MORRIS PICKERING PETERSON & TRACHOK · · 2016-11-22the Republic of the Philippines, Plaintiff,...

SQUIRE, SANDERS & DEMPSEY L.L.P.

One Maritime Plaza, Suite 300 San Francisco, CA 94111-3492

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DEFENDANT’S RESPONSE TO PLAINTIFF’S “MOTION FOR ORDER REQUIRING DEFENDANT TO SHOW CAUSE WHY THIS CASE SHOULD NOT BE REMANDED TO STATE COURT”– Case No. 2:05-CV-01299-KJD-RJJ

MORRIS PICKERING PETERSON & TRACHOK Steve Morris, Esq. (Bar No. 1543) Rex Garner, Esq. (Bar No. 9401) 300 S. 4th St., Ste. 900 Las Vegas, NV 89101 Telephone: +1.702.759.8337 Facsimile: +1.702.474.9422

SQUIRE, SANDERS & DEMPSEY, L.L.P. Rodney R. Patula, Esq. (admitted pro hac vice) Suzanne Henderson, Esq. (admitted pro hac vice) One Maritime Plaza, Suite 300 San Francisco, CA 94111-3492 Telephone: +1.415.954.0200 Facsimile: +1.415.393.9887

Attorneys for Defendant PLACER DOME INC.

UNITED STATES DISTRICT COURT

DISTRICT OF NEVADA

(LAS VEGAS DIVISION)

PROVINCIAL GOVERNMENT OF MARINDUQUE, a political subdivision of the Republic of the Philippines,

Plaintiff,

vs.

PLACER DOME INC., a Canadian corporation,

Defendant.

Case No. 2:05-CV-01299-KJD-RJJ

PLACER DOME INC.’S RESPONSE TO PLAINTIFF’S “MOTION FOR ORDER REQUIRING DEFENDANT TO SHOW CAUSE WHY THIS CASE SHOULD NOT BE REMANDED TO STATE COURT”

Case 2:05-cv-01299-KJD-RJJ Document 107 Filed 04/05/2006 of 29



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Defendant PLACER DOME INC. (“PDI”) submits this response to the Motion by

Plaintiff PROVINCIAL GOVERNMENT OF MARINDUQUE, PHILIPPINES (“Plaintiff” or

“the Province”) for an order requiring PDI to show cause why this case should not be remanded

to state court under 28 U.S.C. section 1447(c) and, apparently in lieu of sanctions under the

Federal Rules of Civil Procedure Rule 11, awarding the Province’s fees and costs in securing

such remand. Doc # 94. Given the procedural history of this case, detailed below, PDI hereby

accepts responsibility for making the affirmative case for the propriety of removal of the case five

months ago and on all other issues raised by Plaintiff’s Motion.

I. PRELIMINARY STATEMENT

The “well-pleaded” allegations of the Province’s original Complaint filed in state court

raised substantial issues under the federal common law of “foreign relations,” as articulated by

the Supreme Court and lower federal courts, including the Ninth Circuit. The Complaint was

brought by a “foreign state,” within the meaning of U.S. federal law. It asserted claims under the

law of that foreign state—and only under such law—including the regulatory and penal laws of

that country. The Complaint further called into controversy the action and inaction of the foreign

state, as essential elements of the claims for relief asserted, and it called into controversy the

alleged conduct of PDI acting in concert and “under color of law” with the foreign state. Finally,

the Complaint pleaded for specific remedies to be enforced within the sovereign territory of the

foreign state, including non-monetary remedies to be specifically imposed and supervised by this

Court within the foreign state’s borders. As seen below, the allegations of the Complaint

unquestionably present substantial questions under the federal common law of foreign relations, a

federal question for purposes of Section 1331. Removal was therefore proper.

The Province’s subsequent amendments to its original Complaint continue to implicate the

same foreign relations concerns, while raising separate and doctrinally-unrelated questions

regarding the Province’s standing to pursue claims added by the amendments, after PDI’s

removal. These include primarily so-called “natural resource damages” (or “NRD”) claims. The

Province’s potential lack of standing to assert its additional claims, however, in no way

undermines the propriety of the earlier removal or continuing federal jurisdiction in this case. In




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fact, as explained below, determination of the Province’s standing—as a regional subdivision of a

sovereign foreign government—is itself a federal question under the federal common law of

foreign relations. Because, at their core, the Province’s claims ask this Court to pass judgment on

the sovereign acts of a foreign government and to administer a trust over, and for the benefit of, a

foreign sovereign’s natural resources, this Court possesses federal subject matter jurisdiction over

the claims even if the Second Amended Complaint had been the original Complaint filed in state

court.

II. PROCEDURAL BACKGROUND

A. The Original Complaint, Removal, and Plaintiff’s First Challenge to Removal

The Province filed its Complaint in the district court for Clark County, Nevada on October

24, 2005. Doc # 1, Attach. 1. The Complaint alleged violations of Philippine law in connection

with the copper-mining operations of the Marcopper Mining Corporation (“Marcopper”), a

Philippine corporation, on the island of Marinduque from 1969 until 1996. PDI, a subsidiary of

which was a former minority shareholder in Marcopper, is sued as the purported alter-ego,

“manager,” and “controller” of Marcopper.

The Complaint asserts claims for enforcement of public duties, violations of the

Philippine Penal Code (including “reckless imprudence” and “simple imprudence”), violations of

the Water Code of the Philippines, the Philippine Fisheries Decree of 1975, the Philippine

National Pollution Control Decree of 1976, the Philippine National Water and Air Pollution

Control Commission Act; the Philippine Mining Act of 1995, and for “quasi-delict” by

negligence and by public and/or private nuisance, as well as for breaches of contract and

promissory estoppel. The action was brought by the Province “in both its sovereign capacity and

in its capacity as parens patriae to all Marinduquenos.” Doc # 1, Attach. 1 at ¶ 18.

On October 27, 2005, PDI removed the action to this Court on grounds that it raised a

substantial federal question, specifically under the federal common law of foreign relations.

Federal question jurisdiction under 28 U.S.C. section 1331 existed because, inter alia, the

Province—a political subdivision of the Republic of the Philippines purportedly acting in a

sovereign capacity—brought claims under Philippine law arising in material part from PDI’s




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and/or Marcopper’s alleged dealings with the Philippine government and calling into controversy

not merely the conduct of PDI and/or Marcopper but also the actions and inactions of the

government. Furthermore, the Complaint sought, inter alia, an order from this Court requiring

environmental clean-up and remediation within the Philippines. See PDI’s Notice of Removal

(Doc # 1). As explained more fully in Section III.A, infra, the resolution of such claims by a U.S.

court necessarily implicates “foreign relations” between the U.S. and the Philippines, within the

meaning of controlling precedent.

On November 7, 2005, the Province filed its “Statement in Respect of Defendant’s

Removal of This Action to This Court” (Doc # 9) (the “Province’s Statement”). In it, the

Province did not seek remand, but expressed concern that “the federal subject matter jurisdiction

issue . . . will hang over this case for its duration.” Id. at ¶ 4. Accordingly, the Province asked

this Court to inquire sua sponte into its jurisdiction and requested that the burden of any briefing

of the issue be placed on PDI. Id. at ¶ 6.

The next day, PDI filed its Response, proposing a briefing schedule to address the

propriety of the removal. PDI’s Response at ¶ 3 (Doc # 8). PDI also indicated its intent to seek

dismissal of this action for lack of personal jurisdiction over PDI and for improper forum, i.e.,

under the forum non conveniens doctrine. Id. at ¶ 1-3. PDI further stated that, because of the

foreign relations implications of the Province’s claims, “U.S. Supreme Court and other governing

precedents underscore the propriety of a federal court, rather than a state court, deciding those

issues.” Id. at ¶ 2-3.

On November 9, 2005, the Province filed its First Amended Complaint (“FAC”).

Doc # 15. The FAC made no amendments material to the issue of federal jurisdiction as far as

PDI can discern. Then, on November 14, 2005, the Province filed a “Reply Statement” to PDI’s

Response, claiming that “rather than adhering to its declaration that this Court has subject matter

jurisdiction on the international relations/federal common law theory stated in its removal

papers,” PDI had abandoned its theory of removal. Pl.’s Reply Stmt. In re Def. PDI’s Removal

of This Action to This Court at ¶ 7 (Nov. 14, 2005) (omitted from electronic docket).

Specifically, the Province focused on PDI’s statement that a federal rather than a state court




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should decide the issues presented by this case, including the threshold issues of personal

jurisdiction over a Canadian company and the propriety, under forum non conveniens, of any U.S.

court entertaining the action. The Province asserted that PDI had removed not on the foreign

relations grounds stated in its removal papers but rather because “it wants this Court, and [] not

Judge Adair, to decide its threatened personal jurisdiction, forum non conveniens, and failure to

state a claim motions.” Id. The Province asked this Court to determine—immediately and

without briefing—that the removal was improper and to remand the case. Id. at ¶ 12.

On November 16, 2005, PDI filed a Motion for a Pretrial Conference (Doc # 10) to

address the concerns raised by the Province. Id. at ¶ 7. As relevant to the Province’s contentions,

PDI explained that the grounds for removal and the reasons for choosing to remove need not be

the same, and that:

PDI’s ground for removal has not changed at all. The ground was and is as stated in the Notice of Removal—that is, the presentation, on the face of the Complaint and its well-pleaded allegations, of questions of federal common law of foreign relations. As the Ninth Circuit has observed: “Federal common law is, of course, federal law; so if a plaintiff’s claim arises under the federal common law recognized by Sabatino [i.e., Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401 (1964) -that is, the common law of foreign relations], the federal courts will have jurisdiction under 28 U.S.C. §1331.” Patrickson v. Dole Food Co., 251 F.3d 795, 800 (9th Cir. 2001), aff’d on other grounds, 538 U.S. 468 (2003).

Id. (emphasis in original).

On November 21, 2005, the Province opposed PDI’s request for a pretrial teleconference,

again questioning PDI’s motives for removal, rather than the grounds. Doc # 19 at 2:2-9. The

Province insisted that, because of such motives, this Court should decide the subject matter

jurisdiction issue without any further input from the parties. Id.

On December 5, 2006, this Court, by Magistrate Judge Johnson, conducted a pre-trial

teleconference. See Transcript (Doc # 101 Attach. 13). At the conference, this Court made clear

that if the Province was not going to file a motion to remand, no further action on the Province’s

Statement of November 7, 2005 would be taken. Id. at 11. The Province stated that if PDI “is

willing to confirm that it’s removing this case because it has a good-faith belief under Rule 11




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that there’s federal subject-matter jurisdiction and not because it has a forum-shopping purpose to

get a federal judge as opposed to a state judge to decide motions and issues raised by its defense,

that’s fine with [it]. [The Province is] happy to stay in federal court.” Id. at 14:11-17. PDI

explained that it had conducted “extensive research before [it] filed the notice of removal,” and

was “entirely confident in the Court’s jurisdiction” under “the Foreign Relations Common Law

Doctrine, [which] is specified in the case law as [proper] grounds for choosing federal court over

state court.” Id. at 13:18-20; 14:22-24. The Province suggested that “we go forward in federal

district court . . . .” Id. at 15:3-5, 15-16.

B. The Second Amended Complaint, PDI’s Motion to Dismiss, and Plaintiff’s Second Challenge to the Removal

At the time of the December 5 hearing, PDI was preparing its Motion to Dismiss the FAC

on personal jurisdiction and forum non conveniens grounds. But during the hearing, the Province

informed this Court and PDI that it intended to file a second amended complaint. Id. at 16.

Immediately after the hearing, the Province informed PDI that the second amended complaint

would address some unspecified “standing issues.” See Doc # 101 ¶ 3. Based on that, PDI did

not file its Motion to Dismiss the FAC, and later in December, the Province sent PDI its proposed

amended pleading and proposed motion for leave to file same. Id. at ¶ 4. Subsequently, PDI

stipulated to the filing of the amendment, which was accomplished on January 5, 2006. Doc # 43.

The Second Amended Complaint (the “SAC”) did indeed address “standing issues.” In

fact, the SAC asserted wholly new claims for relief for which the Province necessarily had to

assert a theory of standing not asserted in the original Complaint or the FAC. As detailed in

Section III.B, infra, the Province asserted claims, still under the “laws of the Republic of the

Philippines” (Doc # 43 at ¶ 5), but for so-called “natural resource damages” or “NRD,” as it is

known in the U.S. Such damages are recoverable only by the “public trustee” of the resources in

question. The SAC asserted, in substance, that while the federal government of the Philippines is

the “public trustee” of all natural resources in the country, the Province “shares” that trusteeship

as to the resources within Marinduque, and, on that basis, the Province claims standing to sue on

the NRD claims in the SAC. Id. at ¶¶ 8, 11. The SAC also reasserts claims that were in the




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original Complaint and the FAC—for negligence, public and private nuisance, breaches of

contract and promissory estoppel, and for civil liabilities under Philippine penal and regulatory

laws. Id. at ¶¶ 418-52.

Based on research and consultation with environmental attorneys in the Philippines, PDI

determined that the Province’s new claims and theory of standing raised some serious issues,

requiring expert testimony from an expert on Philippine law. Accordingly, as part of its

stipulation to filing the SAC, PDI sought and obtained the Province’s stipulation to an

enlargement of time in which to respond to the SAC. Doc # 43 at 2.

During January and February, PDI confirmed that the SAC raised issues of first

impression under Philippine law, including issues as to the Province’s standing to sue on at least

some of the claims in the SAC. This, in turn, raised doubts about this Court’s jurisdiction over

such claims, as a matter of Article III justiciability requirements.

On March 1, 2006, PDI filed its Motion to Dismiss the SAC for lack of personal

jurisdiction and on forum non conveniens grounds. Doc #’s 52-57. In connection with the latter,

PDI argues that doubts about the Province’s new theory of standing can be resolved only by

determinations of Philippine law, on which there is no authority and very little guidance. This

raises an important, additional reason why this Court should not entertain this case, but rather

should dismiss it without prejudice under the doctrine of forum non conveniens. This is

especially true given the Supreme Court’s recognition that the “doctrine of forum non conveniens

. . . is designed in part to help courts avoid conducting complex exercises in comparative law.”

Piper Aircraft Co. v. Reyno, 454 U.S. 235, 251 (1981); see Doc # 57 Attach. 1 at 6-9.1 1 As explained in Section III.B, infra, the doubt about the Province’s standing to sue on the

claims added by the SAC has no legal effect on the propriety of removing the original Complaint from state court. But the doubts are significant in the totality of the circumstances material to the forum non conveniens ground for dismissing this case without prejudice, in deference to Canada as an appropriate, alternative forum—indeed the only proper forum—for litigating this controversy. For example:

• All claims for relief asserted in the SAC concern events in the Philippines and in Canada. None of the events occurred in Nevada—or anywhere else in the U.S.

(Continued on Next Page)




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PDI did not move to dismiss any claims in the SAC for lack of standing, because, inter

alia, the standing issues are so complex that they are properly deferred under Ruhrgas AG v.

Marathon Oil Co., 526 U.S. 574, 584-85 (1999); see also Doc # 53 at 4, n.1 and Doc # 105 at 4-

12 and authorities there discussed; see especially In re Papandreou, 139 F.3d 247, 255-56 (D.C.

Cir. 1998) (cited with approval in Ruhrgas, 526 U.S. at 584-85).

///

///

• All claims in the SAC are made expressly “under the laws of the Republic of

the Philippines.” Doc # 47 at ¶ 5. All substantive issues not governed by Philippine law are governed by the law of British Columbia. Not one substantive issue in the case is governed by U.S. or Nevada law.

• If this Court entertains the case, it will be required to project what the Supreme Court of the Philippines would rule on certain issues of law not yet decided in the Philippines.

• The sole Plaintiff in this case is a Province of the Philippines, and the sole Defendant is a Canadian corporation. No U.S. party whatsoever is implicated in the controversy.

• Virtually all witnesses are resident in the Philippines or in Canada. And not a single material witness is resident in Nevada. Not one witness, including non-party witnesses, is subject to this Court’s power to compel testimony at trial.

• Not a single document concerning this litigation is located or is discoverable in Nevada. The vast majority of the pertinent documents are in the Philippines or in Canada.

Given those circumstances, why was this suit filed here rather than in the Philippines or in Canada? PDI’s Brief in support of its pending Motion to Dismiss explains:

The answer came in a press conference by the Province—in Ottawa—the day the action was commenced, during which: “[l]awyers for Marinduque said they didn’t believe they could get a fair hearing in Canada and the lawsuit couldn’t be filed in the Philippines because Placer Dome no longer does business there.” PDI is indeed not amenable to suit in the Philippines, but not merely because it “no longer does business there.” It never did business there within the meaning of Philippine law . . . . And as to Canada as an alternative forum, the notion that the Province cannot “get a fair hearing in Canada” is no different from a New York citizen claiming that in suing a Nevada company, the New Yorker cannot get a fair trial in this Court.

Doc # 53 at 2-3 (citations omitted).




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PDI’s Motion to Dismiss triggered a flurry of motions and other papers by the Province

(see Doc #’s 60, 61-62 (inc. 25 volumes of exhibits at Doc #s 65-69, 71-90), 63-64 and 94),

including the instant Motion for Remand. In this second challenge to the removal, the Province

claims that PDI has “questioned” its own grounds for removal. This is premised on footnote 1 at

page 4 of PDI’s Memorandum in Support of its Motion to Dismiss:

As mentioned, there are other grounds for dismissal not asserted by the instant motion (although they are identified in this Brief, infra). Those grounds are not advanced here because they are more complex and they go to subject matter jurisdiction and therefore are not waived.

Doc # 53 at 4, n.1 (emphasis added).2

In quoting this statement in its Motion to Remand, the Province deletes the eight words in

the bolded parenthetical. Then, with that deletion, the Province contends that “[i]n the initial

footnote to its supporting memorandum, Placer Dome effectively announces its plan to file a

series of dilatory motions to dismiss, over and above the existing motions to dismiss, which will

attack the Plaintiff’s case for unspecified subject matter jurisdictional defects.” (Emphasis in

original).

But in fact, the “other grounds” are fully disclosed and discussed in depth in the Brief on

the Motion to Dismiss. The first ground is the Province’s lack of standing to sue on some of the

claims in the SAC, as summarized above. See Doc # 53 at 2, 25, 36-38, & n.39. And the second

(and only other) ground is the so-called “act of state” doctrine, as to which the Brief on the

Motion to Dismiss states:

Earlier in this Brief, PDI mentioned that grounds for dismissing this case exist that are not asserted yet, as they are more complex than the grounds advanced here and because they go to subject matter jurisdiction and therefore will not be waived. In addition to the standing defense discussed in text above, the allegations of the SAC and other facts pointing to the potential responsibility of the Republic for the environmental harms alleged here raises the “act of state” doctrine, as a further reason for not exercising subject matter jurisdiction. See, e.g., Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401 (1964) (“The act of state doctrine in its traditional formulation precludes the courts of this country from

2 In contrast, the personal jurisdiction defense of course would have been waived if it had not

been raised with the forum non conveniens ground for dismissal.




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inquiring into the validity of the public acts [of] a recognized foreign sovereign power committed within its own territory.”)

Doc # 53 at 38-39 n.24 (emphasis added, citations omitted).

Neither the standing nor act of state defenses—even if they had been asserted as grounds

for dismissal—would negate PDI’s removal of this case last October. Before turning to the

analysis and authorities which confirm that, it is high time that the propriety of the removal be

affirmatively established, beyond any of the conclusory and vague doubts that the Province has

been voicing since last November.

III. LEGAL ARGUMENT

There are some basic principles that are operative here. First, “[f]or purposes of removal

jurisdiction, we are to look at the case as of the time it was filed in state court.” Wisconsin Dept.

of Corrections v. Schacht, 524 U.S. 381, 390 (1998); see also Sparta Surgical Corp. v. NASD,

159 F.3d 1209, 1211 (9th Cir. 1998) (“[J]urisdiction must be analyzed on the basis of the

pleadings filed at the time of removal without reference to subsequent amendments.”)

Second, this Court is empowered to hear those cases “in which a well-pleaded complaint

establishes . . . that the plaintiff’s right to relief necessarily depends on resolution of substantial

questions of federal law.” Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S.

1, 27-28 (1983), superseded by statute on other grounds, Morda v. Klein, 865 F.2d 782, 783, (6th

Cir. 1982). And such federal law includes not just the “Constitution, laws, or treaties of the

United States,” but also the federal common law. Ivy Broad. Co. v. American Tele. & Tele. Co.,

391 F.2d 486, 492 (2d Cir. 1968); Grynberg Prod. Corp. v. British Gas, 817 F. Supp. 1338, 1355

(E.D. Tex. 1993) (“[I]n some areas federal courts have authority to fashion a federal common law

either because of uniquely federal interests at stake or because of Congressional authorization”).

Third, removal on federal question grounds is proper in “those cases in which a well-

pleaded complaint establishes either that federal law creates the cause of action or that the

plaintiff’s right to relief necessarily depends on resolution of a substantial question of federal

law.” Construction Laborers, 463 U.S. at 27-28. Removal here was on the second of those

bases.




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Fourth, although, as the Province points out (Doc # 94 at 4:1-5), federal jurisdiction is

never presumed and grounds asserted for it are strictly construed, the right to remove in the

proper case cannot be taken lightly. Federal jurisdiction is not a matter of discretion—and that

works in both directions, in the assertion of jurisdiction and in its denial. See Wright, Miller &

Cooper, FEDERAL PRACTICE AND PROCEDURE, Juris. § 3739 at 450 (citing Boatmen’s Bank of St.

Louis, Missouri v. Fritzlen, 135 F. 650 (8th Cir. 1905)). In Boatmen’s, the court observed:

[T]he petitioner either has or he has not the right to the trial and decision of his controversy in [federal] court. That right is of sufficient value and gravity to be guarantied by the Constitution and the acts of Congress. If it exists, and the [court] denies its existence, and remands . . . , the error is remediless, and it deprives the petitioner of his constitutional right.

Boatmen’s Bank, 135 F. at 655; see also McKinney v. Bd. of Trs., 955 F.2d 924, 927 (4th Cir.

1992) (“[B]y providing for removal in the first place, Congress seems to believe that the

defendant’s right to remove a case that could be heard in federal court is at least as important as

the plaintiff’s right to the forum of his choice.”); 17th St. Assocs., LLP v. Markel Int’l Ins. Co.

Ltd., 373 F. Supp. 2d 584, 593 (E.D. Va. 2005) (“[F]ederal courts must not interpret removal

statutes . . . so strictly as to overwhelm the very right that they are intended to confer and the

federal interests that they were designed to protect [, but must] recogni[ze] that the duty ‘to

exercise jurisdiction where it is conferred, and not to usurp it where it is not conferred, are of

equal obligation.’”).

Finally as to basic principles, both in its first and in its current challenge to the removal,

the Province suggests that a case may be remanded if the federal trial court feels that the

defendant was motivated to remove by what the Province repeatedly calls “forum-shopping.”

Every removal amounts to choosing a federal over a state forum. Bryfogle v. Carvel Corp., 666

F. Supp. 730, 733 (E.D. Pa. 1987) (“It is, of course, always true that a defendant will remove only

when it perceives removal to be an advantageous litigation strategy. Removal is a statutory right.

As long as defendant is within its rights to remove under the statute, defendant’s motives for

removal are irrelevant in determining whether removal is proper.” (emphasis added, internal

citations omitted); see also Alabama Great S. Ry. Co. v. Thompson, 200 U.S. 206, 218 (1906);




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Martin v. Hunter’s Lessee, 14 U.S. (1 Wheat.) 304, 348 (1816).3

In any event, in this case PDI has asserted a more pressing reason for choosing federal

court than exists in most cases. There is a “strong congressional intent that any questions

involving foreign sovereigns be litigated in federal court and federal court alone.” Grynberg, 817

F. Supp. at 1356; see also Sabbatino, 376 U.S. at 417-18, 424-25 (noting that “rules of

international law [are] not [to] be left to divergent and perhaps parochial state interpretations”).

A. The Province’s Complaint Presents Substantial Questions under the Federal Common Law of Foreign Relations.

Sabbatino is the seminal case on the federal common law of foreign relations, even though

it was not a subject matter jurisdiction case in the first instance. The Sabbatino Court considered

whether the “act of state” doctrine required U.S. courts to recognize the validity of the Cuban

government’s expropriation of private property. 376 U.S. at 400-01. Even though in previous

decisions the Court had broadly stated that foreign relations were committed by the Constitution

to the Executive—and in some contexts, the Legislative—branches, the Court recognized some

judicial cognizance in foreign relations. Id. at 423 (“The text of the Constitution . . . does not

irrevocably remove from the judiciary the capacity to review the validity of foreign acts of

state.”).

The Court held that determinations by U.S. courts implicating international relations and

principles of international comity fall squarely within the “enclave of federal judge-made law.”

Id. at 426. Issues involving the United States’ “relationships with other members of the

international community must be treated exclusively as an aspect of federal law.” Id. at 423-25.

Since Sabbatino and as an outgrowth of it, when analyzing whether a case is one “arising

under the . . . laws . . . of the U.S.,” federal courts may look to the unique federal interest, together

with that of other members of the international community, in matters of “foreign relations.” On

this basis, federal subject matter jurisdiction over a controversy may exist even though Congress 3 The Province’s motion (at 11-12) cites Justice Ginsburg’s opinion in Ruhrgas as support for

the notion that bad or questionable motive can undermine the validity of a removal. That is utter nonsense. Justice Ginsburg was referring to “unwarranted removals’ that might be motivated by improper purposes, not that “bad purposes” would make the removals invalid.




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has not granted specific subject matter jurisdiction over the claims for relief asserted. Grynberg,

817 F. Supp. at 1338 (upholding removal to federal court when plaintiff sought specific

performance of its alleged contractual, i.e., non-federal, right to mine mineral resources in

Kazakhstan).

The leading case in the Ninth Circuit on such federal common law is Patrickson v. Dole

Food Co., 251 F.3d 795 (9th Cir. 2001), aff’d on other grounds, 538 U.S. 468 (2003). There, a

class of banana workers from several Latin American countries sought compensation for injuries

allegedly caused by defendants’ manufacture, sale, and use of toxic substances in their operations

in the foreign states. Id. at 800. The defendants did business in Hawaii, and the case was brought

in Hawaii state court, asserting claims under the laws of Hawaii. Id. at 799. Defendants removed

the action to federal court on grounds that “the case concerns a vital sector of the economies of

foreign countries and so has implications for our nation’s relations with those countries.” Id. at

800.

Plaintiffs moved to remand, which was denied, and the lower court ultimately dismissed

the case on forum non conveniens grounds. This is of course precisely the path PDI contends this

case should follow (see Doc # 53 at 26-40; Doc # 100 at 2-8 and Doc # 105 at 4-12, but with one

critical difference, as discussed below.

The Ninth Circuit reversed the denial of the motion for remand. The court began its

analysis recognizing that “[f]ederal common law, is of course, federal law; so if a plaintiff’s claim

arises under the federal common law recognized by Sabbatino, the federal courts have

jurisdiction under 28 U.S.C. § 1331.” 251 F. 3d at 800, 800 n.2 (observing that “[a]lthough the

act of state doctrine generally serves as a defense, it can also be used affirmatively as the basis of

a claim.” (citing Restatement (Third) of Foreign Relations Law § 443 cmt. (i) (1986))).

The court ruled that foreign relations were not, however, implicated by the banana

workers’ claims because “nothing in the plaintiffs’ complaint turns on the validity or invalidity of

any act of a foreign state,” and “[p]laintiffs don’t claim that any foreign government participated

in [the alleged] activities or that the defendants acted under the color of foreign law.” 251 F.3d at

800. Accordingly, the case framed by the Complaint did “not require [the court] to evaluate any




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act of state or apply any principle of international law.” Id. at 800.

The court in Patrickson also took issue, at considerable length, with rulings in other

circuits which looked beyond the “well-pleaded” allegations of the Complaint for determining the

existence of federal jurisdiction. Id. at 800-05. In particular, the court rejected the notion that an

informal or even formally asserted “interest” in a U.S. lawsuit by a foreign state could establish

federal jurisdiction via the federal common law of international relations:

We therefore decline to follow [cases from the Second, Fifth and Eleventh Circuit’s] insofar as they stand for the proposition that the federal courts may assert jurisdiction over a case simply because a foreign government has expressed a special interest in its outcome.

Id. at 803, 804 n.9. Thus, Dole’s assertion that the outcome of the case might affect “a vital

sector of the economies of foreign countries and so has implications for our nation’s relations

with those countries,” id. at 800, was of no significance to jurisdiction under § 1331. The

assertion was neither in the Complaint nor a legally material part of the controversy, as presented

by the Complaint. Again:

Plaintiffs don’t claim that any foreign government participated in such activities [i.e, those causing the injuries or loss in question] or that the defendant acted under color of foreign law. The case—at least as framed by plaintiffs—does not require us to evaluate any act of state or apply any principle of inter-national law.

251 F.3d at 800.

The question then is how does the Complaint filed by the Province in state court line up

with the principles articulated in Patrickson.

1. The Foreign State as a Party and Foreign Law as the Governing Law.

First, no foreign government was a party in Patrickson. Here, the Province sued “in both

its sovereign capacity and in its capacity as parens patriae to all Marinduquenos.” Doc #1

Attach. 1 ¶ 18. Plaintiff, even though a “political subdivision” of a “foreign state,” is considered

a “foreign state” under U.S. law. 4 4 Unlike the U.S., where both the federal and state governments are possessed of independent

sovereignty, sovereignty in the Philippines, under its laws, is “unitary” and is in the national government, although the national government can and does “share” its sovereignty with Provinces and other “Local Government Units” or “LGU’s.” See Doc # 57 Attach. 1 ¶ 11.2. That complication need not be considered here, because the Province alleges and asserts its




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Second, in Patrickson, all the claims were governed by the law of Hawaii, and the court

emphasized that the case did not call for the application for any foreign law. See also Hyatt Corp.

v. Stanton, 945 F. Supp. 675, 691 (S.D.N.Y. 1996) (in denying federal question jurisdiction,

noting that resolution of plaintiff’s claims did not “require[] the determination of some issue of

international law, such as the act of state doctrine or the interpretation of foreign laws or

regulations” (emphasis added)). In contrast, all the claims in this case arise under Philippine law.

(As a matter of U.S. law, none of the substantive claims or defenses in this case could be

governed by U.S. law, because of the presumption against extraterritorial application. See Arc

Ecology v. United States Dep’t of the Air Force, 411 F.3d 1092, 1097 (9th Cir. 2005).)

Moreover, some of the claims asserted in the Complaint ask this Court to enforce the regulatory

and penal laws of the Philippines.

While these first two factors may not, by themselves, establish the presence of a federal

common law of foreign relations question, they are a good start.

2. The Foreign Government’s Participation and Defendant’s Alleged Actions “Under Color of Law” in the Foreign State.

The Complaint is replete with allegations that the national government of the Philippines

(the “Republic”) “participated in [the] activities” upon which the claims here are based and that

the activities were a proximate cause of the injuries alleged. Similarly, the Complaint alleges a

continuous course of dealing between PDI and the Republic, by which PDI allegedly acted under

“color of law” in the Philippines for over 30 years and through three Presidential administrations.

For example, the Complaint alleges that in the mid-1960’s, PDI “secretly” formed a “partnership”

sovereignty in the Complaint and under the well-pleaded complaint rule, that is binding, and because under U.S. federal law, including laws implicating foreign relations, political subdivisions of foreign states are treated as “foreign states.” For example, under the Foreign Sovereign Immunities Act (“FSIA”), a “‘foreign state’ . . . includes a political subdivision of a foreign state.”); 28 U.S.C. § 1603(a); see also 28 U.S.C. § 1603(b) (defining an “agency or instrumentality of a foreign state” as a separate legal entity that “is an organ of a foreign state or political subdivision thereof”); see, e.g., Hester Int’l Corp. v. Federal Republic of Nigeria, 681 F. Supp. 371, 377 (N.D. Miss. 1988), aff’d, 879 F.2d 170 (5th Cir. 1989); see also Malewicz v. City of Amsterdam, 362 F. Supp. 2d 298, 306 (D.C. 2005); Virtual Countries, Inc. v. Republic of South Africa, 148 F. Supp. 2d 256, 262-63 (S.D.N.Y. 2001), aff’d, 300 F.3d 230 (2d Cir. 2002).




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with Ferdinand Marcos to allow Marcopper to develop a mine within a “protected forest reserve”

on Marinduque. Compl. (Doc # 1 Attach. 1) ¶ 40. According to the Complaint, the Republic,

acting through Marcos, “overturn[ed] the forest reserve’s protected status, thereby clearing the

way for mining to commence on Marinduque.” Id. at ¶ 41.

After the mine began operating, the Republic’s involvement intensified:

In 1974, Placer Dome, on Marcopper’s behalf, applied to the National Water Air Pollution Control Commission (“NWAPCC”) for a permit to dump tailings [sic] into Calancan Bay. Thereafter, Placer Dome appealed directly to its dictator partner, Ferdinand Marcos, to grant Marcopper a dumping permit. Marcos complied, and ordered the NWAPCC to issue Marcopper a permit allowing for the still-unsafe disposal of tailings [sic] deep beneath the surface of Calancan Bay.

Id. at ¶ 65. That permit and Marcopper’s operations under it allegedly lead to some of the most

damaging conditions on the island for which the Complaint seeks recovery. See, e.g., id. at ¶¶ 68-

88.5

After Marcos was deposed in 1986, the Republic seized most of his assets. According to

the Complaint, these included his holdings (or those of his family) in Marcopper. Id. at ¶ 42.

This meant that the Republic controlled Marcopper until 1994, when—according to the

Complaint—the shareholdings were divested. Id. at ¶ 170. Much of the Marcopper operations

that allegedly caused the enormous damage for which the Province seeks to recover occurred

during that eight-year period. For example, the Complaint alleges that:

[In 1991], “Placer Dome” prepared to commence mining operations at the San Antonio Pit. “Placer Dome” wanted to dump the mine tailings [sic] produced at the San Antonio Pit into Calancan Bay [as had been previously permitted] However, the Philippine government mandated that “Placer Dome” dump any tailings produced at the San Antonio Pit into the Tapian Pit, which was by that point just a huge hole in the ground.

5 The Complaint, and its successors, employ the device of substituting “PDI” for “Marcopper”

as if Plaintiff had already proven that PDI and Marcopper were legally the same entity. Other than placing the name “Placer Dome” within quotation marks in the quotations from the Complaint, PDI will not offer its defense to that assertion here, but if the Court wishes to know some of “other side of the story,” then please see Doc #53 at 4-11 (“Statement of Facts”).




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To accommodate its new dumping program, “Placer Dome” installed a 9.8-foot thick concrete bulkhead or “plug” into the drainage tunnel at the base of the Tapian Pit, as a hedge against tailings [sic] escaping into the drainage tunnel, and through the tunnel into Marinduque’s freshwater river systems. “Placer Dome” then began dumping tailings [sic] into the pit [i.e., as mandated by the government].

Id. at ¶¶ 90-91. This course of operations, starting with the government-mandated deposit of

tailing in the “huge hole in the ground” at the Tapian Pit proximately lead to perhaps the most

catastrophic incident at Marcopper alleged in the Complaint, the March 1996 discharge of

millions of cubic feet of tailing from the Tapian Pit into the Boac River. Id. at ¶¶ 97-99; see also

Complaint at ¶¶ 38-41, 65, 90-91.

While the examples already given amply make the point, there is a great deal more here.

Indeed, the Complaint devotes an entire section to the Republic’s participation in the activities

giving rise to this suit and to PDI’s acts allegedly in concert with the government, i.e., “under

color of law” in the Philippines:

“Placer Dome,” for example, enlisted help from Marcos in obtaining the original permit to dump in Calancan Bay. But by early 1974, leaders from seven local villages were complaining to “Placer Dome” and writing to Marcos to question “Placer Dome’s” plan to dump mine tailings into Calancan Bay. They asked that Marcos not allow the dumping if it would have adverse consequences on Calancan Bay.

“Placer Dome,” knowing full well the effect that the dumping would have on Calancan Bay and the surrounding environment, responded to this discontent by asking Marcos to turn a deaf ear to the villagers’ pleas. Marcos complied with “Placer Dome’s” request, and subsequently ordered the NWAPCC to issue a permit for “Placer Dome” to dump mine tailings into Calancan Bay.

“Placer Dome” again appealed to Marcos several years later. In June 1981, after inspecting Calancan Bay, Commissioner Pecache, the Chairman of the NWAPCC, ordered “Placer Dome” to immediately cease and desist its dumping of mine tailings from the San Antonio Pond into the bay. Commissioner Pecache also drafted a letter to Ferdinand Marcos detailing the problems with “Placer Dome’s” disposal methods.

By October 1981, however, the NWAPCC had backed away from its position favoring an immediate and absolute ban on dumping. Instead, the NWAPCC issued a six-month temporary permit for “Placer Dome” to discharge up to 32,000 dry metric tons of tailings [sic] per day into Calancan Bay. In the meantime, the NWAPCC ordered “Placer Dome” to identify alternative methods




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for disposal of its mine tailings [sic].

But “Placer Dome” refused to accept any restrictions imposed by the NWAPCC. On December 22, 1981, the “Placer Dome”-appointed President of Marcopper, Garth Jones, directly solicited “Placer Dome’s” accomplice, Ferdinand Marcos, to intercede on its behalf. In response, Marcos removed the constraints on “Placer Dome’s” operating permit and ordered the NWAPCC never again to impose restrictions on “Placer Dome’s” ability to dump mine tailings into Calancan Bay, or anywhere else on Marinduque.

Complaint at ¶¶ 150-154.

And, there is still more:

In early 1988, . . . a group of Calancan Bay fishermen filed a lawsuit against “Placer Dome,” seeking damages and an injunction against its mining operations. As a result of this lawsuit, on April 11, 1998, the Pollution Adjudication Board (the “PAB”), a new government agency charged with adjudicating pollution cases, ordered “Placer Dome” to cease and desist its dumping into Calancan Bay.

“Placer Dome” responded with perhaps its most blatantly coercive and heavy-handed tactic yet. On April 19, 1988, without any warning whatsoever, “Placer Dome” shut down its huge electric generators, thereby cutting off electricity to the entire island of Marinduque.

. . . .

In addition to its blackout stratagem, “Placer Dome” sought to undermine the PAB’s cease-and-desist order by appealing directly to the newly elected Philippine President, Corazon Aquino. On April 20, 1988, John Dodge, the then-current “Placer-Dome” appointed President of Marcopper, asked Aquino to overrule the PAB “from above.”

. . . .

On May 2, 1988, Aquino initially denied “Placer Dome’s” request, stating that she did not have the power to overrule the PAB. Less than 10 days later, however, Aquino inexplicably succumbed to the continuing pressure applied by “Placer Dome” and enjoined the PAB from enforcing its cease-and-desist order.

Complaint at ¶¶ 158-160, 162.

In short, the Complaint is rife with allegations of the Philippine government’s

participation in the very course of conduct giving rise to the claims in this case and “Placer

Dome’s” alleged actions in concert with and under color of governmental authority. And the




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conduct in question goes to proximate cause and all other elements of “Placer Dome’s” alleged

liability on the Province’s claims.6

* * * *

Cases outside the Ninth Circuit also strongly support the propriety of removing the

Complaint in this case. Before turning to such cases, however, it is prudent to revisit Patrickson,

given that it is critical, in some respects of cases outside this circuit. Its criticisms, however, are

limited, and in not one instance does it reject the result reached in those cases. Rather, it “parts

6 In a post-Patrickson case in the Ninth Circuit, Sarei v. Rio Tinto plc, 221 F. Supp. 2d. 1116

(C.D. Cal. 2002), the district court was confronted with two issues requiring it to consider Rio Tinto’s status as a “state actor” and whether the validity of the acts of the Papua New Guinea government (“PNG”) were called into issue by the Alien Tort Claims Act claims. Judge Morrow’s analysis of both issues is instructive here. First, on the state actor issue, she held:

[P]laintiffs have alleged, inter alia, that Rio Tinto and PNG "were joint venture partners, [and that they] worked in concert with each other and conspired to commit the violations of customary international law set forth" in the complaint. As these allegations make clear, plaintiffs seek to prove that PNG played an integral role in building and operating the mine, and in the racial discrimination and environmental harm that was purportedly caused thereby. Given the allegations of joint action and international law violations, and given the codification of PNG's relationship with Rio Tinto in the Copper Act, there is a strong likelihood that the court will be required to assess the legality of PNG's official conduct. Cf. Patrickson v. Dole Food Co., 251 F.3d 795, 800 (9th Cir. 2001).

221 F. Supp. 2d at 1187 (footnotes omitted).

Similarly, on the act of state issue, the court held:

Here, Rio Tinto's liability is premised on its alleged joint venture with the PNG government, as codified in the Copper Act, and on the purported actions the two took jointly to construct, operate, and reopen the mine on Bougainville. Certain of those alleged activities clearly involved official acts of the PNG government - e.g., conferring a mining concession on Rio Tinto and allowing Rio Tinto to exercise eminent domain powers to dispossess the native people of Bougainville. n261 Were the court to conclude that Rio Tinto was a state actor, and that its conduct violated the law of nations, it would, a fortiori, have to conclude that PNG's official acts were invalid as well. For this reason, the court cannot accept plaintiffs' argument that defendants have failed to demonstrate that the act of state doctrine applies to their racial discrimination and environmental claims.

Id. at 1188. The parallels to our case and the reasoning in Patrickson, focusing on Sabbatino is unmistakable.




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company” with the Second, Fifth and Eleventh Circuits in their willingness to consider material

outside the Complaint in deciding whether a federal common law of foreign relations issue is

presented (251 F.3d at 804, n.9) and their willingness to consider broadly whether the foreign

government merely has an “interest” in the case (251 F.3d at 803-05)—rather than requiring

more narrowly that the “foreign government participated in [the] activities” giving rise to the

claims asserted or that the non-governmental defendants participated in such activities “under

color of foreign law” of the country in question. 251 F.3d at 800. PDI applied in October and

applies here those narrower standards, but the same must be done in considering cases outside the

circuit. When that is done with care, there is some compelling support for removal in this case

beyond Patrickson itself.

Claims such as the Province’s in this case, which require a U.S. court to question the

regulation and conduct of a foreign government with respect to its own natural resources within

its own sovereign territory, necessarily implicate the foreign relations concerns of the United

States. See, e.g., Sequihua v. Texaco, Inc., 847 F. Supp. 61, 62-63 (S.D. Tex. 1994) (upholding

removal under federal common law of foreign relations and subsequent dismissal under both the

doctrine of comity of nations and forum non conveniens, where citizens of Ecuador alleged

contamination of the air, ground, and water arising from defendant’s operations, which were

regulated by the Ecuadorian government); Grynberg, 817 F. Supp. at 1359-60 (finding federal

jurisdiction because the relief plaintiff sought would require the court to become the arbiter of

Kazakhstan’s sovereign determinations regarding its natural resources).

Similar to the claims in Sequihua and Grynberg, the Province—itself a regional

subdivision of a foreign sovereign government—alleges harm arising from PDI’s alleged

involvement in conduct heavily regulated by the Philippines government and in which, by the

Province’s own admission, the Philippines government was complicit.

In Sequihua, residents of Ecuador filed suit in Texas state court “asserting a variety of

causes of action arising out of the alleged contamination of the air, ground and water in Ecuador,”

seeking “an injunction requiring Defendants to return the land to its former condition and the

imposition of a ‘trust fund’ to be administered by the Court.” 847 F. Supp. at 62. The court




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determined that the claims raised matters affecting international law and the relationship between

the United States and Ecuador because the plaintiffs “complain about conduct which is regulated

by the government in Ecuador, which is a country with its own environmental laws and

regulations, a nation that owns the land at issue, and that treats all petroleum exploration and

development as a “public utility” controlled by the government.” Id. The court additionally

noted that the well-pleaded elements of the plaintiffs’ claims “of nuisance and for injunctive relief

require[d] them as part of their prima facie case to challenge the policies and regulations of

Ecuador, as well as the approvals from Ecuador that Defendants received, in order to show that

the conduct was improper on land owned by Ecuador.” Id. at 62-63. The court determined that

federal question jurisdiction clearly exists where “the essential elements of the Plaintiffs’ prima

facie case necessarily involve federal international relations, such as the international law

relating to the control by a foreign county over its own resources.” Id. at 63 (citing Grynberg,

817 F. Supp. at 1360-1363) (emphasis added) (“It is a question of international relations law

whether a foreign sovereign has the sole power to control its natural resources.”) (citing Int’l

Ass’n of Machinists & Aerospace Workers v. OPEC, 477 F. Supp. 553, 567 (C.D. Cal. 1979),

aff’d, 649 F.2d 1354 (9th Cir. 1981)) (“The control over a nation’s natural resources stems from

the nature of sovereignty. By necessity and by traditional recognition, each nation is its own

master in respect to its physical attributes.”)

Further, as in Sequihua and Grynberg, the well-pleaded elements of the Province’s claims

of nuisance and for equitable relief (in the form of an order requiring environmental remediation

and the creation of a constructive trust in favor of the Province and within its borders) require the

Province, as part of its prima facie case, to challenge the conduct, policies, regulations and

control over natural resources by the national government of the Philippines, as well as the

historical approvals from, and mandates by, the Philippines that “Placer Dome” received, in order

to show that the conduct was improper. See Complaint (Doc # 1 Attach. 1) ¶¶ 40-41 see also

Grynberg, 817 F. Supp. at 1358-59 (finding federal jurisdiction where the plaintiff’s sought

remedy of specific performance required it to establish the invalidity of and or otherwise nullify

the Republic of Kazakhstan’s sovereign determinations regarding allocation of valuable oil and




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gas rights within its sovereign territory).

3. The Remedies Sought by the Complaint

The Patrickson decision does not explicitly mention remedies as a component of the

“foreign relations” calculus; however, it does cite with approval and quote (see 251 F.3d at 800

n2); Marcos, 806 F.2d at 354, as follows:

We hold that federal jurisdiction is present in any event because the claim raises, as a necessary element, the question whether to honor the request of a foreign government that the American courts enforce the foreign government’s directives to freeze property in the United States subject to future process in the foreign state.

The remedies sought in this case have even more profound “foreign relations” implications than

the remedy in Marcos, as there, the remedy would attach solely to property in the U.S. All the

remedies in question here would be implemented, not in the U.S., but in the Philippines or in

Canada. See, e.g., Doc # 1 Attach. 1 ¶¶ 206-209 and “Prayer” at ¶¶ a-g.

* * * *

Finally (and ironically), the Province points to PDI’s forum non conveniens argument to

the effect that because the controversy between the Province and PDI concerns events occurring

only in the Philippines and Canada and is governed solely by the laws of those two countries, the

U.S. has no material connection to the controversy and that alone requires dismissal of this case

in favor of Canada as an alternative, adequate forum. The Province suggests that the absence of a

connection between the substantive controversy and the U.S. means there cannot be a federal

question presented by the original Complaint. But it is the very fact that this controversy has

material connections only with foreign states and implicates no substantive U.S. law that a

substantial “foreign relations” issue is presented under U.S. common law. The essence of that

federal question lies in the fact that a U.S. court is being asked to exercise its power to adjudicate

and potentially to remedy damage to the environment and ecology of a foreign country, and

specifically damage that occurred during and under the regulatory jurisdiction of that country.

The removal of this case from state court was proper.




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B. PDI’s Potential Challenge to the Province’s Standing to Raise NRD Claims Does Not Undermine or Effect the Propriety of the Removal.

PDI has not challenged the Province’s standing to bring the NRD-type claims it asserted

in its SAC. Instead, PDI’s Motion to Dismiss pointed out that complicated issues of first

impression under foreign law militate against this Court’s exercise of jurisdiction over such

claims and therefore this case, under the doctrine of forum non conveniens. (Doc # 53) at 36:1-

37:10. Even if PDI had raised an express challenge, however, that could not have affected this

Court’s jurisdiction over the Province’s claims.

First, it is axiomatic that once a case has been properly removed to federal court, the

plaintiff cannot plead his way back to state court. “[T]he first amended complaint may not be

used to defeat the removal of plaintiff's case to federal court.” Lyster v. First Nationwide Bank

Fin. Corp., 829 F. Supp. 1163, 1165 (N.D. Cal. 1993) (citing 6 Charles Alan Wright, Arthur R.

Miller & Mary Kay Kane, FEDERAL PRACTICE & PROCEDURE: Civil § 1477, at 562 (2d ed. 1990)

(“Wright”) (“[A] party may not employ Rule 15(a) to interpose an amendment that would deprive

the district court of jurisdiction over a removed action.”)

By removing this action to federal court, PDI did not waive any defense it may have had

to the Province’s claims. Greenberg v. Giannini, 140 F.2d 550, 553 (2d Cir. 1944) (“When a

defendant removes an action from a state court in which he has been sued, he consents to nothing

and ‘waives’ nothing; he is exercising a privilege unconditionally conferred by statute. . . .”); see

also Wright at Civil § 1395 (“Upon removal a defendant may assert any defense that would have

been available to him in state court.”); id. at Juris. § 3721. PDI can—and has—asserted the same

defenses before this Court that it would have in state court, namely lack of personal jurisdiction

and forum non conveniens. Similarly, before either this Court or a Nevada state court, PDI can

question the standing of the Province to sue under Philippine law on any of the claims asserted,

including the NRD claims in question here. See Motion to Dismiss (Doc # 53) at 36:1-37:10.

///

///

///




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The Province’s standing to pursue such claims is wholly distinct from, and does not

impact, the federal jurisdiction of this Court over the Province’s original complaint and claims.

The Province’s Complaint invoked this Court’s “original jurisdiction, and therefore removal

jurisdiction under 28 U.S.C. [section] 1441(a), . . . as long as there is subject matter jurisdiction

over one or more of the claims alleged.” Lee v. American Nat’l Ins. Co., 260 F.3d 997, 1006 (9th

Cir. 2001). Consequently, even if the SAC were the pleading originally filed in state court and

even if this Court ultimately determined that the Province did lack standing under Philippine law

to bring claims typically reserved for enforcement by a national sovereign—here the Republic of

the Philippines—it would, nevertheless, continue to possess jurisdiction over the Province’s

remaining claims. See, e.g., Schacht, 524 U.S. at 391-92; Lee, 260 F.3d at 1006; see especially

Kruse v. Hawaii, 68 F.3d 331, 334-35 (9th Cir. 1995) (holding that the presence of at least some

claims over which the district court has original jurisdiction is sufficient to sustain the removal of

an entire case, even if others claims are beyond the district court’s authority).

Schacht involved a terminated prison guard’s section 1983 action against the Wisconsin

state corrections department and several of its employees. 524 U.S. at 383. The defendants

removed the suit to federal court on the grounds that the guard’s claims arose under federal law.

Id. Immediately after removal, the corrections department asserted its Eleventh Amendment

immunity to preclude the guard’s damages claim against it. Id. The Seventh Circuit held that—

because the Eleventh Amendment barred the federal court from deciding certain of the guard’s

claims—the entire case had been improperly removed from state court and must be remanded. Id.

at 385.

The United States Supreme Court reversed. Id. After first determining that the case was

properly removed in the first instance, the Supreme Court then rejected the plaintiff’s contention

that “if the district court lacks subject matter jurisdiction over any claim, then every claim, i.e.,

the entire case, must be remanded to the state court.” Id. at 391. To the contrary, the Court

reasoned that the remand statute requires a district court to remand a removed “case” to state

court “if at any time before final judgment it appears that the district court lacks subject matter

jurisdiction.” 28 U.S.C. § 1447(c). Assuming for the purpose of interpreting this statute that the




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Eleventh Amendment bar to federal-court litigation of certain claims was “a matter of subject-

matter jurisdiction,” (id at 391), the Court construed section 1447(c) to mean that the case must

be remanded only if subject matter-jurisdiction is lacking over the entire case, and not over just

some of the plaintiff’s claims. See id. at 392 (“An ordinary reading of the language indicates that

the statute refers to an instance in which a federal court ‘lacks subject matter jurisdiction’ over a

‘case,’ and not simply over one claim within a case.”).

Similarly in Kruse, the Ninth Circuit considered whether a case involving claims against

some state and some individual defendants was properly removed to federal court where, after

removal, the state defendants asserted Eleventh Amendment immunity from suit. Kruse, 68 F.3d

at 334. Plaintiff sought remand, claiming that the Eleventh Amendment immunity deprived the

district court of jurisdiction, making removal improper. Id. The Ninth Circuit held that the

Eleventh Amendment bar to deciding some of the plaintiff’s claims had no bearing on the district

court’s original jurisdiction over the case as a whole. Rather, because there was federal

jurisdiction over some claims, the plaintiff’s entire case was removable from state court. Id. at

335.

More important, nothing in the Kruse court’s decision “hinged on the nature of Eleventh

Amendment immunity as opposed to any other constitutional limit on federal jurisdiction.”

Lee, 260 F.3d at 1003 (emphasis added) (standing, at issue here, is of course such a

“constitutional limit.”). The Ninth Circuit determined that “a jurisdictional bar against particular

claims, and not entire cases . . . should not deprive the district court of its otherwise proper

jurisdiction over the action.” Kruse, 68 F.3d at 334 (citing Henry v. Metropolitan Sewer Dist.,

922 F.2d 332, 338-39 (6th Cir. 1990)). Kruse thus recognized, as a general proposition, that

federal jurisdiction over a removed case is proper so long as some claims remain within the

district court’s power to decide. Lee, 260 F.3d at 1003.

In Lee, a California resident filed suit against two Texas corporations, ANI and ANTEX,

claiming that because the companies sold insurance policies promising dividends they failed to

deliver, their marketing practices violated California’s Unfair Business Practices Act. Id. at 999.

The Texas defendants removed on the basis of diversity. Id. Lee subsequently attempted twice,




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without success, to obtain class certification of his claims. Id. The district court explained that

because Lee had only purchased an ANI policy, but never an ANTEX policy, he could not

demonstrate that he had suffered an actual injury and therefore could not establish standing to

bring suit in federal court. Id. Even though the California Unfair Business Practices Act did not

(at the time) require actual injury to pursue a claim in state court, the district court determined

that Article III of the Constitution “takes priority” in federal court over the California statute’s

more liberal standing rules. Id. at 999-1000. Unable to pursue his claims in federal court, Lee

requested that the district court remand his case back to California state court, where actual injury

was not required for Lee to enforce California’s Unfair Business Practices Act as a so-called

“private attorney general.” Id. at 1000. The district court concluded, and the Ninth Circuit

confirmed, that so long as the district court retains jurisdiction over some claims, such that the

case could have been filed in federal court originally, subject matter jurisdiction remained and

remand was inappropriate. Id. at 1004.7

Here, PDI has identified a potential standing problem with respect to some—but not all—

of the Province’s claims.8 The fact that the Province may ultimately be found to lack standing to

prosecute NRD claims against PDI, however, does not defeat or undermine this Court’s removal

jurisdiction under the federal common law of foreign relations as to all other claims in the

Province’s complaint. Accordingly, even if this Court determined that the Province actually 7 The Kruse and Schacht decisions involved cases removed to federal court because they

presented claims arising under federal law. Lee, by contrast, was removed on the basis of diversity jurisdiction. The Ninth Circuit noted, however, that “[t]here is no meaningful distinction between federal question and diversity jurisdiction, however, that would direct a different result, . . . [because s]ection 1441(a) governs the removal of both kinds of cases.” Lee, 260 F.3d at 1004.

8 For example, in the Fourth Claim for Relief, the Province sues as a “third party beneficiary” of insurance contracts relating to the environmental damage allegedly caused by Marcopper, and on the Fifth Claim, it sues as an a direct contracting party and as a third-party beneficiary of an alleged contract by which PDI purportedly agreed to remediate the environmental damage from the March 1996 tailing spill at Marcopper. And the Sixth Claim is for promissory estoppel arising from the same course of conduct and dealings between PDI and the Republic of the Philippines after that spill. All these claims were asserted in the original Complaint, as were the claims for negligence and public and private nuisance. There are no standing defects in any of these claims as far as PDI can tell. The problem, if there is one, is with the claims in which the Province purports to sue as the “public trustee” of natural resources.




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lacked standing, this Court would not be required to remand this case.

C. That the Act of State Doctrine Might Apply to Any or Even All of the Claims in this Case Has No Bearing on the Propriety of Removal.

As established in section III.A, supra, the Province’s Complaint, on its face, calls into

question acts of the foreign government of the Philippines within it own sovereign territory. In

addition to act of state, as a claim, conferring federal jurisdiction, the doctrine may also provide a

defense to some, or all, of the Province’s claims. This potential defense, however, has no impact

on the propriety of PDI’s removal and does not provide any basis for remand. Indeed, research

discloses no case where the availability of an act of state defense was even raised as a possible

grounds for remand. This is not surprising given the nature of the defense.

The doctrine is flexible and designed to prevent judicial pronouncements about the acts of

foreign states that may potentially embarrass the Executive Branch in the conduct of foreign

affairs. See Sabbatino, 376 U.S. at 428. “The ‘touchstone’ or ‘crucial element’ is the potential

for interference with our foreign relations.” International Ass’n of Machinists & Aerospace

Workers v. OPEC, 649 F.2d 1354, 1360 (9th Cir. 1981). As long as that requirement is met, the

act of state doctrine can be invoked by private parties, such as PDI. See, e.g., Credit Suisse v.

United States Dist. Court, 130 F.3d 1342, 1348 (9th Cir. 1997); Timberlane Lumber Co. v. Bank

of America, 549 F.2d 597, 606 (9th Cir. 1976). Also, of course, as a defense, the doctrine would

not be limited to the facts in the Complaint.

This potential defense, however, in no way undermines this Court’s jurisdiction over the

Province’s claims. As a defense, the doctrine is purely prudential doctrine, on the notion that “the

courts of one country will not sit in judgment on the acts of the government of another, done

within its own territory.” Underhill v. Hernandez, 168 U.S. 250, 252 (1897); see also Ricaud v.

American Metal Co., 246 U.S. 304, 309 (1918); OPEC, 649 F.2d at 1359 (noting that the act of

state doctrine is not a jurisdictional limit on courts, but rather “a prudential doctrine designed to

avoid judicial action in sensitive areas”). Like the political question doctrine in domestic law, the

act of state doctrine simply “requires that the courts defer to the legislative and executive

branches when those branches are better equipped to resolve a politically sensitive question.” Id.




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Thus, while the defense implicates or “goes to” subject matter jurisdiction, it does so only

in the prudential sense—that is, it questions whether a court should or may exercise subject

matter jurisdiciton that it has. It does not go to the existence of subject matter jurisdiciton. As

PDI stated in its Brief in support of its pending Motion to Dismiss, discussing the act of state

defense not asserted by the Motion: “In addition to the standing defense . . . , the allegations of

the SAC and other facts pointing to the potential responsibility of the Republic for the

environmental harms alleged here raises the ‘act of state’ doctrine, as a further reason for not

exercising subject matter jurisdiction.” Doc # 53 at 38-39, n.24 (citing Sabbatino, 376 U.S. at

401).

In short, the potential for an act of state defense in this case is of no assistance to the

Province in its effort to defeat this Court’s subject matter jurisdiciton.

D. Plaintiff’s Request for an Award of Fees and Costs Should Be Denied.

The Province seeks an award of fees and costs under 28 U.S. C. § 1447(c) for what it

claims was not merely a wrongful removal, but “egregious” and “rank gamesmanship” in

violation of Rule 11. Doc # 94 at 3, 14, n.37. The Province claims that PDI “has abused the

removal process” as “part of an apparent forum-shopping scheme to secure improper advisory

opinions from this Court—while leaving open the possibility that [PDI] itself will someday move

to remand . . . .” Id. at 2 (emphasis in original). PDI’s counsel is even charged with concealing

its “secret” intentions from both the Magistrate Judge and the province’s counsel. Id.at 7. These

vociferous accusations may have more than one purpose, but at a minimum, they are offered to

show that PDI “lacked an objectively reasonable basis” for its removal last October, within the

meaning of Section 1447(c). Id. at 13-14 (citing Martin v. Franklin Capital Corp., __ U.S. __,

126 S. Ct. 704, 711 (2005).

The bases for these accusations are two-fold: (1) PDI’s contention that this Court is the

proper court to decide the issues in this case, including whether any U.S. court should be

entertaining this action (see footnote 1, supra); and (2) the supposed failure by PDI to identify its

“unspecified” grounds for challenging subject matter jurisdiciton. As to the former, PDI’s

motives in removing this case are proper and consistent with congressional intent and Supreme




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Court precedent. They are also irrelevant. As to the latter, the Province regrettably chose to

“edit” the quotation to PDI’s Brief in support of its Motion to Dismiss to create the impression

that PDI was being deceptive. In any event, the “standing” and act of state issues have no bearing

on this Court’s continuing jurisdiction, and PDI certainly will not “someday move to remand” this

case.

PDI submits that the claim for fees and cost should be denied—either because the removal

was proper and should be sustained for the reasons set forth above or because PDI did have a

more than “objectively reasonable basis” for the removal.

IV. CONCLUSION

Because PDI properly removed this case pursuant to the federal common law of foreign

relations, and federal jurisdiction still exists—and will necessarily continue to exist—the

Province’s Motion to Remand is without merit and should be denied.

Respectfully submitted,

Dated: April 5, 2006 SQUIRE SANDERS & DEMPSEY, L.L.P.

By: /s/ Rodney R. Patula Rodney R. Patula (admitted pro hac vice) Suzanne Henderson (admitted pro hac vice)

MORRIS PICKERING PETERSON & TRACHOK

Steve Morris Rex Garner

Attorneys for Defendant PLACER DOME INC.

SANFRANCISCO/178563.10


MORRIS PICKERING PETERSON & TRACHOK · · 2016-11-22the Republic of the Philippines, Plaintiff,...

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