Adams v. Alcolac, Inc.

• Decision Date: 06 September 2019
• Docket Number: CIVIL ACTION NO. 3:18-CV-00185
• Parties: WILLIAM J. ADAMS, ET AL. Plaintiffs. v. ALCOLAC, INC., ET AL. Defendants.
• Court: U.S. District Court — Southern District of Texas

WILLIAM J. ADAMS, ET AL. Plaintiffs. v. ALCOLAC, INC., ET AL. Defendants.

CIVIL ACTION NO. 3:18-CV-00185

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS GALVESTON DIVISION

September 6, 2019

MEMORANDUM AND RECOMMENDATION

Before the Court is Defendant Alcolac, Inc. and Rhodia Inc.'s Motion for Summary Judgment and Memorandum in Support ("Motion for Summary Judgment"). See Dkt. 17. The Motion for Summary Judgment was referred to this Court for report and recommendation pursuant to 28 U.S.C. § 636(b)(1). See Dkt. 35.

After reviewing the motion, the responsive briefing, and applicable case law, the Court recommends that the Motion for Summary Judgment be GRANTED and this suit be DISMISSED.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs are comprised of military personnel or their family members, who allege that during the 1991 Gulf War¹ the military personnel suffered serious injuries after theGovernment of Iraq exposed them to mustard gas. In this lawsuit, Plaintiffs, who will be referred to as "the Gulf War Veterans," seek relief for damages sustained as a result of this exposure. In pursuit of this relief, the Gulf War Veterans have sued two companies that they believe provided the Government of Iraq material support in creating the mustard gas: Alcolac, Inc. ("Alcolac") and Rhodia Inc. ("Rhodia"), a successor owner of Alcolac.²

In the years leading up to the Gulf War, Alcolac manufactured the chemical Thiodiglycol ("TDG"). TDG is a chemical solvent that has lawful applications in the textile industry, in the manufacture of ink, and in various other industries. However, TDG is also a chemical precursor often used to create mustard gas.

In the 1980s, Alcolac International, Inc. ("Alcolac International"), a non-party and former subsidiary of Alcolac, was responsible for internationally marketing and selling the TDG manufactured by Alcolac. Between 1984 and 1987, several years before the Gulf War, Alcolac International sold large quantities of TDG to various third-party buyers—none of whom are defendants in this suit. Some of those third-party buyers transhipped the TDG they purchased from Alcolac International to Pakistan and Iran. Other third-party buyers transhipped the TDG they purchased to Iraq, where it was used to create mustard gas.

As a result of the transhipments that made it to Pakistan and Iran, the United States charged Alcolac International with violating the Export Administration Act ("EAA") onthe basis that it knew or should have known that the ultimate destination listed on the shipping declaration filed with the U.S. Customs Service was not the intended destination thereby facilitating the re-export to Pakistan and Iran. The United States did not charge Alcolac International for violating the EAA based on the sales that were ultimately transhipped to Iraq. Nonetheless, the Gulf War Veterans contend that Defendants should be held responsible for their injuries in this lawsuit because, acting through Alcolac International, Defendants intended to aid Iraq in creating mustard gas.

This case is certainly not new. In June 1994, as a part of a broader products liability case, the substance of this suit was first alleged in Cause No. 94-C-1392; Coleman, et. al. v. ABB Lummus Crest, Inc., et al.; In the 23rd District Court of Brazoria County, Texas. The Coleman suit included allegations related to injuries caused by both sarin and mustard gas, both of which were used in the Gulf War. In 2008, the state court severed the claims related to injuries caused by mustard gas from those caused by sarin gas, and the mustard gas claims moved forward in Cause No. 46491; Adams, et al. vs. Alcolac, Inc., et al.; In the 23rd Judicial District Court of Brazoria County, Texas.

During the pendency of Adams in state court, it was decided that one plaintiff, Dr. Victor Alarcon, would serve as the bellwether case. Defendants moved for summary judgment on all of Dr. Alarcon's claims: negligence; gross negligence; negligence per se; strict liability; and a violation of the Texas Uniform Fraudulent Transfer Act ("TUFTA"), TEX. BUS. & COMM. CODE § 24.001 et seq. The bellwether case failed because, as explained by the Texas Court of Appeals, Dr. Alarcon presented "no evidence from which a reasonable fact finder could conclude that [he] was exposed to mustard gas made withAlcolac's TDG." Alarcon v. Alcolac Inc., 488 S.W.3d 813, 828-29 (Tex. App.—Houston [14th Dist.] 2016, pet. denied). In other words, Dr. Alarcon failed to carry his burden to demonstrate causation on each of his claims. See id. at 829.

Following their success against Dr. Alarcon, Defendants moved for summary judgment against the Gulf War Veterans. Prior to the state court ruling on the motion, the Gulf War Veterans filed a Fourth Amended Petition in Intervention, adding two new claims, including a claim brought under federal law. See Dkt. 1-2 at 165-91.

Based on the inclusion of the federal claim, Defendants removed the Adams case to this Court on June 27, 2018. See Dkt. 1. In this Court, the Gulf War Veterans filed a Fifth Amended Petition in Intervention ("Active Complaint"). See Dkt. 14. The Active Complaint is substantially similar to the Fourth Amended Petition that was filed in state court. The alleged causes of action include: negligence; gross negligence; negligence per se; strict liability; a violation of TUFTA; civil conspiracy; and a violation of the Anti-Terrorism Act (the "ATA"), 18 U.S.C. §2333 et seq. See Dkt. 14. The only real difference between the Fourth Amended Petition and the Active Complaint is that the Gulf War Veterans have beefed up their factual allegations.

Since removal, the Gulf War Veterans have stipulated that their product liability and negligence related claims were foreclosed by the decision in Alarcon, 488 S.W.3d 813. See Dkts. 9, 12. Thus, at this juncture, the only claims remaining before the Court are: aviolation of the ATA; civil conspiracy; and a violation of TUFTA.³ Defendants move for summary judgment on all three claims.

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A genuine dispute of material fact does not exist unless "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Burell v. Prudential Ins. Co. of Am., 820 F.3d 132, 136 (5th Cir. 2016) (citation omitted). "The moving party . . . bears the initial responsibility of informing the district court of the basis for its motion." Brandon v. Sage Corp., 808 F.3d 266, 269-70 (5th Cir. 2015) (citation omitted). If the burden of production at trial "ultimately rests on the nonmovant, the movant must merely demonstrate an absence of evidentiary support in the record for the nonmovant's case." Lyles v. Medtronic Sofamor Danek, USA, Inc., 871 F.3d 305, 310-11 (5th Cir. 2017). Once a party "meets the initial burden of demonstrating that there exists no genuine issue of material fact for trial, the burden shifts to the non-movant to produce evidence of the existence of such an issue for trial." Brandon, 808 F.3d at 270. The party opposingsummary judgment "must do more than simply show that there is some metaphysical doubt as to the material facts. [It] must go beyond the pleadings and come forward with specific facts indicating a genuine issue for trial to avoid summary judgment." Id. (citations and quotation marks omitted). "In deciding whether a fact issue exists, courts must view the facts and draw reasonable inferences in the light most favorable to the nonmoving party." Rayborn v. Bossier Par. Sch. Bd., 881 F.3d 409, 414 (5th Cir. 2018) (quotation marks and citation omitted).

DISCUSSION

I. VIOLATION OF THE ATA

The ATA provides a private right of action to "[a]ny national of the United States injured in his or her person, property, or business by reason of an act of international terrorism, or his or her estate, survivors, or heirs, may sue therefor in any appropriate district court of the United States." 18 U.S.C. § 2333(a). A claim brought under the ATA is also known as a "Direct Liability Claim." To prevail on a Direct Liability Claim, a plaintiff must show: "(1) an injury to a U.S. national, (2) an act of international terrorism, and (3) causation." Shaffer v. Deutsche Bank AG, No. 16-CR-497-MJR-SCW, 2017 WL 8786497, at *3 (S.D. Ill. Dec. 7, 2017).

In 2016, Congress passed the Justice Against Sponsors of Terrorism Act ("JASTA"), which amended the ATA to impose liability on "any person who aids and abets, by knowingly providing substantial assistance, or who conspires with the person who committed" an act of international terrorism. JASTA § 4, Pub. L. No. 114-222, 130Stat. 852 (2016) (codified at 18 U.S.C. § 2333(d)). A claim brought under Section 2333(d) is also known as an "Aiding and Abetting Claim."

In the Active Complaint, the Gulf War Veterans specifically identify JASTA as being the basis of their federal claim. See Dkt. 14 at 22. For this reason, Defendants advanced several arguments against the Gulf War Veterans based on their belief that the Gulf War Veterans had advanced a claim under JASTA, as opposed to under the ATA. In responding to Defendants' motion, the Gulf War Veterans argue that their claim is not brought under JASTA; instead, it is a hybrid Direct Liability Claim, which has certain features of an Aiding and Abetting Claim, as described in Boim v. Quranic Literacy Inst. & Holy Land Found. For Relief And Dev., 291 F.3d 1000 (7th Cir. 2002) and Boim v. Holy Land Found. for Relief & Dev., 549 F.3d 685 (7th Cir. 2008).

Defendants question the propriety of the Gulf War Veterans raising this "new theory" based on the ATA at this late stage in response to the Motion for Summary Judgment. Ordinarily, the Court would reject a new theory that arises for the first time in response to a summary judgment motion. See, e.g., Byest v. Wal-Mart Stores, Inc., No....