Ogala et al v. Chevron Corporation et al

Filing 44

ORDER by Judge Samuel Conti granting 38 Motion to Dismiss, with leave to amend, and denying motion to strike class action allegations. Plaintiffs may amend their FAC only to add facts demonstrating that (1) the named plaintiffs suffered injury sufficient to confer standing and (2) the named plaintiffs suffered harm different in kind to support private maintenance of public nuisance claims. Plaintiffs shall file an amended complaint that addresses the concerns identified above within fourteen (14) days of the signature date of this Order. Failure to do so may result in dismissal of this action with prejudice. (sclc1, COURT STAFF) (Filed on 8/21/2014)

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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 OGOLA, et al.,

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Plaintiffs,

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v.
CHEVRON CORPORATION,

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Defendant.

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Case No. 14-cv-173-SC
ORDER GRANTING MOTION TO
DISMISS WITH LEAVE TO AMEND AND
DENYING MOTION TO STRIKE

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I. INTRODUCTION
Now before the Court is Defendant Chevron Corporation's

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("Chevron") motion to dismiss Plaintiffs' First Amended Complaint.

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ECF No. 34 ("FAC").

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Chevron U.S.A.'s motion to dismiss Plaintiffs' original complaint,

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with leave for Plaintiffs to amend.

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Order").

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responded on July 3 with a motion to dismiss the complaint and

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///

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///

On May 19, 2014, the Court granted Chevron and

ECF No. 30 ("Dismissal

Plaintiffs filed their FAC on June 17, 2014, and Chevron

The motion is fully briefed 1

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strike the class action allegations.

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and suitable for determination without oral argument per Civil

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Local Rule 7-1(b).

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Chevron's motion to dismiss is GRANTED, Plaintiffs' claims are

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DISMISSED WITH LEAVE TO AMEND, and Chevron's motion to strike is

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DENIED.

For the reasons set forth below, Defendant

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II. BACKGROUND

United States District Court

For the Northern District of California

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

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

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

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incident . . . ."

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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.

The explosion caused a fire that

Id. ¶ 12.

Plaintiffs are persons who reside in
FAC ¶ 4.

The named

They allege that they have suffered

Id. ¶ 3.

Plaintiffs initially named three defendants: Chevron, Chevron

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U.S.A., Inc., and Chevron Investments, Inc.

Plaintiffs have

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voluntarily dismissed their claims against Chevron U.S.A. and

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Chevron Investments, ECF Nos. 35; 36, so Chevron is the only

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remaining defendant in the case.

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Endeavor was negligently operated by Chevron Nigeria Limited

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("CNL") under Chevron's direction.

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Chevron Investments, which in turn is a wholly owned subsidiary of

Plaintiffs allege that the KS

Id. ¶ 2.

CNL is owned by

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ECF Nos. 38 ("Mot."), 40 ("Opp'n"), 42 ("Reply").

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action.

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equipment failures, smoke, and a dangerous buildup of gas on the KS

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Endeavor.

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drilling to continue (or sanctioned CNL's decision to continue

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drilling), resulting in the ensuing explosion.

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has moved to dismiss for failure to state a claim under Federal

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United States District Court

Chevron.

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For the Northern District of California

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Id. ¶¶ 13-14.

CNL is not named as a defendant in this

Rule of Civil Procedure 12(b)(6) and to strike Plaintiffs' class

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action allegations.

Specifically, Plaintiffs allege that Chevron was aware of

Plaintiffs allege that Chevron negligently ordered

Id. ¶ 26.

Chevron

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III. LEGAL STANDARD

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A.

Motion to Dismiss

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A motion to dismiss under Federal Rule of Civil Procedure

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

Navarro v.

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

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

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

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is inapplicable to legal conclusions.

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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

"Dismissal can be based

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

Ashcroft v.

However, "the tenet that a court

Threadbare recitals of the

Id. (citing Bell Atl. Corp. v.

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The allegations made in a

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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).

Starr v. Baca, 652 F.3d

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B.

Leave to Amend

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When a motion to dismiss is granted, a district court must

United States District Court

For the Northern District of California

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decide whether to grant leave to amend.

Generally, the Ninth

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Circuit has a liberal policy favoring amendments and, thus, leave

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to amend should be freely granted.

See, e.g., DeSoto v. Yellow

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Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).

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court does not need to grant leave to amend in cases where the

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court determines that permitting a plaintiff to amend would be an

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exercise in futility.

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Winery, 829 F.2d 729, 738 (9th Cir. 1987) ("Denial of leave to

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amend is not an abuse of discretion where the pleadings before the

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court demonstrate that further amendment would be futile.").

However, a

See, e.g., Rutman Wine Co. v. E. & J. Gallo

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C.

Motion to Strike

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There is a split in this District as to whether a motion to

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strike class action allegations may be entertained at the motion to

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dismiss stage.

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Tasion Commc'ns, Inc. v. Ubiquiti Networks, Inc., C-13-1803 EMC,

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2014 WL 1048710, at *3-4 (N.D. Cal. Mar. 14, 2014) (Chen, J.)

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(denying motion to strike class action allegations because Rule

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12(f) is not the proper vehicle for such a motion) 2; Clerkin v.

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Several judges have held that they may not be.

See

Puzzlingly, Chevron cites Tasion for the proposition that "class
allegations properly are addressed on the pleadings under Rule
12(b)(6)." Mot. at 14. In fact, Tasion held the opposite. Judge
Chen did recognize that "[c]ourts have held previously that, in

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29, 2011) (Wilken, J.) ("Defendants fail to identify any authority

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permitting the use of a motion to dismiss for failure to state a

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claim to contest the suitability of class certification."); Astiana

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v. Ben & Jerry's Homemade, Inc., C 10-4387 PJH, 2011 WL 2111796, at

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*13-14 (N.D. Cal. May 26, 2011) (Hamilton, J.) ("[S]uch a motion

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appears to allow a determination of the suitability of proceeding

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United States District Court

MyLife.Com, C 11-00527 CW, 2011 WL 3809912, at *3 (N.D. Cal. Aug.

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For the Northern District of California

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as a class action without actually considering a motion for class

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certification."); Swift v. Zynga Game Network, Inc., C 09-05443

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SBA, 2010 WL 4569889, at *10 (N.D. Cal. Nov. 3, 2010) (Armstrong,

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J.) (denying motion to strike class action allegations based on

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Ninth Circuit precedent indicating that Rule 12(f) is not the

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proper vehicle for such a motion).

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Other judges have held that a motion to strike class action

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allegations may be brought (but granted only rarely) at the motion

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to dismiss stage.

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SI, 2014 WL 1618279, at *3 (N.D. Cal. Apr. 21, 2014) (Illston, J.)

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("A defendant may move to strike class actions prior to discovery

See Allagas v. BP Solar Int'l Inc., C 14-00560

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rare circumstances, class allegations may be struck where 'the
complaint demonstrates that a class action cannot be maintained on
the facts alleged, a defendant may move to strike class allegations
prior to discovery.'" Tasion, 2014 WL 1048710 at *3. However,
Judge Chen ultimately decided "that the viability of this case law
is questionable in light of the Ninth Circuit's decision in
Whittlestone, Inc. v. Handi–Craft Co., 618 F.3d 970 (9th Cir.
2010)." Id. Because Whittlestone limited motions to strike to
certain issues not including class action allegations, Judge Chen
denied the motion. Chevron may have been confused because Judge
Chen did dismiss the Tasion plaintiffs' class action allegations
with respect to one count. However, he did so only because the
underlying cause of action expressly prohibited class actions
seeking monetary relief. Dismissing a cause of action because it
is explicitly prohibited by law is entirely different from what
Chevron requests here: essentially a denial of a motion to certify
the class at the motion to dismiss stage.

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maintained on the facts alleged therein.") 3; In re Apple, AT&T iPad

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Unlimited Data Plan Litig., C-10-02553 RMW, 2012 WL 2428248, at *2-

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3 (N.D. Cal. June 26, 2012) (Whyte, J.) (motions to strike class

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action allegations may be brought at the motion to dismiss stage

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but are disfavored); Sanders v. Apple Inc., 672 F. Supp. 2d 978,

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990 (N.D. Cal. 2009) (Fogel, J.) ("Where the complaint demonstrates

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United States District Court

where the complaint demonstrates a class action cannot be

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For the Northern District of California

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that a class action cannot be maintained on the facts alleged, a

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defendant may move to strike class allegations prior to

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discovery.").

Even these judges, however, have applied a very

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strict standard to motions to strike class allegations on the

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pleadings.

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law are clear and not in dispute, and that under no set of

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circumstances could the claim or defense succeed" may the

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allegations be stricken.

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2012 WL 2428248 at *2; see also Allagas, 2014 WL 1618279, at *3;

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Sanders, 672 F. Supp. 2d at 990.

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actually granted a motion to strike.

Only if the court is "convinced that any questions of

In re iPad Unlimited Datat Plan Litig.,

Of these judges, only Judge Fogel

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IV. DISCUSSION

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A.

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The Negligence Claims
1.

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Imputing CNL's Liability to Chevron

One of the bases on which the Court dismissed Plaintiffs'

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original complaint was that Plaintiffs had failed to plead facts

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Though Judge Illston did recognize that such motions may be
brought, she observed that "[m]otions to strike class action
allegations are rarely granted at the pleading stage. The better
practice is to assess class allegations through a motion for class
certification." Allagas, 2014 WL 1618279, at *6. She proceeded to
deny the motion to strike without analyzing its merits.

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sufficient to implicate the defendants, including Chevron.

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original complaint made generally unsupported legal assertions that

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Chevron was responsible for CNL's activities in Nigeria but did not

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include factual allegations to support those claims.

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argues that the FAC suffers from the same deficiency.

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The

Chevron

Plaintiffs have added a number of additional factual

United States District Court

allegations to the amended complaint.

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For the Northern District of California

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With respect to Chevron's

corporate structure, Plaintiffs allege that many of CNL's employees

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were also Chevron employees who "ultimately were working on

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assignment from Chevron Corp."

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allege that CNL's "[p]ersonnel were selected by [Chevron] and under

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the control and direction of Chevron" and that Chevron "authorized

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pay, bonuses and job rotations" for CNL employees.

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FAC ¶ 17.

Plaintiffs further

Regarding the allegedly negligent decision to continue

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drilling, Plaintiffs allege that "any and all decisions as to

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whether there should be cessation of pumping and evacuation of the

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rig were taken by Defendant, alternatively sanctioned by Defendant

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from its headquarters in San Ramon, California."

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specifically, Plaintiffs allege that

Id. ¶ 27.

More

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[Chevron] employed a representative who was, at all
material times, the Rig Superintendant [sic] with overall
control on the rig.
Prior to the explosion he was
attending daily report meetings with the personnel on
board and in particular the Offshore Installation Manager
("OIM").
Some 3 days prior to the explosion but after
the gas pressure and pumping problems had been reported,
the said representative of the Defendant failed to appear
at any meeting [sic] and simply disappeared. Despite
instructions from the Defendant to continue operations on
the rig as normal, the OIM took the initiative to launch
the lifeboats in readiness to evacuate the rig.

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Id. ¶ 27.

Chevron ignores these crucial additions to the FAC,

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essentially repeating the arguments made in support of its first

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motion to dismiss.
The new facts pleaded in the FAC support both direct and

Plaintiffs allege that Chevron, not CNL, employees had the ultimate

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power to decide whether or not to continue drilling once they

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became aware of the potentially dangerous situation on the rig.

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The new facts also allege that a Chevron employee was actually

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United States District Court

indirect theories of liability.

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For the Northern District of California

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The new facts make clear that

running day-to-day operations on the rig.

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that Chevron employee had issued the instructions to continue

According to the FAC,

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drilling.

In other words, Plaintiffs allege that Chevron actually

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made the allegedly negligent decision and executed that decision

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through an employee on the ground in Nigeria.

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these factual allegations sufficient to support a negligence claim

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against Chevron directly.

The Court finds

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Plaintiffs' FAC also supports indirect liability theories.

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Generally, a corporate subsidiary is the agent of its parent if

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"the nature and extent of the control exercised over the subsidiary

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

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be 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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App. 4th 523, 541 (Cal. Ct. App. 2000).

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the parent must be shown to have moved beyond the establishment of

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general policy and direction for the subsidiary and in effect taken

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over performance of the subsidiary's day-to-day operations in

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carrying out that policy."

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allegations are critical: (1) CNL employees were actually Chevron

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employees under Chevron's ultimate direction; (2) Chevron actually

Sonora Diamond Corp. v. Superior Ct., 83 Cal.

Id. at 542.

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"As a practical matter,

Three new factual

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made operations decisions (such as the decision to continue

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drilling); and (3) a Chevron employee was the superintendent of the

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KS Endeavor responsible for the day-to-day operations of the rig.

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Those allegations are enough to render plausible the possibility

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that CNL acted as Chevron's agent.

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dismissed on this ground.

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United States District Court

For the Northern District of California

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2.

Plaintiffs' claims cannot be

Injury in Fact

"To establish the irreducible constitutional minimum of
standing, a plaintiff invoking federal jurisdiction must establish

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injury in fact, causation, and a likelihood that a favorable

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decision will redress the plaintiff's alleged injury."

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City & Cnty. of San Francisco, 656 F.3d 1002, 1005 (9th Cir. 2011)

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(internal quotation marks omitted).

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invasion of a legally protected interest which is . . . concrete

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and particularized."

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560 (1992).

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the pleadings stage, as "[s]tanding merely requires a redressable

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injury that is fairly traceable to Defendants' conduct.

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plaintiff can recover for that injury under a particular theory of

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liability is a separate question."

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F. Supp. 2d 1145, 1161 (C.D. Cal. 2010).

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though, "there must be specific allegations that each lead

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Plaintiff suffered some loss."

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Supp. 2d 883, 901 (C.D. Cal. 2011).

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Carrico v.

An injury in fact is "an

Lujan v. Defenders of Wildlife, 504 U.S. 555,

This is not usually a difficult standard to meet at

Whether a

In re Toyota Motor Corp., 754
At the very minimum,

In re Toyota Motor Corp., 785 F.

The Court found that Plaintiffs' original complaint failed to

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establish standing because Plaintiffs did not plead any injury in

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fact to the named plaintiffs.

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noted that Plaintiffs had merely listed general categories of

Dismissal Order at 9-10.

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The Court

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damages they allegedly suffered.

But nowhere did they explain how

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the explosion or fire on the KS Endeavor harmed Plaintiffs.

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did Plaintiffs plead facts that would establish the "concrete and

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particularized" injury required by Lujan.

Nor

The Court explained:

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There is no discussion whatsoever of how a fire on an
offshore
rig
damaged
the
businesses,
livelihoods,
property, or health of Dr. Ogala 4 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."
But there are no
allegations that the damaged livestock belonged to
Plaintiffs, that the Plaintiffs' livelihoods depended on
fisheries, that the contaminated water or soil harmed
them or their property, or that the "general health
breakdown" affected them.

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United States District Court

For the Northern District of California

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Id. at 10 (citation omitted).

The Court even alluded to the sort

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of facts that might be sufficient to establish standing, explaining

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that Plaintiffs needed to provide "some indication of what property

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was damaged, who suffered what physical injuries, and how the

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damage or injuries resulted from Defendants' conduct . . . ."

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Dismissal Order at 10.

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the proposition that "[T]here must be specific allegations that

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each lead Plaintiff suffered some loss."

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Supp. 2d at 901).

Finally, the Court quoted In re Toyota for

Id. at 9 (quoting 785 F.

Despite this clear instruction, Plaintiffs have not resolved

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the defects with their allegations of injury.

The FAC alleges that

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"Plaintiffs have suffered: losses to their livelihood;

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environmental disaster impacting upon food and water supplies;

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health problems all arising out of the gross negligence of the

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4

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Plaintiffs have clarified that Dr. Ogola's name was misspelled in
all of Plaintiffs' documents filed prior to June 17, 2014. ECF No.
37.

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Defendant."

FAC ¶ 3.

That claim is copied almost verbatim from

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the original complaint.

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further allege that that their "entitlement to compensation arises

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out of their common and joint ownership, possession and entitlement

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to use the land, ocean, rivers and waterways for farming, fishing,

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general dwelling and community activities."

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allegation is new.

See ECF No. 1 ("Compl.") ¶ 3.

Id. 3.

They

That

Additionally, the FAC includes the claim that

United States District Court

For the Northern District of California

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The explosion caused a massive escape of both hydrocarbon
gas and pollutants from the drilling operations to be
discharged into the ocean in an area only some 5 nautical
miles from the shoreline. The ingress of both hydrocarbon
gas and pollutants impacted upon the fish stocks within
the ocean and were carried inland by tides into creeks
and soil. Wells supplying fresh water were affected.
Rivers inland and fed by the sea were poisoned.
Additionally the fire itself which burned for some 46
days killed immense fish stock.
Each community comprises individuals whose livelihood was
reliant upon fishing and they have had their industry
devastated; persons eating fish that did survive or have
drunk polluted water have sustained illness and sickness
caused by gas and discharged pollutants affecting both
fish and water, all proximately and directly caused by
the failures on the part of the Defendant as alleged.

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FAC ¶ 30.

This allegation is also new.

These facts help establish

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the connection between Chevron's alleged negligence and the alleged

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environmental damage.

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concrete injury suffered by the plaintiffs in this case.

But the FAC still fails to plead any

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The named plaintiffs are Dr. Foster Ogola, Elder Endure

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Humphrey Fisei, Mr. Fresh Talent, Matthew Kingdom Mieseigha,

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Chris Wilfred Itonyo, and Natto Iyela Gbarabe.

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standing, Plaintiffs must explain specifically how each of these

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people was injured.

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personally have been injured, not that injury has been suffered by

To establish

Plaintiffs "must allege and show that they

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which they purport to represent."

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502 (1975).

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See Opp'n at 7 ("In a prospective class action, the court must

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assess standing to sue based upon the standing of the named

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plaintiff(s) and not upon the standing of unidentified class

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members.") (citing id.).

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United States District Court

other, unidentified members of the class to which they belong and

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For the Northern District of California

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of injury to unidentified class members.

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describe any injury to any of the named plaintiffs.

Warth v. Seldin, 422 U.S. 490,

Plaintiffs appear to be aware of that requirement.

But their FAC includes only allegations
Nowhere does the FAC ever
Plaintiffs

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must describe a specific injury to each of the named plaintiffs.

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Because they fail to do so, their FAC is insufficient to establish

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standing for their negligence claims.

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The Court clearly explained this defect, and even suggested

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how it might be corrected, in the dismissal of Plaintiffs' original

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complaint.

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cure the defect in their pleadings.

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Court to dismiss Plaintiffs' claims with prejudice.

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sympathetic to Chevron's arguments but is also cognizant of the

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Ninth Circuit's directive that leave to amend should be freely

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granted.

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their FAC, it is not yet clear to the Court that one more

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opportunity to amend would necessarily be futile.

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Plaintiffs' negligence claims are DISMISSED WITH LEAVE TO AMEND.

Plaintiffs disregarded that explanation and failed to
Accordingly, Chevron urges the
The Court is

Despite Plaintiffs' failure to correct this problem in

Therefore,

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B.

Nuisance Claim

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Plaintiffs' fourth cause of action is nuisance.

Neither the

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original complaint nor the FAC specifies whether Plaintiffs bring

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this claim under Nigerian law or California law, but both parties

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analyze the claim under California law. 5

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23-24.

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indicates that Plaintiffs bring a public, rather than private,

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nuisance claim.

Though the FAC asserts a count only for "Nuisance," it

FAC ¶ 89.

In its order dismissing Plaintiffs' original complaint, the

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See Mot. at 13; Opp'n at

Court explained that:

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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.").

United States District Court

For the Northern District of California

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Dismissal Order at 14.

Generally, public nuisance claims are

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brought by governmental entities.

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Ct., 50 Cal. 4th 35, 55 (Cal. 2010).

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suffered a special injury that is different in kind, not just

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degree, from the general public" may private individuals bring a

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suit for public nuisance.

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App. 4th 1540, 1544 (Cal. Ct. App. 2009).

Cnty. of Santa Clara v. Superior
"[O]nly where they have

Birke v. Oakwood Worldwide, 169 Cal.

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Plaintiffs appear to recognize this requirement, arguing that

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"[t]he special damage bearing upon loss of income claims have been

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indicated within the lists provided and further discovery will

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elicit further the damage injury and inconvenience affecting the

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population comprising the class."

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provided" apparently refers to lists of the 65,000 members of the

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purported plaintiff class and are apparently in the custody of

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Plaintiffs' lawyer in Nigeria.

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Opp'n at 24.

The "lists

Plaintiffs claim to have provided

Plaintiffs mention briefly that California and Nigerian nuisance
laws are similar. Opp'n at 23. Neither party has briefed the
issue of extraterritorial application of California law in this
case.

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these lists to Chevron, but the lists are not incorporated into the

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FAC and have never been produced to the Court.

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discussed in the section on injury in fact above, Plaintiffs have

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failed to allege any specific injury to the named plaintiffs.

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Consequently, Plaintiffs have not adequately pleaded that they

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suffered any injury at all, much less an injury different in kind

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from other members of the public.

United States District Court

As

Once again, the Court notes that it provided clear direction

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For the Northern District of California

See id. at 3.

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to Plaintiffs on how to fix this problem with their pleadings.

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However, the Court is not yet entirely convinced that one more

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chance to amend the pleadings would be futile.

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nuisance claims are therefore DISMISSED WITH LEAVE TO AMEND.

Plaintiffs'

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C.

Motion to Strike or Dismiss Class Action Allegations

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Chevron also brings a motion to strike Plaintiffs' class

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action allegations.

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authorized by Federal Rules of Civil Procedure 23(d)(1)(D) and

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23(c)(1)(A).

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purported class under Rules 23(a) and 23(b) and argues that

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Plaintiffs cannot bring a class action in this case.

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respond that Chevron's motion is premature, and that, were the

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Court to consider the motion on its merits, they have sufficiently

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plead their class action allegations.

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Chevron argues that such motions are

Mot. at 13.

Chevron proceeds to analyze Plaintiffs'

Plaintiffs

Opp'n at 13-23.

Even were the Court to permit Chevron's motion at this stage

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of the proceedings, it would be denied.

The Court is not convinced

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from Chevron's brief that Plaintiffs' class action could succeed

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under no set of circumstances.

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that this is one of the rare and exceptional cases in which class

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allegations should be stricken at the motion to dismiss stage.

Chevron has failed to demonstrate

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Accordingly, Chevron's motion to strike or dismiss the class

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allegations on the pleadings is DENIED.

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V. CONCLUSION
For the foregoing reasons, the Court GRANTS Defendant Chevron

strike.

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United States District Court

Corporation's motion to dismiss and DENIES Chevron's motion to

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For the Northern District of California

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Plaintiffs may amend their FAC only to add facts demonstrating that

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(1) the named plaintiffs suffered injury sufficient to confer

Plaintiffs' FAC is DISMISSED with leave to amend.

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standing and (2) the named plaintiffs suffered harm different in

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kind to support private maintenance of public nuisance claims.

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Plaintiffs shall file an amended complaint that addresses the

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concerns identified above within fourteen (14) 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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IT IS SO ORDERED.

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Dated: August 21, 2014
UNITED STATES DISTRICT JUDGE

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