Consumer Class Actions and Mass Torts : Class Action Lawyer & Attorney : J. Russell Jackson : Skadden Law Firm : Complex Class Actions : Consumer Class Actions & Mass Torts Law Blog

On June 1 the Ninth Circuit granted a motion for panel rehearing and issued a new opinion in Carijano v. Occidental Petroleum Corp., No. 08-56187 (9th Cir. June 1, 2011) that unduly restricts a district court's authority in granting forum non conveniens dismissal and provides a roadmap for foreign plaintiffs to defeat forum non conveniens motions.

In Carijano, 25 members of a tribe indigenous to the Peruvian rainforest sued the defendant for its former Peruvian subsidiary's 30 years of allegedly polluting the rainforest and water supplies with the discharge of toxic oil byproducts.  These plaintiffs sued in California state court in 2007, asserting claims for strict liability, negligence, battery, medical monitoring, wrongful death, fraud, misrepresentation, public and private nuisance, trespass, and intentional infliction of emotional distress, as well as a violation of California's Unfair Competition Law.

After the defendant removed the case to federal court and evinced its intention to move for forum non conveniens dismissal, plaintiffs amended their complaint to add as a plaintiff a U.S. advocacy group, Amazon Watch, that had been assisting plaintiffs for some time.

Defendant moved for forum non conveniens dismissal and, not surprisingly, the district court granted the motion.  The alleged pollution and contamination was in Peru.  It allegedly was discharged by what was a Peruvian company.  The alleged victims all were exposed in Peru, treated in Peru, and live in Peru.

The district court had looked at the Piper Aircraft factors and held that the private and public interest factors favored dismissal in favor of Peru.  It considered expert evidence to conclude that Peru would provide an adequate alternative forum.  The Ninth Circuit did not disagree with this conclusion.

It did, however, take the district court to task for discounting the domestic status of Amazon Watch.  The district court concluded that this plaintiff's choice of forum was entitled to reduced deference because the main subject of the suit was compensation of Peruvian residents like the 25 original plaintiffs to the suit.  The Ninth Circuit held that the district court committed reversible error by not giving substantial deference to Amazon Watch's status as an American citizen.  The clear import of the Carijano opinion is that if you are a foreign national that wants to avoid forum non conveniens dismissal, add a U.S. advocacy group to your lawsuit as a plaintiff.

Notably, the defendant had strong arguments that Amazon Watch had no direct injury and thus lacked Article III standing and standing under California's Unfair Competition Law to bring a suit at all.  The Ninth Circuit twisted the holding in a case in which the argument for forum non conveniens dismissal was so strong that the Supreme Court held that the issue could be decided before even reaching Article III jurisdiction.  See Slip op. at 7136 (citing Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422 (2007).  It used this holding to presume that Amazon Watch properly had standing and thus concluded that its choice of forum as a domestic plaintiff was entitled to full Piper deference, i.e., "a strong presumption that its choice of forum was convenient."  This was so even though Amazon Watch was added as an afterthought upon removal and was accompanied by 25 foreign nationals asserting personal injuries from conduct arising on foreign soil by a foreign subsidiary.

The Ninth Circuit panel also concluded that it did not matter that a US court could not compel the attendance of witnesses from Peru because by filing the lawsuit, the plaintiffs had evinced a willingness to travel to New York.  It chided the defendant for not being able to identify individuals who would not travel to the U.S.  This, despite the fact that all of the injuries allegedly occurred in Peru, were treated in Peru, and allegedly were the result of the activities of former employees of a subsidiary in Peru.  At the pleading stage, it is simply unreasonable to require a defendant to identify individuals who have expressed an unwillingness to travel when all of the sources of proof reside in another country.

The Ninth Circuit panel held that California had an interest in "providing a forum for those harmed by the actions of its corporate citizens" that was at least as strong as Peru's interest in compensating the physical injuries of its residents.  Slip op. at 7145-46.  That seems highly improbable.  Certainly the interest of a domestic defendant's state of residence is not given the same weight in conflicts of law interest analysis as that of a state where a plaintiff was injured.  And this analysis ignores the corporate formalities between the defendant and its former Peruvian subsidiary.

One other problem with the court's analysis is its consideration of the statute of limitations issue.   Slip op. at 7149.  The court held that the defendant's clear intention to use the statute of limitations as a defense in Peru makes Peru an inadequate forum.  The statute of limitations, of course, is part of the foreign nation's sovereign law.  And while it may be reasonable for a court considering a forum non conveniens motion to condition dismissal on the defendant agreeing to tolling during the pendency of the U.S. action, it is manifestly unreasonable to require a defendant to agree to foregoing the statute of limitations defense altogether where the claim expired years before it was ever filed in the United States.  This is particularly true when one considers that a U.S. court applying foreign law would itself be bound to apply the foreign state's statute of limitations.

The panel's opinion on rehearing indicates that the parties are free to file new petitions for panel rehearing and rehearing en banc.  Here's hoping an en banc panel of the Ninth Circuit will reverse some of the damage to forum non conveniens law that was done by the Carijano opinion.

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Judge Saundra Brown Armstrong's opinion in Native Village of Kivalina v. ExxonMobil Corp., Case No. C 08-1138 SBA, Slip op. (Sept. 30, 2009) is a strong retort to the Second Circuit's recent opinion in Connecticut v. American Elect. Power Co., 2009 WL 2996729 (2d Cir. Sept. 21, 2009).  In Kivalina, Judge Armstrong was faced with a public nuisance suit for damages estimated to run between $95 million and $400 million.  She held that the court lacked subject matter jurisdiction under the political question doctrine, and that plaintiffs lacked Article III standing because their injuries were not fairly traceable to the defendants' alleged misconduct.  In these respects, her conclusions were squarely against those of the Second Circuit in AEP.

Judge Armstrong proceeded from the standard presumption against federal jurisdiction, placing the burden on plaintiffs, as the proponents of federal jurisdiction, to establish their right to be in federal court.  The court also refused to apply a lower standard to plaintiffs as governmental entities because theirs was a lawsuit for damages, not merely a suit to enforce a regulatory scheme.

Judge Armstrong agreed with the Second Circuit that the issue of global warming -- which implicates international relations through things like the Kyoto Protocol -- did not present an issue of foreign policy that was textually committed to another branch of government.    Slip op. at 8-9. 

But she parted company with the Second Circuit on the issue of whether the case was justiciable using judicially discoverable and manageable standards.  Judge Armstrong observed that the tort of public nuisance requires the jury to determine whether there was an "unreasonable" interference with a right common to the public.  That determination involves comparing the social utility of the defendant's conduct with the gravity of the harm it inflicts.  Judge Armstrong makes a strong case that this determination is not one that can be guided by rational, principled legal rules:

[T]he factfinder will have to weigh, inter alia, the energy-producing alternatives that were available in the past and consider their respective impact on far ranging issues such as their reliability as an energy source, safety considerations and the impact of the different alternatives on consumers and business at every level.  The factfinder would then have to weigh the benefits derived from those choices against the risk that increasing greenhouse gases would in turn increase the risk of causing flooding along the coast of a remote Alaskan locale.  Plaintiffs ignore this aspect of their claim and otherwise fail to articulate any particular judicially discoverable and manageable standards that would guide a factfinder in rendering a decision that is principled, rational, and based upon reasoned distinctions.

Id. at 12 (citations omitted).

Judge Armstrong acknowledged that the Second Circuit expressed faith in the judiciary's ability to handle "new and complex problems" of environmental law, but she herself was "not so sanguine."  Judge Armstrong pointed out that the Second Circuit's authorities were distinguishable because they "involved a discrete number of 'polluters' that were identified as causing a specific injury to a specific area."  Id.  But the Kivalina plaintiffs presented a far different case -- one where everyone in the world shared some responsibility, but only a handful of defendants were named, and where the harm at issue allegedly derived from emissions that occurred over more than a hundred years.  Judge Armstrong noted that the causal chain in the Second Circuit's environmental cases was much tighter than the one pled by plaintiffs:

In a water pollution case, the discharge in excess of the amount permitted is presumed harmful.  In contrast, the harm from global warming involves a series of events disconnected from the discharge itself.  In a global warming scenario, emitted greenhouse gases combine with other gases in the atmosphere which in turn results in the planet retaining heat, which in turn causes the ice caps to melt and the oceans to rise, which in turn causes the Arctic sea ice to melt, which in turn allegedly renders Kivalina vulnerable to erosion and deterioration resulting from winter storms.

Id. at 13 (citations omitted).  Because of the uniqueness of plaintiffs' theory, the prior case law would not equip a court to determine the claims in a reasoned manner, Judge Armstrong concluded.

Judge Armstrong also took issue with the conclusion that plaintiffs' global warming claims did not impermissibly ask the judiciary to make policy choices better left to the representative branches.  As she observed, deciding plaintiffs' public nuisance claim would require the court to determine what emission limits should have been imposed in the past, and to make the fundamental policy choice of who should bear the costs of global warming.  Particularly where plaintiffs admit that nearly everyone on Earth bears some responsibility, but they have sued only a limited number of defendants from arbitrarily chosen industries -- including none from the transportation industry -- the court could properly conclude that the policy choice of allocating responsibility for global warming should be made by the legislative or executive branch in the first place.

Because plaintiffs' claims lacked judicially manageable standards and required the court to make policy choices better left to political branches of government, Judge Armstrong held that the political question doctrine applied.

Judge Armstrong also found that plaintiffs lacked standing because their injuries were not fairly traceable to defendants' conduct.  Once again, the court analogized to earlier Clean Water Act cases.  Those cases had involved presumptively-harmful discharges above a permit level into a readily identifiable waterway.  In Kivalina, however, there were no federal standards on the release of greenhouse gases, and thus no presumptive causation could apply.  Moreover, the release was not traceable, but rather diffused into the atmosphere and combined with gases released from countless other sources over centuries.  Judge Armstrong analogized to water pollution cases discussing the concept of the "zone of discharge," which hold that where the plaintiff lives too far downstream, he is not within the zone that would make his injury fairly traceable to the defendant's release of effluent.  She concluded that, given the lack of traceability and the tenuous chain of causation pled, plaintiffs lacked standing to sue because their injuries were not fairly traceable to the defendants' conduct.

The Kivalina opinion is a well-written critique of federal jurisdiction over global warming claims.  One can expect that it will be heavily cited in petitions for rehearing en banc in AEP and Comer v. Murphy Oil Co., 2009 WL 3321493 (Oct. 16, 2009), which I posted yesterday.

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