Prov Govt Marinduque v. Placer Dome, Inc.

Court of Appeals for the Ninth Circuit·Decided September 29, 2009·No. 07-16306·Published

Opinion

FOR PUBLICATION

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

PROVINCIAL GOV’T OF MARINDUQUE,  Plaintiff-Appellant, No. 07-16306 v.

 D.C. No.

CV-05-01299-BES

PLACER DOME, INC.; BARRICK GOLD CORP., OPINION Defendants-Appellees.

Appeal from the United States District Court for the District of Nevada Brian E. Sandoval, District Judge, Presiding

Argued and Submitted

March 10, 2009—San Francisco, California

Filed September 29, 2009

Before: M. Margaret McKeown and Sandra S. Ikuta, Circuit Judges, and Frederic Block,* District Judge.

Opinion by Judge McKeown

*The Honorable Frederic Block, Senior United States District Judge for the Eastern District of New York, sitting by designation.

14015

MARINDUQUE v. PLACER DOME, INC. 14019

COUNSEL

Walter J. Scott, James D. McCarthy (argued), and David H. Ammons, Diamond McCarthy LLP, Dallas, Texas; Neil Peck, Snell & Wilmer LLP, Denver, CO; Patrick G. Byrne, Las Vegas, Nevada, for the plaintiff-appellant.

Steve Morris, Rex D. Garner, Morris Pickering & Peterson, Las Vegas, Nevada; Jerrold J. Ganzfried (argued), Edward Han, Martin Cunniff, Howrey LLP, Washington, DC, for the defendants-appellees.

14020 MARINDUQUE v. PLACER DOME, INC.

OPINION

McKEOWN, Circuit Judge:

Under the act of state doctrine, “the acts of foreign sovereigns taken within their own jurisdiction shall be deemed valid.” W.S. Kirkpatrick & Co. v. Environmental Tectonics Corp., 493 U.S. 400, 409 (1990). Founded on international law, the doctrine also serves as a basis for federal-question jurisdiction when the plaintiff’s complaint challenges the validity of a foreign state’s conduct. We consider here whether the district court had subject-matter jurisdiction over this suit, based upon the act of state doctrine, such that removal from state to federal court was proper. Because none of the referenced conduct by the foreign sovereign—in this case, the Philippine government—is essential to any of the plaintiff’s causes of action, we reverse the district court’s exercise of subject-matter jurisdiction under the act of state doctrine.

BACKGROUND

The Provincial Government of Marinduque (“the Province ”) sued Placer Dome Corporation in 2005 in Nevada state court for alleged human health, ecological, and economic damages caused by the company’s mining operations on Marinduque, an island province of the Republic of the Philippines .1 According to the complaint, Placer Dome severely polluted the lands and waters of Marinduque for some thirty 1 For purposes of determining whether removal was proper, our analysis concerns “the pleadings filed at the time of removal without reference to subsequent amendments.” Sparta Surgical Corp. v. Nat’l Ass’n of Sec. Dealers, Inc., 159 F.3d 1209, 1213 (9th Cir. 1998). The factual background is thus derived from the allegations in the original complaint filed in state court.

The Province sued in Nevada because, according to the complaint, Placer Dome conducts significant and continuous business in the state.

MARINDUQUE v. PLACER DOME, INC. 14021 years, caused two cataclysmic environmental disasters, poisoned the islanders by contaminating their food and water sources, and then left the province without cleaning up the mess—all in violation of Philippine law. The Province further alleges that Placer Dome received certain forms of assistance in its mining endeavors from the Philippine government. More particularly, the Province contends that former Philippine President Ferdinand Marcos, in exchange for a personal stake in the mining operations, eased various environmental protections obstructing Placer Dome’s way.

Immediately after the Province filed suit, Placer Dome removed the case to federal district court for the District of Nevada on the basis of federal-question jurisdiction. Specifically , Placer Dome contended that the case “tender[ed] questions of international law and foreign relations.” The Province moved for an order requiring Placer Dome to show cause why the action should not be remanded to the state court due to a lack of subject-matter jurisdiction. The district court denied the Province’s motion, holding that federal-question jurisdiction existed under the act of state doctrine of the federal common law. Placer Dome moved to dismiss the suit for lack of personal jurisdiction and forum non conveniens. The district court granted limited discovery on personal jurisdiction.2 Before discovery was concluded, in March 2007, the United States Supreme Court issued Sinochem International Co. v. Malaysia International Shipping Corp., announcing that district courts have latitude to rule on the threshold issue of forum non conveniens before definitively ascertaining subject- matter and personal jurisdiction. 549 U.S. 422, 432 (2007). The district court stayed jurisdictional discovery, and ordered briefing on the issue of forum non conveniens. Invoking Sinochem, the district court dismissed the matter on forum non conveniens grounds in favor of a Canadian forum. In rul-

2 Around this time, Barrick Gold Corporation was joined as a defendant because it had obtained a controlling 81 percent interest in Placer Dome. We refer to both defendants collectively as “Placer Dome.”

14022 MARINDUQUE v. PLACER DOME, INC. ing on the Province’s motion for reconsideration, the district court affirmed its earlier conclusion that “subject matter jurisdiction does, in fact, exist in this case, based upon the act of state doctrine.”

ANALYSIS

I. Removal to Federal Court

This case was removed from state to federal court under 28 U.S.C. § 1441(a)3 on Placer Dome’s representation that the Province’s claims implicated the federal common law of foreign relations. Removal was proper only if the district court would have had original jurisdiction over the claims. Placer Dome asserted jurisdiction pursuant to 28 U.S.C. § 1331, which states that federal courts have jurisdiction over cases presenting questions of federal constitutional, statutory, and common law.

Federal courts may exercise federal-question jurisdiction over an action in two situations. First, and most commonly, a federal court may exercise federal-question jurisdiction if a federal right or immunity is “ ‘an element, and an essential one, of the plaintiff’s cause of action.’ ” Franchise Tax Bd. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 11 (1983) (quoting Gully v. First National Bank, 299 U.S. 109, 112 (1936)). Thus, the federal question on which jurisdiction is premised cannot be supplied via a defense; rather, the federal question must “be disclosed upon the face of the complaint , unaided by the answer.” Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125, 127-28 (1974) (per curiam). Second , a federal court may have such jurisdiction if a state-law 3 The removal statute provides that “any civil action brought in a State court of which the district courts of the United States have original jurisdiction , may be removed by the defendant or defendants, to the district court of the United States for the district and division embracing the place where such action is pending.” 28 U.S.C. § 1441(a).

MARINDUQUE v. PLACER DOME, INC. 14023 claim “necessarily raise[s] a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally-approved balance of federal and state judicial responsibilities.” Grable & Sons Metal Prod., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314 (2005). Such a federal issue must be “a substantial one, indicating a serious federal interest in claiming the advantages thought to be inherent in a federal forum.” Id. at 313.

The removal statute is strictly construed against removal jurisdiction. Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 32 (2002); California ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 (9th Cir. 2004). The defendant bears the burden of establishing that removal is proper. Id.

II. Determination of Removal Jurisdiction in Light of Sinochem

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