JMCB, LLC v. The Board of Commerce & Industry et al

Filing 79

ORDER granting 67 Motion to Dismiss for Failure to State a Claim, and Plaintiff's claims are DISMISSED WITHOUT PREJUDICE. Plaintiff shall have twenty-eight (28) days from the Court's ruling on the State Defendants' Motion to Dismiss Certain Claims Pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc. 66) in which to cure the above deficiencies. If Plaintiff fails to do so, Plaintiff's claims will be dismissed with prejudice. Signed by Judge John W. deGravelles on 08/23/2018. (KDC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
JMCB, LLC, ON BEHALF OF ITSELF
AND ALL OTHERS SIMILARLY
SITUATED
CIVIL ACTION
VERSUS
NO. 17-77-JWD-JCW
THE BOARD OF COMMERCE &
INDUSTRY; LOUISIANA
DEPARTMENT OF ECONOMIC
DEVELOPMENT; AND SABINE PASS
LIQUEFACTION, LLC
RULING AND ORDER
This matter comes before the Court on Sabine Pass Liquefaction, LLC’s (“SPL”) Motion
to Dismiss (Doc. 67). Plaintiff JMCB, LLC opposes the motion (Doc. 72), and SPL has filed a
reply (Doc. 76). Oral argument is not necessary. For the following reasons, SPL’s motion is
granted.
I.

Introduction
Defendants in this matter are (1) The Board of Commerce and Industry (the “Board”); (2)

the Louisiana Department of Economic Development (“LDED”) (the “Board” and “LDED” are
collectively, the “State Defendants”); and (3) SPL. (Doc. 61 ¶ 1.) While this motion is made
only by SPL and not the State Defendants (who have filed a separate Motion to Dismiss Certain
Claims Pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc. 66)), SPL seeks dismissal of
all claims in this action (Doc. 67 at 1; Doc. 67-1 at 19.)
This case is about the alleged invalidity of a contract between the State Defendants and
SPL granting an exemption to ad valorem taxes (also known as “property taxes”) (the

“Contract”). The Contract was entered into pursuant to Article VII, Section 21 of the Louisiana
Constitution of 1974, which provides in relevant part:
Section 21. In addition to the homestead exemption provided for in Section 20 of
this Article, the following property and no other shall be exempt from ad valorem
taxation:
...
(F) Notwithstanding any contrary provision of this Section, the State Board of
Commerce and Industry or its successor, with the approval of the governor, may
enter into contracts for the exemption from ad valorem taxes of a new
manufacturing establishment or an addition to an existing manufacturing
establishment, on such terms and conditions as the board, with the approval of the
governor, deems in the best interest of the state.
The exemption shall be for an initial term of no more than five calendar years, and
may be renewed for an additional five years. All property exempted shall be listed
on the assessment rolls and submitted to the Louisiana Tax Commission or its
successor, but no taxes shall be collected thereon during the period of exemption.
The terms “manufacturing establishment” and “addition” as used herein mean a
new plant or establishment or an addition or additions to any existing plant or
establishment which engages in the business of working raw materials into wares
suitable for use or which gives new shapes, qualities or combinations to matter
which already has gone through some artificial process.
La. Const. art. VII, § 21(F) (emphasis added).
Plaintiff is a company that “owns property (land) in Cameron Parish which is subject to
ad valorem taxes for which no exemption is available” (Doc. 61 ¶ 25) and purports to bring this
action on behalf of itself and individuals who “own property in Cameron Parish . . that is subject
to ad valorem taxation, and any and all Cameron Parish governmental bodies that are entitled to
receive Cameron Parish ad valorem taxes, as of October 12, 2016.” (Id. ¶ 36.) Plaintiff maintains
that “it will have an inflated ad valorem tax liability due and payable to Cameron Parish taxing
bodies that receive ad valorem taxes as a result of the exemption granted to SPL through the
Contract.” (Id. ¶ 26.) Further, Plaintiff contends “that it and the class members would, including

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the Cameron Parish taxing bodies that receive ad valorem taxes, benefit from the payment of ad
valorem taxes by SPL.” (Id. ¶ 26.)
Plaintiff’s claims boil down to the following: the Board’s action was improper, and SPL’s
contract for the exemption of ad valorem taxes is thus null, for two reasons. First, SPL stated in
its Application that it was building an “addition to an existing manufacturing establishment . . .
when, in fact, SPL did not have an existing manufacturing plant or establishment of any kind at
the project location at the time the Board considered its application.” (Doc. 61 ¶ 27). Second,
according to Plaintiff, SPL’s facility did not satisfy the definition of “manufacturing
establishment” or “addition” in that it was not “engaged in the business of working raw materials
into wares suitable for use or which gives new shapes, qualities or combinations to matter which
already has gone through some artificial process at that project location and at the time the Board
considered its Application.” (Id.)
The Court has carefully considered the law, the facts in the record, and the arguments and
submissions of the parties and finds that Plaintiff has failed to state a cognizable claim.
Preliminarily, Plaintiff has not responded to any of the substantive arguments raised by SPL, so
SPL’s motion is largely unopposed. But, even putting this aside,1 Plaintiff’s claims must fail.
The documents submitted by SPL in connection with its motion (which are referenced in and
central to Plaintiff’s Amended Complaint and can thus be considered) demonstrate that SPL’s
facility satisfied the definition of “manufacturing establishment” under Louisiana law. Even if it

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Plaintiff did file an Ex Parte Motion for Leave to File Sur-Reply Memorandum in Opposition to [SPL’s] Motion to
Dismiss (Doc. 77) stating in part: “Although Plaintiff did outline sufficient facts in that briefing in support of its
argument that it has stated claims upon which relief may be granted, upon reviewing SPL’s reply memorandum
(Doc 76), Plaintiff shows that some additional briefing which further outlines and details the facts alleged by the
Plaintiff in support of its claims in the Amended Complaint may assist the Court in its consideration of the motion.”
(Doc. 77 at 1–2.) The Court denied Plaintiff’s request as follows: “The briefing order states that ‘Sur-reply briefs
will be permitted only with leave of Court for extraordinary reasons supported by sufficient facts.’ Plaintiff has
failed to demonstrate extraordinary reasons justifying the filing of a sur-reply brief.” (Doc. 78.) The Court agrees
with that decision but notes that, having reviewed the additional brief, the result would still be the same.

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did not, Plaintiff has not shown that the State Defendants’ decision was arbitrary or capricious.
And, lastly, Plaintiff fails to provide any authority (law or regulation) that would invalidate the
Contract because SPL’s manufacturing establishment was new rather than an addition; rather, the
Article VII, Section 21(F) authorizes the tax exemption under either situation without regard to
what is in the application. For all these reasons, Plaintiff has failed to state a claim.
The Court also rejects Plaintiff’s sole procedural argument made in opposition to the
motion. Plaintiff’s entire opposition is centered on the somewhat convoluted argument that,
even though Plaintiff is seeking to invalidate the Contract between SPL and State Defendants,
because the State Defendants have acknowledged that Plaintiff stated a claim, and because the
Court found that SPL is a necessary and indispensable party, then SPL cannot seek dismissal of
the entire Amended Complaint but must rather wait for the adjudication of the claims against the
State Defendants. Putting aside the fact that this contention appears to conflict with basic
fairness and common sense, the entire argument fails because the State Defendants have clearly
and unambiguously said that they deny that Plaintiff has stated a claim and that, if SPL’s motion
is successful, they should be dismissed as well. Thus, Plaintiff is left with no basis for opposing
SPL’s motion.
Nevertheless, the general rule in the Fifth Circuit (and common judicial practice) is to
allow plaintiffs at least one opportunity to amend their complaint following a ruling granting a
motion to dismiss. The Court will act according to this general rule and grant Plaintiff leave to
amend its complaint to cure the deficiencies.

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II.

Relevant Background
The following allegations are taken from the First Amending Class Action Complaint

(Doc. 61) (“Amended Complaint”). They are assumed to be true for purposes of this motion.
Thompson v. City of Waco, Tex., 764 F.3d 500, 502–03 (5th Cir. 2014).
A. The Application Process Generally (According to the Complaint)
Plaintiff alleges that, “[i]n order to apply for the exemption, an advance notification form
must be filed with LDED prior to the beginning of construction or installation of facilities.” (Doc. 61
¶ 6.) “An application must also be filed with LDED during the prescribed time period allowed by the
rules. According to the rules [in Title 13, Chapter 5 of the Louisiana Administrative Code], eligibility
of the applicant and the property for the exemption is reviewed by the Board based upon the facts
and circumstances existing at the time the application is considered.” (Id.). According to Plaintiff,
“[a]n application filed prior to completion of construction may be considered by the Board and a
contract may be executed based upon the best available estimates of the values of the buildings,
equipment and machinery to be made part of the facility, subject to review and approval of the
Project Completion Report and Affidavit of Final Cost.” (Id.) Further, Plaintiff asserts that,
“[a]ssuming the Board votes to approve the exemption request, the exemption itself is evidenced by a
written contract that is signed by the governor of Louisiana, the Board, and the
applicant/manufacturer.” (Id. ¶ 7.)

B. SPL’s Application Process
1. Initial Submissions
On or about April 15, 2011, Didier Consultants, Inc. (“Didier”)—SPL’s consultant—
submitted, on SPL’s behalf, “an Industrial Ad Valorem Tax Exemption Program Application
(‘Application’) and an Advance Notification form to LDED for the purpose of applying for an ad
valorem tax exemption provided for at La. Const. art. VII, § 21(F).” (Doc. 61 ¶ 8.) Plaintiff
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alleges that these documents (1) stated that the “project’s physical address and actual location
was 9243 Gulf Beach Highway, Cameron, Louisiana”; (2) said in the “Product Manufactured”
ection of the Application: “Liquefied Natural Gas”; (3) provided the following in the
“Manufacturing Process” section as a description: “ ‘The manufacturing process begins with
natural gas, which is “worked” into a new quality and combination to matter, defined as liquefied
natural gas, by means of an artificial process’ ”; and (4) “suggested that SPL’s investment
amount in the project, to be considered for the exemption, would be $6,000,000,000.” (Id. ¶ 8.)
Plaintiff also alleges:
The Application indicated that the project type was an “addition to an existing
plant,” and the Advance Notification form indicated that the project type was an
“expansion,” thus implying that SPL had an existing plant or establishment at the
project location and that SPL was applying for an exemption under the “addition to
an existing manufacturing establishment” portion of the constitutional provision.
(Id. ¶ 9.) The Amended Complaint then asserts:
Upon information and belief, Plaintiff avers that SPL did not have an existing
manufacturing plant or establishment of any kind at the project location (9243 Gulf
Beach Hwy., Cameron, Louisiana) at the time that SPL’s Application was
considered by the Board, and was not engaged in the business of working raw
materials into wares suitable for use or which gives new shapes, qualities or
combinations to matter which already has gone through some artificial process. In
fact, upon information and belief, construction on SPL’s facility did not begin until
August 2012 - well after the Application was considered by the Board.
(Id. ¶ 10 (emphasis in original).)
2. State Defendants’ Response to the Application
Around April 18, 2011, LDED sent a letter to SPL, through Didier, saying that it had
received the documentation concerning SPL’s project. (Doc. 61 ¶ 11.) The LDED then
“assigned Application Number 20110659-ITE to SPL’s proposed project.” (Id.)

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A few days later, on April 21, 2011, LDED sent an email to Didier expressing, among
other things, that the consensus after internal discussions about the project was that:
“the manufacturing process as stated does not meet the qualification of
manufacturing. If all the company is doing is taking natural gas and freezing it, that
has not been considered manufacturing by the department or the board. However,
if they are doing additional processing of the natural gas prior to the freezing, then
it could be considered manufacturing. Please get a better description of the
manufacturing process so that we can make a determination.”
(Doc. 61 ¶ 12; see also Doc. 67-2 at 2.)
3. SPL’s Reply to State Defendants’ Response
Plaintiff then makes two allegations on information and belief about SPL’s reply. First,
while SPL provided further information about its purported manufacturing process to LDED, the
information provided by SPL “confirmed that SPL’s process does not meet the qualification of
manufacturing under the constitutional provision” because “SPL’s process simply takes natural
gas and freezes it until it turns into liquid form.” (Doc. 61 ¶ 13.) Second, Plaintiff claims that
“the description of its proposed process in the Application and the additional information
provided comprises all of the descriptions and information SPL provided to LDED about its
process, and the Board did not conduct any independent investigation into whether SPL’s
process qualified as manufacturing under the constitutional provision.” (Id. ¶ 14.)
However, Defendant submits as an exhibit to its opposition the “information [Didier]
supplied in response on behalf of [SPL] to the [LDED] on or about April 27, 2011.” (Doc 67-2
¶ 4.) The first page of this response is an email from someone with Didier to certain individuals
(presumably with LDED) stating, “Thank you so much for spending the time with Daniel and I
yesterday. We appreciate your help. Below is Daniel’s contact information.” (Id. at 3.)
The next two pages appear to be copies of a webpage from SPL’s parent company
Cheniere Energy Partners, L.P. (“Cheniere Partners”), describing the “Sabine Pass” project with
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SPL. (Id. at 4–5.) This page explains how Cheniere Partners “initiated a project to include
liquefaction services at the [SPL] receiving terminal in Cameron Parish” and that “[a]dding
liquefaction capabilities would transform the [SPL] terminal into a bi-directional facility capable
of liquefying and exporting natural gas in addition to importing and regasifying foreign-sourced
LNG.” (Id. at 4.)
The final exhibit, also from a webpage, is titled the “ConocoPhillips Optimized Cascade
Process.” (Id. at 6.) After listing the “several advantages” of this project, the page contains this
graphic of the process:

(Id.) The page then provides a description of the process which includes the following:
Natural gas is first treated to remove contaminants including CO2, water and
mercury before entering the liquefaction section of the plant. The treated gas is then
chilled to approximately —260 degrees Fahrenheit in successively colder heat
exchangers that use propane, ethylene and methane as refrigerants. Product leaving
the methane exchangers is LNG ready for storage.
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(Id.)
4. State Defendants’ Approval of the Application, the Contract, and the
Tax Benefit at Issue
Continuing with the allegations of the Amended Complaint, around June 8, 2011, LDED
notified SPL by letter to Didier that the Application would be considered by the Board at its June
28, 2011 meeting. (Doc. 61 ¶ 15.) The operative complaint alleges:
Despite the fact that LDED’s staff correctly questioned whether SPL’s stated
process met the qualifications of manufacturing, and despite receiving further
information from SPL that confirmed that its process did not meet the
qualifications of manufacturing, LDED enclosed with the letter a work sheet
containing LDED’s staff’s unreasonable recommendation of “approval” relative
to the Application. Specifically, the work sheet is dated May 24, 2011, and noted
that: the company name is “Sabine Pass Liquefaction, LLC”; the project type is
“expansion”; the contract amount was “$6,000,000,000”; the ad valorem tax was
“$1,447,200,000”; and, the staff recommends “approval.” The comments section
of the work sheet also referred to the contract as a “front end contract.”
(Id.)
Around July 19, 2011, LDED sent a letter to SPL (via Didier) expressing that the Board
“voted to approve SPL’s request for tax exemption on the estimated $6,000,000,000 investment
amount at its July 18, 2011 meeting.” (Id. ¶ 16.) The Contract was initially for a period of five
years with a provision for an additional five years of exemption if there was compliance with the
Contract and the rules governing the tax exemption program. (Id.) The Contract was a “Front
End” contract, so it had the additional requirement of filing an “Annual Status Declaration for
Advance Contracts form.” (Id.)
Plaintiff complains about particular provisions of the Contract as follows:
Plaintiff shows that one section of the Contract states that “…the Contractee
(referring to SPL) will construct a manufacturing establishment in the State of
Louisiana…”, but in the same sentence, the Contract then states that “… the
creation and operation of the said addition has been deemed by the Board to be of
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great benefit to the State…” (emphasis added). Later in the Contract, it states that
“[T]he Contractee will construct at an approximate cost of $6,000,000,000, an
addition to its manufacturing establishment.” (emphasis added).
(Id. ¶ 17 (emphasis in original).) The Contract was executed by SPL’s CFO, the Board, and the
Governor on August 1, October 4, and October 12, 2011, respectively. (Id. ¶ 18.)
Under Article V of the Contract, the agreement’s effective date “shall be the last day of
the tax assessment year in which the project becomes operational as stated in the Project
Completion Report[.]” (Doc. 61 ¶ 20.) Additionally, “from the effective date of the Contract and
for a period of five (5) years thereafter, the Board gives and grants unto SPL an exemption from
all ad valorem taxes, including all state, parish, municipal, district and special taxes for the
property belonging to SPL as described in the Affidavit of Final Cost.” (Id.) Under Article IV of
the Contract, SPL had to file with LDED’s Office of Business Development a sworn statement
indicating the exact date of completion and beginning of operation on the Project Completion
Report within thirty days “following the last day of the month after effective operation has
begun, or construction is essentially complete, whichever occurs last.” (Id. ¶ 21.)
Plaintiff alleges:
Upon information and belief, the Contract was considered to be a “Front End”
contract due to the fact that the effective date of the contract and the resulting tax
exemption would occur several years after the contract was actually executed, and
SPL was required to file an Annual Status Declaration for Advance Contracts form
each year with LDED until the effective date.
(Id. ¶ 22.)
Plaintiff claims that construction at the facility began in August 2012 and that, according
to news reports, portions of the SPL facility became operational in February 2016. (Id. ¶ 23.)
“[T]he first cargo vessels loaded with liquefied natural gas sailed from the facility on February

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24, 2016.” (Id.) Plaintiff asserts that, based on these reports and Article V of the Contract, the
effective date of the agreement was December 31, 2016. (Id.)
Plaintiff further alleges that LDED created “sub-numbers” concerning “Number
20110659-ITE[.]” (Doc. 61 ¶ 24.) One sub-number was made upon SPL’s submission of a
Project Completion Report and Affidavit of Final Cost to LDED. This sub-number “shows an
approved investment amount of $4,797,201,241.00, and an estimated tax benefit amount of
$1,167,159,062.” (Id.) A second sub-number “was created for the remaining portion of the
project described in Number 20110659-ITE, and has been assigned an estimated investment
amount of $2,486,889,823.00, and an estimated tax benefit amount of $516,278,327.” (Id.)
Plaintiff asserts: “[U]pon information and belief, the original Contract executed in 2011 is the
only contract that applies to the SPL project described under Number 20110659-ITE.” (Id.)
C. Plaintiff’s Objections to the Contract
Again, Plaintiff’s claims boil down to the following: (1) SPL submitted the Industrial Ad
Valorem Tax Exemption Program Application and Advance Notification form to LDED stating
that it was applying for an “addition to an existing manufacturing establishment” when, in
reality, there was no existing manufacturing establishment at the project location; and (2) SPL
“was not engaged in the business of working raw materials into wares suitable for use or which
gives new shapes, qualities or combinations to matter which already has gone through some
artificial process at that project location and at the time the Board considered its Application”
(Id. ¶ 27.) Plaintiff thus alleges that the Board “exceeded its constitutional authority in entering
into the Contract because SPL did not qualify and was not authorized to receive an industrial tax
exemption under the ‘addition to an existing manufacturing establishment’ provision of La.

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Const. art. VII, § 21(F).” (Id..) Plaintiff seeks a declaration that the Board’s action was improper
and that the Contract was null. (Id. ¶¶ 29–34.)
Significantly, with respect to Plaintiff’s second line of attack, Plaintiff alleges that “the
process described by SPL in its Application and/or as described in additional information
provided to LDED does not meet the required definition of ‘working raw materials . . .’” (Doc 61
¶ 35 (emphasis added).)
D. Procedural History
On October 12, 2016, Plaintiff filed its original Class Action Petition in the 19th Judicial
District Court. (Doc. 1-2 at 1.) On February 10, 2017, SPL removed the action to this Court.
(Doc. 1.)
On March 24, 2017, SPL moved to dismiss the Class Action Petition. (Doc. 15.) Plaintiff
responded by filing a motion to voluntarily dismiss SPL (Doc. 16), which this Court granted on
April 5, 2017. (Doc. 17)
SPL subsequently filed a motion to reconsider and vacate the Court’s order and,
alternatively, to intervene (Doc. 22.) On December 5, 2017, the Court granted SPL’s motion,
finding that SPL should be joined as a necessary and indispensable party under Fed. R. Civ. P.
19 or through intervention under Rule 24. (Doc. 57 at 2.) Plaintiff was given an additional
twenty-eight days to clarify its allegations against all parties. (Id.)
On January 12, 2018, Plaintiff filed its First Amended Class Action Complaint. (Doc. 61.)
On February 16, 2018, SPL filed the instant motion seeking dismissal of all claims. (Doc. 67-1).
III.

Rule 12(b)(6) Standard
In Johnson v. City of Shelby, Miss., 135 S. Ct. 346 (2014), the Supreme Court explained

“Federal pleading rules call for a ‘short and plain statement of the claim showing that the pleader

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is entitled to relief,’ Fed. R. Civ. P. 8(a)(2); they do not countenance dismissal of a complaint for
imperfect statement of the legal theory supporting the claim asserted.” 135 S. Ct. at 346–47
(citation omitted).
Interpreting Rule 8(a) of the Federal Rules of Civil Procedure, the Fifth Circuit has
explained:
The complaint (1) on its face (2) must contain enough factual matter (taken as true)
(3) to raise a reasonable hope or expectation (4) that discovery will reveal relevant
evidence of each element of a claim. “Asking for [such] plausible grounds to infer
[the element of a claim] does not impose a probability requirement at the pleading
stage; it simply calls for enough fact to raise a reasonable expectation that discovery
will reveal [that the elements of the claim existed].”
Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 257 (5th Cir. 2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 556, 127 S. Ct. 1955, 1965 (2007)).
Applying the above case law, the Western District of Louisiana has stated:
Therefore, while the court is not to give the “assumption of truth” to conclusions,
factual allegations remain so entitled. Once those factual allegations are identified,
drawing on the court's judicial experience and common sense, the analysis is
whether those facts, which need not be detailed or specific, allow “the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.”
[Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949 (2009)]; Twombly,
55[0] U.S. at 556. This analysis is not substantively different from that set forth in
Lormand, supra, nor does this jurisprudence foreclose the option that discovery
must be undertaken in order to raise relevant information to support an element of
the claim. The standard, under the specific language of Fed. R. Civ. P. 8(a)(2),
remains that the defendant be given adequate notice of the claim and the grounds
upon which it is based. The standard is met by the “reasonable inference” the court
must make that, with or without discovery, the facts set forth a plausible claim for
relief under a particular theory of law provided that there is a “reasonable
expectation” that “discovery will reveal relevant evidence of each element of the
claim.” Lormand, 565 F.3d at 257; Twombly, 55[0] U.S. at 556.
Diamond Servs. Corp. v. Oceanografia, S.A. De C.V., No. 10-00177, 2011 WL 938785, at *3
(W.D. La. Feb. 9, 2011) (citation omitted).

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The Fifth Circuit further explained that all well-pleaded facts are taken as true and
viewed in the light most favorable to the plaintiff. Thompson v. City of Waco, Tex., 764 F.3d 500,
502–03 (5th Cir. 2014). The task of the Court is not to decide if the plaintiff will eventually be
successful, but to determine if a “legally cognizable claim” has been asserted.” Id. at 503.
IV.

Discussion
A. Parties’ Arguments
1. SPL’s Original Memorandum (Doc. 67-1)
SPL first argues that Plaintiff fails to adequately challenge the “manufacturing

establishment” status of SPL’s facility. SPL asserts that Plaintiff’s allegations are conclusory
and that, while Plaintiff alleges that the information provided by SPL was inadequate, Plaintiff
fails to describe what that information was. SPL further contends that this was an intentional
omission by Plaintiff, as the documents SPL submits demonstrate that SPL’s facility was a
“manufacturing establishment.” (Doc. 67-1 at 12.) Plaintiff thus pleads no facts supporting its
conclusion that the SPL facility was not a “manufacturing establishment.”
SPL next asserts that, in any event, the constitutional provision at issue does not require a
particular description in an application; “all that matters is that the subject property contain a
‘new manufacturing establishment or an addition to an existing manufacturing establishment.’ ”
(Id. at 13.) SPL then notes that the operative complaint “does not even purport to challenge any
of the State’s administrative rules or the States’ application of those rules here.” (Id.)
SPL then contends that its facility satisfies the definition of “manufacturing
establishment” based on the relevant case law. SPL also points to a 1938 Louisiana Attorney
General Opinion which allegedly “interpreted natural gas operations as ‘manufacturing
establishments.’ ” (Id. at 15 (citing Op. Atty. Gen. 1938-1940, p. 1180 (Dec. 16, 1938)).) This

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particular opinion from the Louisiana Attorney General specifically found that a facility treating
natural gas to remove “undesirable elements” qualified as a “manufacturing establishment.” (Id.
(quoting Op. Atty. Gen. 1938-1940, at 1181–82).) What SPL does—both as alleged in the
operative complaint and as detailed in the exhibits to SPL’s opposition—easily satisfies this
standard.
SPL next argues that, even if there were a question about SPL’s status as a
“manufacturing establishment”, the LDED and Board’s decision are “entitled to deference under
an ‘arbitrary and capricious’ standard because the constitution grants the State sole authority and
discretion to determine eligibility for the exemption.” (Doc. 67-1 at 17 (citations omitted).) SPL
maintains that the operative complaint “comes nowhere close to pleading a plausible claim of
arbitrary and capricious conduct by anyone.” (Id.) To the contrary, Plaintiff’s complaint shows
that LDED’s employees had “several discussions internally” concerning SPL’s facility’s status
as a “manufacturing establishment” and then requested a “better description” from SPL to “better
understand the manufacturing process so that we [(i.e., LDED)] can make a determination.” (Id.
at 17–18 (quoting Amended Complaint, ¶¶ 12–13).)
Finally, as to Plaintiff’s contention that SPL’s facility was a “new manufacturing
establishment” rather than an “addition” to one, SPL asserts that Plaintiff has failed to state a
claim because, “even if Plaintiff’s allegation were true (and it is not), the distinction is without a
legal difference.” (Id. at 18.) Article VII, Section 21(F) allows for exemptions for both “new
manufacturing establishments” and “additions.” Further, “Section 21(F) makes no reference to
applications whatsoever. Nor do any of the rules that [the Board] has promulgated under that
section impose any requirement that an applicant perfectly describe the facility in its application
or materials provided to LDED.” (Id. at 18 (emphasis in original).) SPL states:

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In other words, an industrial tax exemption is not unconstitutional merely because
an application submitted in connection with the exemption (or a resulting contract)
does not describe the property in a certain way. . . . [A]s long as it qualifies as a
‘manufacturing establishment’ it must either be a ‘new’ facility or an ‘addition to’
an existing facility. Either way, the constitution would have authorized the State to
grant the exemption regardless.
(Id. at 19 (emphasis in original).)
After adopting the three specific arguments the State Defendants assert in their motion to
dismiss2 and those asserted by Cameron LNG, LLC in the related suit JMCB, LLC v. The Board
of Commerce & Industry, et al., No. 17-75, SPL seeks dismissal of the entire complaint.
2. Plaintiff’s Opposition (Doc. 72)
Plaintiff begins by explaining how it originally moved to dismiss SPL because the State
Defendants were the “only parties alleged to have committed the unconstitutional acts outlined in
the original Complaint as public servants or governmental entitles” and because the State
Defendants only moved for dismissal of certain claims. (Doc. 72 at 2.) According to Plaintiff,
State Defendants acknowledged that “Louisiana law grants a citizen the right to seek judicial
review of acts of public servants that are alleged to have been illegal or unconstitutional, and to
enjoin any unlawful action by those public servants.” (Id. (quoting Doc. 14-1 at 2).) Thus,
Plaintiff argues, it did state a cognizable claim against the State Defendants, and this was one
that State Defendants recognized.
However, Plaintiff continues, the Court allowed SPL to rejoin the litigation, and SPL then
moved for dismissal of the entire Amended Complaint. Yet the State Defendants again did not
join SPL in its motion to dismiss but rather again recognized that Plaintiff had a claim. “As a

2

As SPL states, these grounds are: “(1) Plaintiff is not entitled to recovery of attorney’s fees, (2) the government
plaintiffs do not have a cause of action because they are not taxpayers or citizens, and (3) Plaintiff cannot represent
any governmental entities in a proposed class.” (Doc. 67-1 at 19.) The Court will address these issues in ruling on
the State Defendants’ motion. (Doc. 66.)

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result, the Plaintiff’s claims for declaratory relief and the entire Amended Complaint cannot be
dismissed as to the indispensable State Defendants at this time.” (Id. at 4.)
Plaintiff then argues that SPL has taken an inconsistent position: “If the indispensable
State Defendants acknowledge that the Plaintiff has stated a claim upon which relief may be
granted and the case will proceed against them at this time, then how can SPL, as a Courtordered indispensable party co-defendant, procedurally seek dismissal of the entire Amended
Complaint as to it?” (Id. at 4–5 (emphasis in original).) Plaintiff further contends that it is
inconsistent for SPL to argue that it is an indispensable party that must participate in the case but
then to move to dismiss the entire Amended Complaint:
Plaintiff avers that SPL must decide whether it wants to participate in the case and
defend and protect its interests or not, because moving to dismiss all of the
Plaintiff’s claims and the entire Amended Complaint as to it certainly suggests that
it does not want to participate in the case that will proceed against the State
Defendants. Indeed, if the Court were to grant SPL’s motion to dismiss all of the
Plaintiff’s claims and the entire Amended Complaint as to it, then SPL would be
out of the case again.
Plaintiff avers that if one or more indispensable co-defendants acknowledge that a
plaintiff has stated a claim upon which relief may be granted against them, then any
other indispensable co-defendant parties named in the suit have no choice but to
accept that reality and must be estopped from moving to dismiss the entire
complaint as to them because the plaintiff’s claims which are not challenged in a
motion to dismiss by the acknowledging indispensable party co-defendant must
necessarily proceed against all of the indispensable party defendants. Here,
dismissing the entire Amended Complaint as moved for by SPL is not a viable
procedural option for SPL because the State Defendants acknowledge that the
Plaintiff has stated a claim upon which relief may be granted against them, and SPL
must remain in the suit as a necessary and indispensable party as long as those
claims against the State Defendants are viable. Indeed, if the Plaintiff cannot
voluntarily dismiss SPL from the suit because SPL is a necessary and indispensable
party in this litigation along with the indispensable State Defendants, and claims
made against the State Defendants must proceed, then SPL cannot move to dismiss
the entire Amended Complaint as to it for the same reasons.
(Id. at 5 (emphasis in original).)
17

Plaintiff argues that, as a general rule, a Defendant lacks standing to move for dismissal
of claims against another co-defendant. (Doc. 72 at 6–8 (citations omitted).) Thus, SPL lacked
the capacity to seek dismissal of the claims against the State Defendant, who did not join in
SPL’s motion and did not seek dismissal but rather filed their own limited motion to dismiss.
Plaintiff again asserts:
However, as discussed above, SPL’s moving for such relief on its own creates an
untenable procedural situation under the circumstances. Plaintiff posits that the
Court cannot grant SPL’s motion to dismiss the entire Amended Complaint when
the Court has already found SPL to be an indispensable party defendant, and SPL’s
two indispensable party co-defendants (the State Defendants) not only have not
moved for the same total dismissal relief sought by SPL, but acknowledge that
under Louisiana law, the Plaintiff has stated claims upon which relief may be
granted against them. (Docs. 66, 66-1). Indispensable party defendant SPL cannot
be granted dismissal of the entire Amended Complaint as to it when the State CoDefendants acknowledge that the very same claims made against them may proceed
under Louisiana law. If SPL is truly indispensable, it must remain in the case.
(Id. at 7–8.) Plaintiff maintains that SPL should be “estopped” from moving for total dismissal.
In the alternative, Plaintiff argues that it has “overwhelmingly” stated a claim for relief.
(Id. at 9.) Again, Plaintiff avers that it has standing to pursue the claims against the State
Defendants, who do not challenge Plaintiff’s claims. Plaintiff states:
Under the circumstances and because the Plaintiff’s claims are viable against the
State Defendants, and because SPL has been determined to be an indispensable
party defendant by the Court, SPL has no choice but to remain in the suit to defend
whatever interests it may have in the ITE Contracts to the extent it deems necessary.
SPL cannot procedurally move to dismiss the entire Amended Complaint with
prejudice as to it when it has been determined to be an indispensable party
defendant by the Court and the same claims alleged against the State Defendants
will proceed.
(Id. at 10.) Plaintiff asks for leave to amend the operative complaint to cure any deficiencies.
(Id.)

18

Lastly, Plaintiff argues that the three issues raised by the State Defendants should be
denied on the same grounds articulated above. Alternatively, the motion to dismiss on these
issues should be denied on the same grounds identified in Plaintiff’s opposition to the State
Defendants’ motion. (Id. at 10–11.)
3. SPL’s Reply (Doc. 76)
SPL responds that Plaintiff’s opposition “confirms that the First ‘Amending’ Class
Action Complaint . . . does not plead the facts required to state a viable legal claim, and that
Plaintiff cannot do so as a matter of law.” (Doc. 76 at 1.) SPL continues: “Indeed, Plaintiff’s
Opposition nowhere confronts any of the numerous factual and legal deficiencies of the
Complaint that are set forth in SPL’s motion.” (Id.) SPL asserts that what Plaintiff has done
instead is, “for the second time in this lawsuit[,] . . . engage in a procedural shell game to avoid
dismissal of its claim” on the grounds of “estoppel” from State Defendants’ alleged admission.
(Id.) SPL argues that the State Defendants made no such concession and, even if it had,
“Plaintiff’s estoppel argument is contrary to the established law of this Circuit, as well as basic
logic and procedural fairness.” (Id.)
After asserting that Plaintiff has waived any objection to SPL’s motion through its
silence, SPL reiterates that Plaintiff has failed to state a claim under any theory. SPL’s facility
satisfies the definition of “manufacturing establishment”, and “Plaintiff’s Opposition provides no
response to these undisputed facts or the longstanding law of Louisiana.” (Id. at 3.)
As to Plaintiff’s “estoppel” argument, SPL argues that it is “based on an incorrect factual
premise and a misapprehension of the law.” (Id.) First, the State did not “acknowledge” that
Plaintiff stated a claim; rather, the “State merely recognized ‘that Louisiana law grants a citizen
the right to seek judicial review of acts of public servants that are alleged to have been illegal or

19

unconstitutional , and to enjoin any unlawful action by those public servants.’ ” (Id. at 3–4
(quoting (Doc 72 at 2 (quoting Doc. 14-1 at 2), 4 (quoting Doc. 66-1 at 2)).) But SPL asserts:
“The fact that a taxpayer could have standing to challenge an act does not mean that a plaintiff
has pled sufficient facts of an illegal and unconstitutional act.” (Id. at 4.) SPL notes that two of
the cases on which Plaintiff relies actually find the complaint to be insufficient to state a claim.
(Id. at 4 n. 2.) This standing argument does not mean that Plaintiff stated a claim. And finally,
“Lest there be any doubt, the State has further clarified that it fully agrees with SPL’s assertion
that the Complaint does not state a cause of action and should be dismissed in its entirety.” (Id. at
4 (quoting Doc. 73 at 1–2 & n. 2).)
Second, SPL contends that (a) it is hornbook law that any defendant can move to dismiss
an insufficient complaint, and (b) “ ‘where a defending party establishes that plaintiff has no
cause of action, this defense should inure to similarly situated defendants.’ . . . ‘The policy
rationale for this rule is that it would be “incongruous” and “unfair” to allow some defendants to
prevail, while not providing the same benefit to similarly situated defendants.’ ” (Doc. 76 at 4–5
(citations omitted).) As a result, SPL does have the right to dismiss the Amended Complaint in
its entirety because of Plaintiff’s failure to state a claim.
In closing, SPL urges that Plaintiff should be denied leave to amend. Plaintiff fails to
provide any information on what facts he might assert to cure the deficiencies. (Id. at 6 (citing,
inter alia, Patrick v. Wal-Mart, Inc., 681 F.3d 614, 623 (5th Cir. 2012); Waggoner v. Denbury
Onshore, LLC, 612 F. App’x 734, 740 (5th Cir. 2015)).) Further, according to SPL, leave to
amend would be futile and cause undue delay and prejudice to SPL, “which has already
constructed a multi-billion dollar LNG facility in reliance on its ITE Contract with the State.”

20

(Id. at 6–7 (citing Sinclair v. Petco Animal Supplies Stores, Inc., 581 F. App’x 369, 371 (5th Cir.
2014).) SPL asserts:
Plaintiff has never disputed the deficiencies in the Complaint as set forth in SPL’s
Motion, and avoided responding to them altogether through procedural posturing.
This matter has been pending more than a year and a half, and there is no reason to
allow Plaintiff to continue to create needless uncertainty about SPL’s investment in
its liquefaction facility based solely on innuendo, not facts. Plaintiff has had every
opportunity to plead a claim. It has not done so, and the Complaint should be
dismissed without leave to amend.
(Doc. 76 at 7 (emphasis in original).)
B. Analysis
1. Plaintiff Has Failed to State Any Viable Claim
As a preliminary note, Plaintiff did not respond to the substance of any of SPL’s
arguments. “The Fifth Circuit makes it clear that when a party does not address an issue in his
brief to the district court, that failure constitutes a waiver on appeal.” Magee v. Life Ins. Co. of N.
Am., 261 F. Supp. 2d 738, 748 n. 10 (S.D. Tex. 2003) (citations omitted); see also United States
v. Reagan, 596 F.3d 251, 254–55 (5th Cir. 2010) (defendant’s failure to offer any “arguments or
explanation . . . is a failure to brief and constitutes waiver”). “By analogy, failure to brief an
argument in the district court waives that argument in that court.” Magee, 262 F. Supp. 2d at 748
n. 10; see also Kellam v. Servs., No. 12-352, 2013 WL 12093753, at *3 (N.D. Tex. May 31,
2013), aff'd sub nom. Kellam v. Metrocare Servs., 560 F. App’x 360 (5th Cir. 2014) (“Generally,
the failure to respond to arguments constitutes abandonment or waiver of the issue.” (citations
omitted)); Mayo v. Halliburton Co., No. 10-1951, 2010 WL 4366908, at *5 (S.D. Tex. Oct. 26,
2010) (granting motion to dismiss breach of contract claim because plaintiff failed to respond to
defendants’ motion to dismiss on this issue and thus waived the argument). On this ground
alone, the Court could dismiss Plaintiff’s Amended Complaint.
21

Nevertheless, the Court finds that SPL has shown that Plaintiff has still failed to state a
cognizable claim. As the Louisiana First Circuit explained in Robinson v. Ieyoub, 97-2204 (La.
App. 1 Cir. 12/28/98), 727 So. 2d 579, 583, in interpreting La. Const. art. VII, § 21(F):
In general, the constitution is subject to the same rules of interpretation as other
laws and written instruments. When a constitutional provision is clear and
unambiguous, and its application does not lead to absurd consequences, it must be
applied as written without further interpretation in search of its intent. Every
provision must be interpreted in light of the purpose of the provision and the
interests it furthers and resolves. When a constitutional provision is identical or
very similar to that of a former constitution, it is presumed that the same
interpretation will be given to it as was attributed to the former provision. Because
the question of how the constitution was understood by the people adopting it, not
merely how it was viewed by the drafters, the debates of a convention, as a general
rule, cannot be resorted to for the purpose of varying the otherwise clear and
unambiguous meaning of a constitutional provision.
Id. (quoting Succession of Lauga, 624 So. 2d 1156, 1165 (La. 1993).
Again, La. Const. art. VII, § 21(F) provides in relevant part:
The terms “manufacturing establishment” and “addition” as used herein mean a
new plant or establishment or an addition or additions to any existing plant or
establishment which engages in the business of working raw materials into wares
suitable for use or which gives new shapes, qualities or combinations to matter
which already has gone through some artificial process.
Id.
“The purpose of the Industrial Tax Exemption Program is to provide an incentive for
businesses to locate and/or expand in Louisiana, thereby increasing employment opportunities
and boosting state and local economies.” Robinson, 727 So.2d at 583. The ad valorem tax
exemption goes back to the Louisiana Constitution of 1921, and the “present definition of
manufacturing establishment contained in the Louisiana Constitution of 1974 mirrors the
language of the 1938 amendment to the 1921 Constitution.” Id. The Robinson court explained:
[T]he exact language used to define a manufacturing establishment in the
constitution originates from the judicial definition of a manufacturer. This
22

definition can be traced to two cases. The first is City of New Orleans v. LeBlanc,
34 La. Ann. 596 (La. 1882), wherein the court defined a manufacturer using the
exact language now found in our constitution, but also indicated that the end result
of a manufacturer's work would yield a product to be placed in the stream of
commerce. The court wrote that “manufacturers are the suppliers of the dealers, or
consumers.” City of New Orleans v. LeBlanc, 34 La. Ann. at 597–98. The court's
initial definition of a manufacturer encompassed his role in commerce and trade,
which necessitated the production of a good that the dealers and consumers would
find useful, thereby creating a demand for that product.
In City of New Orleans v. Ernst, 35 La. Ann. 746 (La. 1883), the court also defined
a manufacturer using the exact language as contained in the constitution. The court
further indicated that a manufacturer is one who “prepares the original substance
for use in different forms. He makes to sell, and stands between the original
producer and the dealer, or first consumers, depending for his profit on the labor,
which he bestows on the raw material.” City of New Orleans v. Ernst, 35 La. Ann.
at 747. Again, the court clearly contemplated that a manufacturer's product would
have a use.
Robinson, 727 So. 2d at 583–84. In Robinson, the First Circuit found that a company running a
hazardous waste incinerator facility was not entitled to tax exemption because what was actually
sold was the “actual incineration service” and because the company “did not create a product
from the incinerator ash that could be sold for use or sold as a component of another product
which had a use.” Id. at 584.3

3

The Robinson court went on to conclude:
When considering the goals sought to be accomplished by the ad valorem tax exemption, a
manufacturer must be required to produce products suitable for use. Any other interpretation would
frustrate the reason for the ad valorem tax exemption program. State and local economies are
boosted when a manufacturer produces products which can be sold for use, thereby increasing
revenue for the manufacturer, which translates into taxable profits, taxable income for employees,
and sales taxes on the products manufactured. If a manufacturer only changes the shapes, qualities,
or composition of something and the product is not suitable for use, this does not stimulate the
economy in terms of providing other taxable sources. If the product is not suitable for use, the
economy is not affected in a positive manner and alternative tax revenue opportunities do not exist.
Therefore, we find the “suitable for use” requirement must apply whether a manufacturer is working
raw materials into wares, or taking materials which have already gone through some artificial
process and changing its shape, qualities, or composition.
We find the trial court did not err when it found that Rollins did not meet the constitutional definition
of a manufacturing establishment. The record reflects that the incinerator ash produced by Rollins
is not the product of a process which contemplates its use after incineration, nor does Rollins take

23

Notwithstanding Robinson, SPL cites to a host of cases in which the tax exemption was
allowed under the parameters set out in LeBlanc and Ernst. See, e.g., State v. Transmission
Mach. Co., 157 La. 827, 828, 103 So. 180 (1925) (finding that business engaged in
“manufacturing” when its “business consist[ed] of casting wheels (pulleys) out of iron, trimming
and finishing same by means of lathes, and drilling therein such holes as are needed for fitting
them where they belong”); State v. Am. Creosote Works, 163 La. 547, 550, 112 So. 412, 413
(1927) (finding that company was engaged in a “manufacturing process” when “[r]ough timber
and lumber [was] converted into telephone and telegraph poles, cross-arms for said poles,” and
many other named products “through the process of creosoting”). In American Creosote Works,
the court collected a number of other cases reaching the same result:
In State v. Amer. Biscuit, Mfg. Co., 47 La. Ann. 160, 16 So. 750, it was held that
one who made crackers and Italian paste from flour was a manufacturer.
In State v. Wilbert, 51 La. Ann. 1223, 26 So. 106, it was held that:
‘The proprietor of an establishment employed in the conversion of
saw logs into lumber of different kinds and qualities in its rough
state, is engaged in changing, by machinery, of raw materials into
new and useful forms, and is therefore a manufacturer. * * *’
The court has also held to be manufacturers and as such exempt from license taxes
the following classes of business, viz.: A company engaged in the refining of sugar
State v. American Sugar Refining Co., 108 La. 603, 32 So. 965); a company
engaged in the business of casting iron wheels (State v. Transmission Machinery
Co., 157 La. 827, 103 So. 180); and a company making only special brands of cakes

any steps to make the incinerator ash marketable, which could be considered as evidence the
incinerator ash had some use. Although the incineration process does change the hazardous waste
into incinerator ash, because the ash is not “suitable for use,” Rollins cannot be considered a
manufacturing establishment according to the constitution.
By granting a facility that did not qualify as a manufacturing establishment an industrial ad valorem
tax exemption, the Board clearly exceeded it constitutional authority. The decision of the trial court
is affirmed.
Robinson, 727 So.2d at 584.

24

entirely by machinery, except the icing and wrapping (State v. Young, 157 La. 845,
103 So. 186).
Id., 163 La. 550–51, 112 So. at 413–14.
Also persuasive, SPL points to a Louisiana Attorney General opinion directly on point.
Specifically, in La. Op. Atty. Gen. 1938–1940, p. 1180 (Dec. 16, 1938), the Attorney General
was asked to evaluate whether a company was “eligible for tax exemption” under Article VII,
Section 21(F)’s predecessor when the company’s application covered “machinery for treating
raw gas to remove undesirable elements which are present as it flows from the well.” Id. The
opinion concluded: “We are of the opinion . . . that the plants or establishments where the raw
natural gas is treated to remove undesirable elements, such as salt, water and other impurities and
to convert the gas into a usable fuel, are within the definition of the term ‘manufacturing
establishment’ as found in . . . the Constitution.” Id. at 1181–82. While this opinion is not
binding, the Court finds it persuasive. See Colvan Cattle Co., L.L.C. v. Lafouorche Par. Gov't,
No. 08-907, 2009 WL 2914369, at *5 (E.D. La. Sept. 4, 2009) (stating that “Louisiana Attorney
General opinions are merely advisory and not binding, though regarded by Louisiana courts as
persuasive” and finding that, “[a]s there [was] no case on point regarding the scope of” a
particular statute, “the opinion provide[d] further persuasive support in favor of Defendant’s
position[.]” (citation omitted)); cf. Ellis v. State Nat. Bank of Ala., 434 F.2d 1182, 1190 (5th Cir.
1970) (finding that a particular opinion fell “short of a definitive statement of Alabama law,” but
stating, “It is well recognized that state attorney general opinions are advisory in nature. . . . Such
opinions are often strongly persuasive.”).

25

Looking at La. Const. art. VII, § 21(F) and this authority in conjunction with the
documents submitted with SPL’s motion, 4 the Court finds that SPL’s facility constituted a
“manufacturing establishment.” Again, SPL’s documents were submitted to LDED on behalf of
SPL after LDED initially questioned SPL’s status as a “manufacturing establishment.” (Doc. 672 at 1.) One document stated that Cheniere Partners “initiated a project to include liquefaction
services at the [SPL] receiving terminal in Cameron Parish” and that “[a]dding liquefaction
capabilities would transform the [SPL] terminal into a bi-directional facility capable of
liquefying and exporting natural gas in addition to importing and regasifying foreign-sourced
LNG.” (Doc. 67-2 at 4.) The second document described the facility’s process as follows:
Natural gas is first treated to remove contaminants including CO2, water and
mercury before entering the liquefaction section of the plant. The treated gas is then
chilled to approximately —260 degrees Fahrenheit in successively colder heat
exchangers that use propane, ethylene and methane as refrigerants. Product leaving
the methane exchangers is LNG ready for storage.
(Doc. 67-2 at 6.)
Thus, this description clearly satisfies the definition of “manufacturing establishment.”
SPL’s process satisfies the plain language of the La. Const. art. VII, § 21(F), as SPL is
“engage[d] in the business of working raw materials into wares suitable for use or which gives

4

While the Court can ordinarily not consider “matters outside the pleadings” on a Rule 12(b)(6) motion without
converting it to a motion for summary judgment, Fed. R. Civ. P. 12(d), the Fifth Circuit has approved district courts’
consideration of documents attached to a motion to dismiss, when such documents are referred to in the plaintiff’s
complaint and are central to the plaintiff’s claim. See Werner v. Dept. of Homeland Sec., 441 Fed. App’x. 246, 248
(5th Cir. 2011); Scanlan v. Texas A & M Univ., 343 F.3d 533, 536 (5th Cir. 2003); Collins v. Morgan Stanley Dean
Witter, 224 F.3d 496, 498–99 (5th Cir. 2000).
Here, SPL’s documents satisfy this standard. Plaintiff alleges, on information and belief, that while SPL provided
further information to LDED about its purported manufacturing process, “that provided information confirmed that
SPL’s process does not meet the qualification of manufacturing under the constitutional provision” because “SPL’s
process simply takes natural gas and freezes it until it turns into liquid form” and that the Application and this
“additional information . . . comprises all of the descriptions and information SPL provided to LDED about its
process.” (Doc. 61 ¶¶ 13–14.) Critically, one of Plaintiff’s grounds for invalidating the Contract was that ““the
process described by SPL in its Application and/or as described in additional information provided to LDED does
not meet the required definition of ‘working raw materials . . .’” (Doc 61 ¶ 35 (emphasis added).) For these reasons,
the Court finds that this document is referenced in and central to the Amended Complaint, so it can be considered in
connection with the instant motion.

26

new shapes, qualities or combinations to matter which already has gone through some artificial
process.” Id.
Even if this language were ambiguous, SPL’s facility constitutes a “manufacturing
establishment” under the above authorities. As in LeBlanc, Ernst, and their progeny, SPL is
creating a product capable of use for the stream of commerce and “stand[ing] between the
original producer and the dealer, or first consumers.” Robinson, 727 So.2d at 583–84 (citations
omitted). And, like in the Attorney General Opinion, SPL is taking “the raw natural gas” and
“treat[ing] [it] to remove undesirable elements, such as salt, water and other impurities . . . to
convert the gas into a usable fuel.” La. Op. Atty. Gen. 1938–1940 at p. 1181–82. As a result,
even assuming the La. Const. art. VII, § 21(F) were ambiguous, SPL is, under the above
authorities, a “manufacturing establishment.” Plaintiff’s claims thus fail as a matter of law.
In Plaintiff’s proposed Sur-reply, Plaintiff focuses on the allegations of the Amended
Complaint, which state that the information SPL provided in its application was inadequate.
(Doc. 77-1 at 1–2.) Even if the Court were to consider this Sur-reply, and even acknowledging
that SPL’s documents conflict with Plaintiff’s claims, these exhibits control over the allegations.
See Keane v. Fox Television Stations, Inc., 297 F. Supp. 2d 921, 925 (S.D. Tex. 2004), aff'd, 129
F. App’x 874 (5th Cir. 2005) (“courts ‘are not required to accept as true conclusory allegations
which are contradicted by documents referred to in the complaint.’ ” (citing Warren v. Fox
Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003); Nishimatsu Const. Co., Ltd. v.
Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (concluding that when plaintiff
attaches documents to a complaint that contradict statements in the complaint itself, the more
specific document controls))). For this additional reason, dismissal is warranted.

27

Further, even putting this aside and assuming that SPL’s facility failed to meet the
definition of a “manufacturing establishment”, Plaintiff’s claims must also be dismissed because
Plaintiff has failed to demonstrate that the State Defendants abused their discretion in entering
into the Contract. La. Const. art. VII, § 21(F) vests the State Defendants “with wide discretion in
their efforts to attract industries to this state; their executing of a contract with any new industry
that applied for the tax relief was not made mandatory.” See State ex rel. Kohler's Snowite
Laundry & Cleaners v. State Bd. of Commerce & Indus., 205 La. 622, 626, 17 So.2d 899, 900
(1944). Agency action must stand unless there is an “arbitrary, unjust or capricious exercise of
that discretion.” Id., 205 La. at 632, 17 So.2d at 902. “It may be that the board's discretion was
exercised unwisely, and not to the best interests of the state, in some instances; but whether it
was is not for us to decide. . . . We are to determine in this case whether there has been an
arbitrary, discriminatory and capricious abuse of the board's discretion[.]” Id., 205 La. at 639, 17
So.2d at 904; see also Bunge N. Am., Inc. v. Bd. of Commerce & Indus. & Louisiana Dep't of
Econ. Dev., 2007-1746 (La. App. 1 Cir. 5/2/08), 991 So.2d 511, 531 (affirming denial of tax
assessor’s motion for summary judgment and finding that he failed to demonstrate no genuine
issue of material fact that the “Board and State acted arbitrarily and capriciously when it
approved and entered into the contract that provided an exemption from ad valorem taxes” for
addition to appellant’s soybean facility); cf. id. at 520 (finding that plaintiff stated a claim that
Board “clearly exceeded its constitutional authority” in granting an exemption which was
allegedly not “a manufacturing establishment under the definition found in La. Const. art. VII, §
21(F)” (citing Robinson, 727 So.2d at 584)).
Here, the Court agrees with SPL that Plaintiff has failed to demonstrate arbitrary or
capricious action by the State Defendants; to the contrary, the documents submitted by SPL

28

contradict Plaintiff’s conclusory allegations and demonstrate a considered decision by the State
Defendants. According to the Amended Complaint, the Board received an initial description of
the manufacturing process from SPL, informed SPL that “after several discussions internally
about the proposed project, . . . the consensus” was that SPL’s description was not satisfactory,
and asked SPL for “a better description.” (Doc. 61 ¶¶ 8–12.) Plaintiff acknowledges that SPL
“did provide further information to LDED about its purported manufacturing process” yet claims
this still “did not meet the qualification of manufacturing under the constitutional provision.”
(Doc. 61 ¶ 13.) But, as shown above, the documents submitted by SPL provide a firm basis for
the State Defendants’ decision. Even if the Board’s choice was wrong, it did not rise to the level
of arbitrary and capricious conduct.
Lastly, as to the “addition” versus “new” manufacturing establishment claim, the Court
also finds that this is a distinction without a difference. Again, Article VII, Section 21(F)
provides in relevant part:
(F) Notwithstanding any contrary provision of this Section, the State Board of
Commerce and Industry or its successor, with the approval of the governor, may
enter into contracts for the exemption from ad valorem taxes of a new
manufacturing establishment or an addition to an existing manufacturing
establishment, on such terms and conditions as the board, with the approval of the
governor, deems in the best interest of the state.
La. Const. art. VII, § 21(F) (emphasis added). As SPL contends, the constitutional provision
authorizes an exemption for new manufacturing establishment or additions, and there is nothing
in this section that would invalidate an exemption if an application said it was one when it was in
fact the other. Further, Plaintiff has failed to point to any regulation or statute that would nullify
the Contract under this set of facts.
For all these reasons, the Court finds that Plaintiff has failed to state a claim upon which
relief can be granted. As a result, SPL’s motion should be granted.
29

2. Plaintiff’s “Estoppel” Argument Is Without Merit
Without any opposition to the substance of SPL’s arguments, Plaintiff makes the
following circuitous argument: (1) because State Defendants allegedly admit that Plaintiff has
stated a claim, (2) because SPL cannot seek dismissal of claims against State Defendants, and (3)
because SPL is a necessary, indispensable party, SPL is “estopped” from seeking dismissal of the
Amended Complaint.
The Court rejects Plaintiff’s argument. The Court has reviewed the State Defendant’s
alleged admission, and the Court does not believe it can be reasonably construed as Plaintiff
would like.5 But, even putting this aside, State Defendants have since made absolutely clear that
they do not admit that Plaintiff stated a claim and in fact seek dismissal of the Complaint on the
same grounds as SPL:
JMCB posits that the State Defendants “do not dispute and clearly recognize that
the Plaintiff has stated a claim upon which relief may be granted against them.”
Doc. No. 69, at 2. This is incorrect. In its original memorandum, the State
Defendants observed, as a general proposition, that Louisiana law recognizes a
cause of action, enjoyed only by taxpayers, to enjoin unconstitutional actions by
state agencies. Doc. No. 66-1, at 2. The State Defendants have never conceded that
the particular allegations made in the First Amended Complaint are sufficient to
state this cause of action. To the contrary, the State Defendants’ agree with their
codefendant’s assertion that these allegations do not state a cause of action. . . .
The State Defendants’ co-defendant has filed a motion to dismiss which challenges
the cause of action jointly asserted against all defendants. Although the State
Defendants have not formally joined in this motion, should this Court grant the codefendant’s motion, it should dismiss the First Amended Complaint as to the State
Defendants as well. Sanders v. Prentice-Hall Corp. System, Inc., 969 F. Supp. 481,
483 n. 1 & 487 (W.D. Tenn. 1997) (noting that in appropriate cases “the dismissal
of the Complaint operates to the benefit of the non-moving defendants as well as to
Defendants.”). If the Court grants Sabine Pass Liquefaction, LLC’s motion, but the
5

Plaintiff traces State Defendants’ alleged admission to a lengthy quote from Bunge concerning a taxpayer’s right to
“seek judicial review,” annul unconstitutional or illegal contracts, and “enjoin unlawful action by a public body.”
(Doc. 72-2 at 2–3 (quoting Bunge, 991 So.2d at 523).) It is telling that this quote comes from the Bunge court’s
discussion on whether plaintiff had a right of action, not whether plaintiff stated a viable claim. As SPL notes, the
Bunge court ultimately dismissed on summary judgment the attack on the tax exemption. Bunge, 991 So.2d at 530–
31.

30

State Defendants remain parties to this suit, the State Defendants will file a Rule
12(c) motion asserting the (successful) grounds for dismissal raised in the codefendant’s motion. Walker v. Cain, 2012 WL 3028016, *1 n. 1 (M.D. La. June 4,
2012).
(Doc. 73 at 1–2 & n. 2) Given this clear and unambiguous rejection of the central premise of
Plaintiff’s argument, Plaintiff’s entire opposition fails.
Even putting State Defendants’ clear and unambiguous statement aside, the Court
disagrees with Plaintiff’s argument. The Court previously ruled that SPL was an indispensable
party to this suit because it was a party to a contract which Plaintiff sought to invalidate. (Doc.
57 at 11–13.) The Court found that any judgment invalidating the Contract in SPL’s absence
would be extraordinarily prejudicial to it. Plaintiff now is essentially trying to circumvent the
Court’s ruling by preventing SPL from defending its own interest.
Further, while the Court does not doubt that, as a general rule, one party cannot seek
dismissal of the claims against another party represented by different counsel (which seems
fairly non-controversial and commonsensical), this appears to be a special situation where the
claims against the State Defendants and SPL are essentially one and the same: the invalidity of
the Contract. It makes little sense from a logical or equitable standpoint to hold that SPL is
estopped from seeking dismissal of all claims that would nullify its own contract (and tax
benefit). See Lewis v. Lynn, 236 F.3d 766, 768 (5th Cir. 2001) (per curiam) (“where ‘a defending
party establishes that plaintiff has no cause of action ... this defense generally inures also to the
benefit of a defaulting defendant.’ . . . The policy rationale for this rule is that it would be
‘incongruous’ and ‘unfair’ to allow some defendants to prevail, while not providing the same
benefit to similarly situated defendants.” (internal citations omitted)); Foxx v. My Vintage Baby,
Inc., 624 F. App’x 318, 319 (5th Cir. 2015) (“[b]ecause [one defendant] established that
[plaintiff] failed to state a cause of action [under Rule 12(b)(6)], that defense inures to the benefit
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of the corporate defendants where [plaintiff] offers only bare assertions to the contrary.” (citing
Lewis, 236 F.3d at 768)). For all these reasons, the Court rejects Plaintiff’s procedural defense. 6
3. Leave to Amend Will Be Granted
Lastly, Plaintiff seeks leave to amend his complaint. “[A] court ordinarily should not
dismiss the complaint except after affording every opportunity to the plaintiff to state a claim
upon which relief might be granted.” Byrd v. Bates, 220 F.2d 480, 482 (5th Cir. 1955). The Fifth
Circuit has further stated:
In view of the consequences of dismissal on the complaint alone, and the pull to
decide cases on the merits rather than on the sufficiency of pleadings, district courts
often afford plaintiffs at least one opportunity to cure pleading deficiencies before
dismissing a case, unless it is clear that the defects are incurable or the plaintiffs
advise the court that they are unwilling or unable to amend in a manner that will
avoid dismissal.
Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002).
One leading treatise has further explained:
As the numerous case[s] . . . make clear, dismissal under Rule 12(b)(6) generally is
not immediately final or on the merits because the district court normally will give
the plaintiff leave to file an amended complaint to see if the shortcomings of the
6
Putting aside the above rule about dismissing claims against similarly situated defendants, the Court notes in
closing that, under the appropriate circumstances, the Court can sua sponte dismiss Plaintiff’s claims. See Shawnee
Int'l, N.V. v. Hondo Drilling Co., 742 F.2d 234, 236 (5th Cir. 1984) (“we . . . align ourselves with our colleagues in
the other circuits who have held that a district court may dismiss a complaint on its own motion for failure to state a
claim” (collecting cases)); Sanders, 969 F. Supp. at 483 n. 1 & 487 (dismissing claims against non-moving
defendants sua sponte because such claims were “equally meritless” and “because it would be expedient and in the
interest of judicial economy to do so”). “[T]he district court can only dismiss an action on its own motion “ ‘as long
as the procedure employed is fair[,]’ ” which means, “in this context[,] . . . ‘both notice of the court’s intention and
an opportunity to respond.’ ” Carroll v. Fort James Corp., 470 F.3d 1171, 1177 (5th Cir. 2006) (citations omitted)).
These circumstances were met here. When the Court ruled that SPL was a necessary and indispensable party, the
Court effectively gave Plaintiff notice that it viewed Plaintiff’s claims against the State Defendants as essentially the
same as Plaintiff’s claims against SPL. (See Doc. 57 at 11 (“If SPL were excluded from this case, SPL would
essentially be at risk of losing its rights under the contract without any ability to voice an objection.”), 12 (“the heart
of this dispute is whether SPL’s contract with the State Defendants is invalid so as to subject SPL to about $1.4
billion in additional taxes it contracted out of.”).) Further, the Court gave Plaintiff an opportunity to oppose
dismissal of the State Defendants by giving Plaintiff an opportunity to oppose dismissal of essentially the very same
claim made against SPL.
Nevertheless, as will be explained in the next section, the Court is granting Plaintiff leave to amend the complaint
to cure its deficiencies. Thus, to the extent Plaintiff was not given adequate notice or an opportunity to respond, the
Court does so through this ruling.

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original document can be corrected. The federal rule policy of deciding cases on
the basis of the substantive rights involved rather than on technicalities requires that
the plaintiff be given every opportunity to cure a formal defect in the pleading. This
is true even when the district judge doubts that the plaintiff will be able to overcome
the shortcomings in the initial pleading. Thus, the cases make it clear that leave to
amend the complaint should be refused only if it appears to a certainty that the
plaintiff cannot state a claim. A district court's refusal to allow leave to amend is
reviewed for abuse of discretion by the court of appeals. A wise judicial practice
(and one that is commonly followed) would be to allow at least one amendment
regardless of how unpromising the initial pleading appears because except in
unusual circumstances it is unlikely that the district court will be able to determine
conclusively on the face of a defective pleading whether the plaintiff actually can
state a claim for relief.
5B Charles A. Wright, Arthur R. Miller, et al., Federal Practice and Procedure § 1357 (3d ed.
2016).
Here, Plaintiff requested leave to amend in the event SPL’s motion was granted. While
Plaintiff previously amended its complaint, it did not do so in response to a ruling by this Court
assessing the sufficiency of Plaintiff’s claims. Thus, though SPL makes a compelling case for
denying leave to amend, the Court will act in accordance with the “wise judicial practice” and
general rule and grant Plaintiff’s request.
V.

Conclusion
Accordingly,

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IT IS ORDERED that Sabine Pass Liquefaction, LLC’s Motion to Dismiss (Doc. 67) is
GRANTED, and Plaintiff’s claims are DISMISSED WITHOUT PREJUDICE.
IT IS FURTHER ORDERED that Plaintiff shall have twenty-eight (28) days from the
Court’s ruling on the State Defendants’ Motion to Dismiss Certain Claims Pursuant to Federal
Rule of Civil Procedure 12(b)(6) (Doc. 66) in which to cure the above deficiencies. If Plaintiff
fails to do so, Plaintiff’s claims will be dismissed with prejudice.
Signed in Baton Rouge, Louisiana, on August 23, 2018.

S

JUDGE JOHN W. deGRAVELLES
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

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