Plaintiff That Let Fed. R. Civ. P. 12(b)(1) Procedural Error Slip Forfeits Subject-Matter Jurisdiction Under Doctrine of Party Presentation, Holds Eleventh Circuit

In PDVSA US Litig. Trust v. Lukoil Pan Americas, LLC,.No. 19-10950 (11th Cir. Oct. 18, 2021), the plaintiff-appellant failed to raise its best argument on appeal – that the district court decided the central legal issue on the merits on a Fed. R. Civ. P. 12(b)(1) motion to dismiss – and thus loses under the “principle of party presentation.”

PDVSA, the Venezuelan state-owned oil company, alleged a “multi-billion-dollar conspiracy to defraud” the business out of oil trading data. It allegedly assigned its claim to the plaintiff, a litigation trust organized under New York. The district court, on a Rule 12(b)(1) motion to dismiss, held that the trust “did not properly authenticate the trust agreement—it failed to authenticate three of the five signatures in the agreement—and without an admissible agreement it lacked standing.” Alternatively, it held that “even if the trust agreement were authenticated and admissible, it was void as champertous under New York law.”

The Eleventh Circuit affirms. The panel chooses to avoid an unsettled legal question of whether the whether the trust properly authenticated the agreement. Under Fed. R. Evid. 901, a party seeking to admit a document must persuade first the district court and then the finder of fact that the proffered evidence is what it purports to be. “We have not addressed whether or how [this] two-step authenticity process … should be applied in a Rule 12(b)(1) context where the defendant’s attack on subject-matter jurisdiction is factual, and where the district court is permitted to act as the ultimate decision-maker on jurisdictional facts.” District courts have applied different standards to this threshold question.

The panel thus assumes that the trust document is authentic and reaches the question of whether the agreement is void. Here, the Eleventh Circuit observes, the district court may have overreached by making factual determinations at the Rule 12(b)(1) stage. “Because champerty likely implicated the merits of the claims brought by the [plaintiff] Litigation Trust, there is a strong argument that the district court should have used the Rule 56 standard in addressing whether the trust agreement was champertous under New York law …. But we do not reverse on this ground because the Litigation Trust does not raise any procedural objections to the district court’s handling of the champerty question.”

The panel holds the plaintiff to its procedural default. “In a case like this one—involving sophisticated litigants represented by able counsel—there is no reason to depart from the general principle of party presentation, and we decline to take up sua sponte the district court’s failure to apply the Rule 56 standard.”

Reaching the champerty issue on the merits, the panel affirms the dismissal. “Whether an agreement is champertous ‘is a mixed question of law and fact,’ … and a number of New York cases have reversed summary judgment rulings on champerty because there were underlying disputes of material fact.” Yet, once again, “the Litigation Trust does not make any Rule 56-type arguments on appeal. So we treat the champerty ruling as one made by the district court as the ultimate decision-maker, and review any underlying factual findings for clear error (as the Litigation Trust asks us to do).” The panel upholds the lower courts findings.

“This appeal might have come out differently had it been argued differently,” the panel concludes. “But on the issues presented to us, we affirm the district court’s dismissal of the Litigation Trust’s complaint without prejudice for lack of standing.”

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