Opposition Brief — Exxon Mobil Corp. v. Saudi Basic Industries Corp.

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Supreme Coun Uo)

(2) JUL 2 2 2004

No. 03-1696 OFFICE OF THE CLERK |

IN THE

Supreme Court of the Anited States

EXXONMOBIL CORPORATION, EXXON CHEMICAL

ARABIA, INC. AND MOBIL YANBU PETROCHEMICAL

COMPANY, INC.,

Petitioners,

SAUDI BASIC INDUSTRIES CORPORATION,

Respondent.

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the Third Circuit

RESPONDENT’S BRIEF IN OPPOSITION

KENNETH R. ADAMO GREGORY A. CASTANIAS

JONES DAY (Counsel of Record)

North Point LAWRENCE D. ROSENBERG

901 Lakeside Avenue JACK W. CAMPBELL IV

Cleveland, OH 44114 WILLIAM K. SHIREY II

(216) 586-3939 JONES DAY

51 Louisiana Avenue, N.W.

Washington, D.C. 20001

(202) 879-3939

Counsel for Respondent

a ETE ES

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20001

QUESTION PRESENTED

Whether the court of appeals properly dismissed

Petitioners’ federal action pursuant to the Rooker-Feldman

doctrine when: (i) the federal action presents claims identical

to ones already litigated to final judgment in the Delaware

Superior Court; and (ii) Petitioners admit that the federal

action is an “insurance policy” they will pursue only if they

need to challenge a Delaware Supreme Court ruling

reversing the Delaware Superior Court’s final judgment for

Petitioners.

CORPORATE DISCLOSURE STATEMENT

Respondent Saudi Basic Industries Corporation

(“SABIC”) is a Saudi Arabian corporation that is owned

70% by the Saudi government and 30% by private investors.

SABIC has no parent corporations, and no publicly held

corporation owns 10% or more of SABIC’s stock.

111

TABLE OF CONTENTS

Page

QUESTION PRESENTED .........ccsscccsssesssscssseessssesssvessuesenseee

CORPORATE DISCLOSURE STATEMENT .......c.sseecsseee- ii

TABLE OF AUTHORITIES .........ccccsssesssseccssecsssscssseccsseeene iv

RESPONDENT’S BRIEF IN OPPOSITION .........e:-ssee-000++- 1

STATEMENT OF THE CASE.....cccsccsssseccsssecssssesessecesseesene 1

REASONS FOR DENYING THE WRIT .........-ssecccsesssseeess 5

I. PETITIONERS MISCHARACTERIZE THE

NATURE AND SCOPE OF THE DECISION

BELOW IN AN UNSUCCESSFUL EFFORT TO

MANUFACTURE A MATERIAL CONFLICT

pos bt, ) See 5

II. THIS CASE IS A POOR VEHICLE FOR

EXPLORING WHATEVER DISTINCTIONS

MAY EXIST BETWEEN THE ROOKER-

FELDMAN DOCTRINE AND RES JUDICATA

PTT TIE solicichnnepctcininiithdnedonincinadanetansesounenesnecccetsencsscens 10

A. The Third Circuit’s Decision Was Narrow,

Factbound, And Entirely Consistent With The

Rooker-Feldman Doctrine .............ccccccccceeeeeeeeeeeeeees 10

B. Petitioners Did Not Raise Below, And The Third

Circuit Did Not Consider, The Question Presented

SE ERE EN eco ce a 12

C. Whether Decided On Rooker-Feldman Grounds

Or On Res Judicata Grounds, Petitioners’

“Insurance Policy” Federal Action Is Barred.......... 13

CONCLUSION........... iineibididichenisaetinentesemneensniesnccenensensisesoons 15

TABLE OF AUTHORITIES

Page

CASES

American Reliable Ins. Co. v. Stillwell,

SOG P.3G F210 COs CO. BGG) ccorccsececcccescesccseoscesassees 7,11, 12

Arizona v. California, 530 U.S. 392 (2000)........ccccceecceeeeeeees 6

ASARCO Inc. v. Kadish, 490 U.S. 605 (1989)..........cccceseeees 7

Bechtold v. City of Rosemount, 104 F.3d 1062

SPA: SDT icsedisccapeulaeionlnastteiiilaieilaialasisidihiabiiiaanivial 6

Centres, Inc. v. Town of Brookfield, Wis., 148 F.3d 699

CRG SINT sscnesssniessacnimininainiedpnienciiinnsianitaneeulinsinaiedicnensil 8

District of Columbia Court of Appeals v. Feldman,

as Se I cincseneiinesnsiniesbceidnasiiniiipligniiabiintantdinanemmenpeineien |

Ezzes v. Ackerman, 234 A.2d 444 (Del. 1967) ...............00006 13

GASH Assocs. v. Village of Rosemont, 995 F.2d 726

COR We etircnttindinmmininennei 6

Glover v. United States, 531 U.S. 198 (2001) ............ eee 13

Hughes v. Trans World Airlines, Inc., 336 A.2d 572

SEU. Spe cenistvsapniaidbannecnparetittcnincenenniiartiniaiennsiienstiemnintneins 13

Hutcherson v. Lauderdale County, Tenn., 326 F.3d 747

SE A ccrccrcsceiedsiticieilicisiciicitiiiiiividciasaeiiiipinienitiemmenisenenal 6

Izumi Seimitsu Kogyo Kabushiki Kaisha v. U.S. Philips

Es He es BF CD ic ittecincdctsinentsinnictiniindascennsecnnes 10

Kenmen Eng’g v. City of Union, 314 F.3d 468

Cs BD ciicchicinicnsiticiinisiininisaniitidingsshinimviiniiinnenenee 7,8

Lowell Staats Mining Co. v. Philadelphia Elec. Co.,

SFG Fre Cee COE. BGG) cccccccocesccsescscsssessscceccssosees 6, 7

Maldonado v. Flynn, 417 A.2d 378 (Del. Ch. 1980)......13, 14

McClain v. Apodaca, 793 F.2d 1031 (9th Cir. 1986) ............. 6

Moccio v. N.Y. State Office of Court Admin., 95 F.3d 195

SEER GUI soncseresesnsutosensinnnanesionisnditoenesnniecsscinnnticinnsenneeseni 8

TABLE OF AUTHORITIES

(Continued)

Page

National Collegiate Athletic Ass'n v. Smith,

ee I indice ccudinsiitanniiabbiitisinncnnisaneinatonbinnnienian 13

Noel v. Hall, 341 F.3d 1148 (9th Cir. 2003)... 8,9

Packwood v. Senate Select Comm. on Ethics,

I cee 10 -

Parkview Assocs. P’ship v. City of Lebanon,

I SE irrtisccassdcceieuisninnmensnnnsenincnsnd 6, 7

Playtex Family Prods., Inc. v. St. Paul Surplus Lines Ins.

Co., 564 A.2d 681 (Del. Super. Ct. 1989)... 14

Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923)................ 1

Salahuddin v. Jones, 992 F.2d 447 (2d Cir. 1993) ................. 6

Stanton v. District of Columbia Court of Appeals,

Be ee ts RI TE hitcnceerccictossoentinncccecnensasccnineononsce 7

Studio Art Theatre of Evansville, Inc. v. City of Evansville,

I I iniciitdhicteictinbitninienidiincaritntinenniat 6

United States v. Mendoza, 464 U.S. 154 (1984)................... 14

Vulcan Chem. Techs., Inc. v. Barker,

Be TL TTI saricncsnensnsntpendniniondinisenniensnieniie 9

STATUTES

a i eiesitchdidiitiicsbibccniiseninndindiicsnnsddtipicveenminnitennddent 14

OTHER AUTHORITY

Restatement (Second) of Judgments (1982) ..........:ccsecsseeeees 14

2 Moore's Federal Practice (3d ed.) ............cccccssecceeeseeeeseeees 14

RESPONDENT?’S BRIEF IN OPPOSITION

The Rooker-Feldman doctrine prohibits parties from

seeking appellate review of a state-court judgment in a

United States district court. Such review is incompatible

with 28 U.S.C. § 1257’s grant of exclusive federal appellate

jurisdiction over state-court decisions to this Court. See

District of Columbia Court of Appeals v. Feldman, 460 U.S.

462, 482 (1983); Rooker v. Fidelity Trust Co., 263 U.S. 413,

416 (1923). In this case, the Third Circuit held that the

Rooker-Feldman doctrine bars Petitioners from maintaining

a federal action when: (i) the federal action presents claims

identical to ones already litigated to final judgment in the

Delaware Superior Court; and (11) Petitioners admit that their

federal action is an “insurance policy” they will pursue only

if they need to challenge a Delaware Supreme Court

judgment reversing a Delaware Superior Court judgment in

Petitioners’ favor. The Third Circuit’s application of the

Rooker-Feldman doctrine to put a stop to Petitioners’

admitted gamesmanship was entirely proper.

Petitioners attempt to concoct circuit splits by

mischaracterizing both the nature and scope of the

straightforward decision below. Moreover, even if this

Court desires someday to elucidate whatever differences may

exist between the Rooker-Feldman doctrine and res judicata

principles, this case is a singularly poor vehicle for doing so.

The decision below was narrow and factbound; Petitioners

did rot raise their question presented before the Third

Circuit; and the result in this case is the same whether

analyzed under the Rooker-Feldman doctrine or under res

judicata principles. The petition should be denied.

STATEMENT OF THE CASE

This case involves allegations that Respondent, Saudi

Basic Industries Corporation (“SABIC”), overcharged two

SABIC-ExxonMobil joint ventures for certain technology

used in the production of polyethylene. SABIC and

Petitioners have already litigated the identical claims raised

in this federal court action to a $416.8 million final judgment

for Petitioners in the Delaware Superior Court. SABIC has

appealed that judgment to the Delaware Supreme Court,

where briefing and oral argument are complete and a

decision is pending. The Third Circuit dismissed Petitioners’

federal action for lack of subject-matter jurisdiction pursuant

to the Rooker-Feldman doctrine. (Pet. App. 6a, 8a) The

Third Circuit reached this result because Petitioners admitted

that their federal and Delaware suits raise “identical” claims,

that their federal suit is “an insurance policy” to be pursued

only if the Delaware Supreme Court reverses the $416.8

million judgment, and (if SABIC is unsuccessful at obtaining

a reversal in Delaware) that they will dismiss their federal

suit once SABIC has exhausted its appellate rights in

Delaware.

1. In 1980, SABIC and two corporations that are now

wholly-owned ExxonMobil subsidiaries formed two separate

joint ventures to produce polyethylene in the Kingdom of

Saudi Arabia. SABIC, which was then wholly-owned, and is

now 70% owned, by the Saudi Arabian government, entered

into these joint ventures pursuant to a Saudi government

mandate to help industrialize the Kingdom by attracting

capital investment and technological know-how from foreign

corporations. The first of these two joint ventures — Yanpet

— was formed on April 19, 1980 when SABIC and Mobil-

Yanbu executed a joint-venture agreement. The other — Al-

Jubail Petrochemical Co, or Kemya — was formed on April

26, 1980 when SABIC and Exxon Chemical Arabia executed

a nearly identical joint-venture agreement.

2. In 1998, SABIC brought unrelated claims of patent

misappropriation against ExxonMobil in the United States

District Court for the District of New Jersey. In mid-2000,

during discovery in that dispute, ExxonMobil first alleged

that SABIC had breached a provision of the joint-venture

agreements. ExxonMobil claimed that, starting in 1980,

SABIC provided certain technology for the production of

polyethylene to the joint ventures and charged them a margin

above SABIC’s costs. ExxonMobil asserted that the joint-

venture agreements required any technology provided by a

partner to the joint ventures had to be provided at cost.

3. On July 24, 2000, SABIC filed a declaratory judgment

action against the ExxonMobil subsidiaries in the Delaware

Superior Court. Both ExxonMobil subsidiaries are Delaware

corporations, and Delaware was the only state where SABIC

could ensure that it obtained personal jurisdiction over them.

SABIC sought declarations that: (1) the relevant provisions

of the joint-venture agreements do not apply to the

polyethylene technology in question; (2) ExxonMobil’s

overcharge allegations are time barred; and/or (3) SABIC

had not overcharged the joint ventures. In early 2002,

Petitioners asserted damage claims for breach of contract and

“usurpation” under Saudi Arabian law as counterclaims in

the Delaware action”

4.a. On August 8, 2000, Petitioners filed this case in the

United States District Court for the District of New Jersey

based upon, as Petitioners put it, the “identical claims” that

form the basis of the Delaware action. (Pet. 20) Petitioners

sought damages for SABIC’s alleged breach of the joint-

venture agreements.

b. SABIC moved to dismiss ExxonMobil’s federal suit

based on, inter alia, SABIC’s status as a foreign sovereign

commercial instrumentality entitled to immunity from suit

under the Foreign Sovereign Immunities Act of 1976, 28

U.S.C. § 1602 et seg. (“FSIA”). (Pet. App. 45a-46a, 49a)

On April 22, 2002, SABIC filed an interlocutory appeal to

the Third Circuit to challenge the district court’s ruling

denying SABIC immunity under the FSIA. (Pet. App. 4a)

The district court stayed proceedings pending resolution of

the appeal.

c. With the Third Circuit appeal pending, the parties

jointly agreed to proceed to trial in the Delaware Superior

Court. ExxonMobil moved to be treated as the plaintiff in

the Delaware action and thus to present its damage

counterclaims first at trial. The Delaware court agreed and,

after a two-week trial, a jury returned general verdicts on

ExxonMobil’s claims totaling $416.8 million. (Pet. App. 4a)

After the Delaware Superior Court rejected SABIC’s post-

trial motions, the judgment became final in September 2003.

On October 1, 2003, SABIC noticed its appeal to the

Delaware Supreme Court. (/d.)

5.a. On December 9, 2003, the Third Circuit heard

argument in SABIC’s interlocutory appeal. Pursuant to the

court’s pre-argument instructions, the parties specifically

addressed the question whether the Delaware final judgment

stripped the federal court of jurisdiction under the Rooker-

Feldman doctrine. During argument, the court expressly

asked Petitioners’ counsel to explain their continued pursuit

of the federal action:

THE COURT: But I guess you’re not too unhappy so

far in Delaware?

MR. QUINN: So far so good. So far so good, but

knock on wood, you never know, because anything

could happen. We feel pretty good about it, but --

THE COURT: So New Jersey is an insurance policy?

MR. QUINN: Ina way it is. .. .

(Tr. Oral Arg. 28-29 (docketed 12/18/03))

Petitioners’ counsel also admitted that, if SABIC loses the

Delaware appeal, “there really would be nothing left to do

except dismiss the New Jersey case” because Petitioners

“can only collect $417 million once.” (Tr. Oral Arg. 27)

b. On March 24, 2004, after receiving supplemental

briefing from boih parties, the Third Circuit vacated the

district court’s decision and remanded the case “with

instruction to dismiss th[e] action for lack of subject matter

jurisdiction.” (Pet. App. 8a) The court relied on the well-

established Rooker-Feldman doctrine, which provides that

“lower federal courts lack the power to decide claims in

which ‘the relief requested . . . reavires determining that the

state court’s decision is wrong or . . . void[ing] the state

court’s ruling.”” (Pet. App. Sa (citations omitted)) The

Third Circuit explained that “‘a claim is barred by Rooker-

Feldman under two circumstances: first, if the claim was

‘actually litigated’ in state court prior to filing of the federal

action or, second, if the claim is ‘inextricably intertwined

with [the] state adjudication.”” (Jd. (citations omitted))

Applying this standard, the court held:

[b]Jecause ExxonMobil’s federal claims were identical

to the claims in which the Delaware Superior Court

reached a final judgment, they are barred by the

Rooker-Feldman doctrine. Even within our Court’s

narrow confines for Rooker-Feldman, this case is easily

cabined. We cannot imagine a more classic invocation

of the Rooker-Feldman jurisdictional bar than to

preclude a party from maintaining a federal action as an

“insurance policy” in case the state trial court decision

in that party’s favor is overturned by an appellate state

court

(Pet. App. 8a)

c. Petitioners did not seek rehearing or rehearing en banc.

They filed a petition for certiorari on June 22, 2004.

REASONS FOR DENYING THE PETITION

I. PETITIONERS MISCHARACTERIZE THE

NATURE AND SCOPE OF THE DECISION

BELOW IN AN UNSUCCESSFUL EFFORT TO

MANUFACTURE A MATERIAL CONFLICT

WITH OTHER CIRCUITS

Petitioners attempt to concoct a material conflict with

other circuits by offering three mischaracterizations of the

decision below. First, Petitioners assert that the Third

Circuit’s decision “replaces th[e] waivable affirmative

defense” of res judicata with the “nonwaivable jurisdictional

bar” of the Rooker-Feldman doctrine. (Pet. 7) Second,

Petitioners contend that the decision below “eviscerates the

well-established principle that concurrent jurisdiction may

permit overlapping and even identical claims to proceed in

parallel in state and federal courts.” (/d.) Third, Petitioners

claim that “the Third Circuit’s reformulation of Rooker-

Feldman promotes gamesmanship and forum shopping.”

(Pet. 22) None of these assertions (which were not even

raised below, see infra Sectior II(B)) withstands even

cursory scrutiny.

~T. Turning to Petitioners’ first contention, the decision

below did not “transmute{] Rooker-Feldman into a doctrine

that encompasses all claims that may fall within the scope of

ordinary preclusion principles.” (Pet. 9) The Third Circuit

twice emphasized its “narrow view of the Rooker-Feldman

doctrine.” (Pet. App. 6a; id. at 8a) Indeed, the Third Circuit -—.

has expressly adopted the view that the Rooker-Feldman

doctrine and res judicata are “distinct” and “not

coextensive.” Parkview Assocs. P’ship v. City of Lebanon,

225 F.3d 321, 328-29 (3d Cir. 2000) (citing GASH Assocs. v.

Village of Rosemont, 995 F.2d 726, 728 (7th Cir. 1993)). In

other words, if there is any split among the circuits on this

issue, the Third Circuit falls squarely on the side that

Petitioners assert is the “correct” side — i.e., that the two

doctrines are “not coextensive.””"

' Petitioners’ implication that res judicata is only a waivable affirmative

defense is also wrong. Indeed, this Court has recognized that federal

courts may invoke res judicata sua sponte, even on appeal, to dismiss a

federal suit. “This result is fully consistent with the policies underlying

res judicata: it is not based solely on the defendant’s interest in avoiding

the burdens of twice defending a suit, but is also based on the avoidance -—-

of unnecessary judicial waste.” Arizona v. California, 530 U.S. 392,

4112 (2000); accord, e.g., Salahuddin v. Jones, 992 F.2d 447, 449 (2d

Cir. 1993); Hutcherson v. Lauderdale County, Tenn., 326 F.3d 747, 756-

57 (6th Cir. 2003); Studio Art Theatre of Evansville, Inc. v. City of

Evansville, 76 F.3d 128, 130 (7th Cir. 1996); Bechtold v. City of

Rosemount, 104 F.3d 1062, 1068 (8th Cir. 1997); McClain v. Apodaca,

793 F.2d 1031, 1032-33 (9th Cir. 1986); Lowell Staats Mining Co. v.

—_-

In this case, the Third Circuit simply held that the Rooker-

Feldman doctrine prohibits Petitioners from maintaining a

federal action that presents claims “identical” to those they

litigated to final judgment in the Delaware Superior Court,

especially given Petitioners’ admission that they are doing so

as an “insurance policy” to be pursued if, and only if, they

need to challenge a Delaware Supreme Court judgment

reversing the Delaware Superior Court. (Pet. App. 8a) On

its face, this holding does not conflate the Rooker-Feldman

doctrine and res judicata. Res judicata “prohibits

reexamination not only of matters actually decided in the

prior case, but also those that the parties might have, but did

not, assert in that action.” Parkview Assocs., 225 F.3d at

329 n.2 (emphasis added).

In contrast, the Third Circuit’s holding here was limited to

prohibiting readjudication of “identical” claims, a result

entirely consistent with this Court’s view that “to sue in

federal trial court in order to readjudicate the very same

issues that were determined in ... state-court proceedings

below ... would be an attempt to obtain direct review of the

[state court’s] decision in the lower federal courts, and would

represent a partial inroad on Rooker-Feldman’s construction

of 28 U.S.C. § 1257.” ASARCO Inc. v. Kadish, 490 U.S.

605, 622-23 (1989). Courts of appeals on both sides of

Petitioners’ supposed “‘split” hew to the same line. See, e.g.,

American Reliable Ins. Co. v. Stillwell, 336 F.3d 311, 317

(4th Cir. 2003) (“Rooker-Feldman generally applies when a

state-court litigant sues in federal district court to

readjudicate the same issues decided in the state court

proceedings.”); Kenmen Eng’g v. City of Union, 314 F.3d

Philadelphia Elec. Co., 878 F.2d 1271, 1274, 1278 (10th Cir. 1989);

Stanton v. District of Columbia Court of Appeals, 127 F.3d 72, 77 (D.C.

Cir. 1997).

468, 473 (10th Cir. 2002) (“Rooker-Feldman doctrine

prohibits a lower federal court from considering claims

actually decided by a state court . . . .”); Centres, Inc. v.

Town of Brookfield, Wis., 148 F.3d 699, 703 (7th Cir. 1998)

(Rooker-Feldman applies where federal litigant presents no

“independent claim”); Moccio v. N.Y. State Office of Court

Admin., 95 F.3d 195, 198-99 (2d Cir. 1996) (“If the precise

claims raised in a state court proceeding are raised in the

subsequent federal proceeding, Rooker-Feldman plainly will

bar the action.”).

2. Equally misplaced is Petitioners’ claim that the

decision below “eviscerates the well-established principle

that concurrent jurisdiction may permit overlapping and even

identical claims to proceed in parallel” in state and federal

courts. (Pet. 7) The decision below does nothing of the

kind. The Third Circuit merely held that when the state

court reaches a final judgment on the merits first, the federal

court is then barred from further consideration of the

identical issues, at least where the federal action is being

maintained, admittedly, for the sole purpose of providing an

“insurance policy” against an unfavorable judgment by a

state appellate court. This is fully consistent with the

principles of Rooker-Feldman because, were the federal

district court to also proceed to a final judgment on the

identical claims, its judgment would operate in effect as an

appellate de novo review of the state court’s judgment.

Moreover, as a matter of both judicial efficiency and federal-

state comity, it makes no sense whatsoever to have both a

state and then a federal court render final judgments on

identical claims between the same parties, and Petitioners

themselves tellingly offer no argument to the contrary.

Hence, Petitioners’ attempt (Pet. 13-14) to manufacture a

split between the decision below and the Ninth Circuit's

decision in Noel v. Hall, 341 F.3d 1148 (9th Cir. 2003), fails.

Petitioners rely on Noel for the proposition that “Rooker-

Feldman did not apply to prevent Noel from pursuing

identical claims simultaneously in federal and pending state

—

proceedings.” (Pet. 14) This is beside the point. The Third

Circuit’s decision below is entirely consistent with this

holding of Noel. In Noel, there was no state court final

judgment; both the federal and state proceedings were

pending. Noel, 341 F.3d at 1165. Here, by contrast, the state

court has reached a final judgment on the identical claims

that Petitioners are pursuing in their federal action.”

Petitioners’ attempt to manufacture a split with the Fourth

Circuit’s decision in Vulcan Chemical Technologies, Inc. v.

Barker, 297 F.3d 332 (4th Cir. 2002), on the permissibility

of “parallel” state and federal litigation, is likewise futile. In

Vulcan, the court did “not reach [the] Rooker-Feldman

argument.” Jd. at 338 (emphasis added). Instead, stressing

the “unusual circumstances of th[e] case, in which a state

court had entered judgment on the exact issue to be

considered by the federal court before the federal court had

even heard argument in the case,” the Fourth Circuit

dismissed the federal suit under the Colorado River

abstention doctrine. Jd. at 343-44. Indeed, to the extent that

Vulcan is instructive at all, it begs the question why

Petitioners are complaining about dismissal of their federal

action. Petitioners. concede (Pet. 21) that their case “likely”

should be dismissed on abstention grounds — a result that

would accord with Vulcan. Petitioners offer no explanation

why this Court should review a case dismissed on Rooker-

Feldman grounds that they concede could have as easily

been dismissed on abstention grounds.

3. Lastly, Petitioners argue that “the Third Circuit’s

reformulation of Rooker-Feldman promotes gamesmanship

and forurn shopping.” (Pet. 22) As they see it, “[a]

defendant who is sued in federal district court in the Third

2 Petitioners concede that “the fact that the Delaware trial court’s

decision is pending on appeal” does not prohibit application of the

Rooker-Feldman doctrine. (Pet. 18)

Circuit — or any circuit that adopts the Third Circuit's

Rooker-Feldman approach — can now defeat federal

jurisdiction simply by filing a suit (eg., a declaratory

judgment action) raising identical issues in state court.” (/d.

(footnote omitted)) This argument is absurd. For one thing,

it ignores Petitioners’ own “gamesmanship” in maintaining

this federal action as an “insurance policy” in the event that

they are moved to challenge an adverse judgment by the

Delaware Supreme Court. A clearer case of forum shopping

is difficult to imagine. For another, it ignores the fact that

the mere filing of a federal action does not eliminate

jurisdiction under the decision below; only a state-court final

judgment does, at least where the federal action is admittedly

intended only to serve as an “insurance policy” against a

state appellate court’s reversal of a favorable judgment.

ll. THIS CASE IS A POOR VEHICLE FOR

EXPLORING WHATEVER DISTINCTIONS MAY

EXIST BETWEEN THE ROOKER-FELDMAN

DOCTRINE AND RES JUDICATA PRINCIPLES

A.The Third Circuit’s Decision Was Narrow,

Factbound, And Entirely Consistent With The

Rooker-Feldman Doctrine

As explained above, Petitioners have presented a highly

exaggerated and misleading picture of what the Third Circuit

really held in this case. In fact, they ultimately admit (Pet.

17-18) that their complaint boils down to a disagreement

with the way the Third Circuit applied the Rooker-Feldman

doctrine on a set of unusual facts. But this Court does not

grant certiorari to resolve factbound applications of legal

standards. See, e.g., Packwood v. Senate Select Comm. on

Ethics, 510 U.S. 1319, 1320-21 (1994); Izumi Seimitsu

Kogyo Kabushiki Kaisha v. U.S. Philips Corp., 510 US. 27,

34 (1993). No exception is warranted here.

The Third Circuit’s decision is on its face a narrow,

factbound application of the Rooker-Feldman doctrine. As

the Third Circuit noted, Petitioners’ federal action does not

present claims that are merely similar, or related, to claims

they have pursued to final judgment in Delaware: “([T]here

is no dispute that [Petitioners’] claims are identical to the

claims upon which the Delaware Superior Court reached a

final judgment.” (Pet. App. 6a (emphasis added))

Moreover, Petitioners admitted at oral argument (though this

admission is tellingly absent from their petition) that they

seek “to maintain [their] federal action as an ‘insurance

policy’ in order to relitigate the overcharge issue if SABIC

prevails in its efforts to overturn the state court verdict ....”

(Pet. App. 8a (emphasis added)) In other words, Petitioners’

avowed and only purpose for maintaining their federal action

is as a vehicle to overturn any adverse judgment that the

Delaware Supreme Court might issue.

On these unusual facts, which are unlikely to recur with

any frequency, the Third Circuit’s decision to employ the

Rooker-Feldman doctrine to stop Petitioners from gaming

the system is unremarkable. In fact, in the only other case

presenting similar facts, the Fourth Circuit reached precisely

the same result. In American Reliable Insurance Co. v.

Stillwell, 336 F.3d 311 (4th Cir. 2003) — a case that

Petitioners themselves cite as a correct application of the

Rooker-Feldman doctrine (Pet. 22) — a party “prepar[ed] a

complaint raising claims identical to those in state court . . .

and fil{ed] it immediately prior to the state court decision in

preparation for an adverse determination.” /d. at 318. The

party also admitted that it intended “to let the federal

complaint sit . . . while awaiting the state-court decision and

to pursue it only if [it] lost in state court.” Jd. (internal

quotation marks omitted). The Fourth Circuit rejected this

“ploy” to “nullify the purpose of [the] Rooker-Feldman”

doctrine. Jd. “[A] party cannot avoid Rooker-Feldman .. .

where it is patently obvious, as it was here, that the federal

action is intended to be nothing more than an appeal of an

unfavorable decision by the state court.” Jd. at 319. As the

Fourth Circuit put it, barring the federal action was

“consistent with the spirit of the Rooker-Feldman doctrine,”

which “elevat[es] substance over form.” Jd.

The substance and spirit of the Rooker-Feldman doctrine

manifestly are not served by allowing Petitioners to clog the

federal court system with a suit they admit will go forward

only if they are moved to attack an adverse state-court

judgment. Faced with these unusual (and probably non-

recurrent) facts the Third Circuit reached an entirely

understandable and correct result.

B. Petitioners Did Not Raise Below, And The Third

Circuit Did Not Consider, The Question Presented

In The Petition

Before the Third Circuit, Petitioners raised only two

issues with respect to the Rooker-Feldman doctrine’s

applicability to their federal action. Neither was the question

presented in their petition.

First, Petitioners argued that the Rooker-F eldman doctrine

did not apply because they filed their federal action before

they filed “identical claims” as counterclaims in the

Delaware Superior Court. (Pet. App. 6a) The Third Circuit

correctly rejected this argument, stating that the “only timing

relevant is whether the state judgment precedes a federal

judgment” and it is “the substance of the state court’s

judgment compared to the plaintiff's claims in the federal

action” that determines Rooker-Feldman’s applicability.

(Id.) Petitioners do not take issue with the Third Circuit’s

rejection of their argument on this issue.

Second, Petitioners argued that ExxonMobil (the parent

corporation) was not, in fact, a party to the Delaware

litigation, whose counterclaims were brought by two of

ExxonMobil’s wholly-owned subsidiaries. The Third Circuit

rejected this claim on the grounds that the “common sense

privity principle” and “the fact that ExxonMobil’s interest in

its federal claims is identical to its subsidiaries’ interest in

their state court claims” meant that ExxonMobil was a party

to the Delaware action. (Pet. App. 7a-8a) Petitioners have

not challenged the Third Circuit’s resolution of this issue 7

against them, either.

Below, Petitioners did not so much as hint at their present

position that application of the Rooker-Feldman doctrine to

bar their “insurance policy” federal action would improperly

conflate that doctrine with res judicata. Nor, after the Third

Circuit issued its decision, did Petitioners file a petition for

rehearing or suggestion of rehearing en banc raising this

question. Having not raised their question presented in the

court below, Petitioners cannot properly raise it here. This

Court does “not decide in the first instance issues not

decided below.” National Collegiate Athletic Ass'n v. Smith,

525 U.S. 459, 470 (1999); accord, e.g., Glover v. United

States, 531 U.S. 198, 205 (2001).

C. Whether Decided On Rooker-Feldman Grounds Or

On Res Judicata Grounds, Petitioners “Insurance

Policy” Federal Action Is Barred

This case is a poor vehicle for exploring the differences

between the Rooker-Feldman doctrine and res judicata

principles for yet another reason: The outcome of this case

would be the same under either analysis.

Petitioners as much as concede this point in arguing that

the Third Circuit’s analysis tracked precisely the application

of Delaware res judicata law. (See Pet. 7,9, & 20n.4) As

discussed above (see supra pp. 6-8), this is a

mischaracterization of the decision below. But Petitioners

are correct that, had the Third Circuit analyzed this case

under Delaware res judicata law, it would have reached the

same result. Delaware’s res judicata doctrine “precludes a

second attempt to litigate the same ‘cause of action.’”

Hughes v. Trans World Airlines, Inc., 336 A.2d 572, 574

(Del. 1975); accord, e.g., Ezzes v. Ackerman, 234 A.2d 444,

445 (Del. 1967) (“[A] judgment entered either after trial on

the merits or upon an approved settlement is res judicata and

bars subsequent suit on the same claim....”). Moreover,

even a “judgment being appealed will support the application .

of... res judicata.” Maldonado v. Flynn, 417 A.2d 378, 384

(Del. Ch. 1980); accord, e.g., Playtex Family Prods., Inc. v.

St. Paul Surplus Lines Ins. Co., 564 A.2d 681, 684 n.2 (Del.

Super. Ct. 1989); Restatement (Second) of Judgments § 13

cmt. f (1982). See generally 28 U.S.C. § 1738 (state

“judicial proceedings ... shall have the same full faith and

credit in every court within the United States... as they

have by law or usage in the courts of such State... from

which they are taken”).

Thus, because Petitioners’ suit is not only barred under the

Rooker-Feldman doctrine, but is also presently precluded

under elementary principles of Delaware res judicata law, it

is a poor vehicle for teasing out any distinctions that may

exist between the two. Indeed, it is mystifying that

Petitioners would seek to challenge the Third Circuit’s

Rooker-Feldman-based dismissal, which, like all subject-

matter jurisdiction dismissals, is without prejudice. See 2

Moore’s Federal Practice § 12.30[2] (3d ed.). The

alternative is a res judicata dismissal on the merits with

prejudice, which “bars further claims by parties or their

privies on the same cause of action.” United States v.

Mendoza, 464 U.S. 154, 158 n.3 (1984) (emphasis added).