United States District Court, D. Delaware
Raymond J. DiCamillo, Jeffrey L. Moyer, and Travis S. Hunter,
RICHARDS, LAYTON & FINGER, P.A, Wilmington, DE
L. Weigel, Jason W. Myatt, and Rahim Moloo, GIBSON, DUNN
& CRUTCHER LLP, New York, NY Attorneys for Plaintiff
Crystallex International Corp.
T. Hirzel, II, PROCTOR HEYMAN ENERIO LLP, Wilmington, DE
D. Pizzurro, Peter J. Behmke, and Julia B. Mosse, CURTIS,
MALLET-PREVOST, COLT & MOSLE LLP, New York, NY Attorneys
for Defendant Petroleos de Venezuela, S.A.
U.S. District Judge
case stems from allegations that the Bolivarian Republic of
Venezuela ("Venezuela") unlawfully expropriated
certain mining rights and investments belonging to a Canadian
company, Plaintiff Crystallex International Corporation
("Crystallex"). According to Crystallex, Venezuela
then orchestrated a scheme to monetize its American assets
and pulled the proceeds out of the United States, with the
goal of evading potential arbitration creditors, including
Crystallex. (See generally D.I. 1)
Petroleos de Venezuela, S.A. ("PDVSA") is
Venezuela's state-owned oil company and, undisputedly, an
"agency or instrumentality" of Venezuela.
(See D.I. 1 at 18-33 (alleging that PDVSA is
Venezuela's alter ego); D.I. 28-2 at 1; D.I. 31
at 13 n.7) PDVSA directly and indirectly owns Defendant PDV
Holding, Inc. ("PDVH") and CITGO Holding, Inc.
("CITGO Holding" and, together with PDVH, the
"Delaware Subsidiaries"), both of which are
Delaware corporations. Crystallex alleges that PDVSA
instructed CITGO Holding to issue $2.8 billion in debt and
pay the proceeds to its parent company, PDVH, as a dividend.
Then, according to Crystallex, PDVH transferred this sum
further up the ladder and out of the U.S. by issuing a
dividend in the same amount to its own parent, PDVSA. It is
alleged that the transactions effecting this repatriation of
funds to Venezuela (the "Transfer(s)") "had no
legitimate purpose" but, instead, were "designed
deliberately to hinder and delay Venezuela's
creditors." (D.I. 1 ¶ 55)
November 23, 2015, Crystallex filed a complaint (D.I. 1)
("Complaint") asserting claims based on the
Delaware Uniform Fraudulent Transfer Act, 6 Del. C. §
1301 et seq. ("DUFTA"). By its Complaint,
Crystallex seeks a judgment ordering the return to the United
States of $2.8 billion in Transfer proceeds, or alternatively
an award of money damages against the defendants, as well as
an injunction against further transfers of remaining funds or
assets out of the United States. In April, 2016, the tribunal
arbitrating the dispute between Crystallex and Venezuela
awarded Crystallex more than $1.4 billion. (See D.I.
31 at 1) On March 25, 2017, the United States District Court
for the District of Columbia confirmed the Crystallex
arbitration award in an amount in excess of $ 1.2 billion.
(See D .1. 61 -1)
PDVSA's co-defendants, PDVH and CITGO Holding, moved to
dismiss the Complaint for failure to state a claim. (D.I. 8)
On September 30, 2016, the Court issued a memorandum opinion
and order dismissing CITGO Holding, but not PDVH, from the
case. (See D.I. 34, 35) An interlocutory appeal from
the Court's order on the Delaware Subsidiaries'
motion to dismiss is presently pending in the United States
Court of Appeals for the Third Circuit. (See D.I.
Court now turns to PDVSA's separate motion to dismiss
under the Foreign Sovereign Immunities Act, 28 U.S.C. §
1602 et seq. ("FSIA" or "Act"),
and Federal Rules of Civil Procedure 12(b)(1), 12(b)(2), and
12(b)(6). (See D.I. 28) The parties fully briefed
PDVSA's motion (see D.I. 28-2, 31, 32), and the
Court heard oral argument on December 20, 2016 (see
D.I. 57 ("Tr.")). For the reasons stated below, the
Court will grant PDVSA's motion.
Subject Matter Jurisdiction
12(b)(1) "authorizes dismissal of a complaint for lack
of jurisdiction over the subject matter, or if the plaintiff
lacks standing to bring his claim." Samsung Elec.
Co., Ltd. v. ON Semiconductor Corp., 541 F.Supp.2d 645,
648 (D. Del. 2008). A motion to dismiss for lack of subject
matter jurisdiction may present either a facial attack or a
factual attack. See CNA v. United States, 535 F.3d
132, 139 (3d Cir. 2008); Fed.R.Civ.P. 12(b)(1). A facial
attack "concerns an alleged pleading deficiency, "
while a factual attack concerns the "failure of a
plaintiffs claim to comport factually with the jurisdictional
prerequisites." CNA, 535 F.3d at 139 (internal
quotation marks and brackets omitted).
PDVSA brings a facial challenge to the Court's subject
matter jurisdiction. (See D.I. 28-2 at 5 n.3) PDVSA
has not introduced extrinsic evidence, and the parties'
briefs and arguments reflect disagreement over "the
legal sufficiency of the plaintiff s jurisdictional
allegations." Rong v. Liaoning Province
Gov't, 452 F.3d 883, 888 (D.C. Cir. 2006) (internal
quotation marks omitted). Therefore, the Court will
"take the plaintiffs factual allegations as true and
determine whether they bring the case within any of the
[FSIA's] exceptions." Id. (internal
quotation marks omitted); see also Petruska v. Gannon
Univ., 462 F.3d 294, 302 n.3 (3d Cir. 2006) ("When
considering a facial attack, the Court must consider the
allegations of the complaint as true, and in that respect
such a Rule 12(b)(1) motion is similar to a Rule 12(b)(6)
motion.") (internal quotation marks omitted).
12(b)(2) directs the Court to dismiss a case when it lacks
personal jurisdiction over the defendant. On a motion to
dismiss for lack of personal jurisdiction, "the
plaintiff is entitled to have its allegations taken as true
and all factual disputes drawn in its favor." Miller
Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir.
2004). Pursuant to the FSIA, prerequisites for personal
jurisdiction over a foreign sovereign or its agencies or
instrumentalities are that there be subject matter
jurisdiction and service of process. See 28 U.S.C.
Failure to State a Claim
a motion to dismiss under Rule 12(b)(6) requires the Court to
accept as true all material allegations of a complaint.
See Spruill v. Gillis, 372 F.3d 218, 223 (3d Cir.
2004). "The issue is not whether a plaintiff will
ultimately prevail but whether the claimant is entitled to
offer evidence to support the claims." In re
Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1420
(3d Cir. 1997) (internal quotation marks omitted). Thus, the
Court may grant such a motion to dismiss only if, after
"accepting all well pleaded allegations in the complaint
as true, and viewing them in the light most favorable to
plaintiff, [the] plaintiff is not entitled to relief."
Subject Matter Jurisdiction
PDVSA is presumptively immune under the FSIA
FSIA provides the sole means for "obtaining jurisdiction
over a foreign state in the courts of this country."
Argentine Republic v. Amerada Hess Shipping Corp.,
488 U.S. 428, 434 (1989). However, foreign states and their
agents and instrumentalities are "presumptively immune
from the jurisdiction of United States courts unless one of
the Act's express exceptions to sovereign immunity
applies." OBB Personenverkehr AG v. Sachs, 136
S.Ct. 390, 394 (2015) (internal quotation marks omitted).
While the "ultimate burden of proving immunity from
suit" belongs to the foreign state or its agency or
instrumentality, a plaintiff suing such a defendant must
"establish that one of the exceptions to immunity
applie[s]." Fed. Ins. Co. v. Richard I. Rubin &
Co., 12 F.3d 1270, 1285 (3d Cir. 1993). That is, once a
defendant makes a prima facie showing that it is a
"foreign state, " or an "agency or
instrumentality" of a foreign state, "the burden
shifts to the plaintiff to produce sufficient evidence
demonstrating the application of one of the statutory
exceptions to immunity." Ezeiruaku v. Bull, 617
F.App'x 179, 181 (3d Cir. 2015) (citing Fed.
Ins., 12 F.3d at 1282).
Crystallex alleges that PDVSA is an "agency or
instrumentality" of Venezuela, which PDVSA does not
deny. (See D.I. 1 ¶ 15 (quoting 28 U.S.C.
§ 1603(b)); D.I. 28-2 at 1) It is undisputed, therefore,
that the FSIA is applicable. It is further undisputed that
PDVSA is presumptively immune from suit. What is disputed is
whether Crystallex has met its ...