Petition for Writ of Certiorari — Rodriguez Delgado v. Shell Oil Co.

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001316 FEB 14 PAD

No.

DFEICE O68 THE OL ERK

In The

Supreme Court of the United States

FRANKLIN RODRIGUEZ DELGADO, ET AL.,

Petitioners,

SHELL OIL CO., ET AL.,

Respondents.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Fifth Circuit

PETITION FOR A WRIT OF CERTIORARI

FreD Misko, Jr. CHARLES S. SIEGEL

Law Ofrices OF FRED Counsel of Record

Misko, Jr., P.C. Waters & Kraus, LLP

3811 Turtle Creek Blvd. 3219 McKinney Avenue

Suite 1900 Suite 3000

Dallas, TX 75219 Dallas, TX 75204

(214) 443-8000 (214) 357-6244

STEPHEN D. SUSMAN THomas Hart

MICHAEL LEE ALKON, RHEA & Hart

*“SUSMAN GODFREY 2115 Queen Street

5100 First Interstate Bank Christiansted, St. Croix,

Plaza VI 08820

1000 Louisiana Street (340) 773-3305

Houston, TX 77002

(713) 651-9366

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

To gain access to federal court, defendants in a state

court action filed third-party complaints against an entity

asserted to be a “foreign state” within the meaning of the ©

Foreign Sovereign Immunities Act. The entity was never

a party to the state court actions. After these filings, that

entity removed the actions to federal court, where defen-

dants obtained dismissal on the basis of a federal defense

not available in state court.

This case raises two questions that warrant review by

this Court:

1. Whether an entity, a majority of whose shares are

owned not by a foreign state but by an agency or

instrumentality of a foreign state, should itself be

deemed to be a foreign state under 28 U.S.C.

§1603(b)(2) - a question on which the lower

courts are divided; and

2. Whether the court of appeals departed from

recent and controlling authority of this Court, in

holding that an entity need not be a party to a

state court proceeding before removing it to fed-

eral court.

LIST OF PARTIES

The named petitioner, Franklin Rodriguez Delgado,

was the named plaintiff in one of the cases consolidated

below. The other petitioners are approximately sixteen

thousand individuals who were also named plaintiffs in

one of the consolidated cases. One of the cases below,

Jorge Colindres Carcamo, et al. v. Shell Oil Co., et al. was

filed as a putative class action, but certification was never

ruled upon. For this reason, the phrase “Franklin

Rodriguez Delgado, individually and on behalf of all

others similarly situated” appears in the caption of the

court of appeals’ decision.

The record contains the names of each petitioner.

Their names are omitted here in the interest of brevity,

but can be supplied to the Court promptly upon request.

The respondents are Shell Oil Co., Dow Chemical

Co., Occidental Chemical Corp., Standard Fruit Co., Stan-

dard Fruit and Steamship Co., Dole Food Co., Dole Fresh

Fruit Co., Chiquita Brands, Inc., Chiquita Brands Interna-

tional, Inc., Del Monte Tropical Fruit Co., Del Monte

Fresh Produce, N.A., Dead Sea Bromine Co, Ltd., and

Ameribrom, Inc., defendants and third-party defendants

in the district court.

ill

TABLE OF CONTENTS

Page

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CD ons Vacs dcccenctecsescasesess iii

BE I PAUP RMUIIAEEEED 6 cc ccc cccsncccccecccessae iv

OPINIONS BELOW....... pe PrP err errs Pre rrrr er. 1

I aba SU seed secocensssevisscossisces 1

Ee ere 1

STATEMiems: OF THE CASE.........ccccccsccccnes 2

REASONS FOR GRANTING THE WRIT ........... 10

I. THERE IS A DIRECT CONFLICT AMONG THE

COURTS OF APPEALS AND THE DISTRICT

COURTS ON THE DEFINITION OF “FOREIGN

STATE” UNDER THE FPSUA .......ccccccccccces 10

A. The Courts of Appeals Are Divided On

Whether An Indirect Subsidiary of a Foreign

State Is Itself A Foreign State ............. 12

B. The District Courts are Divided on Tiering... 19

C. The Issue Of Foreign State Status is Impor-

PAPE TET TE PTTL EEL 22

Il. THE DECISION BELOW CONFLICTS WITH

THIS COURT’S RECENT DECISION IN MUR-

PHY BROS., INC. V. MICHETTI PIPE STRING-

TN GAN GRKVU6 665.000.3065 6600K 60 danengee 24

Ae Ee ee 30

at i Ag ee ae App. 1

TABLE OF AUTHORITIES

Page

CASES

Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 10

Foe Ae Ue Ge PD sos vks vase rsceenctesseeises 18

Argentine Republic v. Amerada Hess Shipping Corp.,

ee Se Se ERE oa eb cbc kweceee shes pines sasees 10

C & H Nationwide, Inc. v. Thompson, 903 S.W.2d 315

Ce erp rere terre rrr rye yer ries errr re 4

Corporacion Mexicana de Servicios Maritimos, S.A. v.

M/T Respect, 89 F.3d 650 (9th Cir. 1996)........... 14

Dewhurst v. Telenor Invest AS, 83 F.Supp.2d 577

PE Do ddug ce od Pocescusea un eeeee eee esas) 21

Federal Ins. Co. v. Richard I. Rubin & Co., 12 F.3d

Sere Ge Ge POE ood Fake chs ee rh eke eann eee aie 18

Gardiner Stone Hunter Int'l v. Iberia Lineas Aereas de

Espana, S.A., 896 F.Supp. 125 (S.D.N.Y. 1995)...... 19

Gates v. Victor Fine Foods, 54 F.3d 1457 (9th Cir.),

cert. denied, 516 U.S. 869 (1995)........ 13, 14, 17, 24

- Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d

Oa Gee GE es as va veces ceevaa tetas tekndesaer 18

Hyatt Corp. v. Stanton, 945 F.Supp. 675 (S.D.N.Y.

GOR id ddayanaeewehie ee cable ceesinks baeaeal 11, 20

In re Air Crash Disaster Near Roselawn, Indiana, 96

Ce iy, Fa ee * errrerrr errr rer rer rr 18, 29

In re Clearsky Shipping Corp., 1999 WL 1021825

Ce Sig Te i eo i xc hc edS Si eee eerie 21

Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984) .... 23

Linton v. Airbus Industrie, 934 S.W.2d 754 (Tex.

App. 1996), cert. denied, 525 U.S. 1145 (1999)...... 21

TABLE OF AUTHORITIES - Continued

Page

Martinez v. Dow Chemical Co., 1996 WL 502461

(E.D. La., Sept. 4, 1996)......-cccccvcvccccceseces 20

Millicom Int'l Cellular, S.A. v. Republic of Costa Rica,

995 F.Supp. 14 (D.D.C. 1998)..........seeeeeeeeene 21

Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc.,

$26 US. 546 (1999) oo ccccceses 24, 2, 26, 2/7, 2, 29

Parex Bank v. Russian Sav. Bank, 81 F.Supp.2d 506

CRAP. YW. SOR ooo cecdnsscccasesenssaansgaugeseaes 29

Patrickson v. Dole Food Co., No. 97-01516 HG

(D.Haw., Sept..9, 1998) ......cccccccccccsccevseeee 24

Proctor & Gamble Cellulose Co. v. Viskoza-Loznica, 33

F.Supp.2d 644 (W.D. Tenn. 1998)...............0- 21

Refco, Inc. v. Galadari, 755 F.Supp. 79 (S.D.N.Y.

FOND cincccdncccccscesckecsssapiakees tense 11

Rodriguez v. Shell Oil Co., 818 F.Supp. 1013 (S.D.

Wet. TOGO o's ok Peed ko deckascdstieercereeeeee ee 3

Saudi Arabia v. Nelson, 507 U.S. 349 (1993)............ 7

Southern Ocean Seafood Co. v. Holt Cargo Systems,

Inc., 1997 WL 539763 (E.D. Pa. 1997)...........+.-. 21

United States Fidelity & Guar. Co. v. Braspetro Oil

Services Co., 1999 WL 307666 (S.D.N.Y., May 17,

ey PEPE EMEP POET TO Te Serr rrr Terre rrr ee 20

Valley Industries, Inc. v. Martin, 733 S.W.2d 720

(Tex. App. 1967)... cccccccccesccdcsssncensnsonese 28

Vencedora Oceanica Navigacion S.A. v. Compagnie

Nationale Algerienne De Navigation, 730 F.2d 195

Cs CUE TID isn ccuccasercaden cs eenenevaysieines 11

TABLE OF AUTHORITIES - Continued

Page

STATUTES

Be Dalle BAPE) 0b aks 6 iseecvvadudetececsexcaweeins 1

aD Wes RUD < 60:0 0 6-00000 000 nrenb ee eneeens 2, 10, 11

Be WGK. GG o 6 00.66 cecnntineascsiseseseeaeree 24

BD Wn. EE « cr ciccicectstsistantastasee passim

OD Uae Rs 6 606-60 cones eacnscaessssbassteeel 11

BB UGK, SRORIOs 00 occ cnrcaddvcnceceescetnvucans 1]

RULEs

i et Re ee PR rere ee ea 4, 28

; Ms |. SB Perr er eee ee, 4,6

\ ee ee eS rrr rrr re roe 4, 28

OTHER AUTHORITIES

Thad T. Dameris and Michael J. Muchetti, Vectors

to Federal Court: Unique Approaches to Subject

Matter Jurisdiction in Aviation Cases, 62 J. Air L.

Ge COUR. SEP CHOOED 6 v0 knnccanshdkaccesbasaneus 22, 29

Jane H. Griggs, Note, International Law — The For-

eign Sovereign Immunities Act: Do Tiered Corpo-

rate Subsidiaries Constitute Foreign States?, 20 W.

New Eng. L. Rev. 387, 429-34 (1998) .............. 21

Joseph W. Hardy, Note, Wipe Away the Tiers: Deter-

mining Agency or Instrumentality Status under the

Foreign Sovereign Immunities Act, 31 Ga. L. Rev.

SIZE, BEM SS CESSES 0 v0 kevccentccsvnweetettecusues 21

vii

TABLE OF AUTHORITIES - Continued

William C. Hoffman, The Separate Entity Rule in

International Perspective: Should State Ownership

of Corporate Shares Confer Sovereign Status for

Immunity Purposes?, 65 Tul. L. Rev. 535, 576

LIDSDD . oc ccccccccccccccrcccscnescesccccegecoeces

Kelly Shaul, Comment, Tiered Entities and Sovereign

Privileges Under the Foreign Sovereign Immuntties

Act, 34 San Diego L. Rev. 1817, 1836-51 (1997) ....

R.P. Short, “The Role of Public Enterprises: An

International Statistical Comparison,” in Public

Enterprise in Mixed Economics 110, 115 (Interna-

tional Monetary Fund 1984) ..............+++:.

Page

OPINIONS BELOW

The decision of the United States Court of Appeals

for the Fifth Circuit is reported as Franklin Rodriguez

Delgado v. Shell Oil Co., 231 F.3d 165 (5th Cir. 2000), and is

reproduced in the Appendix at 1-39. The district court

opinions are reported at 890 FSupp. 1315 and 890 F.Supp.

1324, and appear in the Appendix at 40-59, 60-172.

JURISDICTION

The judgment of the court of appeals was entered on

October 19, 2000. The court denied a timely motion for

rehearing on November 16, 2000.

The jurisdiction of this Court is invoked under 28

U.S.C. §1254(1).

STATUTES INVOLVED

28 U.S.C. §1603, the definitional provision of the

Foreign Sovereign Immunities Act, provides in pertinent

part:

(a) A “foreign state,” except as used in section

1608 of this title, includes a political subdi-

vision of a foreign state or an agency or

instrumentality of a foreign state as defined

in subsection (b).

(b) An “agency or instrumentality of a foreign

state” means any entity...

(1) which is a separate legal person, cor-

porate or otherwise, and

(2) which is an organ of a foreign state or

political subdivision thereof, or a

majority of whose shares or other

ownership interest is owned by a for-

eign state or political subdivision

thereof, and

i i

(3) which is neither a State of the United

States as defined in section 1332(c) and

(d) of this title, nor created under the

laws of any third country.

28 U.S.C. §1441 provides in pertinent part:

(a) Except as otherwise expressly provided by

Act of Congress, any civil action brought in

a State court of which the district courts of

the United States have original jurisdiction,

may be removed by the defendant or defen-

dants, to the district court of the United

States for the district and division embrac-

ing the place where such action is pend- ~ |

i i

(d) Any civil action brought in a State court

_ against a foreign state as defined in section

1603(a) of this title may be removed by the

foreign state to the district court of the

United States for the district and division

embracing the place where such action is

pending ....

STATEMENT OF THE CASE

Petitioners respectfully seek a writ of certiorari to the

United States Court of Appeals for the Fifth Circuit. That

court affirmed dismissals entered in several cases that

had been consolidated at the district court level and on

appeal. App. 5, 9, 14.

Petitioners are workers on banana plantations in sev-

eral foreign countries. They sued most of the respondents

in various state courts in Texas. Other respondents were

later impled as third-party defendants.

Petitioners alleged they had been sterilized as a

result of occupational use of a pesticide made or used by

the respondents. Respondents Shell Oil Co., Dow Chemi-

cal Co. and Occidental Chemical Corp. were alleged to

ee eee ed

have made and sold the pesticide; respondents Standard

Fruit Co., Standard Fruit & Steamship Co., Dole Food Co.,

Inc., Dole Fresh Fruit Co., Chiquita Brands, Inc., Chiquita

Brands Int'l. Inc., and Del Monte Tropical Fruit Co. were

alleged to have required petitioners to use it while

employing petitioners on their banana plantations. Peti-

tioners alleged that both groups of respondents knew of

“the hazards of the pesticide, and that they continued to

sell and use it after the Environmental Protection Agency

banned its use in this country because it caused sterility

and cancer.

The choice of Texas state court was not an accident.

Two of the respondents, Shell Oil Co. and Occidental

Chemical Corp., have their world headquarters in Texas.

A third, Dow Chemical Co., has its largest facility there.

Texas also did not recognize the doctrine of forum non

conveniens at the time the suits were filed.

Most of the cases were removed and remanded once.

E.g. Rodriguez v. Shell Oil Co., 818 F.Supp. 1013 (S.D. Tex.

1993); App. 8. Unable to remove the cases on any normal

basis, respondents decided to implead a putative third-

party defendant — an Israeli company which was asserted

to be a “foreign state” within the meaning of the Foreign

Sovereign Immunities Act. This third-party defendant,

respondent Dead Sea Bromine Co. (“Dead Sea”), was not

owned by the State of Israel. Instead, it was a second-tier

subsidiary of a company owned by the State of Israel.

Respondents had no true interest in contribution or

indemnity from Dead Sea. Instead, they wanted to use

Dead Sea as a procedural weapon, to facilitate removals

that were otherwise barred. As an asserted foreign sover-

eign, it could remove not only the third-party claims

brought against it, but also the petitioners’ underlying

claims against the primary respondents.

The respondents in the state cases secured Dead Sea’s

cooperation in advance, before filing the ostensible third-

party claims against it. This cooperation is evidenced by,

among other things, the simultaneous filing of the third-

party complaints and the resulting removals.

The first removal occurred in the Delgado case in

Galveston County, Texas.

On March 15, 1994, respondent Del Monte Fresh Pro-

duce, N.A. served a third-party claim upon respondent

Dead Sea. Dead Sea removed the entire case the same

day. App. 9. Petitioners were never served with Del

Monte’s third-party action until well after the removal

occurred.

In light of the respondents’ impleader of Dead Sea,

and in view of petitioners’ knowledge that Dead Sea

played no role in causing their injuries because its prod-

uct was virtually never sold in petitioners’ countries,

petitioners amended their pleadings in other state court

actions to specifically disclaim recovery of any damages

attributable to any act, omission or product of Dead Sea.

App. 87. The point of these amendments, of course, was

to eliminate any derivative third-party claim against

Dead Sea. E.g., C & H Nationwide, Inc. v. Thompson, 903

S.W.2d 315, 320 (Tex. 1994) (“[A] person is not liable to a

defendant for contribution if he is not also liable to the

plaintiff.”). Petitioners assumed that the defendants

would bring motions in the state courts, under Tex. R.

Civ. Proc. 38, for leave to serve Dead Sea with third-party

complaints.

Tex. R. Civ. Proc. 38(a) is similar to Fed. R. Civ. Proc.

14(a), in that it provides a time period - 30 days after

}

answering, as opposed to ten under the federal rule —- in

which a defendant may implead a third party without

leave of court. After 30 days, the Texas rule requires that

a defendant “must obtain leave on motion upon notice to

all parties to the action.” Petitioners wished to avoid the

impleader of Dead Sea, and believed that the elimination

of any third-party liability on Dead Sea’s part would

weigh in favor of denial of such motions.

Petitioners did not anticipate, however, the orchestra-

tion of pleadings that next occurred. These carefully cho-

reographed maneuvers resulted in the normal state court

scrutiny of third-party petitions being circumvented.

Here is Dead Sea’s own description of the removal

machinations in one case:

On April 5, 1994, defendant The Dow Chemical

Company (“Dow”), filed a third-party petition

against Dead Sea Bromine and Ameribrom, Inc.

(“Ameribrom”). Dead Sea Bromine, which is an

“agent or instrumentality” of the State of Israel

within the meaning of Section 1603(b) of the

Foreign Sovereign Immunities Act (“FSIA”), 28

U.S.C. §1603(b), immediately removed the

action to this Court under 28 U.S.C. §1441(d).

The Notice of Removal, was filed at 4:00 p.m.,

and included as an attachment a copy of the

third party petition which was filed by Dow at

3:55 p.m. Before filing the Notice of Removal,

Dead Sea’s counsel, Mr. Cole, verified with

Dow’s local counsel, that Dow had in fact filed

the third party petition in state court. The

Notice of Removal was filed at 4:00 p.m., which

was after Mr. Cole confirmed that the third

party action against Dead Sea was, in fact, filed

in the State Court.

In other words, the defendant's third-party petition,

and Dead Sea’s ensuing removal, were filed five minutes

apart, in two different cities, after coordination between

counsel. Petitioners, of course, were never served with

either document until well after impleader and removal

had been accomplished. In another case, the third-party

petition and the removal were filed twenty minutes apart.

' Again, the respondents never sought the required

leave, under Tex. R. Civ. Proc. 38, to serve Dead Sea.

Instead, without seeking leave of court, and without serv- |

ing or otherwise notifying petitioners or the state courts, |

they served “courtesy copies” of the third-party claims on

Dead Sea counsel, and contrived with their ostensible

adversary, Dead Sea, for the removals to occur before

petitioners even learned of them. In this way, of course,

respondents avoided the normal state court scrutiny of

requests to implead third parties. Respondents’

unwillingness to use the normal state court procedures

for impleading third parties reflects respondents’ knowl-

edge that they had no viable claim against Dead Sea. i

Once in federal court, the cases were ultimately con-

solidated before Judge Lake of the Southern District of

Texas. Prior to consolidation, however, certain rulings

occurred. On June 10, 1994, prior to any ruling on any

aspect of petitioners’ motions for remand, a magistrate

granted leave to respondents to serve amended third- )

party complaints on Dead Sea. App. 74. On June 30, 1994,

Judge Lake consolidated the Delgado and another action,

the Jorge Carcamo case, and tentatively denied petitioners’

motions for remand on certain points. He ruled that Dead

Sea qualified as a “foreign state” under the Foreign Sov-

ereign Immunities Act, and as such its presence conferred

subject matter jurisdiction over the actions in their

entirety. Judge Lake reserved ruling on the othe: remand

Se ee

issues. These included petitioners’ contentions that Dead

Sea’s removals had been premature, that even if Dead Sea

was a foreign sovereign it was immune from jurisdiction

under the FSIA or had been fraudulently joined, and

respondents’ arguments that both diversity and federal

question jurisdiction also existed.

The district court’s decision that Dead Sea was a

“foreign state” under the FSIA did not fully resolve the

issue of subject matter jurisdiction. Under the Act, once

an entity is classified as a foreign state, it is “presump-

tively immune from the jurisdiction of United States

courts; unless a specified exception applies, a federal

court lacks subject matter jurisdiction over a claim

against a foreign state.” Saudi Arabia v. Nelson, 507 U.S.

349, 355 (1993). Unlike the normal foreign state defen-

dant, however, Dead Sea was actively cooperating with

the respondents that were ostensibly suing it, and so

Dead Sea waived its immunity, thus strengthening

respondents’ arguments for federal subject matter juris-

diction. App. 81.

On March 23, 1995, a magistrate denied petitioners’

motion for remand in the Juan Valdez action, a case that

had not yet been transferred from the Eastern District of

Texas, addressing only Dead Sea’s status as a foreign

state that had waived its immunity. On the same day, he

granted defendants’ motion for leave to sue Dead Sea in

federal court. This case, too, ultimately was transferred to

the Southern District of Texas.

On July 11, 1995, Judge Lake issued an order which

disposed of the remaining remand issues, and granted

respondents’ motion to dismiss on forum non conveniens

grounds. Judge Lake found that Dead Sea’s removals

were premature, and thus defective, because it had never

properly been made a party in the state court actions, and

only parties can remove cases. He denied remand, how-

ever, because leave to add Dead Sea as a party had been

granted in federal court. App. 106. Judge Lake rejected

petitioners’ contention that Dead Sea had been fraudu-

lently joined, and also rejected respondents’ contentions

that other bases for federal subject matter jurisdiction

existed. App. 85, 96-103.1 Turning to the motion to dis-

miss on forum non conveniens grounds, Judge Lake

granted this motion in its entirety. The claims were dis-

missed in favor of litigation in the petitioners’ home

countries, subject to certain conditions imposed on the

defendants.?

Since a forum non conveniens dismissal requires the

consent to foreign jurisdiction of all defendants, Judge

Lake required Dead Sea to stipulate to foreign jurisdic-

tion as well. On the date that Dead Sea was required to

stipulate to foreign jurisdiction, respondents released

1 In those cases in which leave to add Dead Sea had not

been granted in federal court, Judge Lake ordered remand. One

such case, Erazo, was settled and is not part of this petition.

Another such case, Rodriguez, was later removed for the third

time. This case was disposed of by the Fifth Circuit’s ruling and

is included in this petition as to the first question presented.

App. 5.

2 Pursuant to Judge Lake’s dismissal order, petitioners

refiled their suits in the foreign countries. Since the claims were

refiled in August of 1995, trial courts in Costa Rica, Panama,

Nicaragua, Guatemala and the Philippines have refused to

exercise jurisdiction over the refiled cases. Pursuant to Judge

Lake’s order, plaintiffs from Costa Rica and Panama have filed

motions for reinstatement of their claims in the United States,

since no further appeal of the jurisdictional rulings is available

in these countries.

over 98% of their “claim” against Dead Sea. In two sepa-

rate agreements, respondents agreed that Dead Sea’s lia-

bility in any foreign proceeding would be capped at a

figure not to exceed 2.5% of any foreign judgment. In the

case of almost all countries the percentage is even

smaller, and averages out to approximately 1.9%. Before

the final dismissal of this action, then, respondents had

released the vast majority of their claim against Dead Sea.

App. 17. Even the remaining percentage liability was to

be finally litigated not in the foreign proceedings, but in a

separate proceeding in New York.

On October 27, 1995, the district court finally dis-

missed all of the cases. Petitioners appealed the dis-

missals to the United States Court of Appeals for the Fifth

Circuit, which ultimately consolidated all of the cases

into one appeal. App. 5. During the pendency of the

appeal, certain petitioners settled their claims against

some or all of the respondents. All petitioners and

respondents technically remained parties in the Fifth Cir-

cuit, however, as that Court denied all motions to dismiss

the appeal pursuant to settlement. App. 39.3

On October 19, 2000, the Fifth Circuit affirmed the

district court’s decision. First, the court of appeals held

that indirect state ownership suffices for “foreign state”

status under the FSIA. App. 23. Second, the court deter-

mined that Dead Sea’s removals were not premature, and

therefore not defective. App. 25, 26. The Fifth Circuit

+ The court of appeals stressed, however, that none of the

settlements required either court approval or dismissal of the

appeal as a condition of settlement, and that it was expressing

no opinion as to any of the objections to the settlements filed by

nonsettling respondents. App. 39.

denied a timely motion for rehearing on November 16,

2000. App. 176-77.

In this petition, two reasons are advanced for grant-

ing the writ. The first - the conflict among the lower

courts on the construction of an important threshold pro-

vision in the Foreign Sovereign Immunities Act — applies

to all petitioners. The second reason is that the Fifth

Circuit has failed to follow controlling precedent from

this Court on removal procedure. In view of the differ-

ences in procedural history among the various lower

court cases consolidated in the district court and in the

Fifth Circuit, this second contention applies only to peti-

tioners in the Jorge Carcamo and Juan Valdez cases, Nos.

H-94-1337 and H-95-1356. The petitioners in these two

cases comprise the substantial majority of all petitioners.

REASONS FOR GRANTING THE WRIT

I. THERE IS A DIRECT CONFLICT AMONG THE

COURTS OF APPEALS AND THE DISTRICT

COURTS ON THE DEFINITION OF “FOREIGN

STATE” UNDER THE FSIA

The Foreign Sovereign Immunities Act provides the

exclusive source of jurisdiction over foreign states. Argen-

tine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428,

443 (1989). The threshold question in any suit brought

under the Act is whether the defendant, or third-party

defendant as in this case, is a “foreign state.”

A finding of foreign state status has highly signifi-

cant consequences for both the entity in question and the

litigant suing it. First, there is no right to a jury trial

against any entity that qualifies as a foreign state. 28

U.S.C. §1441(d). Second, as noted above, if an entity is a

foreign state, then it is immune from suit unless one of

the exceptions to immunity in §1605 applies. The most

frequently invoked exception is the “commercial activity”

exception, which requires that the plaintiff’s claim must

arise from “a commercial activity performed in the

United States, or from ‘an act performed in the United

States in connection with a commercial activity of the

foreign state elsewhere,’ or from ‘an act outside the terri-

tory of the United States in connection with the commer-

cial activity of the foreign state elsewhere and that act

causes a direct affect in the United States.’” 28 U.S.C.

§1605(a)(2).

This standard generally requires that the commercial

activity “bearing the nexus [to the United States] must be

the same activity that gives rise to the claim.” William C.

Hoffman, The Separate Entity Rule in International Perspec-

tive: Should State Ownership of Corporate Shares Confer Sov-

ereign Status for Immunity Purposes?, 65 Tul. L. Rev. 535,

576 (1991). In some cases a court will lack jurisdiction

over an entity if it is deemed a foreign state, but would be

able to exercise jurisdiction under normal principles of

general jurisdiction. Hyatt Corp. v. Stanton, 945 F.Supp.

675, 689 (S.D.N.Y. 1996) citing Vencedora Oceanica Naviga-

cion S.A. v. Compagnie Nationale Algerienne De Navigation,

730 F.2d 195, 199 (5th Cir. 1984).

Another major consequence of foreign state status is,

of course, a virtually unlimited removal right. Foreign

states need not obtain the consent of codefendants to

remove, they can remove the underlying claims as well as

third-party claims asserted against them, and their time

limits for removing cases can be extended merely for

“cause,” not necessarily good cause. 28 U.S.C. §1441(d);

see e.g., Refco, Inc. v. Galadari, 755 F.Supp. 79, 83-84

(S.D.N.Y. 1991) (allowing removal by foreign state after

case had been pending in state court for over five years).

These unusual removal rights are, of course, what led

respondents to seek Dead Sea’s cooperation here.

As detailed in part II below, this expansive removal

ability also invites collusive third-party impleaders, to

engineer the removal of otherwise unremovable cases. A

number of other procedural consequences flow from for-

eign state classification as well. See Hoffman, supra, at

571-73 (noting different service of process rules that fre-

quently blindside litigants who do not know that a com-

pany is state-owned, more restrictive rules for default

judgments and prejudgment attachment, and shifting of

the burden of proof on immunity issues).

In view of the important effects of “foreign state”

status determinations, this Court should grant certiorari

to resolve the conflicts among the lower courts set forth

below.

A. The Courts of Appeals are Divided on Whether

an Indirect Subsidiary of a Foreign State is

Itself a Foreign State

The definitional section of the FSIA, 28 U.S.C. §1603,

first defines a “foreign state” as “a political subdivision

of a foreign state or an agency or instrumentality of a

foreign state as defined in subsection (b).” Subsection (b)

next defines “agency or instrumentality” as “any entity —

(1) which is a separate legal person, corporate

or otherwise, and

(2) which is an organ of a foreign state or

political subdivision thereof, or a majority

of whose shares or other ownership interest

is owned by a foreign state or political sub-

division thereof, and

(3) which is neither a citizen of a State of the

United States, nor created under the laws

of any third country.”

The dispute in this case is whether Dead Sea meets

the second of the three criteria above. Dead Sea is only

indirectly owned by Israel, through a “tiered” set of

companies: Israel owns 75.3% of Israel Chemicals, Ltd.,

which owns 88.2% of Dead Sea Works, Ltd., which owns

100% of Dead Sea.* In other words, Israel, plainly a

foreign state, owns Israel Chemicals, Ltd., plainly an

agency or instrumentality.

The next company in the chain, however, is not a

company “a majority of whose shares . . . is owned by a

foreign state or political subdivision thereof.” Instead,

Dead Sea Works is owned only by an agency or instru-

mentality of a foreign state (Israel Chemicals). Dead Sea

itself is a further step removed: it is owned by a company

that is owned by an agency or instrumentality of a for-

eign state.

The Fifth Circuit held that such “indirect or tiered

majority ownership is sufficient to qualify an entity as a

foreign state, assuming that all other requirements are

met.” App. 23. The court acknowledged the conflict with

the Ninth Circuit’s holding that only direct ownership is

permitted by §1603(b), in Gates v. Victor Fine Foods, 54 F.3d

1457, 1462 (9th Cir.), cert. denied, 516 U.S. 869 (1995). App.

* In fact, Dead Sea is no longer majority-owned by Israel at

all, and has been privately owned since February of 1995, before _

the trial court’s judgment in this case. App. 81. It was indirectly

owned by Israel at the time of its alleged involvement in the

underlying events of this case, however, and at the time of suit.

Petitioners have not contended that its change in status during

the pendency of this case is relevant to the “foreign state”

determination.

23. There is indeed a straightforward conflict between the

Fifth and Ninth Circuits on this issue: in Gates, the Ninth

_ Circuit squarely held that the entity in question was

“wholly owned by an agency or instrumentality of a

foreign state; [but] not owned by ‘a foreign state or

political subdivision thereof,’ as required by the statute.”

Id. at 1462. The Ninth Circuit has adhered to its holding

that direct ownership is required. Corporacion Mexicana de

Servicios Maritimos, S.A. v. M/T Respect, 89 F.3d 650, 655

(9th Cir. 1996).

Gates involved actions brought by employees who

were terminated when their employer closed their plant.

Defendants included several entities ultimately owned by

a Canadian government body. Defendant Alberta Pork

Producers Development Corp. (“Alberta Pork”) is a

Canadian entity which assists in the marketing of hogs

produced in Alberta. Alberta Pork purchased Fletcher’s

Fine Foods (“FFF”). FFF, in turn, owns a number of

subsidiaries and through those subsidiaries owned

Golden Gate Fresh Foods (“GGFF”), a California pork

processing plant. Id. at 1459.

Former employees of GGFF brought a class action

against their direct employer, GGFF, as well as Alberta

Pork, FFF and others. Alberta Pork and its wholly owned

subsidiary FFF each moved for dismissal for lack of sub-

ject matter jurisdiction under the FSIA. The district court

declined to decide whether defendants qualified as for-

eign sovereigns; instead it held that even if they were,

there was subject matter jurisdiction, because they were

not immune pursuant to the “commercial activities”

exception to the Act. Id.

On appeal, the Ninth Circuit addressed the status of

Alberta Pork and FFF under the Act. The court first set

out the statutory framework, in which the Act defines a

foreign state to include any “agency or instrumentality of

a foreign state,” and then requires an “agency or instru-

mentality” to be, among other things, “an organ of a

foreign state or political subdivision thereof, or [an entity,

a] majority of whose shares or other ownership interest is

owned by a foreign state or political subdivision

thereof”... . 28 U.S.C. §1603(b)(2). The parties had agreed

that other criteria for “agency or instrumentality” status

were satisfied; the only issue before the court was

whether the defendants were either “organs” of a foreign

state, or majority-owned by a foreign state. The court

concluded that Alberta Pork was an organ of the govern-

ment, but that FFF was not. Id. at 1461. The only remain-

ing issue, as in this case, was whether the entity claiming

immunity could be indirectly owned by the foreign state.

After finding that FFF could not constitute an

“organ” of Alberta, the Ninth Circuit turned to the

remaining possibility for establishing agency or instru-

mentality status: the majority ownership option set out in

subsection 1603(b). The facts were simple: Alberta Pork

was an organ of the government of the province of

Alberta, and as such, was an agency or instrumentality of

a foreign state, and it owned 100% of the shares of FFF.

The question presented was simply whether FFF could

claim “agency or instrumentality” status, and therefore

sovereign immunity, by being wholly owned by an entity

which was itself an agency or instrumentality of a foreign

state.

The Ninth Circuit closely read the plain language of

the Act, and concluded that such a chain of ownership

was not sufficient to confer foreign sovereign status on

FFF, the wholly owned subsidiary of Alberta Pork. Id. at

1461-62. Tracking the statutory language, the Ninth Cir-

cuit held that FFF could only be an agency or instru-

mentality of a foreign state if a majority of its shares were

owned by “a foreign state or political subdivision

thereof.” While it was true that FFF was wholly owned by

an agency or instrumentality of a foreign state, it was not

owned by the foreign state itself (or political subdivision

thereof), as clearly required by the statute. The court

explicitly rejected the argument that because Alberta

Pork was itself an agency or instrumentality, that it ipso

facto became a foreign state:

First, the statute provides that a foreign state

includes an agency or instrumentality, not that it

is an agency or instrumentality or that it is

defined as an agency or instrumentality. Second,

the remainder of the statute contradicts any

interpretation that would equate “an agency or

instrumentality” with “a foreign state.” If Con-

gress had intended “agencies or instru-

mentalities of a foreign state” to mean “a foreign

state” for the purposes of §1603, then it also

would have intended a “political subdivision”

to mean “a foreign state” because section

1603(a) defines a foreign state as including both

“a political subdivision of a foreign state or an

agency or instrumentality of a foreign state.”

Id. at 1462 (emphasis the court’s). The court found the

statutory language strongly indicates that Congress ‘did

not intend this interpretation, however, because the

remainder of the section differentiates between “foreign

states” and “political subdivisions thereof.” Id. Therefore,

being owned by an agency or instrumentality is not syn-

onymous with being owned by a foreign state or its

political subdivision.

The Ninth Circuit found further support for its con-

struction of section 1603 in the legislative history, citing

the House Report on the Act:

The second criterion requires that the entity be

either an organ of a foreign state (or of a foreign

state’s political division), or that a majority of

the entity’s shares or other ownership interest

be owned by a foreign state (or by a foreign

state’s political subdivision). If such entities are

entirely owned by a foreign state, they would, of

course, be included within the definition. Where

ownership is divided between a foreign state

and private interests, the entity will be deemed

to be an agency or instrumentality of a foreign

state only if a majority of the ownership inter-

ests (shares of stock or otherwise) is owned by a

foreign state... .

Id. at 1462, citing 1976 U.S.C.C.A.N. 6604, 6614.

The Ninth Circuit was convinced that the Act dis-

plays a clear recognition of the distinctions between for-

eign states, political subdivisions of foreign states, and

agencies or instrumentalities of foreign states. Had Con-

gress wished to confer “agency or instrumentality” status

on entities owned by other agencies or instrumentalities,

it could have done so clearly. It did not, however, and

instead made clear that the requisite majority ownership

could only be held by foreign states or their political

subdivisions. Congress had sound policy reasons for

drafting the Act as it did:

Moreover, a contrary reading of the statute

could expand immunity far beyond what Con-

gress intended. As it is written, the Act provides

potential immunity to entities that are either

organs of a foreign state or political subdivision

thereof or have a majority of shares owned by

the foreign state or political subdivision. To add

to that list entities that are owned by an agency

or instrumentality would expand the potential

immunity considerably because it would pro-

vide potential immunity for every subsidiary in

a corporate chain, no matter how far down the

line, so long as the first corporation is an organ

of the foreign state or political subdivision or

has a majority of its shares owned by the foreign

state or political subdivision. Although such a

broad view of sovereign immunity may very

well be desirable, we cannot assume that Con-

gress intended such a result when a literal read-

ing of the statute leads to the opposite

conclusion.

Id. In sum, both the plain language of the statute, and the

Congressional purpose behind it, compelled a holding

that FFF, as a lower-tier subsidiary, was not a foreign

state.

The direct conflict between the Fifth and Ninth Cir-

cuits alone, on the treatment of subsidiary corporations

under the FSIA, should suffice to warrant review by this

Court to resolve the conflict. Other courts of appeals’

opinions, however, also take different positions.

As noted by the court of appeals in this case, the

Seventh Circuit also views indirect ownership as suffi-

cient under §1603(b). In re Air Crash Disaster Near Rose-

lawn, Indiana, 96 F.3d 932, 941 (7th Cir. 1996).5 Conversely,

one judge on the Third Circuit has indicated his belief

that indirect ownership does not suffice. In Federal Ins.

5 The Court also cited two earlier cases, Allendale Mut. Ins.

Co. v. Bull Data Sys., Inc., 10 F.3d 425, 427 (7th Cir. 1993), and

Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445, 449-50 (6th

Cir. 1988). No party in either case, however, raised the tiering

issue.

Co. v. Richard I. Rubin & Co., 12 F.3d 1270 (3d Cir. 1993),

cert. denied, 511 U.S. 1107 (1994) all parties simply

assumed that the indirectly-owned entities in question

were foreign states. Judge Greenberg, however, raised the

question sua sponte, and noted his belief that this

assumption “might not be correct” because “a reasonable

inference might be drawn that the term ‘foreign state’ in

28 U.S.C. §1603(b)(2) does not include an entity which is a

foreign state only because it is an agency or instru-

mentality of a foreign state.” Id. at 1285 n. 12. Judge

Greenberg joined the opinion because the indirect-owner-

ship issue had not been preserved, id., but plainly felt

that indirect ownership does not suffice.

Among the courts of appeals, then, two Circuits — the

Fifth in the present case and the Seventh - view tiered

ownership as sufficient for “foreign state” status. The

Ninth Circuit holds the opposite, and a judge in the Third

Circuit has supported the Ninth Circuit’s view. Peti-

tioners respectfully submit that this division among the

courts of appeals warrants resolution of the question by

this Court. As detailed immediately below, however, the

district courts are also split on the issue.

B. The District Courts are Divided on Tiering

The district courts, too, have struggled with whether

tiered ownership satisfies §1603(b)(2). Even judges within

the same court have disagreed.

In Gardiner Stone Hunter Int'l v. Iberia Lineas Aereas de

Espana, S.A., 896 F.Supp. 125, 130 (S.D.N.Y. 1995), Judge

Koeltl adopted the Ninth Circuit viewpoint, finding it

“straightforward and persuasive.” Just over a year later,

Judge Mukasey of the Southern District also held that

“[a] corporation a majority of whose shares are owned by

an agency or instrumentality is not a foreign state under

the FSIA.” Hyatt Corp. v. Stanton, 945 F.Supp. 675, 690

(S.D.N.Y. 1996). Judge Mukasey found both the Ninth and

Seventh Circuits’ reasoning unconvincing. Instead, he

thoroughly examined the legislative history of §1603, and

other factors including “the remoteness of corporations

owned by agencies or instrumentalities from sovereign

control, and the far-reaching consequences of including

such corporations within the definition of foreign state

coupled with the ambiguous language on which such

consequences would have to rest,” and held direct owner-

ship essential. Id. at 688.

In United States Fidelity & Guar. Co. v. Braspetro Oil

Services Co., 1999 WL 307666 (S.D.N.Y., May 17, 1999)

Judge Koeltl again held indirect ownership insufficient,

agreeing with “Judge Muskasey’s careful analysis.” Id. at

*5. Most recently, however, Judge Sweet has taken the

opposing view. Parex Bank v. Russian Sav. Bank, 81

F.Supp.2d 506, 508 (S.D.N.Y. 2000).

Before the Fifth Circuit’s ruling on the issue, courts

within its boundaries had similarly disagreed, and indeed

had reached different conclusions with regard to Dead

Sea itself. After the district court ruling in this case, the

United States District Court for the Eastern District of

Louisiana held that Dead Sea was not a foreign state

because “[t]he plain language of the clause defining

‘agency or instrumentality’ requires that a ‘foreign state

or political subdivision thereof’ own the majority of the

entity; it does not provide that an entity may be an

‘agency or instrumentality’ because it is majority owned

by another agency or instrumentality.” Martinez v. Dow

Chemical Co., 1996 WL 502461, *2 (E.D. La., Sept. 4, 1996).6

In a later case, however, a different judge in the same

district held, in a case not involving Dead Sea, that indi-

rect ownership is all that is required by §1603(b)(2). In re

Clearsky Shipping Corp., 1999 WL 1021825, *4 (E.D. La.,

Nov. 8, 1999).

Other courts are similarly divided. Compare Dew-

hurst v. Telenor Invest AS, 83 F.Supp.2d 577, 593-95 (D.Md.

2000) (tiering not permitted), and Southern Ocean Seafood

Co. v. Holt Cargo Systems, Inc., 1997 WL 539763, *4-5 and

n. 9 (E.D. Pa. 1997) (citing Richard Rubin, supra, and

noting that “the dictum of the Third Circuit . . . [is]

persuasive although it is set forth as the view of only one

Judge.”), with Millicom Int’l Cellular, S.A. v. Republic of

Costa Rica, 995 F.Supp. 14, 18 n. 5 (D.D.C. 1998) (tiering

permitted); and Linton v. Airbus Industrie, 934 S.W.2d 754,

762 (Tex. App. 1996), cert. denied, 525 U.S. 1145 (1999)

(same). One district court has noted the conflict but

avoided the question. Proctor & Gamble Cellulose Co. v.

Viskoza-Loznica, 33 F.Supp. 2d 644, 654 n. 9 (W.D. Tenn.

1998).7

respondents here, making similar claims concerning sterility

and cancer. These plaintiffs, however, are not among the

petitioners here.

? Reflecting the deep split among courts, commentators are

divided as well. Compare Jane H. Griggs, Note, International

Law — The Foreign Sovereign Immunities Act: Do Tiered Corporate

Subsidiaries Constitute Foreign States?, 20 W. New Eng. L. Rev.

387, 429-34 (1998) (tiering should not be allowed), Kelly Shaul,

Comment, Tiered Entities and Sovereign Privileges Under the

Foreign Sovereign Immunities Act, 34 San Diego L. Rev. 1817,

1836-51 (1997) (same), Joseph W. Hardy, Note, Wipe Away the

Tiers: Determining Agency or Instrumentality Status under the

In sum, there is a direct conflict among the courts of

appeals and the district courts as to whether 28 U.S.C.

§1603(b)(2) permits indirect ownership by a foreign gov-

ernment to suffice for “foreign state” status under the

FSIA. This Court should resolve the conflict among these

many decisions so that this provision is applied uni-

formly throughout the nation.

C. The Issue Of Foreign State Status Is Important

As noted above, the FSIA is the sole source of juris-

diction over foreign governments, their political subdivi-

sions, organs, and subsidiary corporations. The question

of whether indirectly-owned entities qualify for foreign

state status is thus critical to determining the boundaries

of that jurisdiction. It is important for this jurisdictional

statute to receive this Court’s authoritative construction.

The substantial majority of litigation under the FSIA

concerns foreign government-owned corporations. While

it is rarely problematic to determine whether a political

entity constitutes a “foreign state or political subdivision

thereof,” most cases concern corporate entities. Today,

U.S. citizens, be they persons or corporations, are much

more likely to interact with such foreign government-

owned corporations. “[E]conomic globalization brings

domestic businesses increasingly into contact with for-

eign commerce.” Hoffman, supra, at 566-67.

Foreign Sovereign Immunities Act, 31 Ga. L. Rev. 1121, 1128-51

(1997) (same), with Thad T. Dameris and Michael J. Muchetti,

Vectors to Federal Court: Unique Approaches to Subject Matter

Jurisdiction in Aviation Cases, 62 J. Air L. & Com. 959, 972-74

(1997) (tiering permitted).

The foreign commercial entity encountered by an

American person or business is very likely to be state-

owned. In a 1992 study, two-thirds of the foreign firms in

the Fortune 500 were wholly or partly state-owned.

Shaul, Note, supra at 1820, quoting Abdullahm A\l-

Obaidan and Gerald W. Scully, Efficiency Differences

between Private and State-Owned Enterprises in the Interna-

tional Petroleum Industry, 24 Applied Economics 237

(1992). Yet the true degree of government involvement is

often low. State-owned enterprises are frequently

engaged in purely commercial activities. Hoffman, supra,

566 n. 152, citing R.P. Short, “The Role of Public Enter-

prises: An International Statistical Comparison,” in Public

Enterprise in Mixed Economics 110, 115 (International Mon-

etary Fund 1984) (state-owned enterprises are engaged in

virtually all industries, not simply natural monopoly

areas traditionally associated with governmental con-

trol.).

In view of the burgeoning presence and reach of

foreign state-owned businesses, it is crucial that the only

jurisdictional statute addressing them be applied in a

uniform manner in all courts. A patchwork of conflicting

decisional authority on the proper definition of

§1603(b)(2) leads to arbitrary and inequitable results, and

to venue choices based on such considerations. For

instance, if a foreign state-owned airplane flying from

Chicago to Los Angeles crashed, potential plaintiffs

would have to consider, as part of their litigation strategy,

whether to file suit in Chicago, where tiering is allowed,

or Los Angeles, where it isn’t. Although plaintiffs “forum

shop” for a variety of understandable and unobjection-

able reasons, e.g. Keeton v. Hustler Magazine, Inc., 465 U.S.

770, 779 (1984), differing applications of federal jurisdic-

tional provisions ought not be part of the equation. And

if the plane crashed in New York, federal jurisdiction

could depend on which federal judge was drawn.®

In view of the pronounced and widespread disagree-

ment on the issue of indirect ownership, this Court

should grant certiorari to resolve the confusion. This

important federal jurisdictional provision should be

applied uniformly in all courts in the United States.

II. THE DECISION BELOW CONFLICTS WITH THIS

COURT’S RECENT DECISION IN MURPHY

BROS., INC. V. MICHETTI PIPE STRINGING, INC.

In Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc.,

526 U.S. 344 (1999) this Court held that “a named defen-

dant’s time to remove is triggered” only upon service of a

complaint. Id. at 347-48. Resolving a conflict among the

lower courts as to whether formal service of process was

required to begin a defendant’s removal period under 28

U.S.C. §1446(b). the Court first noted that service of pro-

cess is essential to any obligation of a named defendant

to act in a suit brought against it:

8 Dead Sea itself has been the subject of several differing

holdings about its status. In addition to the divergent opinions

in the district courts within the Fifth Circuit, Dead Sea has been

“sued” as a cooperative third-party defendant in a similar

pesticide case in Hawaii. It dutifully removed the entire case the

same day. Applying Gates, the United States District Court for

the District of Hawaii held that Dead Sea was not a foreign state.

Patrickson v. Dole Food Co., No. 97-01516 HG (D.Haw., Sept. 9,

1998). The pertinent portion of this opinion appears in the

Appendix at 178-204. See App. 195.

Service of process, under longstanding tradition

in our system of justice, is fundamental to any

procedural imposition on a named defen-

dant .... In absence of service of process (or

waiver of service by the defendant), a court

ordinarily may not exercise power over a party

the complaint names as defendant... . Accord-

ingly, one becomes a party officially, and is

required to take action in that capacity, only

i upon service of a summons or other authority-

asserting measure stating the time within which

the party served must appear and defend.

j Id. at 350 (citations and quotations omitted). Accordingly,

the Court reaffirmed “the historic function of service of

process as the official trigger for responsive action by an

individual or entity named defendant.” Id. at 352 (foot-

note omitted).

The district court here had held as much four years

earlier. Respondents made the very same argument

rejected in Murphy Bros.: “Defendants’ argument rests on

the rule that the time for removal ordinarily begins upon

receipt, ‘through service or otherwise,’ of the pleading

first evidencing removability .. . . [D]efendants argue

that Dead Sea was entitled to remove when it received a

copy of the third-party petition against it without waiting

for the state court to act.” App. 93-94. But Judge Lake

rejected this argument, holding straightforwardly that

because state court leave to implead Dead Sea had never

been granted, “Dead Sea’s removal was defective because

Dead Sea was not yet a ‘defendant’ in the cases when it

removed them.” App. 87. Nonetheless, the district court

denied remand because in federal court, magistrates had

granted post-removal leave to add Dead Sea as a party.

On appeal, the Fifth Circuit agreed that the post-

removal amendments were ineffective. The court still

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affirmed the denial of remand, nevertheless, because in

its view the removals were not premature in the first

place:

Plaintiffs’ logic proceeds as follows: (1) at the

time of removal, the state court had not granted

leave to serve Dead Sea, so Dead Sea was not a

party in state court; (2) as a non-party, Dead Sea

could not remove to federal court; (3) without

Dead Sea’s presence in federal court, there was

no federal subject matter jurisdiction; and (4) in

the absence of subject matter jurisdiction, (a) the

magistrate judgés had no authority to issue

post-removal orders, and (b) the district court

had no choice but to remand.

In the face of the district court’s ruling that

there had to have been court leave to serve the

third-party petitions on Dead Sea and that the

removals were, therefore, premature, we recog-

nize the logical force of plaintiffs’ argument.

Nevertheless, we reject plaintiffs’ desired result

because, contrary to the district court and plain-

tiffs’ view, the removals were not premature.

Generally, service of process is not an absolute

prerequisite to removal.

App. 24-25. The Fifth Circuit wholly failed to follow

Murphy Bros. The court held that the failure of respon-

dents to obtain leave from the state courts to serve Dead

Sea was immaterial, because service is not a prerequisite

to the ability to remove. The court of appeals acknowl-

edged this Court’s holding that receipt of a complaint,

without formal service, does not trigger a defendant's

obligation to remove. The court of appeals nonetheless

attempted to distinguish Murphy Bros. by declaring that a

defendant is permitted to remove without having been

served. The fundamental point of Murphy Bros., however,

is that an entity is not a party until it has been served:

A Alta at Cale AO.

“one becomes a party officially, and is required to take

action in that capacity, only upon service of a summons

or other authority-asserting measure stating the time

within which the party served must appear and defend.”

Id. at 350.

Moreover, even if Dead Sea was procedurally able to

remove, how could it suprly a basis for federal jurisdic-

tion if it was not in the case? Again, under both the district

court’s opinion and the Fifth Circuit’s opinion, Dead Sea

was not a party in state court. Leaving aside whether it

could remove the case as a nonparty, it plainly could not

supply federal subject matter jurisdiction, under the

FSIA, if it was not in the case. While its nonparty status

may not deprive it of removal power, Dead Sea surely

could not provide federal jurisdiction in a case in which it

was not a party.

One must step back for a moment, to see exactly the

scheme respondents must defend:

1. In deliberate and orchestrated violation of

the state rules, and without notice to the state

court or plaintiffs, respondents and a willing

third-party defendant arrange for filing of the

third-party complaint and a simultaneous

removal:

The Notice of Removal was filed at 4:00

p-m. and included as an attachment a copy

of the third-party petition which was filed

by Dow at 3:55 p.m. Before filing the Notice

of Removal, Dead Sea’s counsel, Mr. Cole

verified with Dow’s local counsel, that Dow

had in fact filed the third-party petition in

state court. The Notice of Removal was filed

at 4:00 p.m., which was after Mr. Cole con-

firmed that the third-party action against

Dead Sea was, in fact, filed in state court.

2. Having thus colluded to circumvent the

state rules to remove an unremovable case, ask

magistrates for leave to amend in Dead Sea - in

effect recognizing that Dead Sea had not been

made a party in state court to begin with.

3. Then, after obtaining dismissal on a defense

not available in state court, release over 98% of

the claim against the ostensibly adverse third

party.

Murphy Bros. does not permit this Kafkaesque result.

Nor should this Court indulge the halfhearted attempt, in

a footnote, to distinguish Murphy Bros. on the ground that

service of process is not required before a party can

remove a case. Such reasoning not only runs afoul of

Murphy Bros.’ clear statement that “one becomes a party

officially” only upon service. It also opens up vast oppor-

tunities for collusive removals of the kind that occurred

in this case.

One important purpose behind state third-party

practice rules, of course, is the regulation of impleader by

the court after a certain point in the litigation. Texas’ Rule

38(a) gives defendants 30 days - three times the period

afforded in Fed. R. Civ. Proc. 14(a) - to implead third

parties as of right. After that point, the state judge deter-

mines whether leave to implead should be granted.

Among the considerations, of course, is whether the

third-party claim is viable, and whether it is interposed

for delay. E.g., Valley Industries, Inc. v. Martin, 733 S.W.2d

720, 721 (Tex. App. 1987). Noting the potential for

removals to be set up in the way they were below, two

members of a firm representing one of the respondents

have recommended such ploys in an article designed to

help defendants in transnational cases use “some uncon-

ventional approaches to ensure a federal forum... .”

Thad T. Dameris and Michael J. Muchetti, Vectors to Fed-

eral Court: Unique Approaches to Subject Matter Jurisdiction

in Aviation Cases, 62 J. Air L. & Com. 959, 960 (1998).?

Counsel give the following advice for arranging collusive

removals:

Even if a defendant cannot qualify as a foreign

sovereign under the FSIA, a third-party defen-

dant might. A defendant may sue a third party

who is a “foreign sovereign” under the FSIA

and this third-party, foreign sovereign defen-

dant may remove the action to federal court. A

court should not concern itself “with why these

parties prefer to be in federal court so long as

there is a legitimate basis for jurisdiction.” In

most jurisdictions, such a third-party defendant

can remove the entire action to federal court.

Id. at 975-76, quoting Roselawn, supra, 96 F.3d at 942.

When there is no bona fide claim against the friendly

third-party defendant, however, then if the litigation has

progressed, the state judge may not grant leave to serve

the third-party complaint. What to do? Simply go behind

the state court’s back.

The Fifth Circuit countenanced such gamesmanship

with its holding below. In so doing, however, it deviated

from the clear and recent holding in Murphy Bros. that

removability does not begin until service. This Court

should grant the writ and reverse the Fifth Circuit’s mis-

chievous holding.

9 The authors are members of the firm that is lead counsel

for respondent Occidental Chemical Corp.

CONCLUSION

In view of the conflict among the lower courts on

indirect ownership under the FSIA, and the departure

from this Court’s authority on removal procedure, this

Court should grant the petition for a writ of certiorari.

Respectfully submitted,

CHARLES S. SIEGEL

Counsel of Record

Waters & Kraus, LLP

3219 McKinney Avenue

Suite 3000

Dallas, TX 75204

(214) 357-6244

(214) 871-2263 fax

Of Counsel:

FreD Misko, Jr.

Law Offices OF FRED Misko, Jr., P.C.

3811 Turtle Creek Blvd.

Suite 1900

Dallas, TX 75219

(214) 443-8000

STEPHEN D. SUSMAN

MICHAEL LEE

SUSMAN GODFREY

5100 First Interstate Bank Plaza

1000 Louisiana Street

Houston, TX 77002

(713) 651-9366

THomMasS Hart

ALKON, RHEA & Hart

2115 Queen Street

Christiansted, St. Croix, VI 08820

(340) 773-3305

ecrilae sex inh be Sethi el ES:

App. 1

UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 95-21074

FRANKLIN RODRIGUEZ DELGADO, ET AL. (Individu-

ally and on behalf of all others similarly situated),

Plaintiffs-Appellants-Cross-Appellees,

VERSUS

SHELL OIL COMPANY; DOW CHEMICAL COMPANY;

OCCIDENTAL CHEMICAL CORPORATION

(Individually and as successor to Occidental Chemical

Company and Occidental Chemical and Agricultural

Products, Inc.); STANDARD FRUIT CO.; STANDARD

FRUIT AND STEAMSHIP COMPANY; DOLE FOOD

COMPANY, INC.; DOLE FRESH FRUIT CO.;

CHIQUITA BRANDS, INC.; CHIQUITA BRANDS

INTERNATIONAL, INC.; DEL MONTE TROPICAL

FRUIT COMPANY,

Defendants-Appellees-Cross-Appellants,

DEL MONTE FRESH PRODUCE, N.A.,

Defendant-Third Party

Plaintiff-Appellee-Cross-Appellant,

VERSUS

DEAD SEA BROMINE COMPANY, LTD.;

AMERIBROM, INC.,

Third Party Defendants-Appellees-Cross-Appellants.

2b 9h a ab ae oF a ob a ae a ae a ab ae 2 ae 2 ab ab a oe a ae 2 a be ae ee ie a 2 ee a ee ee a 2 be ae a ab a eb a a 2b ab ab a a a a ob a a

JORGE COLINDRES CARCAMO, ET AL. (Individually,

and on behalf of all others similarly situated),

App. 2

Plaintiffs-Appellants-Cross-Appellees,

VERSUS

SHELL OIL COMPANY; OCCIDENTAL CHEMICAL

CORPORATION (Individually and as successor to

Occidental Chemical and Occidental Chemical and

Agricultural Products, Inc.); STANDARD FRUIT

COMPANY; STANDARD FRUIT AND STEAMSHIP

COMPANY; DOLE FOOD COMPANY, INC.; DOLE

FRESH FRUIT COMPANY; CHIQUITA BRANDS, INC.;

CHIQUITA BRANDS INTERNATIONAL, INC.,

Defendants-Appellees, Cross-Appellants,

DOW CHEMICAL COMPANY,

Defendant-Third Party

Plaintiff-Appellee-Cross Appellant,

VERSUS

DEL MONTE FRESH PRODUCE COMPANY (sued as

Del Monte Tropical Fruit Company); DEAD SEA

BROMINE COMPANY, LTD.; AND

AMERIBROM, INC.,

Third Party Defendants-Appellees-Cross-Appellants,

DEL MONTE FRESH PRODUCE, N.A., INC.,

Third Party Defendant-Fourth Party

Plaintiff-Appellee-Cross-Appellant,

VERSUS

BROMINE COMPOUNDS, LTD.,

Fourth Party Defendant-Appellee-Cross-Appellant.

266 E96 ee 2 2 a EE aE 2 aE 2 a OE a a a a ae a a a a 2 a ee a 2 Oe a ae a ae ee

App. 3

JUAN RAMON VALDEZ, ET AL.,

Plaintiffs-Appellants-Cross-Appellees,

VERSUS

SHELL OIL COMPANY; OCCIDENTAL CHEMICAL

CORPORATION (Individually and as successor to Occi-

dental Chemical Company and Occidental Chemical and

Agricultural Products, Inc.); STANDARD FRUIT COM-

PANY; STANDARD FRUIT AND STEAMSHIP COM-

PANY; DOLE FOOD COMPANY, INC.; DOLE FRESH

FRUIT COMPANY; CHIQUITA BRANDS, INC.; CHI-

QUITA BRANDS INTERNATIONAL, INC.,

Defendants-Appellees-Cross-Appellants,

DOW CHEMICAL COMPANY,

Defendant-Third Party

Plaintiff-Appellee-Cross-Appellant,

VERSUS

DEL MONTE FRESH PRODUCE, N.A.; DEL MONTE

TROPICAL FRUIT COMPANY; DEAD SEA BROMINE

COMPANY, LTD.; AMERIBROM, INC.,

Third Party Defendants-Appellees-Cross-Appellants.

SHE Sp babii biibbiabiibbbb bb bb bt bbbb bobbi bb bbb bab at 3 a bab bt ab ab aba

ISAE CARCAMO,

Plaintiff-Appellant-Cross-Appellee,

VERSUS

DOW CHEMICAL COMPANY; OCCIDENTAL

CHEMICAL CORPORATION (Individually and as

successor to Occidental Chemical Company and

Occidental Chemical and Agricuicural Products, Inc.);

STANDARD FRUIT COMPANY; STANDARD FRUIT

AND STEAMSHIP COMPANY; DOLE FOOD

COMPANY, INC.; DOLE FRESH FRUIT COMPANY,

App. 4

Defendants-Appellees-Cross-Appellants,

SHELL OIL COMPANY

Defendant-Third Party

Plaintiff-Appellee-Cross-appellant,

VERSUS

DEAD SEA BROMINE COMPANY, LTD.,;

AMERIBROM, INC.,

Third Party Defendants-Appellees-Cross-Appellants.

No. 97-20060

RAMON RODRIGUEZ RODRIGUEZ,

Plaintiff-Appellant,

VERSUS

SHELL OIL COMPANY; STANDARD FRUIT &

STEAMSHIP COMPANY; CHIQUITA BRANDS;

CHIQUITA BRANDS INTERNATIONAL, INC.;

STANDARD FRUIT COMPANY,

Defendants-Third Party Plaintiffs-Appellees,

and

DOLE FOOD COMPANY, INC.; DOLE FRESH FRUIT

CO.; DOW CHEMICAL COMPANY; OCCIDENTAL

CHEMICAL,

Defendants-Appellees,

VERSUS

BROMINE COMPOUNDS, LTD.; AMVAC CHEMICAL

COMPANY; DEAD SEA BROMINE COMPANY, LTD.,

App. 5

Third Party Defendants-Appellees.

Appeals from the United States District Court

For the Southern District of Texas

(Filed Oct. 19, 2000)

Before GARWOOD, WIENER and DeMOSS, Circuit

Judges.

DeMOSS, Circuit Judge:

In these consolidated appeals,) Plaintiffs-Appellants

(“Plaintiffs”), who are several thousand foreign agri-

cultural workers, challenge the district court’s orders dis-

missing on forum non conveniens, five of six cases

removed from Texas state court. Plaintiffs assert that the

removals were improper and that the district court lacked

subject matter jurisdiction. Concluding that removal and

jurisdiction were proper in all of the five dismissed cases,

we affirm.

I. BACKGROUND

A. Overview

Plaintiffs originally filed all six cases in various

Texas state courts, seeking damages for injuries

allegedly caused by their apparently incremental expo-

sure over a considerable period to a nematocide,

dibromochloropropane (“DBCP”), while working on

1 By a concurrent order, appeal No. 97-20060 is

consolidated with appeal No. 95-21074.

App. 6

banana farms in several foreign countries. Plaintiffs jus-

tify their presence in the state courts of Texas on provi-

sions of a Texas statute that furnishes a Texas forum to a

plaintiff who has been injured in a foreign country if that

plaintiff is a citizen of a foreign country that has equal

treaty rights with the United States. See Tex. Civ. Prac. &

Rem. Code § 71.031. Defendants-Appellees (collectively

“Defendants”) are Shell Oil Company (“Shell”), Dow

Chemical Company (“Dow”), Occidental Chemical Cor-

poration (“Occidental”), Standard Fruit Company and

Standard Fruit & Steamship Company (collectively “the

Standard Fruit entities”), Dole Fresh Fruit Company and

Dole Food Company, Inc. (collectively “the Dole enti-

ties”), Chiquita Brands, Inc., and Chiquita Brands Inter-

national, Inc. (collectively “the Chiquita entities”), and

Del Monte Tropical Fruit Company and Del Monte Fresh

Produce, N.A. (collectively “the Del Monte entities”).

Defendants are alleged to have designed, manufactured,

sold, or used DBCP.

The filing of these cases in the state courts of Texas

was by no means happenstance. In a classic exercise of

forum shopping, Plaintiffs selected Texas because, among

other plaintiff-friendly features, its law at the time of

filing provided no applicable doctrine of forum non con-

veniens pursuant to which their actions could be dis-

missed. See Dow Chemical Co. v. Castro Alfaro, 786

S.W.2d 674, 679 (Tex. 1990).2

2 The Texas legislature subsequently enacted a statute

making the doctrine of forum non conveniens applicable to

personal injury actions filed on or after September 1, 1993. See

App. 7

In response, Defendants determined that removal of

these cases to federal court, where forum non conveniens

was available, would be an effective way to send these

suits back to their countries of origin. In pursuit of their

objective, a different pre-designated defendant in each of

the six cases first filed a third-party petition impleading

Dead Sea Bromine Company, Limited (“Dead Sea”). Next,

Dead Sea removed each action to federal court by virtue

of its alleged status as a “foreign state” under the Foreign

Sovereign Immunity Act (“FSIA”), 28 7.9.4.

§§ 1602-1611.3 As the third step, Dead Sea waived its

sovereign immunity in each of the federal cases.

But, among other things, Plaintiffs contend that Texas

Rule of Civil Procedure 38(a) requires a third-party plain-

tiff to obtain leave of court to serve a third-party petition

when it is filed more than thirty days after service of the

defendant’s original state court answer.* In four of the six

cases, the third-party petitions were filed more than

thirty days after the answers. In the remaining two cases,

the third-party petitions were filed within less than thirty

Tex. Civ. Prac. & Rem. Code § 71.051. Plaintiffs filed the instant

actions before that date.

3 Under 28 U.S.C. § 1441(d), a foreign state is entitled to

remove to federal court any civil action brought against it in a

state court.

4 Tex. R. Civ. P. 38(a) provides, “The third-party plaintiff

need not obtain leave to make the service [on the third-party

defendant] if he files the third-party petition not later than

thirty (30) days after he serves his original answer. Otherwise,

he must obtain leave on motion upon notice to all parties to the

action.”

App. 8

days following the answers, so leave of court was not

required.

B. Prior Proceedings

Against this backdrop, we pause to recount in turn

the individual procedural history of each case, for cogni-

zance of the prior proceedings in each is essential to our

determination of (1) the efficacy of Defendants’ joinder of

Dead Sea, (2) the validity of Dead Sea’s removals, and (3)

the existence of federal subject matter jurisdiction.

1. Delgado v. Shell Oil Co. (“Delgado”)

The Delgado plaintiffs are more than 2,000 residents

of three foreign countries who filed suit originally in

Galveston County, Texas.5 The defendants in Delgado

previously attempted to remove to federal court, assert-

ing that the Federal Insecticide, Fungicide, and Roden-

ticide Act (“FIFRA”), 7 U.S.C. §§ 136-136y, preempted the

plaintiffs’ claims and provided federal question jurisdic-

tion. The district court remanded, noting that even if the

FIFRA preempted the Delgado plaintiffs’ claims, there

was no federal question jurisdiction. See Rodriguez v.

Shell Oil Co., 818 F. Supp. 1013, 1018 (S.D. Tex. 1993).¢

° The Delgado plaintiffs are residents of Costa Rica,

Nicaragua, or Panama. The Delgado defendants are Shell, Dow,

Occidental, the Standard Fruit entities, the Dole entities, the

Chiquita entities, and the Del Monte entities.

with Aguilar v. Shell Oil Co., an action brought in that court by

an uncertified class of all persons (and their spouses) in Costa

App. 9

Subsequently, Defendant Del Monte Fresh Produce, N.A.,

filed an original answer in state court and, within thirty

days, served a third-party petition impleading Dead Sea

and its American affiliate, Ameribrom, Inc., (“Ameri-

brom”) as third-party defendants. State court leave to

serve the third-party petition was not required. Later the

same day that the third-party petition was filed against it,

Dead Sea removed the case to the Southern District of

Texas, Galveston Division.”

The other defendants joined in the removal and filed

cross-claims against Dead Sea and, in some cases, against

one another.® Shell filed supplemental notices of removal.

The Delgado plaintiffs filed a motion to remand, asserting

lack of subject matter jurisdiction. The district court

denied the motion, concluding that Dead Sea was a for-

eign state entitled to remove, pursuant to 28 U.S.C.

§ 1441(d),2 and consolidated Delgado with Jorge, which

we consider next.

Rica who had been adversely exposed to DBCP that was

allegedly designed, manufactured, marketed, distributed, or

sold by one or more of the defendants and who had not already

commenced an individual civil action. The defendants in

Aguilar are Shell, Dow, Occidental, and the Standard Fruit

entities.

7 The district judge to whom the case was originally

assigned recused himself. The case was transferred to the

Houston Division and assigned to the district judge whose

decisions form the basis of these appeals.

8 Del Monte Fresh Produce, N.A., did not file a cross-claim

against Dead Sea.

® The district court refrained from deciding at that time

whether Dead Sea’s presence conferred federal subject matter

jurisdiction.

App. 10

2. Jorge Carcamo v. Shell Oil Co. (“Jorge”)

The Jorge plaintiffs are nine representatives who filed

suit originally in Brazoria County, Texas, on behalf of

themselves and an uncertified class of more than 16,000

citizens and residents of twelve foreign countries.'°

Defendant Dow filed a third-party petition against Dead

Sea, Ameribrom, and the Del Monte entities and deliv-

ered a courtesy copy of that petition to Dead Sea. More

than thirty days had elapsed since Dow had served its

original answer in state court, and Dow did not obtain

state court leave prior to filing the third-party petition.

Regardless, on the same day that Dow filed its third-

party petition, Dead Sea removed the case to the South-

ern District of Texas, Galveston Division.?! Predictably,

the other defendants joined in the removal, asserting

additional bases of subject matter jurisdiction, and filed

cross-claims. Shell filed supplemental notices of removal.

The Jorge plaintiffs filed motions to remand, arguing that

(1) Dead Sea’s removal was procedurally defective for

10 The Jorge plaintiffs are residents of Burkina Faso, Costa

Rica, Dominica, Ecuador, Guatemala, Honduras, Ivory Coast,

Nicaragua, Panama, the Philippines, Saint Lucia, or Saint

Vincent. One of the Honduran plaintiffs is allegedly a resident

of California. The Jorge defendants are the same as those in

Delgado with the exception of the Del Monte entities, which are

not defendants in Jorge.

11 The district judge to whom the case was originally

assigned (and to whom Delgado had also been originally

assigned) recused himself. The case was transferred to the

Houston Division and ultimately assigned to the district judge

whose decisions form the basis of these appeals.

App. 11

want of state court leave to serve Dead Sea, and that (2)

the district court lacked subject matter jurisdiction as the

Jorge plaintiffs’ Seventh Amended Petition expressly

renounced any intention of pursuing claims against Dead

Sea or its affiliated entities, thus rendering Dead Sea’s

joinder “fraudulent.” Subsequent to removal, however,

Dow moved for leave to serve an amended third-party

complaint impleading, inter alia, Dead Sea.12 The motion

was referred to a magistrate judge, who granted the

motion.

3. Rodriguez v. Shell Oil Co. (“Rodriguez”)

The Rodriguez plaintiffs are Honduran citizens and

residents who filed suit originally in Jim Hogg County,

Texas.13 Defendants Shell and the Chiquita entities filed

third-party petitions against Dead Sea and Ameribrom

more than thirty days after filing their original answers in

state court, without any prior approval by the state court.

12 The other third-party defendants served were

Ameribrom, the Del Monte entities, AMVAC Chemical Corp.

(“AMVAC”), Saint Lucia Banana Growers Association, Saint

Vincent Banana Growers Association, Dominica Banana

Growers Association, and Programa Nacional de Banano. Del

Monte Fresh Produce, N.A., then filed a fourth-party complaint

impleading Bromine Compounds, Ltd., (“Bromine”) a wholly

owned subsidiary of Dead Sea. The district court later

dismissed Dominica Banana Growers Association, Saint Lucia

Banana Growers Association, Saint Vincent Banana Growers

Association, and Programa Nacional de Banano.

3 One Rodriguez plaintiff is alleged to be a resident of

Texas and another a resident of Michigan. The Rodriguez

defendants are the same as those in Jorge.

App. 12

After these petitions were filed, Dead Sea removed the

case to the Southern District of Texas, Laredo Division.

The other defendants joined in the removal, asserting

additional bases of federal subject matter jurisdiction,

and filed cross-claims against Dead Sea. Shell filed sup-

plemental notices of removal. The Rodriguez plaintiffs

moved to remand, asserting lack of subject matter juris-

diction. The district court in Laredo transferred

Rodriguez to the Houston Division where it was consoli-

dated with Delgado, Jorge, and the following case.

4. Erazo v. Shell Oil Co. (“Erazo”)

In Erazo, a lone Honduran citizen filed suit originally

in Hidalgo County, Texas.14 Defendant Shell filed a third-

party petition against Dow, Occidental, Dead Sea, Ameri-

brom, and AMVAC more than thirty days after answering

and without leave to serve the petition. Dead Sea imme-

diately removed the case to the Southern District of

Texas, McAllen Division. The remaining defendants

joined in the removal, asserting additional bases of fed-

eral subject matter jurisdiction, and filed cross-claims

against Dead Sea. Shell filed supplemental notices of

removal. The Erazo plaintiff moved to remand, asserting

lack of subject matter jurisdiction. The district court

transferred the case to the Houston Division where it was

consolidated with the others.

14 Shell attempted to remove, asserting federal question

jurisdiction based on FIFRA preemption, but the district court

remanded for lack of subject matter jurisdiction, as it did in

Delgado and Rodriguez.

App. 13

5. Isae Carcamo v. Shell Oil Co. (“Isae”) |

Isae was originally brought in Morris County, Texas,

by another lone Honduran citizen and resident.15 Defen-

dant Dow filed a single pleading containing both an

answer and a third-party petition against Dead Sea,

Ameribrom, and the Del Monte entities. As a result, state

court leave to serve that petition was not required. Dead

Sea removed the case to the Eastern District of Texas, and

the other defendants joined in the removal, asserting

additional bases of federal subject matter jurisdiction,

and filed cross-claims against Dead Sea. Shell filed sup-

plemental notices of removal. The Isae plaintiff moved to

remand, asserting lack of subject matter jurisdiction. The

case, however, was consolidated with Valdez, which we

consider last.

6. Valdez v. Shell Oil Co. (“Valdez”)

The plaintiffs in Valdez are more than 6,000 citizens

of eight foreign countries who filed suit originally in

Morris County, Texas.1© More than thirty days after

15 Originally, Shell was the only Isae defendant. Shell filed

a notice of removal, asserting federal question jurisdiction

based on FIFRA preemption, but the district court remanded the

case for the reasons articulated in Delgado, Rodriguez, and

Erazo. The plaintiff then amended his petition to add, as

defendants, Dow, Occidental, the Dole entities, and the

Standard Fruit entities.

16 The Valdez plaintiffs are citizens of Burkina Faso,

Dominica, Ecuador, Honduras, Ivory Coast, the Philippines,

Saint Lucia, or Saint Vincent. At least two of them allegedly

App. 14

answering, Defendant Dow filed a third-party petition

against the Del Monte entities, Dead Sea, and Ameribrom

and delivered a courtesy copy of that petition to Dead

Sea. Dead Sea removed the case to the Eastern District of

Texas. The other defendants joined in the removal, assert-

ing additional bases of federal subject matter jurisdiction,

and filed cross-claims against Dead Sea. Shell filed sup-

plemental notices of removal. The district court consoli-

dated Valdez with Isae.

Subsequent to removal, Dow moved for leave to

serve an amended third-party complaint to implead, inter

alia, Dead Sea.17 The magistrate judge assigned to the

Valdez case granted the motion and also denied remand

in both Valdez and Isae, concluding that federal subject

matter jurisdiction existed in the two cases. Thereafter,

Valdez and Isae were transferred to the Southern District

of Texas, Houston Division, where they were consoli-

dated with the other four cases.

C. The Houston District Court’s Proceedings

Once the six cases were consolidated in the Houston

Division of the Southern District, Plaintiffs filed (1)

motions to remand, asserting lack of subject matter juris-

diction and -procedurally defective removal, and (2)

reside in Texas. The Valdez defendants are the same as those in

Jorge.

17 The other third-party defendants served were

Ameribrom, the Del Monte entities, AMVAC, Saint Lucia

Banana Growers Association, St. Vincent Banana Growers

Association, and Programa Nacional de Banano.

App. 15

motions to strike the third-party claims or, in the alterna-

tive, to dismiss Dead Sea and its affiliated entities for

fraudulent joinder, and to remand the underlying claims.

Defendants contested the fraudulent joinder allegation,

asserting the validity of their third-party claims against

Dead Sea based on the laws of the home countries of

several of the plaintiffs. As a final step, Defendants filed

motions to dismiss all of the removed cases for forum non

conveniens.

The district court addressed first whether Dead Sea’s

removals were proper in Jorge, Valdez, Rodriguez, and

Erazo, the cases in which Texas law required leave of

state court to serve the third-party petitions. The court

concluded that all removals were premature and, thus,

defective for want of leave. Deferring to the authority of

the state court to determine in the first instance whether

third-party joinder was appropriate, the district court

remanded Rodriguez and Erazo. On appeal, neither party

challenges this decision to remand.

In Jorge and Valdez, however, the district court noted

that magistrate judges had issued post-removal orders

granting leave to implead Dead Sea into federal court

pursuant to Federal Rule of Civil Procedure 14. The dis-

trict court assumed that Dead Sea had, thus, validly been

made a party in federal court and would remain a party

on remand to state court. Speculating that Dead Sea

would “immediately exercise its presently mature right to

again remove the actions to federal court,” the district

court concluded that remand would be futile and denied

remand.

App. 16

The district court also denied remand in the final two

cases, Delgado and Isae (the “under thirty days” cases),

in neither of which had leave to make service on Dead

Sea been required under Texas law.!® Invoking the doc-

trine of forum non conveniens, the district court then

dismissed all four cases that remained unremanded - the

two “over thirty days” cases and the two “under thirty

days” cases.

As conditions precedent to dismissal, the district

court required Defendants (including third- and fourth-

party defendants) to (1) waive all jurisdictional and cer-

tain limitation-based defenses, (2) permit the dismissed

plaintiffs a reasonable period within which to conduct

discovery before trial in their home countries, and (3)

agree to satisfy those plaintiffs’ concerns with respect to

the enforceability of foreign judgments that might be

rendered against Defendants. In addition, the district

court permanently enjoined the dismissed plaintiffs from

commencing or causing to be commenced in the United

States any DBCP action and from intervening in

Rodriguez and Erazo, the two remanded cases. Finally,

the district court agreed that it would re-assume jurisdic-

tion, on proper motion, if the highest court in any foreign

country should affirm a dismissal for lack of jurisdiction

over any action commenced by a dismissed plaintiff in

his home country or his country of injury.

18 In Delgado, Del Monte Fresh Produce, N.A., filed a third-

party petition against Dead Sea within thirty days of the service

of its (Del Monte’s) answer in state court. In Isae, Dow filed a

single pleading containing an answer and a third-party petition

against Dead Sea.

App. 17

D. The Agreements Between Defendants And Dead

Sea

On the day that Dead Sea was required to stipulate to

foreign judgment, Defendants and Dead Sea entered into

a pair of agreements which together allocated their joint

liability in the event of an adverse judgment.!9 Those

agreements stipulated Dead Sea’s maximum percentage

market share liability in each foreign country. In no coun-

try was that share greater than 2.5%.

As soon as Plaintiffs got word of the existence of the

agreements, they filed a motion for relief from final judg-

ment, pursuant to Federal Rule of Civil Procedure

60(b)(2), arguing that Defendants (1) never intended to

prosecute their claims against Dead Sea and (2) joined

Dead Sea only to gain entry into federal court. Plaintiffs

asked the district court to remand the entire matter to

State court or, in the alternative, to sever the third-party

claims and remand the underlying ones. The district

court denied Plaintiffs’ motion.

E. The Re-Removal Of Rodriguez

When the district court remanded Rodriguez to Texas

state court on July 11, 1995, the Standard Fruit entities

19 The first agreement was executed by the “Manufacturer

Defendants,” defined as Dow, Shell, and Occidental, and “Dead

Sea,” defined as Dead Sea and Bromine. The second agreement

was executed by the “Non- Manufacturer Defendants,” defined

as the Standard Fruit entities, the Dole entities, the Del Monte

entities, and the Chiquita entities, and “Dead Sea,” again

defined as Dead Sea and Bromine.

App. 18

had on file a “Special Appearance Objecting to Jurisdic-

tion, First Amended Motion to Transfer Venue, or in the

Alternative Motion to Dismiss, and First Amended Origi-

nal Answer.” In essence, the Standard Fruit entities had

filed their answers subject to and without waiving their

special appearances. Upon remand, the state court

addressed and denied the Standard Fruit entities’ special

appearances on February 2, 1996, with the order filed on

February 5, 1996. On March 4, 1996, without obtaining

leave from the state court, the Standard Fruit entities filed

third-party petitions naming Dead Sea, Bromine, and

AMVAC as third-party defendants and delivered cour-

tesy copies to Dead Sea and to Bromine. Thereafter, Dead

Sea and Bromine removed the case to the Laredo Division

of the Southern District of Texas, asserting federal ques-

tion jurisdiction as a foreign state under the FSIA. The

case was then transferred to the federal district court at

Houston, whose decisions form the basis of these

appeals.

In the district court, the Rodriguez plaintiffs moved

for remand, arguing that the Standard Fruit entities

should have asked for leave from the state court before

filing their third-party petitions pursuant to Rule 38(a)

because the Standard entities had filed their original

answers in August of 1993 and their amended original

answers on September 17, 1993, over two years from the

time that the Standard Fruit entities had filed their third-

party petitions. The district court denied the motion,

finding that the Standard Fruit entities’ answers were

conditional and did not become effective for purposes of

Rule 38(a) until the state court overruled the Standard

Fruit entities’ special appearances. As in Delgado, the

App. 19

Rodriguez plaintiffs sought to strike the third-party

claims on grounds of fraudulent joinder or, in the alterna-

tive, to sever the third-party claims while the Defendants

moved for dismissal on forum non conveniens. The dis-

trict court denied the Rodriguez plaintiffs’ motions, but

granted dismissal subject to the same conditions as in

Delgado.

F. The Appeals?°

In appeal No. 95-21074, Plaintiffs timely seek review

of the district court’s dismissal of the “over thirty days”

cases (Jorge and Valdez ) and the “under thirty days”

cases (Delgado and Isae ), asserting that the district court

erred in denying remand and in dismissing these cases

for forum non conveniens. Specifically, Plaintiffs maintain

that: (1) Dead Sea is not a “foreign state” under the FSIA;

(2) the magistrate judges’ orders in the “over thirty days”

cases were nullities which could neither cure Defendants’

defective joinder of Dead Sea and Dead Sea’s premature

removal nor confer on the district court its otherwise

lacking subject matter jurisdiction; (3) Dead Sea was

fraudulently joined; and (4) the district court abused its

discretion in denying Plaintiffs’ Rule 60(b)(2) motion. In

appeal No. 97-20060, besides charging that Dead Sea is

not a “foreign state” under the FSIA and that it was

fraudulently joined, Plaintiffs contend that the district

court erred when it ruled that the Standard Fruit entities’

answers did not become effective for purposes of Rule

20 Erazo is not on appeal.

App. 20

38(a) until the state court overruled their special appear-

ances. In neither of the appeals, however, do Plaintiffs

explicitly take umbrage with the substance of the district

court’s forum non conveniens analysis, or its use by the

court were we to conclude that it had subject matter

jurisdiction.?!

II. DISCUSSION

A. Subject Matter Jurisdiction And The Foreign Sov-

ereign Immunity Act

Before proceeding to the other issues raised in these

appeals, we must first address whether the district court

would have subject matter jurisdiction over any case that

Dead Sea properly removed, for original jurisdiction is

absolutely essential to the maintenance of an action in

federal court. See Avitts v. Amoco Prod. Co., 53 F.3d 690,

693 (5th Cir. 1995). If we conclude that the district court

lacked subject matter jurisdiction, we have no choice but

to remand the cases to state court. See 28 U.S.C. § 1447(c)

(“If at any time before final judgment it appears that the

district court lacks subject matter jurisdiction, the case

shall be remanded.”). We review questions of federal

21 Defendants and third-party defendants also cross-

appealed, seeking modification of the district court judgment to

incorporate the protections of the Uniform Foreign Money-

Judgments Recognition Act and equivalent common law rules.

Defendants later withdrew their request to modify the district

court judgment after Plaintiffs conceded that nothing in the

district court’s orders or the agreements submitted by

Defendants, as required by those orders, deprives Defendants

of the protections of those laws.

eee

App. 21

subject matter jurisdiction de novo. See United States v.

Teran, 98 F.3d 831, 833-34 (5th Cir. 1996).

The district court based its jurisdiction solely on

Dead Sea’s presence in the cases, concluding that Dead

Sea was a “foreign state” entitled to remove to federal

court and that its waiver of sovereign immunity con-

ferred jurisdiction. Under the express provisions of 28

U.S.C. § 1330, the district courts are vested with original

jurisdiction of civil actions against a foreign state as

defined by § 1603(a), as to which the foreign state is not

entitled to immunity under §§ 1605-1607. Furthermore,

according to the federal removal statutes, a foreign state,

as defined in 28 U.S.C. § 1603(a), may remove any civil

action brought against it in a state court. See 28 U.S.C.

§ 1441(d). Section 1603 provides in pertinent part:

(a) A “foreign state”, . . includes a politi-

cal subdivision of a foreign state or an agency or

instrumentality of a foreign state as defined in

subsection (b).

(b) An “agency or instrumentality of a for-

eign state” means any entity -

(1) which is a separate legal person,

corporate or otherwise, and

(2) which is an organ of a foreign state

or political subdivision thereof, or a major-

ity of whose shares or other ownership

interest is owned by a foreign state or politi-

cal subdivision thereof, and

(3) which is neither a citizen of a State

of the United States ... , nor created under

the laws of any third country.

28 U.S.C. § 1603. Dead Sea is not “a political subdivision

of a foreign state;” therefore, to pass muster as a foreign

App. 22

state, it must be an “agency or instrumentality of a for-

eign state as defined in subsection (b).” Id. None of the

parties question that Dead Sea meets the first and third

requirements of that subsection; the only issue is whether

a majority of Dead Sea’s shares are owned by a foreign

state, as required by (b)(2).

Indisputably a foreign state, the State of Israel owns

75.3% of Israel Chemicals Limited, an entity which owns

88.2% of Dead Sea Works Limited, which in turn owns

100% of Dead Sea. Through this tiered structure, there is

no question that Israel indirectly owns a majority interest

in Dead Sea. Plaintiffs insist, however, that indirect own-

ership is insufficient to qualify an entity for foreign state

status. We disagree. Based on our reading of the statute,

we discern nothing to support the proposition that indi-

rect ownership of the requisite percentage precludes an

entity from qualifying as a foreign state.

The plain language of the statute simply requires

“ownership” by a foreign state. It draws no distinction

between direct and indirect ownership; neither does it

expressly impose a requirement of direct ownership.

Indeed, we have previously indicated that indirect own-

ership is sufficient to confer foreign state status. In Linton

v. Airbus Industrie, we stated:

[T]he resolution of the Airbus Defendants’ claim

of immunity turns on whether through “tiering”

a foreign state’s ownership interest can be

attributed when that foreign state did not own a

majority interest in the company that held the

ownership interest in Airbus. . . . [Section 1603],

however, erects no explicit bar to the methods

App. 23

by which a foreign state may own an instru-

mentality, merely requiring that the entity claim-

ing immunity — not its parent - have a “majority

of [its] shares or other ownership inter-

est . . . owned by a foreign state or a political

subdivision thereof.” There is no mention of

“voting” or “control” majority, thus equitable or

beneficial majority ownership is not expressly

prohibited from serving.

30 F.3d 592, 598 n.29 (5th Cir. 1994) (citations omitted).

Should any doubt remain concerning this Circuit’s posi-

tion on tiering or indirect ownership, we squarely hold

today that indirect or tiered majority ownership is suffi-

cient to qualify an entity as a foreign state, assuming that

all other requirements are met. In so doing, we join at

least two other Circuits that have considered the issue

and reached the same conclusion. See In re Air Crash

Disaster Near Roselawn, Ind. on Oct. 31, 1994, 96 F.3d

932, 941 (7th Cir. 1996); Allendale Mut. Ins. Co. v. Bull

Data Sys., Inc., 10 F.3d 425, 426-27 (7th Cir. 1993); and

Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445,

449-50 (6th Cir. 1988). But see Gates v. Victor Fine Foods,

54 F.3d 1457, 1462 (9th Cir. 1995). We hold, therefore, that

Dead Sea is a foreign state for purposes of the FSIA and

can create federal subject matter jurisdiction in actions

that it properly removes to federal court. We turn next to

consider the validity of Dead Sea’s removals.

B. Removal

1. Standard of Review

In dismissing the cases for forum non conveniens, the

district court implicitly denied plaintiffs’ motions to

remand. We review the district court’s refusal to remand

App. 24

de novo. See Herron v. Continental Airlines, Inc., 73 F.3d

57, 58 (5th Cir. 1996).

2. Removal and Texas Rule of Civil Procedure 38(a)

In the “over thirty days” cases, Texas Rule of Civil

Procedure 38(a) required state court leave to serve third-

party petitions on Dead Sea. Even though the required

leave was not obtained before removal, the district court

upheld the validity of Dead Sea’s removals by relying on

the post-removal orders of two federal magistrate judges

who granted leave to implead Dead Sea pursuant to

Federal Rule of Civil Procedure 14.

Plaintiffs contend that the district court erred in rely-

ing on those orders.?? Plaintiffs’ logic proceeds as follows:

(1) at the time of removal, the state court had not granted

leave to serve Dead Sea, so Dead Sea was not a party in

state court; (2) as a non-party, Dead Sea could not remove

to federal court; (3) without Dead Sea’s presence in fed-

eral court, there was no federal subject matter jurisdic-

tion; and (4) in the absence of subject matter jurisdiction,

(a) the magistrate judges had no authority to issue post-

removal orders, and (b) the district court had no choice

but to remand.

In the face of the district court’s ruling that there had

to have been state court leave to serve the third-party

22 Because state court leave to serve the third-party

petitions was not required in the “under thirty days” cases,

Plaintiffs do not challenge their removal on the basis of a failure

to comply with Rule 38(a).

App. 25

petitions on Dead Sea and that the removals were, there-

fore, premature, we recognize the logical force of Plain-

tiffs’ argument. Nevertheless, we reject Plaintiffs’ desired

result because, contrary to the district court and Plain-

tiffs’ view, the removals were not premature. Generally,

service of process is not an absolute prerequisite to

removal. Section 1446(b) expressly provides for removal

of a civil action or proceeding within thirty days after the

receipt by the defendant, “through service or otherwise,

of a copy of an amended pleading, motion, or order or

other paper from which it may first be ascertained that

the case is one which is or has become removable.” We

read § 1446(b) and its “through service or otherwise”

language as consciously reflecting a desire on the part of

Congress to require that an action be commenced against

a defendant before removal, but not that the defendant

have been served.* Indeed, 28 U.S.C. § 1448, which pro-

vides that service may be completed in district court for

any removed case from state court in which any one or

more of the defendants was not served with process or in

which the service was not perfected prior to removal,

reinforces a less demanding view of the service “require-

ment” prior to removal. And under Texas law, an action

has commenced when a petition is filed. See Tex. R. Civ. P.

22.

*3 In Murphy Bros. v. Michetti Pipe Stringing, 119 S. Ct.

1322 (1999), the Supreme Court found that mere receipt of a

complaint unattended by any formal service did not trigger a

defendant’s time to remove a case from state court. But the

decision did not address whether service was a prerequisite for

a defendant to be able to remove a case.

ais App. 26

Moreover, the removal statute pertaining to a FSIA

entity, does not refer to a served party, or even the term

“party,” and it does not differentiate between parties who

have been served and those who have not. See 28 U.S.C.

§ 1441(d). Instead, that removal statute merely states that

“lajny civil action brought in a State court against a

foreign state . .. may be removed by the foreign state to

the district court. ...” In light of the fact that Texas views

an action as having commenced when a petition is filed,

Defendants’ filing of their third-party claims initiated

civil actions against Dead Sea, which allowed for the

instant cases to be removed under § 1441(d).24

Accordingly, Defendants’ failure to seek leave under

Rule 38(a) to serve the third-party petitions on Dead Sea

did not materially affect Dead Sea’s right to remove the

instant cases from state court, and the removals were not

improper. Because service was not a prerequisite to the

removal of the “over thirty days” cases, we need not

24 In the case of a third-party petition, one might argue that

under Texas law such a complaint should be viewed differently

than an initial petition with respect to when an action has

commenced. That is, a third-party action should not be viewed

as having commenced until the third-party petition has been

filed and served. Rule 22, however, makes no distinction

between an initial petition and a third-party petition. The filing

of both kinds of petitions commences an action. Additionally,

the history of Rule 38(a) and third-party petitions indicates that

any distinction between the two kinds of petitions, which may

have existed in the past, regarding the commencement of an

action was likely eviscerated by amendments enacted in 1984.

Before that year, a party had to seek leave of court to file and to

serve a third-party petition. See Tex. R. Civ. P. 38(a) (Vernon

1979, amended 1984). After the amendments, only leave to serve

is required. See Tex. R. Civ. P. 38(a).

ee ee ee ee ee eee ee

ee ee ee ee

App. 27

address in Rodriguez whether the Standard Fruit entities’

answers became effective for purposes of Rule 38(a) only

after the state court overruled their special appearances.

3. Fraudulent or Collusive Joinder

As another basis for remand, Plaintiffs insist that

defendants “fraudulently” joined Dead Sea for no pur-

pose but to have it invoke FSIA jurisdiction as Defen-

dants’ ticket for admission into federal court. For

support, they refer to: 1) the speed with which the

removals occurred; 2) the post-removal agreements

between Defendants and Dead Sea; and 3) two of their

amended petitions, which expressly state that they are

not asserting any claims arising out of products attributa-

ble to Dead Sea.

We have normally confronted the fraudulent joinder

doctrine when a defendant removes a case based on

diversity jurisdiction and charges that the plaintiff fraud-

ulently joined a non-diverse defendant to try to prevent

removal. That doctrine has not been applied where, as

here, a third-party, foreign sovereign is alleged to have

been joined willingly and cooperatively to create jurisdic-

tion as a basis for removal. Recognizing this, the district

court pressed a different inquiry of the facts surrounding

Dead Sea’s joinder, pursuant to 28 U.S.C. § 1359, which

prohibits federal jurisdiction “in a civil action in which

any party, by assignment or otherwise, has been improp-

erly or collusively made or joined to invoke the jurisdic-

tion of such court.” “Section 1359 is designed to prevent

the litigation of claims in federal court by suitors who by

sham, pretense, or other fiction acquire a spurious status

App. 28

that would allow them to invoke the limited jurisdiction

of the federal courts.” Nolan v. Boeing Co., 919 F.2d 1058,

1067 (5th Cir. 1990). Its purpose is “to prevent the manip-

ulation of jurisdictional facts where none existed before.”

Id. And it has generally been restricted to circumstances

involving assignment of interests from non-diverse to

diverse parties to collusively create diversity jurisdiction.

See, e.g., Kramer v. Caribbean Mills, Inc., 89 S. Ct. 1487

(1969). Because Plaintiffs did not aver that Defendants

had manufactured Dead Sea’s status as a foreign sover-

eign or their claims for contribution or indemnity against

Dead Sea, the district court was not persuaded that any

jurisdictional facts had been collusively manipulated in

contravention of § 1359. We believe that the district court

was correct in holding that § 1359 was not applicable.

On appeal, Plaintiffs do not appear to challenge the

district court’s § 1359 analysis. Rather, they question the

district court’s reliance on that statute as opposed to an

analysis predicated on the fraudulent joinder doctrine. As

we previously noted, the district court declined to apply

that doctrine because it perceptively realized that fraudu-

lent joinder is normally reserved for cases where a third

party is alleged to have been joined to defeat diversity

jurisdiction as a basis for removal. Accordingly, we are

wary of recognizing the applicability of that judicially

constructed doctrine in a new context. Moreover, whether

we ought to apply the fraudulent joinder doctrine to

situations where a third-party, foreign sovereign is

alleged to have been joined willingly and cooperatively to

create jurisdiction as a basis for removal is complicated

by the doctrine’s intersection with Congress’s paramount

desire that a foreign sovereign have access to a federal

App. 29

forum to ensure uniformity in procedure and substance.

See, e.g., Nolan, 919 F.2d at 1065. That is, to craft a

fraudulent joinder rule to an FSIA entity’s right to

remove an action from state court would conflict with

Congress’s intent. We need not, and do not, resolve these

issues today, for it is apparent that even if the fraudulent

joinder doctrine were to apply to the instant case, Plain-

tiffs have failed to establish that Dead Sea was fraudu-

lently joined.

In those more typical fraudulent joinder cases where

a party has been joined to defeat removal, the burden of

persuasion is on the one who cries fraudulent joinder.25

See B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th

Cir. Unit A Dec. 1981). To establish fraudulent joinder, the

party crying foul must show that there is no reasonable

probability of recovery against the joined party or that

there has been outright fraud in the pleadings of jurisdic-

tional facts. See id. If there is no arguably reasonable basis

for believing that liability may be established against the

25 In the more typical fraudulent joinder case, the party

crying fraudulent joinder is also the party removing the case.

Because the party invoking removal jurisdiction has the burden

of establishing federal court jurisdiction, see Frank v. Bear

Stearns & Co., 128 F.3d 919, 921-22 (5th Cir. 1997), one might

argue that the burden of persuasion should still be with the

party who removed the case rather than with the party seeking

remand but charging fraudulent joinder. Such an argument,

however, presumes that the removing party has not already

satisfied its burden to establish federal court jurisdiction. After

the removing party has satisfied its burden to establish federal

court jurisdiction, the burden of persuasion with respect to the

issue of fraudulent joinder to create federal court jurisdiction

shifts to the party charging fraudulent joinder.

App. 30

joined party, then remand is appropriate. See id. at 550.

Normally, a court reviewing allegations of fraudulent

joinder should refrain from conducting an evidentiary

hearing but may utilize a summary judgment-like pro-

cedure. See Burchett v. Cargill, 48 F.3d 173, 176 (5th Cir.

1995).

To support their fraudulent joinder allegations, Plain-

tiffs’ rely upon three main points: 1) the speed with

which the removals occurred; 2) the post-removal agree-

ments between Defendants and Dead Sea; and 3) two of

Plaintiffs’ amended state court petitions, which expressly

state that they are not asserting any claims arising out of

products attributable to Dead Sea. With respect to the

first point, the intervals between the filing of the third-

party petitions by Defendants and the filing of the notices

of removal by Dead Sea were short, but in our view a

short time interval in and of itself is not enough to

establish fraudulent joinder. Indeed, opposing parties

often notify each other about pending petitions and

arrange for their convenient delivery. See, e.g., 28 U.S.C.

§ 1608(b)(1) (contemplating special arrangements for ser-

vice by parties suing agencies or instrumentalities of

foreign states). As for Plaintiffs’ second point, the post-

removal agreements between Defendants and Dead Sea

were dated nearly sixteen months after the filing of the

third- party petitions against Dead Sea in state court and

the removal of those cases. There is nothing in the record

_reflecting any negotiation and agreement between Defen-

dants and Dead Sea prior to the filing of the third-party

petitions and the notices of removal. Absent such proof,

Plaintiffs have not established that no cause of action

App. 31

could possibly have been asserted against Dead Sea by

Defendants at the time of removal.

Plaintiffs’ third basis for fraudulent joinder, however,

merits further discussion. At the time of removal, in two

of the dismissed cases, Jorge and Rodriguez, the latest

state court amended petitions expressly stated that Plain-

tiffs were not asserting any “claims because of exposure

to DBCP or DBCP-containing products designed, manu-

factured, marketed, distributed, or used by Dead Sea

Bromine Co., Ltd., Ameribrom, Inc., Israel Chemical Co.,

Ltd., Dead Sea Works, Ltd., and the State of Israel.” The

critical issue becomes what law determines the effect of

those disclaimers. Without explanation, Plaintiffs seem to

think that Texas law applies to this determination and

dictates the outcome of any fraudulent joinder analysis.2°

Indeed, the only affidavit that either Plaintiffs or Defen-

dants refer to in their briefs with respect to the choice of

law issue does not support Plaintiffs’ position but actu-

ally suggests the opposite. Defendants, on the other

hand, make a blanket assertion that the relevant choice of

law for determining whether a party was fraudulently

joined in a DBCP-related case is the law of the country

where the plaintiff was exposed to DBCP, i.e., Honduras

in the case of Rodriguez and various foreign countries in

the case of Jorge. For support, they cite to a decision out

of the Eleventh Circuit. See Cabalceta v. Standard Fruit

Co., 883 F.2d 1553, 1562 (11th Cir. 1989). In Cabalceta,

26 The only legal authority that Plaintiffs refer to is an order

in an unrelated DBCP case by a Texas state court judge denying

certain defendants motion to apply Costa Rican law. That order,

though, does not state that Texas law, or any other law, is the

governing law.

App. 32

several Costa Rican plaintiffs brought suit in Florida state

court against several defendants, including many in the

present appeals, for injuries from exposure to DBCP. The

defendants removed the case to federal district court

where it was ultimately dismissed on forum non conve-

niens. Among the issues on appeal was whether the

plaintiffs had fraudulently joined one of the defendants,

Dole Fresh Fruit Co. (“Dole”), to defeat removal. To

determine whether the plaintiffs had a colorable cause of

action, the district court applied Florida law. The plain-

tiffs charged that this was error because when the district

court dismissed the case on forum non conveniens, it

ruled that Costa Rican law would apply. Noting that the

plaintiffs’ pleadings at the time of removal did not defi-

nitely assert that they were proceeding against Dole

under Florida law, the Eleventh Circuit agreed with the

plaintiffs and reversed, remanding the fraudulent joinder

issue so that the plaintiffs’ cause of action against Dole

could be evaluated under Costa Rican law.

We find Cabalceta instructive but not dispositive of

the instant cases. We note first that Plaintiffs have not

alleged in either Jorge or Rodriguez that their claims are

made under the laws of any particular state or nation.

Next, we turn to the Texas law of conflicts for guidance as

Texas is the state in which the forum district court sits.

See W.R. Grace & Co. v. Continental Cas. Co., 896 F.2d

865, 873 (5th Cir. 1990). In Gutierrez v. Collins, 583

S.W.2d 312, 318 (Tex. 1979) (Johnson, J.), the Texas

Supreme Court adopted the most significant relationship

test as enunciated in sections 6 and 145 of the Restate-

ment (Second) of Conflicts as governing all conflicts cases

sounding in tort. Those sections provide:

App. 33

§ 6. Choice of Law Principles

(1) A court, subject to constitutional

restrictions, will follow a statutory directive

of its own state on choice of law.

(2) When there is no such directive, the

factors relevant to the choice of the applica-

ble rule of law include

(a) the needs of the interstate and

international systems,

(b) the relevant policies of the forum,

ested states and the relative interests of

those states in the determination of the

particular issue,

(d) the protection of justified expecta-

tions,

(e) the basic policies underlying the

particular field of law,

(f) certainty, predictability and unifor-

mity of result, and

(g) ease in the determination and

application of the law to be applied.

§ 145. The General Principle

(1) The rights and liabilities of the parties

with respect to an issue in tort are deter-

mined by the local law of the state which,

with respect to that issue, has the most sig-

nificant relationship to the occurrence and

the parties under the principles stated in

§ 6.

(2) Contacts to be taken into account in

applying the principles of § 6 to determine

the law applicable to an issue include:

App. 34

(a) the place where the injury

occurred,

(b) the place where the conduct caus-

ing the injury occurred,

place of incorporation and place of

business of the parties, and

(d) the place where the relationship, if

any, between the parties is centered.

These contacts are to be evaluated according to

their relative importance with respect to the par-

ticular issue.

In addition, § 173 of the Restatement (Second) of Con-

flicts states that “[t]he law selected by application of the

rule of § 145 determines whether one tortfeasor has a

right to contribution or indemnity against another

tortfeasor.” At least one court has interpreted that section

to mean that the source of law governing the primary

liability claim is also the source of law governing the

contribution claim. See 50-Off Stores, Inc. v. Banque Par-

ibas (Suisse) S.A., No. SA-95-CA-159, 1997 WL 7907339, at

*12 (W.D. Tex. May 20, 1997); cf. Marathon Pipe Line Co.

v. Drilling Rig Rowan/Odessa, 761 F.2d 229, 235 (5th Cir.

1985) (“This court has held that the body of law establish-

ing the indemnitee’s primary liability governs his claim

for indemnity or contribution against a third party.”).

Our evaluation of the choice of law issue under these

prescribed rules leads us to conclude that Texas law

would not qualify as the appropriate source of law.

Among other things, more than 99 percent of the Jorge

and Rodriguez plaintiffs are citizens of another country

and not of the United States. All of the plaintiffs’ injuries

App. 35

occurred in various foreign countries, principally Hon-

duras, and those foreign countries obviously have an

interest in protecting the rights and welfare of their citi-

zens. And even if the source of law governing Defen-

dants’ contribution claims were different than that for

governing the primary liability issue, our review suggests

no reason why Texas law would necessarily be the prefer-

red choice. As the party crying foul, Plaintiffs have the

burden of proof and persuasion to show that there is no

arguably reasonable basis for believing that liability may

be established against Dead Sea. Plaintiffs have not cited

us to any case law or siatutory provision of any jurisdic-

tion, other than Texas, likely to be chosen as the source of

law for determination of (i) the Plaintiffs’ liability claim

against the various Defendants, (ii) the claims for indem-

nity or contribution among the various Defendants, or

(iii) the effects of Plaintiffs’ disclaimer respecting Dead

Sea on any of the foregoing.

Given the multiplicity of differing provisions that the

various systems of jurisprudence in the countries

involved in this litigation have on the subjects of primary

tort liability, apportionment of liability among joint

tortfeasors, indemnity and contribution, and the dis-

claimer in this case, and given the incremental nature of

the claimed exposure, the numerous sources of DBCP’s

going into the particular products produced by the manu-

facturing Defendants, the apparently very small and

undifferentiated percentage attributable to Dead Sea, and

the various quantities of product that each grower Defen-

dant could have purchased from any particular manufac-

turer, we conclude that Plaintiffs have failed to sustain

their burden. Therefore, we are unable to conclude that

App. 36

Defendants fraudulently or collusively joined Dead Sea to

create federal court jurisdiction and to remove their

cases.?7

C. Rule 60(b)(2) And The Motion To Sever

Plaintiffs’ final attempt for relief pertains to the dis-

trict court’s denial of their Motion for Relief from Final

Judgment pursuant to Federal Rule of Civil Procedure

60(b)(2). That motion was filed subsequent to Plaintiffs’

discovery of the post-removal agreements between

Defendants and Dead Sea. According to Plaintiffs, those

agreements illustrate 1) that there was fraudulent or col-

lusive joinder, and 2) that Defendants no longer have any

valid claims against Dead Sea and, hence, no basis for

federal court jurisdiction. Apparently, intertwined with

the denial of the Rule 60(b)(2) motion was another ruling

denying Plaintiffs’ request, in the alternative, to sever the

third-party claims from the primary claims and to

remand those primary claims back to state court. We

review both of the district court’s denials for abuse of

discretion. See Fed.R.Civ.P. 14 advisory committee’s note

(stating that a district court has discretion with respect to

severance of a third-party claim); Barrs v. Sullivan, 906

F.2d 120, 121 (5th Cir. 1990) (“The standard of review is

whether the district court plainly abused its discretion in

denying the rule 60(b) motion.”).

27 Because Dead Sea is an agency or instrumentality of a

foreign state and because Defendants did not prematurely

remove their cases or fraudulently implead Dead Sea, we need

not address Defendants’ other arguments for removal and

subject matter jurisdiction.

App. 37

Under Rule 60(b)(2), “on motion and upon such

terms as are just, the court may relieve a party or a

party’s legal representative from a final judgment, order,

or proceeding for . . . newly discovered evidence which

by due diligence could not have been discovered in time

to move for a new trial under Rule 59(b).” Due to our

conclusions with regard to the fraudulent joinder allega-

tions, we find no abuse of discretion based on Plaintiffs’

first contention that the post-removal agreements illus-

trate fraudulent or collusive joinder. As for Plaintiffs’

second contention that the agreements demonstrate that

Defendants have no valid claims against Dead Sea and,

thus, no basis for federal court jurisdiction, we agree with

the district court that there is still a case or controversy

between Defendants and Dead Sea. Although the agree-

ments cap the maximum liability that Dead Sea may owe

to Defendants for their third-party claims, the agreements

do not definitely outline what the actual liability is and

Dead Sea is not barred from still contesting its liability.

Accordingly, we conclude that the district court did not

abuse its discretion when, confronted with the agree-

ments between Defendants and Dead Sea, it denied Plain-

tiffs’ Rule 60(b)(2) motion.

Lastly, the district court did not abuse its discretion

when it denied Plaintiffs’ request to sever Defendants’

third-party claims from the primary claims and to

remand those primary claims to state court. Indeed, at

least one other circuit has held that a district court has no

discretion to remand a plaintiff’s claims when a FSIA

third-party defendant has removed the third-party and

primary claims to federal court. See In re Surinam Airways

Holding Co., 974 F.2d 1255, 1260 (11th Cir. 1992). Although

we decline to address the specifics of that holding at this

ages

sy pa es eS

iggep alata

App. 38

time, the Eleventh Circuit’s decision suggests that the

district court’s decision was not an abuse of discretion.

Furthermore, we note that there was no indication that

the third-party claims unduly complicated or overbur-

dened the primary claims. On the contrary, policy inter-

ests such as efficiency warranted the disposition of all

those claims together. Thus, we find no abuse of discre-

tion in the district court’s refusal to sever the third-party

claims from the primary claims and to remand those

primary claims to state court.

III. CONCLUSION

Initially, we hold that the majority ownership

requirement for an entity to qualify as a “foreign state”

under the FSIA is satisfied by tiered or indirect majority

ownership to the same extent that it is satisfied by direct

ownership. Therefore, we determine that Dead Sea is a

“foreign state.”

Next, we conclude that Dead Sea did not prematurely

remove the instant cases, notwithstanding Defendants’

failure to seek leave in state court to serve Dead Sea.

Service was unnecessary to trigger Dead Sea’s right, as a

FSIA entity, to remove under the removal statute.

As for Plaintiffs’ fraudulent joinder argument, we do

not believe that the speed with which the removals

occurred or the post-removal agreements between Defen-

dants and Dead Sea are indicative of that reprobated

tactic. With respect to the Jorge and Rodriguez cases, the

mere inclusion of disclaimers was insufficient to satisfy

Plaintiffs’ burden as to fraudulent joinder. Plaintiffs failed

App. 39

to establish that Texas law or the law of any other juris-

diction precluded Defendants from asserting a cause of

action against Dead Sea.

Finally, the district court did not abuse its discretion

when it denied Plaintiffs’ Rule 60(b)(2) motion and their

request to sever the third-party claims from the primary

claims and to remand those primary claims to state court.

AFFIRMED.?8

28 During the pendency of this appeal, the parties have filed

numerous motions that have been held in abeyance. Many of

those motions pertain to various settlement agreements that have

been entered into by some, but not all, of the plaintiffs with some,

but not all, of the defendants in each of the cases involved in this

appeal. Among those motions pertaining to the various

settlement agreements, several seek to dismiss this appeal due to

those settlements. Other parties to this appeal have filed

objections to those motions for dismissal. None of the

consummated settlements required our approval as a condition

of settlement, and none of the settlements required dismissal of

this appeal as a condition of settlement. Under those

circumstances, we conclude that the most appropriate course of

action is to deny all motions for dismissal of this appeal based on

settlement; however, denial of those motions for dismissal should

not be deemed or construed by any party as indicating our

position, either pro or con, as to the validity or binding effect of

those settlements. Finally, all other pending motions are

dismissed as moot.

App. 40

United States District Court,

S.D. Texas,

Houston Division.

Franklin Rodriguez DELGADO, et al., Plaintiffs,

SHELL OIL CO., et al., Defendants.

Civ. A. No. H-94-1337.

June 30, 1995.

Fred Misko, Charles Siegel, Misko, Howie &

Sweeney, Dallas, TX, Stephen D. Susman, James McCartt,

Michael A. Lee, Susman Godfrey, Houston, TX, Harold W.

Nix, Edward L. Hohn, Harold Nix & Associates, Dainger-

field, TX, Wayne Fisher, Jim Huguenard, Fisher, Gal-

lagher & Lewis, Houston, TX, John McEldowney, Greer,

Herz & Adams, Galveston, TX, James W. Bradford, Jr.,

Angleton, TX, Joseph C. Kohn, Myles H. Malman, Martin

J. D’Urso, Kohn, Nast & Graf, P.C., Philadelphia, PA,

Thomas H. Hart, III, Alkon, Rhea & Hart, St. Croix, VI,

Ramon Garcia, Dalinda G. Quintana, Law Office of

Ramon Garcia, P.C., Edinburg, TX, Enrique Alvino Garza,

Hebronville, TX, J.A. “Tony” Canales, Canales & Simon-

son, Corpus Christi, TX, Vaughn O. Stewart, Lake Jack-

son, TX, for plaintiffs.

John L. Hill, Jr., J. Michael Dorman, Richard Staff,

James E. Essig, Liddell, Sapp, Zivley, Hill & Laboon, Burt

Ballanfant, Shell Oil Co., Houston, TX, Morris Atlas, Lisa

Powell, Atlas & Hall, L.L.P., McAllen, TX, Richard R.

Gonzales, Hebronville, TX, Robert W. Weber, Atchley,

Russell, Waldrop & Hlavinka, L.L.P., Texarkana, TX, John

R. Gilbert, Gilbert, Gilbert & Boyd, P.C., Angleton, TX, for

Shell Oil Co.

App. 41

D. Ferguson McNeil, Vinson & Elkins, Charles W.

Schwartz, Houston, TX, Stephen C. Lewis, Charles M.

O’Connor, Mariah Baird, Landels, Ripley & Diamond, San

Francisco, CA, Michael M. Phillips, Angleton, TX, T. John

Ward, Calvin Capshaw, Brown, McCarrol & Oaks Hart-

line, Longview, TX, for Occidental Chemical Corp.

Terence M. Murphy, James S. Teater, Michael L. Rice,

Jones, Day, Reavis & Pogue, Dallas, TX, Wiley Thomas,

Angleton, TX, for Standard Fruit Co., Dole Fresh Fruit Co.

F. Walter Conrad, Michael Brem, Baker & Botts,

L.L.P., Houston, TX, Patrick Reilly, Galveston, TX, J.G.

Adami, Jr., Perkins, Oden, Warbuxton, McNeill, Adami &

Paisley, Alice, TX, John R. Gilbert, Gilbert, Gilbert &

Boyd, P.C., Angleton, TX, Eduardo R. Rodriguez,

Rodriguez, Colvin & Chaney, Brownsville, TX, Robert

Rolston, Bird Old III, Old, Rolston & Old, Mount Pleas-

ant, TX, T. John Ward, Calvin Capshaw, Brown, McCarrol

& Oaks Hartline, Longview, TX, for Dow Chemical Co.

Samuel E. Stubbs, William D. Wood, Fulbright &

Jaworski L.L.P., Houston, TX, for Chiquita Brands and

Chiquita Brands Intern., Inc.

James J. Juneau, Pamela K. Estes, Strasburger & Price,

L.L.P., Houston, TX, Robert T. Greig, Howard S. Zelbo,

Cleary, Gottlieb, Steen & Hamilton, New York City, for

Del Monte Fresh Produce, N.A. and Del Monte Tropical

Fruit Co.

Edward F. Fernandes, Solar & Fernandes, ee

Houston, TX, for Programa Nacional de Banano.

Scott M. Hendler, The Hendler Law Firm, Austin, TX,

Don Weitinger, Carrie Weitinger, Weitinger & Weitinger,

App. 42

Houston, TX, Michael Brickman, Ness, Motley, Loadholt,

Richardson & Poole, P.A., Charleston, SC, for intervenors.

Jeffrey H. Marsh, Mattingly & Marsh, Houston, TX,

Robert Crow, Boornazian, Jensen & Garthe, Oakland, CA,

for Amvac Chemical Corp.

Laurence E. Best, Best, Koeppel & Klotz, Houston,

TX, Laurence E. Best, Best, Koeppel & Klotz, New

Orleans, LA, for interveners (Hondurans).

Thomas J. Brandt, Bradley W. Cole, Robert A. Shults,

Sheinfeld, Maley & Kay, P.C., Houston, TX, Peter R.

Paden, Teitelbaum, Hillde, Rodman, Paden & Hibsher,

P.C., New York City, for third- and fourth-party defen-

dants, Dead Sea Bromine Co., Ltd., Bromine Compounds,

Ltd., and Ameribrom, Inc.

MEMORANDUM AND ORDER

LAKE, District Judge.

Pending before the court is the Motion to Remand or,

in the Alternative, Motion to Sever and Remand of plain-

tiffs (Docket Entry No. 16). Plaintiffs argue that the court

must remand this action pursuant to 28 U.S.C. § 1447(c)

because the court lacks subject matter jurisdiction. Alter-

natively, plaintiffs ask the court to sever claims concern-

ing the recently impleaded party that may have conferred

subject matter jurisdiction and to remand the remaining

claims. Also pending is the Motion to Consolidate of

defendant, Shell Oil Co. (Docket Entry No. 19).

ee ee ee

App. 43

I. Background

On January 13, 1993, plaintiffs, residents of Costa

Rica, Panama, and Nicaragua, filed a petition in the 212th

District Court of Galveston County, Texas. They sought

damages from a variety of defendants for injuries stem-

ming from alleged exposure to a nematocide,

dibromochloropropane (DBCP), while working on banana

plantations in those countries. Although plaintiffs pur-

sued remedies available exclusively under state law,

defendants removed the action to the Galveston division

of this district on the basis that the Federal Insecticide,

Fungicide and Rodenticide Act (FIFRA) preempted those

claims. Judge Kent found that FIFRA did not preempt

plaintiffs’ clams and remanded the action on April 19,

1993. Rodriguez v. Shell Oil Co., 818 F.Supp. 1013

(S.D.Tex.1993). All further proceedings, including consol-

idation of the action with another DBCP case,! were

conducted by the state court until March 15, 1994, when

one of the defendants, Del Monte Fresh Produce, N.A.,

filed a third-party petition against Dead Sea Bromine Co.

Ltd. (Dead Sea), an Israeli company. Dead Sea removed

the action to the Galveston division pursuant to 28 U.S.C.

§ 1441(d) because Dead Sea is a “foreign state” within the

meaning of the FSIA.? The case was assigned to Judge

1 The January 7, 1994, Order consolidating this action with

Aguilar v. Shell Oil Co., No. 93-CV-0658 (56th Dist.Ct., Galveston

County, Texas), is attached as Exhibit 19 to Dead Sea Bromine’s

First Supplement to the Record Following Removal (Docket

Entry No. 11).

* The Foreign Sovereign Immunities Act was originally

enacted as Pub.L. No. 94-583, 90 Stat. 2892 (1976). It is now

codified as amended at 28 U.S.C. §§ 1602-1611.

App. 44

Kent as Civil Action No. G-94-193. Upon Judge Kent's

recusal (Docket Entry No. 8) the case was transferred to

the Houston division and randomly assigned to the

undersigned judge (Docket Entry No. 14).

II. Standard of Review

“Section 1447(c) provides two grounds for remand:

(1) a defect in removal procedure and (2) lack of subject

matter jurisdiction.” Burks v. Amerada Hess Corp., 8 F.3d

301, 303 (5th Cir.1993). When considering a motion to

remand the removing party bears the burden of showing

that removal was proper. Willy v. Coastal Corp., 855 F.2d

1160, 1164 (5th Cir.1988), appeal after remand, 915 F.2d

965 (5th Cir.1990), aff'd, 503 U.S. 131, 112 S.Ct. 1076, 117

L.Ed.2d 280 (1992). “This extends not only to demonstrat-

ing a jurisdictional basis for removal, but also necessary

compliance with the requirements of the removal stat-

ute.” Albonetti v. GAF Corporation-Chemical Group, 520

F.Supp. 825, 827 (S.D.Tex.1981). Because removal jurisdic-

tion “raises significant federalism concerns,” Willy, 855

F.2d at 1164, courts must construe removal statutes “nar-

rowly, with doubts resolved in favor of remand to the

state court.” Jefferson Parish Hosp. Dist. No. 2 v. Harvey,

788 F.Supp. 282, 283-84 (E.D.La.1992). If there is any

doubt that a right to removal exists, “ambiguities are to

be construed against removal.” Samuel v. Langham, 780

F.Supp. 424, 427 (N.D.Tex.1992).

App. 45

III. Discussion

A. Was removal properly achieved?

Plaintiffs argue that the case was improperly

removed because Dead Sea is not a foreign state. 28

U.S.C. § 1441(d) provides fo:..gn states an absolute right

to remove cases in which they are a party.3 The FSIA

contains a detailed definition of a foreign state.

(a) A “foreign state”, except as used in section

1608 of this title, includes a political subdivision

of a foreign state or an agency or instru-

mentality of a foreign state as defined in subsec-

tion (b).

(b) An “agency or instrumentality of a foreign

state” means any entity -

(1) which is a separate legal person, corporate

or otherwise, and

(2) which is an organ of a foreign state or

political subdivision thereof, or a majority of

whose shares or other ownership interest is

owned by a foreign state or political subdivision

thereof, and

(3) which is neither a citizen of a State of the

United States ... nor created under the laws of

any third country.

3 See, e.g., Talbot v. Saipem A.G., 835 F.Supp. 352, 353

(S.D.Tex.1993). In Nolan v. Boeing Co., 919 F.2d 1058 (5th

Cir.1990), cert. denied, 499 U.S. 962, 111 S.Ct. 1587, 113 L.Ed.2d

651 (1991), the Fifth Circuit held that § 1441(d) affords third-

party defendants the right to remove not only the third-party

claims, but the entire case.

App. 46

28 U.S.C. § 1603. Dead Sea has introduced uncontradicted

evidence that it satisfies the first and last elements of

§ 1603(b). The evidence demonstrates that Dead Sea is a

corporation organized under the laws of Israel* and

plaintiffs do not contend that Dead Sea is a citizen of a

State of the United States or created under the laws of a

third country. Instead, plaintiffs argue that despite the

disjunctive criteria of § 1603(b)(2), Dead Sea’s proof that

Israel indirectly owns a majority of its shares> is insuffi-

cient to satisfy § 1603(b)(2). Citing Edlow Int’l v. Nuklearna

Elektrarna Krsko (NEK), 441 F.Supp. 827 (D.D.C.1977),

plaintiffs argue that the court should also require Dead

Sea to prove that it discharges a governmental function or

that the State of Israel exercises direct control over its

operations.

Plaintiffs’ argument is unconvincing. In Edlow a Ber-

mudan nuclear fuels broker sued NEK, “an independent

self-managing organization of workers linked in labour

by common interests and organized in basic organiza-

tions of associated labour” chartered by the Socialist Fed-

eral Republic of Yugoslavia to build and operate a nuclear

4 Affidavit of Bat-Sheva Golan, attached as part of Exhibit

1-A to Memorandum of Law of Third-Party Defendant Dead Sea

Bromine Co., Ltd. in Opposition to Plaintiffs’ Motion to Remand

(Dead Sea’s Opposition; Docket Entry No. 31).

> Dead Sea has introduced uncontradicted evidence that

Israel owns, albeit indirectly, roughly two-thirds of the

outstanding shares of Dead Sea. Id. The fact that Israel’s

ownership interest in Dead Sea is “indirect” because Dead Sea is

a wholly-owned subsidiary of an entity in which Israel owns an

indirect majority interest is immaterial. See, e.g., Talbot v. Saipem

A.G., 835 F.Supp. 352, 353 n. 2 (S.D.Tex.1993).

Se a ee

App. 47

power plant, to resolve a dispute over NEK’s obligation

to pay the broker its fee. 441 FSupp. at 831.NEK argued

that the court lacked subject matter jurisdiction over the

action because it was not a foreign state within the mean-

ing of § 1603(b). The broker countered that NEK met the

§ 1603(b)(2) test because Yugoslavia “owned” NEK by

virtue of the country’s socialist political ideology that all

property was “owned” by the state. In rejecting that

argument the court stated that

to accept plaintiff’s argument on this point

would be to characterize virtually every enter-

prise operated under a socialist system as an

instrumentality of the state. . . . [While the

FSIA’s] legislative history evinces Congress’

intent that the definition of “agency or instru-

mentality of a foreign state” be read broadly to

encompass “a variety of forms,...” there is no

suggestion that a foreign state’s system of prop-

erty ownership, without more, should be deter-

minative on the question whether an entity

operating within the state is a state agency or

instrumentality under the [FSIA].

Id. at 831-32 (citation omitted). Faced with both a political

system that forbade most private enterprise and a dearth

of evidence with which to distinguish state-owned from

privately held enterprises, the court was forced to impro-

vise. It developed the test that plaintiffs now ask this

court to apply; a test designed to determine whether NEK

met the first § 1603(b)(2) criteria because it was an

“ ‘organ’ of the Yugoslav government” that discharged a

governmental function, or whether it met the second

criteria because the Yugoslav government actually exer-

cised control over its operations in a manner indicating

App. 48

that it “owned” a controlling interest in the organization.

Id. at 832. Since the court concluded that NEK met neither

of § 1603(b)(2)’s criteria, it held that NEK was not a

foreign state within the meaning of § 1603(a).

Nothing in § 1603(b) or any other provision of the

FSIA suggests that a corporation able to satisfy the major-

ity ownership requirement of § 1603(b)(2) must also meet

the separate test performed by the Edlow court. Because

the FSIA “sets forth the sole and exclusive standards to

be used in resolving questions of sovereign immunity

raised by foreign states before Federal and State courts in

the United States,”® this court joins those courts that have

declined to judicially engraft the Edlow test onto the

§ 1603(b)(2) “ownership” inquiry.” Dead Sea is an agency

or instrumentality of Israel because Israel owns a major-

ity of its shares. Accordingly, Dead Sea had a right to

remove the action under § 1441(d).

B. Is remand necessary even though removal was

proper?

Plaintiffs argue in the alternative that even if Dead

Sea’s removal was proper, its immunity under the FSIA

deprives the court of subject matter jurisdiction over

Dead Sea. Plaintiffs urge the court to dismiss Dead Sea

for lack of subject matter jurisdiction and to remand the

6 H.R.Rep. No. 94-1487, 94th Cong., 2d Sess. 12, reprinted

in 1976 U.S.C.C.A.N. 6604, 6610; see also Rodriguez v. Transnave

Inc., 8 F.3d 284, 287 (5th Cir.1993).

7 See, e.g., Intercontinental Dictionary Series v. De Gruyter,

822 FSupp. 662, 673 (C.D.Cal.1993); Yessenin-Volpin v. Novosti

Press Agency, 443 F.Supp. 849, 852-54 (S.D.N.Y.1978).

——e eC

App. 49

remaining claims to state court. Defendants contest plain-

tiffs’ arguments and argue in the alternative that even if

Dead Sea is immune, other bases for subject matter juris-

diction exist.

1. Does 28 U.S.C. § 1330(a) provide a basis for juris-

diction?

The FSIA provides “the sole basis for obtaining juris-

diction over a foreign state in [American] courts.” Argen-

tine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428,

434, 109 S.Ct. 683, 688, 102 L.Ed.2d 818 (1989). Because

Congress predicated the exercise of “subject-matter juris-

diction in any . . . action [against a foreign sover-

eign] . . . on the existence of one of the specified

exceptions to foreign sovereign immunity, 28 U.S.C.

§ 1330(a) [, a]t the threshold of every action in a district

court against a foreign state . . . the court must satisfy

itself that one of the exceptions applies... . ” Verlinden

B.V. v. Central Bank of Nigeria, 461 U.S. 480, 493-94, 103

S.Ct. 1962, 1971, 76 L.Ed.2d 81 (1983). “[I]f none of the

exceptions to sovereign immunity set forth in the FSIA

applies, the district court lacks statutory subject matter

jurisdiction. . . . Thus, where a case is removed based on

the FSIA and section 1330, federal jurisdiction over both

foreign and nonforeign parties does not attach until it is

determined that the foreign sovereign lacks immunity

pursuant to the FSIA.” Jones v. Petty-Ray Geophysical Geo-

source, Inc., 954 F.2d 1061, 1065 (5th Cir.), cert. denied, 506

U.S. 867, 113 S.Ct. 193, 121 L.Ed.2d 136 (1992).

Plaintiffs have expended considerable effort to show

that the court lacks subject matter jurisdiction over Dead

App. 50

Sea because it is immune. Defendants, in an effort to

retain the forum of their choice, have submitted an even

greater volume of papers to show that Dead Sea is not

immune. Dead Sea has asserted, but has submitted no

papers to show, that the court lacks subject matter juris-

diction over it. Although it is true that “even if the

foreign state does not enter an appearance to assert an

immunity defense, a district court must still determine

that immunity is unavailable under the Act,” Verlinden,

461 U.S. at 494 n. 20, 103 S.Ct. at 1971 n. 20, the court is

unwilling to determine Dead Sea’s immunity status with-

out affording Dead Sea an opportunity to speak on its

own behalf. Accordingly, Dead Sea will be ordered to

provide the court with whatever arguments, authorities,

and evidence supporting its claim to immunity it desires

to present within 20 days from the entry of this Mem-

orandum and Order. Any party opposing Dead Sea’s

claim of immunity must file any papers in opposition

within 40 days from the entry of this Memorandum and

Order. Dead Sea will have 10 days to reply to any opposi-

tions.

2. Is there an alternative basis for jurisdiction?

Citing a line of Fifth Circuit cases beginning with In

re Wilson Industries, Inc., 886 F.2d 93 (5th Cir.1989), defen-

dants argue that the existence of independent bases for

subject matter jurisdiction make remand improper even

were the court to determine that Dead Sea’s immunity

precludes the exercise of subject matter jurisdiction under

§ 1330. Alternatively, citing Williams v. M/V SONORA, 985

F.2d 808 (5th Cir.1993), defendants urge that remand is

OR Oe ee ee ee ee ee ee ee ee ee ay Tee ee SS

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App. 51

committed to the discretion of the court and would be

inappropriate in this case.

a. Does diversity jurisdiction exist?

The parties dispute the existence of complete diver-

sity between the plaintiffs and defendants. 28 U.S.C.

§ 1332(a)(2) provides that “[t]he district courts shall have

original jurisdiction of all civil actions where the matter

in controversy exceeds the sum of $50,000 . . . and is

between . . . citizens of a State and citizens or subjects of a

foreign state.” Defendants argue that this test is satisfied

because all defendants are citizens of various states of the

United States and all plaintiffs are citizens of foreign

countries. Plaintiffs argue that § 1332(a)(2) is not satisfied

because one of the defendants, the Standard Fruit Co., is,

for diversity purposes, a citizen of a foreign country and

the presence of foreigners on both sides of the case

destroys diversity. See, e.g., Kuehne & Nagel (AG & Co.) v.

Geosource, Inc., 874 F.2d 283, 290-91 (5th Cir.1989) (com-

plete diversity does not exist in action between a foreign

plaintiff corporation and a foreign defendant corpora-

tion).

28 U.S.C. § 1332(c)(1) provides that “a corporation

shall be deemed to be a citizen of any State by which it

has been incorporated and of the State where it has its

principal place of business. .. . ” Plaintiffs acknowledge

that Standard Fruit Co. is a citizen of Delaware, the place

of its incorporation, but argue that it is also a citizen of

Ecuador because that is where it maintains its principal

place of business. Defendants, relying on Cabalceta v.

Standard Fruit Co., 883 F.2d 1553 (11th Cir.1989), counter

App. 52

that nothing in § 1332(c)(1) precludes the exercise of

diversity jurisdiction even if Standard Fruit Co.'s princi-

pal place of business is in Ecuador.

Because § 1332(c)(1) does not expressly apply to for-

eign corporations courts are divided as to its effect on

foreign corporations. Some courts have concluded that

§ 1332(c)(1) applies only to domestic corporations. See,

e.g., Eisenberg v. Commercial Union Assur. Co., 189 F.Supp.

500, 502 (S.D.N.Y.1960) (“Unless a corporation is incorpo-

rated by a State of the United States it will not be deemed

a citizen of the State where it has its principal place of

business.”). The Fifth Circuit first examined the effect of

§ 1332(c)(1) on foreign corporations in Jerguson v. Blue Dot

Investment, Inc., 659 F.2d 31 (5th Cir.1981), cert. denied,

456 U.S. 946, 102 S.Ct. 2013, 72 L.Ed.2d 469 (1982). In

Jerguson the defendant was a Panamanian corporation

that maintained its principal place of business in Florida,

the plaintiff's home state. The court held that diversity

jurisdiction did not exist. After analyzing the conflicting

judicial interpretations of the section, the court concluded

that congressional silence as to foreign corporations did

not preclude reading § 1332(c)(1) in a way that gave effect

to congressional intent to restrict the availability of diver-

sity over all corporations that were in reality local wher-

ever they might be incorporated.

The Fifth Circuit has continued to apply § 1332(c)(1)

to cases involving foreign corporations in a manner con-

sistent with congressional intent to limit diversity juris-

diction whenever the underlying purposes of diversity

jurisdiction would not be furthered. In Panalpina Welt-

transport GmBh v. Geosource, 764 F.2d 352 (5th Cir.1985),

the court, relying in part on Jerguson, explained that

App. 53

neither § 1332(c)(1) nor congressional intent to restrict

diversity jurisdiction is limited to cases in which a foreign

corporation is really a local concern.

Like a domestic corporation, an alien corpora-

tion may add an additional place of citizenship

for diversity purposes if its principal place of

business is within one of the states of the United

States. . . . Through multiple places of incor-

poration, principal place of business, and alter

ego or consolidation doctrines, a corporation

may become the citizen of several places for

purposes of diversity jurisdiction. Such a result

is in keeping with Congress’ intendment to con-

strict the availability of diversity jurisdiction. A

party cannot, however, pick and choose among

the places of citizenship ignoring one or more in

an effort to preserve diversity jurisdiction. Such

a practice would be contrary to the historical

intent of Congress.

Id. at 354 (citations omitted). In Chick Kam Choo v. Exxon

Corp., 764 F.2d 1148 (5th Cir.1985), the court held that the

presence of a Liberian affiliate of Exxon among the defen-

dants defeated diversity in a suit by citizens of Singapore

even though the affiliate’s principal place of business was

in New Jersey.

[W]e cannot overemphasize the primary under-

lying purpose of the diversity statute, that is, to

provide a separate forum for out-of-state citi-

zens to protect those citizens against the preju-

dices of local courts and local juries by making

available to them the benefits and safeguards of

the federal courts. When, as in this case, an alien

plaintiff sues in state court another alien (who

has a principal place of business in the United

App. 54

States), the danger is remote that the alien plain-

tiff will benefit from local bias of state courts or

juries. Thus, the underlying purpose of diversity

jurisdiction simply would not be furthered by

its extension under the facts of this case.

Id. at 1153 (citation omitted).

These Fifth Circuit opinions teach that when con-

fronted with a situation in which a corporate entity -

whether foreign or domestic — might fall within the ambit

of § 1332(c)(1)’s limitation on diversity jurisdiction a

court must determine whether the purposes of diversity

jurisdiction would be advanced by affording a federal

forum to that litigant. The court concludes that the pri-

mary underlying purpose of diversity jurisdiction would

not be furthered by affording a federal forum to disputes

between alien plaintiffs and a corporation that has a

corporate charter from one of the states of the United

States but maintains its principal place of business

abroad.

Resolution of the parties’ dispute over the existence

of complete diversity will require the court to determine

where the Standard Fruit Co. maintains its principal place

of business by applying the “total activity test” articu-

lated in J.A. Olson Co. v. City of Winona, Miss., 818 F.2d 401

(5th Cir.1987). In Olson the Fifth Circuit explained that the

“total activity test” is a compilation of the “nerve center”

and “place of activity” tests. A court should employ a

“nerve center” analysis whenever a corporation engages

“far-flung and varied activities which are car-

ried on in different states.” ... In such situa-

tions, the nerve center, or corporate offices, will

—

App. 55

[ordinarily] clearly be the principal place of

business . . . [because] the corporation’s activ-

ities are dispersed to the point that no place in

which the corporation conducts operations or

activities can be denoted “principal.”

Id. at 407 (citations omitted). When the bulk of a corpora-

tion’s operations are conducted in one state while its

administrative functions are conducted in another the

court should use the “place of activity” analysis instead.

Id. at 408-09.

The “total activity test” acknowledges that neither of

these tests is absolute; a court must first analyze the

corporation’s overall activities, and even then must apply

the appropriate test with some flexibility. Thus, while

corporate offices are ordinarily the principal place of

business of a far-flung corporation, the court might con-

clude otherwise when the nature of the activities at each

location and the relationship between those activities and

the corporation’s overall purpose indicates that a more

appropriate “nerve center” exists — even if that entails

ignoring the formal separation between corporate enti-

ties. Id. at 412 (“[A] corporation’s nerve center does not

have to be located within the corporate shell, but can be

found wherever the nerve center exists.”). Likewise, if the

bulk of a corporation’s operations are “passive,” the

administrative office that oversees these “activities” may

be the principal place of business even though a strict

application of the “place of activity” analysis might yield

the opposite result. Id. at 410 (“New York, the location of

the corporation’s offices, was therefore not only its nerve

center but also the location of its primary activity, that is,

App. 56

the management of its [real estate investment] assets

[located in other states].”).

When reviewing a motion to dismiss for lack of sub-

ject matter jurisdiction that appears to involve a need to

determine factual matters not contained within the plain-

tiff’s complaint “the district court must give [the party

seeking the federal forum] an opportunity for discovery

and for a hearing that is appropriate to the nature of the

motion to dismiss.” Williamson v. Tucker, 645 F.2d 404, 414

(5th Cir.), cert. denied, 454 U.S. 897, 102 S.Ct. 396, 70

L.Ed.2d 212 (1981). At present, the parties have merely

introduced purported judicial admissions or determina-

tions in this and other lawsuits; although some of these

items are based on deposition testimony, the parties have

submitted very few original evidentiary materials. As it

appears that the parties have already conducted discov-

ery on this issue, the Standard Fruit Co. will be ordered

to submit within 20 days from the entry of this Memoran-

dum and Order evidence sufficient for the court to deter-

mine where it maintains its principal place of business.

Plaintiffs may file papers in opposition to Standard Fruit

Co.’s submission within 40 days from the entry of this

Memorandum and Order. Standard Fruit Co. will have 10

days to reply to any opposition.

b. Does federal question jurisdiction exist?

Defendants also argue that the court can exercise

subject matter jurisdiction over the underlying action

because that action raises at least one federal question.

Defendants argue that one or more of the plaintiffs’

causes of action arise under a treaty or under federal

App. 57

common law because the case implicates both interna-

tional law and the law of foreign relations. The court has

been forced to postpone a determination of Dead Sea’s

immunity under the FSIA and the existence of diversity

jurisdiction. Because the resolution of these questions

may provide a basis for subject matter jurisdiction, the

court will defer considering the existence of federal ques-

tion jurisdiction until it has determined whether it has

jurisdiction under 28 U.S.C. § 1380 or diversity jurisdic-

tion.

IV. Consolidation

Shell Oil Co. has moved to consolidate Carcamo v.

Shell Oil Co., No. H-94-1359, also pending in the Houston

division, with the instant action. Defendants also seek to

consolidate Rodriguez v. Shell Oil Co., No. L-94-49, now

pending in the Laredo Division of the Southern District of

Texas; and Erazo v. Shell Oil Co., No. M-94-055, now

pending in the McAllen Division of the Southern District

of Texas, with this action. Since plaintiffs do not oppose

consolidation of Carcamo, No. H-94-1359, into this action,

the Motion to Consolidate of defendant, Shell Oil Co.

(Docket Entry No. 19), will be granted as it relates to

H-94-1359.

Plaintiffs complain that Shell has not yet responded

to their objection to consolidation of this case with the

Laredo and McAllen actions on the grounds that Shell has

chosen the wrong procedural vehicle to accomplish its

objective. Plaintiffs argue that interdivision consolida-

tions within one district must be preceded by a motion to

transfer venue pursuant to 28 U.S.C. § 1404(b) (“Upon

App. 58

motion ... any action... of a civil nature . . . may be

transferred, in the discretion of the court, from the divi-

sion in which pending to any other division in the same

district.”). Shell will be ordered to respond to this objec-

tion within 10 days from the entry of this Memorandum

and Order.

V. Conclusion and Order

Dead Sea’s removal was proper under 28 U.S.C.

§ 1441(d) because Dead Sea is a “foreign state.” Because

the court is unable to determine whether Dead Sea is

immune from the jurisdiction of this court Dead Sea is

ORDERED to provide the court with whatever argu-

ments, authorities, and evidence supporting its claim to

immunity it desires to present within 20 days from the

entry of this Memorandum and Order. Any party oppo-

sing Dead Sea’s claim of immunity must file any papers

in opposition within 40 days from the entry of this Mem-

orandum and Order. Dead Sea will have 10 days to reply

to any oppositions.

Because the court is unable to determine whether

diversity jurisdiction exists the Standard Fruit Co. is

ORDERED to submit within 20 days from the entry of

this Memorandum and Order evidence sufficient for the

court to determine where it maintains its principal place

of business. Plaintiffs may file papers in opposition to

Standard Fruit Co.’s submission within 40 days from the

entry of this Memorandum and Order. Standard Fruit Co.

will have 10 days to reply to any opposition.

Because the court is unable at this time to determine

whether it has subject matter jurisdiction over the entire

App. 59

action or over a portion of the action, plaintiffs’ Motion to

Remand or, in the Alternative, Motion to Sever and

Remand (Docket Entry No. 16) is DENIED. The court

reserves the right to consider the existence of its subject

matter jurisdiction and to remand or dismiss the action or

any part of the action that falls outside of its original or

supplemental jurisdiction.

Shell Oil Company’s motion to consolidate Carcamo v.

Shell Oil Co., No. H-94-1359, now pending in the Houston

Division of the Southern District of Texas, with this action

is GRANTED. Shell is ORDERED to respond to plaintiffs’

objections to Shell’s attempt to effect an interdivisional

consolidation within 10 days from the entry of this Mem-

orandum and Order.

In order to expedite a final determination of the

court’s subject matter jurisdiction over this action, all

Parties filing papers pursuant to this Memorandum and

Order should not only file those papers with the clerk,

but should also deliver a copy of their papers to the

court’s chambers. The court encourages defendants to file

joint submissions whenever possible.

App. 60

United States District Court,

S.D. Texas,

Houston Division.

Franklin Rodriguez DELGADO, et al., Plaintiffs,

SHELL OIL CO., et al., Defendants.

Jorge Colindres CARCAMO, et al., Plaintiffs,

SHELL OIL CO., et al., Defendants.

Ramon Rodriguez RODRIGUEZ, et al., Plaintiffs,

Vz.

SHELL OIL COMPANY, et al., Defendants.

tAanuel Antonio Balderamos ERAZO, Plaintiff,

SHELL OIL CO., et al., Defendants.

Juan Ramon VALDEZ, et al., Plaintiffs,

Vv.

SHELL OIL CO., et al., Defendants.

Isae CARCAMO, Plaintiff,

SHELL OIL CO., et al., Defendants.

Civ. A. Nos. H-94-1337, H-94-1359, H-94-3248, H-94-3451,

H-95-1356 and H-95-1407.

July 11, 1995.

Fred Misko, Charles Siegel, Misko, Howie &

Sweeney, Dallas, TX, Stephen D. Susman, James McCartt,

Michael A. Lee, Susman Godfrey, Houston, TX, Harold W.

Nix, Edward L. Hohn, Harold Nix & Associates, Dainger-

field, TX, Wayne Fisher, Jim Huguenard, Fisher,

App. 61

Gallagher & Lewis, Houston, TX, John McEldowney,

Greer, Herz & Adams, Galveston, TX, James W. Bradford,

Jr, Angleton, TX, Joseph C. Kohn, Myles H. Malman,

Martin J. D’Urso, Kohn, Nast & Graf, P.C., Philadelphia,

PA, Thomas H. Hart, III, Alkon, Rhea & Hart, St. Croix,

VI, Ramon Garcia, Dalinda G. Quintana, Law Office of

Ramon Garcia, P.C., Edinburg, TX, Enrique Alvino Garza,

Hebronville, TX, J.A. “Tony” Canales, Canales & Simon-

son, Corpus Christi, TX, Vaughn O. Stewart, Lake Jack-

son, TX, for plaintiffs.

John L. Hill, Jr., J. Michael Dorman, Richard Staff,

James E. Essig, Liddell, Sapp, Zivley, Hill & Laboon, Burt

Ballanfant, Shell Oil Co., Houston, TX, Morris Atlas, Lisa

Powell, Atlas & Hall, L.L.P., McAllen, TX, Richard R.

Gonzales, Hebronville, TX, Robert W. Weber, Atchley,

Russell, Waldrop & Hlavinka, L.L.P., Texarkana, TX, John

R. Gilbert, Gilbert, Gilbert & Boyd, P.C., Angleton, TX, for

Shell Oil Co.

D. Ferguson McNeil, Vinson & Elkins, Charles W.

Schwartz, Houston, TX, Stephen C. Lewis, Charles M.

O’Connor, Mariah Baird, Landels, Ripley & Diamond, San

Francisco, CA, Michael M. Phillips, Angleton, TX, T. John

Ward, Calvin Capshaw, Brown, McCarrol & Oaks Hart-

line, Longview, TX, for Occidental Chemical Corp.

Terence M. Murphy, James S. Teater, Michael L. Rice,

Jones, Day, Reavis & Pogue, Dallas, TX, Wiley Thomas,

Angleton, TX, for Standard Fruit Co., Dole Fresh Fruit Co.

F. Walter Conrad, Michael Brem, Baker & Botts,

L.L.P., Houston, TX, Patrick Reilly, Galveston, TX, J.G.

Adami, Jr., Perkins, Oden, Warbuxton, McNeill, Adami &

Paisley, Alice, TX, John R. Gilbert, Gilbert, Gilbert &

App. 62

Boyd, P.C., Angleton, TX, Eduardo R. Rodriguez,

Rodriguez, Colvin & Chaney, Brownsville, TX, Robert

Rolston, Bird Old III, Old, Rolston & Old, Mount Pleas-

ant, TX, T. John Ward, Calvin Capshaw, Brown, McCarrol

& Oaks Hartline, Longview, TX, for Dow Chemical Co.

Samuel E. Stubbs, William D. Wood, Fulbright &

Jaworski L.L.P., Houston, TX, for Chiquita Brands and

Chiquita Brands Intern., Inc.

James J. Juneau, Pamela K. Estes, Strasburger & Price,

L.L.P., Houston, TX, Robert T. Greig, Howard S. Zelbo,

Cleary, Gottlieb, Steen & Hamilton, New York City, for

Del Monte Fresh Produce, N.A. and Del Monte Tropical

Fruit Co.

Edward F. Fernandes, Solar & Fernandes, L.L.P.,

Houston, TX, for Programa Nacional de Banano.

Scott M. Hendler, The Hendler Law Firm, Austin, TX,

Don Weitinger, Carrie Weitinger, Weitinger & Weitinger,

Houston, TX, Michael Brickman, Ness, Motley, Loadholt,

Richardson & Poole, P.A., Charleston, SC, for intervenors.

Jeffrey H. Marsh, Mattingly & Marsh, Houston, TX,

Robert Crow, Boornazian, Jensen & Garthe, Oakland, CA,

for Amvac Chemical Corp.

Laurence E. Best, Best, Koeppel & Klotz, Houston,

TX, Laurence E. Best, Best, Koeppel & Klotz, New

Orleans, LA, for intervenors (Hondurans).

Thomas J. Brandt, Bradley W. Cole, Robert A. Shults,

Sheinfeld, Maley & Kay, P.C., Houston, TX, Peter R.

Paden, Teitelbaum, Hillde, Rodman, Paden & Hibsher,

App. 63

P.C., New York City, for third- and fourth-party defen-

dants, Dead Sea Bromine Co., Ltd., Bromine Compounds,

Ltd., and Ameribrom, Inc.

MEMORANDUM AND ORDER

LAKE, District Judge.

TABLE OF CONTENTS

Page

INI. nos ss0 es c's so cow o vndcnx:, ponse BOOe

Il. Parties, Posture, and Pending Pleadings. .... 1336

A. All Roads Lead to Houston............. 1336

1. Delgado v. Shell Oil Co.

A ee 1336

2. Jorge Carcamo v. Shell Oil Co.. |

NOOR vo Ls os ockcceecesnccce, 1337

3. Rodriguez v. Shell Oil Co.,

CPU So dbs eee éccusenseccesse, 1338

4. Erazo v. Shell Oil Co., H-94-3451..... 1338

5. Valdez v. Shell Oil Co., H-95-1356 & Isae

Carcamo v. Shell Oil Co., H-95-1407. . .1339

B. Common Contentions and Uncommon

ee es ga eer ell eo 1340

1. Issues concerning the propriety of

removal..... MECCHEN Ga UNwitecekaceal: 1340

2. Issues concerning dismissal of parties

ERE 134]

IIl.- Removal and Remand....................... 1341

App. 64

A. Standard of Review.................605: 1341

B. Removal by Dead Sea................... 1342

1. Prawmculemt toimger. ......22.0cccceses 1342

Ss PII 0.65 on cinctnscscsvacnaess 1343

a. What law governs?.............. 1343

b. When does a defendant's right to

CUNO UE GRMRIIET. «5 oc ccc cnscsess 1343

c. Did Dead Sea have a mature right

OP OE oc ki caccgasescscenuccs 1344

ae. GR Teer rere ee 1346

1. Medical monitoring.................. 1346

2. FRO GOR avec cade sds caisevedns: 1347

3. Foselgm wGietiem

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