Exxon Mobil Corp. v. CorporacióN Cimex S.A.

• Decision Date: 08 October 2021
• Docket Number: Case No. 19-cv-1277 (APM)
• Citation: 567 F.Supp.3d 21
• Parties: EXXON MOBIL CORPORATION, Plaintiff, v. CORPORACIÓN CIMEX S.A. et al., Defendants.
• Court: U.S. District Court — District of Columbia

567 F.Supp.3d 21

EXXON MOBIL CORPORATION, Plaintiff,

v.CORPORACIÓN CIMEX S.A. et al., Defendants.

Case No. 19-cv-1277 (APM)

United States District Court, District of Columbia.

Signed October 8, 2021

Jared R. Butcher, CrossCastle, LLC, Michael Jeremy Baratz, Steven K. Davidson, Steptoe & Johnson LLP, Washington, DC, for Plaintiff.

Michael Krinsky, Lindsey Frank, Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C., New York, NY, for Defendants.

MEMORANDUM OPINION AND ORDER

Amit P. Mehta, United States District Court Judge

Plaintiff Exxon Mobil Corporation brought this action under Title III of the Cuban Liberty and Democratic Solidarity Act of 1996 (LIBERTAD), 22 U.S.C. § 6082(a)(1)(A), to recover money damages arising from the trafficking of confiscated property by various Defendants who are instrumentalities of the Cuban government. On April 20, 2021, the court held that it has subject matter jurisdiction over one such instrumentality, Defendant Corporación Cimex (S.A.) ("CIMEX"), under the commercial activity exception to the Foreign Sovereign Immunities Act ("FSIA"). Exxon Mobil Corp. v. Corporación CIMEX S.A. , No. 19-cv-1277 (APM), 534 F.Supp.3d 1, 26 (D.D.C. Apr. 20, 2021). It also ordered limited jurisdictional discovery as to two other instrumentalities, Defendants Unión Cuba-Petróleo and Corporación CIMEX S.A. (Panama). Id. at 30. A central issue before the court was whether it could exercise subject matter jurisdiction pursuant to the commercial activity exception or whether the expropriation exception alone applied. Id. at 14–15. The court held that it could consider jurisdiction under both exceptions and ultimately found only the commercial activity exception was satisfied. Id. at 14–30.

Just three days after issuing its decision, the D.C. Circuit decided Ivanenko v. Yanukovich , which also considered the interaction of the expropriation and commercial activity exceptions. See 995 F.3d 232, 234 (D.C. Cir. 2021). To ensure that its decision was consistent with current D.C. Circuit precedent, the court ordered the parties to notify it if they "believe[d] that the Ivanenko decision impact[ed] this court's" prior decision. Minute Order, Apr. 23, 2021.

Defendants took the court up on its invitation. They filed a motion for reconsideration that is ostensibly based on the D.C. Circuit's decision in Ivanenko . See Defs.’ Mot. Pursuant to the Court's Apr. 23, 2021 Minute Order, ECF No. 66 [hereinafter Defs.’ Mot.]. It suffices to say that Defendants’ motion argues more than just the applicability of Ivanenko . Although perhaps more than it bargained for, the court nonetheless has exercised its discretion to consider Defendants’ additional arguments regarding the applicability of the commercial activity exception. For the reasons that follow, the court denies Defendants’ motion for reconsideration.

I.

In Ivanenko v. Yanukovich , the D.C. Circuit held that Ukraine was flexing "quintessentially sovereign" powers when it seized the plaintiffs’ property via "an exercise of eminent domain." 995 F.3d at 239 (quoting Rong v. Liaoning Province Gov't , 452 F.3d 883, 890 (D.C. Cir. 2006) ). The D.C. Circuit found that Ukraine's confiscation of the plaintiffs’ property "could not have been carried out by a private participant in the marketplace," and regardless of Ukraine's "motives" in confiscating the property and "subsequent use" of the plaintiffs’ property as a golf course and sports facility, its exercise of sovereign powers precluded application of the commercial activity exception. Id. The court cautioned that a foreign sovereign's " ‘subsequent acts’ with [a plaintiff's] property" do not necessarily " ‘transform the expropriation into commercial activity.’ " Id. (alteration omitted) (quoting Rong , 452 F.3d at 890 ). Otherwise, the court reasoned, " ‘almost any subsequent disposition of expropriated property could allow the sovereign to be haled into federal court under FSIA.’ " Id. (quoting Rong , 452 F.3d at 890 ).

This potential to end-run the expropriation exception by relying on the commercial activity exception is at the heart of Defendants’ motion for reconsideration. They argue that, even if the commercial activity exception can be read literally to apply to claims related to expropriated property (that is, to claims like Exxon's trafficking claim), the court should refrain from applying the commercial activity exception because to do so would allow plaintiffs to sue foreign sovereigns for expropriation without satisfying the expropriation exception's requirement that the expropriation violate international law. See Defs.’ Mot., Defs.’ Mem. of P. & A. in Supp. of Defs.’ Mot. Pursuant to Court's April 23, 2021 Minute Order, ECF No. 66-2 [hereinafter Defs.’ Br.], at 2–7. With careful pleading, Defendants urge, any claim for expropriation could be rewritten as a claim for trafficking. See id. The court rejects these concerns as applied to this case.

The Supreme Court's decisions in Saudi Arabia v. Nelson and OBB Personenverkehr AG v. Sachs teach that the court must separate antecedent conduct that is related to a wrongful act from the conduct that actually forms the "foundation" of the claim. OBB Personenverkehr AG v. Sachs , 577 U.S. 27, 36, 136 S.Ct. 390, 193 L.Ed.2d 269 (2015) ; Saudi Arabia v. Nelson , 507 U.S. 349, 358, 113 S.Ct. 1471, 123 L.Ed.2d 47 (1993). In Nelson , the Court refused to apply the commercial activity exception to claims of personal injury that arose from plaintiff Scott Nelson's performance of an employment contract with Saudi Arabia. 507 U.S. at 358, 113 S.Ct. 1471. Saudi Arabia's recruitment and employment of Nelson "alone," the Supreme Court explained, "entitle[d] the Nelsons to nothing under their theory of the case." Id. Rather, the Nelsons’ claim concerned "personal injuries caused by [Saudi Arabia's] intentional wrongs and by [Saudi Arabia's] negligent failure to warn Scott Nelson that [it] might commit those wrongs." Id. The Court concluded that "[t]hose torts, and not the arguably commercial activities that preceded their commission, form[ed] the basis for the Nelsons’ suit." Id. (emphasis added). Likewise, in Sachs , the Supreme Court explained that it lacked jurisdiction over the plaintiff's claims for "traumatic personal injuries [sustained] when she fell onto the tracks at the Innsbruck, Austria, train station." Sachs , 577 U.S. at 29, 36, 136 S.Ct. 390. Even though the plaintiff had purchased a Eurail pass in the United States to board the train, the antecedent commercial activity of selling the Eurail pass did not give rise to liability on plaintiff's claims "[w]ithout the existence of the unsafe boarding conditions in Innsbruck." Id. at 35, 136 S.Ct. 390. Therefore, the Court held, "the incident in Innsbruck" was the "foundation" of plaintiff's claim, not the U.S. ticket sale. Id. at 35–36, 136 S.Ct. 390.

Here, the "foundation" of Exxon's Title III claim is a private commercial act, and not the antecedent sovereign act of expropriation. A sovereign is not immune for the former type of act but remains immune with respect to the latter. See Federal Republic of Germany v. Philipp , ––– U.S. ––––, 141 S. Ct. 703, 713, ––– L.Ed.2d –––– (2021) (stating that, under the "restrictive view" of sovereign immunity embodied in the FSIA, "immunity extends to a sovereign's public but not its private acts," and that the commercial activity exception "comport[s] with the overarching framework of the restrictive theory"); Bolivarian Republic of Venezuela v. Helmerich & Payne Int'l Drilling Co. , ––– U.S. ––––, 137 S. Ct. 1312, 1320, 197 L.Ed.2d 663 (2017) ("[W]e ... began to limit our recognition of sovereign immunity, denying that immunity in cases ‘arising out of a foreign state's strictly commercial acts,’ but continuing to apply that doctrine in ‘suits involving the foreign sovereign's public acts ,’ " (quoting Verlinden B.V. v. Cent. Bank of Nigeria , 461 U.S. 480, 487, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983) )). Title III creates liability for "any person that ... traffics" in "property confiscated by the Cuban government on or after January 1, 1959." 22 U.S.C. § 6082(a)(1)(A). The term "traffics" is defined in purely commercial terms. It encompasses, broadly speaking, the use or disposition of the confiscated property.¹ The original public act of confiscation by the sovereign alone does not constitute "trafficking." Confiscation without trafficking is therefore not actionable under Title III. See Exxon Mobil Corp. , 534 F.Supp.3d at 15 (observing that "liability under the Act attaches only when a U.S. person's property has been confiscated and trafficked"). The definition of "person" further underscores that the "foundation" of a Title III claim is a commercial act, and not a sovereign one. "Person" is defined to mean "any person or entity, including any agency or instrumentality of a foreign state." 22 U.S.C. § 6023(11) (emphasis added). So, Title III makes any subsequent user of confiscated property, and not just an "agency or instrumentality" of Cuba, liable for trafficking in such property. These statutory definitions thus make clear that private commercial activity, and not the sovereign act of expropriation, is at the heart of Exxon's claim under Title III. Evaluating a "trafficking" claim under the commercial activity exception, as the court did here, naturally follows from that conclusion.

This straightforward reading of Title III should settle the matter, but Defendants argue that more is necessary. They urge that, "when, as here, there are FSIA provisions that more explicitly and precisely address the particular activity at hand, and with restrictions not found in the commercial activity exception," the Supreme Court's decision in Federal Republic of Germany v. Philipp "teaches that an additional analysis must be undertaken." Defs.’ Reply Mem. of P. & A. in Supp. of Mot. Pursuant to the Court's Apr. 23, 2021 Minute Order & For Recons., ECF No. 69, at 8. In Philipp , the...