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Republic of Colombia v. Diageo North America Inc.

September 7, 2007


The opinion of the court was delivered by: Garaufis, United States District Judge


On June 19, 2007, this court issued a Memorandum & Order (the "Order") granting in part and denying in part Defendants Diageo North America Inc., United Distillers Manufacturing Inc., Seagram Export Sales Company Inc., and Pernod Ricard USA LLC's (collectively, "Defendants") motion to dismiss the Complaint. Defendants have requested that this court, pursuant to 28 U.S.C. § 1292(b), certify the Order for immediate appeal and stay the proceedings pending the resolution of Defendants' application and appeal process. The Republic of Colombia, Colombia's Capital District of Bogota, and a number of Departments of the Republic of Colombia (collectively, "Plaintiffs") oppose these requests. Defendants' request for a certificate of appealability is granted, but their request for a stay of discovery and all other proceedings is denied.


Under 28 U.S.C. § 1292(b), a district court may certify a question for interlocutory appeal where (1) the decision to be appealed "involves a controlling question of law," (2) "as to which there is a substantial ground for difference of opinion," and (3) "an immediate appeal may materially advance the ultimate determination of the litigation."Once the district court certifies an Order for interlocutory appeal pursuant to Section 1292(b), the Court of Appeals is free to accept or reject the interlocutory appeal. 28 U.S.C. § 1292(b). If the Court of Appeals accepts the appeal, it "'may address any issue fairly included within the certified order,' as 'it is the order that is appealable and not the controlling question identified by the district court.'" California Pub. Employees' Retirement Sys. v. WorldCom, Inc., 368 F.3d 86, 95 (2d Cir. 2004) (quoting Yamaha Motor Corp. v. Calhoun, 516 U.S. 199, 205 (1996)).

Whether to certify a question for interlocutory appeal is trusted to the sound discretion of the district court. Morris v. Flaig, No. 02-cv-5988, 2007 WL 1651854, at *2 (E.D.N.Y. June 6, 2007). In fact, "[d]istrict court judges have broad discretion to deny certification even where the statutory criteria are met." Id. (internal quotation marks omitted). Some courts primarily consider efficiency in determining whether to certify an order for interlocutory appeal:

The institutional efficiency of the federal court system is among the chief concerns underlying Section 1292(b). See Forsyth v. Kleindienst, 599 F.2d 1203 (3d Cir.), cert. denied, 453 U.S. 912 (1979). Because the district court's efficiency concerns are greatest in large, complex cases, certification may be more freely granted in so-called "big" cases. See Bruce v. Martin, 712 F. Supp. 442, 445 (S.D.N.Y. 1989). However, the efficiency of both the district court and the appellate court are to be considered, and the benefit to the district court of avoiding unnecessary trial must be weighed against the inefficiency of having the Court of Appeals hear multiple appeals in the same case.

In re Lloyd's Am. Trust Fund Litig., No. 96 Civ. 1262 (RWS), 1997 WL 458739, at *4 (S.D.N.Y. Aug. 12, 1997). As the Second Circuit has explained, interlocutory appeals typically create inefficiency for the Courts of Appeals: "it does not normally advance the interests of sound judicial administration or efficiency to have piecemeal appeals that require two (or more) three-judge panels to familiarize themselves with a given case, instead of having the trial judge, who sits alone and is intimately familiar with the whole case, revisit a portion of the case if he or she has erred in part and that portion is overturned following the adjudication of the whole case." Harriscom Svenska AB v. Harris Corp., 947 F.2d 627, 631 (2d Cir. 1991).

Efficiency, however, is not the only consideration, and district courts also consider the following factors in determining whether to certify a decision for immediate appeal pursuant to Section 1292(b):

(1) the benefit of further factual development and a complete record on appeal, particularly in rapidly developing or unsettled areas of the law; (2) the time an appeal would likely take; (3) the need for a stay pending appeal and the effect on the litigation including discovery, that would result from a stay; and (4) the probability that other issues may moot the need for the interlocutory appeal.

Mayers v. New York Community Bancorp, Inc., No. CV-03-5837 (CPS), 2006 WL 2013734, at *9 (E.D.N.Y. July 18, 2006) (internal quotation marks omitted).

The fact that district courts have the power to certify questions for interlocutory appeal in no way suggests that interlocutory appeal should be the norm: "As we have repeatedly cautioned, however, use of this certification procedure should be strictly limited because only exceptional circumstances [will] justify a departure from the basic policy of postponing appellate review until after the entry of a final judgment." In re Flor, 79 F.3d 281, 284 (2d Cir. 1996) (internal quotation marks omitted);Koehler v. Bank of Bermuda Ltd., 101 F.3d 863, 865 (2d Cir. 1996) ("Section 1292(b)'s legislative history reveals that although that law was designed as a means to make an interlocutory appeal available, it is a rare exception to the final judgment that generally prohibits piecemeal appeals.").One district court went so far as to analyze its past rulings on Section 1292(b) motions, concluding that it granted two out of twenty-three such motions over an eighteen year period. In re Lloyd's, 1997 WL 458739, at *3.


Defendants argue that the Order ruled upon four difficult and close legal questions which meet the Section 1292(b) prerequisites and should be resolved through an interlocutory appeal: revenue rule, penal law rule, forum non conveniens and whether the elements of a RICO claim have been adequately pled. Plaintiffs argue that the three requirements for Section 1292 certification have not been met.*fn1

First, Plaintiffs argue that the questions that are the basis for certification are primarily mixed questions of fact and law as opposed to pure questions of law. (Plaintiffs' Memorandum of Law in Opposition to Defendants' Motion for Section 1292(b) Certification ("Pl. Opp.") at 4.) Plaintiffs appear to acknowledge, however, that "this court's decision to apply a 'continuum' approach [to its revenue rule analysis] resolved a question of law." (Id.) Clearly, the Order's analysis of the revenue and penal law rules required the court to dispose of pure questions of law. Whether the revenue rule bars recognition, consideration and application of a foreign revenue law-as opposed to ruling upon the validity of a foreign revenue law (Order at 23-29)-is a pure question of law. My determination that a foreign sovereign's claim calls upon a court to engage in the proscribed direct enforcement of a foreign revenue rule only when the sovereign is experiencing damages suffered in its sovereign capacity (id. at 17-22) is also a pure question of law. Similarly, the decision to construe the penal law rule as parallel to the revenue rule is a pure question of law. Finally, how Supreme Court and ...

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