Case 1:13-cv-07074-GBD Document 41 Filed 05/23/14 Page 1 of 34

Transcription

Case 1:13-cv-07074-GBD
Document 41 Filed 05/23/14
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
Filed by ECF
No. 13-cv-7074
Page 1 of 34
(GBD)
x
FIONA HA VLISH, individually
on behalf of the ESTATE OF
DONALD G. HA VLISH, JR.,
Deceased, et al.,
Judgment Debtors:
Islamic Republic of Iran
National Iranian Oil Company
Islamic Revolutionary Guard Corp
Ministry of Petroleum
Ayatollah Ali Hosenei Khameneri
Ali Akbar Hashemi Rafsanjani
Ministry of Information and Security
National Iranian Tanker Corporation
National Iranian Gas Company
National Iranian Petrochemical Co.
Ministry ofEcon. Affairs & Finance
Ministry of Commerce
Ministry of Defense & Armed Forces
Iran Airlines
Central Bank of Iran
Hezbollah
and
Petitioners,
v.
ROYAL DUTCH SHELL PLC
Carel van Bylandtlaan 30
2596 HR The Hague
The Netherlands,
Respondent.
x
PLAINTIFFS'
MEMORANDUM
IN OPPOSITION
TO ROYAL DUTCH SHELL'S
MOTION TO DISMISS THE PETITION
AND STRIKE THE RESTRAINING
NOTICE
Stuart H. Singer, Esq. (Pro Hac Vice)
William S. Dzurilla, Esq. (Pro Hac Vice)
BOIES, SCHILLER & FLEXNER LLP
401 East Las Olas Boulevard, Suite 1200
Fort Lauderdale, FL 33301
Telephone: (954) 356-0011
Facsimile: (954) 356-0022
E-mail: ssinger@bsfllp.com
E-mail: wdzurilla@bsfllp.com
Lee Wolosky, Esq. (Bar no. W-1280)
575 Lexington Avenue
New York, NY 10022
Telephone: (212) 446-2300
Facsimile: (212) 446-2350
Email: lwolosky@bsfllp.com
Michael Gottlieb, Esq. (Pro Hac Vice)
5301 Wisconsin Ave., NW
Washington DC 20015
Telephone:
(202) 237-2727
Facsimile:
(202) 237-6131
Email: mgottlieb@bsfllp.com
Richard D. Hailey, Esq. (Pro Hac Vice)
RAMEY & HAILEY LAW
9333 North Meridian Street, Suite 105
Indianapolis, IN 46260
Telephone:
(317) 582-0000
Facsimile:
(317) 582-0080
E-mail: rich@rameyandhaileylaw.com
Additional counsel on next page
Timothy B. Fleming (Pro Hac Vice)
Of Counsel
WIGGINS CHILDS PANT AZIS FISHER
Page 2 of 34
Dennis G. Pantazis (Pro Hac Vice)
WIGGINS CHILDS P ANTAZIS FISHER
GOLDFARBLLC
1850 M Street, N.W., Suite 720
Washington, D.C. 20036
Telephone: (202) 467-4489
Facsimile: (205) 314-0805
Email: tfleming@wigginschilds.com
The Kress Building
301 Nineteenth Street North
Birmingham, AL 35203
Telephone: (205) 314-0531
Facsimile: (205) 314-0731
Email: dgp@wigginschilds.com
Stephen A. Corr, Esquire (Pro Hac Vice)
David C. Lee, Esq. (Pro Hac Vice)
STARK & STARK, P.C.
LAW OFFICE OF DAVID C. LEE
777 Township Line Road, Suite 120
Yardley, PA 19067
Telephone: (267) 907-9600
Facsimile: (267) 907-9659
Email: scorr@stark-stark.com
800 S. Gay Street, Suite 700
Knoxville, TN 37902
Telephone: (865) 247-9736
Facsimile: (865) 381-1638
Email: DavidLeeAttomey@gmaiI.com
GOLDFARB PLLC
Robert M. Foote, Esq. (Pro Hac Vice)
FOOTE, MIELKE, CHAVEZ & O'NEIL, LLC
10 West State Street, Suite #200
Geneva, IL 60134
Telephone: (630) 232 7450
Facsimile: (630) 232 7452
Email: rmf@fmcolaw.com
Attorneys for Petitioners
Page 3 of 34
TABLE OF CONTENTS
TABLE OF AUTHORITIES
ii
I.
BACKGROUND
1
II.
THIS COURT HAS SUBJECT MATTER JURISDICTION OVER THIS
EXECUTION ACTION AGAINST THE ASSETS OF AN ADmDGED SPONSOR
OF TERRORISM
2
A.
B.
III.
B.
C.
D.
10
This Court Has Personal Jurisdiction Over Shell Because Shell is "Essentially
at Home" in New York or At Least in the United States as a Whole
10
1.
This Court Has General Jurisdiction Under Bauman
12
2.
Shell's Massive Affiliations With New York and the United States as a
Whole Make Shell "At Home" Here
14
a.
Shell's New York and U.S. Affiliations Are Extensive
14
b.
Shell is Essentially At Home in New York and the United
States
16
Shell Cannot Escape U.S. Jurisdiction By Operating Through Subsidiaries ......... 17
1.
Shell's Subsidiaries Lack Independence and Distinctness
17
2.
Shell's U.S. Subsidiaries Are Shell's Agents
18
3.
Shell's Subsidiaries Are Alter Egos or "Mere Departments" of Shell.. .... 21
This Court Also Has General Personal Jurisdiction Over Shell Because Shell
Has Consented to be Sued Here
23
Petitioners Are At Least Entitled to Jurisdictional Discovery
.23
Comity Does Not Require Dismissal of This Execution Action
CONCLUSION
3
Even If Petitioners Are Only Entitled to Execute on NIOC Assets in the
United States, Petitioners Are Entitled to Discovery on the Situs of the Assets .....9
THIS COURT HAS PERSONAL JURISDICTION OVER SHELL
A.
IV.
Assets of an Adjudged Terrorism Sponsor, Such As NIOC, Are Subject to
Execution Wherever Found
24
26
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Filed 05/23/14
Page 4 of 34
TABLE OF AUTHORITIES
Autotech Tech. LP v. Integral Research & Dev. Corp.,
499 F .3d 737 (7th Cir. 2007)
7
Ball v. Metallurgie Hoboken-Overpelt,
902 F.2d 194 (2d Cir. 1990)
9
SA.,
Barriere v. Cap Jaluca Leading Hotels,
2014 WL 652831 (S.D. Fla. Feb. 19,2014)
13, 20
Beja v. Jahangiri,
453 F.2d 959 (2d Cir. 1971)
10
Bellikoffv. Eaton Vance Corp.,
481 F.3d 110 (2d Cir. 2007)
6
Bellomo v. Pennsylvania Life Co.,
488 F. Supp. 744 (S.D.N.Y. 1980)
19
Bialek v. Racal-Milgo, Inc.,
545 F. Supp. 25 (S.D.N.Y.1982)
21
Burger King Corp. v. Rudzewicz,
471 U.S. 462 (1985)
17
Caminetti v. United States,
242 U.S. 470 (1917)
4
Cicippio-Puleo v. Iran,
353 F.3d 1024 (D.C. Cir. 2004)
6
Crawford Fitting Co. v. JT Gibbons, Inc.,
482 US 437 (1987)
5
Daimler A G v. Bauman,
134 S. Ct. 746 (2014)
10, 20
Dardana Ltd. v. Yuganskneftegaz,
317 F.3d 202 (2d Cir. 2003)
11
Dorchester Financial Securities, Inc. v. Banco BRJ, SA.,
722 F.3d 81 (2d Cir. 2013)
11
9,23
Page 5 of 34
Estate of Heiser v. Islamic Republic of Iran,
807 F. Supp. 2d 9 (D.D.C. 2011)
1
Filartiga v. Peiia-Irala,
630 F.2d 876 (2d Cir. 1980)
2
Flatow v. Bank Saderat Iran,
308 F.3d 1065 (9th Cir. 2002)
6
Flatow v. Islamic Republic of Iran,
999F. Supp.1 (D.D.C.1998)
3
Frummer v. Hilton Hotels Int'l Inc.,
19 N.Y.2d 533 (1967)
19
Gelfand v. Tanner Motor Tours, Ltd.,
385 F.2d 116 (2d Cir. 1967)
19
George v. Uponor Corp.,
2013 WL 6801219 (D. Minn. 2013)
21
George v. Uponor Corp.,
2014 WL 1431194 (D. Minn. 2014)
.20, 23
Gundlach v. IBM Japan, Ltd.,
No. 11-CV-846 (CS), 2013 WL 6123627 (S.D.N.Y. Nov. 21, 2013)
22
In re Parmalat Securities Litigation,
414 F. Supp. 2d 428 (S.D.N.Y. 2006)
12
In re South African Apartheid Litigation,
643 F. Supp. 2d 423 (S.D.N.Y. 2009)
11
JW Oilfield Equipment, LLC v. Commerzbank AG,
764 F. Supp. 2d 587 (S.D.N.Y. 2011)
Landoil Res. Corp. v. Alexander & Alexander Servo Inc.,
918 F.2d 1039 (2d Cir. 1990)
Levin V. Bank of NY,
No. 09-CV5900, 2011 WL 812032 (S.D.N.Y. Mar. 4, 2011)
Liberty Property Trust V. Republic Properties Corp.,
577 F.3d 335 (D.C. Cir. 2009)
111
8
12
1
19
Page 6 of 34
Ministry of Defense and Support for Armed Forces of Islamic Republic of Iran v.
Cubic Defense Systems, Inc.,
2013 WL 6231403 (S.D. CaL 2013)
Morris Plan Industrial Bank of New York v. Gunning,
295 N.Y. 324(1946)
Mwani v. Laden,
947 F. Supp. 2d 1 (D.D.C. 2013)
5
10
8
Palmieri v. Estefan,
793 F. Supp. 1182 (S.D.N.Y. 1992)
21
Perkins v. Benguet Consolidated Mining Co.,
342 U.S. 437 (1952)
16
Peterson v. Islamic Republic of Iran,
2013 WL 1155576 (S.D.N.Y. 2013)
11, 25
Rates Technology Inc. v. Broadvox Holding Co.,
2014 WL 46538 (S.D.N.Y. 2014)
13
Rosario v. US.,
625 F. Supp. 2d 123 (S.D.N.Y. 2008)
20
Sonera Holding B. V v. Cukurova Holding A.S.,
_ F.3d _,2014 WL 1645255 (2d Cir. Apr. 25, 2014)
20
STX Panocean (UK) Co., Ltd. v. Glory Wealth Shipping Pte Ltd.,
560 F.3d 127 (2d Cir. 2009)
23
Tiffany (NJ) LLC v. Forbse,
2012 WL 1918866 (S.D.N.Y. 2012)
8
US v. Ron Pair Enterprises, Inc.,
489 U.S. 235 (1989)
4
US v. Swiss American Bank, Ltd.,
191 F.3d 30 (1st Cir. 1999)
11
Volkswagenwerk Aktiengesellschaft
751 F.2d 117 (2dCir. 1984)
v.
Beech Aircraft Corp.,
21
Wiwa v. Royal Dutch Petroleum Co.,
226 F. 3d 88 (2d Cir. 2000)
13
IV
Page 7 of 34
Statutes
28 USC 1355(b)(2)
8
28 USC 1605A
passim
28 USC 1605(a)(7)
4
28 USC 1610(a)
passim
28 USC 1610(g)
5
Other Authorities
Born & Vollmer, The Effect of the Revised Federal Rules,
150 F.R.D. 221 (1993)
11
House Conf. Report,
H.R. Conf. Rep. No. 110--477, at 1001-02 (2007)
7
Paust, Permissible Self-Defense Targeting and the Death of Bin Laden,
39 Denv. J. Int'l L. & Pol'y 569 (2011)
8
Restatement (3d) of U.S. Foreign Relations Law § 402
2
Restatement (3d) of U.S. Foreign Relations Law § 404
8
Terrorism Act 2000 (UK) §
12, 17,63
25
Wright & Miller, Federal Practice and Procedure § 1068.1
v
11
Page 8 of 34
Petitioners, judgment creditors Fiona Havlish, et al., oppose the motion for dismissal of
respondent Royal Dutch Shell pic ("Shell").
I.
BACKGROUND
This Court entered a judgment, the validity of which is not challenged by Shell, which
found that the Islamic Republic of Iran ("Iran") and its agents, including the National Iranian Oil
Company ("NIOC"), are sponsors of terrorism within the meaning of28 USC 1605A and are
liable under to Petitioners for aiding and supporting the terrorist attacks of September 11, 2001.
NIOC is admittedly owed over $2.3 billion by Shell or wholly owned Shell subsidiaries, and
Petitioners seek to execute on this debt, in partial satisfaction of this Court's $6 billion judgment
against NIOC.
In response to the petition, Shell could have remained neutral, or at least interpleaded the
funds at issue, as Sprint and others have done in cases against Iranian agencies.'
Instead, Shell
has opted to attempt to block petitioners from obtaining the funds that NIOC is undisputedly
owed and that Shell undisputedly controls.
Even more surprisingly, Shell argues for dismissal, before any discovery, on the basis of
arguments that read restrictions into unambiguous statutory language, and that rely on the
unsupported "understanding" of a non-lawyer.
Shell also claims this Court lacks personal
jurisdiction, even though it is by revenue the world's largest company, with 22,000 employees in
the U.S., hundreds of billions of dollars of business in New York and throughout the United
States, and multi-billion dollar refineries, pipelines, terminals, wells, plants, and other major
facilities from New York to the Gulf of Mexico to Alaska.
1 See Estate of Heiser v. Islamic Republic of Iran , 807 F. Supp. 2d 9, 17 (D.D.C. 2011); Levin v. Bank ofN Y,
No. 09-CV5900, 2011 WL 812032, at *2 (S.D.N.Y. Mar. 4, 2011).
1
Page 9 of 34
Shell leans heavily on "sovereign immunity" and "customary international law," but it
completely ignores that NIOC is an adjudged sponsor of terrorism, with responsibility for the
worst terrorist attack on record for both persons (nearly 3,000 deaths) and property ($40 billion
in damages). Terrorists, including terrorist states and their instrumentalities, have no sovereign
immunity and no rights under customary international law. Like the torturer, pirate, and slave
trader, the terrorist is "hostis humani generis, an enemy of all mankind." Filartiga v. Peiia-Irala,
630 F.2d 876,890 (2d Cir. 1980),z
Accordingly, Shell's motion should be denied. This Court has subject matter jurisdiction
to execute on NIOC's assets, even on assets located outside the U.S. In any event, Petitioners
are entitled to discovery to determine where the assets are located. And this Court has general
personal jurisdiction over Shell, which has affiliations with New York and the United States that
are so continuous and systematic as to render it "essentially at home" in New York and/or the
United States, and which has consented to be sued here. Finally, "comity" does not oblige this
Court to refrain from ordering the turnover of the NIOC assets, and U.S. statutes mandate such
an order.
II.
THIS COURT HAS SUBJECT MATTER JURISDICTION OVER THIS
EXECUTION ACTION AGAINST THE ASSETS OF AN ADJUDGED SPONSOR
OF TERRORISM
Shell contends that this Court lacks subject matter jurisdiction, on the basis of two
contentions: 1) assets of an instrumentality of a sovereign are not subject to execution unless
located within the USA, even if the sovereign has committed and been held liable for terrorist
acts, and 2) the assets at issue, debts owed by Shell (or at least entities wholly owned by Shell) to
See Restatement (3d) of U.S. Foreign Relations Law § 402, comment g (principle that a state may apply its law to
foreign acts "is increasingly accepted as applied to terrorist and other organized attacks on a state's nationals").
2
2
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NIOC, are not located in the USA. Shell's motion must be denied if either of these contentions
is incorrect.
A.
Assets of an Adjudged Terrorism
Execution Wherever Found
Sponsor, Such As NIOC, Are Subject to
NIOC has no right to any immunity under U.S. law or customary international law. The
U.S. Congress has repeatedly acted to strip state sponsors of terrorism of any "immunity" they
might otherwise have under the Foreign Sovereign Immunities Act ("FSIA"). In 1996 Congress
created the "state sponsored terrorism exception" to the FSIA to permit U.S. victims of terrorism
to bring civil suits against terrorist states. After a federal court interpreted this exception
narrowly, Congress passed the "Flatow Amendment," which created an express federal cause of
action against terrorists. See Flatow v. Islamic Republic of Iran , 999 F. Supp. 1, 12 (D.D.C.
1998). However, some courts gave this new cause of action a narrow construction, and in 2008
Congress felt compelled to act yet again. Congo Rec. S54-55 1/22/08 (S. Lautenberg-
sponsor
of bill).
In 2008, as part of the National Defense Appropriations Act ("NDAA"), Congress
enacted a broad new provision designed to aid plaintiffs who, like plaintiffs in this case, have
obtained a judgment under 28 U.S.C. § 1605A, which provides a federal cause of action against
terrorist states such as Iran. The new provision, 28 U.S.C. § 1610(g), clearly provides that "the
property of an agency or instrumentality of such a state, including property that is a separate
juridical entity or is an interest held directly or indirectly in a separate juridical entity, is subject
to attachment in aid of execution, and execution .... " 28 U.S.C. § 1610(g)(1).
Prior to the 2008 enactment of28 U.S.C. § 1610(g), section 1605Ajudgments
against
state-sponsored terrorists could, just like judgments against non-terrorist states, only be satisfied
by execution against property in the United States: "The property in the United States of a
3
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foreign state ... shall not be immune from attachment in aid of execution, or from execution,
upon a judgment entered by a court of the United States or of a State ... if ... the judgment
relates to a claim for which the foreign state is not immune under [the FSIA's terrorism
exception]. 28 U.S.C. § 1610(a)(7) (emphasis added);' see also id. § 1610(b) (under specified
conditions, "any property in the United States of an agency or instrumentality of a foreign state
engaged in commercial activity in the United States shall not be immune from attachment in aid
of execution, or from execution") (emphasis added).
Shell admits that, unlike §
1610(a) & (b), § 1610(g) does not contain an "in the United
States" limitation. Shell Brief at 10. Shell only argues that the same limitation should
nevertheless be read into § 1610(g), to give adjudged terrorists the benefit of "sovereign
immunity" and the "presumption against extraterritorial effect of U.S. statutes." Id. Shell's
interpretation of § 1610(g) ignores the language of the statute, the FSIA statutory scheme as a
whole, the legislative history, and simple common sense.
The language of § 1610(g) is plain and unambiguous: "the property of an agency or
instrumentality of [a state adjudged liable for terrorist acts under § 1605A], including property
that is a separate juridical entity or is an interest held directly or indirectly in a separate juridical
entity, is subject to attachment in aid of execution, and execution .... " Nothing in the statutory
language limits this provision to property located in the U.S. Where, as here, the statutory
language is unambiguous, the words of the statute must be given their plain and ordinary
meaning. US v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241 (1989) (quoting Caminetti v.
United States, 242 U.S. 470, 485 (1917) (where statutory language "is plain ... the sole function
3 Prior to 2008, the terrorism exception was at 28 USC 1605(a)(7). The 2008 legislation broadened the exception
and moved it to 28 USC 1605A.
4
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of the courts is to enforce it according to its terms, ... and the rules which are to aid doubtful
meanings need no discussion").
This rule applies fully to § 1610(g): "The plain language of the statute supports a broad
reading. Section 1610(g) allows attachment of any 'property of a foreign state against which a
judgment is entered under section 1605A'." Ministry of Defense and Support for Armed Forces
of Islamic Republic of Iran v. Cubic Defense Systems, Inc., 2013 WL 6231403, *18 (S.D. CaL
Nov. 27, 2013) (emphasis added). As put by another court:
Courts generally presume that Congress is knowledgeable about existing law
pertinent to the legislation it enacts. Yet, in crafting the broad remedial language
of § 1610(g), Congress made no exceptions to its reach, despite the fact that the
plain language of the Act undeniably reaches transactions otherwise authorized by
OFAC regulations .... [T]he Court cannot ignore that a core purpose of the
NDAA is to significantly expand the number of assets available for attachment
in satisfaction of terrorism-related judgments under the FSIA. As already set
forth above, the language of § 1610(g) is broad and without reservation; indeed,
this Court has explored the "broad remedial purposes" of the NDAA, explaining
that § 1610(g) "demonstrate [s] that Congress remains focused on eliminating
these barriers that have made it nearly impossible for plaintiffs in these actions to
enforce civil judgments against Iran or other state-sponsors of terrorism." In light
of these strong remedial purposes, the Court will not now read a significant
exception into § 1610(g) that is not otherwise found in the text and that would
severely undercut the unmistakable goals of Congress.
Estate of Heiser, 807 F. Supp. 2d at 25-26 (emphasis added, citations and quotations omitted).
If there were any doubt about § 161O(g)' s applicability to a terrorist's assets outside the
U.S., it would be resolved by comparing its language with that of §
1610(a) & (b), which
pertain to execution on assets of non-terrorist states, and which both contain an "in the United
States" limitation. This comparison clearly shows that Congress knows how to limit the
territorial scope of an FSIA execution provision when it chooses to do so, and it declined to do
so here. See Crawford Fitting Co. v. JT Gibbons, Inc., 482 US 437, 442 (1987) (express limits in
other statutes made it "clear that when Congress meant to set a limit on fees, it knew how to do
5
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so"); Bellikoffv. Eaton Vance Corp., 481 F.3d 110, 116 (2d Cir. 2007) ("Congress's explicit
provision of a private right of action to enforce one section of a statute suggests that omission of
any explicit private right to enforce other sections was intentional") (quotation omitted).
Courts have already rejected the notion that limitations in § § 161O(a) & (b) limit the
scope of § 1610(g). For example, even though §
1610(a) & (b) limit execution to property used
in "commercial activity," § 1610(g) has been held to have no such limitation. Cubic Defense
Systems, supra, 2013 WL 6231403 at *18; Estate of Heiser, 807 F. Supp. 2d at 19 n.8. Nor do
OFAC regulations limit the reach of § 1610(g), even if the garnishee has a U.S. government
license to do business with an Iranian agency. Estate of Heiser, 807 F. Supp. 2d at 25-26.
The legislative history of § 1610(g) further demonstrates Congress' intent not to place
territorial limitations on its scope. As the Estate of Heiser court has outlined in great detail,
Congress included § 1610(g) in the NDAA in 2008 with a "core purpose" of "significantly
expand[ing] the number of assets available for attachment in satisfaction of terrorism-related
judgments under the FSIA." 807 F. Supp. 2d at 26. Congress enacted § 1610(g) to overrule the
restrictive interpretation some courts had given to § 1610(g). As the sponsor of the legislation
explained, "this legislation is essential to providing justice to those who have suffered at the
hands of terrorists and is an important tool designed to deter future state-sponsored terrorism.
The existing law passed by Congress in 1996 has been weakened by recent judicial decisions.
This legislation fixes these problems."
§
Congo Rec. S54-55 1/22/08 (S. Lautenberg)." Thus,
1610(g) was broadly "written to subject any property interest in which the foreign [terrorist]
state enjoys a beneficial ownership to attachment and execution," subject only to a court's
inherent authority to protect the rights of innocent third parties, and treaties on diplomatic
4 Sen. Lautenberg gave several examples of cases his bill was intended to overrule, including Cicippio-Puleo v.
Iran, 353 F.3d 1024 (D.C. Cir. 2004) (finding no private right of action) and Flatow v. Bank Saderat Iran, 308 F.3d
1065 (9th Cir. 2002) (finding no right to execute against property ofIranian bank).
6
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property such as embassies. House Conf. Report, H.R. Conf. Rep. No. 110--477, at 1001-02
(2007) (emphasis added). Nothing in the legislative history even remotely suggests any intent to
limit the territorial scope of § 161O(g). 5
In light of the plain language of the statute, the FSIA statutory scheme as a whole, and
the legislative history, Congress has provided far more than the "hint" of intent necessary to
overcome the presumption of domestic-only application required by the case law Shell cites,
Shell Brief at 11 (citing Autotech Tech. LP v. Integral Research & Dev. Corp., 499 F.3d 737,
750-51 (7th Cir. 2007) (construing a different statutory section, § 1610(a), which, as discussed
above, is expressly limited to assets "in the United States")). Shell's position should therefore be
rejected.
Shell complains that "no court has ever interpreted [§ 161O(g)] to lift immunity with
respect to property in other countries."
Shell Brief at 12. This is technically true, but neither has
any court interpreted § 1610(g), which applies solely to the property of terrorists, as only limited
to assets located in the United States. The only case Shell cites for this proposition did not
involve extraterritorial assets. Shell quotes the case as stating, "judgment creditors can now
reach any U.S. property in which Iran has any interest," but the very next sentence reads: "the
only requirement for attachment or execution of property is evidence that the property in
question is held by a foreign entity that is in fact an agency or instrumentality of the foreign state
against which the Court has entered judgment."
Estate of Heiser v. Bank of Tokyo Mitsubishi
UFJ, 919 F. Supp. 2d 411,417 (S.D.N.Y. 2013) (emphasis added, quotations omitted).
5 President George W. Bush vetoed this legislation the first time it was passed by Congress because it allowed
judgments for Iraqi state-sanctioned terrorism to be satisfied by assets of the post-Saddam Hussein government. The
only "legislative history" cited by Shell is a statement by President Bush, not by Congress, that the bill would "risk
the freezing of substantial Iraqi assets in the United States--including
those of the Development Fund for Iraq
(DFI), the Central Bank ofIraq (CBI), and commercial entities in the United States in which Iraq has an interest."
Resp. Auth. 6, at 1641. The president's expression of concern regarding these specific U.S. assets, under
circumstances very different than those present here, is hardly proof that other assets, outside the United States, were
intended by Congress to be beyond the legislation'S reach.
7
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Similarly meritless is Shell's contention that extraterritorial application of § 1610(g)
would violate international law. Even in ordinary commercial disputes where the judgment
debtor is not a terrorist, in appropriate circumstances a U.S. court may allow the judgment
creditor to execute on debtor property located outside the United States. See, e.g., JW Oilfield
Equipment, LLC v. Commerzbank AG, 764 F. Supp. 2d 587 (S.D.N.Y. 2011) (German bank
ordered to tum over judgment debtor's German-based bank account balance to judgment
creditor); Tiffany (NJ) LLC v. Forbse, 2012 WL 1918866, *12 (S.D.N.Y. 2012) (injunction
restraining assets in Chinese bank account); see also 28 USC 1355(b )(2) ("Whenever property
subject to forfeiture under the laws of the United States is located in a foreign country, ... an
action or proceeding for forfeiture may be brought" in federal court).
Moreover, while U.S. court orders may have extraterritorial effect even in ordinary
litigation, extraterritorial action is a fortiori legal under international law where, as here, it is
directed against terrorist states. The law of nations is founded on the premise that sovereign
states will "settle their international disputes by peaceful means in such a manner that
international peace and security, and justice, are not endangered" and to refrain "from the threat
or use of force against the territorial integrity" of any other state. U.N. Charter, art. 2. Where, as
here, a sovereign and its instrumentalities flagrantly breach this duty by committing terrorist acts
causing massive deaths and destruction, the victims are entitled to take reasonable and
proportionate measures against the terrorists, regardless of location. See Mwani v. Laden, 947 F.
Supp. 2d 1,5 (D.D.C. 2013) (U.S. statute given extraterritorial effect against terrorists who
bombed U.S. embassy in Kenya).6 This Court should reject Shell's contention that the assets of
UN. Charter, art. 51; Restatement (3d) of US. Foreign Relations Law § 404, comment a ("universal jurisdiction
is increasingly accepted for certain acts of terrorism, such as ... indiscriminate violent assaults on people at large").
Paust, Permissible Self Defense Targeting and the Death of Bin Laden, 39 Denv. 1. Int'l L. & Pol'y 569 (2011)
(U.N. Charter permits extraterritorial response to terrorism).
6
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NIOC, an adjudged sponsor of terrorism, are entitled to any type of sovereign immunity from
execution.
B.
Even If Petitioners Are Only Entitled to Execute on NIOC Assets in the
United States, Petitioners Are Entitled to Discovery on the Situs of the Assets
As shown above, § 1610(g) permits Petitioners to execute on NIOC assets regardless of
their location. In any event, Petitioners are entitled to discovery on the location issue. The Form
20-F that Shell filed with the SEC in 2012 states that "we have approximately $2,336 million
payable to, and $11 million receivable from, National Iranian Oil Company." Petition (DE 1)
Ex. L (DE 1-10) at 51. The form makes no mention of SITME, STIL, or the location of the
assets. With so much at stake and so little public information about Shell's corporate structure
and operating procedures, discovery is needed before any conclusions are drawn about the situs
of the debt. Shell is not entitled to summary dismissal on the basis of an untested declaration.
As the Second Circuit has repeatedly held:
Prior to discovery, a plaintiff challenged by a jurisdiction testing motion may
defeat the motion by pleading in good faith, legally sufficient allegations of
jurisdiction. At that preliminary stage, the plaintiff's prima facie showing may be
established solely by allegations. After discovery, the plaintiff's prima facie
showing, necessary to defeat a jurisdiction testing motion, must include an
averment of facts that, if credited by the trier, would suffice to establish
jurisdiction over the defendant. At that point, the prima facie showing must be
factually supported.
Dorchester Financial Securities, Inc. v. Banco BRJ, SA., 722 F.3d 81,84 -85 (2d Cir. 2013)
(quoting Ball v. Metallurgie Hoboken-Overpelt,
SA., 902 F.2d 194, 197 (2d Cir. 1990)).
Shell relies on a declaration from Mr. Bjorn Fermin, who alleges that two obscure Shell
subsidiaries, SITME and STIL, which allegedly do no business in the U.S., are the entities that
owe the money to NIOC. Declaration of Bjorn Fermin ("Fermin Decl.") ~~ 13-15. However,
SITME has stated that North America is one of its "major markets." Declaration of James
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McCoy ("McCoy Decl.") ~ 6, Ex. 4. Petitioners are entitled to discovery to test Shell's contrary
allegations and to examine, for example, how and where the contracts arose, whether any funds
or oil flowed to the United States, and the terms of the contracts, including whether payments
were designated in dollars. Shell has made no showing that these two subsidiaries operate as
independent companies such that jurisdiction, if found over RDS, is not sufficient for execution
on the Iranian assets in question.
Moreover, even if the debt is owed by a foreign entity, the situs of the debt "may be
wherever the debtor may be found and sued." Fletcher's Cyclopedia of Corporations § 4736;
Beja v. Jahangiri, 453 F.2d 959,963 (2d Cir. 1971) (foreign insurer properly found and sued in
NY could be garnished for insurance proceeds payable to foreign residents as a result of foreign
accidents); Morris Plan Industrial Bank of New York v. Gunning, 295 N.Y. 324, 330 (1946)
(under NY law, a judgment creditor may attach "a debt to a nonresident from a foreign
corporation provided the foreign corporation can be personally served in New York").
Petitioners allege that the Shell debt to NIOC is owed by an entity that may properly be sued and
served here, and no further showing is required at this early stage of the litigation. Therefore, at
the very least, Shell's motion should be denied as premature.
III.
THIS COURT HAS PERSONAL JURISDICTION OVER SHELL
A.
This Court Has Personal Jurisdiction Over Shell Because Shell is
"Essentially at Home" in New York or At Least in the United States as a
Whole
Shell is indisputably present and open for business in New York and the U.S.
Notwithstanding that reality, Shell argues that this Court lacks personal jurisdiction, supposedly
because it only has "attenuated or sporadic" New York affiliations. Shell Brief at 17. Not so.
Shell's New York affiliations are "so continuous and systematic as to render it essentially at
home" in New York. Daimler AG v. Bauman, 134 S. Ct. 746, 749 (2014). And even if Shell's
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New York contacts were deemed insufficient, this Court would still have personal jurisdiction
under Rule 4(k)(2), Fed. R. Civ. P., because at the least Shell's affiliations with the United States
as a whole make Shell "at home" in the USA as a whole.
Shell's brief does not mention Rule 4(k)(2), which provides:
For a claim that arises under federal law, serving a summons or filing a waiver of
service establishes personal jurisdiction over a defendant if: (A) the defendant is
not subject to jurisdiction in any state's courts of general jurisdiction; and (B)
exercising jurisdiction is consistent with the United States Constitution and laws.
Under Rule 4(k)(2), "a defendant sued under federal law may be subject to jurisdiction
based on its contacts with the United States as a whole, when the defendant is not subject to
personal jurisdiction in any state ... so long as the exercise of jurisdiction comports with the Due
Process Clause of the Fifth Amendment."
Dardana Ltd. v. Yuganskneftegaz, 317 F.3d 202,
207 (2d Cir. 2003) (remanding for discovery on nationwide contacts). See In re South African
Apartheid Litigation, 643 F. Supp. 2d 423,429-31 (S.D.N.Y. 2009); Wright & Miller, Federal
Practice and Procedure § 1068.1.
Rule 4(k)(2) is a type of "federal long-arm statute," under which the "defendant's
national contacts take center stage because the ... federal courts draw jurisdictional authority
from the federal sovereign [and] the applicable constitutional requirements devolve from the
Fifth rather than the Fourteenth Amendment."
US v. Swiss American Bank, Ltd., 191 F.3d 30,
36 (1st Cir. 1999). In applicable cases, Rule 4(k)(2), when combined with new provisions on
extraterritorial service of process, "authorizes world-wide service of process and a national
contacts analysis in all federal question cases." Born & Vollmer, The Effect of the Revised
Federal Rules, 150 F.R.D. 221, 227 (1993).
An action for execution on a judgment under § 1605A of the FSIA is a federal claim
within the meaning of Rule 4(k)(2). Peterson v. Islamic Republic of Iran , 2013 WL 1155576,
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*17 (S.D.N.Y. 2013). Under Rule 4(k)(2), the question thus is whether Shell has the "requisite
aggregate contacts with the United States as a whole." Id. at *15 (finding personal jurisdiction in
New York over foreign garnishees holding Iranian assets, and ordering turnover of such assets);
see also In re Parmalat Securities Litigation, 414 F. Supp. 2d 428,442 (S.D.N.Y. 2006) ("due
process analysis looks to defendant's contacts with the United States as a whole, rather than with
the forum state specifically'Y'
Rule 4(k)(2) applies to all federal claims if "the defendant is not subject to jurisdiction in
any state's courts of general jurisdiction."
Shell does not contend that any other state has
jurisdiction over this matter.f As it would be unduly burdensome to require a plaintiff to prove
affirmatively that the defendant is not subject to general jurisdiction in any of the 50 states, most
courts have held that Rule 4(k)(2) confers jurisdiction "so long as a defendant does not concede
to jurisdiction in another state." Mwani, 417 F .3d at 11 (citing cases ).9
1.
This Court Has General Jurisdiction
Under Bauman
In Bauman, the Supreme Court refined the traditional test for general jurisdiction: no
longer is a foreign company's "continuous and systematic activity" in the forum enough by itself
for all-purpose jurisdiction; instead, the defendant's affiliations with the forum must be "so
continuous and systematic as to render it essentially at home." 134 S. Ct. at 749. Also, while the
7 Shell acknowledges
that this Court has personal jurisdiction if Shell 1) does business in New York with a "fair
measure of permanence and continuity," Landoil Res. Corp. v. Alexander & Alexander Servo Inc., 918 F.2d 1039,
1043 (2d Cir. 1990), and 2) the exercise of jurisdiction comports with constitutional requirements under Bauman.
Shell Brief at 17-18. Plaintiffs submit that Shell's N ew York affiliations satisfy these tests, but it may not be
necessary for the Court to decide this issue because, even if Shell's New York contacts are insufficient, under Rule
4(k)(2) the Court has jurisdiction if Shell's nationwide contacts are constitutionally sufficient.
8 If Shell concedes or the Court finds that Shell is subject to jurisdiction
in another state, such as Delaware (the state
of incorporation of many of Shell's US. subsidiaries) or Texas (the site of Shell's investor relations office and the
principal place of business of many of Shell's subsidiaries), Rule 4(k)(2) would not apply, but the proper course in
that case would be transfer under 28 USC § 1404, not dismissal, if Shell's New York contacts are found inadequate.
9 Although most courts have applied the Mwani presumption, some courts have required plaintiffs invoking Rule
4(k)(2) to certify that, based on available information, the defendant is not subject to suit in the courts of general
jurisdiction of any state. E.g., South African Apartheid, 643 F. Supp. 2d at 429. Plaintiffs so certify because, if
Shell's New York contacts are insufficient, Shell's contacts with other states would not likely be sufficient, although
Shell's aggregate US. contacts would be.
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Court made no holding as to when the forum contacts of a subsidiary could be imputed to a
foreign parent, the Court suggested in dicta that such contacts could be attributed under the alter
ego theory and perhaps under an agency theory, although the Court indicated that the Ninth
Circuit's particular application of agency theory was too "sprawling" to be acceptable. Id. at
759-60. Bauman thus "undoubtedly limit[s] the application of general jurisdiction to foreign
defendants [but should not be viewed] as mandating the complete casting off' of prior authority.
Barriere v. Cap Jaluca Leading Hotels, 2014 WL 652831, at *9 (S.D. Fla. Feb. 19,2014).
In light of Shell's New York and United States affiliations, this case is plainly
distinguishable from Bauman. In Bauman, Argentinian plaintiffs sought jurisdiction in the U.S.
courts in order to hold a German company liable for actions in Argentina. Here, by contrast,
Petitioners are U.S. citizens who seek to enforce a final judgment, entered by a U.S. court,
predicted on a terrorist attack that took place in New York, and they do not seek to impose
liability on Shell for anything. Instead, Petitioners seek only a turnover of funds that Shell
admittedly would be paying to NIOC.
This case is less similar to Bauman than it is to a prior case in which the Second Circuit
held that Shell's predecessor was subject to general jurisdiction in this Court. In that case, the
court found that Shell and its U.S. subsidiaries "have a physical presence in the forum state, have
access to enormous resources, face little or no language barrier, have litigated in this country on
previous occasions, have a four-decade long relationship with one of the nation's leading law
firms, and are the parent companies of one of America's largest corporations, which has a very
significant presence in New York." Wiwa v. Royal Dutch Petroleum Co., 226 F. 3d 88, 99 (2d
Cir. 2000); accord, Rates Technology Inc. v. Broadvox Holding Co., 2014 WL 46538, *5
(S.D.N.Y.2014).
So too, here, Shell is "at home" in New York, or at least in the United States
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as a whole. The New York and U.S. affiliations of Shell's subsidiaries are imputable to Shell,
under any reasonable reading of the Bauman dicta and Second Circuit authority.
2.
Shell's Massive Affiliations With New York and the United States as a
Whole Make Shell "At Home" Here
a.
Shell's New York and U.S. Affiliations Are Extensive
Shell is the world's largest company, in terms of gross revenue. Petition ~ 3. Shell's
wholly-owned U.S. subsidiaries are active in all 50 states, employing over 22,000 employees,
and operating about 25,000 Shell-branded service stations nationwide. Petition ~ 11. Operating
through at least 1,268 subsidiaries, McCoy Decl. at ~ 9, Ex. 6, all using the famous red and gold
"pecten" logo, Shell asserts that it "has no operations of its own" (Fermin Decl. ~ 5) and its
"principal activity is being the parent company for ShelL" Petition Ex. L at 161.
The scope and extent of Shell's U.S. and New York affiliations are far greater than what
is typically seen in a personal jurisdiction case. With $87.5 billion in annual revenue from its
U.S. operations, McCoy Deci. at ~ 11, Ex. 8 at 8, Shell runs a "vast U.S. network" of pipelines
and terminals. Id. at ~ 13, Ex. 10. Compare, e.g., South African Apartheid, 643 F. Supp. 2d at
436 ("The notion that a company may do [$100 million] of business in the United States without
anticipating application of general jurisdiction is implausible at best"). Shell-branded service
stations are in all 50 states, a total of 25,000 nationwide. McCoy Deci. ~ 14, Ex. 11. Shell has
major production facilities, refineries and/or chemical plants in Texas, California, Washington,
Wyoming, Pennsylvania, Alaska, and Louisiana. Petition Ex. L at 26-27,39-40.
One Shell
Square in New Orleans is the tallest building in all of Louisiana, and One Shell Plaza is the third
tallest building in Houston.
Although incorporated abroad, Shell "is owned to a very large extent by U.S. institutional
Shareholders," such as Fidelity (FMR), Capital Group, T. Rowe Price, Dodge & Cox, Franklin
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Resources, BlackRock, and others. McCoy Deci. ~ 15, Exs. 12 and ~ 17, Ex. 14. Four of Shell's
largest seven shareholders, and 27% of all Shell shareholders, are American. Id. at ~ 17, Ex. 14
at 20 and ~ 10, Ex. 7 at 1. And many of Shell's "European" shareholders are merely foreign
subsidiaries of American companies, such as BNY Mellon, Chase, and State Street. Id. at ~ 12,
Ex. 9 at 180. On the New York Stock Exchange, $25-30 billion worth of Shell shares are traded
daily, with two classes of stock and 14 series of Shell-guaranteed notes. Id. at ~ 17, Ex. 14 at 20;
Declaration of Ken Lawrence ("Lawrence Decl.") ~ 4. Shell's "presentation and functional
currency is US dollars," and dividends are paid in U.S. dollars. Petition Ex. L at 44, 161.
Over half of the worldwide Shell service stations are in the USA. In 2012,38% of
Shell's worldwide expenditures for oil and gas exploration and production were in the United
States, and 38% of Shell's ethylene capacity was here. Id. at 29,37.
As an example of the
magnitude of Shell's U.S. presence, in 2012 Shell paid $1.9 billion for 2,200 square kilometers
(849 square miles) of Texas acreage "rich in oil and natural gas." Id. at 21.
Moreover, Shell is omnipresent throughout New York. Its wholly owned subsidiaries
have offices in Manhattan, Brooklyn, Albany, and Syracuse.
'0
Shell service stations are in every
city and town. As mentioned above, 14 series of Shell-guaranteed notes and two classes of Shell
ADR shares are traded on the NYSE. Lawrence Decl. ~ 4. Shell products are traded on the New
York Mercantile Exchange ("NYMEX").
McCoy Deci. ~ 5, Exs. 2-3.
To manage risk, Shell is an active participant in the trading of options and futures
commodities contracts on the NYMEX exchange. Shell is a large player on the commodities
market, and at least one Shell entity is a corporate member of NY ME X, which is the largest
physical commodity futures exchange and preeminent forum for energy in the world. McCoy
Deci. ~ 5, Exs. 2-3.
10
McCoy Decl. ~ 18, Ex. 15 (Syracuse and Albany) and ~ 19, Ex. 16 (Manhattan and Brooklyn).
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At least eight prominent Shell subsidiaries, including Shell Oil Company, are registered
with the New York Department of State to do business and have appointed an agent for the
service of process in New York. One Shell entity filed with the Department of State and
appointed a registered agent as recently as February 4,2014.
b.
McCoy Deci. ~ 4, Ex. 1.
Shell is Essentially At Home in New York and the United States
In Bauman, the Supreme Court stated that "continuous and substantial activity" is not
alone enough, that domicile and principal place of business are enough, and that other types of
contacts may be enough, if a corporation's operations in a forum are "so substantial and of such a
nature as to render the corporation at home in that State." 134 S. Ct. at 761 n.19. As an example
of a situation where a company could be deemed "at home" in a jurisdiction other than its place
of domicile or principal place of business, the Court cited Perkins v. Benguet Consolidated
Mining Co., 342 U.S. 437 (1952), where the Court held that the courts in Ohio could exercise
general jurisdiction over a Philippine company with its principal place of business in the
Philippines, because the company's foreign operations had been disrupted by war and its
business was being run from a small Ohio office.
However the courts ultimately refine the Bauman test, Shell will fall comfortably within
its scope. Whatever Bauman means, it cannot be read to preclude all courts in the United States
from exercising general jurisdiction over the world's largest company, a company that profits
from access to the U.S. markets to the tune of some $87.5 billion in annual revenue, with over
22,000 U.S. employees, service stations in all 50 states, huge facilities and operations in many
states, whose securities and commodities are traded daily in huge numbers on exchanges a few
miles from this Court, and substantial other U.S. connections, as outlined above.
By many measures, the USA is Shell's principal place of business. As discussed above,
over half of the world's Shell stations are here, 38% of Shell's worldwide expenditures for on oil
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and gas exploration and production are here, and 38% of Shell's ethylene capacity is here. The
touchstone of due process is fundamental fairness, Burger King Corp. v. Rudzewicz, 471 U.S.
462,470 (1985), and patently there is no unfairness at all in treating Shell as a defacto U.S.
domiciliary.
B.
Shell Cannot Escape U.S. Jurisdiction By Operating Through Subsidiaries
1.
Shell's Subsidiaries Lack Independence and Distinctness
Although Shell's declarations claim that its numerous subsidiaries are "independent,"
available information indicates otherwise, and discovery has not yet occurred. Employees of one
Shell entity work for others, as Shell corporate lines are blurred and crossed. For example, Shell,
the only publicly-traded entity in the Shell group, has an investor relations office in Houston,
TX, which is staffed by employees of Shell subsidiaries Shell Oil Company and Shell Canada
Services Ltd. Lawrence Decl. ~ 8. The exact nature of the relationships between Shell and its
subsidiaries is not clear, but the company presents itself to the world as a unitary, highlyintegrated entity.
Shell itself has no employees, but the brochure that Shell apparently gives to new
employees of its subsidiaries does not even mention the name of their formal employer; it refers
to Shell as "our company," to Shell's CEO as "our CEO," and to Shell as a singular "vertically
integrated oil company." McCoy Decl. ~ 16, Ex. 13 at 1-4. According to the brochure, Shell's
"upstream" business has always been centralized, with "detailed technical and financial direction
coming from the central offices in The Hague." And, although historically the local
"downstream" businesses had more autonomy, today such autonomy "has been largely
removed." Id. at 2.
Shell has a "single risk based control framework," the "Shell Control Framework," to
identify and limit risks. This control framework governs all Shell companies in which the parent
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has a direct or indirect controlling interest. Fermin Decl., Ex. F at 2, Ex. D at 1.
Shell's press statements and reports usually do not even mention the name of the
pertinent subsidiary or any of the subsidiary's officers, and the spokesman and decision maker is
typically Shell's own CEO or another officer of the parent. For example, "Energy giant Royal
Dutch Shell pic (NYSE:RDS.A) has shelved plans to build a $12.5 billion natural gas-to-diesel
conversion plant in Louisiana .... Shell CEO Peter Voser said, 'We are making tough choices
here, focusing our efforts and capital on the most attractive opportunities in our worldwide
portfolio to add value for shareholders. '" McCoy Decl. at ~ 20, Ex. 17. Shell CEO Voser was
also spokesman for the announcement that "Royal Dutch Shell" planned to start production in
North American "tight oil" reserves. Id. at ~ 21, Ex. 18. And it was Mr. Voser's successor, Ben
van Beurden, who recently announced that "Royal Dutch Shell" would not pursue its effort to
drill in Alaska during 2014, because he was "frustrated" by a court decision and was not
prepared to commit further money and employee time to the project. Id. at ~ 22, Ex. 19.
2.
Shell's U.S. Subsidiaries Are Shell's Agents
Shell admits that the presence of a subsidiary in the forum renders the parent subject to
general jurisdiction if the subsidiary is an "agent" or "mere department" of the parent. Shell
Briefat 19. These are two different tests. Shell argues its U.S. subsidiaries are not "mere
departments" under the four-factor test Gundlach test, but it ignores the separate agency test,
except to say that its ownership of its U.S. subsidiaries is not, standing alone, sufficient to make
the subsidiaries agents of Shell for personal jurisdiction purposes. Shell Brief at 19-20. It is true
that ownership alone is not enough, but here there is much more.
Under the Second Circuit's traditional agency test, Shell's subsidiaries are
unquestionably Shell's agents and the New York and U.S. affiliations of the subsidiaries are
imputable to ShelL The Second Circuit has long adhered to the rule that a foreign corporation is
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subject to all-purpose New York jurisdiction if its subsidiary acts as its "New York
representative entity and that New York representative renders services on behalf of the foreign
corporation that go beyond mere solicitation and are sufficiently important to the foreign entity
that the corporation itself would perform equivalent services if no agent were available."
Wiwa,
226 F.3d at 95. Under this rule, "a plaintiff need demonstrate neither a formal agency
agreement, nor that the defendant exercised direct control over its putative agent. The agent must
be primarily employed by the defendant and not engaged in similar services for other clients."
Id. (citations omitted).
Wiwa followed the Second Circuit's earlier decision in Gelfand v. Tanner Motor Tours,
Ltd., 385 F.2d 116,120-21 (2d Cir. 1967) and the New York Court of Appeals opinion in
Frummer v. Hilton Hotels Int'l Inc., 19 N.Y.2d 533,537 (1967). Gelfand held that New York
residents injured on a tour bus in Arizona could sue the foreign tour operator in New York,
because a New York company acted as sales service representative for the foreign tour company
and accounted for approximately 3,000 of the 7,000 total annual passenger reservations on the
tour. Frummer found general New York jurisdiction over Hilton Hotels (U.K.) Ltd., a British
corporation, because it used Hilton Reservation Service, which had an office in New York, to
accept and confirm room reservations at the London Hilton.
Shell's subsidiaries have a far larger New York presence and do far more work for Shell
than did the agent companies in Wiwa, Gelfand, and Frummer. As Shell is merely a holding
company that "has no operations of its own," Fermin Decl. ~ 5, the business of the subsidiaries
"constitutes the only business of the parent" and thus "there is no basis for distinguishing
between the business of the parent and the business of the subsidiaries."
Liberty Property
Trust v. Republic Properties Corp., 577 F.3d 335,341-42 (D.C. Cir. 2009) (quoting Bellomo v.
19
Pennsylvania
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Life Co., 488 F. Supp. 744, 746 (S.D.N.Y. 1980) (jurisdiction based on
local activities if plaintiffs could prove the subsidiary was a "mere instrumentality
of the parent"). Under the rationale of these cases, this Court plainly has personal jurisdiction
over Shell.
The Wiwa-Gelfand-Frummer line of authority should remain binding law following
Daimler AG v. Bauman. See Sonera Holding B. V v. Cukurova Holding A.S., _ F.3d _,2014
WL 1645255, *4 (2d Cir. Apr. 25, 2014) ("we need not consider whether the agency principles
announced in Wiwa survive in light of Daimler").
The Bauman Court's comments about agency
were, at most, not necessary to the decision, and therefore constitute dicta. Thus, this Court
remains bound by more than 45 years of controlling Second Circuit precedents - and it is for the
Second Circuit to say otherwise. See, e.g., Rosario v. US., 625 F. Supp. 2d 123, 130 (S.D.N.Y.
2008) ("whether Koon undermines Restrepo is for the Second Circuit to decide; this Court
remains bound by its authority").
Post-Bauman cases have agreed that prior authority should not be cast aside. See
Barriere v. Cap Jaluca Leading Hotels, 2014 WL 652831, at *9. Barriere was a suit against an
Anguillan company by Texas citizens for injuries at the defendant's resort in Anguilla. The
court concluded that, notwithstanding Bauman, Florida could exercise general jurisdiction by
virtue of the defendant's presence in Florida via a Miami sales agent, Miami asset management
agent, and Miami sales reservation agent. See also George v. Uponor Corp., 2014 WL 1431194,
*2 (D. Minn. 2014) (notwithstanding Bauman, foreign parent subject to personal jurisdiction in
subsidiary's principal place of business).
The Supreme Court's criticism (in dicta) of the Ninth Circuit's version of agency theory
is inapposite in the Second Circuit. Bauman held that the Ninth Circuit's agency theory
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purported to "subject foreign corporations to general jurisdiction whenever they have an in-state
subsidiary or affiliate."
134 S. Ct. at 749. That has never been so in the Second Circuit. See,
e.g., Volkswagenwerk Aktiengesellschaft
v. Beech Aircraft Corp., 751 F.2d 117, 120 (2d Cir.
1984) ("the presence of a local corporation does not create jurisdiction over a related, but
independently managed, foreign corporation").
Even if, in light of Bauman, the Second Circuit
limits imputation of a subsidiary's contacts, for example to situations where the parent and
subsidiary have a "close, synergistic relationship" that transcends "mere ownership," George v.
Uponor Corp., 2013 WL 6801219, at *6 (D. Minn. 2013), the contacts of Shell's subsidiaries
would still be imputed. See, e.g., South African Apartheid Litigation, supra, 643 F. Supp. 2d at
435 (imputation where the companies form an "integrated business unit," with "individual
instances of direct control," shared facilities and staff, and overlapping officers); Parmalat
Securities Litigation, supra, 414 F. Supp. 2d at 442 (imputation based on control and "an
integrated, global organization"); Palmieri v. Estefan, 793 F. Supp. 1182, 1193 (S.D.N.Y. 1992)
(quoting Bialek v. Racal-Milgo, Inc., 545 F. Supp. 25, 32 (S.D.N.Y.1982) (local subsidiary
deemed agent of foreign parent if they are both "components of a tightly-knit commercial
organization of common-owned entities"). See also Liberty Property, 577 F.3d at 341-42
(imputation is proper where the subsidiaries are "mere instrumentalities"
that are "created by
the parent, for tax or corporate finance purposes, to carry on business on its behalf').
Thus, based even on the limited pre-discovery
facts available to plaintiffs, and under
even the most limited version of the agency theory, the New York and U.S. affiliations of
Shell's subsidiaries may be imputed to Shell, as the subsidiaries are at most instrumentalities
in Shell's tightly knit, synergistic business.
3.
Shell's Subsidiaries Are Alter Egos or "Mere Departments"
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As noted above, Bauman discussed with approval the alter ego theory of corporate
imputation. In New York, this theory is often called the "mere department" theory. As Shell
admits, a subsidiary's forum affiliations are imputed to the parent if the subsidiary is deemed a
"mere department" of the parent by virtue of: (1) common ownership, (2) financial dependency
of the subsidiary on the parent corporation, (3) the degree to which the parent corporation
interferes in the selection and assignment of the subsidiary's executive personnel and fails to
observe corporate formalities, and (4) the degree of control over the marketing and operational
policies of the subsidiary exercised by the parent." Shell Brief at 19-20 (quoting Gundlach v.
IBM Japan, Ltd., No. 11-CV-846 (CS), 2013 WL 6123627, *4 (S.D.N.Y. Nov. 21, 2013). Only
the first factor is essential to an alter ego finding; the others "comprise a balancing test." Id.
Shell admits common ownership, the only essential factor. And it is apparent that
corporate formalities are not always observed, as the Shell investor relations office is staffed by
employees of subsidiaries that have no "investors" other than Shell itself. Lawrence Decl. ~ 8. It
also seems plain that Shell has total control over the subsidiaries' marketing and operational
policies. Shell exercises such control by enforcing the Shell Control Framework, by imposing
"detailed technical and financial direction" and directly managing "virtually all of Shell's
operations in all of its various businesses," and by making all significant policy decisions, which
are announced in Shell's name by Shell's own officers, with not even a mention of the
subsidiary. See Part III.B.1 supra. As for "financial dependency," the facts are not yet clear, but
Shell's own exhibits show that at least one subsidiary'S activities are financed "mainly by funds
provided by the shareholder."
Fermin Decl., Ex. Gat 4. It is inconceivable that Shell's more
than 1,000 subsidiaries are each separate companies under the pertinent tests.
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Accordingly, the New York and U.S. contacts of the subsidiaries should be imputed to
ShelL See George v. Uponor Corp., supra, 2014 WL 1431194, at *2 (notwithstanding Bauman,
foreign parent subject to personal jurisdiction in subsidiary's principal place of business, because
subsidiary was parent's alter ego). Shell's motion to dismiss should be denied.
C.
This Court Also Has General Personal Jurisdiction
Has Consented to be Sued Here
Over Shell Because Shell
As noted above, at least eight wholly owned Shell subsidiaries, including Shell Oil
Company, have appointed a registered agent for service of process in New York. By appointing
an agent for service of process, all eight of these wholly-owned Shell subsidiaries have
consented to general jurisdiction in New York, STX Panocean (UK) Co., Ltd. v. Glory Wealth
Shipping Pte Ltd., 560 F.3d 127,131 (2d Cir. 2009), regardless of whether they are "at home" in
New York under the Bauman test. Thus, Shell is subj ect to general jurisdiction here if the
affiliations of even one of these eight subsidiaries are imputed to the parent. For the reasons
stated above, imputation is appropriate because the subsidiaries are agents or alter egos of ShelL
Bauman concerns only general personal jurisdiction on the basis of contacts. It does not
in any way negatively impact the authority of cases such as STX Panocean, which hold that allpurpose jurisdiction may be based on consent. In light of Shell's consent, Shell's personal
jurisdiction argument should be rejected.
D.
Petitioners
Are At Least Entitled to Jurisdictional
Discovery
If the facts discussed above are not themselves sufficient, Shell's motion should
nevertheless be denied as premature, and petitioners should be allowed jurisdictional discovery
regarding Shell's New York and nationwide affiliations. Petitioners allege in good faith that
Shell has sufficient New York and/or nationwide contacts to satisfy due process concerns, and
that is all that is needed at this stage of this litigation. Dorchester Financial Securities, Inc. v.
23
Document 41
Filed 05/23/14
Page 31 of 34
Banco BRJ, SA., 722 F.3d at 84 -85 (prior to discovery, "good faith, legally sufficient allegations
of jurisdiction" are sufficient to defeat a motion to dismiss for lack of jurisdiction).
There is no
basis for dismissal on the basis of Shell's untested, conclusory declarations that have already
been shown to be inaccurate, at least to some extent.
IV.
COMITY DOES NOT REQUIRE DISMISSAL OF THIS EXECUTION ACTION
Shell argues that comity requires dismissal because the U.S. interest in this matter "is
outweighed by the interest of the United Kingdom and European Union in the application of
their sanctions law to property located within their territorial jurisdictions."
Shell Brief at 30.
Thus, Shell's comity argument depends on the notion that the payables are located outside the
USA.
If the payables to NIOC are deemed to have a U.S. situs, Shell's comity argument fails at
the threshold. As discussed above, petitioners allege that the assets are located in the United
States. Petitioners dispute the contrary allegations in Shell's declarations and are entitled to
discovery on this jurisdictional issue. See Part II.B supra.
In any event, Shell's contention that this case presents a "true conflict" (compliance with
an order to tum over the payables to this court would require Shell to violate UK law) turns
entirely on an unsupported "understanding" in ~ 17 of the declaration ofMr. Fermin that
payment "would require express prior authorization by the competent authorities, including the
UK Government (specifically, Her Majesty's Treasury)."
Shell does not cite any EU or UK law or regulation that supports Mr. Fremin's
"understanding" regarding a governmental prior authorization requirement, even though Shell is
supposedly a UK entity. There is no mention of any such requirement on the UK government's
official Iran sanctions page, https://www.gov.uklsanctions-on-iran.
In any event, even if
authorization were required, Shell has asserted absolutely no reason why the UK would deny it,
24
Document 41
Filed 05/23/14
Page 32 of 34
as the UK is strongly opposed to terrorism and its laws criminalize the support and financing of
terrorism, even where such acts occur outside the UK. "
Shell complains of only a "speculative hardship," which is not grounds for abstention on
comity grounds. JW Oilfield Equipment, supra, 764 F. Supp. 2d at 598; accord, Tiffany (NJ),
supra, 2012 WL 1918866 at *9 (speculative possibility of sanctions "not a factor" to be weighed
in comity analysis). The possibility that compliance with a turnover order would place a
European company in violation of the EU freeze on Iranian assets was specifically rejected as
grounds for dismissal by Judge Forrest in Peterson v. Islamic Republic of Iran, supra, 2013 WL
1155576 at *22, *28 ("it cannot be that a court must refrain from adjudicating a dispute where
the potential exists for a foreign legal regime to impose penalties on a litigant based on the U.S.
court's decision").
Shell's comity argument should likewise be rejected here.
Shell is obligated to prove that execution on a proper judgment by the Havlish plaintiffs
would constitute a transfer of funds that is subject to and in violation ofEU or UK sanctions. It
has not even satisfied this threshold issue. It is therefore premature and inappropriate for the
Court to rely on the conclusory argument and Mr. Fermin's declaration to find that such an
execution invokes concerns of comity, let alone that comity should suffice to defeat lawful
execution upon this Court's judgment.
This is especially true as any order by this Court will not
require Shell to make payment to an Iranian person, entity or body.
11
Terrorism Act 2000 (UK) §
12, 17,63, at http://www.legislation.gov.uk/ukpga!2000Il1.
25
Document 41
Filed 05/23/14
Page 33 of 34
CONCLUSION
For the reasons stated above, Shell's motion should be denied in its entirety. In the
alternative, at the very minimum, Shell's motion should be denied as premature, subject to
renewal after completion of jurisdictional discovery.
Dated: May 23,2014
Respectfully submitted,
BOIES, SCHILLER & FLEXNER
LLP
By: lsi Stuart H. Singer
STUART H. SINGER
Stuart H. Singer, Esq. (Pro Hac Vice)
William S. Dzurilla, Esq. (Pro Hac Vice)
401 East Las Olas Boulevard, Suite 1200
Fort Lauderdale, Florida 33301
Telephone: (954) 356-0011
Facsimile: (954) 356-0022
E-mail: ssinger@bsfllp.com
E-mail: wdzurilla@bsfllp.com
Lee Wolosky, Esq. (Bar no. W-1280)
575 Lexington Avenue
New York, NY 10022
Telephone: (212) 446-2300
Facsimile: (212) 446-2350
Email: lwolosky@bsfllp.com
Michael Gottlieb, Esq. (Pro Hac Vice)
5301 Wisconsin Ave., NW
Washington DC 20015
Telephone: (202) 237-2727
Facsimile: (202) 237-6131
Email: mgottlieb@bsfllp.com
Richard D. Hailey, Esq. (Pro Hac Vice)
RAMEY & HAILEY LAW
9333 North Meridian Street, Suite 105
Indianapolis, IN 46260
Telephone: (317) 582-0000
Facsimile: (317) 582-0080
E-mail: rich@rameyandhaileylaw.com
Dennis G. Pantazis (Pro Hac Vice)
Timothy B. Fleming (Pro Hac Vice)
Of Counsel
WIGGINS CHILDS PANTAZIS FISHER
GOLDFARBLLC
WIGGINS CHILDS PANT AZIS FISHER
The Kress Building
301 Nineteenth Street North
Birmingham, Alabama 35203
Telephone: (205) 314-0531
Facsimile: (205) 314-0731
Email: dgp@wigginschilds.com
GOLDFARB PLLC
1850 M Street, N.W., Suite 720
Washington, D.C. 20036
Telephone: (202) 467-4489
Facsimile: (205) 314-0805
Email: tfleming@wigginschilds.com
26
Document 41
Stephen A. Corr, Esquire (Pro Hac Vice)
STARK & STARK, P.C.
777 Township Line Road, Suite 120
Yardley, PA 19067
Telephone: (267) 907-9600
Facsimile: (267) 907-9659
Email: scorr@stark-stark.com
Filed 05/23/14
Page 34 of 34
David C. Lee, Esq. (Pro Hac Vice)
LAW OFFICE OF DAVID C. LEE
800 S. Gay Street, Suite 700
Knoxville, TN 37902
Telephone: (865) 247-9736
Facsimile: (865) 381-1638
Email: DavidLeeAttomey@gmaiI.com
Robert M. Foote, Esq. (Pro Hac Vice)
FOOTE, MIELKE, CHAVEZ & O'NEIL, LLC
10 West State Street, Suite #200
Geneva, IL 60134
Telephone: (630) 232 7450
Facsimile: (630) 232 7452
Email: rmf@fmcolaw.com
Attorneys for Petitioners
CERTIFICATE
OF SERVICE
I HEREBY CERTIFY that on May 23, 2014, a true and correct copy of the foregoing has
been furnished to all counsel of record via ECF and emaiL
By: lsi Stuart H. Singer
STUART H. SINGER
27

Case 1:13-cv-07074-GBD Document 41 Filed 05/23/14 Page 1 of 34

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