Our Litigator of the Week is Baker Botts partner Aaron Streett, who persuaded the U.S. Court of Appeals for the Fifth Circuit to nix a $123 million foreign judgment against his client, self-made billionaire John DeJoria.

As the appellate panel noted, "It is often harder to collect a judgment than win one." Usually though, the problem is someone trying to dodge a legitimate obligation. This was the reverse.  

DeJoria was on the hook for a judgment in Morocco, where he couldn't appear due to death threats and couldn't find a lawyer to represent him because the king of Morocco had an adverse interest in the case. The appellate decision is believed to be the first time a U.S. court has refused to recognize a foreign judgment under the 2005 Uniform Foreign Country Money-Judgment Recognition Act because the specific foreign proceeding violated a defendant's due-process rights.

Streett discussed the case with Lit Daily.

Lit Daily: The Fifth Circuit described your client as a "philanthropist, environmental activist, and haircare and liquor tycoon"—a singular combination for sure. Tell us a bit about him and how you came to represent him.

Aaron Streett: Mr. DeJoria's is a singular American story indeed, with a rags to riches background. He co-founded Paul Mitchell Hair Products and founded Patron Tequila, which was recently sold for $5 billion. His philanthropic and entrepreneurial ventures now focus on preserving the environment and helping the poor.  

I was brought into the case after the first Fifth Circuit appeal due to my constitutional law experience and Supreme Court and Fifth Circuit track record.

DeJoria tried to add another title: Oil magnate. What happened?

Mr. DeJoria invested in a company that sought to explore for oil and gas in Morocco. That company partnered with a Moroccan company linked to the Moroccan royal family. The king himself personally recruited investors and made a televised speech projecting that the oil found by the venture would make Morocco energy-independent for decades.  

The venture soured, to the king's embarrassment, and the Moroccan companies sued Mr. DeJoria in Moroccan court. The whole affair was a politically sensitive topic for the monarchy. The district court found that one newspaper that questioned the king's side of the story was shut down and its publisher interrogated.

How did the case play out in Moroccan commercial court?

Mr. DeJoria fled Morocco and could not return due to a credible death threat. Nor could he find counsel to defend him in the Moroccan suit. Lawyers he contacted advised him that it would be unwise and unsafe for anyone to litigate against the king's interest in this case.  

The case proceeded against Mr. DeJoria despite his inability to mount a defense. The court appointed a rotating cast of experts to examine the case and advise the court. The first three were unable to recommend any damages against Mr. DeJoria, so they were dismissed. A fourth expert was appointed and dismissed for unknown reasons. Finally, a fifth expert recommended 970 million dirhams in damages (then equivalent to $123 million). The court essentially agreed with that expert.

How do U.S. courts typically treat foreign judgments?

There is a general presumption that U.S. courts will recognize foreign judgments, but every state's law provides various defenses to recognition. For example, U.S. courts will not recognize a foreign judgment where the foreign court lacked personal jurisdiction or failed to provide notice of the lawsuit.  

Our case focused on the due process defense included in two different versions of uniform judgment-recognition acts that have been adopted by most states. The earlier version of the Uniform Act prohibits recognition where the foreign "system" could not provide due process or impartial tribunals. The updated version of the act, adopted by 23 states, allows non-recognition where the "specific proceeding" failed to provide due process.

The case has a long history. What happened the first time you were before the Fifth Circuit?

When the Moroccan companies sought to enforce the judgment against Mr. DeJoria in the Western District of Texas in 2013, the older version of the Uniform Act was in effect in Texas. The district court held that the Moroccan system failed to provide due process to Mr. DeJoria due to the politically sensitive nature of the case. 

The Fifth Circuit, however, reversed and held that under the old version of the act courts must focus exclusively on the foreign judicial system as a whole and cannot examine the nature of the specific case. The Fifth Circuit said that unless no American could ever get a fair trial in Morocco, the judgment against DeJoria must be recognized.  

As mentioned, after this opinion, Baker Botts joined the defense team to prepare a cert petition to the U.S. Supreme Court. We believed that the Fifth Circuit had interpreted the old Uniform Act in a way that violated the U.S. Constitution's Due Process Clause. Supreme Court precedent had long established that a U.S. state must not enforce a judgment from another state that was rendered in violation of due process. But that rationale had never been applied to the context of a foreign-country judgment.  

While the Supreme Court ultimately denied cert, we persuaded the district court to allow us to add the constitutional defense on remand, thus allowing the case to continue. The Supreme Court research also prompted us to discover the newer version of the Uniform Act, which as noted, required courts to consider whether the specific proceeding—not just the foreign system—comported with fundamental due process.

While the case was on remand, the Texas legislature changed state law. What did they do? Were you involved in the lobbying effort?

We believed that Mr. DeJoria's experience illustrated precisely why Texas should adopt the updated Uniform Act. Even in foreign systems where a fair trial is sometimes possible, individual cases may nonetheless grossly violate due process. Texas law should ensure that Texas courts do not deprive Texans of liberty or property as a result of a fundamentally unfair foreign proceeding.  

As have 22 other states, the Texas Legislature unanimously adopted the updated Uniform Act to require courts to examine whether the specific foreign proceeding violated due process. The act applied to pending cases to ensure that Mr. DeJoria and other litigants with cases in the pipeline were not deprived of due process.  

As recounted in the district court opinions, my co-counsel, former Texas Supreme Court Justice Craig Enoch, testified in support of the act before the legislature.

The Fifth Circuit noted that "There is a deep irony in allowing DeJoria to contend he was denied due process in Morocco when it was his lobbying efforts that changed the rules of the game midway through the proceedings in the United States." What's your response?

It's common for a legislature to amend a statute in response to a judicial interpretation that reveals a weakness in the statute. Retroactive laws rightly cause concern when they strip a party of rights in the middle of litigation, but as the Fifth Circuit concluded, there's no right to enforce a judgment obtained through a violation of due process.  

Given that the statute protected rights and simply brought Texas into line with the U.S. Constitution, it would have been perverse not to apply it to pending cases.   

Who was opposing counsel? Any comment on their advocacy?

Geoffrey Harrison of Susman Godfrey was lead opposing counsel. He is a zealous advocate for his clients and a talented lawyer.

Who were the members of your team and how did you work together?

From Baker Botts, superstar appellate associates Mark Little and Travis Gray were essential to researching and briefing the due-process arguments. We focused on the constitutional aspects of the case, examining, for example, what does "due process" require in the context of a foreign judgment. We took the lead on drafting the briefs in the trial and appellate courts, and I split the Fifth Circuit oral argument with Craig Enoch of Enoch Kever PLLC.  

Judge Enoch focused on the state constitutional challenge to the new act. He and his partners Gary Zausmer and Melissa Lorber are fantastic lawyers and wise strategists, both at the trial and appellate level.

What did you find especially significant about the appellate panel's decision?

It is the first appellate decision refusing to recognize a foreign judgment under the due-process prong of the updated Uniform Act. Because there is relatively little precedent in this area, both the district court and the Fifth Circuit opinions will provide important guidance on how Americans can defend against enforcement of foreign judgments.

What do you hope will be the legacy of this case?

We take for granted that if we (or our clients) are sued in the United States, then we will have a full and fair opportunity to mount a defense before an impartial tribunal. While foreign courts need not mirror the U.S. legal system in every respect, those core due process rights are a prerequisite before American courts can enforce a foreign judgment against a U.S. person or business.