De Venezuela v. John Deere Thibodeaux, Inc.

• Decision Date: 13 December 2012
• Docket Number: No. 11–30776.,11–30776.
• Citation: 702 F.3d 794
• Parties: SERVICIOS AZUCAREROS DE VENEZUELA, C.A. and Zvonimir Tolj, Sr., Plaintiffs–Appellants, v. JOHN DEERE THIBODEAUX, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

702 F.3d 794

SERVICIOS AZUCAREROS DE VENEZUELA, C.A. and Zvonimir Tolj, Sr., Plaintiffs–Appellants,

v.JOHN DEERE THIBODEAUX, INC., Defendant–Appellee.

No. 11–30776.

United States Court of Appeals,Fifth Circuit.

Dec. 13, 2012.

Sidney L. Shushan, Jonathan Marks Shushan, Sidney L. Shushan, A.P.L.C., New Orleans, LA, for Plaintiffs–Appellants.

Roy C. Cheatwood, Christopher Matthew Hannan, Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., New Orleans, LA, for Defendant–Appellee.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before DAVIS, DENNIS and HAYNES, Circuit Judges.

DENNIS, Circuit Judge:

This case calls upon us to reaffirm the standing of citizens of foreign states to bring suits against citizens of the United States in federal courts; and to apply our circuit precedents holding that a district court's dismissal of a complaint for failure to follow briefing instructions is reserved for extreme circumstances, where there is a clear record of delay or contumacious conduct, and where lesser sanctions would not serve the best interests of justice.

Plaintiffs–Appellants Servicios Azucareros de Venezuela, C.A., a Venezuela corporation, and its president, Zvonimir Tolj, Sr., a citizen of Venezuela, (collectively, “Servicios”), filed suit in the United States District Court for the Eastern District of Louisiana against Defendant–Appellee, John Deere Thibodaux, Inc. (“John Deere”),¹ a Louisiana corporation, for breach of a contract providing for Servicios's exclusive distributorship of John Deere products in Venezuela. Servicios appeals the district court's judgment, which dismissed the complaint on two grounds: Servicios's alleged lack of prudential standing as the citizen of a foreign state to bring this suit in a U.S. district court and Servicios's failure to follow the court's instructions in filing a supplemental brief. We conclude that neither ground supports the dismissal of Servicios's suit. Accordingly, the district court's order dismissing the complaint is vacated and the case is remanded to it for further proceedings.

I.

Servicios alleges that prior to the events leading up to this lawsuit, it had a contract with Cameco Industries, Inc., making Servicios the exclusive distributor of John Deere products in Venezuela; that in 1996, Cameco changed its name to John Deere Thibodaux; that under the contract, Servicios is entitled to receive, and did for many years receive, a 20% commission on all John Deere harvesters and tractors, and a 25% commission on spare parts, sold in Venezuela. Servicios alleges that the contract was oral but was substantiated with various written instruments over the years. Servicios asserts that through its efforts over the years, it successfully developed the Venezuela market for John Deere products. Servicios alleges that after John Deere changed its name, it wrongfully reduced Servicios's commission from 20% to 10% and, using “economic duress,” eventually attempted to terminate the contract altogether. Servicios alleges that John Deere's breach of contract caused it to suffer over $1.5 million in damages.

Servicios filed the present lawsuit in the United States District Court for the Eastern District of Louisiana pleading alienage jurisdiction and seeking, inter alia, damages for breach of contract. Servicios pleaded claims under Louisiana and, alternatively Venezuela, law. Under Louisiana law, Servicios seeks recovery of damages for breach of contract under the contract law principles of Louisiana Civil Code, articles 1983, 1966–67, 2013–14, and 2024 and, alternatively, unjust enrichment under article 2298 and commissions wrongfully withheld under Louisiana Revised Statutes, sections 51:481–90. Under Venezuelan law, Servicios asserts contract remedies pursuant to Venezuela Civil Code articles 1159, 1212, and 1264, unjust enrichment under article 1184, and moral damages under article 1196.

John Deere filed a 12(b)(6) motion to dismiss, arguing, inter alia, that Servicios did not have standing to sue “under the well-established rule of prudential standing that prohibits non-resident aliens from maintaining suit in American federal courts.” The parties submitted briefing on John Deere's motion. Servicios contended that there is no valid legal basis for the prudential standing requirement John Deere seeks to invoke. Servicios also argued that it should be afforded access to U.S. courts for a variety of reasons, including international comity and the United States's obligations under the United States–Venezuela treaty guaranteeing access to U.S. courts for Venezuelan citizens on the same terms as U.S. citizens if they are “transient or dwelling” in the United States.² Servicios also defended the sufficiency of its complaint on the merits and in the alternative requested an opportunity to amend its complaint.

The district court requested supplemental briefing on two issues “in light of the D.C. Circuit's recent ruling” in Doe v. Exxon Mobil Corp., 654 F.3d 11 (D.C.Cir.2011). The order listed the issues as: “(1) Standing. Ignoring any rule on non-resident alien standing, do the plaintiffs meet the zone-of-interests test for prudential standing? (2) Choice of law. Does Louisiana or Venezuela law govern plaintiffs' claims? See LA. Civ.Code. Ann. arts. 3542–3548.” The district court also ordered that the supplemental briefs could not exceed five pages.

John Deere filed a supplemental brief in response to the court's order essentially restating its prior arguments and arguing that Venezuelan law applies. Servicios filed a motion for leave to file an amended “petition” and a motion for leave to file a supplemental opposition to John Deere's motion. Servicios also filed a motion to amend its complaint to plead prudential standing. Servicios' “supplemental opposition” contained its response to the court's request for supplemental briefing; among other things, Servicios argued that the prudential standing requirement on which John Deere relies has no basis in law and that the D.C. Circuit opinion in Exxon Mobil, the case on which the court requested supplemental briefing, confirms the invalidity of that standing requirement. Servicios also argued that under Louisiana's choice of law rules, Louisiana substantive law governed, and that it met the zone of interests test for prudential standing. However, the brief was twenty-five pages long.

The district court denied Servicios' motion for leave to file the supplemental opposition, referencing the court's previous order requesting supplemental briefing. The district court also granted John Deere's 12(b)(6) motion to dismiss in an order that stated in its entirety:

Before the Court is the defendant John Deere Thibodaux, Inc.'s Rule 12(b)(6) motion to dismiss, which was set for hearing on the papers on July 20, 2011. On July 15, 2011, the Court ordered supplemental briefing on (1) prudential standing and (2) choice of law. Because the plaintiffs failed to respond to the Court's July 15 Order, and further, it appearing to the Court that the motion has merit, IT IS ORDERED: The motion is GRANTED as unopposed.

The court's single footnote stated: “The plaintiffs have not addressed the question of prudential standing as the Court requested, and the issue is therefore deemed waived. The plaintiffs are therefore DISMISSED for lack of standing.”

Servicios then filed a motion to “reopen,” which the district court construed as a Rule 59(e) motion to alter or amend. The district court denied the motion, explaining:

In evaluating the defendant's motion to dismiss, the Court considered extensive briefing, and requested supplemental briefing on two discrete issues. The plaintiffs ignored the order and instead elected to file an excessively long brief which did not address the issues on which the Court ordered supplemental briefing. Because the plaintiffs failed to address issues this Court deemed necessary to the resolution of defendant's motion, the Court treated those issues as waived and granted the defendant's motion on standing grounds.

Meanwhile, on August 24, 2011, Servicios filed a notice of appeal from the district court's July 29, 2010 order dismissing its complaint. On September 1, 2011, the district court denied Servicios's motion for reconsideration. On September 9, 2011, Servicios filed an amended notice of appeal to include the denial of its motion to reconsider.

II.

“Every federal appellate court has a special obligation to satisfy itself not only of its own jurisdiction, but also that of the lower courts in a cause under review, even [if] the parties are prepared to concede it.” Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 95, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (alteration and quotation marks omitted). “And if the record discloses that the lower court was without jurisdiction this court will notice the defect, [even if] the parties make no contention concerning it. When the lower federal court lacks jurisdiction, we have jurisdiction on appeal, not of the merits but merely for the purpose of correcting the error of the lower court in entertaining the suit.” Id. (alterations and quotation marks omitted). Thus, the threshold jurisdictional question is whether Servicios had standing to sue.

Article III, § 2 of the Constitution extends the “judicial Power” of the United States only to “Cases” and “Controversies.” U.S. Const. art. III, § 2. The Supreme Court has “always taken this to mean cases and controversies of the sort traditionally amenable to, and resolved by, the judicial process.” Steel Co., 523 U.S. at 102, 118 S.Ct. 1003. According to Supreme Court doctrine, “[t]he ‘irreducible constitutional minimum of standing’ contains three requirements. First and foremost, there must be alleged (and ultimately proved) an ‘injury in fact’—a harm suffered by the plaintiff that is ‘concrete’ and ‘actual or imminent, not “conjectural” or “hypothetical.” ’ Second, there must be...