Venezuela v. Helmerich & Payne International Drilling Company

PETITIONER: Bolivarian Republic of Venezuela, et al.
RESPONDENT: Helmerich & Payne International Drilling Company, et al.
LOCATION: U.S. District Court for the District of Columbia

DOCKET NO.: 15-423
DECIDED BY:
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: US ()
GRANTED: Jun 28, 2016
ARGUED: Nov 02, 2016

ADVOCATES:
Catherine M.A. Carroll - for respondents
Catherine E. Stetson - for petitioners
Elaine J. Goldenberg - for United States, as amicus curiae

Facts of the case

The Foreign Sovereign Immunities Act protects foreign sovereigns from suits in American courts unless one of a set of specifically enumerated exceptions applies. One of these exceptions is when the foreign sovereign takes U.S. property (the expropriation exception), and another is when the action of the foreign sovereign has direct effect on U.S. commercial activity (the commercial activity exception).

Oklahoma-based company Helmerich & Payne International Drilling Company owns a subsidiary that contracts with the Venezuelan state-owned corporation that controls the exploration, production, and exportation of oil in Venezuela. In 2007, the two companies executed contracts for the Venezuelan corporation to use Helmerich & Payne’s drilling rigs. By 2008, the unpaid debt from those contracts totaled more than $63 million, and when the debt was over $100 million in 2009, Helmerich & Payne announced it would not be renewing the contract and packed up its drills. Employees of the Venezuelan corporation, assisted by members of the Venezuelan National Guard blockaded the yards in which Helmerich & Payne was keeping its equipment, and then-President Hugo Chavez issued a Decree of Expropriation. Helmerich & Payne sued Venezuela and its state-owned corporation in federal district court under the expropriation and commercial activity exceptions to the FSIA. Venezuela moved to dismiss, and the district court granted the motion with respect to the expropriation claim but denied it with respect to the commercial activity claim. The U.S. Court of Appeals for the District of Columbia Circuit reversed and held that, because the expropriation claim was neither insubstantial nor frivolous, the district court should not have granted the motion to dismiss that claim.

Question

When determining whether a claim that alleges that a case falls under the expropriation exception to the Federal Sovereign Immunities Act should be dismissed, should a court only dismiss the claim if the allegations are determined to be “insubstantial” or “frivolous”?

Media for Venezuela v. Helmerich & Payne International Drilling Company

Audio Transcription for Oral Argument - November 02, 2016 in Venezuela v. Helmerich & Payne International Drilling Company

John G. Roberts, Jr.:

We'll hear argument first this morning in Case No. 15-423, Bolivarian Republic of Venezuela v. Helmerich & Payne International Drilling Company. Ms. Stetson.

Catherine E. Stetson:

Mr. Chief Justice, and may it please the Court: The exceptionally low Bell v. Hood pleading standard under which a plaintiff's claims will survive dismissal for lack of subject matter jurisdiction as long as they are not wholly insubstantial or frivolous has no application in a Foreign Sovereign Immunities Act.

Subject matter jurisdiction bespeaks the court's power to decide a case, and before a court in the United States may exercise that power over a foreign sovereign, it needs to decide that that sovereign is not entitled to immunity.

"Decide" comes from Section 1602 of Title 28.

That phrase "not entitled to immunity comes from Section 1330.

What that means in practice is what this Court has explained in Verlinden, which is that a court presented with a Foreign Sovereign Immunity Act claim against a sovereign must decide at this threshold of the litigation, must satisfy itself that jurisdiction exists.

Anthony M. Kennedy:

I take it there will be instances, or there could be instances in which the court finds that there is jurisdiction, that there is no immunity, and then as the case develops in the fact finding stages that, you know, I've made a mistake; there's immunity here.

That could happen.

Catherine E. Stetson:

It could conceivably happen, Your Honor.

It generally does not happen for a couple reasons.

The first is that immunity is -- unless it is pressed by the sovereign at the beginning, it's considered to be waived.

So in circumstances where a sovereign, for example, doesn't raise a factual challenge --

Anthony M. Kennedy:

In my -- my hypothetical, it is raised; the judge rules against it, and especially in a case like this where there's, I think, a foreign subsidiary that's incorporated in domestic -- domestically in Venezuela, then there might be questions of the extent of overlapping management and so forth. It seems to me that that might -- if there's an initial finding of no immunity, the judge might, in the course of hearing the case on the merits that, you know, really there's immunity here.

That's -- that's possible.

Catherine E. Stetson:

It's certainly possible.

I think the more problematic issue is what happened here, though, which is that the D.C. Circuit completed --

Anthony M. Kennedy:

This is the opposite, where they didn't know.

Catherine E. Stetson:

That's -- that's precisely right, that the D.C. Circuit here concluded that because there might be not be immunity, what it said was at this stage of the litigation, it was permitting the claims against the sovereign to go forward.

Ruth Bader Ginsburg:

I think -- I think what you have described sounds to me like the 12(b)(6) standard, that is have you stated a claim that would entitle you to relief under this statute.

So to the extent that I comprehend your position, it's -- there's no counterpart to 12(b)(1)

There's no discrete 12(b)(1), 12(b)(6) standard.

It's one and the same. It's the 12(b)(6) standard.

Catherine E. Stetson:

Well, Justice Ginsburg, I'm not -- I'm not sure that this case blends those two standards, and that's -- in that way.

Here's what I'd say.

With respect to a 12(b)(1) motion to dismiss for lack of subject matter jurisdiction pursuant to the FSIA, what the court is required to do then is to turn to what this Court has described as all of those substantive, detailed Federal standards that are essentially baked into the jurisdictional standard itself.

So for purposes of establishing jurisdiction in a FSIA case, you certainly would bring, and we did bring, that motion under section 12(b)(1)

But what you do then is not just to apply this loose Bell v. Hood standard.

What you do is you apply the relevant substantive Federal standards that are included in those jurisdictional provisions. Now --

Ruth Bader Ginsburg:

And how did -- and how would that differ from a 12(b)(6) inquiry?

Catherine E. Stetson:

It differs in a number of different respects, most importantly procedurally.