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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”
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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
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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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
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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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
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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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
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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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
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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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
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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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
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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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
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
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