Republic of the Philippines v. Westinghouse Elec.

• Decision Date: 01 November 1991
• Docket Number: Civ. No. 88-5150.
• Parties: The REPUBLIC OF THE PHILIPPINES and The National Power Commission, Plaintiffs, v. WESTINGHOUSE ELECTRIC CORPORATION, Westinghouse International Projects Company and Burns and Roe Enterprises, Inc., Defendants.
• Court: U.S. District Court — District of New Jersey

774 F. Supp. 1438

The REPUBLIC OF THE PHILIPPINES and The National Power Commission, Plaintiffs, v. WESTINGHOUSE ELECTRIC CORPORATION, Westinghouse International Projects Company and Burns and Roe Enterprises, Inc., Defendants.

Civ. No. 88-5150.

United States District Court, D. New Jersey.

September 20, 1991.

As Amended October 1 and November 1, 1991.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Greenbaum, Rowe, Smith, Ravin & Davis by Paul A. Rowe, Alan S. Naar, Woodbridge, N.J., and Shaw, Pittman, Potts & Trowbridge by Mark Augenblick, Washington, D.C., for plaintiffs.

Shanley & Fisher by Raymond M. Tierney, Jr., William D. Sanders, Morristown, N.J., Cravath, Swaine & Moore by Davis Boies, Richard W. Clary, New York City, and Donovan Leisure, Rogovin, Huge & Schiller by Jonathan D. Schiller, Randall L. Speck, Washington, D.C., for defendants Westinghouse Elec. Corp. and Westinghouse Intern. Projects Co.

McCarter & English by George W.C. McCarter, Jr., Newark, N.J., and Stein, Mitchell & Mezines by Glenn A. Mitchell, David U. Fierst, Washington, D.C., for defendant Burns & Roe Enterprises, Inc.

OPINION

DEBEVOISE, District Judge.

This is an action brought by the Republic of the Philippines (the "Republic") and the National Power Corporation ("NPC"), the Philippine government agency responsible for electric power generation, against Westinghouse Electric Corporation, a Pennsylvania corporation, Westinghouse International Projects Company (herein referred to collectively as "Westinghouse") and Burns and Roe Enterprises, Inc. ("Burns & Roe"), a New Jersey corporation. Westinghouse and Burns & Roe have moved for summary judgment on Counts 3 and 8 of the complaint. For the following reasons, defendants' motion is denied.

PROCEDURAL AND FACTUAL BACKGROUND

This case arises out of the construction of the 600 megawatt Philippines Nuclear Power Plant Unit 1 ("PNPP") in Bagac, Bataan during a ten year period commencing in 1976. The fifteen count complaint alleges breach of contract, fraud, tortious interference with fiduciary duties, negligence, civil conspiracy, RICO violations, antitrust violations and various pendent state claims.

On May 18, 1989 I filed an opinion in which I concluded that: (i) with the exception of Count 3, which alleges tortious interference with fiduciary duties, and that part of Count 8 which sets out a claim for conspiracy to interfere with fiduciary duties, all counts against Westinghouse should be stayed under section 3 of the Federal Arbitration Act pending arbitration pursuant to Article 24 of the PNPP prime contract; (ii) Count 2 against Burns & Roe should be stayed under section 3 of the same Act pending arbitration in accordance with the terms of its consulting contract with the NPC; (iii) with the exception of Count 3 and Count 8, to the extent that the latter sets out a claim for conspiracy to interfere with fiduciary duties, all other claims against Burns & Roe should, in the interests of judicial economy, be stayed pending resolution of the arbitration proceedings involving Westinghouse; and (iv) Count 3 and the related portion of Count 8 would be permitted to proceed in this Court against both Westinghouse and Burns & Roe. See Republic of the Philippines v. Westinghouse Electric Corp., 714 F.Supp. 1362 (D.N.J.1989).

After issuance of the 1989 opinion NPC and Westinghouse commenced, pursued and are continuing to pursue the contract and related tort and statutory claims in arbitration proceedings in Geneva, Switzerland. Meanwhile, the Republic and defendants engaged in extensive discovery proceedings directed to the claims which continued to be litigated in this court. The essence of those claims, as illuminated by discovery, can be very simply stated.

Beginning in the summer of 1973, Westinghouse sought the award of a turnkey contract for the PNPP project, and Burns & Roe sought first a consulting contract with NPC and later the architectural and engineering subcontract to be awarded by Westinghouse. At that time, and during the ensuing years pertinent to this case, Ferdinand E. Marcos, President of the Republic of the Philippines, held ultimate authority as the ruler of the nation. Both Westinghouse and Burns & Roe concluded that they could not effectively pursue the contracts with NPC unless they retained a special sales representative ("SSR") who had influence with the President.

Westinghouse and Burns & Roe retained Herminio T. Disini as their SSR under separate agreements. Disini was a well-known Philippine businessman and close friend of President Marcos. His wife was Mrs. Marcos' cousin and personal physician. The agreements provided for generous commissions to be paid to companies controlled by Disini.

The complaint alleges, and the facts developed on discovery substantiate, (i) that President Marcos intervened with NPC and its officials to ensure that Westinghouse received the turnkey contract, (ii) that President Marcos directed NPC to award the consulting contract to Burns & Roe and interceded with Westinghouse to grant the architectural and engineering subcontract to Burns & Roe, (iii) that during the contract negotiations President Marcos intervened with NPC to secure contract terms favorable to Westinghouse, and (iv) that from time to time during the performance of the contract President Marcos interceded with NPC on Westinghouse's behalf.

The Republic asserts that the defendants knew that to secure this favorable treatment all or a substantial part of their commission payments to Disini were paid over to President Marcos and that President Marcos was given additional financial benefits through Westinghouse's award of PNPP subcontracts to concerns in which President Marcos held an interest. In essence, the Republic claims that Westinghouse and Burns & Roe bribed the President to obtain their economic ends. Thus they caused (Count 3) and conspired to cause (Count 8) President Marcos to breach a fiduciary duty he owed to the people and to the Republic of the Philippines, by inducing him to intervene in the PNPP contracting process in derogation of the rights and interests of the Philippine people in a fair and open bidding process.

Westinghouse asserts three independent reasons to grant its motion for summary judgment. First, they contend there is no evidence of any Westinghouse bribe payments to President Marcos. Second, they argue that the civil causes of action for tortious interference with President Marcos' fiduciary duty and for conspiracy to so interfere do not exist as a matter of Philippine law. And, finally, they assert that New Jersey's six year statute of limitations is applicable to this case and bars the Republic's claims, and there are no facts to support non-application of the statute. In the alternative, Westinghouse moves for partial summary judgment limiting damages to the amount of any improper payments received by President Marcos.

The grounds for Burns & Roe's motion for summary judgment parallel those of Westinghouse: (i) There is no evidence that Burns & Roe paid a bribe to President Marcos; (ii) there is no evidence that payments to Disini caused President Marcos to use his influence to induce NPC to award the Phase I consulting contract to Burns & Roe; (iii) there is no evidence that President Marcos induced Westinghouse to award the Phase II architectural and engineering contract to Burns & Roe; (iv) the Republic's claims are barred by the applicable statute of limitations and there are no facts to support non-application of the statute; (v) the causes of action which the Republic asserts do not exist under Philippine law; and (vi) the action is barred by the act of state doctrine.

For the reasons which will be set forth below, I conclude: (i) There remain factual issues whether Westinghouse and Burns & Roe paid bribes to President Marcos and whether these bribes induced President Marcos to intervene in the administration of the PNPP in order to obtain favorable treatment for Westinghouse and Burns & Roe. (ii) The Republic's claims are not barred by the applicable statute of limitations, nor by the doctrines of laches or estoppel. (iii) The Republic has stated a cognizable cause of action under Philippine law, and neither the political question doctrine nor the act of state doctrine prevents this Court from hearing the Republic's claims. (iv) There is no basis for limiting damages to the amount of the bribes received by President Marcos. Therefore, I deny defendants' summary judgment motion in its entirety.

DISCUSSION

I. EVIDENCE OF BRIBES.

The standards for summary judgment are well established. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Elect. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). See also Lujan v. National Wildlife Federation, ___ U.S. ___, 110 S.Ct. 3177, 3188-89, 111 L.Ed.2d 695 (1990). Summary judgment

"shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.

Anderson, 477 U.S. at 247-48, 106 S.Ct. at 2509-10 (emphasis in original). Where "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'" Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356. Summary judgment is appropriate where no "fair-minded jury could return a verdict for the plaintiff on the evidence...