Provincial Gov't of Marinduque v. Placer Dome

• Decision Date: 29 September 2009
• Docket Number: No. 07-16306.,07-16306.
• Parties: PROVINCIAL GOV'T OF MARINDUQUE, Plaintiff-Appellant, v. PLACER DOME, INC.; Barrick Gold Corp., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

582 F.3d 1083

PROVINCIAL GOV'T OF MARINDUQUE, Plaintiff-Appellant, v. PLACER DOME, INC.; Barrick Gold Corp., Defendants-Appellees.

No. 07-16306.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 10, 2009.

Filed September 29, 2009.

Walter J. Scott, James D. McCarthy (argued), and David H. Ammons, Diamond

McCarthy LLP, Dallas, TX; Neil Peck, Snell & Wilmer LLP, Denver, CO; Patrick G. Byrne, Las Vegas, NV, for the plaintiff-appellant.

Steve Morris, Rex D. Garner, Morris Pickering & Peterson, Las Vegas, NV; Jerrold J. Ganzfried (argued), Edward Han, Martin Cunniff, Howrey LLP, Washington, DC, for the defendants-appellees.

Appeal from the United States District Court for the District of Nevada, Brian E. Sandoval, District Judge, Presiding. D.C. No. CV-05-01299-BES.

Before M. MARGARET McKEOWN and SANDRA S. IKUTA, Circuit Judges, and FREDERIC BLOCK,^* District Judge.

McKEOWN, Circuit Judge:

Under the act of state doctrine, "the acts of foreign sovereigns taken within their own jurisdiction shall be deemed valid." W.S. Kirkpatrick & Co. v. Environmental Tectonics Corp., 493 U.S. 400, 409, 110 S.Ct. 701, 107 L.Ed.2d 816 (1990). Founded on international law, the doctrine also serves as a basis for federal-question jurisdiction when the plaintiff's complaint challenges the validity of a foreign state's conduct. We consider here whether the district court had subject-matter jurisdiction over this suit, based upon the act of state doctrine, such that removal from state to federal court was proper. Because none of the referenced conduct by the foreign sovereign—in this case, the Philippine government—is essential to any of the plaintiff's causes of action, we reverse the district court's exercise of subject-matter jurisdiction under the act of state doctrine.

BACKGROUND

The Provincial Government of Marinduque ("the Province") sued Placer Dome Corporation in 2005 in Nevada state court for alleged human health, ecological, and economic damages caused by the company's mining operations on Marinduque, an island province of the Republic of the Philippines.¹ According to the complaint, Placer Dome severely polluted the lands and waters of Marinduque for some thirty years, caused two cataclysmic environmental disasters, poisoned the islanders by contaminating their food and water sources, and then left the province without cleaning up the mess—all in violation of Philippine law. The Province further alleges that Placer Dome received certain forms of assistance in its mining endeavors from the Philippine government. More particularly, the Province contends that former Philippine President Ferdinand Marcos, in exchange for a personal stake in the mining operations, eased various environmental protections obstructing Placer Dome's way.

Immediately after the Province filed suit, Placer Dome removed the case to federal district court for the District of Nevada on the basis of federal-question jurisdiction. Specifically, Placer Dome contended that the case "tender[ed] questions of international law and foreign relations." The Province moved for an order requiring Placer Dome to show cause why the action should not be remanded to the state court due to a lack of subject-matter jurisdiction. The district court denied the Province's motion, holding that federal-question jurisdiction existed under the act of state doctrine of the federal common law. Placer Dome moved to dismiss the suit for lack of personal jurisdiction and forum non conveniens. The district court granted limited discovery on personal jurisdiction.² Before discovery was concluded, in March 2007, the United States Supreme Court issued Sinochem International Co. v. Malaysia International Shipping Corp., announcing that district courts have latitude to rule on the threshold issue of forum non conveniens before definitively ascertaining subject-matter and personal jurisdiction. 549 U.S. 422, 432, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007). The district court stayed jurisdictional discovery, and ordered briefing on the issue of forum non conveniens. Invoking Sinochem, the district court dismissed the matter on forum non conveniens grounds in favor of a Canadian forum. In ruling on the Province's motion for reconsideration, the district court affirmed its earlier conclusion that "subject matter jurisdiction does, in fact, exist in this case, based upon the act of state doctrine."

ANALYSIS

I. Removal to Federal Court

This case was removed from state to federal court under 28 U.S.C. § 1441(a)³ on Placer Dome's representation that the Province's claims implicated the federal common law of foreign relations. Removal was proper only if the district court would have had original jurisdiction over the claims. Placer Dome asserted jurisdiction pursuant to 28 U.S.C. § 1331, which states that federal courts have jurisdiction over cases presenting questions of federal constitutional, statutory, and common law.

Federal courts may exercise federal-question jurisdiction over an action in two situations. First, and most commonly, a federal court may exercise federal-question jurisdiction if a federal right or immunity is "`an element, and an essential one, of the plaintiff's cause of action.'" Franchise Tax Bd. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 11, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) (quoting Gully v. First National Bank, 299 U.S. 109, 112, 57 S.Ct. 96, 81 L.Ed. 70 (1936)). Thus, the federal question on which jurisdiction is premised cannot be supplied via a defense; rather, the federal question must "be disclosed upon the face of the complaint, unaided by the answer." Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125, 127-28, 94 S.Ct. 1002, 39 L.Ed.2d 209 (1974) (per curiam). Second, a federal court may have such jurisdiction if a statelaw claim "necessarily raise[s] a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally-approved balance of federal and state judicial responsibilities." Grable & Sons Metal Prod., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005). Such a federal issue must be "a substantial one, indicating a serious federal interest in claiming the advantages thought to be inherent in a federal forum." Id. at 313, 125 S.Ct. 2363.

The removal statute is strictly construed against removal jurisdiction. Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 32, 123 S.Ct. 366, 154 L.Ed.2d 368 (2002); California ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 (9th Cir.2004). The defendant bears the burden of establishing that removal is proper. Id.

II. Determination of Removal Jurisdiction in Light of Sinochem

The question before us, then, is whether the district court had subject-matter jurisdiction under 28 U.S.C. § 1331. We review de novo a district court's determination that subject-matter jurisdiction exists for a case that has been removed. Schnabel v. Lui, 302 F.3d 1023, 1029 (9th Cir.2002).

Before considering this issue, we first address Placer Dome's assertion that the district court dismissed this case on forum non conveniens grounds without resolving the issue of subject-matter jurisdiction. According to Placer Dome, the district court exercised its discretion under the Supreme Court's decision in Sinochem "not [to] resolve whether it has authority to adjudicate the cause (subject-matter jurisdiction) or personal jurisdiction over the defendant if it determines that, in any event, a foreign tribunal is plainly the more suitable arbiter of the merits of the case." 549 U.S. at 425, 127 S.Ct. 1184. If the district court did not determine subject-matter jurisdiction, Placer Dome intimates, then we are presented with only the forum non conveniens dismissal to review. Placer Dome further argues that, even if the district court concluded that subject-matter jurisdiction existed, that holding was alternative to the forum non conveniens determination.

We question whether Sinochem restricts our ability to address an issue of subject-matter jurisdiction, even if characterized as an alternative holding. "[W]e have an independent obligation to examine our own and the district court's jurisdiction." Rivas v. Rail Delivery Serv., Inc., 423 F.3d 1079, 1082 (9th Cir.2005). That obligation necessarily carries with it the authority to determine for ourselves, under Sinochem, whether the jurisdictional issue should be addressed, regardless of the path the district court chose to take.

In any event, Placer Dome misapprehends the proceedings below. Following removal of this suit, the Province challenged the court's subject-matter jurisdiction. The district court agreed with Placer Dome that removal was proper, holding that the Province's allegations invoked the act of state doctrine and thus triggered federal-question jurisdiction. The district court arguably cast a shadow upon that conclusion when it dismissed the case on forum non conveniens grounds. However, in its final order denying the Province's motion for reconsideration, the district court clarified that it had inadvertently placed its subject-matter jurisdiction in doubt and explicitly affirmed its previous conclusion that the complaint presented federal questions under the act of state doctrine. Whether viewed as an alternative holding or not, it is abundantly clear that the district court concluded it had subject-matter jurisdiction over this suit.⁴

In Sinochem, the Supreme Court considered whether a district court must first conclusively establish its own jurisdiction before dismissing a suit on the basis of forum non conveniens. Answering in the negative, the Court explained that, because jurisdiction is vital only if a court intends to render a determination on the merits of a case, "a federal court has leeway `to choose among threshold grounds for denying audience to a case on the merits.'" 549 U.S. at 431, 127 S.Ct. 1184 (quoting Ruhrgas AG...