Metropolitan News-Enterprise


Friday, June 1, 2012


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Court Denies En Banc Review in Suit Against Occidental Petroleum

Five Dissenters Argue Jurisdiction Should Be Decided Before Suit Over Rainforest Damage Proceeds




The Ninth U.S. Circuit Court of Appeals yesterday denied en banc review of a ruling allowing an environmental contamination suit against Occidental Petroleum Corporation based on its crude oil processing operations in Peru, to go forward.

In a brief order, the court said a majority of its unrecused active judges had voted to deny Occidental’s petition for rehearing en banc. Judge Carlos Bea recused himself.

But Chief Judge Alex Kozinski dissented, and was joined by Judges Diarmuid O’Scannlain, Consuelo Callahan, Sandra Ikuta, and N. Randy Smith. Kozinski  argued the court should accept review in order to determine the threshold question of whether the district court has jurisdiction to hear the suit.

Three-Judge Panel

The three-judge panel ruled that jurisdiction could be presumed for the purpose of determining whether to stay or dismiss the action under the forum non conveniens doctrine.

The panel also said there was a sufficient showing of jurisdiction to conclude that U.S. District Judge Philip S. Gutierrez of the Central District of California abused his discretion in finding that the action should be litigated in Peru, without imposing any mitigating conditions.  

Several dozen members of an indigenous Peruvian community known as the Achuar filed a complaint in Los Angeles Superior Court alleging that Occidental knowingly utilized unsafe methods for separating crude oil while operating a processing facility within the northern Peruvian rainforest, resulting in the discharge of millions of gallons of toxic oil byproducts into waterways which the Achuar relied upon for drinking, fishing, and bathing.

The plaintiffs asserted causes of action for common law negligence, strict liability, battery, medical monitoring, wrongful death, fraud and misrepresentation, public and private nuisance, trespass, intentional infliction of emotional distress, and violation of California’s Unfair Competition Law. They sought damages, injunctive and declaratory relief, restitution, and disgorgement of profits.

After Occidental removed the action to federal court, the complaint was amended to add Amazon Watch—a nonprofit Montana corporation headquartered in San Francisco—as a plaintiff.

Motion to Dismiss

Occidental then filed its motion to dismiss based on the inconvenience of the forum, which Gutierrez granted without oral argument and without allowing discovery on the adequacy of Peru as an alternative forum.

In December 2010, a three-judge panel reversed and directed the district judge to reconsider the motion. Judge Kim McLane Wardlaw, writing for herself and Senior Judge Mary Schroeder, criticized Gutierrez for accepting Occidental’s stipulation to consent to jurisdiction in Peru “at face value” without “considering the glaring absence of a waiver of the statute of limitations, which Occidental’s own expert suggest[ed] may have run.”

Judge Pamela Ann Rymer—since deceased—dissented in part, saying the district judge did not abuse his discretion in determining that dismissal was appropriate, but should have specifically considered the issue of conditions.

The panel subsequently granted rehearing and amended its opinion, but did not change the result, in June of last year.

Kozinski, in his dissent from the denial of en banc rehearing yesterday, said the court should have considered whether Amazon Watch has Article III standing to bring suit.

‘Hypothetical Jurisdiction’

The case, he said, is one of “hypothetical jurisdiction” in which the court has allowed the case to remain in federal court based on Amazon Watch’s status as a domestic corporation, thus permitting the case to proceed on the merits in district court even if Amazon Watch is found to lack standing.

“If the majority really wants to give the district court first bite at the jurisdictional apple, it can simply remand for the district court to consider that issue, without making any other ruling in the case,” he wrote. “By assuming jurisdiction instead, the panel gives itself license to write a precedential opinion on a difficult forum non conveniens question, based on the hypothesis that Amazon Watch has standing and its interests can be weighed in the  forum non analysis. Federal courts have no authority to opine on other issues when their jurisdiction has been seriously called into question; their obligation is to remain silent on those other issues until the jurisdictional question has been put to rest.”

Wardlaw, concurring in the denial of en banc rehearing, responded:

“Whoa!!! The Chief has put the proverbial cart before the horse. The district court did not touch upon the merits of the claims alleged in the complaint in any manner whatsover, and neither did our panel’s disposition. Nor did we or the district court invoke the doctrine of “hypothetical jurisdiction” in an effort to reach the merits, quite contrary to the dissent’s assertion. Rather, based on the record before the district court, the panel concluded only that the district court abused its discretion when it dismissed this action under the forum non conveniens doctrine.”

 The attorneys who argued the case, Carijano v. Occidental Petroleum Corporation, 08-56187, were Marco Simons of Earthrights International on behalf of the plaintiffs and Daniel P. Collins of Munger Tolles & Olson LLP for the defendant.


Copyright 2012, Metropolitan News Company