No longer safe at home: preventing the misuse of federal common law of foreign relations as a defense tactic in private transnational litigation.

• Author: Mulligan, Lumen N.

INTRODUCTION

In an increasingly common litigation strategy, (1) plaintiffs in Patrickson v. Dole Food Company, (2) laborers in the banana industries of Costa Rica, Ecuador, Guatemala and Panama, brought a class-action suit in Hawaii state court against Dole Food and other defendants. (3) Plaintiffs brought only state law causes of action, alleging that they had been harmed by Dole Food's use of DBCP, a toxic pesticide banned from use in the United States. (4) Dole Food removed the case to federal district court seeking the procedural advantages of a federal forum, (5) as corporate defendants facing alien tort plaintiffs seeking redress for overseas conduct invariably do. The advantages Dole Food sought from a federal forum included: stricter standing requirements, stricter burdens of proof, (6) and a more liberal standard for forum non conveniens dismissal. (7) Of these, federal forum non conveniens doctrine was, arguably, Dole Food's strongest weapon. A forum non conveniens dismissal that forces plaintiffs to seek recovery in Central American courts, as was the case in Patrickson, generally equates to a victory for a corporate defendant. (8) As is often the case, the district court granted Dole Food's motion to dismiss based on forum non conveniens. (9)

On appeal, plaintiffs sought to void the removal to federal court, and the subsequent dismissal, by arguing that the district court lacked subject matter jurisdiction. (10) Plaintiffs chose to file suit in Hawaii state court in order to avoid removal based on diversity jurisdiction, (11) forcing Dole Food to argue that a federal question was raised by the com plaint. (12) Dole Food responded that the complaint implicated the federal common law of foreign relations, (13) thereby raising federal question subject matter jurisdiction ("federal question jurisdiction"). (14) The Ninth Circuit rejected this argument, holding that the district court lacked subject matter jurisdiction, and remanded the case to Hawaii state court. (15)

In so holding, the Ninth Circuit split with the Torres v. Southern Peru Copper Corp. (16) line of cases ("the Torres approach") from the Fifth and Eleventh Circuits. (17) In Torres, 700 Peruvian miners brought state tort causes of action in Texas state court against an American multinational mining corporation. (18) The defendant, Southern Peru Copper Corporation ("SPCC"), removed to federal court and was granted a forum non conveniens dismissal. (19) As in Patrickson, the Torres plaintiffs appealed, arguing that the federal district court lacked subject matter jurisdiction. (20) The government of Peru, although not a party to the dispute, filed statements in opposition to the plaintiffs' case with the State Department and with the court. (21) The Fifth Circuit found that federal question jurisdiction existed in this case, thus the removal and the subsequent dismissal were proper. (22)

This Note argues that foreign plaintiffs should be able to sue American multinational corporations in state courts. Part I advances the most charitable readings of both the Torres approach and the Patrickson challenge to that view. Part II contends that while the Patrickson court reaches the correct result, it fundamentally misinterprets the Torres approach, thereby failing to attack the core deficiencies of the Torres approach. Part III argues that the foreign sovereign conduct approach, an alternative analysis of the federal common law of foreign relations, best reflects established case law. This Note concludes that providing foreign plaintiffs an opportunity to seek redress in state courts fosters corporate responsibility among American multinational companies.

1. FEDERAL COMMON LAW OF FOREIGN RELATIONS: EXPANSIVE AND RESTRICTIVE JURISDICTIONAL VIEWS

   Corporate defendants such as SPCC and Dole Food often rely upon expansive notions of federal question jurisdiction to remove cases to federal court, in an effort to avoid an on the merits defense of their conduct abroad. Part I advances the most charitable readings of the Torres and Patrickson resolutions of this issue. Section I.A provides a doctrinal argument on behalf of the Torres approach. Section I.B presents the doctrinal arguments implicitly relied upon by the Patrickson court.

   1. The Torres Approach

      The Torres approach extends federal question jurisdiction to state causes of action that significantly affect the vital economic and sovereign interests of foreign states, even when a foreign sovereign is not a party to the litigation. (23) The Torres court presents precious little argument itself in support of its extension of federal question jurisdiction, citing only two supporting cases and devoting merely one page of the Federal Reporter to the approach. (24) This section formulates a doctrinal defense on behalf of the Torres approach. Although this approach is ultimately untenable, this Section argues that it is best understood as a specific application of the well-pleaded complaint rule that is triggered when two additional criteria are met: (1) the foreign government involved lodges a protest with the court and (2) both the plaintiffs and the injuries complained of are of foreign origin. (25)

      1. The Torres Approach's Consistency with the Well-Pleaded Complaint Rule

         The Fifth Circuit views the Torres approach as "a very specific application of the well-pleaded complaint rule," (26) noting that, even within the erudite realm of federal common law of foreign relations, the well-pleaded complaint rule applies. (27) As such, proponents of the Torres approach do not view it as an exception to the well-pleaded complaint rule, as its opponents contend, (28) but rather as an independent corollary to it. (29)

         All grants of federal question jurisdiction are subject to the well-pleaded complaint rule. (30) Following the rule, only issues raised in a plaintiff's complaint can establish federal question jurisdiction. (31) Thus in Torres, defenses raised by SPCC that rely upon federal law supply an insufficient foundation for establishing federal question jurisdiction. (32) The well-pleaded complaint rule makes the plaintiff "the master of the claim," allowing the plaintiff to avoid federal question jurisdiction--and a federal forum--by alleging only state claims. (33) The Torres and Patrickson plaintiffs took this approach. (34) Nevertheless, in an effort to investigate potentially artfully pled complaints, the Torres court felt obliged to look past the face of the complaint to determine if the federal common law of foreign relations was implicated by the plaintiff's claims. (35)

         Although the court does not provide a robust defense of this view, doctrinal support for the court's action is forthcoming. (36) Congress codified its general grant of federal question jurisdiction in Title 28 United States Code [section] 1331. (37) "Although the language of [section] 1331 parallels that of the `Arising Under' Clause of Art. III, [the Supreme] Court never has held that statutory `arising under' jurisdiction is identical to Art. III `arising under' jurisdiction." (38) The Court interprets [section] 1331 as granting a much narrower scope of federal question jurisdiction than the Constitution permits. (39) The Court has established two independent tests for meeting the [section] 1331 grant of jurisdiction: (1) the plaintiff's cause of action was created by federal law ("Holmes test") (40) and (2) vindication of plaintiff's state cause of action necessarily requires the construction of federal law ("necessary construction test"). (41)

         Plaintiffs in Torres rely exclusively upon state causes of action; hence, the Holmes test is inapplicable in this instance. (42) As such, SPCC pursued federal jurisdiction via the necessary construction test. (43) Even though the Supreme Court has stated that this test should be applied with caution, as this realm of jurisdiction lies at the outer reaches of [sections] 1331, (44) the Fifth Circuit found that the Torres complaint passed in this case. (45)

         The Fifth Circuit's well-pleaded complaint rule analysis invoked the ban on "artfully plead" complaints. (46) "[I]t is an independent corollary of the well-pleaded complaint rule that a plaintiff may not defeat removal by omitting to plead necessary federal questions in a complaint." (47) A plaintiff, then, may not escape federal question jurisdiction by artfully pleading a federal claim in state law terms. (48) Federal courts have an obligation to investigate complaints to determine if a complaint alleging only state law causes of action actually is founded upon federal law. (49) In Torres, SPCC, relying upon this judicial duty, contended that the plaintiffs artfully pled their complaint to avoid addressing federal common law of foreign relations. (50) As such, the extension of federal question jurisdiction did not violate the well-pleaded complaint rule--as long as the federal common law of foreign relations was applicable. (51)

      2. The Torres Approach's Use of the Federal Common Law of Foreign Relations

         In Torres, SPCC presented the novel, but ultimately flawed, argument that the plaintiffs' complaint implicated the federal common law of foreign relations. (52) SPCC argued that this was the case because Peru's vital economic and sovereign interests were at stake. (53) SPCC was the largest mining company in Peru, an industry that accounted for fifty percent of Peru's export income and eleven percent of its gross domestic product. (54) The court accepted, without citing any authority, SPCC's view that a vital, Peruvian economic interest was at stake. (55) The court found, again without citing authority, that the sovereign interests of Peru were involved because it owned the land upon which SPCC mined, owned the extracted minerals, granted SPCC concessions, and actually owned the mining refinery itself until 1994. (56) The court held, citing only Republic of the Philippines v. Marcos, (57) that these two Peruvian interests...