Helmerich & Payne Int'l Drilling Co. v. Bolivarian Republic of Venezuela.,Case No. 11-cv-01735 (D.D.C. May 13, 2016) [click for opinion]
Plaintiff brought suit against Defendant Venezuela, the Venezuelan state-owned oil company PDVSA, and one of its subsidiaries, PDVSA-P, for a taking of oil rigs located in Venezuela in violation of international law. Plaintiff alleged that jurisdiction was appropriate under the "expropriation exception" contained in the Foreign Sovereign Immunities Act (the "FSIA"), at 28 U.S.C. § 1605(a)(3).
To prove its allegations, Plaintiff sought jurisdictional discovery, including requests for documents. Defendants refused to respond fully to many requests and argued that Defendant Venezuela was immune from discovery, leading to Plaintiff's motion to compel. The court granted the motion.
As an initial matter, the court noted that the expropriation exception of the FSIA encompasses two alternative scenarios: (1) cases in which the allegedly expropriated property is present in the United States; and (2) cases in which such property is "owned or operated by an agency or instrumentality of [a] foreign state and that agency or instrumentality is engaged in a commercial activity in the United States." Here, only the second scenario arguably applied, as the oil rigs in question were not located in the United States.
Defendants argued that the second scenario would only grant jurisdiction over the agency or instrumentality in question, and not over the sovereign itself. Defendant cited a recent D.C. Circuit case, Simon, which took this view. Plaintiff argued, however, that an earlier D.C. Circuit decision,Chabad, had found jurisdiction over a sovereign defendant under the second situation. The court agreed, and noted that, in such cases of intra-circuit splits, the earlier decision is binding. Venezuela thus appeared to be a proper defendant at this stage of the proceedings.
However, the court noted the Simon decision in fact cited to—and was allegedly based upon—the Chabad decision, and thus the Circuit Court apparently did not find the two decisions were in conflict. Moreover, the court noted, the Chabad decision had in fact only implicitly answered the instant question; that is, it found that the second scenario applied, and it exercised jurisdiction over the sovereign defendant as well as its instrumentality, but never explicitly stated that the second scenario grants jurisdiction over a sovereign.
Given the Circuit Court's clear articulation of a contrary rule in Simon, and its implicit view that the new rule is consistent with—and perhaps even based on—Chabad, the court found itself "in somewhat of a quandary." Yet the parties had stipulated to the inclusion of only certain issues in the first round of briefing —which did not include the question of whether the second expropriation exception scenario granted jurisdiction over the sovereign Defendant. Thus, despite the potentially unnecessary burden jurisdictional discovery could impose on Venezuela (if it was in fact not a proper defendant in this case), the Court declined at this stage to rule on that question.
The court instead turned to the motion to compel, which it divided into five categories. It found that, for four of the categories, the requests were narrowly-tailored to test allegations made by the Plaintiff that the Defendants exercised legal control over the allegedly expropriated assets. It therefore compelled responses to these requests. As to the fifth category, the court found that the requests related to Defendants' allegation that its subsidiary conducted no commercial activity in the United States, and, because Plaintiff had identified sufficient evidence that this was not the case, it also granted the motion to compel as to that category.