Saudi Basic Ind v. Exxon Corp

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit

3-24-2004

Saudi Basic Ind v. Exxon Corp
Precedential or Non-Precedential: Precedential

Docket No. 02-2130

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Recommended Citation
"Saudi Basic Ind v. Exxon Corp" (2004). 2004 Decisions. Paper 882.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/882

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 PRECEDENTIAL Gregory A. Castanias, Esq. (Argued)
William K. Shirey II, Esq.
UNITED STATES Jones Day
COURT OF APPEALS 51 Louisiana Avenue, N.W.
FOR THE THIRD CIRCUIT Washington, D.C. 20001

Kenneth R. Adamo, Esq.
Michael W. Vary, Esq.
No. 02-2130 Leozino Agozzino, Esq.
Jones Day
North Point
901 Lakeside Avenue
EXXON MOBIL CORPORATION; Cleveland, OH 44114
EXXON CHEMICAL ARABIA, INC.;
MOBIL YANBU PETROCHEMICAL Attorneys for Appellant
COMPANY, INC.
Elizabeth J. Sher, Esq.
v. Pitney, Hardin, Kipp & Szuch
P.O. Box 1945
SAUDI BASIC INDUSTRIES Morristown, NJ 07962
CORPORATION
James W. Quinn, Esq. (Argued)
Appellant David J. Lender, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue, 27 th Floor
New York, NY 10153
On Appeal from the
United States District Court Andrew S. Pollis, Esq.
for the District of New Jersey David J. Michalski, Esq.
D.C. Civil Action No. 00-cv-03841 Hahn, Loeser & Parks
(Honorable William H. Walls) 3300 BP America Building
200 Public Square
Cleveland, OH 44114
Argued December 9, 2003
K.C. Johnson, Esq.
Exxon Mobil Corporation
800 Bell Street, Suite 1686J
Before: AMBRO, FUENTES and Houston, TX 77002
CHERTOFF, Circuit Judges
Attorneys for Appellees
(Filed March 24, 2004)
 agreements with Yanbu and ECAI. Later
that same month ExxonMobil, Yanbu, and
OPINION OF THE COURT ECAI countersued SABIC in the United
States District Court for the District of
New Jersey (Civil Action No. 00-3841),
seeking the converse declaratory
AM BRO, Circuit Judge
judgment—that SABIC had overcharged
Saudi Basic Industries Corporation the joint venture entities for the sublicense
(“SABIC”) appeals from the District in violation of the joint venture
Court’s order denying its motion to agreements.
dismiss, based on sovereign immunity, the
In January 2002, Yanbu and ECAI
claims of two ExxonMobil subsidiaries,
filed an answer to SABIC’s state court
Mobil Yanbu Petrochemical Company
complaint, asserting as counterclaims the
(“Yanbu”) and Exxon Chemical Arabia,
same claims they had filed in their federal
Inc. (“ECAI”). We do not reach the
court complaint. In March 2003, after a
foreign sovereign immunity question,
two-week trial in the Delaware Superior
however, because we determine that the
Court, the jury returned a $416,880,764
Rooker-Feldman doctrine bars federal
verdict against SABIC in favor of
subject matter jurisdiction over the
ExxonM obil. SABIC has appealed the
subsidiaries’ claims, which have been
verdict, which is currently pending in the
already decided in state court.
Delaware Supreme Court.
I.
Prior to the state court trial, SABIC
Facts and Procedural Posture moved to dismiss ExxonMobil’s federal
court action, asserting foreign sovereign
In 1980, SABIC and the Exxon
immunity. The District Court denied the
(now ExxonMobil) subsidiaries formed
motion on April 3, 2002. Saudi Basic
two joint venture entities. One, called
Indus. Corp. v. ExxonMobil Corp., 194 F.
Yanpet, was the joint venture between
Supp. 2d 378 (D.N.J. 2002). Though the
SABIC and Yanbu, and another, called
order also addressed other issues in that
Kemya, was the joint venture between
action, SABIC appeals only from the
SABIC and ECAI. Two decades later, the
sovereign immunity decision.
parties began to dispute the propriety of
royalties SABIC had charged to the joint II.
venture entities for the sublicense to a
Jurisdiction
polyethylene manufacturing method called
the Unipol® process. In September 2000 A. Appellate Jurisdiction
SABIC sued Yanbu and ECAI in the
We generally do not have
Delaware Superior Court seeking a
jurisdiction to review interlocutory
declaratory judgment that these royalty
decisions such as the denial of a motion to
charges did not violate the joint venture

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dismiss. Under the collateral order 2002)). We focused at oral argument on
doctrine,1 however, we have recognized whether federal subject matter jurisdiction
exceptions to this rule. One well- over this case fails under the Rooker-
established exception is for orders denying Feldman doctrine because ExxonM obil’s
motions to dismiss for reasons of claims have already been litigated in state
immunity. See, e.g., In re Montgomery court. Aided by post-argument letter
County, 215 F.3d at 373 (citing Nixon v. briefs submitted by the parties, we
Fitzgerald, 457 U.S. 731 (1982)). Thus, conclude the answer is yes.
we have appellate jurisdiction over the
The Rooker-Feldman doctrine,
District Court’s denial of SABIC’s motion
derived from two Supreme Court
to dismiss based on sovereign immunity.
cases—Rooker v. Fidelity Trust Co., 263
U.S. 413 (1923), and District of Columbia
B. Rooker-Feldman Doctrine Court of Appeals v. Feldman, 460 U.S.
462 (1983)—prevents lower federal courts
D e te rm ining that ap pella te
from “sit[ting] in direct review of the
jurisdiction is proper in a case does not
decisions of a state tribunal.” Gulla v.
end our jurisdictional inquiry. We have a
North Strabane Twp., 146 F.3d 168, 171
“continuing obligation to sua sponte raise
(3d Cir. 1998). Because Congress has
the issue of subject matter jurisdiction
conferred jurisdiction to review a state
when it is in question.” Desi’s Pizza, Inc.
court’s decision only on the Supreme
v. City of Wilkes-Barre, 321 F.3d 411, 420
Court, see 28 U.S.C. § 1257, lower federal
(3d Cir. 2003) (citing Bracken v.
courts lack the power to decide claims in
Matgouranis, 296 F.3d 160, 162 (3d Cir.
which “the relief requested . . . requires
determining that the state court’s decision
is wrong or . . . void[ing] the state court’s
1
The collateral order doctrine excepts a ruling.” Desi’s Pizza, 321 F.3d at 419
“narrow range” of interlocutory decisions (quoting FOCUS v. Allegheny County
from the general rule that only final orders Court of Common Pleas, 75 F.3d 834, 840
are appealable. In re M ontgomery County, (3d Cir. 1996)). As we recently explained,
215 F.3d 367, 373 (3d Cir. 2000) (citing “a claim is barred by Rooker-Feldman
Cohen v. Beneficial Indus. Loan Corp., under two circumstances: first, if the claim
337 U.S. 541, 545–46 (1949)). To be an was ‘actually litigated’ in state court prior
appealable collateral order, it must to the filing of the federal action or,
“conclusively determine the disputed second, if the claim is ‘inextricably
issue, the issue must be completely intertwined with [the] state adjudication.’”
separate from the merits of the action, and Desi’s Pizza, 321 F.3d at 419 (quoting
the decision must be effectively Parkview Assocs. P’ship v. City of
unreviewable on appeal from a final Lebanon, 225 F.3d 321, 325 (3d Cir.
judgment.” Id. (citing Coopers & Lybrand 2000)).
v. Livesay, 437 U.S. 463, 468 (1978)).

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 The state level decision need not be consistently looked to the substance of the
of its highest court. The Rooker-Feldman state court’s judgment compared to the
doctrine applies equally to final decisions plaintiff’s claims in the federal action. See
of lower state courts. FOCUS, 75 F.3d at Parkview Assocs. P’ship, 225 F.3d at
840. 325–36; Gulla, 146 F.3d at 173. Filing the
latter before the state court judgment does
Here there is no dispute that
not escape Rooker-Feldman’s grasp. The
ExxonMobil’s claims are identical to the
only timing relevant is whether the state
claims upon which the Delaware Superior
judgment precedes a federal judgment on
Court reached a final judgment. Thus,
the same claims. Desi’s Pizza itself is
though our Court takes a narrow view of
illustrative because there the state court
the Rooker-Feldman doctrine, Parkview
reached final judgment after the plaintiff
Assocs. P’ship, 225 F.3d at 326, litigating
filed claims in federal court. Yet we
ExxonMobil’s claims to final judgment in
decided that the plaintiff’s claims were not
state court presents the “paradigm situation
“actually litigated” because neither its state
in which Rooker-Feldman precludes a
court pleadings nor the state court’s
federal district court from proceeding.”
judgment discussed or referenced the
E.B. v. Verniero, 119 F.3d 1077, 1090–91
claims it filed in federal court. If in Desi’s
(3d Cir. 1997) (describing a case in which
Pizza we had intended to adopt a new
the federal court plaintiff sought an
requirement that the state court must reach
injunction directing that a state court order
a final judgment prior to the filing of the
not be carried out).
federal action in order for the “actually
ExxonM obil argues that the litigated” trigger to apply, we had a full
“actually litigated” circumstance does not opportunity to do so. Furthermore, were
trigger Rooker-Feldman because the we to find that the Rooker-Feldman
March 2003 state court judgment was not “actually litigated” trigger did not apply to
reached prior to ExxonMobil’s filing of federal actions filed prior to the state
the federal action in August 2000. It cites court’s final judgment, we would be
to Desi’s Pizza, in which we said Rooker- encouraging parties to maintain federal
Feldman bars a claim “if the claim was actions as “insurance policies” while their
‘actually litigated’ in state court prior to state court claims were pending. This
the filing of the federal action,” 321 F.3d defe ats an “elemen tary principle ”
at 419. But we do not read this language underpinning the Rooker-Feld m an
as imposing a new requirement that, in doctrine—“that a party’s recourse for an
order for the “actually litigated” trigger to adverse decision in state court is an appeal
apply, the plaintiff’s federal claims must to the appropriate state appellate court, and
be filed after the state claims reach a final ultimately the Supreme Court under §
judgment. In deciding whether a claim 1257, not a separate action in federal
was “actually litigated” in state court for court.” Parkview Assocs. P’ship, 225 F.3d
Rooker-Feldman purposes, we have at 324.

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 ExxonM obil also argues that 225 F.3d at 327. We simply note that our
Rooker-Feldman should not apply in this case presents an equally clear application
case because it is not a party to the action of the “in extrica bly intertw ined”
in Delaware state court, in which only its circumstance, which exists when “federal
subsidiaries, Yanbu and ECAI, are relief can only be predicated upon a
defendants. Indeed, we have consistently conviction that the state court was wrong,”
(and recently) held that Rooker-Feldman id. at 325, or when “the federal court
does not bar claims of plaintiffs who were must . . . take action that would render [the
not parties to the state court proceeding. state court’s] judgment ineffectual,”
See Nat’l R.R. Passenger Corp. v. Pa. Pub. FOCUS, 75 F.3d at 840. By its own
Util. Comm’n, 342 F.3d 242, 257 (3d Cir. admission, ExxonMobil seeks to maintain
2003); Marks v. Stinson, 19 F.3d 873, 886 its federal action as an “insurance policy”
n.11 (3d Cir. 1994). But we have also in order to relitigate the overcharge issue if
noted that this limiting principle of the SABIC prevails in its efforts to overturn
Rooker-Feldman doctrine “has a close the state court verdict in favor of
affinity to the principles embodied in the ExxonM obil. If that were to happen,
legal concepts of claim and issue ExxonMobil’s federal action would
preclusion.” Valenti v. Mitchell, 962 F.2d squarely be seeking to invalidate a final
288, 297 (3d Cir. 1992). Claims and judgment of the state court, the very
issues decided against an entity bind also situation contemplated by Rooker-
its parties in privity, including wholly- Feldman’s “inextricably intertwined” bar.
owned subsidiaries. Lubrizol Corp. v.
Exxon Corp., 929 F.2d 960, 966 (3d Cir.
* * * * *
1991). Underscoring this common sense
privity principle is the fact that Because ExxonMobil’s federal
ExxonMobil’s interest in its federal claims claims were identical to the claims in
is identical to its subsidiaries’ interest in which the Delaware Superior Court
their state court claims, because its right to reached a final judgment, they are barred
recover is derivative of its subsidiaries’ by the Rooker-Feldman doctrine. Even
right to recover. Indeed, both Yanbu and within our Court’s narrow confines for
ECAI are co-plaintiffs with ExxonMobil Rooker-Feldman, this case is easily
in the federal action. cabined. We cannot imagine a more
classic invocation of the Rooker-Feldman
As ExxonMobil’s federal claims
jurisdictional bar than to preclude a party
were “actually litigated” in state court, we
from maintaining a federal action as an
need not analyze whether, under the
“insurance policy” in case the state trial
alternative prong of the Rooker-Feldman
court decision in that party’s favor is
doctrine, they were “inextricably
overturned by an appellate state court. We
intertwined with a previous state court
therefore vacate those aspects of the
adjudication.” Parkview Assocs. P’ship,
District Court’s order addressing Civil

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Action No. 00-3841, the subject of this
appeal, and remand with instructions to
dismiss that action for lack of subject
matter jurisdiction.

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