Saudi Basic Ind v. Exxon Corp

• Court: Court of Appeals for the Third Circuit
• Decided: March 24, 2004
• Docket: 02-2130
• Status: Published

Opinion

Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit

3-24-2004

Saudi Basic Ind v. Exxon Corp Precedential or Non-Precedential: Precedential

Docket No. 02-2130

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Recommended Citation "Saudi Basic Ind v. Exxon Corp" (2004). 2004 Decisions. Paper 882. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/882

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu. PRECEDENTIAL Gregory A. Castanias, Esq. (Argued) William K. Shirey II, Esq. UNITED STATES Jones Day COURT OF APPEALS 51 Louisiana Avenue, N.W. FOR THE THIRD CIRCUIT Washington, D.C. 20001

Kenneth R. Adamo, Esq. Michael W. Vary, Esq. No. 02-2130 Leozino Agozzino, Esq. Jones Day North Point 901 Lakeside Avenue EXXON MOBIL CORPORATION; Cleveland, OH 44114 EXXON CHEMICAL ARABIA, INC.; MOBIL YANBU PETROCHEMICAL Attorneys for Appellant COMPANY, INC. Elizabeth J. Sher, Esq. v. Pitney, Hardin, Kipp & Szuch P.O. Box 1945 SAUDI BASIC INDUSTRIES Morristown, NJ 07962 CORPORATION James W. Quinn, Esq. (Argued) Appellant David J. Lender, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue, 27 th Floor New York, NY 10153 On Appeal from the United States District Court Andrew S. Pollis, Esq. for the District of New Jersey David J. Michalski, Esq. D.C. Civil Action No. 00-cv-03841 Hahn, Loeser & Parks (Honorable William H. Walls) 3300 BP America Building 200 Public Square Cleveland, OH 44114 Argued December 9, 2003 K.C. Johnson, Esq. Exxon Mobil Corporation 800 Bell Street, Suite 1686J Before: AMBRO, FUENTES and Houston, TX 77002 CHERTOFF, Circuit Judges Attorneys for Appellees (Filed March 24, 2004) agreements with Yanbu and ECAI. Later that same month ExxonMobil, Yanbu, and OPINION OF THE COURT ECAI countersued SABIC in the United States District Court for the District of New Jersey (Civil Action No. 00-3841), seeking the converse declaratory AM BRO, Circuit Judge judgment—that SABIC had overcharged Saudi Basic Industries Corporation the joint venture entities for the sublicense (“SABIC”) appeals from the District in violation of the joint venture Court’s order denying its motion to agreements. dismiss, based on sovereign immunity, the In January 2002, Yanbu and ECAI claims of two ExxonMobil subsidiaries, filed an answer to SABIC’s state court Mobil Yanbu Petrochemical Company complaint, asserting as counterclaims the (“Yanbu”) and Exxon Chemical Arabia, same claims they had filed in their federal Inc. (“ECAI”). We do not reach the court complaint. In March 2003, after a foreign sovereign immunity question, two-week trial in the Delaware Superior however, because we determine that the Court, the jury returned a $416,880,764 Rooker-Feldman doctrine bars federal verdict against SABIC in favor of subject matter jurisdiction over the ExxonM obil. SABIC has appealed the subsidiaries’ claims, which have been verdict, which is currently pending in the already decided in state court. Delaware Supreme Court. I. Prior to the state court trial, SABIC Facts and Procedural Posture moved to dismiss ExxonMobil’s federal court action, asserting foreign sovereign In 1980, SABIC and the Exxon immunity. The District Court denied the (now ExxonMobil) subsidiaries formed motion on April 3, 2002. Saudi Basic two joint venture entities. One, called Indus. Corp. v. ExxonMobil Corp., 194 F. Yanpet, was the joint venture between Supp. 2d 378 (D.N.J. 2002). Though the SABIC and Yanbu, and another, called order also addressed other issues in that Kemya, was the joint venture between action, SABIC appeals only from the SABIC and ECAI. Two decades later, the sovereign immunity decision. parties began to dispute the propriety of royalties SABIC had charged to the joint II. venture entities for the sublicense to a Jurisdiction polyethylene manufacturing method called the Unipol® process. In September 2000 A. Appellate Jurisdiction SABIC sued Yanbu and ECAI in the We generally do not have Delaware Superior Court seeking a jurisdiction to review interlocutory declaratory judgment that these royalty decisions such as the denial of a motion to charges did not violate the joint venture

2 dismiss. Under the collateral order 2002)). We focused at oral argument on doctrine,1 however, we have recognized whether federal subject matter jurisdiction exceptions to this rule. One well- over this case fails under the Rooker- established exception is for orders denying Feldman doctrine because ExxonM obil’s motions to dismiss for reasons of claims have already been litigated in state immunity. See, e.g., In re Montgomery court. Aided by post-argument letter County, 215 F.3d at 373 (citing Nixon v. briefs submitted by the parties, we Fitzgerald, 457 U.S. 731 (1982)). Thus, conclude the answer is yes. we have appellate jurisdiction over the The Rooker-Feldman doctrine, District Court’s denial of SABIC’s motion derived from two Supreme Court to dismiss based on sovereign immunity. cases—Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923), and District of Columbia B. Rooker-Feldman Doctrine Court of Appeals v. Feldman, 460 U.S. 462 (1983)—prevents lower federal courts D e te rm ining that ap pella te from “sit[ting] in direct review of the jurisdiction is proper in a case does not decisions of a state tribunal.” Gulla v. end our jurisdictional inquiry. We have a North Strabane Twp., 146 F.3d 168, 171 “continuing obligation to sua sponte raise (3d Cir. 1998). Because Congress has the issue of subject matter jurisdiction conferred jurisdiction to review a state when it is in question.” Desi’s Pizza, Inc. court’s decision only on the Supreme v. City of Wilkes-Barre, 321 F.3d 411, 420 Court, see 28 U.S.C. § 1257, lower federal (3d Cir. 2003) (citing Bracken v. courts lack the power to decide claims in Matgouranis, 296 F.3d 160, 162 (3d Cir. which “the relief requested . . . requires determining that the state court’s decision is wrong or . . . void[ing] the state court’s 1 The collateral order doctrine excepts a ruling.” Desi’s Pizza, 321 F.3d at 419 “narrow range” of interlocutory decisions (quoting FOCUS v. Allegheny County from the general rule that only final orders Court of Common Pleas, 75 F.3d 834, 840 are appealable. In re M ontgomery County, (3d Cir. 1996)). As we recently explained, 215 F.3d 367, 373 (3d Cir. 2000) (citing “a claim is barred by Rooker-Feldman Cohen v. Beneficial Indus. Loan Corp., under two circumstances: first, if the claim 337 U.S. 541, 545–46 (1949)). To be an was ‘actually litigated’ in state court prior appealable collateral order, it must to the filing of the federal action or, “conclusively determine the disputed second, if the claim is ‘inextricably issue, the issue must be completely intertwined with [the] state adjudication.’” separate from the merits of the action, and Desi’s Pizza, 321 F.3d at 419 (quoting the decision must be effectively Parkview Assocs. P’ship v. City of unreviewable on appeal from a final Lebanon, 225 F.3d 321, 325 (3d Cir. judgment.” Id. (citing Coopers & Lybrand 2000)). v. Livesay, 437 U.S. 463, 468 (1978)).

3 The state level decision need not be consistently looked to the substance of the of its highest court. The Rooker-Feldman state court’s judgment compared to the doctrine applies equally to final decisions plaintiff’s claims in the federal action. See of lower state courts. FOCUS, 75 F.3d at Parkview Assocs. P’ship, 225 F.3d at 840. 325–36; Gulla, 146 F.3d at 173. Filing the latter before the state court judgment does Here there is no dispute that not escape Rooker-Feldman’s grasp. The ExxonMobil’s claims are identical to the only timing relevant is whether the state claims upon which the Delaware Superior judgment precedes a federal judgment on Court reached a final judgment. Thus, the same claims. Desi’s Pizza itself is though our Court takes a narrow view of illustrative because there the state court the Rooker-Feldman doctrine, Parkview reached final judgment after the plaintiff Assocs. P’ship, 225 F.3d at 326, litigating filed claims in federal court. Yet we ExxonMobil’s claims to final judgment in decided that the plaintiff’s claims were not state court presents the “paradigm situation “actually litigated” because neither its state in which Rooker-Feldman precludes a court pleadings nor the state court’s federal district court from proceeding.” judgment discussed or referenced the E.B. v. Verniero, 119 F.3d 1077, 1090–91 claims it filed in federal court. If in Desi’s (3d Cir. 1997) (describing a case in which Pizza we had intended to adopt a new the federal court plaintiff sought an requirement that the state court must reach injunction directing that a state court order a final judgment prior to the filing of the not be carried out). federal action in order for the “actually ExxonM obil argues that the litigated” trigger to apply, we had a full “actually litigated” circumstance does not opportunity to do so. Furthermore, were trigger Rooker-Feldman because the we to find that the Rooker-Feldman March 2003 state court judgment was not “actually litigated” trigger did not apply to reached prior to ExxonMobil’s filing of federal actions filed prior to the state the federal action in August 2000. It cites court’s final judgment, we would be to Desi’s Pizza, in which we said Rooker- encouraging parties to maintain federal Feldman bars a claim “if the claim was actions as “insurance policies” while their ‘actually litigated’ in state court prior to state court claims were pending. This the filing of the federal action,” 321 F.3d defe ats an “elemen tary principle ” at 419. But we do not read this language underpinning the Rooker-Feld m an as imposing a new requirement that, in doctrine—“that a party’s recourse for an order for the “actually litigated” trigger to adverse decision in state court is an appeal apply, the plaintiff’s federal claims must to the appropriate state appellate court, and be filed after the state claims reach a final ultimately the Supreme Court under § judgment. In deciding whether a claim 1257, not a separate action in federal was “actually litigated” in state court for court.” Parkview Assocs. P’ship, 225 F.3d Rooker-Feldman purposes, we have at 324.

4 ExxonM obil also argues that 225 F.3d at 327. We simply note that our Rooker-Feldman should not apply in this case presents an equally clear application case because it is not a party to the action of the “in extrica bly intertw ined” in Delaware state court, in which only its circumstance, which exists when “federal subsidiaries, Yanbu and ECAI, are relief can only be predicated upon a defendants. Indeed, we have consistently conviction that the state court was wrong,” (and recently) held that Rooker-Feldman id. at 325, or when “the federal court does not bar claims of plaintiffs who were must . . . take action that would render [the not parties to the state court proceeding. state court’s] judgment ineffectual,” See Nat’l R.R. Passenger Corp. v. Pa. Pub. FOCUS, 75 F.3d at 840. By its own Util. Comm’n, 342 F.3d 242, 257 (3d Cir. admission, ExxonMobil seeks to maintain 2003); Marks v. Stinson, 19 F.3d 873, 886 its federal action as an “insurance policy” n.11 (3d Cir. 1994). But we have also in order to relitigate the overcharge issue if noted that this limiting principle of the SABIC prevails in its efforts to overturn Rooker-Feldman doctrine “has a close the state court verdict in favor of affinity to the principles embodied in the ExxonM obil. If that were to happen, legal concepts of claim and issue ExxonMobil’s federal action would preclusion.” Valenti v. Mitchell, 962 F.2d squarely be seeking to invalidate a final 288, 297 (3d Cir. 1992). Claims and judgment of the state court, the very issues decided against an entity bind also situation contemplated by Rooker- its parties in privity, including wholly- Feldman’s “inextricably intertwined” bar. owned subsidiaries. Lubrizol Corp. v. Exxon Corp., 929 F.2d 960, 966 (3d Cir. * * * * * 1991). Underscoring this common sense privity principle is the fact that Because ExxonMobil’s federal ExxonMobil’s interest in its federal claims claims were identical to the claims in is identical to its subsidiaries’ interest in which the Delaware Superior Court their state court claims, because its right to reached a final judgment, they are barred recover is derivative of its subsidiaries’ by the Rooker-Feldman doctrine. Even right to recover. Indeed, both Yanbu and within our Court’s narrow confines for ECAI are co-plaintiffs with ExxonMobil Rooker-Feldman, this case is easily in the federal action. cabined. We cannot imagine a more classic invocation of the Rooker-Feldman As ExxonMobil’s federal claims jurisdictional bar than to preclude a party were “actually litigated” in state court, we from maintaining a federal action as an need not analyze whether, under the “insurance policy” in case the state trial alternative prong of the Rooker-Feldman court decision in that party’s favor is doctrine, they were “inextricably overturned by an appellate state court. We intertwined with a previous state court therefore vacate those aspects of the adjudication.” Parkview Assocs. P’ship, District Court’s order addressing Civil

5 Action No. 00-3841, the subject of this appeal, and remand with instructions to dismiss that action for lack of subject matter jurisdiction.