Comparelli v. Republica Bolivariana De Venez., , S.A., an Agency or Instrumentality of the Bolivarian Republic of Venez., Int'l Petrochemical Sales, Ltd.
Comparelli v. Republica Bolivariana De Venez., , S.A., an Agency or Instrumentality of the Bolivarian Republic of Venez., Int'l Petrochemical Sales, Ltd.
Opinion
Carmina Comparelli and Julio Delgado Comparelli sued the República Bolivariana de Venezuela and Petroquimica de Venezuela, S.A., alleging unlawful expropriation of their property in violation of international law. The district court dismissed their complaint for lack of subject-matter jurisdiction and denied their motion for leave nunc pro tunc to file an amended complaint. The Comparellis appealed.
While the case was pending here, the Supreme Court issued an opinion detailing the showing that plaintiffs such as the Comparellis must make in order to have jurisdiction over a foreign state in United States courts under the expropriation (i.e., takings) exception of the Foreign Sovereign Immunities Act,
I. BACKGROUND
The Comparellis alleged the following facts in their complaint. Because they share a last name, we refer to them by their first names.
A. THE SEIZURE OF MARIVELCA IN VENEZUELA
Carmina was born in Italy and moved to Venezuela at a young age. She has resided in Venezuela most of her life and is the sole shareholder of a Venezuelan company, Marivelca, C.A. 1
Marivelca sold chemical products and raw materials in the alimentary, petroleum, and petrochemical industries. Carmina's son, Julio, born in Venezuela, wholly owns Inversiones Trans Benz, C.A., the "trucking arm" of Marivelca. Both Marivelca and Trans Benz worked closely with Venezuela's public sector and its state-owned and operated businesses, including Petroquimica de Venezuela, S.A. ("Pequiven"), a nationalized Venezuelan company engaged in the domestic production and sale of petrochemical products.
Marivelca operated as part of Pequiven's network of certified distributors of hydrochloric acid for legal industrial applications. Pequiven would deliver hydrochloric acid to Marivelca at certain storage locations that Marivelca owned or leased. From those storage locations, Marivelca would transport the hydrochloric acid to other sites beyond Pequiven's direct distribution zone. 2
As part of its delivery network, Marivelca leased storage space from Suplidora del Caribe, C.A., a company headquartered in Maracaibo, Venezuela. Marivelca used the leased space from Suplidora to temporarily store hydrochloric acid that it acquired from Pequiven.
In June of 2008, the Public Ministry of the State of Zulia (a Venezuelan state) began investigating Suplidora. During this investigation, on August 8, 2008, the Anti-Drug Division of the Bolivarian National Guard of Venezuela conducted a warrantless search of Marivelca's headquarters for the suspected illicit storage of controlled chemical substances, as defined in Article 31 of Venezuela's Organic Law Against Illicit Traffic and Consumption of Narcotics and Psychotropic Substances. After this search, the National Guard reported that Marivelca maintained a surplus of about three million pounds of hydrochloric acid that it had not disclosed to Venezuelan *1317 authorities. On October 20, 2008, the National Anti-Drug Office conducted another warrantless search of Marivelca's facilities, at the request of the prosecutor's office in Zulia.
About two years later, in August of 2010, Venezuela charged the Comparellis with illicit storage of controlled chemical substances in violation of Article 31, and criminal conspiracy in violation of Article 6 of Venezuela's Organic Law Against Organized Crime. In November of 2010, Venezuela seized Marivelca and its assets and appointed Pequiven as the "special administrator" of Marivelca.
The original complaint, rife with allegations about corruption in Venezuela's political and judicial branches, asserts that Venezuela initiated the criminal proceeding as a pretext to further an illicit scheme to expropriate Marivelca. The Comparellis allege that they filed pleadings in September of 2010, December of 2010, and January of 2011 in response to the criminal charges, but claim that these pleadings were ignored by Venezuela so that it could "put [the case] at sleep ... for the sole purpose of furthering the illicit scheme." The Comparellis also submitted a petition for extraordinary relief (an "avocamiento") to the Venezuela Supreme Court, but that too was rejected, over the dissent of one justice.
A physical audit of Marivelca's purchases, sales, and inventory-conducted in December of 2010-revealed a surplus of only 903 pounds of hydrochloric acid, an amount within the normal tolerance margins associated with the weighing of bulk purchases of the acid. The Comparellis sent the results of this audit to the prosecutor in January of 2011. Instead of providing any relief, the Venezuelan government sought and obtained arrest warrants for Carmina and Julio. Around this time (the complaint does not say exactly when), the Comparellis fled Venezuela for Costa Rica.
B. THE LAWSUIT
On November 19, 2014, Carmina and Julio, together with Freddy and Loryelena Comparelli, filed a "Complaint for Claims Pursuant to
Venezuela and Pequiven moved to dismiss the Comparellis' original complaint. After receiving an extension of time to respond to the motions to dismiss, Carmina and Julio (but not Freddy and Loryelena) filed an amended complaint rather than a response to the motions. The amended complaint alleged the same wrongful expropriation, removed a reference to the ATS, corrected Marivelca's ownership, added that Carmina and Julio currently reside in Miami-Dade County, Florida, and sought to add an additional defendant, International Petrochemical Sales, Ltd. A week later, Carmina and Julio filed a motion for leave nunc pro *1318 tunc to re-file their amended complaint, requesting that the district court treat it as the operative pleading in the case. Venezuela and Pequiven opposed the motion and separately moved to dismiss the amended complaint.
The district court issued a summary omnibus order (1) denying the motion for leave to file an amended complaint nunc pro tunc ; (2) striking the amended complaint; and (3) ordering the Comparellis to respond to the original motions to dismiss. Freddy and Loryelena Comparelli voluntarily dismissed their claims. Carmina and Julio continued pursuing their claim for unlawful expropriation and filed a response opposing the motions to dismiss the original complaint six days later.
On September 23, 2016, the district court granted the motions to dismiss. It categorized the Comparellis' claim in the original complaint as arising under the ATS, not under § 1605(a)(3) of the FSIA. Applying ATS case law and the presumption against extraterritoriality,
see generally
Kiobel v. Royal Dutch Petroleum Co.
,
II. STANDARD OF REVIEW
We review
de novo
questions of subject-matter jurisdiction.
See
Doe v. Drummond Co., Inc.
,
III. THE FOREIGN SOVEREIGN IMMUNITIES ACT
As noted earlier, the Comparellis' attorney made some errors in the original complaint that led to the filing of the stricken amended complaint. Because the amended complaint was never the operative pleading, we only consider the original complaint. We treat Carmina as the sole shareholder of Marivelca due to the exhibit attached to the original complaint, which governs over the conflicting allegation of ownership in the complaint. See Friedman , 520 F.3d at 1295 n.6.
The original complaint cites the ATS in its caption, but that reference does not preclude us from recognizing that the Comparellis invoked jurisdiction under the FSIA's expropriation exception. First, "although captions provide helpful guidance to the court, they are not determinative as to the parties to the action or the court's jurisdiction."
Lundgren v. McDaniel
,
The FSIA is "the sole basis for obtaining jurisdiction over a foreign state in our courts."
Mezerhane
,
The Comparellis argue that jurisdiction exists under the expropriation exception of the FSIA. That exception, codified at § 1605(a)(3), provides that immunity does not apply in any case "in which rights in property taken in violation of international law are in issue." Under this exception, "expropriation is a uniquely sovereign act, as opposed to a private act."
Devengoechea v. Bolivarian Republic of Venezuela
,
After briefing in this appeal was concluded, but before oral argument, the Supreme Court issued its decision in
Helmerich
, which considered what showing a party must make to establish a federal court's jurisdiction over a foreign sovereign under the FSIA's expropriation exception. A unanimous Supreme Court held that "a party's nonfriviolous, but ultimately incorrect, argument that property was taken in violation of international law is insufficient to confer jurisdiction."
This standard notably departs from the usual pleading standards applied on a Rule 12(b)(6) motion to dismiss, where a plaintiff's factual allegations are taken as true.
See, e.g.
,
Bell Atl. Corp. v. Twombly
,
IV. THE ACT OF STATE DOCTRINE
The act of state doctrine "is a judicially-created rule of decision that 'precludes the courts of this country from inquiring into the validity of the public acts a recognized foreign sovereign power committed within its own territory.' "
Mezerhane
,
[N]o court in the United States shall decline on the ground of the federal act of state doctrine to make a determination on the merits giving effect to the principles of international law in a case in which a claim of title or other right to property is asserted by any party ... based upon (or traced through) a confiscation or other taking ... by an act of that state in violation of the principles of international law.
The Second Hickenlooper Amendment sets out three conditions in order for its exception to the act of state doctrine to apply: (1) a claim of title or other right in property, (2) which is based upon or traced through a confiscation or other taking, (3) and committed in violation of international law. See FOGADE , 263 F.3d at 1294.
V. APPLICATION OF THE DOMESTIC TAKINGS RULE
Although they are separate jurisdictional rules, the FSIA expropriation exception and the Second Hickenlooper Amendment each require a showing that the alleged taking of Marivelca by Venezuela and Pequiven violated international law.
See
de Sanchez v. Banco Cen. de Nicaragua
,
"As a rule, when a foreign nation confiscates the property of its own nationals, it does not implicate principles of international law."
FOGADE
, 263 F.3d at 1294. "At their core, such claims simply are not international."
Mezerhane
,
*1321 A. THE CONCEPT OF NATIONALITY
"Nationality is a concept of international law; citizenship is not, but is a concept in the national law of many states. A citizen under national law is generally a national for purposes of international law, but in some states not all nationals are citizens." Restatement (Third) of the Foreign Relations Law of the United States § 211 (1987).
International law recognizes that it is generally up to each state (i.e., country) to determine who are its nationals.
See
Stserba v. Holder
,
In Venezuela, "[p]ersons are either Venezuelans or foreigners." Venezuelan Civil Code, Chp. II, Art. 24 (Lawrence Pub. Co., Julio Romañach, Jr. ed. 2016). The Venezuelan Constitution provides specific means of obtaining Venezuelan nationality. See Venezuelan Civil Code, Chp. II, Art. 25 ("Venezuelan persons are those declared by the Constitution of the Republic to be such."). Under the Venezuelan Constitution, Venezuelan nationality may be attained either by birth or naturalization. See Constitution of Venezuela, Chp. II, Sec. I, Arts. 32 & 33. 4
B. CARMINA'S NATIONALITY
Carmina, according to the record before us, is not a Venezuelan national. Her Venezuelan identification card (provided to the district court) establishes that she is an "Extranjer[a]"-a foreigner-and that her nationality is Italian. Likewise, other Venezuelan records list Italy as her birthplace and "Resident" as her current status. Pequiven admits as much, stating that Carmina is "Italian and a legal Venezuelan resident since 1957." Br. of Pequiven at 9.
Venezuelan law does not appear to confer nationality on long-time residents who do not follow the constitutionally-prescribed means to become Venezuelan. See *1322 generally Venezuelan Civil Code, Chp. II. See also Constitution of Venezuela, Chp. II, Sec. I, Art. 33 (providing the procedure to obtain Venezuelan nationality through naturalization). Although Carmina has lived in Venezuela for decades and has significant ties there, it appears that Venezuela does not consider her to be one of its nationals. If this is the case, the domestic takings rule does not bar Carmina's claim. 5
C. JULIO'S NATIONALITY
Julio alleged that he is a citizen of Italy. But evidence in the record indicates that he is also a national of Venezuela, having been born in that country. For example, a Venezuelan identity card identifies Julio as "Venezolano." Julio argues that Venezuela is not permitted to go "beyond the four corners of the [c]omplaint ... to argue that he is a dual citizen of Italy and Venezuela." Br. of Carmina and Julio Comparelli at 12. As
Helmerich
made clear, however, this is no longer the case; courts "may take evidence and resolve factual disputes" to determine the applicability of the expropriation exception
. See
Helmerich
,
Under the principle of
jus sanguinis-
citizenship based on parents' citizenship
-
Julio may indeed be a national of Italy because his mother, Carmina, is an Italian national.
See
Faddoul v. I.N.S.
,
Venezuela and Pequiven argue that Julio's claims are barred by the domestic takings rule under
FOGADE
and
Mezerhane
. Neither case, however, analyzed whether the rule extends to a state's expropriation of property belonging to one of its nationals
who is also a national of another country
.
See
FOGADE
, 263 F.3d at 1294 (Venezuelan nationals' claim of expropriation by Venezuelan agency);
Mezerhane
,
Two district courts have addressed expropriation claims by dual nationals. We discuss both cases below.
In
Wahba v. National Bank of Egypt
,
In
Bahgat v. Arab Republic of Egypt
,
We find
Wahba
and
Bahgat
instructive in determining whether the domestic takings rule should apply in the case of a dual national. In doing so, we decline to announce a broad principle that the rule applies automatically to dual nationals. Rather, the inquiry is fact-based, considering matters such as the relationship between the national and the state which allegedly expropriated the property, how the national-through his words and conduct-characterized himself, and whether the state considered its national as one of its own or as a foreign national.
See
Wahba
,
This fact-based inquiry is in line with the analysis international courts have used to determine the "dominant and effective nationality" of dual nationals. For example, the Iran-U.S. Claims Tribunal has jurisdiction over claims of United States nationals against Iran, but not claims by Iranian nationals against Iran. Faced with claims by Iran-U.S. dual nationals, the Tribunal determined that it was required by international law to consider "all relevant factors" to determine the "dominant and effective nationality" of those dual national claimants for jurisdictional purposes. See Iran-U.S. Claims Tribunal: Decision in Case No. A/18 Concerning the Question of Jurisdiction over Claims of Persons with Dual Nationality, Apr. 6, 1984, 5 Iran-U.S. Claims Trib. Reports 251, 265. See also id . at 263 (emphasizing a "search for the real and effective nationality based on the facts of a case, instead of an approach relying on more formalistic criteria").
The fact-based approach also appears to be the accepted analysis among other international courts.
See, e.g.
,
Mergé Case (U.S. v. Italy)
, 14 R.I.A.A. 236, 247 (Italian-U.S. Conciliation Comm'n June 10, 1955) ("[H]abitual residence can be one of the criteria of evaluation [to determine effective nationality], but not the only one. The conduct of the individual in his economic, social, political, civic and family life, as well as the closer and more effective bond with one of the two [s]tates must also be considered.");
Nottebohm Case (Liechtenstein v. Guatemala)
, 1955 I.C.J. 4, 22-23 (Apr. 6, 1955) (describing a "prevailing tendency [ ] to prefer the real and effective nationality" and listing several factors for determination);
Drummond's Case
[1834] 12 Eng. Rep. 492, 500 (P.C.) (concluding that Mr. Drummond "was technically a British subject, ... yet, he was also, at the same time, in form and substance, a French subject, domiciled in France, with all the marks and attributes of French character," and, therefore, a seizure of his property by the French government was "in the exercise of its municipal authority over its own subjects").
See generally
Kim Rubenstein and Daniel Adler,
International Citizenship: The Future of Nationality in A Globalized World
,
We have described the related determination of a party's residency as "a fact-sensitive issue."
Comm'r. v. Estate of Sanders
,
VI. THE PRESUMPTION AGAINST EXTRATERRITORIALITY
Venezuela and Pequiven rely upon a series of Supreme Court cases establishing a presumption against extraterritoriality-"when a statute gives no clear indication of an extraterritorial application, it has none."
Kiobel
,
According to Venezuela and Pequiven, the FSIA "expropriation exception does not have extraterritorial effect if there is no connection whatsoever to the United States." Br. of Pequiven at 21. This may be true, but the argument ignores that the expropriation exception contains a nexus requirement providing a requisite connection to the United States sufficient to allow extraterritorial application.
See
§ 1605(a)(3) (requiring "that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state; or that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States"). The expropriation exception focuses on the connection of the property in question (or any property exchanged for that property) to the United States.
See
id
. Congress explicitly noted that the expropriated property itself "need not be present" in the United States, so long as the agency or instrumentality of the foreign state owns or operates it (or property exchanged for it) and is engaged in commercial activity in the United States.
See
H.R. Rep. 94-1487, at 19 (1976). If a plaintiff satisfies this requirement, that is enough to permit exterritorial application.
See
Verlinden
,
Assuming the Comparellis are able to satisfy the necessary nexus to the United States, this case mirrors the situation described in
RJR Nabisco
, which held that the presumption against extraterritoriality was rebutted for certain applications of the federal RICO statute. There, the Supreme Court noted "that RICO defines racketeering activity to include a number of predicates that plainly apply to at least some foreign conduct."
RJR Nabisco
,
Amerada Hess
does not counsel otherwise. There, two Liberian corporations sued the Argentine Republic in federal court seeking to recover damages stemming from the alleged bombing of their oil tanker in the South Atlantic, about 600 miles off the coast of Argentina.
See
Amerada Hess
,
The expropriation exception does not contain the same limiting language as the non-commercial tort exception addressed in
Amerada Hess
. Rather, § 1605(a)(3) contemplates suits regarding exterritorial takings so long as the nexus requirement in the exception is satisfied. In fact, in
Amerada Hess
, the Supreme Court specifically distinguished the commercial activity exception, § 1605(a)(2), from the non-commercial tort exception, § 1605(a)(5). It explained that under the commercial activity exception, "a foreign state may be liable for its commercial activities 'outside the territory of the United States' having a 'direct effect' inside the United States."
Amerada Hess
,
Whether or not the Comparellis have actually satisfied the nexus requirement is another matter. They allege that Pequiven is an agency or instrumentality of Venezuela and that it engages in commercial activity in the United States. But, as
Helmerich
dictates, the district court will need determine on remand whether the nexus requirement is, in fact, established; mere allegations are no longer sufficient.
See
Helmerich
,
VII. WHETHER THE COMPARELLIS SATISFIED THE EXPROPRIATION EXCEPTION
Because the domestic takings rule does not appear to bar Carmina's claim (and may not bar Julio's claim), we next must determine whether the expropriation exception is satisfied. Again, this exception requires a showing that (1) rights in property are at issue; (2) the property was taken; (3) the taking was in violation of international law; and (4) at least one of the two statutory nexus requirements are satisfied. See § 1605(a)(3).
Not surprisingly, the parties dispute whether this standard has been met. But they and the district court lacked the benefit of Helmerich . Although the parties' briefs on appeal discuss how § 1605(a)(3) applies to the facts of this case, the parties below submitted only limited evidence and the district court made no factual findings resolving any of the now-critical disputes. This leaves us with several matters that the record simply does not answer.
For example, under the third prong of the exception, there are three ways in which a taking may violate international law: (1) when it does not serve a public purpose; (2) when it discriminates against those who are not nationals of the country; or (3) when it is not accompanied by provision for just compensation.
See
Chettri v. Nepal Rastra Bank
,
*1327
Here, the purpose of the alleged expropriation is hotly contested.
See
Siderman de Blake v. Republic of Argentina
,
We also lack any information about what compensation, if any, would be required under the circumstances.
Compare
Chettri
, 834 F.3d at 58 (freezing of assets under "routine law enforcement action" did not constitute a violation of international law),
with
Siderman de Blake
,
These are just some of the issues that must be addressed to determine whether the expropriation exception is satisfied. In this scenario, with
Helmerich
having been issued after the case was on appeal, we believe it is appropriate to remand and have the district court determine in the first instance whether jurisdiction exists under § 1605(a)(3) of the FSIA.
See
Marsteller ex rel. United States v. Tilton
,
VIII. REASSIGNMENT TO ANOTHER DISTRICT JUDGE
Because we are remanding the case to the district court, we must consider the Comparellis' request that we direct the case to be reassigned to a different district judge pursuant to
No factor supports reassignment in this case. The Comparellis explain that their "reasonable belief is grounded on a pattern of adverse rulings," Br. of Carmina and Julio Comparelli at 52, but "the fact that the district judge ruled against the appellants previously is of little impact; otherwise every reversed case would have to be reassigned on remand."
Stargel
,
IX. CONCLUSION
We reverse the dismissal of the Comparellis' complaint. On remand, the district court should permit the Comparellis to file an amended complaint and, after Venezuela and Pequiven have responded, address whether the domestic takings rule applies and whether jurisdiction exists under the FSIA's expropriation exception. Jurisdictional discovery and the presentation of evidence may be required, but we leave those matters in the discretion of the district court.
See
Helmerich
,
"We recognize that merits and jurisdiction will sometimes come intertwined." Id . at 1319. If, on remand, the district court's resolution of the jurisdictional questions under Helmerich requires it to "inevitably decide some, or all, of the merits issues, so be it." Id .
REVERSED AND REMANDED.
The original complaint states that Carmina, Julio, Freddy Comparelli, and Loryelena Comparelli each owned a 25% stake of Marivelca. The Comparellis' attorney acknowledged that this was an error and attempted to correct it by filing an amended complaint alleging that Carmina owned 100% of Marivelca. Although the district court struck the amended complaint, the original complaint includes an exhibit which suggests-at this stage of the litigation-that Carmina is the sole shareholder of Marivelca. Exhibits control over conflicting allegations in a pleading, so for the purposes of this opinion we consider Carmina as the sole shareholder of Marivelca despite the contrary allegation in the original complaint.
See
Friedman v. Market St. Mortg. Corp.
,
Hydrochloric acid is a highly corrosive, strong mineral acid with several industrial uses. Because it is also used in the production of heroin, cocaine, and methamphetamine, it is listed as a Table II controlled drug precursor under the 1988 United Nations Convention Against Illicit Trafficking in Narcotic Drugs and Psychotropic Substances. See UN Economic and Social Council (ECOSOC), United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 19 December 1988.
The Second Hickenlooper Amendment was enacted, in part, as a response to the Supreme Court's decision in
Banco Nacional de Cuba v. Sabbatino
,
On remand, the parties may wish to supplement our preliminary assessment of Venezuelan law with other sources explaining, for example, whether Venezuela confers nationality in other circumstances.
See
Belleri v. United States
,
This conclusion is based upon the record currently before us, which includes government records submitted by Venezuela in its motion to dismiss. On remand, jurisdictional discovery may yield other evidence about Carmina's nationality at the time of the alleged expropriation. As Helmerich dictates, the district court should resolve any such factual disputes.
These requirements are subject to the domestic takings rule. As noted, "when a foreign nation confiscates the property of its own nationals, it does not implicate principles of international law."
FOGADE
,
The Comparellis have alleged numerous treaty violations as sufficient to satisfy the "violation of international law" requirement of the expropriation exception. But "the Eleventh Circuit has never held that the exception to sovereign immunity set out in
That Marivelca is a Venezuelan corporation is not necessarily dispositive. A court may consider whether "a foreign state treats a corporation in a particular way because of the nationality of its shareholders."
Banco Nacional de Cuba v. Farr
,
Reference
- Full Case Name
- Carmina R. COMPARELLI, Julio C. Delgado Comparelli, Plaintiffs-Appellants, Freddy E. Lopez Comparelli, Et Al., Plaintiffs, v. REPUBLICA BOLIVARIANA DE VENEZUELA, a Sovereign Nation, Petroquimica De Venezuela, S.A., an Agency or Instrumentality of the Bolivarian Republic of Venezuela, International Petrochemical Sales, LTD., Defendants-Appellees.
- Cited By
- 23 cases
- Status
- Published