Sabetian v. Exxon Mobil Corp.

• Decision Date: 28 October 2020
• Docket Number: B297107
• Court: California Court of Appeals Court of Appeals
• Parties: Soraya SABETIAN, Plaintiff and Appellant, v. EXXON MOBIL CORPORATION et al., Defendants and Respondents.

57 Cal.App.5th 1054

272 Cal.Rptr.3d 144

Soraya SABETIAN, Plaintiff and Appellant,

v.EXXON MOBIL CORPORATION et al., Defendants and Respondents.

B297107

Court of Appeal, Second District, Division 7, California.

Filed October 28, 2020

As Modified November 25, 2020

Weitz & Luxenberg, Benno Ashrafi and Josiah Parker, Los Angeles, for Plaintiff and Appellant.

Dentons US, Jayme C. Long, Justin Reade Sarno, Los Angeles, Alexander B. Giraldo, Woodland Hills; Gibson, Dunn & Crutcher, Theodore J. Boutrous, Jr., Los Angeles, Joshua S. Lipshutz, and Joseph R. Rose, San Francisco, for Defendants and Respondents Exxon Mobil Corporation and ExxonMobil Oil Corporation.

King & Spadling, Ashley C. Parrish, Peter A. Strotz, Los Angeles, Steven D. Park and Anne M. Voigts, Palo Alto, for Defendants and Respondents Chevron U.S.A. Inc. and Texaco, Inc.

FEUER, J.

Soraya Sabetian¹ appeals from a judgment entered after the trial court granted the motions for summary judgment filed by defendants Chevron U.S.A. Inc. and Texaco, Inc. (Chevron defendants), and Exxon Mobil Corporation and ExxonMobil Oil Corporation (Exxon defendants). Soraya and her husband Houshang Sabetian brought claims for negligence, premises liability, and loss of consortium, alleging Sabetian contracted mesothelioma

caused by exposure to asbestos while he was an Iranian citizen working for the National Iranian Oil Company (NIOC) from about 1960 to 1979 in facilities controlled by defendants.² The trial court concluded the Chevron and Exxon defendants did not owe a duty of care to Sabetian.

On appeal Soraya contends the Chevron and Exxon defendants owed Sabetian a duty of care based on their predecessors’ control over the Abadan refinery in which Sabetian worked and a 1954 contractual agreement between the Iranian government and a consortium of international oil companies, including defendants’ predecessors in interest (the Agreement). Soraya also asserts the Chevron and Exxon defendants, through their predecessors, owed a duty to protect refinery workers like Sabetian from asbestos exposure based on a special relationship between the predecessors and the refinery workers arising from commitments in the Agreement.³

Contrary to Soraya's contentions, neither the Agreement nor the evidence presented by the Sabetians shows the predecessors to the Chevron and Exxon defendants operated or controlled the Abadan refinery. Nor did the Agreement create a special relationship between the predecessor companies and the refinery workers. A duty to a plaintiff may arise from a contract based on public policy considerations, but here the two most significant factors of the six-factor balancing test articulated by the Supreme Court in J'Aire Corp. v. Gregory (1979) 24 Cal.3d 799, 157 Cal.Rptr. 407, 598 P.2d 60 ( J'Aire ) do not support imposition of liability on the Chevron and Exxon defendants. Most significantly, the Agreement was not intended to affect Sabetian and other refinery workers, but rather, to accelerate Iranian oil production and exportation to the global market. In addition, because the predecessor companies had no ability to control day-to-day operations at the Abadan refinery, it was not foreseeable that the companies’ conduct would harm Sabetian and other refinery workers. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Agreement⁴

In 1951 the government of Iran nationalized its oil assets, assuming control from the Anglo-Iranian Oil Company, which was majority-owned by the government of Great Britain. In 1952 Iran formed NIOC to own and supervise all of Iran's oil assets. But NIOC did not have access to the global oil markets. To avoid possible influence from the former Union of Soviet Socialist Republics, the United States "devised a plan in which a consortium of newly-formed international corporations would operate the Abadan refinery and some of the other Iranian Oil Premises, under Iranian supervision."⁵ The United States invited several major American companies with operations in the Middle East to participate in an international consortium with other oil companies.

In 1954 American oil companies Gulf Oil Corporation, Socony-Vacuum Oil Company, Inc., Standard Oil Company of New Jersey, Standard Oil Company of California, and the Texas Company, and European oil companies Anglo-Iranian Oil Company, Ltd., N.V. de Bataafsche Petroleum Maatschappij, and Compagnie Francaise des Pétroles (collectively, the consortium members) entered into the Agreement with Iran and NIOC. Defendant Chevron is the successor in interest to Standard Oil Company of California and Gulf Oil Corporation. Defendant Texaco, Inc., is the successor of the Texas Company. The Exxon defendants are successors in interest to Socony-Vacuum Oil Company, Inc., and Standard Oil Company of New Jersey.

The Agreement consists of two parts, the first among the consortium members, Iran, and NIOC and the second among Iran, NIOC, and the Anglo-Iranian Oil Company, Ltd. Only part I is at issue in this case. The recitals for part I provided, "WHEREAS, both the Government of Iran and [NIOC] desire to increase the production and sale of Iranian oil, and thereby to increase the benefits flowing to the Iranian nation ..., but additional capital, experienced management, and technical skills are required in order to produce, refine, transport and market ... oil in quantities sufficient to effect this increase in a substantial amount ... [¶] WHEREAS, the international oil [consortium members] are in a position and are willing to supply such capital, management and skills; and [¶] ... are in a position to market substantial quantities of Iranian oil ... throughout a large part of the world over a considerable period of time, to the mutual benefit of the Iranian nation and themselves ... [¶] ... the Parties are agreed that said companies should undertake the operation and management of certain of the oil properties ... of the Government of Iran and [NIOC], including the Abadan refinery, as hereinafter set forth ... [¶] ... negotiations have been amicably carried out with the object of assuring to the Government of Iran and [NIOC], on the one hand, a substantial export market for Iranian oil and a means of increasing the material benefits to and prosperity of the Iranian people, and to the companies, on the other hand, the degree of security and the prospect of reasonable rewards necessary to justify the commitment of their resources and facilities to the reactivation of the Iranian oil industry."

Article 3, section A of the Agreement provided that to carry out the "functions of exploration, producing, refining, transportation and the other functions specified in" the Agreement, the consortium members incorporated the "Operating Companies" under the laws of the Netherlands. The Agreement defined the Operating Companies as the Iranian Oil Exploration and Producing Company (IOEPC) and Iranian Oil Refining Company (IORC). The consortium members incorporated a holding company, Iranian Oil Participants Ltd. (IOP), which wholly owned IOEPC and IORC. Each consortium member formed at least one wholly owned subsidiary, each of which purchased 7 to 8 percent of IOP's shares. In article 3, section A of the Agreement, the consortium members "jointly and severally guarantee[d] the due performance by the Operating Companies of their respective obligations under this Agreement."

Article 4 of the Agreement listed and "strictly limited" the "rights, powers and obligations of the Operating Companies as well as the nature and extent of the supervision to be exercised by Iran and NIOC ... to what is clearly stated in this Article." (Art. 4, § J.) Section A, paragraph (1) provided IOEPC the right to explore, drill for, produce, extract, process, store, transport, and ship crude oil and natural gas.

Section A, paragraph (2) provided for IORC to have the right to refine and process crude oil and natural gas produced by IOEPC.

Article 4, section F sets forth "[t]he obligations of the Operating Companies to Iran and NIOC." These obligations included the duty "to conform with good oil industry practice and sound engineering principles applicable and appropriate to operations under similar conditions in conserving the deposits of hydrocarbons, in operating the oilfields and refinery and in conducting development operations." (Agreement, art. 4, § F, ¶ (1).) The Operating Companies were obligated "to carry on such exploration operations as are economically justifiable with a view to providing sufficient reserves to support the rate of production of oil" (id ., § F, ¶ (2)); to maintain full records and accounts of their activities (id ., § F, ¶ (3)); "to minimize the employment of foreign personnel" (id ., § F, ¶ (4)); and "to prepare in consultation with NIOC plans and programs for industrial and technical training and education and to cooperate in their execution ... to replace foreign personnel as soon as reasonably practicable" (id ., § F, ¶ (5)). Article 4, section I further provided, "[T]he Operating Companies shall determine and have full and effective management and control of all their operations," subject to supervision of their operations by Iran and NIOC as set forth in sections F and G.

Article 5, section A of the Agreement stated, "Iran and NIOC undertake that neither of them, and no person other than the Operating Companies, shall at any time ... carry out ... any of the functions specified in [p]aragaphs (1) and (2) of Section A of Article 4 of this Agreement" (defining the rights of IOEPC and IORC to exploration, production, and refining). Article 7 of the Agreement granted the Operating Companies the right to "exclusive use" of certain lands owned by NIOC and Iran for "their operations under [the] Agreement."⁶ Under article 17 of the Agreement, NIOC retained authority over all "non-basic operations," including medical and health services, industrial and technical training and education, and housing.

Article 18 provided consortium members...