Exxon Mobil Corporation v. Saudi Basic Industries Corporation

PETITIONER: Exxon Mobil Corporation, Exxon Chemical Arabia, Inc., and Mobil Yanbu Petrochemical Company, Inc.
RESPONDENT: Saudi Basic Industries Corporation
LOCATION: Texas State Capitol

DOCKET NO.: 03-1696
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 544 US 280 (2005)
GRANTED: Oct 12, 2004
ARGUED: Feb 23, 2005
DECIDED: Mar 30, 2005

ADVOCATES:
Gregory Andrew Castanias -
Gregory S. Coleman - argued the cause for Petitioners
Nancie G. Marzulla - for Defenders of Property Rights et al. as amici curiae
Roger J. Marzulla - for Defenders of Property Rights et al. as amici curiae

Facts of the case

Two subsidiaries of ExxonMobil formed joint ventures with Saudi Basic Industries Corp. (SABIC) to produce polyethylene in Saudi Arabia. When a dispute arose over the royalties SABIC had charged, SABIC sued the two subsidiaries in a Delaware state court, seeking a ruling that the royalties were proper. ExxonMobil countersued in federal district court, alleging SABIC had overcharged. Before the state-court trial, the district court denied SABIC's motion to dismiss the federal suit. As SABIC appealed, the Delaware court ruled for ExxonMobil. The Third Circuit held that as a result of of the state court judgment, the Rooker-Feldman doctrine barred the suit. That doctrine was an offshoot of the federal law giving the U.S. Supreme Court sole authority to modify and prohibiting a federal district court from exercising appellate jurisdiction.

Question

Did the Rooker-Feldman doctrine bar a suit that was filed in federal district court before a state court ruled on the petitioner's related claims?

Media for Exxon Mobil Corporation v. Saudi Basic Industries Corporation

Audio Transcription for Oral Argument - February 23, 2005 in Exxon Mobil Corporation v. Saudi Basic Industries Corporation

Audio Transcription for Opinion Announcement - March 30, 2005 in Exxon Mobil Corporation v. Saudi Basic Industries Corporation

William H. Rehnquist:

The opinion of the court in Exxon Mobil Corporation versus Saudi Basic will be announced by Justice Ginsburg.

Ruth Bader Ginsburg:

This case concerns what is come to be known as the Rooker-Feldman doctrine applied by this Court only twice in 1923 in Rooker v. Fidelity Trust Company then 60 years later in District of Columbia Court of Appeals v. Feldman.

In Rooker, the plaintiffs who had suffered an adverse judgment in State court thereafter filed suit in Federal District Court alleging that the State Court judgment was unconstitutional.

Plaintiffs asked the Federal Court to declare the state judgment null and void.

In Feldman, two plaintiffs brought Federal Court actions after the District of Columbia’s Highest Court denied their petitions to waive a court rule requiring D.C. Bar applicants who have graduated from an accredited law school.

In both Rooker and Feldman, this Court emphasize that appellate jurisdiction to reverse or modify a State Court judgment is lodged exclusively in this Court.

The plaintiffs in Rooker and Feldman had litigated and lost in State Court; their subsequent federal complains invited Federal District Courts to declare the adverse State Court judgments invalid.

We held such federal suits impermissible.

The question we confront, does Rooker-Feldman cover the case at hand.

The parties Exxon Mobil and Saudi Basic Industries became involved in the dispute about royalty charges for licensing certain manufacturing technology.

Saudi Basic preemptively filed a lawsuit in Delaware State Court seeking a declaration that the royalties were proper.

Two weeks later, Exxon Mobil countersuit in Federal District Court in New Jersey seeking to hold Saudi Basic liable for royalty overcharges.

The State Court case proceeded to jury trial resulting in a verdict of over $400 million for Exxon Mobil.

Before trial took place in the State Court, the Federal District Court had denied Saudi Basic's motion to dismiss the parallel federal suit.

After the Delaware Jury verdict, Saudi Basic pursued the interlocutory appeal from the Federal District Court’s refusal to dismiss the federal action.

Responding to that appeal, the US Court of Appeals for the Third Circuit on its own motion invokes the Rooker-Feldman doctrine.

The Court of Appeals did not question the District Court's possession of subject matter jurisdiction at the outside of the suit but held its federal jurisdiction terminated when the Delaware Court ended judgment on the jury verdict.

We granted certiorari in view of the contingent in lower courts regarding the proper application of Rooker-Feldman.

The Rooker-Feldman doctrine, we hold today, is confined to cases of the kind from which the doctrine acquired its name.

Cases brought by State Court losers complaining of injuries caused by State Court judgments rendered before the District Court proceedings, commenced and inviting the District Court to reject those State Court judgments.

Rooker-Feldman does not otherwise override or supplant preclusion doctrine or augments this circumscribed doctrines that allow Federal Courts to stay or dismiss proceedings in deference to State Court actions.

When there is parallel state and federal litigation, as there is here, the entry of judgment in State Court while the federal suit is underway does not trigger the Rooker-Feldman doctrine.

Under the Full Faith and Credit Act, once the State Court adjudication is complete, disposition of the federal action would be governed by state preclusion law committee or abstention doctrines may sometime require or permit a Federal Court to stay or dismiss a federal action in favor of State Court litigation but Rooker-Feldman does not come into play to halt federal proceedings simply because a State Court reaches the finishing line first.

Exxon Mobil plainly has not repaired to Federal Court to undo the substantial Delaware judgment in its favor.

Rather, it appears Exxon Mobil filed its federal suit to protect itself in the event it lost in Delaware on grounds such as the state statute of limitations that might not preclude relief in the federal venue.

A protected action of that order is entirely proper.

The Rooker-Feldman doctrine did not deprive the Federal Court or jurisdiction at the outset of Exxon Mobil’s action and the doctrine did not emerge later to vanquish federal jurisdiction after Exxon Mobil prevails in Delaware.

Because the Third Circuit misperceived the narrow ground occupied by Rooker-Feldman, we reverse that court’s judgment.

The decision is unanimous.