Magistrate Judge Recommends Dismissal of Multi-Billion-Dollar Suit Against Glencore

Paul, Weiss achieved a major victory for our client Glencore when a magistrate judge in the Southern District of Florida recommended the complete dismissal of claims against Glencore and other oil traders for allegedly conspiring to cheat Venezuela’s state oil company, Petróleos de Venezuela SA, or PDVSA, out of billions of dollars. The claims, filed in March by a U.S. litigation trust purportedly on behalf of PDVSA, alleged that the defendants had conspired to bribe Venezuelan officials and rig bids submitted to PDVSA for decades, allegedly costing PDVSA $5.2 billion in lost revenue. The trust, formed under New York law and controlled by PDVSA’s U.S. counsel, was purportedly assigned the claims of PDVSA and the Venezuelan government so that it could litigate on PDVSA’s behalf in the U.S. courts while insulating PDVSA itself from U.S.-based creditors and case-related discovery. 

Prior to answering the complaint, Glencore and the other defendants challenged the trust’s standing and the legal validity of the supposed assignment of claims.  Following extensive briefing on evidentiary issues, the law of champerty and maintenance, and New York trust law, the submission of expert testimony on Venezuelan law, and an evidentiary hearing, U.S. Magistrate Judge Alicia M. Otazo-Reyes found that the trust failed to establish its standing and recommended the dismissal of the complaint. In her 37-page report, Judge Otazo-Reyes concluded that the trust had failed to offer admissible evidence that it had received a valid assignment of claims from PDVSA or the Venezuelan government and that the formation of the trust violated both New York and Venezuelan law. 

The Paul, Weiss team included litigation partners Bruce Birenboim, Jessica Carey and Brad Karp and counsel Adam Schwartz.