John Paul DeJoria, the businessman behind Paul Mitchell hair products and tequila maker The Patrón Spirits Co., won’t have to pay a $123 million judgment against him in Morocco, thanks to an American appellate ruling in his favor.

“Proving that it is often harder to collect a judgment than win one, this is the second time the question of the judgment’s validity has come before us,” the U.S. Court of Appeals for the Fifth Circuit wrote, before siding with DeJoria in the nine-figure dispute.

DeJoria won based on a 2017 law—for which he had lobbied—that applied retroactively to pending cases and changed how Texas courts could recognize foreign judgments. A question in the appeal was whether the retroactive law was unconstitutional under the Texas Constitution.

DeJoria’s Houston lawyer, Baker Botts partner Aaron Streett, called the win “an important victory.”

“The U.S. court system upheld the important principle that no American should suffer at the hands of a foreign court proceeding that’s fundamentally unfair,” Streett said.

Aaron Streett. Photo: Diego M. Radzinschi/ALM

The court’s ruling recounted that DeJoria had attempted in 1999 to add “oil magnate” to his achievements, but, “It did not go well,” wrote Judge Gregg Costa.

The opinion in DeJoria v. Maghreb Petroleum Exploration explained that DeJoria and his business partner had launched Lone Star Energy Corp. in Morocco, hoping to discover oil reserves and make the country self-sufficient for 30 years. The project soured when they didn’t find the reserves. DeJoria lost his place on the board and the company sued him.

In the end, the court issued the judgment against DeJoria and his business partner. To get the money, Maghreb had to convince a U.S. court to recognize and enforce the foreign judgment, but DeJoria resisted. The district court found the Moroccan judgment came from a system that doesn’t have impartial tribunals or procedures to give due process of law, but the Fifth Circuit in 2015 remanded, finding that DeJoria must prove more.

Retroactive law

In 2017, DeJoria lobbied the Texas Legislature to pass legislation to change how Texas law recognized foreign judgments. Lawmakers made the change retroactive to pending cases. Arguing under the new law, the court ruled for DeJoria, finding the Moroccan proceeding lacked due process. Maghreb appealed.

The Texas Constitution prohibits retroactive laws, noted the Fifth Circuit, but it ruled the retroactive law here isn’t unconstitutional.

“The new law’s limited interference with Maghreb’s legitimate rights resolves the question,” the opinion said. “This is not a case in which a law that allowed a party’s recovery was changed to ‘abrogate their claim.’”

Before the new law, DeJoria was already raising a due process challenge. It wasn’t clear then whether Maghreb would prevail, the opinion said.

Maghreb argued on appeal that because DeJoria failed to participate in the Moroccan proceedings, he lost the opportunity to complain about them. But the Fifth Circuit made “short work” of that argument, noting the trial court’s ruling found DeJoria was afraid for his safety because of the death threat, he couldn’t find a lawyer to take his case because his interests were adverse to the Moroccan royal family’s interests, and the Moroccan court went through five experts before landing on one who found Maghreb had substantial damages.

“Maghreb has not shown clear error,” the opinion said, affirming the trial court’s ruling.

Susman Godfrey partner Geoffrey Harrison of Houston, who represented Maghreb, wrote in an email that the ruling was “a stunning disappointment.”

Read the opinion: