UK Approves Imperial Brands To Defend Itself In Libertad Act Lawsuit; Nearing A Year, Iberostar Of Spain Awaiting Answer From EU
/MARIA DOLORES CANTO MARTI, AS PERSONAL REPRESENTATIVE OF THE ESTATES OF DOLORES MARTI MERCADE AND FERNANDO CANTO BORY V. IBEROSTAR HOTELES Y APARTAMENTOS SL [1:20-cv-20078; Southern Florida District]
Zumpano Patricios P.A. (plaintiff)
Bird & Bird (defendant)
Holland & Knight (defendant)
Defendant Imperial Brands PLC's Fourth Status Report (2/8/21)
Defendant Imperial Brands PLC's Fifth Status Report (1/25/21)
Libertad Act Lawsuit Filing Statistics
Excerpts From Defendant’s Response (3/17/21):
This Court granted the Stay to allow Defendant, an E.U. national subject to the laws of the European Union, to seek a mandatory authorization from the European Commission (“Commission”) to submit pleadings responsive to the Complaint, as required by E.U. regulations. Iberostar applied for authorization to the Commission on April 15, 2020 (“Application”), and it has diligently and actively pursued a determination from the European agency since then.
2. The Stay is not immoderate for multiple reasons. It is framed within reasonable limits, as described in the Order. In its Second Order the Court noted the Stay will extend only as long as it takes for the Commission to decide on Iberostar’s Application. See Second Order, p. 1 [ECF No. 25]. This Court is not declining to exercise jurisdiction over this case, but temporarily abstaining from exercising jurisdiction, with no prejudice to Plaintiff, to allow a European entity to obtain a mandatory authorization to appear in this proceeding.1 Defendant is between a rock and a hard place, and it is strictly following the procedure under E.U. law to defend this litigation.
Iberostar is, however, the first European entity to request the Commission to issue an authorization under the European Council Regulation 2271/96, Protecting Against the Effects of the Extra-Territorial Application of Legislation Adopted by a Third Country, and Actions Based Thereon or Resulting Therefrom, 1996 O.J. (L 309) 1 (EC) (“Council Regulation 2271/96”).
4. As a result, there is no precedent to guide the Commission’s decision, which is of utmost importance for the European Union and its 27 members’ interests. As opposed to the U.S. Department of State or the U.K. Department for International Trade, the Commission operates as a cabinet government with 27 members or commissioners, one member per member state. Each of them needs to be consulted before the Commission makes its decision. This decision will set precedent for other applications relating to, not only the Helms-Burton Act (“Act’”), but also other U.S. legislation covered by Council Regulation 2271/96.
Plaintiff also refers to another Title III case in which Honorable Judge Gayles stayed the action against a British defendant, Imperial Brands PLC, pending authorization to participate in the case. See Rodriguez et al., v. Imperial Brands et al., Case No. 20-cv-23287-DPG (S.D. Fla. Sept. 23, 2020).
30. Plaintiff suggests the authorization was granted in around five months because “the court applied the necessary pressure to obtain the required authorization within a reasonable time.” Motion, p. 5. The authorization, however, was granted in five months because the United Kingdom left the European Union and the Commission did not make the decision, but the U.K. Department for International Trade did instead. Plaintiff’s assertion that, “if the U.K. only needed little over a month to publish its decision regarding Imperial, despite simultaneously undergoing the “Brexit” transition, the European Commission certainly does not need more time” shows a fundamental misunderstanding of how the European Union, the Commission and the Brexit transition work.
Finally, the Commission has not, as Plaintiff contends, “defiantly strengthened its opposition to the Helms-Burton Act” since the Stay was mandated. Motion, p. 2. The E.U. has opposed the Act since its passing for 25 years, and Council Regulation 2271/96 is proof of that opposition. Council Regulation 2271/96, nonetheless, provides that an E.U. entity may seek authorization to comply with an order arising out of the Act, as Iberostar has sought.
On March 16, 2021, Iberostar sent a new request to the Commission, seeking further guidance as to the progress that the Commission has made, the steps that lie ahead, and a timeframe, if possible, for when a determination may be made. Iberostar will inform the Court of the Commission’s response in due course.
2020 Annual Report
Imperial Brands
US Helms-Burton litigation
Imperial has been named as a defendant in a civil action in federal court in Miami, Florida under Title III of the Cuban Liberty and Democratic Solidarity Act of 1996 (“Helms-Burton”) filed on 6 August 2020. Title III provides US nationals with a cause of action and a claim for treble damages against persons who have “trafficked” in property expropriated by the Cuban government. Title III is largely untested because it did not come into effect until May 2019. Treble damages are automatically available under Helms-Burton. Although the filed claim is for unquantified damages, we understand the claim could potentially reach approximately $365 million, based on the claimants’ claim to own 90% of the property, which they value at $135 million (and then treble). The claim is based on allegations that Imperial, through Corporación Habanos S.A. (a joint venture between one of Imperial’s now former subsidiaries and the Cuban government), has “trafficked” in a factory in Havana, Cuba that the Cuban government confiscated from the claimants’ ancestor in the early 1960s, by using the factory to manufacture, market, sell, and distribute Habanos cigars. Imperial is subject to an EU law known as the EU Blocking Statute (Regulation (EC) No. 2271/96), which conflicts with Helms-Burton, protects Imperial against the impact of Title III, and impacts how Imperial may respond to the threatened litigation. The EU Blocking Statute continues to apply in the UK during the Brexit “transition period” in place until 31 December 2020. After 31 December 2020, the substance of the law is likely to stay the same in the UK, at least in the near future. On 23 September 2020 the US court granted a stay of the action until 9 February 2021 or until further order of the court, while Imperial awaits the European Commission’s response to its request for authorisation to defend the action. Separately, two other groups of prospective claimants have indicated that they intend to file a lawsuit against Imperial in federal court in Miami, Florida. Neither claim has been filed. The threatened claims relate to other properties in Cuba, which the prospective claimants claim were confiscated from their ancestors by the Cuban government in the 1960s and which they claim are now used by Corporación Habanos S.A for commercial activities. The prospective claimants claim to be entitled to treble damages from Imperial.
