Grynberg et al v. Total Compagnie Francaise Des Petroles et al

Filing 74

MEMORANDUM OPINION re pending motions. Signed by Judge Leonard P. Stark on 9/18/12. (ntl)

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IN THE UNITED STATES ~!STRICT COURT
FOR THE DISTRICT dF DELAWARE
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JACK J. GRYNBERG and PRICASPIAN
DEVELOPMENT CORPORATION,
Plaintiffs,
v.
C.A. No. 10-1088-LPS
TOTAL COMPAGNIE FRANCAISE DES
PETROLES, TOTAL FINA ELF, S.A.,
TOTAL S.A., ROYAL DUTCH PETROLEUM
COMPANY, SHELL TRANSPORT AND
TRADING CO., P.L.C., SHELL PETROLEUM
N.V., SHELL EXPLORATION B.V., and SHELL
INTERNATIONAL EXPLORATION AND
PRODUCTION B.V. f/k/a SHELL
.,
INTERNATIONALE PETROLEUM
•'
MAATSCHAPPIJ B.V.,
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Defendants.
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Richard A. Barkasy, Esq., SCHNADER HARRISON SEGAL & LEWIS LLP, Wilmington, DE.
David Smith, Esq. and Stephen A. Fogdall, Esq., SCifrnADER HARRISON SEGAL & LEWIS
LLP, Philadelphia, PA.
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Attorneys for Plaintiffs.
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Collins J. Seitz, Jr., Esq., Bradley R. Aronstam, Esq.,l SEITZ ROSS ARONSTAM & MORITZ
LLP, Wilmington, DE.
Graham Kerin Blair, Esq., David A. Brakebill, Esq., 1mdrew C. Biberstein, Esq., BAKER &
MCKENZIE LLP, Houston, TX.
Phillip B. Dye, Jr., Esq. and Jennifer H. Davidow, Es ., VINSON & ELKINS LLP, Houston, TX.
Attorneys for Defendants Royal Dutch Petrol urn Company, Shell Transport and Trading
Co, P.L.C., Shell Petroleum N.V., Shell Expl ration B.V., and Shell International
Exploration and Production B.V. f/k/a/ Shell nternational Petroleum Maatschappij B.V.
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Kevin J. Mangan, Esq., WOMBLE CARLYLE SANPRIGE & RICE, PLLC, Wilmington, DE.
John Bowman, Esq., Jennifer Price, Esq., Kevin Clar~, Esq., KING & SPALDING LLP,
Houston, TX.
Attorneys for Defendant Total, S.A.
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MEMORANDUM !OPINION
September 18, 2012
Wilmington, Delaware

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STARK, U.S. District Judge:

Plaintiffs Jack Grynberg ("Grynberg") and Pr,caspian Development Corporation ("PDC")
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(collectively, "Plaintiffs") brought this lawsuit agai, defendants Total S.A. ("Total") 1 and
Royal Dutch Petroleum Company, Shell Transport a~d Trading Co, P.L.C., Shell Petroleum
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N.V., Shell Exploration B.V., and Shell IntemationaliExploration and Production B.V. f/k/a/
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Shell International Petroleum Maatschappij B.V. (col~ectively, "Shell" and, together with Total,
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hereinafter, "Defendants") to recover Plaintiffs' purpfrted share of revenue from Kazakh oil
fields allegedly discovered by Grynberg.

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Pending before the Court are multiple motionf: Defendants' Motions to Take Judicial
Notice (D.I. 13; D.l. 19; D.l. 31), Plaintiffs' Motions ror Leave to File Surreplies (D.I. 42; D.l.
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43; D.I. 44), Plaintiffs' Motion to Strike (D.I. 26), D,fendants' Motions to Dismiss (D.I. 11; D.l.
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15; D.I. 17), and Defendants' Motions for Sanctions ~D.I. 56; D.l. 65).
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For the reasons set forth below, the Court

wil~ grant Defendants' Motions to Take
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Judicial Notice, grant Plaintiffs' Motions for Leave

t1 File Surreplies, deny Plaintiffs' Motion to
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Strike, grant in part and deny in part Defendants' MoFons to Dismiss, and grant Defendants'
Motions for Sanctions.

Total Compagnie Francaise des Petroles and ~otal Fina Elf, S.A. are names under which
Total, S.A. previously operated; they are not separatelentities. (D.I. 12, Ex. B ~ 12)
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BACKGROVND2

I.

The Parties
Grynberg has been engaged in the intemationtl petroleum industry for over forty years.
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(D.I. 10 ~ 18) PDC is a Texas corporation headquarttred in Denver, Colorado. (Id

~ 17)

PDC

is the assignee of a substantial portion of Grynberg' s lleged rights relating to the instant claims.
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(!d)
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Total is incorporated under the laws of Franc~ and operates a vertically integrated
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enterprise to supply energy, chemicals, and other profucts throughout the world. (Id

~ 19)

Shell

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operates a vertically integrated enterprise to supply o~l, natural gas, and other products
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throughout the world. (ld

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20)
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II.

Factual Back~round
In 1989, the Chairman ofthe Attestation

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Co~mittee ofthe Union of Soviet Socialist
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Republics invited Grynberg to Moscow to review "s<fret Soviet seismic data" from the Caspian
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Sea, as well as data from onshore sites in Northweste~ Kazakhstan. (ld

~~ 37-38)

In November

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1989, Grynberg traveled to Moscow and spent one wfek reviewing the seismic data. (ld

~ 38)

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From his analysis ofthe information, Grynberg mappfd a Carboniferous reef in the Northeastern
Caspian Sea, close to shore. (Id) Grynberg refers tolthe mapped area as the Greater Kashagan
Oil Fields ("GKOF"). (Id

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~ 28)

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Later, in November 1989, at the request of thi United States Department of State,
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0n a motion to dismiss brought pursuant to ~ed. R. Civ. P. 12(b)(6), the Court must
accept all factual allegations contained in the compla nt as true and draw all reasonable
inferences in favor of the non-moving party. See Os iver v. Levin, Fishbein, Sedran & Berman,
38 F.3d 1380, 1384 (3d Cir. 1994).
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Grynberg gave a tour to a Kazakh delegation of his cattle feeding operations located near Denver,
Colorado. (Id ~ 39) The delegation was led by the then-First Secretary of Kazakhstan,
Nursultan Abishevich Nazarbaev. (!d) During a diter Grynberg hosted at his home for the
delegation, Nazarbaev invited Grynberg and his teaml to visit Kazakhstan to consider a potential
investment in oil, natural gas, and mining. (!d.) In rJsponse to Nazarbaev's invitation, in
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February 1990 Grynberg brought two teams to

Kaz~stan.

(Id

~ 40)

One team studied

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Kazakhstan's oil and natural gas fields while the oth,r team studied mining opportunities. (!d)
Grynberg's trip to Kazakhstan confirmed his belieft~at the GKOF had significant potential for
oil and natural gas production. (Id

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41)

In July 1990, Grynberg met with representatiies often Western oil companies, including
Total and Shell, in an attempt to form a consortium t4 develop and produce the GKOF. (Id

~ 45)

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On July 20, 1990, Total accepted Grynberg's propos,l to establish a joint venture pursuant to
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which Total agreed to pay Grynberg a net twenty perlent profits interest. (Id ~ 47) Grynberg
alleges that, thereafter, Total used Grynberg's confid ntial information and political contacts to
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acquire an interest in the GKOF without involving Gtynberg. (Id ~~ 50-51)
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Also in July 1990, Grynberg met with Shell r1presentatives in his Denver office. (Id
~53) Grynberg presented his seismic data to the Shep representatives, and the Shell

representatives agreed to enter into a "joint venture" tith Grynberg to develop the GKOF. (!d)
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In June 1993, a Total subsidiary, Shell, and oter oil companies entered into a
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Preliminary Consortium Agreement ("PCA") with Ktzakhstan, thereby forming the "North
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Caspian Sea Consortium" ("Consortium"). (D.I. 12113) Grynberg was not involved in the
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PCA. (!d) In December 1993, the same parties,

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aga~n without Grynberg, signed a Consortium

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Agreement, granting rights to explore the Kazakh sector of the North Caspian Sea for
hydrocarbons. (Jd.) In November 1997, the memberf ofthe Consortium entered into a
Production Sharing Agreement ("PSA") with the

K4akh government. (!d) The PSA granted

Consortium members the right to develop and produ1e hydrocarbons in certain blocks in the
Kazakh sector ofthe North Caspian Sea, including thf GKOF. (/d.)
Grynberg alleges that Defendants were only +le to join the PSA due to their participation
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in a conspiracy spearheaded by James Giffen, an oil qonsultant and purported agent of the United
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States Government. (D.I. 10 ,-r,-r 63-66) Grynberg

cla~ms that Giffen assisted in negotiating the

PSA among the members of the Consortium, includi g Total and Shell, and the Kazakh
government. (Id. ,-r 64) According to Grynberg, the greement was only possible as a result of
the Consortium's payment of a $17 5 million dollar btibe to Kazakh officials. (/d. ,-r 65)
Grynberg asserts that the bribe permitted the Consorttum members to obtain the concession to
develop the GKOF, thereby stealing Grynberg's origiral discovery. (!d.)

III.

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Prior Liti2ation

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A.

The Colorado Actions 3

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In 2003, Grynberg, Grynberg Production Co1oration, and Grynberg Petroleum Company
sued Total in the United States District Court for the pistrict of Colorado. (See D.l. 12, Ex. 9)
Grynberg simultaneously brought identical claims in

~he District of Colorado against Shell.

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3

As the pending Motions to Dismiss are prem sed on the doctrine of claim preclusion, the
Court may take judicial notice of previous related act ons without converting the Motions to
Dismiss into motions for summary judgment. See M & M Stone Co. v. Pa. Dep 't. of Envtl. Prot.,
388 Fed. Appx. 156, 162 (3d Cir. July 28, 2010).
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4

The lawsuits filed against Total and Shell in the District of Colorado will be referred to
collectively as the "Colorado Actions."
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(D.I. 18 at 4) Among other claims, Grynberg allegedlthat Total and Shell breached fiduciary
duties owed to the plaintiffs in the Colorado Actions Fd were unjustly enriched when they
appropriated the plaintiffs' original confidential inforbation regarding the GKOF. (!d. at 4-5;
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D.l. 12 at 5) The Colorado plaintiffs sought damage~ equal to a twenty percent net profits share
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of Total's and Shell's interests under the PSA, as

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as a constructive trust and an accounting.

(D.I. 12 ~ 16 & Ex. A-9 ~~ 42-44; D.l. 18 at 4-5)
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In 2006, the District Court in Colorado granter summary judgment in favor of the
defendants in both Colorado Actions on the basis tha Grynberg's claims were time-barred under
the Colorado statute of limitations. See Grynberg v. fhell Exploration B. V, 433 F. Supp. 2d
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1229 (D. Colo. 2006); Grynberg v. Total, 2006 WL 11517731 (D. Colo. May 31, 2006). On
consolidated appeal, the Tenth Circuit affirmed both ~lings. See Grynberg v. Total SA., 538
F.3d 1336 (I Oth Cir. 2008). On March 9, 2009, the

~.S. Supreme Court denied the Colorado
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plaintiffs' petition for a writ of certiorari. See Grynbf'g v. Total SA., 129 S. Ct. 1585 (2009).
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B.

The New York Actions
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Following the Tenth Circuit's decision, PDC pled suits against Royal Dutch Shell, p.l.c.
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("RDS") and Total in the United States District Cou~ for the Southern District ofNew York. 5
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(D.I. 12 ~ 18; D.l. 18 at 6) In the New York Actions,!PDC sought a declaratory judgment that it
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was entitled to share in the profits from RDS's and Tptal's interest in the GKOF. (D.I. 12 ~ 18;
D.I. 18 at 6) The District Court held that PDC' s clai+s were time-barred and barred under the
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doctrine of res judicata. See Pricaspian Dev. Corp.~. Total SA., 2009 WL 4163513 (S.D.N.Y.

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The lawsuits filed against Total and RDS in tpe Southern District ofNew York will be
referred to collectively as the "New York Actions."

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Nov. 25, 2009); Pricaspian Dev. Corp. v. Royal Dut~h Shell, 2009 WL 1564110 (S.D.N.Y. June
3, 2009). Accordingly, both suits were dismissed wit prejudice. On appeal, the Second Circuit
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affirmed the dismissals in separate summary orders. ~ee Pricaspian Dev. Corp. v. Total SA.,
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397 Fed. Appx. 673 (2d Cir. Oct. 21, 2010);

Pricaspi~n Dev.

Corp. v. Royal Dutch Shell, plc,

382 Fed. Appx. 100 (2d Cir. June 29, 2010).

IV.

ProceduralBackeround
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Plaintiffs filed the instant suit in this District ?n December 10,2010. (D.I. 1) (hereinafter,
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the "Original Complaint") Plaintiffs' Original

Comp~aint

asserted claims of unjust enrichment,

misappropriation of trade secrets, breach of contract, 1and breach of fiduciary duty. On March 16,
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2011, Plaintiffs filed an amended complaint,

droppin~

each of the foregoing causes of action.

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(D.I. 10) (hereinafter, the "Amended Complaint") ln'their Amended Complaint, Plaintiffs assert
a due process claim as well as a claim under Article ~ 17 of the Civil Code of the Republic of
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Kazakhstan, which is a general tort liability provisiod. (!d. ~~ 68-81) Plaintiffs seek damages for
Defendants' alleged misappropriation ofGrynberg's j'original discovery" ofthe GKOF. (!d.
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~~ 1-3, 14) Plaintiffs claim that Defendants are liabl~ to Grynberg for twenty percent of the net

profits earned from the production of oil and natural

~as

in the GKOF. (!d.

~~

19-21)

The parties completed briefing on the proced~ral motions on August 12, 2011. (See D.l.
55) The Court heard oral argument on these motions! on October 31, 2011. See Mot. Hr' g Tr.,
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Oct. 31,2011 (D.I. 67) (hereinafter "Tr."). The parti¢s completed briefing on Defendants'
sanctions motions on December 8, 2011. (See D.l. 71)

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LEGALSTAN)>ARDS
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Motion to Dismiss Pursuant to Rule 12(b)(T)
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Federal Rule of Civil Procedure 12(b)(2) dire?ts the Court to dismiss a case when it lacks
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personal jurisdiction over the defendant.

Determinin~ the existence of personal jurisdiction
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requires a two-part analysis. First, the Court analyze$ the long-arm statute of the state in which
the Court is located. See IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254,259 (3d Cir. 1998).
Next, the Court must determine whether exercising Nrisdiction over the defendant in this state
comports with the Due Process Clause of the Constit~tion. See id. Due Process is satisfied if the
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Court finds the existence of "minimum contacts" between the non-resident defendant and the
forum state, "such that the maintenance of the suit does not offend traditional notions of fair play
and substantial justice." Int'l Shoe Co. v. Washingtoh, 326 U.S. 310,316 (1945) (internal
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quotation marks omitted).
Once a jurisdictional defense has been raised,: the plaintiff bears the burden of
establishing, by a preponderance of the evidence and iwith reasonable particularity, the existence
of sufficient minimum contacts between the defendarh and the forum to support jurisdiction. See
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Provident Nat'! Bankv. Cal. Fed. Sav. & Loan Ass'n~ 819 F.2d 434,437 (3d Cir. 1987); Time
Share Vacation Club v. At!. Resorts, Ltd., 735 F.2d 6~, 66 (3d Cir. 1984). To meet this burden,
the plaintiff must produce "sworn affidavits or other fOmpetent evidence," since a Rule 12(b)(2)
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motion "requires resolution of factual issues outside 1he pleadings." Time Share, 735 F.2d at 67
n. 9; see also Philips Elec. N Am. Corp. v. Contec Cflrp., 2004 WL 503602, at *3 (D. Del. Mar.
11, 2004) ("After discovery has begun, the plaintiffna.ust sustain [its] burden by establishing
jurisdictional facts through sworn affidavits or other competent evidence.").

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If no evidentiary hearing has been held, a

plai~tiff "need only establish a prima facie case

ofpersonaljurisdiction." O'Connor v. Sandy Lane !fotel Co., 496 F.3d 312,316 (3d Cir. 2007).
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A plaintiff "presents a prima facie case for the exercire of personal jurisdiction by establishing
with reasonable particularity sufficient contacts betwfen the defendant and the forum state."
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Mellon Bank (E.) PSFS, Nat. Ass 'n v. Farino, 960 F .td 1217, 1223 (3d Cir. 1992). On a motion
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to dismiss for lack of personal jurisdiction, "the plain(tiff is entitled to have its allegations taken
as true and all factual disputes drawn in its favor." Miller Yacht Sales, Inc. v. Smith, 384 F.3d
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93, 97 (3d Cir. 2004 ). A court is always free to revish the issue of personal jurisdiction if it later
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is revealed that the facts alleged in support of jurisdiition are in dispute. See Metcalfe v.
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Renaissance Marine, Inc., 566 F.3d 324,331 (3d Cid 2009).

The Supreme Court has held that "where issuts arise as to jurisdiction or venue,
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discovery is available to ascertain the facts bearing o~ such issues." Oppenheimer Fund, Inc. v.
Sanders, 437 U.S. 340,351 n.13 (1978). The Third ¢ircuit instructs that if"the plaintiffs claim

is not clearly frivolous, the district court should ordi~arily allow discovery on jurisdiction in
order to aid the plaintiff in discharging ... [its] burd~n." Metcalft, 566 F.3d at 336; see also
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Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass'n,l107 F.3d 1026, 1042 (3d Cir. 1997)

("[G]enerally ... jurisdictional discovery should be ~llowed unless the plaintiffs claim is
'clearly frivolous."'). Jurisdictional discovery may b~ denied "where the party that bears the
burden of establishing jurisdiction fails to establish a threshold prima facie showing of personal
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jurisdiction." S. Seafood Co. v. Holt Cargo Sys., Inc., 1997 WL 539763, at *8 (E.D. Pa. Aug. 11,
1997) (internal quotation marks omitted). "A prima facie case requires factual allegations that
suggest with reasonable particularity the possible exi$tence of the requisite contacts between [the
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party] and the forum state." !d. (internal quotation mfirks omitted).

II.

Motion to Dismiss Pursuant to Rule 12(b)(§)
Evaluating a motion to dismiss under FederaliRule of Civil Procedure 12(b)(6) requires

the Court to accept as true all material allegations ofthe complaint. See Spruill v. Gillis, 372
F.3d 218, 223 (3d Cir. 2004 ). "The issue is not whet~er a plaintiff will ultimately prevail but
whether the claimant is entitled to offer evidence to *pport the claims." In re Burlington Coat
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Factory Sees. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997) (internal quotation marks omitted).
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Thus, the Court may grant such a motion to dismiss only if, after "accepting all well-pleaded
allegations in the complaint as true, and viewing

the~

in the light most favorable to plaintiff,

plaintiff is not entitled to relief." Maio v. Aetna, Inc. I 221 F .3d 4 72, 481-82 (3d Cir. 2000)
(internal quotation marks omitted).
However, "[t]o survive a motion to dismiss,

~civil

plaintiff must allege facts that 'raise a

right to relief above the speculative level on the assmpption that the allegations in the complaint
are true (even if doubtful in fact)."' Victaulic Co. v. fieman, 499 F.3d 227, 234 (3d Cir. 2007)
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(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 5p5 (2007)). While heightened fact pleading
is not required, "enough facts to state a claim to relief that is plausible on its face" must be
alleged. Twombly, 550 U.S. at 570. A claim is faciatly plausible "when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 671 (2009). At bottom, "[t]he
complaint must state enough facts to raise a reasonab~e expectation that discovery will reveal
evidence of [each] necessary element" of a plaintiffs claim. Wilkerson v. New Media Tech.
Charter Sch. Inc., 522 F.3d 315,321 (3d Cir. 2008) (internal quotation marks omitted). "[W]hen

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the allegations in a complaint, however true, could not raise a claim of entitlement to relief, this
basic deficiency should ... be exposed at the point of minimum expenditure oftime and money
by the parties and the court." Twombly, 550 U.S. at ~58 (internal quotation marks omitted). Nor
is the Court obligated to accept as true "bald assertio*s," Morse v. Lower Merion Sch. Dist., 132
F.3d 902, 906 (3d Cir. 1997) (internal quotation mar~s omitted), "unsupported conclusions and
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unwarranted inferences," Schuylkill Energy Res., Inc. v. Pa. Power & Light Co., 113 F.3d 405,
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417 (3d Cir. 1997), or allegations that are "self-evideptly false," Nami v. Fauver, 82 F.3d 63, 69
(3d Cir. 1996).

III.

Motion for Sanctions

Pursuant to Federal Rule of Civil Procedure 1l1(b), an attorney or party "presenting to the
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court a pleading, written motion, or other paper - whfther by signing, filing, submitting, or later
advocating it" - certifies that "it is not being presented for any improper purpose, such as to
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harass ... or needlessly increase the cost of litigation~" that the claims "are warranted by existing
law" or an objectively reasonable argument for a ch~ge in existing law, and "the factual
contentions have evidentiary support." Rule 11 is "intended to discourage pleadings that are
frivolous, legally unreasonable, or without factual fo4ndation, even though the paper was not
filed in subjective bad faith." Napier v. Thirty or More Unidentified Fed. Agents, 855 F.2d 1080,
1090-91 (3d Cir. 1988). In the Third Circuit, conduct violates Rule 11 if is not "objectively
reasonable under the circumstances." Aria v. Unde~riting Members ofSyndicate 53 at Lloyds
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for 1998 Year ofAccount, 618 F.3d 277, 297 (3d Cir.2010) (internal quotation marks omitted).
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A court may, pursuant to its inherent authority, impose sanctions against a party who

abuses the judicial process. See Republic of Philippines v. Westinghouse Elec. Corp., 43 F.3d 65,
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73 (3d Cir. 1994); see also Chambers v. NASCO, Inc., 501 U.S. 32,42-44 (1991).

DISCUSSION
I.

Motions for Judicial Notice
Total and Shell separately filed motions

requ~sting
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that the Court take judicial notice of

opinions and court filings from various related cases filed in the District of Colorado, the
Southern District ofNew York, the Second Circuit, ard the Tenth Circuit. (See D.I. 13; D.I. 19)
Additionally, Shell requests that the Court take judidal notice of proceedings before the Supreme
Court ofNew York, New York County as well as the' Court of Queen's Bench of Alberta,
Canada. (See D.I. 31) These motions are largely unqpposed. (See D.I. 27; D.I. 28)6
In connection with a 12(b)( 6) motion in whic~ claim preclusion is invoked, a court may
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take judicial notice of public records. SeeM & M St6ne Co., 388 Fed. Appx. at 162. In taking
judicial notice of a prior judicial opinion, a court may not use the opinion to establish the truth of
the facts therein, but only to establish the existence of the opinion. See id.
Here, the Court finds it helpful in resolving t4e pending motions to consider the judicial
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opinions and related documents referenced by Defen~ants. Accordingly, the Court will grant
Defendants' Motions to Take Judicial Notice and he*by takes judicial notice of the documents
attached to these motions.

II.

Motions for Leave to File Surreplies
Plaintiffs have requested leave to file surreply briefs in response to Defendants' Motions

to Dismiss. (See D.I. 42; D.I. 43; D.I. 44) Total opposes Plaintiffs' request and argues that it

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Plaintiffs did not file a response to Shell's Sl)pplemental Motion for Judicial Notice (D.I.
31 ), and, thus the Court presumes Plaintiffs also hav~ no objection to the Court taking judicial
notice of the documents submitted in conjunction with this motion.

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would be unfair to permit Plaintiffs to file a surreply at this stage of the proceedings. (Tr. at 37;
see also D.l. 45) Shell does not object to Plaintiffs' request. (D.I. 46)
The Court concludes that Plaintiffs' proposed; surreplies will be helpful to the Court in
resolving the pending motions. Accordingly, the

Co~rt

will grant Plaintiffs' Motions for Leave

to File Surreplies. Plaintiffs' proposed surreplies (Dt 42, Ex. A; D.l. 43, Ex. A; D.l. 44, Ex. A)
are hereby deemed filed.

III.

Motion to Strike

Plaintiffs request that the Court strike Shell's Rule 12(b)(6) motion (D.I. 17)- which was
filed on the next business day after Shell filed its Rule 12(b)(2) motion - on the basis that
successive motions to dismiss under Rule 12(b) are prohibited by Federal Rule of Civil
Procedure 12(g)(2). (D.I. 26 at 1) See generally Myers v. Am. Dental Ass'n., 695 F.2d 716,720
(3d Cir. 1982) ("Rule 12(g) requires a party who

rais~s

a defense by motion prior to answer to

raise all such possible defenses in a single motion.") (emphasis added). Shell responds that,
when read together, Rule 12(g) and Rule 12(h) operate to exempt a Rule 12(b)(6) defense from
the requirement that all 12(b) motions must be filed at the same time. (D.I. 24 at 3)
Alternatively, Shell requests that, even if the Court deems its 12(b)(6) motion to be untimely, the
Court exercise its discretion to decide the motion on its merits. (Id at 4)
Rule 12(g)(2) states: "Except as provided in lule 12(h)(2) or (3), a party that makes a
motion under this rule [i.e., Rule 12] must not make another motion under this rule raising a
defense or objection that was available to the party but omitted from its earlier motion." Rule
12(h)(2), in turn, provides that a defense of failure to state a claim upon which relief can be
granted may be raised in any pleading allowed or ordered under Rule 7(a), or by motion for
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judgment on the pleadings, or at trial. See Fed. R. Civ. P. 12(h)(2)(A)-(C).
This case does not present an occasion to decide whether Shell's motion should be
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dismissed as untimely because, under the circumstandes, the Court will exercise its discretion
and decide the issues raised in Shell's Rule 12(b)( 6) motion even if it is considered untimely. 7
"The aim of Rule 12 is to afford an easy method for the presentation of defenses but at the same
time prevent their use for purposes of delay." Myers, 695 F.2d at 720 (internal quotation marks
omitted). In light of the fact that Shell filed its Rule l2(b)(6) motion one business day after the
filing of its Rule 12(b)(2) motion, and that co-defendant Total had filed a motion to dismiss
based on both Rule 12(b)(2) and 12(b)(6) on the day Shell filed its first motion, the Court finds
no evidence of delay. 8 Accordingly, the Court will d~ny Plaintiffs' Motion to Strike.
IV.

Rule 12(b)(2) Motions to Dismiss for Lack ~f Personal Jurisdiction
Both Defendants have moved to dismiss the Amended Complaint for lack of personal

jurisdiction, pursuant to Fed. R. Civ. P. 12(b)(2). Total contends that this Court does not have
personal jurisdiction over it because none of the alleg~d conduct that forms the basis of
Plaintiffs' claims occurred in Delaware, Total does n<!>t engage in any persistent course of
conduct in Delaware, and Plaintiffs have not identified any specific actions by which indirect

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0ther courts have exercised their discretion to decide a Rule 12(b)(6) motion on its
merits even when filed after another Rule 12(b) motion. See, e.g., Tatum v. R.J Reynolds
Tobacco Co., 2007 WL 1612580, at *6 (M.D.N.C. May 31, 2007) (citing cases); In re
Westinghouse Sees. Litig., 1998 WL 119554, at *6 (W.D. Pa. Mar. 12, 1998) (same).
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Plaintiffs' concerns about page-limits for briefing under the local rules (see D.l. 40 at 3)
are misplaced, as Plaintiffs were able to file responsive briefing and surreply briefing related to
Shell's Rule 12(b)(6) motion. Shell did not gain an unfair advantage by being able to file a
subsequent Rule 12(b) motion.
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Delaware subsidiaries are the alter ego of Total. (D.L 12 at 3)9 Similarly, Shell contends that
this Court does not have personal jurisdiction over it because the litigation has no connection to
Delaware, Shell does not have a substantial, systemic, and continuous presence in Delaware, and
Plaintiffs have not met their burden to establish personal jurisdiction under the alter ego or
agency theories. (D.I. 16 at 2)
In response, Plaintiffs argue that this Court ha:s general personal jurisdiction over Total
and Shell. With respect to Total, Plaintiffs argue that personal jurisdiction is present because
Total, "through its Delaware subsidiaries ... regularly does or solicits business in Delaware and
engages in a persistent course of conduct in Delaware." (D.I. 23 at 2-3) With respect to Shell,
Plaintiffs argue general personal jurisdiction is established both because Shell has utilized the
benefits of Delaware corporate law to form, merge, ot acquire Delaware subsidiaries, "which
they have used to generate billions of dollars of earnings," and because Shell's wholly-owned
Delaware subsidiaries "serve as their agents in Delaware." (D.I. 24 at 1-2) In the alternative,
Plaintiffs ask that if the Court concludes they have failed to state a prima facie case of personal
jurisdiction, the Court should still deny the motions to dismiss and grant Plaintiffs the
opportunity to take jurisdictional discovery. (D.I. 23 at 18-20; D.l. 24 at 2-3, 19-20)
Given that all Defendants have also moved to.dismiss for failure to state a claim, pursuant
to Rule 12(b)(6), the Court inquired into the parties' views as to whether the Court had to
determine if it had personal jurisdiction before it could decide the 12(b)(6) motions. All parties

9

Total raised substantially similar arguments in conjunction with a motion to dismiss for
lack of personal jurisdiction in a related case filed by Plaintiffs against Total in this District, C.A.
No. 10-1093-LPS. In the related case, the Court, by Memorandum Order issued the same date as
this Memorandum Opinion in the instant action, has granted Total's motion to dismiss for lack of
personal jurisdiction. (See C.A. No. 10-1093-LPS D.l. 26)
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responded that it would be acceptable to them for the Court to presume it has jurisdiction over all
Defendants and proceed to decide the 12(b)(6) motions. (See Tr. at 22-23, 34-35, 59) This
approach would be consistent with that taken by the District Court in the New York Actions. See
Pricaspian, 2009 WL 4163513, at *7 ("Because this Court finds that the Plaintiffs claims are
barred by the prior litigation in Colorado, it need not wade into the nuanced world of personal
jurisdiction.").
The Supreme Court has held that "a federal cQurt generally may not rule on the merits of
a case without first determining that it has jurisdiction over the category of claim in suit (subjectmatter jurisdiction) and the parties (personal jurisdict~on)." Sinochem Int 'l Co. Ltd. v. Malaysia
Int 'l Shipping Corp., 549 U.S. 422, 430-31 (2007) (emphasis added). Here, there is no question
that the Court has subject matter jurisdiction (at least pursuant to 28 U.S.C. § 1332) or that
Plaintiffs have standing to sue. 10 There is, however, Qbviously a dispute as to whether this Court
has personal jurisdiction. Unfortunately, resolution of this issue is substantially more
complicated than resolution of the issue as to whether Plaintiffs have even stated a claim on
which relief may be granted. This is because, among other reasons, Plaintiffs would need to be
permitted to take jurisdictional discovery in order to hope to meet their burden on personal
jurisdiction. By contrast, for reasons that will be discussed below, the 12(b)(6) issues are
relatively easier to resolve, as the Amended Complaint asserts claims on which Plaintiffs plainly

10

ln this regard, the instant case is distinguishable from cases in which courts have found
it necessary to address personal jurisdiction prior to r¢aching the merits. See, e.g., Steel Co. v.
Citizens for Better Env 't., 523 U.S. 83, 94-95 (1998) (rejecting practice of assuming jurisdiction
where there is question as to Article III standing); Tagayun v. Lever & Stolzenberg, 239 Fed.
Appx. 708, 709-10 (3d Cir. Mar. 15, 2007) (determining court must assess personal jurisdiction
before reaching merits where there was question over whether court had subject matter
jurisdiction).
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cannot be granted relief. Indeed, the Court is granting Defendants' Motions for Sanctions due to
the filing of these claims.
Under these circumstances, the Court conclucles that the most appropriate course of
action is to proceed to review the issues presented in Defendants' 12(b)(6) motions to dismiss.
Before the Court could make a determination on the merits as to personal jurisdiction, it would
be necessary first to permit Plaintiffs to take jurisdictional discovery, as the Court concludes that
Plaintiffs have failed to make out a prima facie case of personal jurisdiction at this time. But,
even if this discovery - which could take some subst()ntial time to complete, and would impose
financial and other burdens on all parties, and could also generate discovery disputes that would
require judicial attention- proved that this Court has personal jurisdiction over Defendants, the
Court would still dismiss this case, for reasons to be discussed in connection with the 12(b)( 6)
motions. Therefore, the Court is unwilling to permit the jurisdictional discovery. See generally
Mass. Sch. of Law at Andover, 107 F.3d at 1042 ("[G]enerally ... jurisdictional discovery should

be allowed unless the plaintiffs claim is 'clearly frivolous."'); see also generally Fed. R. Civ. P.
1 (stating Federal Rules of Civil Procedure "should be construed and administered to secure the
just, speedy, and inexpensive determination of every action and proceeding"). However, without
the evidence that might be acquired through discovery, Plaintiffs are unable to meet their burden
to establish personal jurisdiction. Accordingly, under these unusual circumstances, the Court
will grant Defendants' motions to dismiss for lack of personal jurisdiction.
Below, the Court proceeds to review the 12(b)(6) motions, explaining that they are
meritorious and that Plaintiffs have failed to state a claim on which relief may be granted. It is
for these reasons that the Court has concluded, as stated above, that it is appropriate to deny
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Plaintiffs' request for jurisdictional discovery, resultihg in a situation in which Plaintiffs have
failed to meet their burden with respect to personal jurisdiction.

V.

Rule 12(b)(6) Motion to Dismiss
Defendants seek to dismiss the Amended Cmnplaint based on statute of limitations and

res judicata grounds. (See D.I. 12; D.I. 18) Defendants also seek to dismiss Plaintiffs' due

process claim on the ground that it fails to state a claim upon which relief can be granted. The
Court addresses each argument in tum.

A.

Applicable Statute of Limitations
1.

Delaware's

Borrowin~

Statute

The statute of limitations issue raised in Defendants' 12(b)( 6) motions requires that the
Court first determine which state's law to apply. "[A] federal court, sitting in diversity, follows
the forum's choice of law rules to determine the applicable statute of limitations." Ross v. JohnsManville Corp., 766 F.2d 823, 826 (3d Cir. 1985). Thus, the Court looks to Delaware law for the

applicable choice of law rules.
Traditionally, statutes of limitations are governed by forum law; however, Delaware's
borrowing statute has modified the traditional rule. See Nat 'I Iranian Oil Co. v. Mapco Int 'I,
Inc., 983 F.2d 485, 494 (3d Cir. 1992). When a non-resident plaintiff files an action in Delaware

for claims arising outside of the state, the Delaware borrowing statute applies. See id.; see also
10 DEL. C.§ 8121. The Delaware borrowing statute provides:

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Where a cause of action arises outside of this state, an action
cannot be brought in a court of this State to enforce such a cause of
action after the expiration of whichever is shorter, the time limited
by the law of this State, or the time limited by the law of the state
or country where the cause of action arose, for bringing an action
upon such cause of action.
10 DEL. C.§ 8121.

2.

Applicability of the Borrowi!H~ Statute

Plaintiffs argue that the Court should not apply Delaware's borrowing statue literally.
Plaintiffs contend that the borrowing statute "only applies to prevent litigants from bringing
actions in Delaware solely to take advantage of a longer statute of limitations in Delaware than in
the more appropriate forum for the lawsuit." (D.I. 23 at 8) (emphasis in original) According to
Plaintiffs, because Delaware's statute oflimitations is not longer than Kazakhstan's limitations
period, the borrowing statute does not apply.
Plaintiffs rely on the Delaware Supreme Court's decision in Saudi Basic Indus. Corp. v.
Mobil Yanbu Petrochemical Co., 866 A.2d 1 (Del. 2005). In Saudi Basic, the plaintiff

strategically chose Delaware as its forum with the knowledge that Delaware's statute of
limitations would bar the defendant's counterclaim. See id. at 17. The defendant argued that the
shorter Delaware statute of limitations should not be applied because its counterclaim was still
valid in the state where the claim had arisen. See id. The Court agreed with the defendant,
concluding that a "literal construction ofthe borrowing statute ... would subvert the statute's
underlying purpose." Id. at 16.
Delaware's borrowing statute is "designed to prevent shopping for the most favorable
forum." Id. In the instant case, unlike Saudi Basic, a literal construction of the borrowing statue

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would not subvert the statute's underlying purpose. To the contrary, the application of the
borrowing statute in the instant case falls squarely within the statute's purpose.
Delaware is the third jurisdiction in which Plaintiffs have brought claims seeking to
recover from Defendants for alleged unjust enrichment arising out of Defendants' interest in the
GKOF. Plaintiffs assert their claims are not subject to any statute of limitations periodalthough two other federal district courts have found their claims to be time-barred. Under the
circumstances, the Court is not convinced by Plaintiffs' protestations that they are not engaged in
forum shopping. Accordingly, the Court will apply the Delaware borrowing statute.
Under the Delaware borrowing statute, the Court must apply the shorter of the Delaware
statute of limitations and the statue of limitations of the place where Plaintiffs' causes of action
accrued. Thus, the Court will next address where Plaintiffs' causes of action accrued.

3.

Most Sienificant Relationship Test

Delaware conflict of law rules direct that the Court determine where Plaintiffs' claims
arose by application of the "most significant relationship" test, as set forth in the Restatement
(Second) Conflict of Laws ("Restatement")§§ 145 and 188 (1971). See Travelers Indem. Co. v.
Lake, 594 A.2d 38,47 (Del. 1991). Under section 188, the rights and duties ofthe parties are

determined by the local law of the state with the most significant relationship to the transaction
and to the parties, based on the following considerations: a) the place of contracting, b) the place
of negotiation of the contract, c) the place of performance, d) the location of the subject matter of
the contract, and e) the domicile, residence, or place of incorporation and place of business of the
parties. See Restatement § 188. When deciding a choice of law issue, "Delaware courts place
considerable emphasis on the place where the injury occurred and the place where the conduct
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causing the injury occurred." Travelers, 594 A.2d at 47.
Plaintiffs contend that the dispute is most significantly related to Kazakhstan.
Specifically, Plaintiffs argue that Kazakhstan is both the place of injury and the place where the
conduct causing the injury occurred. In Plaintiffs' view, Total's and Shell's unlawful conductparticipation in the $175 million bribery scheme- occurred in Kazakhstan. (D.I. 23 at 11)
Plaintiffs further assert that "[t]he concession between the Kazakh government and defendant's
consortium provides substantial benefits to the Kazakh government and its people," that
"Kazakhstan has the most significant relationship to the GKOF, and to the alleged conduct
involving the consortium to develop the GKOF," and that "Kazakhstan is the state 'most deeply
affected' by the parties' dispute." (D.I. 25 at 6-7)
The Court is not persuaded by Plaintiffs' arguments. Plaintiff Grynberg is a resident of
Colorado; PlaintiffPDC is incorporated in Texas and headquartered in Colorado. (D.I. 30 at 5)
A corporation sustains injury where it is incorporated and where it has offices. See Pricaspian,
2009 WL 1564110, at *8. The sole meeting between Total and Grynberg took place in Colorado.
(D.I. 30 at 5) In PDC's New York Action against Total, the Court found that "Colorado is the
place where Plaintiff sustained its alleged injury." Pricaspian, 397 Fed. Appx. at 676. Likewise,
in PDC's New York Action against Shell, the Court concluded that PDC's causes of action
accrued in Colorado. See Pricaspian, 2009 WL 1564110, at *8. The Court concludes that
Colorado has the most significant relationship to the transaction at issue and is the place where
the causes of action asserted in the instant case accrued.
Therefore, under the borrowing statute, the Court must apply the shorter of Colorado's or
Delaware's statute of limitations. Both states' statute of limitations is three years. See
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Strerenbuch v. Goss, 266 P.3d 428, 437 (Colo. App. 2011) (stating there is "three-year statute of
limitations for contract actions"); Fike v. Ruger, 754 A.2d 254, 260 (Del. Ch. 1999) ("Under
Delaware law, a three year statute of limitations applies to claims for breach of contract or breach
of fiduciary duty.").
Accordingly, the causes of action asserted in the Amended Complaint are barred if the
conduct giving rise to them occurred three years prior to the date of the filing of the Original
Complaint. As discussed below, due to application of the doctrine of res judicata, Plaintiffs are
barred from contesting the fact that the three year statute of limitations bars the claims asserted in
the instant action.
B.

Res Judicata

Res judicata, or claim preclusion, prevents parties from "contesting matters that they have
had a full and fair opportunity to litigate." Montana v. United States, 440 U.S. 147, 153-54
(1979). Under Colorado law, 11 claim preclusion applies "where four elements exist: (1) finality
of the first judgment; (2) identity of subject matter; (3) identity of claims for relief; and (4)
identity or privity between parties to the actions." Gallegos v. Colo. Ground Water Comm 'n, 147
P.3d 20, 32 (Colo. 2006). In accordance with the principles of res judiciata, the claims in the
instant action are barred by the judgments in the Colorado actions.
1.

Finality of Jud~ment

The Colorado judgments in favor of Shell and Total are final judgments. See Grynberg,
129 S. Ct. 1585 (denying petition for writ of certiorari). Plaintiffs argue that under Colorado law,

11

As discussed above, Colorado has the most significant relationship to the instant case.
Thus, under Delaware choice of law rules, the Court must apply Colorado law to decide the
issues in the 12(b)(6) motions.
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"a ruling on limitations grounds is not a ruling on the merits and thus has no claim preclusive
effect." (D.I. 23 at 6) Plaintiffs' argument fails, however, because, under Colorado law, a ruling
on the merits is not a necessary element of claim preclusion. See Gallegos, 147 P.3d at 32; see

also Nwosun v. Gen. Mills Rest., Inc., 124 F.3d 1255, 1257 (lOth Cir. 1997) ("A judgment for
failure to comply with the statute oflimitations is a judgment on the merits."). Also, in the New
York Actions, the Southern District of New York found that the judgments in the Colorado
Actions met the finality requirement for res judicata purposes. See Pricaspian, 2009 WL
4163513, at *5; Pricaspian, 2009 WL 1564110, at *8. This Court agrees.

2.

Identity of Subject Matter

The Colorado, New York, and Delaware complaints are all premised on Grynberg's
interest in the GKOF and Defendants' misuse ofGrynberg's proprietary information. All three
complaints allege that Grynberg obtained secret information through his personal relationships
with Russian and Kazakh officials, that Grynberg and Defendants entered into agreements
regarding the exploration of the GKOF, and that Grynberg was later denied his rightful share of
his interest.
The Shell Defendants summarized the similarities of the complaints brought against them
in Colorado, New York, and Delaware as follows:
All three Complaints allege that "[ o]n or about July 17, 1990,
Grynberg advised Shell that Grynberg had been assured in its
discussions with [top] Kazakhstan officials[ ... ] that the Republic
of Kazakhstan was interested in[ ... ] participating as a grantor of
oil and natural gas [... ] rights to, and as a partner with, a group of
western oil companies to be organized by Grynberg." Colo.
Compl. ~ 5; N.Y. Compl. ~ 10; Del. Compl., D.l. 10, ~52. All
three Complaints allege a single meeting with Messrs. De Heer and
Lovelock in Colorado, where de Heer and Lovelock were presented
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with "confidential maps" and "geologic, seismic, and economic
data." Colo. Compl. ~ 5; N.Y. Compl. ~ 10; Del. Compl., D.I. 10,
~53. The data reviewed at this meeting came from Mr. Grynberg's
access to secret (or "top-secret") Soviet seismic data in Moscow in
late 1989. Colo. Compl. ~ 17; N.Y. Compl. ~ 9; Del. Compl., D.I.
10, ~ 38. In Colorado and New York, this information "persuaded"
de Heer and Lovelock "on behalf of Shell, to enter into an
agreement in principle with Grynberg related to the development of
a [highly] profitable and potentially gigantic oil and natural gas
industry in the AMI in Kazakhstan." Colo. Compl. ~ 5; N.Y.
Compl. ~ 10. Plaintiffs now characterize this agreement-inprinciple as a "joint venture," even after they dropped their claim
for breach of fiduciary duty. See Del. Compl., D.I. 10, ~53.
(D.I. 18 at 13)
The subject matter in the complaints filed in the Colorado Actions and the complaint filed
in the instant action against Total are also identical. The complaints all recite that in 1989-90
Grynberg made contacts with Kazakh officials and was given access to secret Russian seismic
data, to which he applied his skills to develop valuable, confidential information, and from which
he identified the area that became known as Kashagan.

3.

Identity of Claims

Colorado applies a transactional approach in determining whether claims share identity.
See Argus Real Estate, Inc. v. E-470 Pub. Highway Auth., 109 P.3d 604, 608 (Colo. 2005). In
determining whether claims arise from the same transaction, the Court must look to pragmatic
considerations, such as "whether the facts are related in time, space, origin, or motivation,
whether they form a convenient trial unit, and whether their treatment as a unit conforms to the
parties' expectations." Camus v. State Farm Mut. Auto Ins. Co., 151 P.3d 678,680 (Colo. App.
2006). "[C]laim preclusion bars relitigation not only of all claims actually decided, but of all
claims that might have been decided if the claims are tied to the same injury." Argus Real
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Estate, 109 P.3d at 609. Attaching a new label or proposing a new legal theory does not
distinguish a claim seeking the same relief for the same injury. !d.
Plaintiffs argue that the claims they press in the instant case did not accrue until
November 2010, "when the District Court presiding over Giffen's prosecution disclosed in open
court for the first time that secret United States government documents confirmed Giffen's

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public authority defense." (D.I. 25 at 13) Plaintiffs assert that their claims, based on "criminal
bribes of top Kazakh government officials," were unknown and, thus, did not exist the time of
the Colorado and New York rulings. !d. Plaintiffs cite Lawlor v. Nat 'I Screen Serv. Corp., 349
U.S. 322, 328-29 (1955), for the proposition that claim preclusion does not apply to claims that
did not exist, or were unknown, at the time of the prior action.
The Court disagrees with Plaintiffs and finds, instead, that Plaintiffs' claims did exist as
early as during the pendency of the Colorado Actions. The information disclosed with respect to
Giffen did not create a new claim. To the contrary, Plaintiffs' claims are barred because they are
tied to the same injury and could have been brought at the time of the Colorado Actions.
Although Plaintiffs did not raise the current bribery and conspiracy allegations in the
Colorado or New York Actions, the injury and remedy sought is identical in the complaints filed
in all three Districts. The injury of which Plaintiffs complain is that Total and Shell did not
include Grynberg in the Consortium and did not share their rights under the PSA with Grynberg
or compensate him for use of his proprietary information and services. As for remedy, Plaintiffs
seek a twenty percent interest in Total's and Shell's pro rata share in the GKOF- precisely the
relief sought in the Colorado and New York Actions. (Compare, e.g., D.l. 10 at 19-21 with D.l.
12, Ex. 9 at 18-19)

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The claims in the instant action are the same as those asserted in the Colorado and New
York Actions: they are based not just on facts that are related in time, space, and origin, but on
precisely the same factual narrative. Therefore, the Court finds that the claims asserted in
Colorado, New York, and the instant case arise from the same transaction and are identical
claims for purposes of res judicata.

4.

Identity of Parties

Colorado law requires "that the parties be the same as those in the first action or persons
in privity with them." Cruz v. Benine, 984 P.2d 1173, 1176 (Colo. 1999). Plaintiffs do not
dispute that the parties in the Colorado Actions and the instant action share identity.
Total was a defendant in one ofGrynberg's Colorado Actions. See Grynberg, 2006 WL
1517731. Grynberg brought the other Colorado Action against the same five Shell entities
named in the instant suit. However, the claims against Royal Dutch Shell, Shell Transport, and
Shell Petroleum were dismissed for lack of personal jurisdiction. The Colorado court entered
summary judgment in favor of Shell Exploration, B. V. and Shell International Exploration and
Production B.V. See Grynberg, 433 F. Supp. 2d at 1230. The Shell entities dismissed for lack of
personal jurisdiction in Colorado were named in PDC's New York complaint. The New York
court found that Royal Dutch, Shell Transport, and Shell Petroleum were in privity with Shell
Exploration and Shell International. Therefore, all five Shell defendants named in the instant
complaint were either granted summary judgment in the Colorado Action or were in privity with
the entities in the Colorado Action that were granted summary judgment.
Accordingly, the Court finds that the four elements of claim preclusion are satisfied and
Plaintiffs' claims must be dismissed.
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C.

Due Process

In addition to dismissal on res judicata grounds, Count II of the Amended Complaint also
must be dismissed because it fails to state a claim upon which relief can be granted. In Count II,
Plaintiffs claim that Total and Shell violated Grynberg's procedural and substantive due process
rights under the Fifth Amendment by acting in concert with James Giffen, an agent of the United
States government, to bribe Kazakh officials and deprive Grynberg of his property. (See D.l. 10
~~

74-81) Plaintiffs argue that Defendants' participation in an integrated alliance with a federal

agent makes them federal actors. (See id.)
A limited private right of action exists for damages against federal officials alleged to
have violated a citizen's constitutional rights. See Bivens v. Six Unknown Fed. Narcotics Agents,
403 U.S. 388 (1971). In Malesko v. Correctional Servs. Corp., 534 U.S. 61, 66 (2001), the
Supreme Court addressed whether the damages action first recognized in Bivens "should be
extended to allow recovery against a private corporation operating a halfway house under
contract with the Bureau of Prisons." The Malesko Court held that a Bivens action could not be
brought against such a defendant. !d.
The parties disagree over the scope of Malesko. Defendants contend that Malesko stands
for the broad proposition that no due process cause of action exists for constitutional violations
perpetrated by private corporations. (D.I. 18 at 20) Plaintiffs counter that Malesko's holding
only applies to the narrow category of defendants that the Court addressed in Malesko: private
prison corporations. (D.I. 44, Ex. A at 4) According to Plaintiffs, the "comprehensive scheme of
administrative remedies" available to prison inmates acted as a "special factor counseling
hesitation" in the Court's decision to not extend the Bivens remedy. (D.I. 25 at 17) Here,
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Plaintiffs argue, there is no analogous remedy "for addressing the Shell Defendants' violations of
plaintiffs' due process rights." (!d.)
Plaintiffs' narrow reading of Malesko is incorrect. The Supreme Court stated in Malesko:
"The Courts of Appeals have divided on whether FDIC v. Meyer, 510 U.S. 471 (1994),

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forecloses the extension of Bivens to private entities .... We hold today that it does." 534 U.S.
at 66 n.2. Likewise, the Third Circuit, citing Malesko, has held that a plaintiff could not bring a

Bivens action against a corporate defendant because "the Supreme Court has explicitly refused to
extend Bivens actions to private corporations." Bob v. Kuo, 2010 WL 2825644, at *2 (3d Cir.
July 20, 2010); see also Castaneda v. United States, 546 F.3d 682, 701 n.25 (9th Cir. 2008)
(explaining that Bivens relief is precluded in "a lawsuit against ... a private corporation").
Total is a corporation organized under the laws of France. The Shell Defendants are
corporations organized under the laws of the Netherlands and the United Kingdom. Based on

Malesko, Plaintiffs may not bring a Bivens action against Total or Shell. Therefore, Plaintiffs
have failed to state a claim on which relief can be granted in Count II of the Amended Complaint
and Plaintiffs' due process claim must be dismissed.

VI.

Motions for Sanctions
A.

Timeliness of Total's Motion

Plaintiffs argue that Total's Motion for Sanctions should be denied as procedurally
improper because (1) Total did not wait the required twenty-one days to file the motion after
serving Plaintiffs with its brief in support of sanctions, 12 and (2) Total did not file its motion

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Total also argues that the brief filed with the Court was not identical to the brief served
on Plaintiffs. (D.I. 60 at 7) However, having examined the briefs, the Court concludes that the
differences were not material; the changes were stylistic and did not alter the substance of the
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promptly but instead served its motion on Plaintiffs 140 days after Plaintiffs had filed their
Amended Complaint. (D.I. 60 at 3 ~ 1)
Plaintiffs' arguments are unpersuasive. First, the fact that Total did not wait twenty-one
days to file its sanctions motion with the Court after serving it on Plaintiffs does not warrant
dismissal ofthe motion. The purpose ofthe twenty-one day requirement of Rule 11 is to give a
party time to "withdraw[] or appropriately correct[]" the "challenged paper, claim, defense,
contention, or denial." Fed. R. Civ. P. 11(c)(2). The Third Circuit has stated that failure to
comply with the twenty-one day notice requirement is not a bar to consideration of the merits of a
motion for sanctions when the party opposing sanctions states it would not have withdrawn the
allegedly sanctionable pleading. See Zuk v. E. Pa. Psychiatric Institute, 103 F.3d 294, 299 n.3
(3d Cir. 1997) (stating that Court "need not address" non-moving party's contention that it did
not receive requisite twenty-one days notice where non-moving party "acknowledged that he
would not have withdrawn the complaint even if he had been given the full21-day safe harbor").
Here, Plaintiffs' counsel stated that Plaintiffs would not withdraw the Amended Complaint that
is the basis for the sanctions motion. (See D.I. 57, Ex. 2 ("[W]e will not withdraw our clients'
claims in response to your frivolous motion for sanctions.")) Thus, Total's failure to fully
comply with Rule 11 's safe harbor period does not warrant dismissing Total's sanctions motion.
Second, although the Rule 11 Advisory Committee notes state that "[o]rdinarily, the
motion should be served promptly after the inappropriate paper is filed," no specific time
requirement is imposed. Fed. R. Civ. P. 11 adv. comm. notes (1993) (emphasis added). In light
of the discussions among Total, Shell, and Plaintiffs in an effort to resolve the sanctions issue

motion.

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prior to bringing it to the Court's attention (see D.I. 62 ,-r 6), there is no evidence that Total
unreasonably delayed filing its sanctions motion.

B.

Sanctionable Conduct
1.

Plaintiffs' Counsel

Defendants contend that Plaintiffs' counsel's refusal to withdraw the Original Complaint
and decision to file an unsupported Amended Complaint violates three subsections of Rule 11:
(b)(1) (pleading presented for improper purpose), (b)(2) (claims unwarranted and frivolous), and
(b )(3) (lack of evidentiary support for factual contentions). The Court concludes that both the
Original and the Amended Complaint were unwarranted and frivolous and, thus, filed in
violation of Rule 11(b)(2). Accordingly, the Court finds that Rule 11 sanctions should be
imposed on Plaintiffs' counsel.
Plaintiffs' counsel's conduct in refusing to withdraw the Original Complaint and in filing
the Amended Complaint was not objectively reasonable under the circumstances. By signing the
Complaints, Plaintiffs' counsel certified that "the claims, defenses, and other legal contentions
are warranted by existing law or by a nonfrivolous argument for extending, modifying, or
reversing existing law or for establishing new law." Fed. R. Civ. P. 11(b)(2). Yet there is no
evidence or credible argument supporting the asserted claims. The Original and Amended
Complaints in the instant case are based on the same factual narrative as the Colorado and New
York Actions. Indeed, Counts I through V of the Original Complaint and Counts I and II in the
Amended Complaint seek the same remedy that was sought in the previous actions: "the cash
value of a 20% carried interest in [Defendants'] pro rata share in the GKOF." (Compare D.I. 1

,-r,-r 69(iii), 74(i), 83(i), 91 (i) and D.I. 10 ,-r,-r 73(i), 81 (i) with D.I. 12 ,-r,-r 38-42 and D.I. 21, Ex. 11
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15-25)
An attorney acting reasonably would have realized that merely asserting a new legal

theory - Kazakh statutory law and due process violations - would not avoid the estoppel and
limitations bars ofthe Colorado and New York Actions. Because the Colorado court determined
that Grynberg's claim accrued no later than 1997, Plaintiffs are collaterally estopped from relitigating this determination. Further, regardless of the legal theory asserted, Plaintiffs' Original
and Amended Complaints in the instant case assert claims that arise out of the same facts and
seek the same relief as was sought in the prior actions; accordingly, these claims are barred by the
doctrine of res judicata. See Arizona v. California, 530 U.S. 392, 424 (2000) (Rehnquist, J.,
concurring) ("Res judicata not only bars relitigation of claims previously litigated, but also
precludes claims that could have been brought in earlier proceedings.") (emphasis added); see

also In re Mullarkey, 536 F.3d 215,225 (3d Cir. 2008). Based on the facts pled in the Original
and Amended Complaints, it is evident to the Court - and should have been evident to counsel that the claims asserted in the instant action could have (and should have) been brought in the
Colorado Actions.
Further, an attorney acting reasonably would have realized that, even to the extent the
claims being asserted now are based on "new" evidence about bribery, these claims would be
barred by the applicable statute of limitations. Grynberg' s sworn testimony demonstrates that he
knew, during the pendency of the Colorado Actions, the essential facts upon which the bribery
allegations are based. (See D.l. 66, Ex. D at 47-48) This raises an "obvious" limitations issue
which should have deterred counsel from proceeding with these claims. See Zuk, 103 F.3d at 299
(sanctions imposed where adequate investigation would have avoided "obvious" limitations

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issue).
In sum, the Court concludes that Plaintiffs' counsel did not have a reasonable basis to
believe that the claims asserted in Plaintiffs' Original and Amended Complaints were warranted
by existing law - or by a nonfrivolous argument for extending, modifying, or reversing existing
law or for establishing new law - because they assert claims that are plainly barred by res

judicata and the applicable statute of limitations. Thus, the Court will impose sanctions on
Plaintiffs' counsel for violation of Rule 11 (b)(2). 13

2.

Plaintiffs

"[A] district court has inherent authority to impose sanctions upon those who ... abuse
the judicial process." Republic of Philippines, 43 F.3d at 73; see also Chambers, 501 U.S. at 4244. In order to impose sanctions under its inherent powers, "the court must consider the conduct
at issue and explain why the conduct warrants sanction." Republic of Philippines, 43 F.3d at 74.
Here, Plaintiffs were personally responsible for seeking to file another lawsuit. Although

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it was Plaintiffs' counsel who ultimately filed the offending Original Complaint and Amended
Complaint with the Court, it is evident that Plaintiffs directed their counsel to file their claims
despite knowing that such litigation had already been dismissed by two other district courts
(dismissals that were upheld on appeal). Thus, the Court concludes that Plaintiffs abused the
judicial process and acted in bad faith in filing the instant lawsuit. The mere fact that Plaintiffs'
counsel aided in the wrongdoing does not relieve Plaintiffs of responsibility as well. See id.
("[A] client cannot always avoid the consequences of the acts or omissions of its counsel.").

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Based on the Court's finding that sanctions are appropriate pursuant to Rule 11(b)(2),
the Court will not address Total's argument that sanctions are also appropriate pursuant to 28
U.S.C. § 1927 (see D.I. 57 at 9-10).
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Grynberg and PDC were parties to the Colorado and New York Actions. Although the
Court cannot expect a non-attorney to have a full understanding of the law, here the district
courts in New York and Colorado informed Plaintiffs in their rulings that any claims are barred if
the claims could or should have been brought in an earlier case based on the same facts. See,
e.g., Pricaspian, 2009 WL 4163513, at *5; Pricaspian, 2009 WL 1564110, at *6. Further, these

courts informed Plaintiffs that, in determining whether new claims arise out of the same facts, the
focus is on the injury alleged. Moreover, Mr. Grynberg is an experienced litigant who has been
involved in numerous lawsuits. (See D.I. 66 at 17 n.31 (stating that, as of October 15,2011,
Grynberg or his companies have been plaintiffs in at least 199 federal court cases); see also id. at
1 n.l (listing federal court cases involving Grynberg's claim to share of profits related to
development of oil in Caspian Sea)) Based on Grynberg's experience with previous litigation
and his decision to bring this new lawsuit despite the holdings ofthe Colorado and New York
courts, the Court concludes that Grynberg acted in bad faith. 14 Absent imposition of sanctions,
Plaintiffs will likely attempt to file this lawsuit in yet another forum, wasting the judicial
resources of another federal court.

3.

Appropriate Sanctions

Having determined that sanctions are warranted in this case, the Court will now tum to
addressing the appropriate sanctions to impose against Plaintiffs and their counsel. As will be

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The Court's conclusion that Grynberg acted in bad faith is supported by the fact that he
has a history of filing lawsuits knowing that they are frivolous and foreclosed by previous
holdings. See L&R Exploration Venture v. Grynberg, 927 N.Y.S.2d 816, at *8 (N.Y. Sup. Ct.
Apr. 19, 2011) (finding Grynberg in contempt of court for commencing action relating to same
underlying conduct already foreclosed by court order); see also 2009 ABQB 452 (Alberta Ct. of
Queens Bench, July 24, 2009) (holding Grynberg in contempt for filing lawsuits in violation of
court's injunction order).
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discussed below, the Court concludes that attorney's fees and costs are an appropriate sanction.
By separate Order the Court will outline the procedure for submitting fee requests, which will be
reviewed at a later time in order to determine the appropriate amount of attorney's fees and costs
to be awarded and the proportion of those fees and costs to be paid by Plaintiffs and Plaintiffs'
counsel.

a.

Plaintiffs' Counsel

As discussed above, the Court has determined that Plaintiffs' counsel violated Rule
11 (b)(2) by filing a pleading that was not warranted by existing law or by a nonfrivolous
argument for extending, modifying, or reversing existing law. Thus, the Court can impose an
appropriate sanction against Plaintiffs' attorney and his law firm, 15 including "an order directing
payment to the movant of part or all of the reasonable attorney's fees and other expenses directly
resulting from the violation." Fed. R. Civ. P. 11(c)(4).

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The goal of sanctions is deterrence, and a "district court's choice of deterrent is
appropriate when it is the minimum that will serve to adequately deter the undesirable behavior."

Zuk, 103 F.3d at 301. In determining appropriate sanctions, a district court should consider the
following factors: (1) whether the attorney has a history of this sort of behavior, (2) the
defendant's need for compensation, (3) the degree of frivolousness, and (4) the wilfulness of the
violation. !d.
Here, Plaintiffs' counsel have no history of this sort ofbehavior, and the instant case
appears to be an isolated incident. Defendants have a significant need for compensation, as their

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"Absent exceptional circumstances, a law firm must be held jointly responsible for a
violation committed by its partner, associate, or employee." Fed. R. Civ. P. 11(c)(l).
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attorneys have had to spend considerable time responding to the frivolous Amended Complaint,
briefing multiple motions, preparing for and appearing at a lengthy oral argument, and engaging
in preliminary discovery. The need for compensation is even more significant in light of the fact
that this is the fifth court in which Defendants have had to defend against allegations arising out
of the same conduct- even after having prevailed (including on appeal) in those prior actions.
As the court in one ofthe New York Actions summarized, this case is merely "one of Jack
Grynberg's recent forays into federal court challenging the development of an oil field under the
Caspian Sea in western Kazakhstan." Pricaspian, 2009 WL 4163 513, at *1 (citing eight separate
cases brought in various locations by Grynberg and his affiliates).
The degree of frivolousness in this case is significant. Plaintiffs' counsel filed the instant
case being fully aware ofthe Colorado and New York Actions (see D.I. 60 at 14); they should
also have been aware of the preclusive effect on the claims asserted in the instant action.
Plaintiffs' counsel's assertion that Kazakh law applies does not alter the Court's finding of
frivolousness, as Plaintiffs have failed to advance any legitimate argument explaining why a
claim under Kazakh law could not have been brought in the prior actions, nor any credible
argument as to why the Kazakh three-year statute of limitations does not bar the present action.
Finally, Plaintiffs' counsel's conduct was willful. Counsel was informed by Defendants
that their conduct was likely sanctionable but they nonetheless refused to withdraw the Original
Complaint, instead choosing to assert a non-meritorious argument regarding Kazakh law.
Accordingly, the Court finds that an appropriate sanction to deter future filing of frivolous
lawsuits is that Plaintiffs' counsel pay Defendants' reasonable attorney's fees and costs arising
out of this litigation.
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b.

Plaintiffs

A district court has "discretion ... to fashion an appropriate sanction for conduct which
abuses the judicial process" and "must also ensure that the sanction is tailored to address the
harm identified." Republic of Philippines, 43 F.3d at 74. In determining the appropriate
sanction, the Court must consider "the extent of the party's personal responsibility" as well as
"the magnitude of the wrongdoing." !d. Further, "the court must specifically consider the range
of permissible sanctions and explain why less severe alternatives to the sanction imposed are
inadequate or inappropriate" and "why it has chosen any particular sanction from the range of
alternatives it has identified." !d.
The Court has already discussed why Plaintiffs' conduct warrants sanction and the fact
that Plaintiffs were personally responsible for bringing the instant lawsuit. Filing a frivolous
lawsuit and wasting the judicial resources of this Court, in light of the judicial resources already
expended by two other District Courts and two Courts of Appeals, is of significant magnitude.
The Court can impose a variety of sanctions on a litigant who it finds has abused the
judicial process. The Court could impose a monetary sanction, such as a fine or the imposition
of cost-shifting measures requiring the litigant to pay the costs and attorneys' fees of the other
parties. 16 See Chambers, 501 U.S. at 45 ("[A]ssesment of attorney's fees is undoubtedly within a
court's inherent power as well."); Prosser v. Prosser, 186 F.3d 403,407 (3d Cir. 1999) (stating
"a court may impose a fine under its inherent power"). Additionally, the Court may enjoin a

16

ln order to impose the sanction of requiring a party to pay the other side's attorney's
fees, the Court must make a finding of bad faith. See Chambers v. NASCO, Inc., 501 U.S. 32,46
(1991); In re Schafer Salt Recovery, Inc., 542 F.3d 90, 97 n.3 (3d Cir. 2008). As discussed
above, the Court has determined that Plaintiffs acted in bad faith in bringing this lawsuit.
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party from filing pleadings where the pleadings raise issues identical or similar to those that have
already been adjudicated. See 28 U.S.C. § 1651; Matter of Packer Ave. Assoc., 884 F.2d 745,
747 (3d Cir. 1989).
Here, the Court concludes that requiring Plaintiffs to pay a portion of Defendants'
attorney's fees and costs should sufficiently deter Plaintiffs from bringing further frivolous
litigation. The Court is hopeful that monetary sanctions (which are likely to be quite large) will
deter Plaintiffs from filing lawsuits like this one in the future.
The extreme sanction of prohibiting Plaintiffs from filing further litigation related to this
case is not warranted. As the Third Circuit has noted, "[a]ll of the courts that have considered
whether an injunction restricting a litigant's future litigation may be issued have emphasized that
such an injunction should be narrowly tailored and rarely issued." Matter of Packer Ave.
Assocs., 884 F.2d at 748; see also Adul-Akbar Watson, 901 F.2d 329, 332 (3d Cir. 1990) (noting
that while "the district court [has] the power to issue an injunction to restrict the filing of
meritless pleadings, it is an extreme remedy which must be narrowly tailored and sparingly
used") (internal quotation marks omitted).
CONCLUSION
For the reasons set forth above, the Court will grant Defendants' Motions to Take Judicial
Notice, grant Plaintiffs' Motions for Leave to File Surreplies, and deny Plaintiffs' Motion to
Strike. Additionally, the Court will grant Defendants' Motions to Dismiss based on lack of

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personal jurisdiction under Rule 12(b)(2) and deny as moot their Motions to Dismiss based on
Rule 12(b)(6). Finally, the Court will grant Defendants' Motions for Sanctions. The appropriate
amount of sanctions shall be determined at a later date pursuant to the procedures outlined in the
Order issued this same date. An appropriate Order follows.

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