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REPUBLIC OF THE PHILIPPINES v. WESTINGHOUSE ELEC.

May 5, 1993

THE REPUBLIC OF THE PHILIPPINES and NATIONAL POWER CORPORATION, Plaintiff,
v.
WESTINGHOUSE ELECTRIC CORPORATION, WESTINGHOUSE INTERNATIONAL PROJECTS COMPANY AND BURNS & ROE ENTERPRISES, INC., Defendants.



The opinion of the court was delivered by: DICKINSON R. DEBEVOISE

 Debevoise, District Judge.

 The Republic of the Philippines (the "Republic") and the National Power Corporation ("NPC") instituted this action against Westinghouse Electric Corporation and Westinghouse International Projects Company (collectively, "Westinghouse") and Burns & Roe Enterprises, Inc. ("Burns & Roe"), asserting fifteen tort and contract claims. Thirteen of these claims were referred to arbitration, and the remaining two claims are the subject of a trial now underway. In these two claims, the Republic alleges that Defendants bribed President Ferdinand E. Marcos in order to obtain particular contracts, and thereby interfered or conspired to interfere with the fiduciary duties that President Marcos owed to the Philippine people. The Republic now seeks a ruling permitting it to present its claims for punitive damages to the jury. This court has jurisdiction because the citizenship of Plaintiffs is diverse from that of Defendants, and the amount in controversy exceeds $ 50,000. 28 U.S.C. ยง 1332.

 I. STATEMENT OF FACTS AND PROCEDURAL HISTORY

 This case arises out of the construction of the 600-megawatt Philippine Nuclear Power Plant ("PNPP") in Bagac, Bataan during a ten year period commencing in 1976. The Republic has alleged that Westinghouse won the contract to build PNPP not by submitting a superior contract proposal, but rather by bribery and deceit. The facts and procedural history of this action are presented in the seven opinions already published, and so I will review them only briefly here. Philippines v. Westinghouse Electric Corp., 782 F. Supp. 972 (D.N.J. 1992); Philippines v. Westinghouse Electric Corp., 139 F.R.D. 50 (D.N.J.), stay denied, 949 F.2d 653 (3d Cir. 1991); Philippines v. Westinghouse Electric Corp., 774 F. Supp. 1438 (D.N.J. 1991); Philippines v. Westinghouse Electric Corp., 132 F.R.D. 384 (D.N.J. 1990), mandamus denied, 951 F.2d 1414 (3d Cir. 1991); Philippines v. Westinghouse Electric Corp., 714 F. Supp. 1362 (D.N.J. 1989).

 II. DISCUSSION

 The Republic wishes to present to the jury a claim under Philippine law for punitive damages. Defendants urge that, in a federal district court sitting in diversity jurisdiction in New Jersey, no punitive damages are available.

 A. Choice of Law

 The threshold question is whether to apply the Philippine laws of punitive sanctions or the law of another jurisdiction. As a practical matter, this question has already been answered. The parties themselves have agreed that Philippine substantive law must apply, and I found in an earlier opinion that all of the significant events and circumstances of this case tie it to the Philippines. 774 F. Supp. at 1449-1451.

 The next question is which law to use in evaluating whether to present the Republic's punitive claims to the jury. It is well-settled that a federal court sitting in diversity jurisdiction applies the choice-of-law rules of the state in which the court sits. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941). This rule extends not just to traditional choice of law questions, but also to cases like the present, in which a court must decide whether to enforce foreign punitive laws. Transcontainer Services (Basel) A.G. v. Security Forwarders, Inc., 752 F.2d 483 (9th Cir. 1985) (court should apply local choice-of-law rules in action where private party sought exemplary damages under English law); Smyth Sales, Inc. v. Petroleum Heat & Power Co., 128 F.2d 697, 702 (3d Cir. 1942) (court should apply local choice-of-law rules in action where private parties sought exemplary damages under law of another state). Accordingly, New Jersey law will govern the question of whether the Republic can recover punitive damages under Philippine law in a New Jersey federal court.

 B. Enforcement of a Judgment versus Trial of a Claim

 Much of the pertinent New Jersey case-law involves actions in which a plaintiff has sought to enforce laws or judgments of another state. There are two potential distinctions between this case-law and the present case: first, the present case involves the law of a foreign country rather than that of another state; and second, the present case involves the trial of a claim rather than the enforcement of a judgment.

 The law of another state carries more authority than that of another country because the laws of other states are protected, at least in part, by the Full Faith and Credit Clause of Article IV, Section I of the U.S. Constitution. Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 86 L. Ed. 2d 628, 105 S. Ct. 2965 (1985); Allstate Insurance Co. v. Hague, 449 U.S. 302, 66 L. Ed. 2d 521, 101 S. Ct. 633 (1981); Milwaukee County v. M.E. White Co., 296 U.S. 268, 275, 80 L. Ed. 220, 56 S. Ct. 229 (1935); Home Ins. Co. v. Dick, 281 U.S. 397, 74 L. Ed. 926, 50 S. Ct. 338 (1930). In addition, as discussed below, concerns of comity and policy may weigh more heavily in favor of enforcing the laws of other states than those of other countries.

 Judgments also carry special authority. Judgments of other states are particularly authoritative, because these judgments wield the full power of the Full Faith and Credit Clause. By comparison, acts of state legislatures depend for their enforcement on a combination of state policy, comity, the Full Faith and Credit Clause, and the Due Process Clause of the Fourteenth Amendment. Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 86 L. Ed. 2d 628, 105 S. Ct. 2965 ; Allstate Insurance Co. v. Hague, 449 U.S. 302, 66 L. Ed. 2d 521, 101 S. Ct. 633 ; Milwaukee County v. M.E. White Co., 296 U.S. at 275.


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