Exxon Mobil Corporation v. Corporación CIMEX S.A.

• Decision Date: 20 April 2021
• Docket Number: Case No. 19-cv-01277 (APM)
• Citation: 534 F.Supp.3d 1
• Parties: EXXON MOBIL CORPORATION, Plaintiff, v. CORPORACIÓN CIMEX S.A. et al., Defendants.
• Court: U.S. District Court — District of Columbia

534 F.Supp.3d 1

EXXON MOBIL CORPORATION, Plaintiff,

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

Case No. 19-cv-01277 (APM)

United States District Court, District of Columbia.

Signed April 20, 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

I. INTRODUCTION

In 1996, Congress enacted the Cuban Liberty and Democratic Solidarity Act, 22 U.S.C. §§ 6021 et seq. , also known as the LIBERTAD, or Helms-Burton, Act. Title III of the LIBERTAD Act creates for U.S. nationals a private right of action against any "person" who traffics in property expropriated by the government of Cuba after January 1, 1959, and defines "person" to include any agency or instrumentality of a foreign state. The Act, however, contains a unique provision that authorizes the President to suspend the private right of action. Every presidential administration since the statute's passage had done just that. But then the Trump Administration announced that it would lift the suspension in May 2019. That action opened the door for this novel lawsuit.

Over sixty years ago, Plaintiff Exxon Mobil Corporation ("Exxon") held an interest in various oil and gas assets located in Cuba that were owned and operated by its wholly owned subsidiaries. The government of Cuba expropriated those assets in 1960. Exxon now seeks compensation under Title III of the LIBERTAD Act from the Cuban state-owned entities that allegedly traffic in its confiscated properties: Defendants Corporación CIMEX S.A. (Cuba) ("CIMEX"), Corporación CIMEX S.A. (Panama) ("CIMEX (Panama)"), and Unión Cuba-Petróleo ("CUPET"). Exxon seeks entry of an actual damages award of over $71 million plus treble damages.

Defendants now move to dismiss Exxon's complaint, arguing that this court lacks subject matter jurisdiction over the dispute. For the reasons that follow, the court denies Defendants’ motion to dismiss as to CIMEX, defers ruling as to CUPET and CIMEX (Panama), and allows limited jurisdictional discovery as to CUPET and CIMEX (Panama).

II. BACKGROUND

A. Factual Background

1. Exxon's Operations in Cuba

Until 1960, Exxon, then known as Standard Oil, owned several subsidiaries operating in Cuba. See Second Am. Compl., ECF No. 33 [hereinafter SAC], ¶¶ 23–24. One such subsidiary was Esso Standard Oil, S.A. ("Essosa"), a wholly owned Panamanian corporation that operated in the Caribbean Basin and had its headquarters in Havana, Cuba. Id. ¶ 24. Exxon also operated Esso Standard (Cuba) Inc. and Esso (Cuba) Inc. (the "Exploration Companies"), which explored for and produced crude oil in Cuba. Id.

In October 1959, following the rise of Fidel Castro, the Cuban government arrived at the Exploration Companies’ Cuban office and "confiscated and copied all files, maps, and other records of geological exploration." See id. ¶ 27. The Exploration Companies subsequently stopped all exploration efforts in Cuba and closed their office on the island. See id.

Some months later, in the summer of 1960, the Cuban government issued a series of resolutions that expropriated Essosa's rights to its Cuban property. Id. ¶ 28. The resolutions prohibited Essosa "from operating its expanded Belot Refinery," forced the company to "abandon its Cuban-based marketing operation," and resulted in the closure of Essosa's gasoline service stations in the country. Id. ¶ 29. All told, the Cuban government confiscated Essosa's Belot Refinery, multiple bulk products terminals, and more than one hundred service stations. See id. ¶ 31. According to Exxon, "Cuba has never paid, and Plaintiff has never received, compensation for the expropriation of" that property. Id. ¶ 33.

2. The Foreign Claims Settlement Commission

In response to Cuban expropriations, Congress in 1964 established a program pursuant to the International Claims Settlement Act of 1949, 22 U.S.C. §§ 1621 et seq. , to provide a way for "nationals of the United States" to submit expropriation claims against Cuba to the U.S. Foreign Claims Settlement Commission ("FCSC"). See Pub. L. No. 88-666, 78 Stat. 1110 (1964) ; Helmerich & Payne Int'l Drilling Co. v. Bolivarian Republic of Venezuela (Helmerich III) , 743 F. App'x 442, 451 (D.C. Cir. 2018). The FCSC was tasked with determining "the amount and validity of claims against the Government of Cuba ... which have arisen since January 1, 1959, ... out of nationalization, expropriation, intervention, or other takings of, or special measures directed against, property of nationals of the United States ... in order to obtain information concerning the total amount of such claims against the Government of Cuba ... on behalf of nationals of the United States." 22 U.S.C. § 1643.

In 1969, Standard Oil, Exxon's predecessor, submitted a claim to the FCSC. SAC ¶ 34. The FCSC certified that Standard Oil "suffered a loss in the total amount of $71,611,002.90 ... as a result of the intervention on July 1, 1960, of the Cuban branch of Essosa, a Panamanian corporation wholly owned by claimant." SAC, Ex. 1, ECF No. 33-1 [hereinafter FCSC Claim], at 9. The award also entitled Standard Oil to interest at a rate of 6% per annum from July 1, 1960, to the date of settlement. Id. at 10. Exxon "has never settled the outstanding certified claims or received any payment from any entity with respect to the principal or interest due on its certified claim." SAC ¶ 43.

3. The LIBERTAD, or Helms-Burton, Act

In 1996, President Clinton signed into law the LIBERTAD Act, also known as the Helms-Burton Act, Pub. L. No. 104–114, 110 Stat. 785 (1996) (codified at 22 U.S.C. §§ 6021 et seq. ). Title III of the Act creates for U.S. nationals who owned property in Cuba a private right of action against any "person" that "traffics in property which was confiscated by the Cuban Government on or after January 1, 1959." 22 U.S.C. § 6082(a)(1)(A). The Act defines "person" to include "any agency or instrumentality of a foreign state." Id. § 6023(11).

A person engaged in trafficking confiscated property shall be liable to the U.S. national "for money damages." Id. § 6082(a)(1)(A). The statute provides multiple ways for computing money damages, one of which is "the amount ... certified to the claimant by the [FCSC], plus interest." Id. § 6082(a)(1)(A)(i)(I). A certified claim from the FCSC creates a rebuttable presumption as to the amount of an award. Id. § 6082(a)(2). It also entitles the claimant to receive treble damages from the person trafficking the confiscated property. Id. §§ 6082(a)(3)(A), (C)(ii).

Title III, however, contains an important condition on the availability of its private cause of action. No doubt due to the potential foreign policy implications of such claims, Congress authorized the President to suspend Title III's private right of action for sequential periods of up to six months upon notification to Congress that "the suspension is necessary to the national interests of the United States and will expedite a transition to democracy in Cuba." Id. § 6085(b)(2). Since the Act's passage every administration has issued a sequential six-month suspension of the right of action. SAC ¶ 45.

That changed under President Trump. On April 17, 2019, Secretary of State Michael Pompeo announced that the Trump Administration "would no longer suspend the right to bring an action under Title III effective May 2, 2019." U.S. Dep't of State, Cuba: Title III FAQs (LIBERTAD), https://www.state.gov/cuba-title-iii-faqs-libertad/ (last visited Mar. 22, 2021). That announcement opened the door for Exxon to file this action, which it did on May 2, 2019. See Compl., ECF No. 1.

4. Defendants’ Alleged Trafficking Activities

Exxon contends that Defendants have "trafficked" in Essosa's confiscated property for commercial gain.

CIMEX. According to Exxon, CIMEX "engages in a variety of foreign commerce across a variety of industries," and, as relevant to Exxon's suit, "operates over 600 service stations that sell gas and consumer goods across Cuba." SAC ¶¶ 105–106. CIMEX, along with CUPET, operates over 300 such service stations under the name "Servi-Cupet." Id. ¶ 106. Exxon explains that Servi-Cupets "are the functional equivalent of a 7-Eleven convenience store." Id. ¶ 109. The stations sell "a variety of American products, including poultry, cereal, rice, cleaning supplies, frozen vegetables, and alcoholic beverages." Id. Some of those service stations are built and maintained on property that formerly belonged to Essosa. Id. ¶ 107.

CIMEX also uses its service stations to process remittances, or money transfers. Id. ¶ 111. When a remittance is sent to Cuba from the United States, "U.S. dollars are transferred by persons in the United States using agent locations in the United States." Id. ¶ 121. Recipients can then collect their remittances at CIMEX's service stations, among other locations in Cuba, and some of the service stations that process remittances are maintained on Essosa's former property. See id. ¶¶ 115–116.

Exxon alleges that "Cuba received an estimated $3.6 billion U.S. dollars in 2018 from remittances, and it is estimated that 90% of these remittances come from the United States." Id. ¶ 112. Remittances are "the only conduit for persons residing in the United States to transfer U.S. dollars to support family and friends in Cuba." Id. ¶ 122. Exxon maintains that the remittance business is crucial to the Cuban economy because it provides U.S. dollars for the Cuban government and financial system, which are strained for hard currency. See id. ¶ 121. Cuba channels remittances through FINCIMEX, which has "a license to manage all remittance wire transfers from the United States," and "CIMEX facilitates remittance transactions through its partnership with a U.S.-based remittance provider." Id. ¶ 113.

CIMEX (Panama)....