Delgado v. Shell Oil Co.

• Decision Date: 30 June 1995
• Docket Number: Civ. A. No. H-94-1337.
• Citation: 890 F. Supp. 1315
• Parties: Franklin Rodriguez DELGADO, et al., Plaintiffs, v. SHELL OIL CO., et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

890 F. Supp. 1315

Franklin Rodriguez DELGADO, et al., Plaintiffs, v. SHELL OIL CO., et al., Defendants.

Civ. A. No. H-94-1337.

United States District Court, S.D. Texas, Houston Division.

June 30, 1995.

Fred Misko, Charles Siegel, Misko, Howie & Sweeney, Dallas, TX, Stephen D. Susman, James McCartt, Michael A. Lee, Susman Godfrey, Houston, TX, Harold W. Nix, Edward L. Hohn, Harold Nix & Associates, Daingerfield, TX, Wayne Fisher, Jim Huguenard, Fisher, Gallagher & Lewis, Houston, TX, John McEldowney, Greer, Herz & Adams, Galveston, TX, James W. Bradford, Jr., Angleton, TX, Joseph C. Kohn, Myles H. Malman, Martin J. D'Urso, Kohn, Nast & Graf, P.C., Philadelphia, PA, Thomas H. Hart, III, Alkon, Rhea & Hart, St. Croix, VI, Ramon Garcia, Dalinda G. Quintana, Law Office of Ramon Garcia, P.C., Edinburg, TX, Enrique Alvino Garza, Hebronville, TX, J.A. "Tony" Canales, Canales & Simonson, Corpus Christi, TX, Vaughn O. Stewart, Lake Jackson, TX, for plaintiffs.

John L. Hill, Jr., J. Michael Dorman, Richard Staff, James E. Essig, Liddell, Sapp, Zivley, Hill & Laboon, Burt Ballanfant, Shell Oil Co., Houston, TX, Morris Atlas, Lisa Powell, Atlas & Hall, L.L.P., McAllen, TX, Richard R. Gonzales, Hebronville, TX, Robert W. Weber, Atchley, Russell, Waldrop & Hlavinka, L.L.P., Texarkana, TX, John R. Gilbert, Gilbert, Gilbert & Boyd, P.C., Angleton, TX, for Shell Oil Co.

D. Ferguson McNeil, Vinson & Elkins, Charles W. Schwartz, Houston, TX, Stephen C. Lewis, Charles M. O'Connor, Mariah Baird, Landels, Ripley & Diamond, San Francisco, CA, Michael M. Phillips, Angleton, TX, T. John Ward, Calvin Capshaw, Brown, McCarrol & Oaks Hartline, Longview, TX, for Occidental Chemical Corp.

Terence M. Murphy, James S. Teater, Michael L. Rice, Jones, Day, Reavis & Pogue, Dallas, TX, Wiley Thomas, Angleton, TX, for Standard Fruit Co., Dole Fresh Fruit Co.

F. Walter Conrad, Michael Brem, Baker & Botts, L.L.P., Houston, TX, Patrick Reilly, Galveston, TX, J.G. Adami, Jr., Perkins, Oden, Warbuxton, McNeill, Adami & Paisley, Alice, TX, John R. Gilbert, Gilbert, Gilbert & Boyd, P.C., Angleton, TX, Eduardo R. Rodriguez, Rodriguez, Colvin & Chaney, Brownsville, TX, Robert Rolston, Bird Old III, Old, Rolston & Old, Mount Pleasant, TX, T. John Ward, Calvin Capshaw, Brown, McCarrol & Oaks Hartline, Longview, TX, for Dow Chemical Co.

Samuel E. Stubbs, William D. Wood, Fulbright & Jaworski L.L.P., Houston, TX, for Chiquita Brands and Chiquita Brands Intern., Inc.

James J. Juneau, Pamela K. Estes, Strasburger & Price, L.L.P., Houston, TX, Robert T. Greig, Howard S. Zelbo, Cleary, Gottlieb, Steen & Hamilton, New York City, for Del

Monte Fresh Produce, N.A. and Del Monte Tropical Fruit Co.

Edward F. Fernandes, Solar & Fernandes, L.L.P., Houston, TX, for Programa Nacional de Banano.

Scott M. Hendler, The Hendler Law Firm, Austin, TX, Don Weitinger, Carrie Weitinger, Weitinger & Weitinger, Houston, TX, Michael Brickman, Ness, Motley, Loadholt, Richardson & Poole, P.A., Charleston, SC, for intervenors.

Jeffrey H. Marsh, Mattingly & Marsh, Houston, TX, Robert Crow, Boornazian, Jensen & Garthe, Oakland, CA, for Amvac Chemical Corp.

Laurence E. Best, Best, Koeppel & Klotz, Houston, TX, Laurence E. Best, Best, Koeppel & Klotz, New Orleans, LA, for interveners (Hondurans).

Thomas J. Brandt, Bradley W. Cole, Robert A. Shults, Sheinfeld, Maley & Kay, P.C., Houston, TX, Peter R. Paden, Teitelbaum, Hillde, Rodman, Paden & Hibsher, P.C., New York City, for third- and fourth-party defendants, Dead Sea Bromine Co., Ltd., Bromine Compounds, Ltd., and Ameribrom, Inc.

MEMORANDUM AND ORDER

LAKE, District Judge.

Pending before the court is the Motion to Remand or, in the Alternative, Motion to Sever and Remand of plaintiffs (Docket Entry No. 16). Plaintiffs argue that the court must remand this action pursuant to 28 U.S.C. § 1447(c) because the court lacks subject matter jurisdiction. Alternatively, plaintiffs ask the court to sever claims concerning the recently impleaded party that may have conferred subject matter jurisdiction and to remand the remaining claims. Also pending is the Motion to Consolidate of defendant, Shell Oil Co. (Docket Entry No. 19).

I. Background

On January 13, 1993, plaintiffs, residents of Costa Rica, Panama, and Nicaragua, filed a petition in the 212th District Court of Galveston County, Texas. They sought damages from a variety of defendants for injuries stemming from alleged exposure to a nematocide, dibromochloropropane (DBCP), while working on banana plantations in those countries. Although plaintiffs pursued remedies available exclusively under state law, defendants removed the action to the Galveston division of this district on the basis that the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) preempted those claims. Judge Kent found that FIFRA did not preempt plaintiffs' claims and remanded the action on April 19, 1993. Rodriguez v. Shell Oil Co., 818 F.Supp. 1013 (S.D.Tex.1993). All further proceedings, including consolidation of the action with another DBCP case,¹ were conducted by the state court until March 15, 1994, when one of the defendants, Del Monte Fresh Produce, N.A., filed a third-party petition against Dead Sea Bromine Co. Ltd. (Dead Sea), an Israeli company. Dead Sea removed the action to the Galveston division pursuant to 28 U.S.C. § 1441(d) because Dead Sea is a "foreign state" within the meaning of the FSIA.² The case was assigned to Judge Kent as Civil Action No. G-94-193. Upon Judge Kent's recusal (Docket Entry No. 8) the case was transferred to the Houston division and randomly assigned to the undersigned judge (Docket Entry No. 14).

II. Standard of Review

"Section 1447(c) provides two grounds for remand: (1) a defect in removal procedure and (2) lack of subject matter jurisdiction." Burks v. Amerada Hess Corp., 8 F.3d 301, 303 (5th Cir.1993). When considering a motion to remand the removing party bears the burden of showing that removal was proper. Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir.1988), appeal after remand, 915 F.2d 965 (5th Cir.1990), aff'd, 503 U.S. 131, 112 S.Ct. 1076, 117 L.Ed.2d 280 (1992). "This extends not only to demonstrating a jurisdictional basis for removal, but also necessary compliance with the requirements of the removal statute." Albonetti v. GAF Corporation-Chemical Group, 520 F.Supp. 825, 827 (S.D.Tex.1981). Because removal jurisdiction "raises significant federalism concerns," Willy, 855 F.2d at 1164, courts must construe removal statutes "narrowly, with doubts resolved in favor of remand to the state court." Jefferson Parish Hosp. Dist. No. 2 v. Harvey, 788 F.Supp. 282, 283-84 (E.D.La.1992). If there is any doubt that a right to removal exists, "ambiguities are to be construed against removal." Samuel v. Langham, 780 F.Supp. 424, 427 (N.D.Tex.1992).

III. Discussion

A. Was removal properly achieved?

Plaintiffs argue that the case was improperly removed because Dead Sea is not a foreign state. 28 U.S.C. § 1441(d) provides foreign states an absolute right to remove cases in which they are a party.³ The FSIA contains a detailed definition of a foreign state.

(a) A "foreign state", except as used in section 1608 of this title, includes a political subdivision of a foreign state or an agency or instrumentality of a foreign state as defined in subsection (b).

(b) An "agency or instrumentality of a foreign state" means 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 ... nor created under the laws of any third country.

28 U.S.C. § 1603. Dead Sea has introduced uncontradicted evidence that it satisfies the first and last elements of § 1603(b). The evidence demonstrates that Dead Sea is a corporation organized under the laws of Israel⁴ and plaintiffs do not contend that Dead Sea is a citizen of a State of the United States or created under the laws of a third country. Instead, plaintiffs argue that despite the disjunctive criteria of § 1603(b)(2), Dead Sea's proof that Israel indirectly owns a majority of its shares⁵ is insufficient to satisfy § 1603(b)(2). Citing Edlow Int'l v. Nuklearna Elektrarna Krsko (NEK), 441 F.Supp. 827 (D.D.C.1977), plaintiffs argue that the court should also require Dead Sea to prove that it discharges a governmental function or that the State of Israel exercises direct control over its operations.

Plaintiffs' argument is unconvincing. In Edlow a Bermudan nuclear fuels broker sued NEK, "an independent self-managing organization of workers linked in labour by common interests and organized in basic organizations of associated labour" chartered by the Socialist Federal Republic of Yugoslavia to build and operate a nuclear power plant, to resolve a dispute over NEK's obligation to pay the broker its fee. 441 F.Supp. at 831. NEK argued that the court lacked subject matter jurisdiction over the action because it was not a foreign state within the meaning of § 1603(b). The broker countered that NEK met the § 1603(b)(2) test because Yugoslavia "owned" NEK by virtue of the country's socialist political ideology that all property was "owned" by the state. In rejecting that argument the court stated that

to accept plaintiff's argument on this point would be to characterize virtually every enterprise operated under a socialist system as an instrumentality of the state.... While the FSIA's legislative history evinces Congress' intent that the definition of "agency or instrumentality of a foreign state" be read broadly to encompass "a variety of forms, ..." there is no suggestion that a foreign state's system of property ownership, without more, should be determinative on the question whether an entity operating within the state is a state agency or

...