White Collar & Regulatory Defense
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Our White Collar & Regulatory Defense group has unparalleled experience and expertise, and is among the most respected and successful in the United States. We regularly defend Fortune 500 companies and their executives and boards before every major federal and state regulatory enforcement authority and in courtrooms nationwide. We excel at developing creative and successful strategies for responding to and, where possible, preventing government investigations and enforcement proceedings.
Paul, Weiss achieved a major victory for commodities trading company Glencore when the U.S. Court of Appeals for the Eleventh Circuit affirmed the dismissal of a multi-billion-dollar lawsuit against Glencore and a host of other oil traders for allegedly conspiring to bribe Venezuelan officials and rig bids for contracts with Venezuela’s national oil company, PDVSA. The action was brought by a trust, controlled indirectly by New York legal counsel, that had allegedly received an assignment of PDVSA’s claims orchestrated by Venezuelan government officials affiliated with the disgraced administration of President Nicolas Maduro. The defendants moved to dismiss the complaint on standing grounds, arguing that the plaintiff could not prove the authenticity or admissibility of the purported assignment, that the assignment violated New York trust law (which governed the assignment), that the assignment was barred by New York’s prohibition against champerty, and that the actions of PDVSA and the Venezuelan government violated Venezuelan law and were not protected by the act of state doctrine. Following extensive briefing and an evidentiary hearing, U.S. Magistrate Judge Alicia M. Otazo-Reyes recommended the dismissal of the action on various grounds, including that plaintiff’s evidence of the assignment was not admissible and that, in any event, the assignment violated the New York law against champerty. In March 2019, U.S. District Judge Darrin Gayles adopted the magistrate judge’s recommendation and dismissed the action for lack of standing. Two years later, a panel of the U.S. Court of Appeals for the Eleventh Circuit unanimously affirmed that dismissal.
The Eleventh Circuit’s decision declined to address the evidentiary issues and rested solely on the ground that the assignment was invalid because it was undertaken “with the intent and for the purpose of bringing an action or proceeding thereof” in violation of the champerty prohibition codified in New York Judiciary Law section 489(1). The Court upheld the District Court’s finding, based on the evidence before it, that the “primary purpose” of the trust agreement was to “facilitate the prosecution and resolution” of PDVSA’s claims. The 11th Circuit also agreed that such litigious primary purpose rendered the agreement champertous under controlling New York precedent.March 18, 2021