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11th Circuit refuses to revive Venezuelan oil giant’s antitrust case

The decision is the second blow handed down by the Atlanta-based appeals court in litigation against a Russian energy corporation and other accused co-conspirators.

ATLANTA (CN) — A panel of the 11th Circuit on Monday rejected an attempt by Venezuela’s state-owned oil company to intervene in a racketeering and antitrust lawsuit, dashing its hopes of pursuing claims that major international energy trading firms cheated the company out of billions in a bribery and price-fixing conspiracy.

In a 13-page decision, the Atlanta-based appeals court refused to answer what it deemed a “nonjusticiable political question,” deferring instead to U.S. State Department policy to rule that “an entity purporting to speak for” Venezuelan oil company Petróleos de Venezuela, S.A., or PDVSA, cannot sue in place of a litigation trust.

The litigation trust sought to sue major international energy firms for allegedly participating in a scheme to force PDVSA into buying and selling energy products at below-market prices. The complaint alleged conspiracy, antitrust, cybercrime and fraud claims against oil traders, banks, oil companies and corrupt Venezuelan officials.

The trust claimed that conspirators bribed PDVSA officials to obtain proprietary oil trading information, which they then used to rig bids and manipulate the pricing of crude oil and hydrocarbon products.

The unanimous three-judge panel ruled Monday that it could not overturn a Florida federal judge’s decision rejecting the company’s attempt to replace a trust as the plaintiff in litigation against Russian energy corporation Lukoil and others.

The problem, U.S. Circuit Judge William Pryor wrote on behalf of the panel, is that the judiciary cannot override the State Department’s position regarding the legitimacy of PDVSA’s board of directors. Since the board of directors was appointed by Venezuelan President Nicolás Maduro, who is not recognized by the State Department as Venezuela’s legitimate leader, the entity does not have legal standing to bring claims in Florida federal court.

The panel rejected arguments proffered by PDVSA’s attorney during a hearing earlier this month insisting that the State Department has not definitively indicated whether the company’s board is legitimate.

Until January, the United States recognized Venezuelan National Assembly president Juan Guaidó as interim president of Venezuela. Guaidó proclaimed himself the legitimate leader of Venezuela in 2019 after Maduro narrowly won reelection in a race the opposition and foreign observers said was fraudulent.

After the Venezuelan National Assembly voted in December to remove Guaidó and replace his interim government with a committee, the State Department moved to recognize the National Assembly elected in 2015 as “the last remaining democratic institution” in Venezuela.

The panel pointed out that no entity with Guaidó-appointed officials has opted to bring a lawsuit over the alleged bribery scheme or authorized the Maduro-appointed board’s action.

“A company may be an independent juridical entity, but it can speak only through its officers and directors. The identities of those officers and directors matter,” wrote Pryor, a George W. Bush appointee. “Even if the Guaidó-appointed board might desire the same outcome in this litigation, as the Maduro entity contends, a party is entitled to decide if and how it wishes to litigate.”

The panel ruled that the political shifts in Venezuela do not abrogate what is still official U.S. policy.

“For more than five years, the executive branch has taken the position that the Maduro government is illegitimate,” Pryor wrote. “And, in its motion, the Maduro entity conceded that its board was appointed by Maduro. The judicial branch is bound to accept the president’s statement that the 2015 National Assembly, not the Maduro government, is the legitimate political authority in Venezuela.”

The lower court was “powerless” to grant PDVSA’s motion to take over as the real party in interest “in contravention of the position taken by the United States Department of State,” the panel held.

“The executive branch has given no indication that it will change its longstanding position that the Maduro government is illegitimate,” the ruling states.

The decision marks the second loss in the case for PDVSA in the 11th Circuit. A different panel of the appeals court ruled in 2021 that the company’s litigation trust lacked legal standing to sue because the assignment from PDVSA to the trust was invalid.

A spokesperson for Boies Schiller & Flexner, which represents PDVSA, did not immediately respond to a request for comment Monday afternoon.

Pryor was joined on the panel by Senior U.S. Circuit Judge Stanley Marcus, a Bill Clinton appointee, and U.S. District Judge Kathryn Mizelle, a Donald Trump appointee sitting by designation from the Middle District of Florida.

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