Case: 09-20084 Document: 00511375631 Page: 1 Date Filed: 02/08/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
February 8, 2011
No. 09-20084 Lyle W. Cayce
Clerk
SPECTRUM STORES INC; MAJOR OIL COMPANY INC; WC RICE OIL
COMPANY; FAST BREAK FOODS LLC
Plaintiffs - Appellants
v.
CITGO PETROLEUM CORPORATION; SAUDI ARABIAN OIL COMPANY,
doing business as Saudi Aramco; SAUDI PETROLEUM INTERNATIONAL INC;
ARAMCO SERVICES COMPANY; SAUDI REFINING INC; MOTIVA
ENTERPRISES LLC; PETROLEOS DE VENEZUELA SA; PDV AMERICA INC;
PDV MIDWEST REFINING LLC; PDV HOLDING INC; OPEN JOINT STOCK
COMPANY, “Oil Company Lukoil”, also known as Lukoil Holings, also known
as Lukoil OAO, also known as OAO Lukoil; LUKOIL AMERICAS
C O R P O R A T IO N ; G E T T Y P E T R O L E U M M A R K E T IN G ; L U K O IL
INTERNATIONAL TRADING AND SUPPLY COMPANY; LUKOIL PAN
AMERICAS LLC
Defendants - Appellees
SPECTRUM STORES INC; MAJOR OIL COMPANY INC; WC RICE OIL
COMPANY INC
Plaintiffs - Appellants
v.
CITGO PETROLEUM CORPORATION
Defendant - Appellee
FAST BREAK FOODS LLC, on behalf of itself and all others similarly situated
Case: 09-20084 Document: 00511375631 Page: 2 Date Filed: 02/08/2011
No. 09-20084
Plaintiff - Appellant
v.
SAUDI ARABIAN OIL COMPANY, doing business as Saudi Aramco; SAUDI
PETROLEUM INTERNATIONAL INC; ARAMCO SERVICES COMPANY;
SAUDI REFINING INC; MOTIVA ENTERPRISES LLC; PETROLEOS DE
VEN EZU ELA SA; PDV AM E R IC A IN C ; C IT G O P E T R O L E U M
CORPORATION; PDV MIDWEST REFINING LLC; PDV HOLDING INC
Defendants - Appellees
GREEN OIL CO, on behalf of itself and all others similarly situated
Plaintiff - Appellant
v.
SAUDI ARABIAN OIL COMPANY, doing business as Saudi Aramco; SAUDI
PETROLEUM INTERNATIONAL INC; ARAMCO SERVICES COMPANY;
SAUDI REFINING INC; MOTIVA ENTERPRISES LLC; PETROLEOS DE
V E N E ZU E L A SA; PD V AM ERICA IN C; C IT G O P E T R O L E U M
CORPORATION; PDV HOLDING INC; PDV MIDWEST REFINING LLC;
OPEN JOINT STOCK COMPANY, “Oil Company Lukoil” also known as Lukoil
Holdings, also known as Lukoil OAO, also known as OAO Lukoil; LUKOIL
AMERICAS CORPORATION; GETTY PETROLEUM MARKETING INC;
LUKOIL PAN AMERICAS LLC
Defendants - Appellees
COUNTRYWIDE PETROLEUM CO; FAST BREAK FOODS, LLC
Plaintiffs - Appellants
v.
PETROLEOS DE VENEZUELA SA; PDV AMERICA INC; CITGO
PETROLEUM CORPORATION; PDV HOLDING INC; PDV MIDWEST
REFINING LLC
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Defendants - Appellees
FAST BREAK FOODS LLC
Plaintiff - Appellant
v.
CENTRAL OHIO ENERGY INC, on behalf of itself and all others similarly
situated; FAST BREAK FOODS LLC
Plaintiffs - Appellants
v.
SAUDI ARABIAN OIL COMPANY, doing business as Saudi Aramco; SAUDI
PETROLEUM INTERNATIONAL INC; ARAMCO SERVICES COMPANY;
SAUDI REFINING INC; MOTIVA ENTERPRISES LLC; PETROLEOS DE
VEN E ZU E L A SA ; P D V A M E R IC A IN C; CITG O PETRO LEU M
CORPORATION; PDV HOLDING INC; PDV MIDWEST REFINING LLC;
OPEN JOINT STOCK COMPANY, “Oil Company Lukoil”, also known as Lukoil
Holdings, also known as Lukoil OAO, also known as OAO Lukoil; LUKOIL
AMERICAS CORPORATION; LUKOIL PAN AMERICAS LLC; GETTY
PETROLEUM MARKETING INC
Defendants - Appellees
Appeals from the United States District Court
for the Southern District of Texas
Before JOLLY, WIENER, and STEWART, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
This case involves two class actions brought by gasoline retailers against
oil production companies (most of which are owned in whole or in part by OPEC
member nations), alleging antitrust violations. After consolidation of the suits
3
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for disposition of pre-trial matters, the oil production companies moved to
dismiss. The district court granted dismissal on the ground that disposing of the
case on the merits would require the court to pass judgment on the actions of
other sovereign nations, which is proscribed by the act of state doctrine.
Alternatively, the district court held that dismissal was also warranted by the
political question doctrine. The gasoline retailers appealed.
Because the political question doctrine is jurisdictional, we address it first.
When we do so, we discern that the complaints before us effectively challenge
the structure of OPEC and its relation to the worldwide production of petroleum.
Convinced that these matters deeply implicate concerns of foreign and defense
policy, concerns that constitutionally belong in the executive and legislative
departments, we conclude that we lack jurisdiction to adjudicate the claims. We
hold alternatively that the complaints seek a remedy that is barred by the act
of state doctrine, that is, an order and judgment that would interfere with
sovereign nations’ control over their own natural resources. Accordingly, we
affirm the judgment dismissing the complaints.
I.
Several U.S. gasoline retailers and other purchasers of petroleum products
allege Sherman Act and Clayton Act violations by oil production companies. The
Spectrum Appellants1 sued Citgo Petroleum Corporation (Citgo); the
Consolidated Appellants2 sued the Saudi Aramco Appellees,3 the Citgo
1
We use “Spectrum Appellants” to refer to: Spectrum Stores, Inc., Major Oil Co., Inc.,
W.C. Rice Oil Co., Inc., and Abston Petroleum, Inc.
2
We use “Consolidated Appellants” to refer to: Fast Break Foods, LLC, S-Mart
Petroleum Inc., Green Oil Co., Countrywide Petroleum Co., and Central Ohio Energy, Inc.
3
We use “Saudi Aramco Appellees” to refer to: Saudi Arabian Oil Company (d/b/a Saudi
Aramco), Saudi Petroleum International, Inc., Aramco Services Company, and Saudi Refining,
Inc. The Saudi Aramco Appellees are owned by Saudi Arabia. Saudi Aramco is the national
oil company of Saudi Arabia, and Saudi Petroleum International, Aramco Services, and Saudi
Refining are wholly owned subsidiaries of Saudi Aramco.
4
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Appellees,4 the Lukoil Appellees,5 and Motiva Enterprises, LLC (Motiva).6 Five
suits from different districts were consolidated in the Southern District of Texas
for disposition of pre-trial matters. At the time of the appealed-from decision,
only two live complaints were before the district court.7 The Spectrum
Appellants decided to stand on their original complaint, while the Consolidated
Appellants chose to file an amended, consolidated class-action complaint in place
of their individual complaints.
A.
The claims raised by Appellants challenge the traditional structure of
international energy policy. The global economy is driven by petroleum-based
products, and countries with bountiful petroleum resources have attempted to
secure the best market prices for their crude oil. With this goal in mind, several
oil-rich nations formed the Organization of Petroleum Exporting Countries
4
We use “Citgo Appellees” to refer to: Petroleos de Venezuela S.A. (“PDVSA” or
“PdVSA”), PDV America, Inc., Citgo, PDV Holding, Inc., and PDV Midwest Refining, LLC.
The Citgo Appellees are owned by Venezuela. PDVSA is the national oil company of
Venezuela, and PDV America, Citgo, PDV Holding, and PDV Midwest Refining are wholly
owned subsidiaries of PDVSA. Saudi Refining holds half of the shares of Motiva, while Shell
Oil Corporation owns the other half.
5
We use “Lukoil Appellees” to refer to: Open Joint Stock Company (a/k/a Oil Company
Lukoil, a/k/a OAO Lukoil, a/k/a/ Lukoil OAO, a/k/a Lukoil Holdings), Lukoil Americas
Corporation, Lukoil International Trading and Supply Company (LITASCO), Lukoil Pan
Americas LLC, and Getty Petroleum Marketing, Inc. The Lukoil Appellees are privately
owned companies, and Lukoil Americas, LITASCO, Lukoil Pan Americas, and Getty Petroleum
are wholly owned subsidiaries of Lukoil.
6
Not all of the named defendants were served with process; those who were not are not
parties to this appeal. The defendants who were served were: Aramco Services Company,
Saudi Petroleum International, Inc., Saudi Refining, Inc., Motiva, PDV America, Inc., Citgo,
PDV Holding, Inc., PDV Midwest Refining, LLC, Lukoil Americas Corporation, Lukoil Pan
Americas LLC, and Getty Petroleum Marketing, Inc. The district court’s dismissal affected
all named defendants, not just those who were served.
7
A third complaint was before the district court, but it is not relevant to this appeal.
5
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(“OPEC”) in the 1960s.8 OPEC’s official mission is “to coordinate and unify the
petroleum policies of its Member Countries and ensure the stabilization of oil
markets in order to secure an efficient, economic and regular supply of
petroleum to consumers, a steady income to producers and a fair return on
capital for those investing in the petroleum industry.” See Organization of the
Petroleum Exporting Countries, OPEC: Our Mission,
http://www.opec.org/opec_web/en/about_us/23.htm (last visited December 30,
2010).
In the years since OPEC’s inception, its members have developed
nationally owned oil production companies, and these companies have formed
and acquired subsidiaries, many of which operate within the United States.
OPEC member nations attend periodic meetings at the organization’s
headquarters in Vienna, Austria to formulate policy. In recent years, some
privately owned corporations have begun attending OPEC meetings. The
Appellants in this case allege that the national oil companies, as well as their
subsidiaries, have conspired with OPEC member nations to fix prices of crude
oil and refined petroleum products (“RPPs”) in the United States, primarily by
limiting crude-oil production—that is, by controlling the spigot.
1.
The Spectrum Appellants accuse Citgo of conspiring with OPEC member
nations “to raise, fix, and stabilize the price of gasoline and other oil-based
products in the United States.” Citgo is wholly owned by Venezuela, through
PDVSA, the national oil company of Venezuela. The Spectrum Complaint
asserts three counts against Citgo under § 1 of the Sherman Act, 15 U.S.C. § 1,
8
The OPEC member nations currently include Algeria, Angola, Ecuador, Iran, Iraq,
Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. See
Organization of the Petroleum Exporting Countries, OPEC: Member Countries,
http://www.opec.org/opec_web/en/about_us/25.htm (last visited December 30, 2010).
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and § 4 of the Clayton Act, 15 U.S.C. § 15.9 The first count seeks to hold Citgo
liable for directly agreeing to participate in “OPEC’s price-fixing conspiracy to
sell oil-based products at anti-competitive prices in the United States.” The
other two counts attempt to hold Citgo liable for agreeing to assist Venezuela
and its parent corporations with their participation in OPEC. The Spectrum
Complaint seeks actual, future, punitive, and treble damages; disgorgement of
profits; injunctive relief against continued price-fixing; and costs of suit under
the Clayton Act, 15 U.S.C. §§ 15, 26.
The Spectrum Complaint alleges that OPEC member nations have agreed
to adjust or cap production of oil on numerous occasions in order to maintain oil
prices within an agreed price range. The Spectrum Complaint also alleges that
the conspiracy is commercial in nature, rather than political or sovereign, as
evidenced by the fact that OPEC member nations have acquired refineries and
distribution facilities in key markets, including the United States.
2.
The Consolidated Appellants accuse all the Appellees of “participat[ing]
in a conspiracy to fix, raise, maintain and stabilize the prices of refined
petroleum products sold . . . in the United States.” The Consolidated Appellants
contend that this constitutes a per se violation of § 1 of the Sherman Act and § 4
of the Clayton Act. They also seek relief under § 16 of the Clayton Act, including
actual and treble damages and costs of suit, as well as injunctive
relief—including the foreign-based companies’ divestiture of their U.S.
subsidiaries. 15 U.S.C. § 26.
The Consolidated Complaint alleges that the price-fixing conspiracy has
been implemented principally through (1) agreements between Appellees to
9
Section 4 of the Clayton Act “provides the private right of action to enforce the
Sherman Act.” Dillard v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 961 F.2d 1148, 1159
(5th Cir. 1992).
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restrain the output of crude oil, and (2) agreements between Appellees to restrict
operating capacity of crude-oil refineries, some of which are located within the
United States. The Consolidated Complaint is more circumspect than the
Spectrum Complaint in its discussion of OPEC and its members, declining to
directly name the organization or its members as coconspirators. However, the
Consolidated Complaint gives a detailed description of the formation and
function of OPEC as background for its allegations as to the alleged conspiracy,
and it frequently refers to OPEC meetings and statements in a list of actions
that purportedly demonstrate knowing participation in the conspiracy by
Appellees.
B.
The Appellees moved to dismiss both complaints on several grounds.
Primarily, they argued that dismissal was proper under Federal Rule of Civil
Procedure 12(b)(1), because the claims pose nonjusticiable political questions,
and under Rule 12(b)(6), because Appellants failed to state a claim for relief
under the act of state doctrine.10
1.
The district court granted Appellees’ motion to dismiss both complaints on
the act of state and political question grounds. It considered both motions under
Rule 12(b)(6). Generally, the district court characterized the complaints as
challenging “the decisions of sovereign states to restrict the production of crude
oil located within their own territories.” In re Refined Petroleum Prods.
10
The district court requested that the initial motion to dismiss be limited to the
following doctrines common to both complaints: act of state; political question; international
comity; indirect purchaser; and Noerr–Pennington. The parties did not raise arguments
regarding possible immunity under the Foreign Sovereign Immunities Act (FSIA), and they
did not make arguments based on Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The
district court expressly did not rule on the international comity, indirect purchaser, or
Noerr–Pennington doctrines. See In re Refined Petroleum Prods. Antitrust Litig., 649 F. Supp.
2d 572, 598 (S.D. Tex. 2009).
8
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Antitrust Litig., 649 F. Supp. 2d 572, 597 (S.D. Tex. 2009). According to the
district court, the Spectrum Complaint alleges that Citgo “facilitated, enabled,
and provided direct assistance to the [OPEC] cartel’s price-fixing scheme by (1)
purchasing crude oil produced by foreign sovereigns, (2) providing technical
assistance to OPEC in the form of information about United States markets, and
(3) allowing its executives to participate in OPEC’s meetings and strategic
planning efforts.” Id. at 585 (internal quotation marks and modifications
omitted). However, as the Spectrum Complaint “alleges that the price-fixing at
issue is caused by the production decisions of the sovereign state members of the
conspiracy,” the district court concluded that adjudication of the claims raised
in the Spectrum Complaint would require the court to pass judgment on the
legality of crude-oil production decisions made by foreign sovereigns. Id.
As to the Consolidated Complaint, the district court noted that unlike the
Spectrum Complaint—which expressly refers to OPEC and its members as
coconspirators in the alleged conspiracy—the Consolidated Complaint is
“artfully worded to limit reference to the actions performed by the sovereign
members of the conspiracy . . . [and] minimizes its description of the acts
performed by the conspiracy’s sovereign members.” Id. at 586. However, the
district court ultimately concluded that the specific factual allegations of the
Consolidated Complaint also show that the alleged price-fixing is caused by the
production decisions of the sovereign members of the conspiracy, and therefore
the pleaded conspiracy “consists of agreements entered by foreign sovereign
states to limit their production of crude oil” and “the actions attributed to the
named defendants are actions that merely facilitate, enable, and assist the
foreign sovereign state members of the conspiracy.” Id. at 587.
Accordingly, the district court held that both complaints required the court
to sit in judgment on the decisions and agreements reached by the foreign
sovereigns regarding the production of crude oil within their own territories, an
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inquiry squarely barred by the act of state doctrine. On the question whether
the complaints pose a nonjusticiable political question, the district court found
that “the adjudication of claims that require the court to determine the legality
of crude oil production decisions of foreign sovereigns would express a lack of
respect for the Executive Branch because of its longstanding foreign policy that
issues relating to crude oil production by foreign sovereigns be resolved through
intergovernmental negotiation.” Id. at 597. The district court noted in
particular that the United States has never sought antitrust sanctions against
any oil-producing countries.11
2.
The parties vigorously contest whether the district court correctly
portrayed the factual allegations of the complaints. As noted above, the district
court read both complaints as “challeng[ing] the decisions of sovereign states to
restrict the production of crude oil located within their own territories.” Id.
According to the district court, the actions attributed to Appellees “merely
facilitate, enable, and assist the foreign sovereign state members of the
conspiracy.”
We agree with the district court that both the Spectrum and Consolidated
Appellants’ complaints allege an overarching conspiracy between OPEC member
nations to fix the price of crude oil and RPPs in the United States. Both
11
We also have before us thirteen amicus briefs in support of Appellees and affirmance.
The following foreign sovereigns submitted amicus curiae briefs: Algeria; the Bolivarian
Republic of Venezuela; the Federal Republic of Nigeria; the Kingdom of Saudi Arabia; the
Republic of Indonesia; the Republic of Iraq; the Russian Federation; the State of Kuwait; the
State of Qatar; the United Arab Emirates; and the United Mexican States. The U.S. Chamber
of Commerce also submitted an amicus brief in support of Appellees and affirmance, as did the
U.S. Departments of State, Treasury, Energy, and Justice. These amicus briefs consistently
emphasize that each nation views its natural resources as exclusively under its sovereign
control. Additionally, the amici warn that a ruling on the merits of these suits would
undermine the longstanding practice of using diplomatic efforts to resolve issues involving
energy policy.
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complaints allege that this conspiracy is carried out through oil production
companies (most of which are wholly owned by sovereign nations) and their
subsidiaries. The Spectrum Complaint focuses solely on crude-oil production
limits as the method used to implement the alleged price-fixing conspiracy; the
Consolidated Complaint, in addition to alleging a production conspiracy, includes
some allegations that refining decisions were also used to implement the
conspiracy. The Consolidated Complaint names Lukoil, a privately traded
Russian oil company and its subsidiaries, and Motiva, owned half by Saudi
Refining and half by Shell Oil Corporation, in addition to national oil companies
and their wholly owned subsidiaries.
The Consolidated Appellants argue that the district court erred by
characterizing their complaint as alleging a conspiracy among sovereign nations
to fix prices via production limits, with the role of the named defendants limited
to facilitation. They argue that the Consolidated Complaint alleges that
commercial corporations, rather than governments, have taken over the
production of crude oil, and that the district court failed to view the complaint
in the light most favorable to them by ignoring these allegations. However, we
agree with the district court that the core of the alleged conspiracy, as is true of
the Spectrum Complaint, consists of agreements entered into by foreign
sovereign states to limit production of crude oil. While the Consolidated
C om plaint does, in som e places, alleg e th at oil p rod u ctio n
companies—specifically, PDVSA, Saudi Aramco, Lukoil, and their
subsidiaries—make the ultimate decisions about the volume of crude oil
produced, the Complaint is internally inconsistent on this point, as the district
court noted.12 The Consolidated Complaint describes the history of OPEC,
12
Although the Consolidated Complaint attempts to omit any reference to nations
controlling production decisions, it fails to do so completely; this leaves the Complaint infected
with inconsistent references to countries making production decisions and participating in the
11
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including its formation and expansion, as background for the conspiracy
allegations. We are simply unable to ignore the involvement of foreign nations
in the conspiracy as pleaded in the Consolidated Complaint.
Moreover, the Consolidated Appellants have failed to allege an
independent conspiracy based on refining decisions. The Complaint asserts that
Appellees “and their subsidiaries joined other co-conspirators and adopted a
common formula for crude oil pricing and RPP pricing that was based on target
profit margins on the sale of RPPs in the United States,” and that one method
of implementing this pricing formula was to “restrict[ ] the operating capacities
of their crude oil refineries in order to increase the price of RPPs.” Beyond this
conclusory language, the Consolidated Complaint contains no further details
about the refining segment of the alleged conspiracy. “[A] conclusory allegation
of agreement at some unidentified point does not supply facts adequate to show
illegality.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 557 (2007). The
Consolidated Complaint thus fails plausibly to allege a conspiracy based on
refining agreements independent from the broader production-oriented
conspiracy.
We thus agree with the district court’s characterization of both complaints.
Appellants allege an overarching conspiracy between sovereign nations to fix
prices of crude oil and RPPs by limiting the production of crude oil. Although
they allege that this primary conspiracy was facilitated through refining
conspiracy. For example, as evidentiary support for the proposition that Saudi Aramco,
PDVSA, and Lukoil agreed with other coconspirators to decrease production of crude oil, the
Consolidated Complaint offers the following: “Together with promises from non-OPEC nations
Russia, Oman and Mexico, world oil producers have pledged to cut world wide production by
approximately 3.1 million [barrels per day]” (emphasis added). The Consolidated Complaint
further alleges that “Citgo has provided PDVSA and defendants with information, including
data on the United States oil market, and technical services that greatly assist in the efforts
of PdVSA and Venezuela to fix the price of oil and RPPs at anticompetitive levels.” Attempting
to establish agreements about production cuts, the Complaint also repeatedly quotes Rafael
Ramirez Carreno, who is both President of PDVSA and Venezuela’s Oil Minister.
12
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decisions, any allegations regarding price-fixing through manipulation of
refining capacity are secondary to the overarching production-based conspiracy.
C.
This court has jurisdiction over Appellants’ timely appeal under 28 U.S.C.
§ 1291. The district court dismissed Appellants’ claims on both act of state and
political question grounds for failure to state a claim under Rule 12(b)(6). As
discussed infra, we view a dismissal on grounds that this case presents a
nonjusticiable political question as a Rule 12(b)(1) dismissal for lack of subject
matter jurisdiction, while the act of state ruling is a Rule 12(b)(6) dismissal for
failure to state a claim. This interpretation does not alter our standard of
review, which is de novo on both grounds for dismissal. Lane v. Halliburton, 529
F.3d 548, 557 (5th Cir. 2008). In undertaking this review, “we take the well-pled
factual allegations of the complaint as true and view them in the light most
favorable to the plaintiff.” Id.
II.
For the reasons that follow, we hold that adjudication of Appellants’ claims
is jurisdictionally barred by the political question doctrine. While our political
question analysis disposes of the case, it also reveals why Appellants’ suit fails
to state a claim under the act of state doctrine.
A.
We first address whether this suit is prohibited by application of the
political question doctrine. Reviewing the district court’s decision de novo, we
treat the Appellees’ original motion to dismiss on political question grounds as
a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. F ED. R.
C IV. P. 12(b)(1). We do so because “[t]he concept of justiciability,” as embodied
in the political question doctrine, “expresses the jurisdictional limitations
imposed upon federal courts by the ‘case or controversy’ requirement of Art[icle]
III.” Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208, 215 (1974).
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See also Massachusetts v. EPA, 549 U.S. 497, 516 (2007) (noting, in the light of
the fact that “Article III of the Constitution limits federal-court jurisdiction to
‘Cases’ and ‘Controversies,’” that it is “familiar learning that no justiciable
‘controversy’ exists when parties seek adjudication of a political question”);
Baker v. Carr, 369 U.S. 186, 198 (1962) (“Our conclusion that this cause presents
no nonjusticiable ‘political question’ settles the only possible doubt that it is a
case or controversy.”); Lane v. Halliburton, 529 F.3d 548, 557 (5th Cir. 2008) (“A
declination of jurisdiction under the doctrine presupposes that another branch
of government is both capable of and better suited for resolving the ‘political’
question.”) (emphasis added); Corrie v. Caterpillar, Inc., 503 F.3d 974, 982 (9th
Cir. 2007) (“We hold that if a case presents a political question, we lack subject
matter jurisdiction to decide that question.”); Schneider v. Kissinger, 412 F.3d
190, 193 (D.C. Cir. 2005) (“The principle that the courts lack jurisdiction over
political decisions that are by their nature committed to the political branches
to the exclusion of the judiciary is as old as the fundamental principle of judicial
review.”) (internal quotation marks omitted).
In contrast to political question claims, and “[u]nlike a claim of sovereign
immunity, which merely raises a jurisdictional defense,” the Supreme Court has
stated that “the act of state doctrine provides foreign states with a substantive
defense on the merits.” Republic of Austria v. Altmann, 541 U.S. 677, 700
(2004). See also Samantar v. Yousuf, 130 S.Ct. 2278, 2290 (2010). Because the
parties’ political question arguments go to the predicate issue of jurisdiction, we
address these arguments first. We agree with the district court that
adjudication of the case is barred by application of the political question doctrine.
B.
At its core, the political question doctrine “excludes from judicial review
those controversies which revolve around policy choices and value
determinations constitutionally committed for resolution to the halls of Congress
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or the confines of the Executive Branch.” Japan Whaling Ass’n v. Am. Cetacean
Soc., 478 U.S. 221, 230 (1986). In Baker v. Carr, the Supreme Court set forth the
seminal test for analyzing whether a claim presents a political question. 369
U.S. at 217. The Court outlined six factors, any one of which is sufficient to
indicate the presence of a nonjusticiable political question:
“[1.] a textually demonstrable constitutional commitment of the
issue to a coordinate political department; or [2.] a lack of judicially
discoverable and manageable standards for resolving it; or [3.] the
impossibility of deciding without an initial policy determination of
a kind clearly for nonjudicial discretion; or [4.] the impossibility of
a court’s undertaking independent resolution without expressing
lack of the respect due coordinate branches of government; or [5.] an
unusual need for unquestioning adherence to a political decision
already made; or [6.] the potentiality of embarrassment from
multifarious pronouncements by various departments on one
question.”
Id. See also Vieth v. Jubelirer, 541 U.S. 267, 277 (2004) (noting that Baker set
forth “six independent tests for the existence of a political question”). These
factors guide our analysis of the claims before us. Our review does not overlook
the Supreme Court’s observation in Baker that cases implicating foreign
relations involve “a discriminating analysis of the particular question posed, in
terms of the history of its management by the political branches, of its
susceptibility to judicial handling in the light of its nature and posture in the
specific case, and of the possible consequences of judicial action.” Baker, 369
U.S. at 211–12. Applying this directive, the following discussion indicates that
the matter before us plainly constitutes a political question.
1. Textual Commitment to the Political Branches
“The dominant consideration in any political question inquiry is whether
there is a ‘textually demonstrable constitutional commitment of the issue to a
coordinate political department.’” Saldano v. O’Connell, 322 F.3d 365, 369 (5th
Cir. 2003) (quoting Baker, 369 U.S. at 217). Appellants contend that this
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litigation does not involve a textual commitment to another branch, as the
complaints merely require the court to interpret domestic antitrust law and
apply it to conduct within the United States having only tangential effects on
foreign affairs. In contrast, Appellees characterize the pleadings as seeking to
condemn the actions of foreign sovereigns and interfere with the longstanding
foreign policy of the political branches. Appellees point to several constitutional
clauses as evidence that foreign policy is exclusively reserved to the political
branches. In particular, they cite Article I, section 8, clause 3 (“The Congress
shall have the Power . . . To regulate Commerce with foreign Nations . . . .”);
Article II, section 2, clause 1 (“The President shall be Commander in Chief of the
Army and Navy of the United States, and of the Militia of the several States
. . . .”); Article II, section 2, clause 2 (“[The President] shall have Power, by and
with the Advice and Consent of the Senate, to make Treaties, provided two
thirds of the Senators present concur; and he shall nominate, and by and with
the Advice and Consent of the Senate, shall appoint Ambassadors [and] other
public Ministers and Consuls . . . .”); and Article II, section 3 (“[The President]
shall . . . receive Ambassadors and other public Ministers . . . .”).
In general, “matters relating ‘to the conduct of foreign relations . . . are so
exclusively entrusted to the political branches of government as to be largely
immune from judicial inquiry or interference.’” Haig v. Agee, 453 U.S. 280, 292
(1981) (quoting Harisiades v. Shaughnessy, 342 U.S. 580, 589 (1952)). “[T]he
conduct of foreign relations is committed by the Constitution to the political
departments of the Federal Government; . . . the propriety of the exercise of that
power is not open to judicial inquiry.” United States v. Pink, 315 U.S. 203,
222–23 (1942). This court has consistently “followed the command that matters
implicating foreign relations and military affairs are generally beyond the
authority or competency of a court’s adjudicative powers.” Lane, 529 F.3d at 559
(citing Farmer v. Mabus, 940 F.2d 921, 923 (5th Cir. 1991); Occidental of Umm
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al Qaywayn, Inc. v. A Certain Cargo of Petroleum, 577 F.2d 1196, 1203 (5th Cir.
1978)).
However, “it cannot of course be thought that ‘every case or controversy
which touches foreign relations lies beyond judicial cognizance.’” Banco National
de Cuba v. Sabbatino, 376 U.S. 398, 423 (1964) (quoting Baker, 369 U.S. at 211).
A general invocation of “foreign policy,” without more, will not suffice. For
example, in Japan Whaling, the Supreme Court held that a political question
was not raised by a claim that asked the Court to “command the Secretary of
Commerce . . . to dishonor and repudiate an international agreement” regarding
limits on commercial whaling. 478 U.S. at 229. The Japan Whaling Court
proceeded to examine the merits of the claim in spite of the case’s “significant
political overtones,” noting that the interpretation of treaties and executive
agreements is “a recurring and accepted task for the federal courts.” Id. at 230.
Unlike Japan Whaling, the case at bar does not present “a purely legal
question of statutory interpretation.” Id. Adjudication of the claims before us
would require that we review the considered foreign policy of the political
branches, which—in contrast to those branches’ chosen policy regarding the
whaling quotas at issue in Japan Whaling—is not codified in a treaty that we
are merely asked to interpret. Moreover, in Japan Whaling, the Court was
asked to compel U.S. officials to act according to the law, whereas in the instant
matter, we are asked essentially to reprimand foreign nations and command
them to dismantle their international agreements. Nor are we presented with
a case in which a political question holding would require our predicate
acceptance of an Executive Branch legal interpretation, such as (for example) the
“premise that de jure sovereignty is the touchstone of habeas corpus
jurisdiction.” Boumediene v. Bush, 553 U.S. 723, 755 (2008).
Appellants have alleged a price-fixing conspiracy involving OPEC member
nations. We must “analyze [this] claim as it would be tried,” Occidental of Umm,
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577 F.2d at 1202, and as we have already observed, a trial on Appellants’
conspiracy claims requires an inquiry into whether Appellees entered into an
agreement with OPEC member nations to fix prices. A pronouncement either
way on the legality of other sovereigns’ actions falls within the realm of delicate
foreign policy questions committed to the political branches. By adjudicating
this case, the panel would be reexamining critical foreign policy decisions,
including the Executive Branch’s longstanding approach of managing relations
with foreign oil-producing states through diplomacy rather than private
litigation, as discussed in the government’s amicus brief and in several official
statements of administration policy.13 In accordance with this policy, the
Department of Justice has, upon thorough consideration, declined to bring a
Sherman Act case on behalf of the United States. Any merits ruling in this case,
whether it vindicates or condemns the acts of OPEC member nations, would
reflect a value judgment on their decisions and actions—a diplomatic
determination textually committed to the political branches.
As the Departments of State, Treasury, Energy, and Justice emphasize in
their brief supporting affirmance,14 adjudication of this case would result in the
frustration of various objectives “of vital interest to the United States’ national
13
See, e.g., OFFICE OF MGM T . & BUDGET , EXECUTIVE OFFICE OF THE PRESIDENT ,
STATEM ENT OF ADM INISTRATION POLICY : H.R. 2264—NO OIL PRODUCING AND EXPORTING
CARTELS ACT OF 2007 (NOPEC) (May 22, 2007) (“[T]he Administration believes that the
appropriate means for achieving [the nation’s] objective[s involving international energy
markets] lies in diplomatic efforts by the United States with the countries involved in [the
energy] trade, rather than lawsuits against those countries in U.S. courts.”).
14
As this case implicates complex and delicate issues of separation of powers and
foreign policy, we requested a Statement of Interest from the United States under 28 U.S.C.
§ 517. Courts have found Statements of Interest to be useful where cases involve questions
of foreign relations. See, e.g., Spacil v. Crowe, 489 F.2d 614, 617 (5th Cir. 1974) (deferring to
Executive’s determination that sovereign immunity should be afforded); Occidental of Umm,
577 F.2d at 1204 (finding convincing a statement from the State Department that the political
question doctrine precluded resolution). While a Statement of Interest does not bind us, we
must “give serious weight to the Executive Branch’s view of the case’s impact on foreign
policy.” Sosa v. Alvarez–Machain, 542 U.S. 692, 733 n.21 (2004).
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security.” The government’s brief underscores that the damaging consequences
of this litigation are likely to include immediate disruption of oil imports into the
United States, the undermining of relationships with OPEC nations on issues
such as counterterrorism and nuclear non-proliferation, the undermining of
relationships with non-OPEC nations that have a stake in the questions
presented here, and the frustration of other national priorities, including foreign
investment in the United States by nations such as Saudi Arabia. Cf. Haig, 453
U.S. at 307 (“[F]oreign policy and national security considerations cannot neatly
be compartmentalized.”). As the briefing before us makes clear, access to
petroleum products is essential to, among other concerns, our military and
national defense infrastructure. A merits ruling in this case has the potential
to interfere with our military’s ability to access the requisite amounts of
petroleum for ongoing military engagements and our national defense generally.
Control over such vital military supplies is textually committed to the political
branches. See Gilligan v. Morgan, 413 U.S. 1, 10 (1973) (“The ultimate
responsibility” for decisions as to, inter alia, “equipping[] and control of a
military force” “is appropriately vested in branches of the government which are
periodically subject to electoral accountability.”); U.S. Const. art. II, § 2, cl. 1.
For the foregoing reasons, we are persuaded that the foreign policy issues
at stake in this case are textually committed to the political branches.
2. Judicially Manageable Standards
We next consider whether there is “a lack of judicially discoverable and
manageable standards for resolving” the claims presented. Baker, 369 U.S. at
217. This concept “is not completely separate from” the concept of a textual
commitment to the coordinate branches. Nixon v. United States, 506 U.S. 224,
228 (1993). However, a court may examine the merits of a case that touches on
foreign policy in some instances, such as where a statutory scheme exists to
guide the court’s determination of an issue. See, e.g., Japan Whaling, 478 U.S.
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at 230 (finding that judicially manageable standards exist, and case is
justiciable, where “decision . . . calls for applying no more than the traditional
rules of statutory construction, and then applying this analysis to the particular
set of facts presented below”). In contrast, where there is an “utter absence of
statutory, administrative or case law” available to guide our decision, we
disfavor resolution on the merits. Lane, 529 F.3d at 562.
We are persuaded that deciding the merits of the instant case would
require a court to recast what are foreign policy and national security questions
of great import in antitrust law terms. We hardly need to pierce the pleadings
before us to understand that Appellants seek nothing short of the dismantling
of OPEC and the inception of a global market that operates in the absence of
agreements between sovereigns as to the supply of a key natural resource. The
Sherman and Clayton Acts are decidedly inadequate to provide judicially
manageable standards for resolving such momentous foreign policy questions.
Indeed, “[i]t has never been supposed that there are any judicially manageable
standards for reviewing the conduct of our nation’s foreign relations by the other
two branches of the federal government.” Trujillo–Hernandez v. Farrell, 503
F.2d 954, 954 (5th Cir. 1974) (per curiam) (citing Harisiades, 342 U.S. 580, Pink,
315 U.S. 203, and Oetjen v. Central Leather Co., 246 U.S. 297 (1918)). We agree
with those courts that have held that merely “recasting foreign policy and
national security questions in tort terms does not provide standards for making
or reviewing foreign policy judgments.” Schneider, 412 F.3d at 197. See also
Aktepe v. United States, 105 F.3d 1400, 1404 (11th Cir. 1997) (“The interjection
of tort law into the realms of foreign policy and military affairs would effectively
permit judicial reappraisal of judgments the Constitution has committed to the
other branches.”). The same reasoning holds true when parties couch the
conduct of foreign relations and national security policy in antitrust terms while
essentially asking us to make a pronouncement on the resource-exploitation
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decisions of foreign sovereigns that control the global supply of oil, a natural
resource vital to the economic and national security of this country.
3. Prudential Considerations
The remaining four Baker factors—the impossibility of deciding without
an initial policy determination of a kind clearly for nonjudicial discretion; the
impossibility of a court’s undertaking independent resolution without expressing
lack of the respect owing to the coordinate branches of government; an unusual
need for unquestioning adherence to a political decision already made; and the
potential of embarrassment from multifarious pronouncements by various
departments on one question—also weigh against an adjudication of this case on
the merits.
Deeply rooted constitutional “[s]eparation-of-powers principles impel a
reluctance in the judiciary to interfere with or embarrass the executive in its
constitutional role as the nation’s primary organ of international policy.” Spacil
v. Crowe, 489 F.2d 614, 619 (5th Cir. 1974). As we have already outlined and as
the government has emphasized to us in its briefing, “the United States, for
more than the last 35 years and through decisions made at the highest levels of
the Executive Branch[,] . . . has charted a consistent course of managing the
complex U.S. relationships with foreign oil-producing states upon which this
country still depends for its domestic energy needs, rather than resorting to the
far blunter instrument of antitrust litigation against them.” Any ruling on the
merits of the instant case would by its very nature involve a policy
determination at odds with this longstanding policy of diplomatic engagement,
expressing a lack of the respect owed to the Executive Branch, which is
constitutionally responsible for the conduct of foreign affairs. This would
inevitably result in embarrassment from the Judicial Branch’s conflicting
pronouncement about the United States’ mode of engagement with foreign
nations that control a critical resource on which this country depends. Such
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profound foreign policy questions “uniquely demand a single-voiced statement
of the Government’s views.” Baker, 369 U.S. at 211. We are thus presented with
an unusual need for adherence to the political decision already made.15
As the foregoing discussion makes clear, each one of the Baker factors
counsels declining to adjudicate the merits of Appellants’ complaints. Under the
“case and controversy” requirement of Article III, we hold that federal courts
lack subject matter jurisdiction over this nonjusticiable political question.
C.
Although our holding rests on a lack of subject matter jurisdiction, the
district court and the parties have devoted considerable attention to the act of
state doctrine. Indeed, many of these arguments coincide with those that have
animated our decision on political question grounds. For reasons similar to
those on which we have relied above, we hold alternatively that, under the act
of state doctrine, Appellants have failed to state a claim on which relief can be
granted.
Under the act of state doctrine, “the courts of one country will not sit in
judgment on the acts of the government of another, done within its own
territory.” Underhill v. Hernandez, 168 U.S. 250, 252 (1897). The doctrine is
15
Moreover, although there has been some debate within Congress about how best to
approach OPEC, there is an apparent political consensus that private litigation is to be
avoided. Proposed legislation, entitled the No Oil Producing and Exporting Cartels Act
(NOPEC), has been introduced before both houses of Congress on numerous occasions since
2000, and versions passed the House of Representatives in 2007 and 2008. The most recent
version of the bill proposes to amend the Sherman Act by making it illegal for foreign states
and their instrumentalities to conspire to limit oil production or distribution, to fix oil prices,
or to restrain the oil trade in any way. See NOPEC Act of 2009, S. 204, 111th Cong. (2009).
However, NOPEC excludes a private right of action, and “leaves the decision to prosecute
OPEC members in the hands of the executive branch by giving the Justice Department sole
authority to prosecute.” 155 Cong. Rec. S300-04 (2009) (statement of Sen. Arlen Specter).
This simply reinforces our conclusion that there is an unusual need for unquestioning
adherence to the political decision made by the branches accountable to the electorate:
Relations with OPEC nations regarding U.S. oil supplies are not to be conducted through
private litigation.
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grounded in the principle that “juridical review of acts of state of a foreign power
could embarrass the conduct of foreign relations by the political branches of the
government.” First Nat’l City Bank v. Banco Nacional de Cuba, 406 U.S. 759,
765 (1972). The doctrine thus overlaps in many respects with the political
question doctrine, as it is rooted in constitutional separation-of-powers concerns.
See Banco National de Cuba v. Sabbatino, 376 U.S. 398, 425 (1964). It
recognizes “‘the thoroughly sound principle that on occasion individual litigants
may have to forgo decision on the merits of their claims because the involvement
of the courts in such a decision might frustrate the conduct of [United States]
foreign policy.’” Callejo v. Bancomer, 764 F.2d 1101, 1113 (5th Cir. 1985)
(quoting First Nat’l City Bank, 406 U.S. at 769).
“For act of state (as opposed to sovereign immunity) purposes, the relevant
acts are not merely those of the named defendants, but any governmental acts
whose validity would be called into question by adjudication of the suit.” Callejo,
764 F.2d at 1115, 1116 (emphasis added). The burden lies on the proponent of
the doctrine to establish the factual predicate for the doctrine’s application. See
Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 694 (1976).
As we have already discussed, Appellees have met their burden of
demonstrating that adjudication of this suit would necessarily call into question
the acts of foreign governments with respect to exploitation of their natural
resources. The Supreme Court has held, albeit in a different factual context,
that exploitation of natural resources is an inherently sovereign function. See
United States v. California, 332 U.S. 19, 38–39 (1947) (allocating the power to
drill for oil in the three miles of water off the California coast to the United
States instead of California). Indeed, our precedents indicate as much. See
United States v. Mitchell, 553 F.2d 996, 1002 (5th Cir. 1977) (noting generally
“the control that a sovereign such as the United States has over the resources
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within its territory. It can exploit them or preserve them or establish a balance
between exploitation and preservation.”).16
In considering whether a merits review would require us to sit in judgment
of the acts of foreign sovereigns in their own territories, we find instructive the
reasoning of the Ninth Circuit in a similar case. See Int’l Ass’n of Machinists &
Aerospace Workers v. OPEC (“IAM”), 649 F.2d 1354 (9th Cir. 1981). In IAM, a
labor union brought Sherman Act claims against OPEC and its member nations.
Id. at 1355. The Ninth Circuit relied on the act of state doctrine in declining to
address the merits, explaining that “the availability of oil has become a
significant factor in international relations,” and illustrating other courts’
recognition of the “growing world energy crisis.” 649 F.2d at 1360 (citing
Occidental of Umm, 577 F.2d 1196; Hunt v. Mobil Oil Corp., 550 F.2d 68 (2d Cir.
1977)). The court noted that “the United States has a grave interest in the
petro-politics of the Middle East[ and] that the foreign policy arms of the
executive and legislative branches are intimately involved in this sensitive area.”
Id. at 1361. “While the case is formulated as an anti-trust action, the granting
of any relief would in effect amount to an order from a domestic court instructing
16
We note that a “commercial activity” exception to this sovereign activity may obtain
with respect to application of the FSIA when, for example, a foreign sovereign enters into “a
joint venture contract with oil companies for the exploration, production, and sale on the world
market of oil and gas,” thus acting “not as a regulator of a market, but in the manner of a
private player within it.” Connecticut Bank of Commerce v. Republic of Congo, 309 F.3d 240,
264 (5th Cir. 2002) (internal quotation marks and citations omitted). However, we agree with
the Ninth Circuit that, under current precedents, “[t]he act of state doctrine is not diluted by
the commercial activity exception which limits the doctrine of sovereign immunity.” Int’l Ass’n
of Machinists & Aerospace Workers v. OPEC, 649 F.2d 1354, 1360 (9th Cir. 1981) (noting that
the two doctrines “address different concerns and apply in different circumstances”). Neither
the Supreme Court nor any circuit have adopted a commercial activity exception to the act of
state doctrine, and we decline to do so today.
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a foreign sovereign to alter its chosen means of allocating and profiting from its
own valuable natural resources.” Id.17
The claims before us present a similar scenario. The granting of any relief
to Appellants would effectively order foreign governments to dismantle their
chosen means of exploiting the valuable natural resources within their sovereign
territories.18 Recognizing that the judiciary is neither competent nor authorized
to frustrate the longstanding foreign policy of the political branches by wading
so brazenly into the sphere of foreign relations, we decline to sit in judgment of
the acts of the foreign states that comprise OPEC.
III.
We sum up: Appellants, retailers of gasoline products in the United States,
have asked the federal courts to adjudicate the merits of their antitrust claims
against oil production companies that have allegedly participated in a conspiracy
to fix prices. Reducing their claims to basics, Appellants allege a conspiracy that
is orchestrated by the sovereign member nations of OPEC. We hold today that
Article III courts lack subject matter jurisdiction over Appellants’ claims because
17
The IAM court also recognized that, “should the court hold that OPEC’s actions are
legal, this ‘would greatly strengthen the bargaining hand’ of the OPEC nations in the event
that Congress or the executive chooses to condemn OPEC’s actions.” Id. (quoting Sabbatino,
376 U.S. at 432). Concluding that “[t]he courts should not enter at the will of litigants into a
delicate area of foreign policy which the executive and legislative branches have chosen to
approach with restraint,” the Ninth Circuit held that the act of state doctrine applied. Id.
18
We recognize the existence of a territorial limitation to the act of state doctrine. See
Maltina Corp. v. Cawy Bottling Co., 462 F.2d 1021, 1027 (5th Cir. 1972) (explaining that the
relevant acts of the foreign sovereign must be “able to come to complete fruition within the
dominion of the [foreign] government”). However, the antitrust claims before us go to price-
fixing through agreements about supply—that is, the amount of oil foreign governments
extract from their territories. Given our characterization of both complaints as challenging
the crude-oil production decisions of foreign sovereigns, the relevant acts are necessarily
intraterritorial. One country has no control or sovereignty over the natural resources of
another country; a country’s decisions about how much of its oil to extract take place
exclusively within that country. Appellants have thus failed to allege actions taking place
within the United States that stand independent from the alleged production conspiracy.
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they present nonjusticiable political questions that are constitutionally
committed to the political branches responsible for the conduct of United States
foreign relations and national security policy. Any ruling on the merits of this
case would, by its core essence, impermissibly interfere with the Executive
Branch’s longstanding policy of engaging with OPEC nations regarding the
global supply of oil through diplomacy instead of private litigation. The
constitutional concerns that inform our declination of jurisdiction under the
political question doctrine similarly persuade us that adjudication of Appellants’
claims is precluded by the act of state doctrine. For the foregoing reasons, we
affirm the judgment of the district court.
AFFIRMED.
26