Filed: Sep. 25, 2020
Latest Update: Sep. 25, 2020
Summary: Case: 19-40899 Document: 00515578820 Page: 1 Date Filed: 09/25/2020 REVISED United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit FILED September 8, 2020 No. 19-40899 Lyle W. Cayce Clerk William J. Adams; Ray Aikens, Sr.; Kathleen J. Aikens; Linda Pearl Akridge; Ronald W. Akridge; et al, Intervenor Plaintiffs—Appellants, versus Alcolac, Incorporated; Rhodia Incorporated, Defendants—Appellees. Appeal from the United States District Court for the Souther
Summary: Case: 19-40899 Document: 00515578820 Page: 1 Date Filed: 09/25/2020 REVISED United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit FILED September 8, 2020 No. 19-40899 Lyle W. Cayce Clerk William J. Adams; Ray Aikens, Sr.; Kathleen J. Aikens; Linda Pearl Akridge; Ronald W. Akridge; et al, Intervenor Plaintiffs—Appellants, versus Alcolac, Incorporated; Rhodia Incorporated, Defendants—Appellees. Appeal from the United States District Court for the Southern..
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Case: 19-40899 Document: 00515578820 Page: 1 Date Filed: 09/25/2020
REVISED
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
September 8, 2020
No. 19-40899 Lyle W. Cayce
Clerk
William J. Adams; Ray Aikens, Sr.; Kathleen J. Aikens;
Linda Pearl Akridge; Ronald W. Akridge; et al,
Intervenor Plaintiffs—Appellants,
versus
Alcolac, Incorporated; Rhodia Incorporated,
Defendants—Appellees.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 3:18-CV-185
Before King, Stewart, and Southwick, Circuit Judges.
Per Curiam:
The plaintiffs are primarily former U.S. military personnel who were
injured by Saddam Hussein’s use of mustard gas during the Gulf War. The
plaintiffs seek to hold Alcolac, Inc. liable for these injuries because, they
allege, it illegally provided the government of Iraq with thiodiglycol, which
was then used to create mustard gas. Previous litigation has already
foreclosed all of the plaintiffs’ claims except two: (1) a claim under the Justice
Against Sponsors of Terrorism Act and (2) a civil-conspiracy claim under
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No. 19-40899
Texas law. We hold that the first claim fails because the statute does not
provide a cause of action for injuries caused by acts of war, and the second
fails because the plaintiffs have not demonstrated that Alcolac or anyone else
committed a tort in furtherance of the alleged conspiracy. Accordingly, we
AFFIRM the district court’s grant of summary judgment to Alcolac.
I.
A.
Thiodiglycol (TDG) is a chemical with a variety of uses. It is used in
the textile industry and to manufacture ink, but it can also be used to produce
mustard gas. In the 1980s, Alcolac, an American chemical manufacturer,
produced TDG and, through a wholly owned subsidiary, exported it. 1
Because of TDG’s potential for misuse, its exportation to Iraq was legally
prohibited.
As relevant here, in 1987 and 1988, Alcolac sold 538 tons of TDG that
its subsidiary then exported to Belgium and the Netherlands in four
shipments. Although the buyer said that the TDG would be used in the textile
industry in Western Europe, the TDG was subsequently transshipped to
Jordan, and then to Iraq. According to the plaintiffs, Alcolac “knew or had
reason to know that these massive shipments of TDG were likely bound for
a prohibited destination.”
In 1991, U.S. troops, including the plaintiffs, entered Iraq as part of
Operation Desert Storm. There, the plaintiffs allege that they were exposed
to, and injured by, mustard gas.
1
Alcolac disputes the extent to which it, rather than its subsidiary, can be held
liable. Because we affirm on other grounds, we do not reach this issue.
2
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B.
The plaintiffs filed this case in Texas state court in 1994, seeking to
hold Alcolac liable for their mustard-gas-related injuries via products-liability
and negligence claims. See Alarcon v. Alcolac Inc., 488 S.W.3d 813, 816 (Tex.
App.—Houston [14th Dist.] 2016, pet. denied). In 2011, Alcolac chose one
plaintiff as a bellwether and sought summary judgment against him. See
id.
The trial court granted the motion, and the Texas Court of Appeals affirmed.
Id. at 816-17, 829. The basis for the ruling was causation: the plaintiff had
failed to present sufficient evidence that the mustard gas to which he was
allegedly exposed “was manufactured with TDG supplied by Alcolac.”
Id. at
818.
Before Alcolac could move for summary judgment against the rest of
the plaintiffs, they amended their complaint, adding two new claims. First,
they alleged that “Alcolac and agents of the Iraqi government conspired with
each other to knowingly violate provisions of the Export Administration Act
. . . to accomplish the unlawful sale and shipment of large quantities of TDG
to Iraq.” Second, they alleged that “Alcolac knowingly and/or recklessly
sold large quantities of TDG to agents of the government of Iraq” in violation
of the Justice Against Sponsors of Terrorism Act (JASTA).
With a federal cause of action now in play, Alcolac removed the case
to federal district court. Alcolac indicated that it would again seek summary
judgment, and the district court obtained stipulations from the plaintiffs that
their original products-liability and negligence claims were no longer viable
in light of the Texas Court of Appeals’ decision. Accordingly, only the two
new claims, plus a derivative claim under the Texas Uniform Fraudulent
Transfer Act (TUFTA), remained to be decided.
The magistrate judge recommended granting Alcolac’s motion for
summary judgment. First, the magistrate judge observed that JASTA does
3
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not allow claims “for injury or loss by reason of an act of war,” 18 U.S.C.
§ 2336(a), which would include the plaintiffs’ Gulf War injuries. Second, the
magistrate judge concluded that the civil-conspiracy claim was not viable
because, under Texas law, such a claim must be based on the defendant’s
participation in actionable conduct, and the plaintiffs had merely alleged a
violation of the Export Administration Act, which does not give rise to a
private cause of action. 2 The district court adopted the magistrate judge’s
report and recommendation in full and granted the motion for summary
judgment, and this appeal followed.
II.
“This Court reviews a grant of summary judgment de novo and applies
the same standard as the district court.” Lyles v. Medtronic Sofamor Danek,
USA, Inc., 871 F.3d 305, 310 (5th Cir. 2017). “The court shall grant summary
judgment if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” FED.
R. CIV. P. 56(a). “‘Where the burden of production at trial ultimately rests
on the nonmovant, the movant must merely demonstrate an absence of
evidentiary support in the record for the nonmovant’s case.’ The nonmovant
must then ‘come forward with specific facts showing that there is a genuine
issue for trial.’”
Lyles, 871 F.3d at 310-11 (citation omitted).
We “view the evidence in the light most favorable to the nonmovant
and draw all reasonable inferences in the nonmovant’s favor,” Star Fin.
Servs., Inc. v. Cardtronics USA, Inc., 882 F.3d 176, 179 (5th Cir. 2018), but
“[w]e may affirm a grant of summary judgment ‘based on any rationale
presented to the district court for consideration,’” Nola Spice Designs, LLC
2
The magistrate judge also concluded that the fraudulent-transfer claims failed for
lack of a successful underlying claim.
4
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v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015) (quoting Terrebonne
Par. Sch. Bd. v. Mobil Oil Corp.,
310 F.3d 870, 887 (5th Cir. 2002)).
III.
A.
Under JASTA, “liability may be asserted as to any person who aids
and abets, by knowingly providing substantial assistance, or who conspires
with [a] person who commit[s] . . . an act of international terrorism.” Pub. L.
No. 114-222, § 4, 130 Stat. 852, 854 (2016) (codified at 18 U.S.C.
§ 2333(d)(2)). “No action shall be maintained under section 2333,”
however, “for injury or loss by reason of an act of war.” § 2336(a). In this
context, an “act of war” is defined as “any act occurring in the course of—
(A) declared war; (B) armed conflict, whether or not war has been declared,
between two or more nations; or (C) armed conflict between military forces
of any origin.” 18 U.S.C. § 2331(4).
Though the plaintiffs admit that their mustard-gas injuries occurred
during the Gulf War, a military conflict between the United States, its allies,
and Iraq, they argue that Iraq’s use of mustard gas “could not be an act of
war because it grossly violated the basic norms and rules established by the
laws of war.” Instead, they argue, Iraq’s use of mustard gas qualifies as
“international terrorism,” because it was used to “‘intimidate or coerce a
civilian population’ or [to] influence ‘the policy of a government.’” See
§ 2331(1).
This argument is far removed from the statute’s plain text. Neither
§ 2336(a) nor § 2331(4) contains any suggestion that the act-of-war exception
applies only to acts of war that conform to international law. See Stutts v. De
Dietrich Grp., No. 03-CV-4058, 2006 WL 1867060, at *4 (E.D.N.Y. June 30,
2006) (concluding that the act-of-war exception applied to use of chemical
weapons on U.S. troops during Gulf War). But see Estate of Klieman v.
5
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Palestinian Authority, 424 F. Supp. 2d 153, 166 (D.D.C. 2006) (“As a matter
of law, an act that violates established norms of warfare and armed conflict
under international law is not an act occurring in the course of armed
conflict.”). Instead, the exception broadly covers “any act occurring in the
course of . . . armed conflict, whether or not war has been declared.”
§ 2331(4) (emphasis added). And there can be no doubt that the Gulf War
was an “armed conflict.” Accordingly, the JASTA claim is foreclosed
because the plaintiffs’ injuries occurred “by reason of an act of war.”
§ 2336(a). 3
B.
“In resolving questions of Texas law, we rely on the authoritative
decisions of the Texas Supreme Court.” Tummel v. Milane, 787 F. App’x
226, 227 (5th Cir. 2019). Under Texas law, a civil conspiracy requires:
(1) a combination of two or more persons; (2) the persons seek
to accomplish an object or course of action; (3) the persons
reach a meeting of the minds on the object or course of action;
(4) one or more unlawful, overt acts are taken in pursuance of
the object or course of action; and (5) damages occur as a
proximate result.
First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 222
(Tex. 2017) (citing Tri v. J.T.T.,
162 S.W.3d 552, 556 (Tex. 2005)). Proving
a conspiracy means that each of the defendants can be held liable for “all acts
done by any of the conspirators in furtherance of the unlawful combination.”
Agar Corp. v. Electro Circuits Int’l, LLC,
580 S.W.3d 136, 140 (Tex. 2019)
(citation omitted).
3
As a fallback position, the plaintiffs also suggest that they may have been injured
not in attacks on U.S. troops but when Hussein used mustard gas on Iraqi civilians. The
plaintiffs cite no evidence in the record to support this proposition, however.
6
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But civil conspiracy is not an independent tort, so “the agreement
itself” does not create a cause of action. Id. at 141-42
(quoting Carroll v.
Timmers Chevrolet, Inc.,
592 S.W.2d 922, 925 (Tex. 1979)). Rather, a plaintiff
must demonstrate that he has been injured by some “act done pursuant to
the common purpose” of the conspiracy.
Id. at 141 (quoting
Carroll, 592
S.W.2d at 925). In other words, damages “proximately caused by the
conspiracy itself” are not enough; the plaintiff must show “some tortious act
committed by a co-conspirator pursuant to the conspiracy.”
Id. at 141-42
;
accord
Carroll, 592 S.W.2d at 928 (“An alleged conspirator is not liable for an
act not done in pursuance of the common purpose of the conspiracy.”).
Though the complaint alleges a conspiracy to violate the Export
Administration Act, 4 the plaintiffs “do not allege that the violation of the
EAA is the underlying tort claim that caused them damages.” And with good
reason. Although the alleged EAA violations may have proximately caused
the plaintiff’s injuries, it is undisputed that the EAA does not provide a
private right of action. See Coleman v. Alcolac, Inc., 888 F. Supp. 1388, 1397
(S.D. Tex. 1995) (recognizing that “no private cause of action exists under
the Export Administration Act”); Bulk Oil (Zug) A.G. v. Sun Co., 583 F.
Supp. 1134, 1143 (S.D.N.Y. 1983) (same), aff’d mem.,
742 F.2d 1431 (2d Cir.
1984).
Instead, the plaintiffs argue that the EAA violations led to Iraq’s use
of mustard gas, which they claim constituted battery. 5 But even if that is so,
4
Specifically, the complaint alleges that Alcolac “entered into an agreement with
agents of the government of Iraq to ship large quantities of TDG in late 1987 and early 1988.
. . . Alcolac and agents of the Iraqi government conspired with each other to knowingly
violate provisions of the Export Administration Act.”
5
We assume, without deciding, that the plaintiffs’ complaint adequately alleges
battery as the tort underlying their civil-conspiracy claim.
7
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the plaintiffs have provided no evidence that Alcolac conspired to commit
that battery. Cf. Chu v. Hong, 249 S.W.3d 441, 446 (Tex. 2008) (“Chu could
only be liable for conspiracy if he agreed to the injury to be accomplished;
agreeing to the conduct ultimately resulting in injury is not enough.”).
Although in their complaint the plaintiffs asserted that Alcolac “acted to aid
and abet Iraq in its efforts to obtain chemical weapons,” the plaintiffs now
concede that “Alcolac may not have known” that the TDG was destined for
“Iraq and Saddam Hussein specifically.” Consequently, any conspiracy
involving Alcolac could not have had as its “common purpose” the provision
of mustard gas to Iraq, much less the use of mustard gas by Iraq in a war that
had not yet begun. Instead, at most, the evidence demonstrates Alcolac’s
participation in a conspiracy to illegally export large quantities of TDG in
exchange for money. Because the plaintiffs have identified no tortious
conduct involved in achieving that object, the plaintiffs have failed to
establish the elements of civil conspiracy. Cf.
Tri, 162 S.W.3d at 557
(“[M]erely proving a joint ‘intent to engage in the conduct that resulted in
the injury’ is not sufficient to establish a cause of action for civil conspiracy.”
(quoting Juhl v. Airington,
936 S.W.2d 640, 644 (Tex. 1996))).
The plaintiffs argue that it was foreseeable that the exported TDG
would be turned into mustard gas by some “nefarious character” and that it
would then be “used for terrorist activity.” Perhaps so, but that misses the
point. The question is not whether the plaintiffs’ battery was a foreseeable
result of the alleged conspiracy but whether the battery was “done in
pursuance of the common purpose of the conspiracy,” Carroll, 592 S.W.2d
at 928. 6 Because there is no evidence of a common purpose beyond the initial
6
For this reason, the plaintiffs’ reliance on Halberstam v. Welch, 705 F.2d 472
(D.C. Cir. 1983), is misplaced. That case recognizes simply that “a conspirator can be liable
even if he neither planned nor knew about the particular overt act that caused injury, so long
8
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sale and exportation of the TDG, any eventual use of mustard gas on the
plaintiffs, even if foreseeable, was not in furtherance of the alleged
conspiracy. The plaintiffs’ conspiracy claim thus fails for lack of an
underlying tort.
C.
Under TUFTA, “an asset transferred with ‘actual intent to hinder,
delay, or defraud’ a creditor may be reclaimed for the benefit of the
transferor’s creditors.” Janvey v. Golf Channel, Inc., 487 S.W.3d 560, 562
(Tex. 2016) (quoting TEX. BUS. & COM. CODE § 24.005(a)(1)). This statute
is “intended to prevent debtors from defrauding creditors by moving assets
out of reach” and therefore “provides a comprehensive statutory scheme
through which a creditor may seek recourse for a fraudulent transfer of assets
or property.”Sargeant v. Al Saleh,
512 S.W.3d 399, 411-12 (Tex. App.—
Corpus Christi 2016, orig. proceeding [mand. denied]). A “creditor” is an
individual “who has a claim,” and a “claim” requires “a right to payment or
property.” TEX. BUS. & COM. CODE § 24.002(3)-(4).
The plaintiffs argue only that because they “have viable underlying
claims, the Court should also reverse the Trial Court[’s] order dismissing
[their] claims under TUFTA.” Because the plaintiffs’ JASTA and civil-
conspiracy claims fail, however, the plaintiffs do not have valid underlying
claims. Accordingly, their TUFTA claims fail as well.
IV.
For the foregoing reasons, we AFFIRM the judgment of the district
court.
as the purpose of the act was to advance the overall object of the conspiracy.” Id. at 487 (emphasis
added).
9
