Chavez v. Occidental Chem. Corp.

• Decision Date: 20 October 2020
• Docket Number: No. 39,39
• Citation: Chavez v. Occidental Chem. Corp., 35 N.Y.3d 492, 158 N.E.3d 93, 133 N.Y.S.3d 224 (N.Y. 2020)
• Parties: Tobias BERMUDEZ CHAVEZ, et al., Respondents, v. OCCIDENTAL CHEMICAL CORPORATION, Individually and as Successor to Occidental Chemical Company and Others, Appellant.
• Court: New York Court of Appeals Court of Appeals

35 N.Y.3d 492

158 N.E.3d 93

133 N.Y.S.3d 224

Tobias BERMUDEZ CHAVEZ, et al., Respondents,

v.OCCIDENTAL CHEMICAL CORPORATION, Individually and as Successor to Occidental Chemical Company and Others, Appellant.

No. 39

Court of Appeals of New York.

October 20, 2020

OPINION OF THE COURT

STEIN, J.

The United States Court of Appeals for the Second Circuit has asked us whether New York recognizes so-called American Pipe(American Pipe and Constr. Co. v. Utah,414 U.S. 538, 94 S.Ct. 756[1974] ) tolling of the statute of limitations for absent class members of a putative class action filed in another jurisdiction.In addition, we have been asked whether "a non-merits dismissal of class certification" can terminate such cross-jurisdictional tolling and, relatedly, whether tolling was ended here by certain orders of the United States District Court for the Southern District of Texas dismissing, on forum non conveniens grounds, a putative class action advancing the same claims as those advanced in the instant action ( Chavez v. Occidental Chem. Corp.,933 F.3d 186, 202[2d Cir.2019] ).We answer these questions in the affirmative.

I.

In 2012, plaintiffs filed individual lawsuits in the United States District Court for the District of Delaware, alleging injuries based upon the manufacturing of a nematicide called dibromochloropane (DBCP) by defendantOccidental Chemical Corporation.Plaintiffs claimed that Occidental continued distributing the chemical to banana plantations in certain Latin American countries after 1977, at which point it was well-known that exposure to DBCP potentially causes sterility, cancer, and sexual and reproductive abnormalities.As relevant here, the cases were consolidated and, in 2017, the action was transferred to the United States District Court for the Southern District of New York.Occidental moved for judgment on the pleadings,¹ arguing that plaintiffs' claims were time-barred under New York law (seeChavez,933 F.3d at 195;see alsoChavez v. Occidental Chem. Corp.,300 F. Supp. 3d 517, 522[S.D. N.Y.2018] ).In response, plaintiffs contended that a putative class action originally filed in Texas state court in 1993 had tolled the applicable three-year statute of limitations (seeCPLR 214[5] ) and, therefore, their claims were timely.²Because the Texas litigation is intertwined with the parties' arguments regarding the proper answer to these certified questions, a recitation of the pertinent history related to that litigation follows.

In 1993, a group of plaintiffs—other than those before us here—from several countries, including Costa Rica, Ecuador, and Panama (hereinafter, the 1993plaintiffs), brought a putative class action in Texas state court, alleging identical claims to those advanced here.The 1993plaintiffs moved for class certification under the Texas rules of civil procedure.Occidental, among other defendants, impleaded two subsidiaries to a parent company owned by the State of Israel.Before the court resolved the motion for class certification, Occidental successfully removed the action to the United States District Court for the Southern District of Texas under the theory that, in light of the impleaded subsidiaries, the Foreign Sovereign Immunities Act of 1979 (FSIA) authorized such removal.³

Soon thereafter, the District Court requested that the parties update the court on the issue of class certification raised in the state court.However, before the issue of class certification was addressed, Occidental moved to dismiss the action based on forum non conveniens, arguing that the claims should be heard in each plaintiff's home country.In response, the 1993plaintiffs argued that the courts in their home countries could not resolve their claims because, among other things, those courts would lack personal jurisdiction over Occidental.

In July 1995, the District Court conditionally granted Occidental's motion to dismiss for forum non conveniens, reasoning that the 1993plaintiffs' home countries offered adequate fora, and providing that if certain housekeeping measures were satisfied, the court would dismiss the action 90 days after its order (seeDelgado v. Shell Oil Co. , 890 F. Supp. 1324, 1373[S.D. Tex1995] ).The same order also included a return jurisdiction clause, which stated that the 1993plaintiffs could test the jurisdiction of their home countries and, in the event of a dismissal for lack of jurisdiction, "plaintiff[s] may return to [the federal district] court and, upon proper motion, the court will resume jurisdiction over the action as if the case had never been dismissed for [forum non conveniens]"( id. at 1375 ).In addition, the court enjoined the named 1993plaintiffs, along with any absent class members who had participated in the litigation or received actual notice of the order, from commencing or intervening in any new case arising from the same underlying facts (seeid. at 1373–1375 ).Finally, the District Court determined that, "[b]ecause [the putative class action] may be dismissed in 90 days, all pending motions ... not otherwise expressly addressed in this Memorandum and Order are DENIED as MOOT"( id. at 1375 ).⁴The 1993plaintiffs subsequently expressed concern that the District Court's July 1995 order regarding the injunction was overbroad.The court qualified the scope of its injunction in a later order, stating that it

"did not intend such a broad reading of its orders....The court did not enjoin any potential plaintiff not before it from filing a DBCP-related claim in a court in the United States and did not enjoin counsel for the plaintiffs and intervenorplaintiffs from representing any person, not a party in the actions pending before the court, in a DBCP-related claim in a court in the United States."

In October 1995, after defendants satisfied the conditions of the July 1995 order,⁵the District Court entered a "Final Judgment" dismissing the action and permanently enjoining the 1993plaintiffs from commencing or joining any DBCP-related litigation.The United States Court of Appeals for the Fifth Circuit ultimately affirmed (seeRodriguez Delgado v. Shell Oil Co.,231 F.3d 165[5th Cir.2000], cert denied532 U.S. 972, 121 S.Ct. 1603, 149 L.Ed.2d 470[2001] ).Nevertheless, plaintiffs contend that, due to the return jurisdiction clause, the case remained pending on the District Court's docket in the Southern District of Texas.

Thereafter, certain 1993plaintiffs sought relief in the courts of Costa Rica, but Costa Rica's Supreme Court swiftly determined that its courts lacked personal jurisdiction over Occidental.In April 1996, a subset of the Costa Rican plaintiffs returned to federal court, seeking reinstatement of their action in the Southern District of Texas, pursuant to the return jurisdiction clause ( Rodriguez Delgado,322 F. Supp. 2d at 802 ).Because, at that time, the appeal of the District Court's October 1995 final judgment was still unresolved at the Fifth Circuit, the District Court denied the motion to reinstate, without prejudice, pending resolution of the appeal.After the Fifth Circuit affirmed the October 1995 final judgment in 2000, the remaining plaintiffs informed the District Court of their intention to petition the United States Supreme Court for certiorari, and suggested that the court defer ruling on the motion for reinstatement until the Supreme Court disposed of that petition.

Meanwhile, a related DBCP class action, originally filed in Hawai‘i state court, was making its way through the federal courts.The Hawaiian action had a similar procedural posture as the Texas litigation insofar as the defendant there had impleaded the same two foreign companies as in the Texas lawsuit, and then sought removal of the action to federal court pursuant to FSIA(seeDole Food Co. v. Patrickson,538 U.S. 468, 471, 123 S.Ct. 1655, 155 L.Ed.2d 643[2003] ).In 2003, the United States Supreme Court held, as relevant here, that in order for a company to be considered a foreign instrumentality, thereby providing a basis for removal to federal court under FSIA, a majority of the company's shares must be held by a foreign state at the time of the filing of the complaint (seeid. at 480, 123 S.Ct. 1655 ).Because Israel did not own a majority of shares in the subsidiaries at issue, the Court concluded that those subsidiaries were not foreign instrumentalities and the defendant could not invoke FSIA for purposes of removal despite the undisputed ownership of the parent company by a foreign state (seeid. at 477–478, 123 S.Ct. 1655 ).

In 2003, the remaining 1993plaintiffs who had not settled their claims, along with intervenors, moved in the Southern District of Texas to vacate that court's previous order of dismissal, in light of Patrickson, arguing that the removal of the lawsuit to federal court under FSIA had been erroneous.The District Court vacated its previous injunction preventing the named plaintiffs from bringing or intervening in any DBCP-related litigation, but denied the request to vacate its forum non conveniens dismissal.In June 2004, the District Court granted the plaintiff-intervenors' motion to remand the action to state court( Rodriguez Delgado v. Shell Oil Co.,322 F.Supp.2d 798, 813, 817[S.D. Tex.2004] ).The court reasoned that the return jurisdiction clause authorized the plaintiffs to seek reinstatement and deemed the motion to reinstate to be a "direct continuation of the prior proceedings over which the court expressly stated its intent to retain jurisdiction"; however, because it lacked subject-matter jurisdiction to decide the motion to reinstate under Patrickson,the court remanded the cases, along with the motion to reinstate, to "the only courts to which those claims can be returned, i.e., the statecourts of Texas"( id. at 811, 815–817 ).⁶

In 2005, the Texas state court granted the motion to reinstate and allowed the plaintiffs and intervenors to file an eighth amended complaint,...