Government of Dominican Republic v. Aes Corp.

• Decision Date: 05 December 2006
• Docket Number: No. CIV.A.06 313.,CIV.A.06 313.
• Citation: 466 F.Supp.2d 680
• Parties: GOVERNMENT OF THE DOMINICAN REPUBLIC and Secretariat of State of the Environment and Natural Resources of the Dominican Republic, Plaintiffs, v. AES CORPORATION, AES Aggregate Services, Ltd., AES Atlantis, AES Puerto Rico, L.P., Silver Spot Enterprises, and Roger Charles Fina, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

466 F.Supp.2d 680

GOVERNMENT OF THE DOMINICAN REPUBLIC and Secretariat of State of the Environment and Natural Resources of the Dominican Republic, Plaintiffs, v. AES CORPORATION, AES Aggregate Services, Ltd., AES Atlantis, AES Puerto Rico, L.P., Silver Spot Enterprises, and Roger Charles Fina, Defendant.

No. CIV.A.06 313.

United States District Court, E.D. Virginia, Alexandria Division.

December 5, 2006.

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Susan L. Burke, Esquire, Burke Pyle, LLC, Philadelphia, PA., for Plaintiffs Attorney's.

Dane Hal Butswinkas, Esquire, Williams & Connolly LLP, Washington, DC, for Defense Attorney's.

MEMORANDUM ORDER

LEE, District Judge.

THIS MATTER is before the Court on Defendant AES Corporation, AES Aggregate Services, Ltd., AES Atlantis, AES Puerto Rico, L.P., Silver Spot Enterprises, and Roger Charles Fina's Motion to Dismiss. The Government of the Dominican Republic ("Dominican Republic") brought this suit complaining that several American companies polluted Samana Bay and Manzanillo by dumping coal ash. There are five issues before the Court. First, the Court must decide whether the Dominican Republic has standing to assert claims of nuisance, product liability, aiding and abetting the violation of laws prohibiting bribery and regulating waste disposal, and civil conspiracy to violate the laws prohibiting bribery and regulating waste disposal. Second, the Court must decide whether the Dominican Republic's RICO claims are deficient as a matter of law because (a) they fail to allege a "pattern" under RICO and (b) "the cognizable predicate acts of wrongdoing alleged by Plaintiffs were not the proximate cause of Plaintiffs' alleged injuries." (Defendants' Memorandum of Law in Support of the AES Defendants' Motion to Dismiss at 2, Dominican Republic v. AES Corp., No. 06-313, 2006 WL 3692617 (E.D.Va.2006) (No. 14) ("Def.'s Br.").) Third, the Court must decide if RICO applies extra-territorially. Fourth, the Court must decide whether. Virginia choice of law principles require the law of the Dominican Republic to govern Plaintiff's claims and, if so, whether the law of the Dominican Republic recognizes the common law causes of action asserted. Finally, the Court must decide whether the act of state doctrine bars this Court from adjudicating the case because the Dominican Republic issued, a permit to the Defendants to dump coal ash at one point in time.

The Court holds that the Government of the Dominican Republic has standing to sue in the United States of America ("United States") courts because the United States recognizes the Dominican Republic, is not at war with the Dominican Republic, and the Dominican Republic meets traditional standing requirements on the facts alleged. Further, the Court dismisses Plaintiff's RICO claims (Counts One and Two of the First Amended Complaint) because the First Amended Complaint fails to allege sufficient "continuity" to establish a pattern of racketeering activity. In the alternative, the Court dismisses Plaintiff's RICO claims because the First Amended. Complaint fails to allege proximate cause of the injury. In addition, the Court denies the Defendant's Motion to Dismiss several common law claims because the Court finds that the law of the Dominican Republic encompasses actions for nuisance, civil conspiracy, and aiding and abetting claims, and Dominican Republic law governs the claims. The Court dismisses the product liability claim because both parties agree that the coal ash is not a "product." Finally, the Court further finds that the act of state doctrine does not bar Plaintiff's claims because a public act is not at issue.

I. BACKGROUND

The Government of the Dominican Republic alleges that the AES Corporation ("AES") formed a civil conspiracy to carry out several illegal acts (including bribery and death threats) in order to dispose of hazardous coal ash in a manner less expensive than safe disposal. (First Amended Complaint ("FAC") at ¶¶ 1, 4, 12, 20, Dominican Republic v. AES Corp., No. 06-313, 2006 WL 3692617 (E.D.Va.2006) (No. 2).) Because the Government of the Dominican Republic does not think its own courts can resolve this matter in a fair and impartial manner, it brought suit in the Eastern District of Virginia. (FAC at ¶ 20.) The Dominican Republic alleges that the AES conspiracy polluted Manzanillo and Samana Bay, wrecked the beach, caused nearby residents to suffer physical injuries that required the state-run healthcare system to provide medical care, hampered tourism, and caused business in the region to suffer. (FAC at ¶¶ 16, 33-53.) In addition, some inhabitants of the Dominican Republic have suffered respiratory problems from breathing polluted air which the state-run healthcare system has addressed. (FAC at ¶¶ 35-38,43-46.)

For the purposes of this motion, the Court assumes the following facts are true. AES of Arlington, Virginia, is the parent company of more than 700 subsidiaries, including AES. Puerto Rico, AES Atlantis, and AES Aggregate Services ("AES Defendants"). (FAC at ¶¶ 5-8, 65.) AES Puerto Rico discovered that it could not find commercial uses for its coal ash, a byproduct of its coal burning power plant. (FAC at ¶ 58.) Disposal costs for the 1000 tons of coal ash generated by the plant each day would have been substantial, approximately $100-200 U.S. per ton. (FAC at ¶ 58.) AES created AES Aggregate Services, Ltd., "a Cayman Islands subsidiary, to enter into a contract with Defendant AES Puerto Rico." (FAC at ¶ 60.) Plaintiff alleges that AES executive Sarah Slusser directed the formation of AES Aggregate Services while at AES headquarters in Arlington, Virginia, part of the idea being that AES could create the illusion that the Puerto Rico plant's ash would be disposed of in accord with relevant law. (FAC at ¶ 64.) When the initial contract between AES Puerto Rico and AES Aggregate Services to dispose of the ash in the Bahamas failed (because the Bahamas refused to accept it), AES hired Silver Spot Enterprises. (FAC at ¶ 66.)

The Government of the Dominican Republic alleges that AES hired Silver Spot, Enterprises of Delray Beach, FL to transport the waste out of Puerto Rico. (FAC at ¶ 66.) Silver. Spot Enterprises has a Dominican Republic subsidiary, Multigestiones Valenza ("MV"). (FAC at ¶ 68.) The entities negotiated the contract in Florida. (FAC at ¶ 66.) The Government of the Dominican Republic alleges that a conspiracy formed among the AES Defendants; Silver Spot;¹ MV; Trans Dominicana de Desarollo ("TDD") (a Dominican company holding the concession for the port of Manzanillo); the former Undersecretary of Environmental Management in the Ministry of the Environment, Rene Ledesma; the former Director of the National Port Authority, Rosendo Arsenio Borges; and elected and unelected officials of the government of the Dominican. Republic, including the municipal government of Manzanillo and provinces of Montecristi and Samana. (FAC at ¶ 11.) The object of the conspiracy involved disposal of tons of coal ash without incurring the costs of proper shipment and/or disposal. (FAC at ¶ 11.) In addition, Plaintiff alleges that the conspirators are conspiring currently to prevent discovery, investigation, and prosecution of their acts. (FAC at ¶ 13.) Plaintiff fears that if the courts of the Dominican Republic were to take up the issues, they would be unlawfully influenced in ways that could allow the Defendants to evade accountability for their actions. (FAC at ¶ 20.)

Plaintiff alleges that from October 2003 to March 2004, Defendants transported ten (10) barge-loads of compacted coal ash from Puerto Rico to the Dominican Republic. (FAC at ¶ 33.) The Dominican Academy of Sciences found that the coal ash had high levels of arsenic, cadmium, nickel, beryllium, chromium, and vanadium. (FAC at ¶ 52.) Four barges (on or about October 20, November 12, December 2, 2003 and January 18, 2004) left approximately 30,000 tons of coal ash in Manzanillo, exposed to the elements.' (FAC at ¶ 34.) The flying unattended coal ash harmed nearby residents of the Manzanillo area; they experienced skin lesions, and several elderly residents and children had difficulty breathing. (FAC at ¶¶ 36, 37.) Several residents were hospitalized. The dumping contributed to, or resulted in, six (6) deaths and five (5) serious illnesses. (FAC at ¶ 38.) The waste destroyed a mangrove wetland. (FAC at ¶ 39.) Tourist activity declined dramatically. (FAC at ¶ 40.)

Samana Bay suffered major damage from the coal ash pollution also. While documents show that barges dumped 27,000 tons of coal ash on Samana Bay beaches, eyewitnesses estimate 50,000 tons. Again, Defendants left the coal ash exposed to the elements. (FAC at ¶ 41.) Again, several residents were injured, suffering skin lesions and breathing difficulties. (FAC at ¶¶ 44, 45.) Six (6) residents were hospitalized with acute respiratory, distress. (FAC at ¶ 46.) Samana Bay region tourism declined dramatically and has not improved; hotel occupancy decreased by 70 percent. (FAC at ¶ 47.) Local fish sales have declined. (FAC at ¶ 48.) Environmentalists and marine biologists have expressed concern about the possible effects on the whale population and the reputation of the Dominican Republic for protecting whales. (FAC at ¶ 50.)

The port of Manzanillo refused to allow the first barge into the Dominican Republic on October 20, 2003 because Silver Spot did not have a permit from the Environment Ministry. (FAC at ¶ 70.) District Attorney Arias aided in preventing the dumping. (FAC at ¶ 72-74.) District Attorney Arias was aware that after the country halted the attempted import of sewage from Philadelphia, Pennsylvania, the Dominican Republic passed a law forbidding the importation of biological, industrial, and residential waste. (FAC at ¶ 77.) Having failed to unload the ash in the Dominican Republic, Roger. Charles Fina ("Fina"), owner of Silver Spot, attempted to unload in...