Gillies v. Brasileiro S.A.

• Docket Number: 2:22-cv-00124-TC
• Decision Date: 31 July 2023
• Parties: WESLEY GILLIES, LOGAN STAHELI, MADISON JONES, AND CARLY STAHELI, in their individual capacity and as heirs of the Estates of Z. Todd Staheli and Michelle Davis Staheli, Plaintiffs, v. PETROLEO BRASILEIRO S.A., a Brazilian corporation; and DOES 1-20, Defendants.
• Court: U.S. District Court — District of Utah

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WESLEY GILLIES, LOGAN STAHELI, MADISON JONES, AND CARLY STAHELI, in their individual capacity and as heirs of the Estates of Z. Todd Staheli and Michelle Davis Staheli, Plaintiffs, v. PETROLEO BRASILEIRO S.A., a Brazilian corporation; and DOES 1-20, Defendants.

No. 2:22-cv-00124-TC

United States District Court, D. Utah, Central Division

July 31, 2023

ORDER AND MEMORANDUM DECISION GRANTING MOTION TO DISMISS AMENDED COMPLAINT

TENA CAMPBELL UNITED STATES DISTRICT JUDGE

The Plaintiffs in this case are Wesley (Staheli) Gillies, Logan Staheli, Madison (Staheli) Jones, and Carly Staheli (collectively “Plaintiffs”). They are the now-grown children of Z. Todd Staheli (“Todd”) and Michelle Davis Staheli (“Michelle”). In 2003 Todd and Michelle were murdered in Brazil while Todd was there working for a subsidiary of Shell Oil Company.

Plaintiffs allege the murders “were orchestrated and carried out at the behest of the executives, employees, directors, and officers of [Defendant] Petroleo Brasileiro, S.A. (“Petrobras”).” (Am. Compl., ECF No. 16 at 2). Plaintiffs seek “compensatory, punitive, and other damages from the persons and entities responsible for the murders of their parents.” Id. at 3.

Before the court are Petrobras' Motion to Dismiss Plaintiffs' Complaint, (Mot. Dismiss Compl., ECF No. 11) and its Motion to Dismiss Plaintiffs' Amended Complaint (Mot. Dismiss Am. Compl., ECF No. 17). In both it has moved to dismiss on several grounds including subject matter jurisdiction. The court has carefully reviewed the parties' arguments and the applicable law. The court finds that under the Foreign Sovereign Immunities Act of 1976 (“FSIA”), it lacks subject matter jurisdiction over Plaintiffs' action and is without power to proceed with this case.

BACKGROUND

I. Plaintiffs' Allegations Against Petrobras.

In 2003, Todd, Michelle, and their four children were living in Brazil. (See Am. Compl. ¶¶ 1-6, 25). They were all American citizens and Utah residents. Id. ¶¶ 1-6. “During the early morning of Sunday, November 30, 2003, Todd and Michelle were beaten to death in their home in Rio as they slept in their bed while their four children slept in their rooms just down the hallway.” Id. ¶ 42. Logan found them; Todd was already dead, while Michelle died at a Rio hospital four days later. Id. ¶¶ 47-49. Wesley was thirteen years old when her parents were murdered, Logan was ten, Madison was eight, and Carly was three. Id. ¶¶ 1-4.

Todd had been sent to Brazil by his employer, Shell Oil Company (“Shell”), a subsidiary of Royal Dutch Shell. Id. ¶ 21. He was sent there, with his family, to find out the basis of the cost overrun losses Shell was experiencing in the joint ventures it had with Petrobras and to fix the problems. Id. ¶ 24. Todd discovered that an extensive bribery and corruption scheme underlay the overruns, and “Just as Todd began to uncover [Petrobras'] massive fraud and took steps to prevent further financial harm to Shell, he and Michelle were killed.” Id. ¶ 41; see also id. ¶ 126 (alleging Petrobras admitted corrupt schemes occurred “at or around the time Todd uncovered Petrobras' corruption and was murdered to keep his discovery a secret.”); id. ¶¶ 13443 (asserting motive for the murders was “to prevent Todd from exposing what would become the largest bribery and kickback scheme in Brazilian history.”).

An extensive coverup occurred in the wake of the murders. First, “police in Rio tried to pin the killings on the two oldest [Staheli] children-Wesley, 13, and Logan, 10.” Id. ¶ 54.

Police next framed a handyman. Id. ¶¶ 61, 63, 162. In characterizing the role of the police, Plaintiffs not only allege that the police were involved in covering up the murders after the fact, they also allege the Chief of the Rio Civil Police and the State Secretary for Public Security for the State of Rio de Janeiro “were attempting to frame the children, and later [the handyman], for the murders to distract from their own involvement in ordering and carrying out the murders.” Id. ¶¶ 68, 70. Also implicated, somewhat indirectly, are the then-President of Petrobras subsidiary Gaspetro (Petrobras Gas S.A.), as well as the then-President of Brazil (who is also the current Brazilian President). See id. ¶¶ 36, 84-88.

The corruption and fraudulent schemes that Plaintiffs assert were first discovered by Todd in 2003, came to light more broadly “beginning in 2014 or earlier when Brazilian Federal Police, under Operation ‘Lava Jato' started arresting participants in these illegal activities.” Id. ¶ 74. “In 2020, the Brazilian government halted the Operation Lava Jato investigations and prosecutions, claiming that all corruption had been addressed and corrected.” Id. ¶ 106. Plaintiffs assert no attempt has been made to address or investigate the Staheli murders or their connection to Petrobras' corruption. Id. In the United States, the United States Securities and Exchange Commission (SEC) brought enforcement actions and monetary sanctions against Petrobras “for these same corruption schemes and securities fraud.” Id. ¶¶ 112-16. The Department of Justice (DOJ) also investigated Petrobras. As part of a DOJ-Petrobras non-prosecution agreement (NPA), Petrobras admitted, among other things, that it violated books and records and internal control statutes, received bribes, and facilitated and directed millions of dollars in corrupt payments to Brazilian politicians and political parties. Id. ¶¶ 121-25.^[1]

II. The Three Causes of Action Brought By Plaintiffs Against Petrobras.

Plaintiffs bring three causes of action against Petrobras and Does 1-20.^[2] Plaintiffs bring an action for wrongful death under Utah Code Ann. § 78B-3-106. Id. ¶¶ 165-174. Plaintiffs also bring a cause of action for civil conspiracy. Id. ¶¶ 175-181. They allege Petrobras, through its executives, officials, employees and agents, and the Doe Defendants, conspired to prevent Todd from revealing the bribery and corruption scheme, and to achieve this, these Defendants ordered the murders of Todd and Michelle. Id. ¶¶ 176-77. Finally, Plaintiffs bring a cause of action for intentional infliction of emotional distress. Id. ¶¶ 182-87. They allege that Petrobras and the Doe Defendants intentionally engaged in extreme and outrageous conduct by engaging in a scheme to murder Todd and Michelle, purposefully and intentionally causing severe emotional distress to Plaintiffs. Id. They argue “The brutality of the killings just yards from where Plaintiffs slept, the trauma of finding their parents murdered in their own blood-soaked bed, and the publicized attempt to blame Wesley and Logan for the murders of their own parents caused Plaintiffs to suffer severe emotional pain.” Id. ¶ 185.

ANALYSIS

I. The Court Considers the Merits of the Amended Complaint.

Petrobras argues that the court should dismiss Plaintiffs' claims under DUCivR 7-1(f) because Plaintiffs improperly amended the Complaint and did not respond to Petrobras' first motion to dismiss. Plaintiffs filed their Complaint on February 23, 2022. (Compl., ECF No. 2). Petrobras moved to dismiss it on July 22, 2022. (Mot. Dismiss Compl., ECF No. 11). Then, Plaintiffs filed their first Amended Complaint on September 30, 2022. (Am. Compl., ECF No. 16). Petrobras moved to dismiss it on October 14, 2022. (Mot. Dismiss Am. Compl., ECF No. 17). Plaintiffs neither sought Petrobras' consent nor the court's leave to amend. As a result, the way Plaintiff's amended their complaint was in violation of the local rules. See DUCivR 15.

But dismissal is a disproportionate sanction. This is particularly because, as Petrobras points out, the amendments made were inconsequential. (Mot. Dismiss Am. Compl., ECF No. 17 at 1). Since the complaints are the same apart from these inconsequential differences, there is little prejudice to Petrobras in the court considering the Amended, rather than the original, Complaint in assessing whether dismissal is appropriate. Further, Petrobras concedes that the court can accept the Amended Complaint. Id. Finally, the Motion to Dismiss the Amended Complaint is fully briefed. Plaintiffs filed a memorandum opposing the Amended Complaint's dismissal, (Mem. Opp. Mot. Dismiss Am. Compl., ECF No. 22), and Petrobras filed a reply in support of its dismissal, (Reply Supp. Mot. Dismiss Am. Compl., ECF No. 25). For these reasons, the court declines to dismiss because of the improper amendment and it treats the original complaint as superseded by the Amended Complaint. See Davis v. TXO Prod. Corp., 929 F.2d 1515, 1517 (10th Cir. 1991).

Any motion that is directed at the original complaint is rendered moot by the filing of an amended complaint. White v. City of Topeka, No. 18-4050, 2019 WL 3546469, at *1 (D. Kan. Aug. 5, 2019). Consequently, Petrobras' Motion to Dismiss the Complaint (ECF No. 11) is moot. The court will decide whether to dismiss Plaintiffs' claims based on how they are pleaded in the Amended Complaint.

II. The Court Lacks Subject Matter Jurisdiction Under FSIA Because the Commercial Activity Exception Does Not Apply.

Petrobras is a foreign state and an agency or instrumentality of a foreign state under FSIA. (Am. Compl., ECF No. 16 ¶ 8 (citing 28 U.S.C. § 1603(a); 28 U.S.C. § 1603(b)). “FSIA provides the exclusive basis for obtaining jurisdiction over claims against a foreign state or its instrumentalities in the United States.” Hansen v PT Bank Negara Indonesia (Persero), 706 F.3d 1244, 1248 (10th Cir. 2013) (citing Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 611 (1992)). Under FSIA, a foreign state is “presumptively immune from suit.” Orient Min. Co. v. Bank of China, 506 F.3d 980, 991 (10th Cir. 2007) (citing 28 U.S.C. § 1604). “But the FSIA ‘carves out certain exceptions to its general grant of...