Ogala et al v. Chevron Corporation et al

Filing 30

ORDER by Judge Samuel Conti granting 13 Motion to Dismiss, with leave to amend (sclc1, COURT STAFF) (Filed on 5/19/2014)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

United States District Court

For the Northern District of California

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FOSTER OGALA, et al.,

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Plaintiffs,

) Case No. 14-cv-173-SC
)
) ORDER GRANTING MOTION TO
) DISMISS
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)

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v.

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CHEVRON CORP., et al.,

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Defendants.

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I. INTRODUCTION

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Now before the Court is Defendants Chevron Corporation

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("Chevron") and Chevron USA, Inc.'s ("CUSA") motion to dismiss

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Plaintiffs' Complaint.

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briefed 1 and suitable for determination without oral argument per

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Civil Local Rule 7-1(b).

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Defendants' motion to dismiss is GRANTED, and Plaintiffs' claims

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are DISMISSED with leave to amend.

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1

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ECF No. 1 ("Compl.").

The motion is fully

For the reasons set forth below,

ECF Nos. 13 ("Chevron MTD"), 25 ("Ogala Opp."), 27 ("Chevron
Reply").

II. BACKGROUND

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On January 16, 2012, an explosion occurred on the KS Endeavor,

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off of the coast of Nigeria.

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burned for forty-six days.

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the Niger Delta region of southern Nigeria.

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plaintiffs also claim to represent 65,000 other people "directly

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United States District Court

an offshore rig drilling for natural gas in the North Apoi Field

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For the Northern District of California

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affected by, interested in and having claims arising out of the

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incident . . . ."

Id. ¶ 9.

The explosion caused a fire that
Plaintiffs are persons who reside in
Id. ¶ 6.

The named

They allege that they have suffered

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losses to their livelihood, environmental damage, and health

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problems as a result of the explosion and fire.

Id. ¶ 3.

Defendants are three American corporations: Chevron

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Corporation ("Chevron"), Chevron Investments, Inc. ("CII"), and

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Chevron U.S.A., Inc. ("CUSA") (collectively "Defendants"). 2

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Plaintiffs allege that the KS Endeavor was negligently operated by

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KS Drilling under the management of Chevron Nigeria Limited

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("CNL").

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CII, which in turn is a wholly owned subsidiary of Chevron.

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¶¶ 10-11.

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Defendants have moved to dismiss for failure to state a claim under

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Federal Rule of Civil Procedure 12(b)(6).

Id. ¶¶ 2, 5, 21.

CNL is a wholly owned subsidiary of
Id.

CNL is not named as a defendant in this action.

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III. LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure

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12(b)(6) "tests the legal sufficiency of a claim."

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2

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Navarro v.

CII has not participated in this motion. Chevron and CUSA state
that Plaintiffs have not served the summons and complaint on CII.
Chevron MTD at 1 n.1. Federal Rule of Civil Procedure 4 specifies
the requirements for properly serving a defendant.

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on the lack of a cognizable legal theory or the absence of

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sufficient facts alleged under a cognizable legal theory."

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Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.

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1988).

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should assume their veracity and then determine whether they

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plausibly give rise to an entitlement to relief."

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United States District Court

Block, 250 F.3d 729, 732 (9th Cir. 2001).

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For the Northern District of California

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"Dismissal can be based

Iqbal, 556 U.S. 662, 679 (2009).

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must accept as true all of the allegations contained in a complaint

"When there are well-pleaded factual allegations, a court

Ashcroft v.

However, "the tenet that a court

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is inapplicable to legal conclusions.

Threadbare recitals of the

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elements of a cause of action, supported by mere conclusory

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statements, do not suffice."

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Twombly, 550 U.S. 544, 555 (2007)).

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complaint must be both "sufficiently detailed to give fair notice

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to the opposing party of the nature of the claim so that the party

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may effectively defend against it" and "sufficiently plausible"

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such that "it is not unfair to require the opposing party to be

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subjected to the expense of discovery."

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1202, 1216 (9th Cir. 2011).

Id. (citing Bell Atl. Corp. v.
The allegations made in a

Starr v. Baca, 652 F.3d

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IV. DISCUSSION

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A.

Imputing CNL's Liability to Defendants

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Plaintiffs claim that Defendants are liable for CNL's actions.

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However, "[i]t is a general principle of corporate law deeply

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ingrained in our economic and legal systems that a parent

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corporation . . . is not liable for the acts of its subsidiaries."

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United States v. Bestfoods, 524 U.S. 51, 61 (1998) (internal

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quotation marks omitted).

To recover against Defendants,

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not apply in this case and that Chevron, CII, and CUSA are liable

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for CNL's actions in Nigeria.

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the application of exceptions to this general principle is highly

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fact-sensitive, Ogala Opp. at 11-12, they still must plead facts

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which, if true, would plausibly render Defendants liable for CNL's

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acts.

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United States District Court

Plaintiffs must establish that this principle of corporate law does

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For the Northern District of California

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normal rule that a corporation is not liable for its subsidiary's

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actions.

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While Plaintiffs are correct that

Plaintiffs pursue liability under two exceptions to the

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Alter Ego

Plaintiffs first argue that Defendants are liable for CNL's

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actions under the alter ego doctrine.

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to pierce the corporate veil and hold a corporation's owners liable

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for the corporation's acts.

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the alter ego of another corporation if (1) there is such unity of

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interest and ownership that the separate personalities of the two

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entities no longer exist and (2) failure to disregard the corporate

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form would cause an inequitable result.

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Superior Court, 83 Cal. App. 4th 523, 538 (Cal. Ct. App. 2000)

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(citing Automotriz Del Golfo De California v. Resnick, 47 Cal. 2d

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792, 796 (Cal. 1957)).

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controlling them when "the corporate form is used to perpetrate a

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fraud, circumvent a statute, or accomplish some other wrongful or

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inequitable purpose."

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This doctrine allows courts

A corporation may be held liable as

Sonora Diamond Corp. v.

Corporations are the alter egos of those

Id.

Plaintiffs have pleaded a number of factual allegations

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relevant to the unity of interest and ownership factor.

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notes, however, that Plaintiffs refer to Chevron, CII, CUSA, and

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CNL collectively as "Chevron" throughout the Complaint.

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The Court

Compl.

refer to a defendant, multiple defendants, or CNL (which is not a

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party).

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whether the Complaint states a plausible claim against any one

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defendant.

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Complaint to any conduct committed by Chevron, CII, CUSA, or CNL

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shall be deemed to mean the conduct of all defendants.

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United States District Court

¶ 2.

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For the Northern District of California

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It is consequently impossible to tell whether allegations

This compounds the confusion by converting the Complaint's more

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specific references to individual defendants, or to CNL, into

As a result, it is extremely difficult to determine

Plaintiffs also note that any reference made in the

Id. ¶ 15.

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references to all defendants.

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Complaint so vague that it is an exercise in futility to attempt to

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determine which defendants (or non-parties) are referred to at

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various points.

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parse the factual allegations of the complaint despite the

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confusion introduced by these methods of referring to Chevron, CII,

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CUSA, and CNL.

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The effect is to render the

Nonetheless, the Court proceeds to attempt to

Plaintiffs claim that CUSA "employs various U.S.-based

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personnel who are responsible for providing oversight, supervision

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and planning for the business operations of CNL . . . ."

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Plaintiffs allege that "CUSA exercised substantial control over

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CNL's operations."

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executives with Defendants: Plaintiffs allege that many CNL

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employees, "including those at the top," were employees of or

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working on assignment from Defendants.

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factual allegations which the Court must presume to be true in

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ruling on the motion to dismiss.

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these allegations -- as Plaintiffs urge it to -- as allegations

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against all defendants.

Id.

Id. ¶ 12.

CNL also apparently shared staff and

Id. ¶ 13.

These are all

However, the Court cannot read

Plaintiffs must plead specific facts that

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implicate each defendant they name, and the Court finds that these

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facts implicate only CUSA.

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In addition to these sound factual allegations, Plaintiffs add

example, Plaintiffs allege that "Chevron Corp. and/or Chevron

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Investments, and/or CUSA commissioned the acts complained of and/or

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authorized CNL in the commission of the acts alleged herein, and/or

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United States District Court

a number of remarkably convoluted disjunctive accusations.

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For the Northern District of California

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ratified the acts of CNL alleged herein."

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simpler version of that sentence might be classified as a factual

Id. ¶ 8.

For

While a

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allegation, Plaintiffs include so many alternative options that it

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is impossible to determine exactly what is alleged or which parties

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are allegedly responsible for it.

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allege that:

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As another example, Plaintiffs

[D]ecisions taken as regards the continuing drilling
despite the build-up of dangerous and harmful gases were
actually taken by or known of or should have been known
of and/or participated in, and/or authorized by; and/or
paid for by, and/or benefitted and/or confirmed by,
and/or ratified by Chevron Corp.

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Id. ¶ 12.

Here, the accusation seems to be aimed at Chevron alone.

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However, the disclaimer that references to Chevron should be deemed

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references to all defendants renders the allegation hopelessly

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unspecific.

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and conditional that it is unclear what Plaintiffs claim Chevron

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actually did.

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that might support liability, but Plaintiffs choose a few that

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might be sufficient and a few that are undoubtedly insufficient and

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lump them all together into a single incoherent sentence.

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are these claims inadequately detailed, they are the sort of bare

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recitations of the elements of a claim that are not entitled to a

Additionally, the allegation itself is so ambiguous

There are multiple theories of Chevron's involvement

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Not only

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presumption of truth under Twombly and Iqbal.
The facts in Plaintiffs' complaint cannot support alter ego

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and resemble those standard consequences of corporate ownership

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inadequate to demonstrate an alter ego.

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sufficient to demonstrate the unity of interest and ownership

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required, Plaintiffs must also plead facts indicating that failure

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United States District Court

liability.

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For the Northern District of California

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The few sufficiently detailed facts relate only to CUSA

to disregard the corporate form would result in injustice.

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state claims against Defendants as alter egos of CNL, Plaintiffs

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must plead more facts with much more specificity than they do in

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this first iteration of their complaint.

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failed to plead sufficient facts to render Defendants liable for

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CNL's actions, they fail to state a claim for which relief may be

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granted.
2.

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Even if those facts were

To

Because Plaintiffs have

Agency

Plaintiffs also claim that Defendants are liable for CNL's

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acts because CNL was Defendants' agent.

Corporate agency arises

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most frequently in the context of assessing minimum contacts for

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jurisdictional purposes, rather than liability.

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Diamond, 83 Cal. App. 4th at 540-42; F. Hoffman-La Roche, Inc. v.

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Superior Court, 130 Cal. App. 4th 782, 796-99 (Cal. Ct. App. 2005).

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However, a principal is liable for the acts of his agent "within

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the scope his actual or ostensible authority."

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2330.

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transaction of the business of the agency", Id. § 2338, or where

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the principal has authorized or ratified the agent's conduct.

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§ 2339.

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Defendants' agent and that CNL committed tortious acts within the

See, e.g., Sonora

Cal. Civ. Code §

A principal is liable for his agent's negligence "in the

Id.

Therefore, if Plaintiffs can prove that CNL was

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scope of that agency, those acts may be imputed to Defendants.

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A corporate subsidiary is the agent of its parent if "the

the parent is so pervasive and continual that the subsidiary may be

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considered nothing more than an agent or instrumentality of the

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parent, notwithstanding the maintenance of separate corporate

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formalities . . . ."

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United States District Court

nature and extent of the control exercised over the subsidiary by

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For the Northern District of California

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Agency requires more than "the degree of direction and oversight

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normal and expected from the status of ownership."

Sonora Diamond, 83 Cal. App. 4th at 541.

Id. at 540.

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Factors such as "interlocking directors and officers, consolidated

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reporting, and shared professional services" are expected in the

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normal course of a parent/subsidiary relationship and do not create

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a principal/agent relationship.

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matter, the parent must be shown to have moved beyond the

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establishment of general policy and direction for the subsidiary

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and in effect taken over performance of the subsidiary's day-to-day

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operations in carrying out that policy."

Id. at 541.

"As a practical

Id. at 542.

The Court finds that Plaintiffs have failed to plead facts

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sufficient to give rise to agency liability for any defendant.

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Plaintiffs have not alleged any facts indicating that Defendants

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took over CNL's day-to-day operations.

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evidence at this stage in the litigation, but they must plead facts

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which, if true, would create liability for each defendant they

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name.

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defendant exercised the requisite control over CNL and that CNL

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acted within the scope of its agency or that Defendants ratified

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its actions.

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Defendants liable as principals of CNL.

Plaintiffs need not produce

In this case, that means facts demonstrating that each

Plaintiffs fail to state a claim that renders

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B.

Injury in Fact

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Defendants next argue that Plaintiffs have failed to plead an

irreducible constitutional minimum of standing, a plaintiff

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invoking federal jurisdiction must establish injury in fact,

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causation, and a likelihood that a favorable decision will redress

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the plaintiff's alleged injury."

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United States District Court

injury in fact adequate to confer standing.

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For the Northern District of California

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"To establish the

Francisco, 656 F.3d 1002, 1005 (9th Cir. 2011) (internal quotation

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marks omitted).

Carrico v. City & Cnty. of San

An injury in fact is "an invasion of a legally

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protected interest which is . . . concrete and particularized."

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Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).

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Plaintiffs do not respond to this argument in their opposition

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brief, except for a brief statement that "[t]he types of claimed

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injuries and economic damage sustained are also stated with

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particularity."

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that the Complaint states the types of injuries they allege, more

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is required.

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a plausible claim that a concrete and particularized invasion of a

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legally protected interest has occurred.

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Motor Corp., 785 F. Supp. 2d 883, 901 (C.D. Cal. 2011) ("[T]here

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must be specific allegations that each lead Plaintiff suffered some

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loss.").

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Ogala Opp. at 16.

While Plaintiffs may be correct

Simply listing various types of harm does not create

See, e.g. In re Toyota

In their complaint, Plaintiffs allege that they have suffered

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(1) "losses to their livelihood; environmental disaster impacting

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upon food and water supplies; health problems," Compl. ¶ 3; (2)

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significant economic damages and loss of business, Id. ¶ 9; (3)

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"dead or diseased fish and livestock, contaminated water and soil

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and general health breakdown within the communities," Id. ¶ 25; (4)

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1

physical injuries and/or property damage, Id. ¶ 50; and (5)

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pollution of rivers and creeks, Id. ¶ 53.
Defendants are correct that the Complaint fails to support

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discussion whatsoever of how a fire on an offshore rig damaged the

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businesses, livelihoods, property, or health of Dr. Ogala or any of

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the other plaintiffs in this case.

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United States District Court

these conclusory allegations with sufficient facts.

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For the Northern District of California

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There is no

damage to fish, livestock, contamination of water and soil, and

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"general health breakdown."

Plaintiffs make claims about

Id. ¶ 25.

But there are no

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allegations that the damaged livestock belonged to Plaintiffs, that

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the Plaintiffs' livelihoods depended on fisheries, that the

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contaminated water or soil harmed them or their property, or that

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the "general health breakdown" affected them.

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property damage and physical injury, there are no allegations that

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the fire ever spread from the KS Endeavor.

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allege facts that make their damages claims plausible; in this

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case, they need facts that indicate how the fire actually harmed

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them.

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(N.D. Ohio Feb. 10, 2014) (dismissing trespass claim where

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complaint failed to plausibly allege that toxic materials had

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migrated from the dumping grounds to their properties).

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some indication of what property was damaged, who suffered what

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physical injuries, and how the damage or injuries resulted from

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Defendants' conduct, the Court finds that Plaintiffs fail to state

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a plausible claim that they suffered an injury in fact sufficient

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to confer standing.

As for the claims of

Plaintiffs need to

Cf. Brown v. Whirlpool Corp., 3:13CV1092, 2014 WL 546082

Absent

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C.

Standing for Unnamed Plaintiffs

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The named plaintiffs in this action purport to represent some

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explosion and fire.

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named plaintiffs have no standing to assert claims on behalf of

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other members of their communities.

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Plaintiffs respond by explaining that it is common practice in

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Nigeria for large groups of plaintiffs to sign onto a lawsuit by

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executing powers of attorney.

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United States District Court

65,000 other members of the Nigerian communities affected by the

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For the Northern District of California

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the regular practice in Nigeria, the Federal Rules of Civil

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Procedure require that an action "be prosecuted in the name of the

Compl. ¶¶ 4, 9.

Defendants argue that the

Chevron MTD at 16-17.

Ogala Opp. at 17-18.

Regardless of

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real party in interest" unless the named party is an executor,

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administrator, guardian, bailee, trustee, party to a contract in

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another's benefit, or other party authorized by statute to bring

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suit on behalf of someone else.

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Plaintiffs have standing to seek redress for injuries done to them,

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"but may not seek redress for injuries done to others."

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Lodge No. 107 v. Irvis, 407 U.S. 163, 166 (1972).

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attorney is insufficient to confer standing.

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San Diego, 114 F.3d 874, 876 (9th Cir. 1997) (power of attorney did

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not give plaintiff the right to assert another's constitutional

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claims); Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106

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F.3d 11, 18 (2d Cir. 1997) ("[A] power of attorney does not enable

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the grantee to bring suit in his own name.").

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Fed. R. Civ. P. 17(a)(1).

Moose

A power of

See Johns v. Cnty. of

Alternatively, Plaintiffs may claim to represent a class under

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Rule 23.

Plaintiffs here never expressly purport to represent a

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class, though they claim the Class Action Fairness Act as an

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alternative basis for reaching the amount-in-controversy threshold

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for diversity jurisdiction.

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this District require actions that seek to be maintained as a class

Ogala Opp. at 3.

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The local rules in

L. R. 3-4(a)(5).

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nor do Plaintiffs claim anywhere in the Complaint to represent a

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class.

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purported class action.

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do not have standing to represent other members of their

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communities based on this Complaint.

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United States District Court

action to bear the legend "Class Action" on the first page.

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For the Northern District of California

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Civ.

Complaint on behalf of unnamed non-parties are DISMISSED with leave

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to amend.

No such legend appears on Plaintiffs' Complaint,

As a result, the Court must conclude that this is not a
The Court finds that the named plaintiffs

Any claims asserted in the

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D.

Federal Jurisdiction

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Plaintiffs state that this Court has jurisdiction over their

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claims under both federal question and diversity jurisdiction.

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Compl. ¶ 7.

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actions arising under the Constitution, laws, or treaties of the

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United States."

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where the amount in controversy exceeds $75,000 and the action is

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between citizens of a foreign state and citizens of a U.S. state.

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Id. § 1332(a).

Federal question jurisdiction exists for "all civil

28 U.S.C. § 1331.

Diversity jurisdiction exists

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Defendants argue that none of Plaintiffs' claims arise under

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federal law, and so federal question jurisdiction does not exist.

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Plaintiffs do not dispute this.

All of their claims arise under

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California law or Nigerian law.

The Court finds that it does not

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have federal question jurisdiction over Plaintiffs' claims.

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Defendants also argue that the Court lacks diversity

25

jurisdiction.

Plaintiffs are all Nigerian citizens, and Defendants

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are all American corporations.

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a lawsuit between citizens of a foreign state and citizens of U.S.

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states, and complete diversity exists.

Compl. ¶¶ 9-12.

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Therefore, this is

However, Defendants contend

1

that Plaintiffs cannot meet the $75,000 amount-in-controversy

2

requirement.

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jurisdiction over an action between diverse parties only if it

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appears "to a legal certainty" that the plaintiff cannot recover

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the amount claimed.

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303 U.S. 283, 289 (1938).

Chevron MTD at 15.

A federal court lacks

St. Paul Mercury Indem. Co. v. Red Cab Co.,

Plaintiffs claim a sum of $5 billion in damages.

7

Compl. ¶ 9.

United States District Court

For the Northern District of California

8

Defendants argue that Plaintiffs cannot aggregate their claims to

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reach the $75,000 threshold and that $75,000 per plaintiff is an

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implausible damages estimate because the GDP per capita in the

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region of Nigeria where Plaintiffs live is $2,544.

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15.

13

Ultimately, the Court cannot assess the reasonableness of

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Plaintiffs' damages estimates because of the lack of specificity in

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their Complaint.

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that the Court dismisses this action on other grounds, the Court

17

declines to rule on the amount-in-controversy issue at this time.

Chevron MTD at

Plaintiffs insist that their damages exceed $75,000.

Due to that defect in the pleadings, and the fact

18

As an alternate argument, Plaintiffs argue that diversity

19

jurisdiction exists under the Class Action Fairness Act ("CAFA") of

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2005.

21

jurisdiction over class actions in which the amount in controversy

22

exceeds $5 million, any member of the plaintiff class is a foreign

23

citizen, and any defendant is a citizen of a U.S. state.

24

§ 1332(d).

25

rule 23 of the Federal Rules of Civil Procedure."

26

§1332(d)(1)(B); see also United Steel Workers Int'l Union v. Shell

27

Oil Co., 602 F.3d 1087, 1091 (9th Cir. 2010) (holding that

28

jurisdiction under CAFA is determined at time of filing and that

Ogala Opp. at 3.

CAFA provides for federal diversity

28 U.S.C.

CAFA defines a class action as "any action filed under

13

Id. at

1

post-filing developments do not defeat jurisdiction).

2

above, there is no indication in the Complaint that this action was

3

filed as a class action, and the Court cannot treat it as one.

4

Plaintiffs seek to establish diversity jurisdiction under CAFA,

5

they must file their case as a class action.

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E.

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Plaintiffs' fourth cause of action is nuisance.

As discussed

If

Nuisance Claim
The complaint

United States District Court

For the Northern District of California

8

does not specify whether Plaintiffs bring this claim under Nigerian

9

law or California law, but both parties analyze the claim under

10

California law.

11

Complaint also fails to specify whether Plaintiffs bring a private

12

or public nuisance claim, but Plaintiffs pursue both claims in

13

their opposition brief.

14

Plaintiffs have failed to state a claim for either.

15

See Chevron MTD at 17; Ogala Opp. at 18-19.

Ogala Opp. at 19.

The

Chevron argues that

Under California law, a private person may bring a claim for

16

public nuisance only if the injury he suffers is different in kind

17

from that suffered by public at large.

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private person may maintain an action for a public nuisance, if it

19

is specially injurious to himself, but not otherwise.").

20

discussed previously, the Complaint alleges only vague categories

21

of injuries that apply broadly to Plaintiffs' communities.

22

is no discussion of any specific injury to the named Plaintiffs

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individually.

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public nuisance.

Cal. Civ. Code § 3493 ("A

As

There

Therefore, the Complaint fails to state a claim for

25

"A private nuisance cause of action requires the plaintiff to

26

prove an injury specifically referable to the use and enjoyment of

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his or her land."

28

App. 4th 601, 610 (Cal. Ct. App. 2014).

Adams v. MHC Colony Park Ltd. P'ship, 224 Cal.

14

Plaintiffs' recitals of

claim.

3

plead facts showing that Defendants' actions interfered with

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Plaintiffs' use and enjoyment of Plaintiffs' land.

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such claims in the Complaint.

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state that Plaintiffs own any land at all.

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fails to state a claim for private nuisance as well.

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United States District Court

various categories of injuries again fail to establish a plausible

2

For the Northern District of California

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nuisance claims are DISMISSED with leave to amend.

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F.

To plead a claim for private nuisance, Plaintiffs must

There are no

In fact, the Complaint does not even
Plaintiffs' Complaint
Plaintiffs'

Negligent Infliction of Emotional Distress

10

As Defendants point out, Plaintiffs list negligent infliction

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of emotional distress as a cause of action in the caption of their

12

Complaint but fail to plead it anywhere in the Complaint's body.

13

In their opposition brief, Plaintiffs do not suggest that negligent

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infliction of emotional distress is a distinct cause of action.

15

Nor should they: "[T]here is no independent tort of negligent

16

infliction of emotional distress" under California law.

17

Firestone Tire & Rubber Co., 6 Cal. 4th 965, 984 (Cal. 1993).

18

Plaintiffs may plead emotional distress damages for their

19

negligence claim, but they may not assert negligent infliction of

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emotional distress as a separate cause of action.

21

that Plaintiffs claim negligent infliction of emotional distress as

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an independent cause of action under California law, that claim is

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DISMISSED with prejudice.

Potter v.

To the extent

24
25
26

V. CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants' motion

27

to dismiss.

28

amend.

Plaintiffs' Complaint is DISMISSED with leave to

Plaintiffs shall file an amended complaint that addresses

15

1

the concerns identified above within thirty (30) days of the

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signature date of this Order.

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dismissal of this action with prejudice.

Failure to do so may result in

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5

IT IS SO ORDERED.

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Dated: May 19, 2014

United States District Court

For the Northern District of California

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UNITED STATES DISTRICT JUDGE

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