ATLANTA (CN) — An attorney for Venezuela’s state-owned energy company asked an 11th Circuit panel on Thursday to overturn a decision rejecting its motion to intervene in a racketeering and antitrust lawsuit accusing major international energy trading firms of cheating the company out of billions in a price-fixing and bid-rigging conspiracy.
The Atlanta-based appeals court ruled in 2021 that a trust formed by Venezuelan oil company Petróleos de Venezuela, S.A., or PDVSA, four years earlier did not have legal standing to sue conspirators who allegedly participated in a scheme to force PDVSA to sell and purchase goods at below-market prices.
The case against Russian energy corporation Lukoil and others is back in front of a three-judge panel of the appeals court after the company’s attempt to replace the trust as the plaintiff failed in a lower court.
PDVSA alleged that the corporations executed a multibillion-dollar fraud on the Venezuelan state oil company and, by extension, the people of Venezuela. They allegedly bribed people to obtain PDVSA’s proprietary oil trading information, which they then conspired to use to manipulate the pricing of crude oil and hydrocarbon products.
Originally filed in 2018, the already long and tangled litigation has become further complicated by the judiciary’s uncertainty on whether the company’s board of directors is recognized by the U.S. State Department.
The panel of judges and an attorney for PDVSA had differing views on the federal government’s position on Thursday. An attorney for the energy trading firms was more pointed in his statements -- going as far as to call the company, which is managed by a board of directors appointed by Venezuelan President Nicolás Maduro, an “imposter.”
Until January, the United States officially recognized Juan Guaidó, president of the Venezuelan National Assembly, as the country’s legitimate leader. Guaidó proclaimed himself the true leader of Venezuela in 2019 after Maduro narrowly won reelection in a race the opposition and foreign observers said was fraudulent.
But Guaidó was never able to push Maduro out of the presidency or gain the support of the country’s military forces. A majority of lawmakers in the opposition-led National Assembly voted to dissolve Guaidó’s interim government in December.
The changes have complicated the case and raised questions about whether a company connected to a leader who was previously deemed “illegitimate” by the executive branch of the U.S. government can have legal standing to bring claims in Florida federal court.
U.S. District Judge Darrin Gayles denied PDVSA’s motion to intervene in the lawsuit originally filed by the PDVSA U.S. Litigation Trust last year. Gayles ruled that the court lacked subject matter jurisdiction to substitute PDVSA as the real party in interest because the assignment from PDVSA to the trust was invalid.
In a brief filed with the 11th Circuit, attorneys for PDVSA explained that the original lawsuit was brought by the trust “so that efforts to hold defendants accountable could proceed without interference from the political and economic instability and rampant corruption in Venezuelan government and society.”
The panel judges on Thursday bristled at a suggestion from PDVSA’s attorney that the best course of action would be to ask the State Department what its position on Maduro is now.
“Why would we do that?” Senior U.S. Circuit Judge Stanley Marcus asked, pointing out that the Biden administration has not fully walked back the Trump administration’s denunciation of Maduro as illegitimate. The State Department still says that the U.S. recognizes the 2015 National Assembly from which Guaidó derived his authority.
Arguing on behalf of PDVSA, attorney George Carpinello of Boies Schiller & Flexner insisted that the State Department has not yet made a “definitive” statement on the matter.
The attorney also suggested that the U.S. Treasury Department's November decision allowing Chevron to resume pumping oil in Venezuela could be read as a "de facto recognition." Carpinello told the panel that the government would not have granted authorization if it did not recognize PDVSA in Venezuela "as a legitimate body."
But Marcus appeared unconvinced. The Bill Clinton appointee told Carpinello that he was “hard-pressed to see where the State Department has renounced its original position.”
In opposition, William Burck of Quinn Emanuel Urquhart & Sullivan, an attorney representing energy trading firm Trafigura Trading LLC, argued that the only thing that matters is the government’s position at the time of the lower court’s decision.
“The Maduro government absolutely was not viewed as a legitimate government,” Burck said. “They’re asking the court to make predictive judgments about where the United States government might go, which doesn’t even matter because at the end of the day the question before this court is whether the Maduro government was legitimate at the time [of the district court’s decision.]”
Burck argued that the lack of official recognition for the Guaidó government “does not therefore render the Maduro government PDVSA legitimate.”
Marcus was joined on the panel by U.S. Circuit Judge William Pryor, a George W. Bush appointee, and U.S. District Judge Kathryn Mizelle, a Donald Trump appointee sitting by designation from the Middle District of Florida.
The panel did not indicate when it would reach a decision in the case.
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