SAMUEL CONTI, District Judge.
Now before the Court is Defendants Chevron Corporation ("Chevron") and Chevron USA, Inc.'s ("CUSA") motion to dismiss Plaintiffs' Complaint. ECF No. 1 ("Compl."). The motion is fully briefed
On January 16, 2012, an explosion occurred on the KS Endeavor, an offshore rig drilling for natural gas in the North Apoi Field off of the coast of Nigeria. The explosion caused a fire that burned for forty-six days. Plaintiffs are persons who reside in the Niger Delta region of southern Nigeria.
Defendants are three American corporations: Chevron Corporation ("Chevron"), Chevron Investments, Inc. ("CII"), and Chevron U.S.A., Inc. ("CUSA") (collectively "Defendants").
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) "tests the legal sufficiency of a claim."
Plaintiffs claim that Defendants are liable for CNL's actions. However, "[i]t is a general principle of corporate law deeply ingrained in our economic and legal systems that a parent corporation . . . is not liable for the acts of its subsidiaries."
Plaintiffs first argue that Defendants are liable for CNL's actions under the alter ego doctrine. This doctrine allows courts to pierce the corporate veil and hold a corporation's owners liable for the corporation's acts. A corporation may be held liable as the alter ego of another corporation if (1) there is such unity of interest and ownership that the separate personalities of the two entities no longer exist and (2) failure to disregard the corporate form would cause an inequitable result.
Plaintiffs have pleaded a number of factual allegations relevant to the unity of interest and ownership factor. The Court notes, however, that Plaintiffs refer to Chevron, CII, CUSA, and CNL collectively as "Chevron" throughout the Complaint. Compl. ¶ 2. It is consequently impossible to tell whether allegations refer to a defendant, multiple defendants, or CNL (which is not a party). As a result, it is extremely difficult to determine whether the Complaint states a plausible claim against any one defendant. Plaintiffs also note that any reference made in the Complaint to any conduct committed by Chevron, CII, CUSA, or CNL shall be deemed to mean the conduct of all defendants.
Plaintiffs claim that CUSA "employs various U.S.-based personnel who are responsible for providing oversight, supervision and planning for the business operations of CNL . . . ."
In addition to these sound factual allegations, Plaintiffs add a number of remarkably convoluted disjunctive accusations. For example, Plaintiffs allege that "Chevron Corp. and/or Chevron Investments, and/or CUSA commissioned the acts complained of and/or authorized CNL in the commission of the acts alleged herein, and/or ratified the acts of CNL alleged herein."
The facts in Plaintiffs' complaint cannot support alter ego liability. The few sufficiently detailed facts relate only to CUSA and resemble those standard consequences of corporate ownership inadequate to demonstrate an alter ego. Even if those facts were sufficient to demonstrate the unity of interest and ownership required, Plaintiffs must also plead facts indicating that failure to disregard the corporate form would result in injustice. To state claims against Defendants as alter egos of CNL, Plaintiffs must plead more facts with much more specificity than they do in this first iteration of their complaint. Because Plaintiffs have failed to plead sufficient facts to render Defendants liable for CNL's actions, they fail to state a claim for which relief may be granted.
Plaintiffs also claim that Defendants are liable for CNL's acts because CNL was Defendants' agent. Corporate agency arises most frequently in the context of assessing minimum contacts for jurisdictional purposes, rather than liability.
A corporate subsidiary is the agent of its parent if "the nature and extent of the control exercised over the subsidiary by the parent is so pervasive and continual that the subsidiary may be considered nothing more than an agent or instrumentality of the parent, notwithstanding the maintenance of separate corporate formalities . . . ."
The Court finds that Plaintiffs have failed to plead facts sufficient to give rise to agency liability for any defendant. Plaintiffs have not alleged any facts indicating that Defendants took over CNL's day-to-day operations. Plaintiffs need not produce evidence at this stage in the litigation, but they must plead facts which, if true, would create liability for each defendant they name. In this case, that means facts demonstrating that each defendant exercised the requisite control over CNL and that CNL acted within the scope of its agency or that Defendants ratified its actions. Plaintiffs fail to state a claim that renders Defendants liable as principals of CNL.
Defendants next argue that Plaintiffs have failed to plead an injury in fact adequate to confer standing. "To establish the irreducible constitutional minimum of standing, a plaintiff invoking federal jurisdiction must establish injury in fact, causation, and a likelihood that a favorable decision will redress the plaintiff's alleged injury."
In their complaint, Plaintiffs allege that they have suffered (1) "losses to their livelihood; environmental disaster impacting upon food and water supplies; health problems," Compl. ¶ 3; (2) significant economic damages and loss of business,
Defendants are correct that the Complaint fails to support these conclusory allegations with sufficient facts. There is no discussion whatsoever of how a fire on an offshore rig damaged the businesses, livelihoods, property, or health of Dr. Ogala or any of the other plaintiffs in this case. Plaintiffs make claims about damage to fish, livestock, contamination of water and soil, and "general health breakdown."
The named plaintiffs in this action purport to represent some 65,000 other members of the Nigerian communities affected by the explosion and fire. Compl. ¶¶ 4, 9. Defendants argue that the named plaintiffs have no standing to assert claims on behalf of other members of their communities. Chevron MTD at 16-17. Plaintiffs respond by explaining that it is common practice in Nigeria for large groups of plaintiffs to sign onto a lawsuit by executing powers of attorney. Ogala Opp. at 17-18. Regardless of the regular practice in Nigeria, the Federal Rules of Civil Procedure require that an action "be prosecuted in the name of the real party in interest" unless the named party is an executor, administrator, guardian, bailee, trustee, party to a contract in another's benefit, or other party authorized by statute to bring suit on behalf of someone else. Fed. R. Civ. P. 17(a)(1). Plaintiffs have standing to seek redress for injuries done to them, "but may not seek redress for injuries done to others."
Alternatively, Plaintiffs may claim to represent a class under Rule 23. Plaintiffs here never expressly purport to represent a class, though they claim the Class Action Fairness Act as an alternative basis for reaching the amount-in-controversy threshold for diversity jurisdiction. Ogala Opp. at 3. The local rules in this District require actions that seek to be maintained as a class action to bear the legend "Class Action" on the first page. Civ. L. R. 3-4(a)(5). No such legend appears on Plaintiffs' Complaint, nor do Plaintiffs claim anywhere in the Complaint to represent a class. As a result, the Court must conclude that this is not a purported class action. The Court finds that the named plaintiffs do not have standing to represent other members of their communities based on this Complaint. Any claims asserted in the Complaint on behalf of unnamed non-parties are DISMISSED with leave to amend.
Plaintiffs state that this Court has jurisdiction over their claims under both federal question and diversity jurisdiction. Compl. ¶ 7. Federal question jurisdiction exists for "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Diversity jurisdiction exists where the amount in controversy exceeds $75,000 and the action is between citizens of a foreign state and citizens of a U.S. state.
Defendants argue that none of Plaintiffs' claims arise under federal law, and so federal question jurisdiction does not exist. Plaintiffs do not dispute this. All of their claims arise under California law or Nigerian law. The Court finds that it does not have federal question jurisdiction over Plaintiffs' claims.
Defendants also argue that the Court lacks diversity jurisdiction. Plaintiffs are all Nigerian citizens, and Defendants are all American corporations. Compl. ¶¶ 9-12. Therefore, this is a lawsuit between citizens of a foreign state and citizens of U.S. states, and complete diversity exists. However, Defendants contend that Plaintiffs cannot meet the $75,000 amount-in-controversy requirement. Chevron MTD at 15. A federal court lacks jurisdiction over an action between diverse parties only if it appears "to a legal certainty" that the plaintiff cannot recover the amount claimed.
Plaintiffs claim a sum of $5 billion in damages. Compl. ¶ 9. Defendants argue that Plaintiffs cannot aggregate their claims to reach the $75,000 threshold and that $75,000 per plaintiff is an implausible damages estimate because the GDP per capita in the region of Nigeria where Plaintiffs live is $2,544. Chevron MTD at 15. Plaintiffs insist that their damages exceed $75,000. Ultimately, the Court cannot assess the reasonableness of Plaintiffs' damages estimates because of the lack of specificity in their Complaint. Due to that defect in the pleadings, and the fact that the Court dismisses this action on other grounds, the Court declines to rule on the amount-in-controversy issue at this time.
As an alternate argument, Plaintiffs argue that diversity jurisdiction exists under the Class Action Fairness Act ("CAFA") of 2005. Ogala Opp. at 3. CAFA provides for federal diversity jurisdiction over class actions in which the amount in controversy exceeds $5 million, any member of the plaintiff class is a foreign citizen, and any defendant is a citizen of a U.S. state. 28 U.S.C. § 1332(d). CAFA defines a class action as "any action filed under rule 23 of the Federal Rules of Civil Procedure."
Plaintiffs' fourth cause of action is nuisance. The complaint does not specify whether Plaintiffs bring this claim under Nigerian law or California law, but both parties analyze the claim under California law.
Under California law, a private person may bring a claim for public nuisance only if the injury he suffers is different in kind from that suffered by public at large. Cal. Civ. Code § 3493 ("A private person may maintain an action for a public nuisance, if it is specially injurious to himself, but not otherwise."). As discussed previously, the Complaint alleges only vague categories of injuries that apply broadly to Plaintiffs' communities. There is no discussion of any specific injury to the named Plaintiffs individually. Therefore, the Complaint fails to state a claim for public nuisance.
"A private nuisance cause of action requires the plaintiff to prove an injury specifically referable to the use and enjoyment of his or her land."
As Defendants point out, Plaintiffs list negligent infliction of emotional distress as a cause of action in the caption of their Complaint but fail to plead it anywhere in the Complaint's body. In their opposition brief, Plaintiffs do not suggest that negligent infliction of emotional distress is a distinct cause of action. Nor should they: "[T]here is no independent tort of negligent infliction of emotional distress" under California law.
For the foregoing reasons, the Court GRANTS Defendants' motion to dismiss. Plaintiffs' Complaint is DISMISSED with leave to amend. Plaintiffs shall file an amended complaint that addresses the concerns identified above within thirty (30) days of the signature date of this Order. Failure to do so may result in dismissal of this action with prejudice.