Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-02820/USCOURTS-cand-3_06-cv-02820-2/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1391 Personal Injury

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JANE DOE I–V AND JOHN DOE I–IV, on

behalf of themselves and all others similarly

situated

Plaintiffs,

 v.

TEXACO, INC.; TEXACO PETROLEUM

CO. AND CHEVRON CORP.,

Defendants. /

No. C 06-02820 WHA

ORDER GRANTING MOTION TO

DISMISS AND DENYING

MOTION TO STAY

INTRODUCTION

In this action alleging environmental harm to the Ecuadorian rainforest, defendants

move to dismiss the complaint. They seek a stay of the case if the dismissal is not with

prejudice. Plaintiffs fail to state a claim. Defendants have not justified a stay. The motion to

dismiss therefore is GRANTED. The motion for a stay is DENIED.

STATEMENT

In 1971, defendant Texaco Petroleum Co. (Texpet) began pumping crude oil from

beneath the Ecuadorian rainforest. Texpet was a subsidiary of defendant Texaco, Inc. Along

with the oil, Texpet extracted water contaminated with heavy-metal salts and petroleum. Under

standard oil-industry procedures at the time, this “produced water” would have been reinjected

into the well. Texpet, however, put this contaminated water in open pits. The run-off flowed

into nearby wetlands and rivers. This practice continued until 1992. By using this practice

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* All facts are taken from the complaint. On a motion to dismiss, “allegations of material fact are taken as

true and construed in the light most favorable to Plaintiffs.” Epstein v. Wash. Energy Co., 83 F.3d 1136,

1140 (9th Cir. 1996). 

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instead of reinjecting the wastewater, Texpet saved itself $1.4 billion to $5.6 billion (Compl. ¶¶

2, 19, 25, 30–31, 47–48, 50, 54).*

 

People living in the region where this oil-drilling took place often drink and bathe in

such contaminated waters, due to a lack of other water supplies. The contamination contained

carcinogenic organic compounds and hydrocarbons. Ingestion of these chemicals by residents

of the area has raised their average risk of cancer to between 12 and 1,000 cancers per million

exposures, at least twelve time the accepted risk under U.S. Environmental Protection Agency

standards. Four of the plaintiffs, Jane Does I–IV, have contracted cancer caused by exposure to

these toxins released by Texpet. Another five of the plaintiffs have family members with such

cancers and are at heightened risk of contracting similar cancers. Plaintiffs sue as

representatives of a putative class of 30,000 people (Compl. ¶¶ 8–16, 74–75, 77–78, 88). 

In 1993, a group of Ecuadorians, purporting to represent a plaintiff class, sued Texaco in

the United States District Court for the Southern District of New York. That action was

dismissed on forum non conveniens grounds, on the condition that Texaco agree to litigate the

issues in Ecuador. See generally Aguinda v. Texaco, Inc., 303 F.3d 470, 473 (2d Cir. 2002). 

In 2000 or 2001, Texaco merged with defendant Chevron Corp. Texpet’s shares are

wholly owned by Chevron or one of its subsidiaries. Since the merger, Chevron has made

statements denying that Texpet’s conduct in Ecuador was responsible for environmental and

health problems region where it drilled for oil. Chevron knew those statements were false or

misleading. It made such statements to induce Californians to buy its products and to protect

the value of its stock (Compl. ¶¶ 18–19, 80, 107–108). 

In 2003, a group of Ecuadorians brought a lawsuit in Ecuador seeking injunctive relief

that would include a clean up of the polluted areas and payment for 10 percent of the total repair

work (Mittelstaedt Decl. ¶ 1, Exh. 1 (Compl., Aguinda v. ChevronTexaco Corp., Super. Ct. of

Nueva Loja, Lago Agrio, Province of Sucumbios, Ecuador; May 7, 2003). 

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In 2004, ChevronTexaco Corp. and Texpet commenced an arbitration proceeding

against Petroecuador, claiming a right to indemnification for their costs and expenses in

connection with the litigation brought in Ecuador. The Republic of Ecuador and Petroecuador

sued to stay the arbitration. See generally Republic of Ecuador v. ChevronTexaco Corp., 376 F.

Supp. 2d 334 (S.D.N.Y. 2005). That action is still pending. Civil Docket Sheet, Republic of

Ecuador v. ChevronTexaco Corp., No. Civil 04-8378 LBS. 

Plaintiffs bring two claims in the instant action. In count one of the complaint, plaintiffs

allege that defendants were unjustly enriched. Count two alleges that they violated California

Business and Professions Code Section 172000, the Unfair Competition Law (Compl. ¶¶ 99,

109). 

ANALYSIS

A motion to dismiss a complaint for failure to state a claim can be granted only if “it

appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which

would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957). “All allegations of

material fact [must be] taken as true and construed in the light most favorable” to the plaintiff. 

However, “conclusory allegations of law and unwarranted inferences are insufficient to defeat a

motion to dismiss for failure to state a claim.” Epstein v. Wash. Energy Co., 83 F.3d 1136,

1140 (9th Cir. 1996). 

1. UNJUST ENRICHMENT.

A party may be required to make restitution if it is unjustly enriched at the expense of

another. A person is enriched if he receives a benefit at another’s expense. Ghirardo v.

Antonioli, 14 Cal. 4th 39, 51 (1996). If a party has suffered certain torts, it may waive the tort

and sue for unjust enrichment. In doing so, the plaintiff is consenting to the taking of his or her

property, thus nullifying the tort and affirming the act of the wrongdoer. The plaintiff therefore

becomes entitled to treat the tort as a sale of his or her property and to seek to recover the

property’s value under an implied contract of sale. Bank of Am. Nat’l Trust & Sav. Ass’n v.

Hill, 9 Cal. 2d 495, 499 (1937). A plaintiff may only elect to waive the tort, however, if there is

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no adequate tort remedy. Ramona Manor Convalescent Hosp. v. Care Enters., 177 Cal. App.

3d 1120, 1140 (Cal. Ct. App. 1986). 

Plaintiffs contend that Texpet was unjustly enriched at their expense because the

company wrongfully invaded “their legally protected interest in freedom from bodily harm”

(Opp. 10). 

Plaintiffs do not state a valid claim for unjust enrichment. The extra profits that

defendants gained by letting contaminated water run into the wetlands and rivers of Ecuador

were not conferred upon them by plaintiffs. Plaintiffs do not cite to any decision addressing —

much less upholding — a complaint that stretched a personal-injury tort claim into a claim of

unjust enrichment simply because the alleged tortfeasor got a benefit that was incidental to the

injury. In the absence of California authority on point, this order declines to extend the theory

of unjust enrichment to the scenario alleged in the complaint.

Additionally, plaintiffs do not adequately plead or argue that they have no adequate

remedy at law. They allege that they have no adequate legal remedy because the injuries they

suffered “cannot be undone by mere compensation” (Compl. ¶ 100). The inability of cash to

cure cancer or reduce plaintiffs’ risk of cancer does not make damages an inadequate remedy. 

If it did, many people who suffered a personal injury would be able to seek disgorgement of

profits rather than compensatory damages. In their brief, plaintiffs claim that legal remedies

also are inadequate because (1) seeking them might require filing individual actions, rather than

the instant class action,(2) because such individual actions would be “prohibitively expensive

and complex,” and (3) because the equitable remedy they seek — a fund to build medical

facilities — is superior than damages. They argue that damages would be inadequate because

“a money judgment would be of a [sic] little use to Plaintiffs in the absence of a trustee to

ensure that medical facilities are established” (Opp. 14–15). None of these reasons demonstrate

that plaintiffs lack a remedy at law. It is possible both to pursue a class action and to seek

individual damages. See generally Alba Conte & Herbert B. Newberg, Newberg on Class

Actions § 10:1 (4th ed. 1992). Furthermore, the Court is not persuaded by counsel’s assertion

that the members of the class would prefer the establishment of medical facilities to the receipt

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of damages. For example, class members who have not developed cancer but merely suffer

increased risk of it might prefer cash. In any case, the mere fact plaintiffs might prefer the

equitable remedy over the legal remedy does not make the legal remedy inadequate as a matter

of law. 

2. UNFAIR COMPETITION LAW.

Actions alleging violations of the Unfair Competition Law may be brought “by any

person who has suffered injury in fact and has lost money or property as a result of such unfair

competition.” Cal. Bus. & Prof. Code § 17204. In the instant action, plaintiffs do not allege

that they lost money or property as a result of Chevron’s false statements about the

environmental and health harms in Ecuador. For plaintiffs to prevail, they would have to claim

that their cancer or increased risk of cancer caused them to lose property or money and that the

false statements caused the cancer or increased risk thereof. Such a contention would be

patently absurd and appears nowhere in the complaint. 

In addition, the “as a result of” language in the statute means that, for a plaintiff to state

a claim, he or she must allege that they relied upon the defendant’s acts of unfair competition

and, as a result, suffered injury in fact. Pfizer v. Super. Ct. of L.A. County, No. B188106, ___

Cal. Rptr. 3d ___, 2006 WL 1892581 at *9 (Cal. Ct. App. July 11, 2006). Plaintiffs here do not

allege that they suffered cancer or increased risk of cancer due to misleading statements made

by Chevron. Their claim founders on this silence. Contrary to counsel’s argument, the

statutory language does not somehow disappear just because the instant action is not a

“consumer” case. 

Plaintiffs also argue, however, that defendants deprived them of their vested property

interest in restitution from Chevron, Texaco and Texpet. They claim that they had a vested

interest in the award due to the wrongful acts of Texpet and Texaco. They assert that, if

Chevron had not misrepresented Texpet’s and Texaco’s record in Ecuador, the corporation

would have been forced to pay restitution. By relying on the false statements, however, they

avoided having to make payment (Opp. 22–23). Plaintiffs’ counsel is stretching legal argument

to its breaking point. Plaintiffs had no vested interest in restitution. Such an interest can only

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become vested after a judgment is entered. Plaintiffs do not allege any judgment was ever

entered against defendants in connection with health impacts from oil drilling in Ecuador, much

less a judgment in favor of plaintiffs. Even if there were such a judgment, Chevron’s false and

misleading statements would not be the reason for defendants’ failure to satisfy it. Plaintiffs are

unable to cite any decisions on point and supporting their position. For these reasons, plaintiffs

have not stated a valid claim for violation of the Unfair Competition Law. 

3. REQUEST FOR STAY.

Defendants also request that the instant action be stayed. They state this request as an

alternative to dismissing the action with prejudice. The Court will grant dismissal with leave to

amend. This order therefore considers the propriety of a stay. 

Defendants claim that a stay should be imposed pursuant to the Court’s inherent

authority to manage the case because plaintiffs may be forum shopping and splitting their cause

of action between the instant action and the proceeding in Ecuador. Plaintiff’s counsel,

Cristóbal Bonifaz, however, stated that “no Plaintiff in this action has ever been a party in any

litigation, past or presently pending, in any forum, against Defendants” (Bonifaz Decl. in

Support of Pls.’ Motion to Proceed With Action Using Pseudonyms ¶ 2). Defendants do not

refute Mr. Bonifaz’s declaration with anything more than speculation. Plaintiffs who have

never before sued over the instant matters cannot split claims or forum shop in the ways

defendants accuse them of doing. A stay, therefore, is not justified. 

CONCLUSION

Plaintiffs have failed to state any claim on which relief could be granted. The motion to

dismiss the complaint is therefore GRANTED. Plaintiffs somehow may be able to surmount the

seemingly impossible barriers they have to stating a valid claim. They are therefore granted

leave to amend. Any amended complaint must be filed and served by AUGUST 5, 2006. Please

do not ask for extensions The motion for a stay is DENIED. 

If plaintiffs do not file an amended complaint by August 5, this action will be dismissed

with prejudice. It therefore make little sense to proceed with plaintiffs’ motion to be allowed to

proceed with this action pseudonymously. The hearing on that motion, set for August 17, 2006,

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is therefore continued to 8 a.m., September 28, 2006. The hearing, of course, will be vacated if

this action is dismissed for failure to file an amended complaint. 

IT IS SO ORDERED.

Dated: July 21, 2006 WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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