 1292(b). Also on October 28, 2016, PDVH filed the motion at issue in the U.S. District Court for the District of Delaware requesting that the Court certify the FSIA issue, as well as its DUFTA holding, for interlocutory review pursuant to 28 U.S.C. § 1292(b).
The Court began its analysis by noting that “under § 1292(b), the Court has discretion to certify orders for interlocutory review where ‘exceptional circumstances’ merit a departure from the final judgment rule.” See Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978). The Court explained that “an order that (i) addresses a ‘controlling question of law’ as to which there is (ii) ‘substantial ground for difference of opinion’ may be certified under the statute if (iii) an immediate appeal ‘may materially advance the ultimate termination of the litigation.’” See 28 U.S.C. § 1292(b); Katz v. Carte Blanche Corp., 496 F.2d 747, 754 (3d Cir. 1974). According to the Court, “all three (3) of these criteria [were] satisfied with respect to both the FSIA and DUFTA issues.”
Regarding the first criterion, the Court explained that “a controlling question of law must encompass at the very least every order which, if erroneous, would be reversible error on final appeal.” See Katz, 496 F.2d at755. The Court found that the “FSIA and DUFTA holdings each involved resolution of complex questions of statutory interpretation,” including “whether the FSIA’s restrictions on prejudgment attachments apply to fraudulent transfer claims seeking a final judgment on the merits, and whether the Complaint alleges a transfer ‘by’ a debtor.” The Court further noted that its “conclusions regarding these purely legal issues were dispositive and would require dismissal of the action if reversed on appeal.” Accordingly, the Court concluded that the first criterion was satisfied.
Regarding the second criterion, the Court noted that “Crystallex’s creative and apparently unprecedented fraudulent transfer theory required the Court to resolve novel questions of law,” and that “in doing so, the Court had to choose between two (2) sets of strong, well-supported, and persuasive arguments.” Accordingly, the Court concluded that there were “substantial grounds for a difference of opinion” with respect to the Court’s resolution of both the FSIA and DUFTA issues, “notwithstanding the novelty of the issues.” In reaching that conclusion, the Court noted that it disagreed “with Crystallex’s suggestion that this criterion for § 1292(b) certification cannot be satisfied where there are no conflicting decisions issued by courts previously grappling with the issue.”
Regarding the third criterion, the Court noted that “the statute requires only the possibility that interlocutory review would materially advance the litigation.” See 28 U.S.C. § 1292(b) (providing that a court should consider whether “immediate appeal may materially advance” the litigation). Crystallex contended that certification would “not materially advance the termination of this litigation” and would “only result in substantial delay to Crystallex’s detriment.” The Court, however, noted that was “only even possibly true if Crystallex prevails on appeal,” and that the delay Crystallex feared was “not an automatic consequence of the Court’s ruling” because discovery did not necessarily need to be stayed during the pendency of the appeal. The Court further noted that “if the Third Circuit agrees with PDVH and reverses one (1) or both of the Court’s holdings, the case would be terminated upon remand.” Accordingly, the Court concluded that interlocutory review would materially advance the litigation.
For the foregoing reasons, the Court granted PDVH’s motion and certified the following questions for interlocutory review:
Whether the FSIA attachment immunity provisions, 28 U.S.C. §§ 1609-1611, preempt state fraudulent transfer laws to the extent that they effectively restrain immunized property of a foreign sovereign debtor or impose liability on non-debtor transferors for prejudgment transfers of immunized property.
Whether the phrase “by a debtor” in DUFTA, 6 Del. C. § 1304(a)(l), applies to “non-debtor transferors” deemed to be acting on the debtor’s behalf, absent allegations of alter ego or piercing the corporate veil.