[00:00:00] Speaker 00:
Place number 20-7078.

[00:00:03] Speaker 00:
Agudas Chassiday Chabad of United States versus Russian Federation et al.

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State Development Corporation VEB.RF, formerly known as FNESH Economic Bank Appellant.

[00:00:14] Speaker 00:
Mr. Lifshitz for the appellant, Mr. Lieberman for the appellate.

[00:00:21] Speaker 05:
I just need one moment to get my file.

[00:00:24] Speaker 04:
Hold on for just one second.

[00:00:33] Speaker 01:
Thank you.

[00:00:39] Speaker 01:
Good morning and may it please the court.

[00:00:41] Speaker 01:
David Lipschitz for VEB, and I'd like to reserve five minutes for rebuttal.

[00:00:46] Speaker 01:
Within the meaning of the FSIA, VEB is an independent instrumentality of the Russian Federation entitled to sovereign immunity.

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Every court that has considered this question has held so.

[00:00:58] Speaker 01:
The district court below ignored its obligation to adjudicate VEB's sovereign immunity.

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Instead, it authorized a subpoena directed to VEB, apparently based on the finding of jurisdiction over the Russian Federation itself.

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In so doing, the district court erred in two ways.

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First, the district court failed to consider VEB's immunity, which requires immediate correction.

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This court's precedent is clear that VEB is entitled to have its immunity determined

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before it is forced to partake in US litigation?

[00:01:33] Speaker 03:
Partake in litigation is a rather broad term.

[00:01:39] Speaker 03:
Whether you're asked the question by the opposing briefs, is there really a third immunity, or do amenities only exist as to being a defendant in litigation or being attached as opposed to simply being subpoenaed, as it were, or ordered as a witness?

[00:01:59] Speaker 01:
Your honor, section 1604 provides immunity from the process of the district court.

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It does not draw a distinction between discovery.

[00:02:09] Speaker 03:
What are the words that you're using there?

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Read it from the statute if you have.

[00:02:15] Speaker 01:
Of course.

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Subject to existing international agreements to which the United States is a party, at the time of enactment of this act, a foreign state shall be immune from the jurisdiction of the courts of the United States

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and of the states except as provided in section 1605.

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This court has held that in order to issue a subpoena, the district court must have jurisdiction over the matter.

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It did not have jurisdiction over VEB here.

[00:02:45] Speaker 01:
That is the Houston Business Journal case, Your Honor.

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Moreover, I would also point you to the Second Circuit decision in Peninsula and in Vera.

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And in Peninsula, the case was very much focused on third-party discovery from an agency and instrumentality of the Korean government.

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Let me ask you, counsel, when your client filed a supplemental brief to its motion to quash,

[00:03:18] Speaker 05:
It raised an immunity defense, did it not?

[00:03:23] Speaker 01:
It raised the immunity defense of the Russian Federation.

[00:03:26] Speaker 01:
Yes, Your Honor.

[00:03:30] Speaker 05:
And so at the point, I'm just trying to understand.

[00:03:35] Speaker 05:
So VEB never raised

[00:03:39] Speaker 05:
its own immunity?

[00:03:41] Speaker 05:
That's what I'm trying to clarify here.

[00:03:42] Speaker 01:
No, that's not true, Your Honor.

[00:03:44] Speaker 05:
Well, where did it raise it?

[00:03:46] Speaker 01:
Sure.

[00:03:47] Speaker 01:
At JA25, VEB preserved its immunity.

[00:03:51] Speaker 01:
Ah, yes.

[00:03:52] Speaker 05:
It says not waiving any immunity or other defenses.

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And that's it.

[00:04:00] Speaker 01:
But as Your Honor.

[00:04:01] Speaker 05:
That's not the same as raising an issue.

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That's true, Your Honor.

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But as Your Honor held in Houston Business Journal, a district court must satisfy itself as to its own jurisdiction.

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The district court did not do so here.

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We thought that adjudication through the 1292 motion that we did file very expressly raising VEB's immunity.

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And the district court.

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But you just told me it didn't.

[00:04:27] Speaker 01:
Well.

[00:04:28] Speaker 01:
In 1292, Your Honor, in our motion in 1292, filed in January of 2020, we specifically asserted that the district court lacked jurisdiction and over VEB, lacked subject matter jurisdiction over VEB, and asked the district court to review that finding and certify that finding for appeal.

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The district court ignored that argument.

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It's not that it decided it against us.

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There is no decision on VEB's immunity argument

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at all.

[00:04:57] Speaker 03:
Excuse me, go ahead.

[00:05:02] Speaker 04:
Thank you.

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On the 1292B, the district court didn't certify it for interlocutory review.

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That's right, Your Honor.

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If it doesn't certify it for interlocutory review, how do we have jurisdiction under 1292B?

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Because that's a necessary ingredient to our jurisdiction.

[00:05:17] Speaker 01:
Of course, Your Honor.

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So I think this is an answer in three parts.

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First of all, this court always has jurisdiction to review a district court's lack of subject matter jurisdiction.

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Second of all, in Briggs, Your Honor, this court established a framework, and it's a little bit confusing because the Briggs majority opinion on this issue is in the dissent.

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But if you look at it, in that case, this court explained that a remediated review of a 1292 denial

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maybe is appropriate in a small class of cases where the district court's decision effectively abrogates a litigant's immunity from having to participate in the legal process.

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In fact, Briggs uses that as an example, stating that a decision which has the effect of abrogating immunity, which protects a person from a trial under action as much as from an outcome on trial,

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is precisely the type of case where immediate review would be appropriate.

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And if you look at this court's decision in Pampadreou, where it finds that sovereign immunity is precisely the type of immunity from trial and the attendance burdens of litigation, and not just a defense to liability on the merits.

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And going back to Judge Santel's question earlier, Pampadreou is precisely a case

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that dealt with discovery rather than the merits, as I mentioned earlier, the Peninsula case in the Second Circuit.

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And finally, Your Honor, if you're... If Briggs is... Briggs, there's some...

[00:07:02] Speaker 04:
confusing things going on because of the variation of the panelists and the different issues that different people addressed and the possibility of collateral order review.

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But apart from that, I'm not understanding how under the terms of the statute, we have jurisdiction when the district court just didn't certify under 1292B.

[00:07:21] Speaker 04:
That just seems to be under the terms of the statute.

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a necessary predicate to our jurisdiction to review the interlocutory order via that route.

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There might be other routes to review something, but under 1292B, the terms of the statute require certification by the district court.

[00:07:39] Speaker 01:
That's right, Your Honor.

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We're not arguing for a review of the district court's discretion.

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We're arguing that that order, which ignored VEB's immunity argument in total,

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effectively abrogates VB's immunity as an instrumentality of the Federation within the FSIA and under this court's precedent in P&ID, Briggs, and Papandreou, excuse me, that should suffice to provide jurisdiction.

[00:08:09] Speaker 04:
Could you add a collateral order appeal of the previous order?

[00:08:14] Speaker 04:
I'm sorry, Your Honor.

[00:08:15] Speaker 04:
May I ask?

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Could you have taken a collateral order appeal of the previous order?

[00:08:20] Speaker 01:
Yeah.

[00:08:21] Speaker 01:
Your Honor, admittedly, the area, the question was unclear when we were looking at it.

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Generally, discovery orders are not subject to collateral order review.

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It was only six months after we filed our 12, or four months, I guess,

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after we filed our 1292 order, that this court decided PNID.

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And in PNID, it made clear for the first time that any order that effectively abrogates immunity is subject to collateral order review.

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That of course was a scheduling order.

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And we submitted a notice of supplemental authority on that point to the district court.

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Again, there was no answer.

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Following all of that, Your Honor, if you feel uncomfortable with simply reviewing the 1292 order, there is the avenue of mandamus, which we submit is satisfied here.

[00:09:14] Speaker 04:
There is no dispute that- It's hard to grant mandamus in a situation in which there was another route.

[00:09:20] Speaker 04:
And if the other route was the collateral order appeal of the December order, then mandamus would seemingly be off the table because that's one of the predicates to mandamus.

[00:09:30] Speaker 01:
Well, Your Honor, we did seek review of the December order.

[00:09:35] Speaker 01:
We thought it through 1292.

[00:09:37] Speaker 01:
At that time, there was no clear avenue that allowed... Did you file an appeal of it or an attempt to appeal of it?

[00:09:44] Speaker 01:
I'm sorry, Your Honor, one more time.

[00:09:46] Speaker 03:
Did you file in this court for review of that 1292 order?

[00:09:50] Speaker 01:
Yes, we did.

[00:09:51] Speaker 01:
We filed in the court timely notice of appeal of the July order of the 1292 order and to go back to number order, but not not to January.

[00:10:03] Speaker 01:
Sorry, we did not.

[00:10:04] Speaker 01:
Yes, I apologize for the confusion.

[00:10:07] Speaker 01:
Yes, we did not file seek immediate review of the December order in this court.

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We did not think we had the ability to do so because at the time it was a discovery order and it was not clear.

[00:10:22] Speaker 01:
So we believe 1292 required us to ask.

[00:10:26] Speaker 01:
Sorry, rather, we believe that at that moment we needed to seek certification.

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This court subsequently issued PNID, which identified an alternative route, which is the route that we saw.

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But if you put us back in the position that we were in in December, Your Honors,

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That wasn't clear.

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It certainly wasn't obvious.

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And so we did what we thought we needed to do to preserve the to assert our rights and to challenge the district court jurisdiction, but we were not sitting on our hands.

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We took every opportunity available to us along the process.

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And the fact remains that today, before this court, there is no duplication.

[00:11:10] Speaker 04:
You didn't take every opportunity available to you because you, and I'm not saying you necessarily, I'm not attributing anything to this.

[00:11:17] Speaker 04:
You had another opportunity available to you and at the time you didn't believe that it was, but it turns out, even you seem to concede that it turns out that it was available to you at the time.

[00:11:27] Speaker 01:
I would submit your honor the P and ID was a was a significant shift at the time that had happened when you for the first time ruled in the context of an order that is not typically available.

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I would also know that this is an area of law which differs from some others.

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In Pempendriou and McKesson, this course endorsed and sovereigns routinely make seriatim motions before asserting immunity.

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So if the issue was that we needed to make a second motion to quash, we would gladly do that.

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We are not asking for anything more than having our immunity adjudicated by someone.

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We believe this court has the authority to do so on the record before it.

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It is, after all, a question of law.

[00:12:12] Speaker 04:
Is there a time limit on filing the second motion to quash now?

[00:12:16] Speaker 01:
I am not aware of one.

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Again, this is an area which has not come up before.

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So if the answer is that we go down below and we make a second motion to quash, that would be perfectly appropriate.

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We're concerned about the fact that if we do so, we would run into issues of sanctions.

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And this court has already identified that it would be inappropriate to sanction an agency or an instrumentality of a sovereign

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without immunity being first adjudicated.

[00:12:49] Speaker 04:
Okay.

[00:12:49] Speaker 04:
And then you want it to reserve some time for rebuttable.

[00:12:53] Speaker 01:
Let me make sure you have five minutes.

[00:12:55] Speaker 04:
Let me make sure my colleagues don't have additional questions for you at this time.

[00:13:00] Speaker 04:
Okay.

[00:13:01] Speaker 04:
I'm sorry, just until you have a question.

[00:13:04] Speaker 03:
Is it really fixed that your immunity is not derivative from the Russian sovereign?

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You understand what I'm saying?

[00:13:14] Speaker 03:
They have waved, if the Russian sovereign has waved or has been held to have waved, and I understand maybe some speaking about whether Chavitad I was correct, but do you have an independent immunity if the sovereign from whom you derive your status has lost its immunity?

[00:13:35] Speaker 01:
Yes, Your Honor.

[00:13:37] Speaker 01:
In order to exercise jurisdiction over us on the basis that Russia has lost its immunity, which is exactly what about asks the score to do at 32 would require the score to ignore four decades of precedent from the Supreme Court and from this court, the precedent of bonkack McKesson.

[00:13:56] Speaker 01:
and other cases that we cite in our papers makes clear that our immunity has to be adjudicated on its own basis.

[00:14:07] Speaker 01:
It's not, quote unquote, derivative.

[00:14:09] Speaker 03:
We're not only the immunity in question before, but the litigation in question.

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That is to say, again, you're not a part of the litigation.

[00:14:17] Speaker 03:
This is a discovery process where that matter has come before us

[00:14:25] Speaker 03:
in spite of the immunity of the sovereign, why didn't that take your immunity with it?

[00:14:30] Speaker 03:
You're not the Russian government.

[00:14:32] Speaker 01:
Of course, Your Honor, but just like the fact that the Second Circuit held that it had immunity over Argentina in the EM case did not give a jurisdiction over the Argentinian central bank or in Walter Fuller aircraft, the fact that there was a jurisdiction over the Republic of the Philippines did not give a jurisdiction over the commission.

[00:14:51] Speaker 01:
The jurisdiction over VB has to be adjudicated as with respect to VB not the Federation itself, their independent their independent entities within the meaning of the Supreme Court's bucket decision, and we're not aware of any case anywhere in the United States.

[00:15:11] Speaker 01:
that would endorse abrogating immunity of an instrumentality within the meaning of the FSIA because the immunity of the sovereign has been deemed to be pierced in any context, including the jurisdictional context.

[00:15:29] Speaker 01:
Sorry, including in the discovery context.

[00:15:32] Speaker 01:
That's all.

[00:15:33] Speaker 04:
Thank you, Mr. Blicius.

[00:15:34] Speaker 04:
We'll give you a little time for rebuttal.

[00:15:36] Speaker 04:
Mr. Lieberman, we'll hear from you now.

[00:15:40] Speaker 02:
May it please the court.

[00:15:41] Speaker 02:
The first question is, as each of your honor's questions make clear as whether this court has jurisdiction to entertain the issues that VEB purports to raise on appeal.

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VEB could have filed an immediate appeal within 30 days from Judge Lamberth's order denying the motion to quash.

[00:16:05] Speaker 02:
It shows not to do that.

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In response to the panel's questions,

[00:16:09] Speaker 02:
Mr. Lifshitz argued for the first time, it wasn't in his opening brief, it wasn't in his reply brief, that the reason that they did not file the notice of appeal is because they had some question as to whether or not an appeal at that point would have been appropriate.

[00:16:25] Speaker 02:
I think Mr. Lifshitz post-hoc argument about that is inconsistent with his argument that for decades it has been known that the Foreign Sovereign Immunity Act

[00:16:37] Speaker 02:
provides immunity against discovery for third parties.

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So I don't know how he's gonna balance those two, but in any event, the motion to quash, no timely noticeable appeal.

[00:16:48] Speaker 02:
There's no jurisdiction to hear the issues on the motion to quash.

[00:16:54] Speaker 02:
On 1292B, this court and other courts have been very clear.

[00:16:59] Speaker 04:
Can I just ask you before we go to 1292B on the motion to quash, what if there's a subsequent motion, can there be a subsequent motion to quash?

[00:17:07] Speaker 02:
I think if there is a subsequent event which gives rise to new issues, they could file a motion to quash.

[00:17:17] Speaker 04:
And then at that time, would that be reviewable under the collateral order doctrine?

[00:17:21] Speaker 02:
Depending upon the nature of the dispute and the order, yes, I think it would be.

[00:17:28] Speaker 02:
But they couldn't just file another motion to quash now.

[00:17:30] Speaker 02:
They'd have to wait for something else to happen.

[00:17:33] Speaker 02:
Otherwise, the jurisdiction requirement of a

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notice of appeal within 30 days would be meaningless.

[00:17:39] Speaker 04:
Well, I mean, the district court would have to issue an order.

[00:17:42] Speaker 02:
Yeah, yes.

[00:17:44] Speaker 02:
But if they just filed a motion to quash saying, you know, based on what's happened in the past, we're filing another motion to quash that would not give rise to the right to bring a new appeal.

[00:17:55] Speaker 02:
But if something else happened in discovery, it was new and distinct.

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Certainly they could file a motion.

[00:18:03] Speaker 02:
As to 1292B,

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As Your Honor correctly pointed out, the statute makes very clear that there is no jurisdiction for the court of appeals to entertain a 1292B appeal unless the district court judge certifies the issues for appeal, which Judge Lambert declined to do here.

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Therefore, 1292B does not get you off.

[00:18:23] Speaker 02:
With respect to mandamus, again, as Your Honor's question makes clear, because there was an alternative route

[00:18:32] Speaker 02:
mandamus is not available.

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And if there was any doubt about that question, this court dealt with that issue recently in the Lee Hospital case.

[00:18:42] Speaker 02:
In the Lee Hospital case, this court specifically said that because the appellants in that case could seek the relief they desire under Rule 60B4, they cannot obtain mandamus relief.

[00:18:58] Speaker 03:
Let me ask you back on the question of the 1292b denial not being appealable.

[00:19:06] Speaker 03:
It makes a great deal of sense, but the question I have is, if you have an immunity case, and forget about the instrumental analogy, suppose you have a very clear sovereign immunity case in which the sovereign has the right to be immune, not just from judgment, but from litigation, and they make the motion, and then they're denied that

[00:19:29] Speaker 03:
appealability under the 1292, is there no way that the sovereign can then get review of the immunity it's being denied?

[00:19:41] Speaker 02:
Well, I think a 1291 appeal would be appropriate in those circumstances, your honor.

[00:19:46] Speaker 02:
And of course, here we have a very different factual situation.

[00:19:49] Speaker 02:
First, VEB chose for whatever reason not to raise the issue of their own purported immunity,

[00:19:57] Speaker 02:
in their motion to quash as Mr. Lipschitz answers to Judge Rogers' questions made very clear.

[00:20:04] Speaker 04:
Not only that, they made sort of- I don't think it matters for jurisdictional purposes because even if they didn't raise it, I think you acknowledge that they could have taken a 1291 appeal of the order denying the motion to quash.

[00:20:17] Speaker 02:
Yes, that's absolutely true.

[00:20:19] Speaker 04:
The fact that they didn't raise it doesn't matter because if they would have taken an appeal at that point under 1291, then we would have been obligated

[00:20:26] Speaker 04:
to address the jurisdictional issue.

[00:20:28] Speaker 04:
Is that not right?

[00:20:29] Speaker 02:
You would, although under the applicable standard review, reviewing an appeal from a motion to quash, you might take into account what arguments they made and did not make below and what factual assertions they made.

[00:20:42] Speaker 02:
So for example, below, they made factual assertions that were inconsistent with their argument now that they're an instrument tele.

[00:20:49] Speaker 02:
If you look at the joint appendix at pages 30 to 32,

[00:20:53] Speaker 02:
They said that VEB is not owned or controlled by the Federation Defense.

[00:20:58] Speaker 02:
It functions independently.

[00:21:00] Speaker 02:
And this is a direct quote from what VEB filed.

[00:21:04] Speaker 02:
VEB, quote, is further removed from being an instrumentality of the Russian state than Exum Bank is with respect to the US government.

[00:21:12] Speaker 02:
So their argument to the district court was actually contrary to their argument now that they're an instrumentality.

[00:21:19] Speaker 02:
So Your Honor is right.

[00:21:22] Speaker 02:
you certainly could consider the issue of immunity, but you would consider it through the lens of the appropriate standard of review in light of the arguments and facts who were presented to the district court.

[00:21:34] Speaker 04:
Can I ask a follow on to Judge Santel's question, which is your answer is you can't take an appeal from 1292B, but you could have taken a 1291 appeal from the original order.

[00:21:45] Speaker 04:
And am I understanding it correctly that what happened here is there's an original order in December.

[00:21:49] Speaker 04:
And then there's a 1292B motion to certify that order for interlocutory appeal.

[00:21:57] Speaker 02:
Well, yeah, I've read the notice of appeal, which is a joint appendix at 502.505 a whole bunch of times.

[00:22:04] Speaker 02:
I can't quite figure out what they're appealing.

[00:22:07] Speaker 04:
But the 1292B certification was in the district court, not before us.

[00:22:13] Speaker 04:
The motion for 1292B certification in the district court was to certify the December order for interrogatory appeal.

[00:22:20] Speaker 02:
Either that or to certify the denial of the 1292B motion itself.

[00:22:28] Speaker 02:
It's not really clear from the notice of appeal, but in either event, as a 1292B motion,

[00:22:36] Speaker 02:
The district court has to certify, otherwise this court doesn't have jurisdiction to entertain the 1292B appeal.

[00:22:42] Speaker 02:
So there are three routes up, I would submit.

[00:22:44] Speaker 02:
1291, which is blocked because they didn't file within 30 days.

[00:22:48] Speaker 02:
1292B, which is blocked because the district court didn't certify.

[00:22:53] Speaker 02:
And mandamus, because as your honor pointed out, there were other routes available, like 1291, which they chose not to.

[00:23:06] Speaker 04:
Okay.

[00:23:11] Speaker 04:
Let's see if my colleagues have further questions for you, Mr. Lieberman.

[00:23:17] Speaker 02:
In that case, I have nothing further, Your Honor.

[00:23:22] Speaker 04:
Thank you, Council.

[00:23:23] Speaker 04:
Mr. Lipschitz, we'll give you three minutes.

[00:23:25] Speaker 04:
I think we used up most of your time, but we'll give you three minutes back for rebuttal.

[00:23:30] Speaker 01:
Thank you, Your Honor.

[00:23:32] Speaker 01:
Four quick points.

[00:23:34] Speaker 01:
First of all, sovereign immunity has never been held to be a use it or lose it device, which is what Mr. Lieberman is suggesting.

[00:23:42] Speaker 01:
When he says that something new would have to come up, what he's effectively saying is, VEB has been ordered to comply with the subpoena.

[00:23:52] Speaker 01:
There would have to be a new order that would be appealable.

[00:23:57] Speaker 01:
That new order would be an order for sanctions.

[00:23:59] Speaker 01:
VEB would have to accept that it would be sanctioned

[00:24:03] Speaker 01:
in order and held in contempt in order to exercise its sovereign immunity.

[00:24:08] Speaker 01:
Pomp and Drill squarely rejects that outcome and the Kellogg mandamus case rejects similarly that outcome in the context of privileged documents.

[00:24:20] Speaker 01:
That's point one.

[00:24:21] Speaker 01:
Point two, our appeal of the July order is a 1291 appeal of the abrogation of our sovereign immunity.

[00:24:30] Speaker 01:
That was clearly done.

[00:24:32] Speaker 01:
There is no authority and no case law anywhere in the United States and Mr. Lieberman has identified none that would permit a sovereign who has asserted immunity

[00:24:43] Speaker 01:
to have that question not be determined and have to comply and partake in the litigation.

[00:24:53] Speaker 01:
And it is all the more odorous here because it is a third party subpoena.

[00:25:00] Speaker 01:
So it's not even a case of where Mr. Lieberman suggests

[00:25:03] Speaker 01:
that we did anything wrong.

[00:25:06] Speaker 01:
It is a case where we're being sucked into a process to which we are not a party in order to bear that burden.

[00:25:15] Speaker 01:
Finally, on, sorry, Your Honor, point three, on the question about owned and controlled and the representations to the district court, from the second paragraph of the preliminary statement,

[00:25:27] Speaker 01:
We argued that it was a duly created instrumentality of a foreign state.

[00:25:33] Speaker 01:
This is a J.A.

[00:25:34] Speaker 01:
24.

[00:25:36] Speaker 01:
The point that was made is where Mr. Lieberman is reading is that just because we're an instrumentality does not mean that we are an alter ego.

[00:25:48] Speaker 01:
This court's finding

[00:25:52] Speaker 01:
In trans America makes the point very clear and alter ego finding it requires of showing that control that substantially exceeds the normal supervisory control that is this course finding and trans America and then McKesson.

[00:26:10] Speaker 01:
And finally, your honor, point number four, there is no question of immunity.

[00:26:16] Speaker 01:
There is no question of an applicable exception to immunity because Mr. Lieberman never once identified an exception.

[00:26:24] Speaker 01:
So here you would have a district court acting against VEB without jurisdiction.

[00:26:29] Speaker 01:
This court's jurisprudence prohibits that.

[00:26:34] Speaker 01:
in Houston Business Journal and in Pimp and Drill.

[00:26:40] Speaker 01:
There's no authority for that outcome.

[00:26:44] Speaker 01:
And finally, if I may, just one final point, Your Honors.

[00:26:48] Speaker 01:
In the briefing, there was lots of attention focused on NML and why NML would potentially permit Mr. Lieberman's subpoena.

[00:26:57] Speaker 01:
That for two reasons does not work.

[00:26:59] Speaker 01:
One is in NML, no subpoena targets were not themselves asserting immunity.

[00:27:08] Speaker 01:
And two, NML is a 1609 case.

[00:27:12] Speaker 01:
We are asserting immunity under 1604.

[00:27:15] Speaker 01:
It's entirely different, Your Honors.

[00:27:19] Speaker 04:
Okay.

[00:27:20] Speaker 04:
Thank you, Mr. Lifshitz.

[00:27:21] Speaker 04:
Thank you, Mr. Lieberman.

[00:27:23] Speaker 04:
We'll take this case under submission.