FOGADE v. ENB Revocable Trust

FOGADE (plaintiff), the Venezuelan government-agency equivalent of the Federal Deposit Insurance Corporation, provided $300 million to Corpofin, a failing bank. FOGADE placed Corpofin in receivership when conditions of the bank did not improve. Santaella, Leanez, and Zamora (defendants) were removed as directors. FOGADE discovered that $30 million worth of Eastern National Bank (ENB) shares were sold to ENB Revocable Trust for less than $1 million. ENB Revocable Trust was controlled by the defendants. ENB was a United States bank located in Florida. FOGADE sued in the United States District Court for the Southern District of Florida to recover the shares. The defendants raised the affirmative defense that FOGADE lacked standing, because FOGADE illegally confiscated the defendants’ rights in Corpofin, and that recovery of the ENB shares would also be a confiscation of the defendants’ rights in violation of the law. FOGADE challenged the defendants’ affirmative defense, arguing that the act-of-state doctrine prevents a United States court from considering a defense based on the illegal actions of a foreign nation. The defendants responded that the Second Hickenlooper Amendment (the Amendment) prevents a court from applying the act-of-state doctrine to claims of confiscation in violation of international law. The district court granted FOGADE’s summary judgment. The defendants appealed to United States Court of Appeals for the Eleventh Circuit.