Steinbock-Sinclair v. Amoco International Oil Co.

• Decision Date: 29 September 1975
• Docket Number: No. 71 C 2828.,71 C 2828.
• Parties: Robert STEINBOCK-SINCLAIR, Plaintiff, v. AMOCO INTERNATIONAL OIL COMPANY, a Delaware Corporation, Defendant.
• Court: U.S. District Court — Northern District of Illinois

401 F. Supp. 19

Robert STEINBOCK-SINCLAIR, Plaintiff, v. AMOCO INTERNATIONAL OIL COMPANY, a Delaware Corporation, Defendant.

No. 71 C 2828.

United States District Court, N. D. Illinois, E. D.

September 29, 1975.

COPYRIGHT MATERIAL OMITTED

Anna R. Lavin, Chicago, Ill., for plaintiff.

William D. Maddux and James E. Dahl of Kirkland & Ellis, Chicago, Ill., for defendant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW RE: JURISDICTION

PERRY, Senior District Judge.

This cause came on for trial on the issue of whether jurisdiction exists in this Court pursuant to the provisions of Title 28, U.S.C. Section 1332(c). The Court, sitting without a jury, having heard the evidence of the witnesses and having examined the documentary evidence submitted by both parties, and having heard the arguments of counsel, hereby makes the following findings of fact and conclusions of law:

Findings of Fact

1. The plaintiff, Robert Steinbock-Sinclair, as of the time of filing this lawsuit, was a citizen and resident of the Northern District of Illinois.

2. The defendant, Amoco International Oil Company, is a corporation organized and existing under and pursuant to the laws of Delaware.

3. Defendant corporation is a wholly owned subsidiary of Standard Oil Company (Indiana) which finds, produces and transports crude oil and natural gas and manufactures and markets refined products outside North America.

4. Defendant's charter shows its business purpose to be the exploration for and production of crude oil and natural gas, the transportation, refining and marketing thereof and of refined oil products and provides for the necessary diverse powers and authorities to carry out this business purpose.

5. At near the time of filing the Complaint herein, defendant did no oil exploration, production, refining, marketing or any other of the activities defined in its charter as its business purpose in the State of Illinois or anywhere in the United States.

6. For the effectuation of the corporate purpose, numerous other corporations were set up in various parts of the world, including New York City, New York; Sydney, Australia; Hamilton, Bermuda; Cairo, Egypt; Tehran, Iran; Wembley and London, England; Dusseldorf, Germany; Milan, Italy; New Delhi and Madras, India; Buenos Aires, Argentina; Bogota, Colombia; as well as in other locations outside the United States. The offices of the foreign countries are known as the "foreign offices" of the defendant.

7. All of the establishments outside the United States were incorporated, some in Delaware and some in countries where the offices were located. (Testimony of Swiger and Vredenburgh). Some of these establishments were principally responsible for the production or exploration for crude oil, some for refining and marketing of refined products (testimony of Swiger and Vredenburgh); the trading for all or most of the foreign establishments and also ocean transportation activities were concentrated in Bermuda (testimony of Swiger and Pl. Ex. 5); Amoco Europe Inc., located in London, England, had management, supervisory and administrative functions over all facets of defendant's business in Europe. (Pl. Ex. 14, 20 and Def. Ex. 8)

8. The evidence discloses only one delivery of crude oil in the United States, and that in small quantities to a refinery in Yorktown, West Virginia (testimony of plaintiff), which delivery was handled through the office in Bermuda. (Pl. Ex. 5)

9. At the time of filing of this suit the defendant was not qualified to do business in the State of Illinois under the laws of Illinois, but made application for such qualification promptly after being served with process in this suit (Pl. Ex. 3) and was so qualified by the State of Illinois in January 1972. (Pl. Ex. 3a)

10. In its application for qualification to the Secretary of the State of Illinois, after the date of filing of this suit, the defendant declared that its principal place of business was in the State of Delaware. (Pl. Ex. 3a)

11. The defendant's New York office had qualified to do buiness in and under the laws of the State of New York, paid taxes in that state and continued its qualification and payment of taxes to this date. (Pl. Ex. 22 and 23)

12. The defendant admitted (Def. Ex. 12) that its conglomerate corporations have grown rapidly, directed activities extending across the globe and in terms of employees and invested capital was the third largest individual company within Standard Oil Company (Indiana). Its Chicago office had only about 400 employees. (Pl. Ex. 10 and testimony of Denton)

13. All sales, billing, credit and collection matters were handled outside the United States (testimony of Vredenburgh). The Chicago office maintained certain statistical information. Funds received from sales were banked outside the United States (testimony of Vredenburgh). The Bermuda office had bank accounts in Nassau, Bahamas (testimony of Vredenburgh). Substantial funds were channeled through New York banks (approximately 400 million dollars annually) (testimony of Vredenburgh). Defendant's banking in Chicago, Illinois, was merely 2 million dollars annually (testimony of Vredenburgh) for the operation of the Chicago office.

14. Although personnel assigned to the Chicago office assisted in negotiating contracts for oil concessions, financing or product marketing, all such contracts were executed by and on behalf of the entities operating outside the United States and never by or for the establishment in Chicago, Illinois. (Testimony of Vredenburgh and Pl. Ex. 6)

15. The actual earnings from operations of the defendant corporation were 38.2 million dollars in 1970 and 86.6 million dollars in 1971. (Answer to Interrogatory No. 5)

16. The defendant reported for its income tax returns to the State of Illinois the following: 1970 — $11,625,671.22 loss and 1971 — $5,377,394.05 loss. (Answer to Request to Admit 6 and Pl. Ex. 9)

17. The defendant did not file any U. S. Federal Income Tax returns but is a member of the consolidated group included in the consolidated income tax return filed by Standard Oil Company (Indiana). None of Standard Oil Company's consolidated tax liability was allocated to the defendant for the years 1970 and 1971. (Answer to Interrogatory 7(c))

18. As of the end of 1971 there was close to 118 million dollars of earnings from the conglomerate corporations, which cash was held by defendant's trading and shipping offices in Bermuda and holding companies in Bermuda and Switzerland (testimony of Swiger, Tr. 183). None of these funds were held in a bank in Chicago, Illinois. (Testimony of Swiger, Tr. 183)

19. Defendant's operations were so structured that more of its establishments made losses than profits but the trading and shipping establishments located in Bermuda were profitable (testimony of Swiger and Vredenburgh); the operation in Australia was also profitable. Earnings of the Bermuda and Australian entities were accumulated abroad without any dividends being declared or paid to the United States. (Testimony of Vredenburgh)

20. Defendant paid in capital at the end of 1971 close to 500 million dollars (Pl. Ex. 3a). Funds on deposit in banks in Illinois were only 100,000 dollars and defendant's only other tangible assets in Illinois consisted of office furniture in the Chicago office. The assets represented by crude oil production facilities, refineries, terminals, warehouses, tankers, retail stations and so on were wholly outside the State of Illinois (testimony of Denton and Vredenburgh).

21. There were 48 officers elected at the Special Meeting of Defendant's Board of Directors in 1971 (Def. Ex. 11). Of these, 30 resided outside the United States (testimony of Denton). In addition there were chairmen, managing directors, general managers, vice-presidents and other officers and high level functionaries of the Delaware-incorporated and of the foreign-incorporated establishments who, in all instances, resided outside the United States (Pl. Ex. 16) and exercised management control of the operations.

22. Defendant's Board of Directors met in Chicago, Illinois, but the Board delegated its responsibilities to the President (testimony of Denton) who, in turn, delegated them to the Regional executives (Pl. Exs. 5, 14, 15, and 20). All day-to-day management and operating decisions were made in the regions abroad (testimony of Vredenburgh). Chicago office had only advisory functions and furnished technical expertise as and when requested by the foreign offices (testimony of Denton and Vredenburgh and Pl. Ex. 20). While operations in Europe were directed from London, England (Pl. Exs. 14 and 20), those in Egypt were conducted by GUPCO, an Egyptian-incorporated company managed from Cairo, Egypt (Pl. Ex. 11 and testimony of Vredenburgh) while those in Iran were directed and managed by IPAC, an Iranian corporation in Tehran, Iran. (Testimony of Vredenburgh)

23. The defendant was inconsistent in its testimony as to the place of greatest crude oil production. Its witness Denton sought to assert that it was Argentina; Vredenburgh stated that it was either Iran or Egypt. Defendant's consolidated control budget (Pl. Ex. 7 and 7a) shows the greatest volume of production of crude oil to be in Egypt.

24. The defendant had an oil refinery and product marketing facilities in Australia, but overwhelmingly the greatest volume of processing of crude oil into refined products and of marketing of refined products to the public was in Europe (England, Germany and Italy) (Pl. Exs. 7 and 7a). All the European refining and marketing operations as well as crude oil and natural gas exploration and production operations (England, Norway, Holland) were directed and administered by Amoco Europe, Inc., situated in London, England (Pl. Exs. 14 and 20 and Def. Ex. 8). The President and all officers of Amoco Europe, Inc., resided and had their offices in England.

25. The defendant contended that its nerve center was in...