Kelly v. Syria Shell Petroleum Development

• Decision Date: 31 May 2000
• Docket Number: No. 99-20095,99-20095
• Citation: 213 F.3d 841
• Parties: (5th Cir. 2000) ANNIE KELLY; JEANETTE CARPENTER, Plaintiffs-Appellants, v. SYRIA SHELL PETROLEUM DEVELOPMENT B.V., ET AL., Defendants, SYRIA SHELL PETROLEUM DEVELOPMENT B.V.; AL FURAT PETROLEUM COMPANY; N. V. KONINKLIJE NEDERLANDSCHE PETROLEUM MATSENAPPIJ; ROYAL DUTCH PETROLEUM; THE SHELL TRANSPORT AND TRADING COMPANY, Defendants-Appellees. KATHY STRONG, Individually and as Next Friend of John Strong, a minor,Plaintiff-Appellant, v. SYRIA SHELL PETROLEUM DEVELOPMENT B.V.; ET AL., Defendants, SYRIA SHELL PETROLEUM DEVELOPMENT B.V.; AL FURAT PETROLEUM COMPANY; N. V. KONINKLIJE NEDERLANDSCHE PETROLEUM MATSENAPPIJ, also known as Royal Dutch Petroleum Company; THE SHELL TRANSPORT AND TRADING COMPANY, Defendants-Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

Page 841

213 F.3d 841 (5th Cir. 2000)

ANNIE KELLY; JEANETTE CARPENTER, Plaintiffs-Appellants, v. SYRIA SHELL PETROLEUM DEVELOPMENT B.V., ET AL., Defendants SYRIA SHELL PETROLEUM DEVELOPMENT B.V.; AL FURAT PETROLEUM COMPANY N. V. KONINKLIJE NEDERLANDSCHE PETROLEUM MATSENAPPIJ; ROYAL DUTCH PETROLEUM; THE SHELL TRANSPORT AND TRADING COMPANY, Defendants-Appellees.

KATHY STRONG, Individually and as Next Friend of John Strong, a minor,Plaintiff-Appellant, v. SYRIA SHELL PETROLEUM DEVELOPMENT B.V.; ET AL., Defendants SYRIA SHELL PETROLEUM DEVELOPMENT B.V.; AL FURAT PETROLEUM COMPANY; N. V. KONINKLIJE NEDERLANDSCHE PETROLEUM MATSENAPPIJ, also known as Royal Dutch Petroleum Company; THE SHELL TRANSPORT AND TRADING COMPANY, Defendants-Appellees.

No. 99-20095

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

May 31, 2000

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Appeal from the United States District Court for the Southern District of Texas

Before BARKSDALE, BENAVIDES, and STEWART, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

Primarily at issue are whether, pursuant to the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. §§ 1330, 1602-11, Al Furat Petroleum Company is an "organ" of Syria for purposes of defeating subject matter jurisdiction; and, if it is, whether immunity is precluded by the FSIA commercial activity exception, 28 U.S.C. § 1605(a)(2). The district court dismissed Al Furat for lack of subject matter jurisdiction; the other Appellees, for lack of personal jurisdiction. As part of contesting those dismissals, Appellants maintain they were denied adequate discovery. We AFFIRM.

I.

On 3 May 1995, a Syrian well, operated by Al Furat Petroleum Company, began leaking oil and gas. That same day, Warmenhoven, who was employed in The Netherlands by SIPM, one of the Royal Dutch/Shell group of companies, called Boots & Coots, L.P. (B&C) in Houston, Texas, to determine its availability to perform well control services.

The call was routed to John Wright, of Wright, Boots & Coots, L.L.C. (WB&C), also in Houston, who confirmed WB&C's availability. Warmenhoven explained that he did not have authority to hire WB&C, but told Wright he would suggest that Al Furat contact WB&C. When deposed concerning jurisdiction for this action, discussed infra, Wright described Warmenhoven as a "worldwide drilling troubleshooter" who advised operating units on mobilization of resources.

Wright proposed to Al Furat that he (Wright), as blowout adviser, and three firefighters (Appellants' decedents) travel to Syria to perform well control services. After receiving confirmation from Al Furat on fees for such services, Wright and Appellants' decedents traveled to Syria that same day.

On 5 May, two days after the leak began and Wright was contacted, Al Furat signed a B&C work order, for B&C, as an independent contractor, to assist in bringing the well under control. The work order gives Al Furat complete authority, dominion, and control over the well site; and Al Furat agreed to indemnify B&C for personal injury claims and to pay it in Houston. (The evidence submitted by Appellants shows that B&C invoiced WB&C for decedents' services; and that Al Furat was invoiced by, and paid, WB&C for the work performed by decedents.)

Subsequently, Al Furat contracted with WB&C for it to perform blowout response and well killing services. The contract, signed in Syria on 10 and 11 June, but effective as of 3 May, provided: Syrian law governed; Al Furat had complete custody of the well site; WB&C was an independent contractor; Al Furat was to defend and indemnify WB&C for personal injuries to personnel of Al Furat and other contractors attributable to activities at the site; WB&C was responsible for, and would defend and indemnify Al Furat and other contractors for, personal injuries to WB&C and subcontractor personnel attributable to activities at the site; on written request of Al Furat, WB&C could be asked to place purchase orders on behalf of Al Furat for equipment or materials; and preference was to be given to Syrian products and subcontractors.

On 10 June, Appellants' decedents died when gas escaping from the well ignited. Two years later, decedents' wrongful death beneficiaries filed two actions in Texas state court (one by Strong's beneficiaries, the other by Kelly and Carpenter's) against Al Furat, Syria Shell Petroleum Development B.V. (Syria Shell), Royal Dutch Petroleum Company (Royal Dutch), The Shell Transport and Trading Company (Shell Transport), and others, claiming their negligence and gross negligence caused the three deaths. Appellees removed both actions to federal court. Approximately two weeks later, Appellees moved in both actions for Al Furat's dismissal for lack of subject matter jurisdiction, claiming FSIA immunity, and for all Appellees' dismissal for lack of personal jurisdiction. They also moved to stay discovery pending disposition of their motions.

The two actions were later consolidated, over Appellants' objections. In December 1997, approximately six months after filing the actions, Appellants moved to conduct jurisdictional discovery on FSIA issues. The following January, they moved to compel discovery on personal jurisdiction, and requested a delay in ruling on dismissal pending discovery. That February, Appellants amended their complaints to claim Al Furat breached its contracts with WB&C and B&C.

The magistrate judge to whom all of the motions were referred recommended dismissal and staying discovery. The district court overruled Appellants' objections; adopted the recommendations; and denied Appellants' motions for reconsideration. (Prior to Appellees' dismissal, the other defendants had been dismissed.)

II.

Appellants challenge Al Furat's dismissal under the FSIA for lack of subject matter jurisdiction and that of Syria Shell, Royal Dutch, and Shell Transport for lack of personal jurisdiction. Concomitantly, they claim denial of adequate jurisdictional discovery.

A.

Al Furat's dismissal is reviewed de novo. E.g., Moran v. Kingdom of Saudi Arabia, 27 F.3d 169, 171 (5th Cir. 1994); Walter Fuller Aircraft Sales, Inc. v. Republic of Philippines, 965 F.2d 1375, 1383 (5th Cir. 1992) ("We review the district court's conclusions about sovereign immunity de novo.").

A court may base its disposition of a motion to dismiss for lack of subject matter jurisdiction on (1) the complaint alone; (2) the complaint supplemented by undisputed facts; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts. Where ... the district court has relied on the third of these bases and has made jurisdictional findings of fact, those findings are reviewed for clear error.

Robinson v. TCI/US West Cable Communications Inc., 117 F.3d 900, 904 (5th Cir. 1997) (footnotes omitted).

Concerning Al Furat, "[t]he FSIA sets forth 'the sole and exclusive standards to be used' to resolve all sovereign immunity issues". Arriba Ltd. v. Petroleos Mexicanos, 962 F.2d 528, 532 (5th Cir.) (quoting H.R. Rep. No. 1487, 94th Cong., 2d Sess. 12 (1976), 1976 U.S.C.C.A.N. 6604, 6610), cert. denied, 506 U.S. 956 (1992); see 28 U.S.C. § 1602 ("Claims of foreign states to immunity should henceforth be decided by courts of the United States and of the States in conformity with the principles set forth in this chapter.").

The FSIA gives federal courts jurisdiction over civil actions against "a foreign state ... as to any claim for relief in personam with respect to which the foreign state is not entitled to immunity under [28 U.S.C. §§] 1605-1607 ... or under any applicable international agreement". 28 U.S.C. § 1330(a) (emphasis added). "Personal jurisdiction over a foreign state shall exist as to every claim for relief over which the district courts have [subject matter] jurisdiction under [§ 1330](a) where service has been made under [28 U.S.C. §] 1608". 28 U.S.C. § 1330(b). Accordingly, "personal jurisdiction like subject-matter jurisdiction, exists only when one of the exceptions to foreign sovereign immunity in §§ 1605-07 applies". Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434 n.3 (1989). See also Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 485 n.5 (1983) ("Under the [FSIA], ... both statutory subject-matter jurisdiction ... and personal jurisdiction turn on application of the substantive provisions of the [FSIA].").

"[A] foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in [28 U.S.C. §§] 1605 to 1607". 28 U.S.C. § 1604. A "foreign state" includes "a political subdivision of a foreign state or an agency or instrumentality of a foreign state as defined in [§ 1603](b)". 28 U.S.C. § 1603(a). Such foreign state "agency or instrumentality" is:

any entity --

(1) which is a separate legal person, corporate or otherwise, and

(2) which is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof, and

(3) which is neither a citizen of a State of the United States as defined in section 1332(c) and (d) of this title, nor created under the laws of any third country.

28 U.S.C. § 1603(b).

It is undisputed that Al Furat satisfies § 1603(b)'s first and third requirements for agency or instrumentality status. The district court held Al Furat satisfied both prongs of the second requirement, as well, holding it is an organ of a foreign state and a foreign state owns a majority of Al Furat's shares or other ownership interest. Appellants challenge the rulings as to both prongs.

Concerning § 1603(b)(2)'s "ownership" prong, the Syrian government owns Syrian Petroleum Company (not a party), which owns 50% of Al Furat. Therefore, at issue for that prong is the requisite majority status. But, because we conclude that Al Furat is an organ of a foreign...