E. GRADY JOLLY, Circuit Judge:
This case involves two class actions brought by gasoline retailers against oil production companies (most of which are owned in whole or in part by OPEC member nations), alleging antitrust violations. After consolidation of the suits for disposition
Because the political question doctrine is jurisdictional, we address it first. When we do so, we discern that the complaints before us effectively challenge the structure of OPEC and its relation to the worldwide production of petroleum. Convinced that these matters deeply implicate concerns of foreign and defense policy, concerns that constitutionally belong in the executive and legislative departments, we conclude that we lack jurisdiction to adjudicate the claims. We hold alternatively that the complaints seek a remedy that is barred by the act of state doctrine, that is, an order and judgment that would interfere with sovereign nations' control over their own natural resources. Accordingly, we affirm the judgment dismissing the complaints.
Several U.S. gasoline retailers and other purchasers of petroleum products allege Sherman Act and Clayton Act violations by oil production companies. The Spectrum Appellants
The claims raised by Appellants challenge the traditional structure of international energy policy. The global economy is driven by petroleum-based products, and countries with bountiful petroleum resources have attempted to secure the best market prices for their crude oil. With this goal in mind, several oil-rich nations formed the Organization of Petroleum Exporting Countries ("OPEC") in the 1960s.
In the years since OPEC's inception, its members have developed nationally owned oil production companies, and these companies have formed and acquired subsidiaries, many of which operate within the United States. OPEC member nations attend periodic meetings at the organization's headquarters in Vienna, Austria to formulate policy. In recent years, some privately owned corporations have begun attending OPEC meetings. The Appellants in this case allege that the national oil companies, as well as their subsidiaries, have conspired with OPEC member nations to fix prices of crude oil and refined petroleum products ("RPPs") in the United States, primarily by limiting crude-oil production—that is, by controlling the spigot.
The Spectrum Appellants accuse Citgo of conspiring with OPEC member nations "to raise, fix, and stabilize the price of gasoline and other oil-based products in the United States." Citgo is wholly owned by Venezuela, through PDVSA, the national oil company of Venezuela. The Spectrum Complaint asserts three counts against Citgo under § 1 of the Sherman Act, 15 U.S.C. § 1, and § 4 of the Clayton Act, 15 U.S.C. § 15.
The Spectrum Complaint alleges that OPEC member nations have agreed to adjust or cap production of oil on numerous occasions in order to maintain oil prices within an agreed price range. The Spectrum Complaint also alleges that the conspiracy is commercial in nature, rather than political or sovereign, as evidenced by the fact that OPEC member nations have acquired refineries and distribution facilities in key markets, including the United States.
The Consolidated Appellants accuse all the Appellees of "participat[ing] in a conspiracy to fix, raise, maintain and stabilize the prices of refined petroleum products sold . . . in the United States." The Consolidated Appellants contend that this constitutes a per se violation of § 1 of the Sherman Act and § 4 of the Clayton Act. They also seek relief under § 16 of the Clayton Act, including actual and treble damages and costs of suit, as well as injunctive relief—including the foreign-based companies' divestiture of their U.S. subsidiaries. 15 U.S.C. § 26.
The Consolidated Complaint alleges that the price-fixing conspiracy has been implemented principally through (1) agreements between Appellees to restrain the output of crude oil, and (2) agreements between Appellees to restrict operating capacity of crude-oil refineries, some of which are located within the United States. The Consolidated Complaint is more circumspect than the Spectrum Complaint in its discussion of OPEC and its members, declining to directly name the organization or its members as coconspirators. However, the Consolidated Complaint gives a detailed description of the formation and function of OPEC as background for its allegations as to the alleged conspiracy, and it frequently refers to OPEC meetings and statements in a list of actions that purportedly demonstrate knowing participation in the conspiracy by Appellees.
The Appellees moved to dismiss both complaints on several grounds. Primarily, they argued that dismissal was proper under Federal Rule of Civil Procedure 12(b)(1), because the claims pose nonjusticiable political questions, and under Rule 12(b)(6), because Appellants failed to state a claim for relief under the act of state doctrine.
The district court granted Appellees' motion to dismiss both complaints on the act of state and political question grounds. It considered both motions under Rule 12(b)(6). Generally, the district court characterized the complaints as challenging "the decisions of sovereign states to restrict the production of crude oil located within their own territories." In re Refined Petroleum Prods. Antitrust Litig., 649 F.Supp.2d 572, 597 (S.D.Tex.2009). According to the district court, the Spectrum Complaint alleges that Citgo "facilitated,
As to the Consolidated Complaint, the district court noted that unlike the Spectrum Complaint—which expressly refers to OPEC and its members as coconspirators in the alleged conspiracy—the Consolidated Complaint is "artfully worded to limit reference to the actions performed by the sovereign members of the conspiracy. . . [and] minimizes its description of the acts performed by the conspiracy's sovereign members." Id. at 586. However, the district court ultimately concluded that the specific factual allegations of the Consolidated Complaint also show that the alleged price-fixing is caused by the production decisions of the sovereign members of the conspiracy, and therefore the pleaded conspiracy "consists of agreements entered by foreign sovereign states to limit their production of crude oil" and "the actions attributed to the named defendants are actions that merely facilitate, enable, and assist the foreign sovereign state members of the conspiracy." Id. at 587.
Accordingly, the district court held that both complaints required the court to sit in judgment on the decisions and agreements reached by the foreign sovereigns regarding the production of crude oil within their own territories, an inquiry squarely barred by the act of state doctrine. On the question whether the complaints pose a nonjusticiable political question, the district court found that "the adjudication of claims that require the court to determine the legality of crude oil production decisions of foreign sovereigns would express a lack of respect for the Executive Branch because of its longstanding foreign policy that issues relating to crude oil production by foreign sovereigns be resolved through intergovernmental negotiation." Id. at 597. The district court noted in particular that the United States has never sought antitrust sanctions against any oil-producing countries.
The parties vigorously contest whether the district court correctly portrayed the factual allegations of the complaints. As noted above, the district court read both complaints as "challeng[ing] the decisions
We agree with the district court that both the Spectrum and Consolidated Appellants' complaints allege an overarching conspiracy between OPEC member nations to fix the price of crude oil and RPPs in the United States. Both complaints allege that this conspiracy is carried out through oil production companies (most of which are wholly owned by sovereign nations) and their subsidiaries. The Spectrum Complaint focuses solely on crude-oil production limits as the method used to implement the alleged price-fixing conspiracy; the Consolidated Complaint, in addition to alleging a production conspiracy, includes some allegations that refining decisions were also used to implement the conspiracy. The Consolidated Complaint names Lukoil, a privately traded Russian oil company and its subsidiaries, and Motiva, owned half by Saudi Refining and half by Shell Oil Corporation, in addition to national oil companies and their wholly owned subsidiaries.
The Consolidated Appellants argue that the district court erred by characterizing their complaint as alleging a conspiracy among sovereign nations to fix prices via production limits, with the role of the named defendants limited to facilitation. They argue that the Consolidated Complaint alleges that commercial corporations, rather than governments, have taken over the production of crude oil, and that the district court failed to view the complaint in the light most favorable to them by ignoring these allegations. However, we agree with the district court that the core of the alleged conspiracy, as is true of the Spectrum Complaint, consists of agreements entered into by foreign sovereign states to limit production of crude oil. While the Consolidated Complaint does, in some places, allege that oil production companies—specifically, PDVSA, Saudi Aramco, Lukoil, and their subsidiaries— make the ultimate decisions about the volume of crude oil produced, the Complaint is internally inconsistent on this point, as the district court noted.
Moreover, the Consolidated Appellants have failed to allege an independent conspiracy based on refining decisions. The Complaint asserts that
We thus agree with the district court's characterization of both complaints. Appellants allege an overarching conspiracy between sovereign nations to fix prices of crude oil and RPPs by limiting the production of crude oil. Although they allege that this primary conspiracy was facilitated through refining decisions, any allegations regarding price-fixing through manipulation of refining capacity are secondary to the overarching production-based conspiracy.
This court has jurisdiction over Appellants' timely appeal under 28 U.S.C. § 1291. The district court dismissed Appellants' claims on both act of state and political question grounds for failure to state a claim under Rule 12(b)(6). As discussed infra, we view a dismissal on grounds that this case presents a nonjusticiable political question as a Rule 12(b)(1) dismissal for lack of subject matter jurisdiction, while the act of state ruling is a Rule 12(b)(6) dismissal for failure to state a claim. This interpretation does not alter our standard of review, which is de novo on both grounds for dismissal. Lane v. Halliburton, 529 F.3d 548, 557 (5th Cir. 2008). In undertaking this review, "we take the well-pled factual allegations of the complaint as true and view them in the light most favorable to the plaintiff." Id.
For the reasons that follow, we hold that adjudication of Appellants' claims is jurisdictionally barred by the political question doctrine. While our political question analysis disposes of the case, it also reveals why Appellants' suit fails to state a claim under the act of state doctrine.
We first address whether this suit is prohibited by application of the political question doctrine. Reviewing the district court's decision de novo, we treat the Appellees' original motion to dismiss on political question grounds as a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. FED.R.CIV.P. 12(b)(1). We do so because "[t]he concept of justiciability," as embodied in the political question doctrine, "expresses the jurisdictional limitations imposed upon federal courts by the `case or controversy' requirement of Art[icle] III." Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208, 215, 94 S.Ct. 2925, 41 L.Ed.2d 706 (1974). See also Massachusetts v. EPA, 549 U.S. 497, 516, 127 S.Ct. 1438, 167 L.Ed.2d 248 (2007) (noting, in the light of the fact that "Article III of the Constitution limits federal-court jurisdiction to `Cases' and `Controversies,'" that it is "familiar learning that no justiciable `controversy' exists when
In contrast to political question claims, and "[u]nlike a claim of sovereign immunity, which merely raises a jurisdictional defense," the Supreme Court has stated that "the act of state doctrine provides foreign states with a substantive defense on the merits." Republic of Austria v. Altmann, 541 U.S. 677, 700, 124 S.Ct. 2240, 159 L.Ed.2d 1 (2004). See also Samantar v. Yousuf, ___ U.S. ___, 130 S.Ct. 2278, 2290, 176 L.Ed.2d 1047 (2010). Because the parties' political question arguments go to the predicate issue of jurisdiction, we address these arguments first. We agree with the district court that adjudication of the case is barred by application of the political question doctrine.
At its core, the political question doctrine "excludes from judicial review those controversies which revolve around policy choices and value determinations constitutionally committed for resolution to the halls of Congress or the confines of the Executive Branch." Japan Whaling Ass'n v. Am. Cetacean Soc., 478 U.S. 221, 230, 106 S.Ct. 2860, 92 L.Ed.2d 166 (1986). In Baker v. Carr, the Supreme Court set forth the seminal test for analyzing whether a claim presents a political question. 369 U.S. at 217, 82 S.Ct. 691. The Court outlined six factors, any one of which is sufficient to indicate the presence of a nonjusticiable political question:
Id. See also Vieth v. Jubelirer, 541 U.S. 267, 277, 124 S.Ct. 1769, 158 L.Ed.2d 546 (2004) (noting that Baker set forth "six independent tests for the existence of a political question"). These factors guide our analysis of the claims before us. Our review does not overlook the Supreme Court's observation in Baker that cases implicating foreign relations involve "a discriminating analysis of the particular question posed, in terms of the history of its management by the political branches, of its susceptibility to judicial handling in the light of its nature and posture in the specific case, and of the possible consequences
"The dominant consideration in any political question inquiry is whether there is a `textually demonstrable constitutional commitment of the issue to a coordinate political department.'" Saldano v. O'Connell, 322 F.3d 365, 369 (5th Cir.2003) (quoting Baker, 369 U.S. at 217, 82 S.Ct. 691). Appellants contend that this litigation does not involve a textual commitment to another branch, as the complaints merely require the court to interpret domestic antitrust law and apply it to conduct within the United States having only tangential effects on foreign affairs. In contrast, Appellees characterize the pleadings as seeking to condemn the actions of foreign sovereigns and interfere with the longstanding foreign policy of the political branches. Appellees point to several constitutional clauses as evidence that foreign policy is exclusively reserved to the political branches. In particular, they cite Article I, section 8, clause 3 ("The Congress shall have the Power . . . To regulate Commerce with foreign Nations . . . ."); Article II, section 2, clause 1 ("The President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States . . . ."); Article II, section 2, clause 2 ("[The President] shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur; and he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors [and] other public Ministers and Consuls . . . ."); and Article II, section 3 ("[The President] shall . . . receive Ambassadors and other public Ministers . . . .").
In general, "matters relating `to the conduct of foreign relations . . . are so exclusively entrusted to the political branches of government as to be largely immune from judicial inquiry or interference.'" Haig v. Agee, 453 U.S. 280, 292, 101 S.Ct. 2766, 69 L.Ed.2d 640 (1981) (quoting Harisiades v. Shaughnessy, 342 U.S. 580, 589, 72 S.Ct. 512, 96 L.Ed. 586 (1952)). "[T]he conduct of foreign relations is committed by the Constitution to the political departments of the Federal Government; . . . the propriety of the exercise of that power is not open to judicial inquiry." United States v. Pink, 315 U.S. 203, 222-23, 62 S.Ct. 552, 86 L.Ed. 796 (1942). This court has consistently "followed the command that matters implicating foreign relations and military affairs are generally beyond the authority or competency of a court's adjudicative powers." Lane, 529 F.3d at 559 (citing Farmer v. Mabus, 940 F.2d 921, 923 (5th Cir.1991); Occidental of Umm al Qaywayn, Inc. v. A Certain Cargo of Petroleum, 577 F.2d 1196, 1203 (5th Cir.1978)).
However, "it cannot of course be thought that `every case or controversy which touches foreign relations lies beyond judicial cognizance.'" Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 423, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964) (quoting Baker, 369 U.S. at 211, 82 S.Ct. 691). A general invocation of "foreign policy," without more, will not suffice. For example, in Japan Whaling, the Supreme Court held that a political question was not raised by a claim that asked the Court to "command the Secretary of Commerce . . . to dishonor and repudiate an international agreement" regarding limits on commercial whaling. 478 U.S. at 229, 106 S.Ct. 2860. The Japan Whaling Court proceeded to examine the merits of the claim in
Unlike Japan Whaling, the case at bar does not present "a purely legal question of statutory interpretation." Id. Adjudication of the claims before us would require that we review the considered foreign policy of the political branches, which—in contrast to those branches' chosen policy regarding the whaling quotas at issue in Japan Whaling—is not codified in a treaty that we are merely asked to interpret. Moreover, in Japan Whaling, the Court was asked to compel U.S. officials to act according to the law, whereas in the instant matter, we are asked essentially to reprimand foreign nations and command them to dismantle their international agreements. Nor are we presented with a case in which a political question holding would require our predicate acceptance of an Executive Branch legal interpretation, such as (for example) the "premise that de jure sovereignty is the touchstone of habeas corpus jurisdiction." Boumediene v. Bush, 553 U.S. 723, 755, 128 S.Ct. 2229, 171 L.Ed.2d 41 (2008).
Appellants have alleged a price-fixing conspiracy involving OPEC member nations. We must "analyze [this] claim as it would be tried," Occidental of Umm, 577 F.2d at 1202, and as we have already observed, a trial on Appellants' conspiracy claims requires an inquiry into whether Appellees entered into an agreement with OPEC member nations to fix prices. A pronouncement either way on the legality of other sovereigns' actions falls within the realm of delicate foreign policy questions committed to the political branches. By adjudicating this case, the panel would be reexamining critical foreign policy decisions, including the Executive Branch's longstanding approach of managing relations with foreign oil-producing states through diplomacy rather than private litigation, as discussed in the government's amicus brief and in several official statements of administration policy.
As the Departments of State, Treasury, Energy, and Justice emphasize in their brief supporting affirmance,
For the foregoing reasons, we are persuaded that the foreign policy issues at stake in this case are textually committed to the political branches.
We next consider whether there is "a lack of judicially discoverable and manageable standards for resolving" the claims presented. Baker, 369 U.S. at 217, 82 S.Ct. 691. This concept "is not completely separate from" the concept of a textual commitment to the coordinate branches. Nixon v. United States, 506 U.S. 224, 228, 113 S.Ct. 732, 122 L.Ed.2d 1 (1993). However, a court may examine the merits of a case that touches on foreign policy in some instances, such as where a statutory scheme exists to guide the court's determination of an issue. See, e.g., Japan Whaling, 478 U.S. at 230, 106 S.Ct. 2860 (finding that judicially manageable standards exist, and case is justiciable, where "decision. . . calls for applying no more than the traditional rules of statutory construction, and then applying this analysis to the particular set of facts presented below"). In contrast, where there is an "utter absence of statutory, administrative or case law" available to guide our decision, we disfavor resolution on the merits. Lane, 529 F.3d at 562.
We are persuaded that deciding the merits of the instant case would require a court to recast what are foreign policy and national security questions of great import in antitrust law terms. We hardly need to pierce the pleadings before us to understand that Appellants seek nothing short of the dismantling of OPEC and the inception of a global market that operates in the absence of agreements between sovereigns as to the supply of a key natural resource. The Sherman and Clayton Acts are decidedly inadequate to provide judicially manageable standards for resolving such momentous foreign policy questions. Indeed, "[i]t has never been supposed that there are any judicially manageable standards for reviewing the conduct of our nation's foreign relations by the other two branches of the federal government." Trujillo-Hernandez v. Farrell, 503 F.2d 954, 954 (5th Cir.1974) (per curiam)
The remaining four Baker factors—the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; the impossibility of a court's undertaking independent resolution without expressing lack of the respect owing to the coordinate branches of government; an unusual need for unquestioning adherence to a political decision already made; and the potential of embarrassment from multifarious pronouncements by various departments on one question—also weigh against an adjudication of this case on the merits.
Deeply rooted constitutional "[s]eparation-of-powers principles impel a reluctance in the judiciary to interfere with or embarrass the executive in its constitutional role as the nation's primary organ of international policy." Spacil v. Crowe, 489 F.2d 614, 619 (5th Cir.1974). As we have already outlined and as the government has emphasized to us in its briefing, "the United States, for more than the last 35 years and through decisions made at the highest levels of the Executive Branch[,]. . . has charted a consistent course of managing the complex U.S. relationships with foreign oil-producing states upon which this country still depends for its domestic energy needs, rather than resorting to the far blunter instrument of antitrust litigation against them." Any ruling on the merits of the instant case would by its very nature involve a policy determination at odds with this longstanding policy of diplomatic engagement, expressing a lack of the respect owed to the Executive Branch, which is constitutionally responsible for the conduct of foreign affairs. This would inevitably result in embarrassment from the Judicial Branch's conflicting pronouncement about the United States' mode of engagement with foreign nations that control a critical resource on which this country depends. Such profound foreign policy questions "uniquely demand a single-voiced statement of the Government's views." Baker, 369 U.S. at 211, 82 S.Ct. 691. We are thus presented with an unusual need for adherence to the political decision already made.
Although our holding rests on a lack of subject matter jurisdiction, the district court and the parties have devoted considerable attention to the act of state doctrine. Indeed, many of these arguments coincide with those that have animated our decision on political question grounds. For reasons similar to those on which we have relied above, we hold alternatively that, under the act of state doctrine, Appellants have failed to state a claim on which relief can be granted.
Under the act of state doctrine, "the courts of one country will not sit in judgment on the acts of the government of another, done within its own territory." Underhill v. Hernandez, 168 U.S. 250, 252, 18 S.Ct. 83, 42 L.Ed. 456 (1897). The doctrine is grounded in the principle that "juridical review of acts of state of a foreign power could embarrass the conduct of foreign relations by the political branches of the government." First Nat'l City Bank v. Banco Nacional de Cuba, 406 U.S. 759, 765, 92 S.Ct. 1808, 32 L.Ed.2d 466 (1972). The doctrine thus overlaps in many respects with the political question doctrine, as it is rooted in constitutional separation-of-powers concerns. See Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 425, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964). It recognizes "`the thoroughly sound principle that on occasion individual litigants may have to forgo decision on the merits of their claims because the involvement of the courts in such a decision might frustrate the conduct of [United States] foreign policy.'" Callejo v. Bancomer, 764 F.2d 1101, 1113 (5th Cir.1985) (quoting First Nat'l City Bank, 406 U.S. at 769, 92 S.Ct. 1808).
"For act of state (as opposed to sovereign immunity) purposes, the relevant acts are not merely those of the named defendants, but any governmental acts whose validity would be called into question by adjudication of the suit." Callejo, 764 F.2d at 1115, 1116 (emphasis added). The burden lies on the proponent of the doctrine to establish the factual predicate for the doctrine's application. See Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 694, 96 S.Ct. 1854, 48 L.Ed.2d 301 (1976).
As we have already discussed, Appellees have met their burden of demonstrating that adjudication of this suit would necessarily call into question the acts of foreign governments with respect to exploitation of their natural resources. The Supreme Court has held, albeit in a different factual context, that exploitation of natural resources is an inherently sovereign function. See United States v. California, 332 U.S. 19, 38-39, 67 S.Ct. 1658, 91 L.Ed. 1889 (1947) (allocating the power
In considering whether a merits review would require us to sit in judgment of the acts of foreign sovereigns in their own territories, we find instructive the reasoning of the Ninth Circuit in a similar case. See Int'l Ass'n of Machinists & Aerospace Workers v. OPEC ("IAM"), 649 F.2d 1354 (9th Cir.1981). In IAM, a labor union brought Sherman Act claims against OPEC and its member nations. Id. at 1355. The Ninth Circuit relied on the act of state doctrine in declining to address the merits, explaining that "the availability of oil has become a significant factor in international relations," and illustrating other courts' recognition of the "growing world energy crisis." 649 F.2d at 1360 (citing Occidental of Umm, 577 F.2d 1196; Hunt v. Mobil Oil Corp., 550 F.2d 68 (2d Cir.1977)). The court noted that "the United States has a grave interest in the petro-politics of the Middle East[ and] that the foreign policy arms of the executive and legislative branches are intimately involved in this sensitive area." Id. at 1361. "While the case is formulated as an anti-trust action, the granting of any relief would in effect amount to an order from a domestic court instructing a foreign sovereign to alter its chosen means of allocating and profiting from its own valuable natural resources." Id.
The claims before us present a similar scenario. The granting of any relief to Appellants would effectively order foreign governments to dismantle their chosen means of exploiting the valuable natural resources within their sovereign territories.
We sum up: Appellants, retailers of gasoline products in the United States, have asked the federal courts to adjudicate the merits of their antitrust claims against oil production companies that have allegedly participated in a conspiracy to fix prices. Reducing their claims to basics, Appellants allege a conspiracy that is orchestrated by the sovereign member nations of OPEC. We hold today that Article III courts lack subject matter jurisdiction over Appellants' claims because they present nonjusticiable political questions that are constitutionally committed to the political branches responsible for the conduct of United States foreign relations and national security policy. Any ruling on the merits of this case would, by its core essence, impermissibly interfere with the Executive Branch's longstanding policy of engaging with OPEC nations regarding the global supply of oil through diplomacy instead of private litigation. The constitutional concerns that inform our declination of jurisdiction under the political question doctrine similarly persuade us that adjudication of Appellants' claims is precluded by the act of state doctrine. For the foregoing reasons, we affirm the judgment of the district court.
AFFIRMED.