Court Opinion

ID: 4710562
Source: CourtListenerOpinion
Date Created: 2021-08-11 18:00:41.620816+00
Date Added: 2024-06-11T08:07:04.031529
License: Public Domain

Case: 20-20338      Document: 00515973760          Page: 1     Date Filed: 08/11/2021

            United States Court of Appeals
                 for the Fifth Circuit                                 United States Court of Appeals
                                                                                Fifth Circuit

                                                                              FILED
                                                                        August 11, 2021
                                    No. 20-20338
                                                                         Lyle W. Cayce
                                                                              Clerk

   Petrobras America, Incorporated,

                                                             Plaintiff—Appellant,

                                        versus

   Samsung Heavy Industries Company, Limited,

                                                             Defendant—Appellee.

                   Appeal from the United States District Court
                       for the Southern District of Texas
                            USDC No. 4:19-CV-1410

   Before Elrod, Willett, and Engelhardt, Circuit Judges.
   Per Curiam:
          Petrobras appeals the Rule 12(b)(6) dismissal of its fraud claims,
   arguing that Samsung did not establish that Petrobras’s claims are barred by
   the applicable statute of limitations. Because the pleadings do not establish
   as a matter of law that Petrobras had actual or constructive notice of its injury
   before March 2015, dismissal at the pleading stage was improper. Therefore,
   we REVERSE and REMAND.
Case: 20-20338        Document: 00515973760              Page: 2      Date Filed: 08/11/2021

                                         No. 20-20338

                                               I.
           Petrobras America, Inc. is the American subsidiary of a Brazilian oil
   and gas producer. It alleges that Samsung Heavy Industries, a Korean
   shipbuilding company, secretly bribed Petrobras executives to finalize a
   drilling-services contract between Petrobras and Pride Global Limited—the
   lynchpin to Samsung’s own construction contract with Pride.
           In 2007, Samsung entered into a construction contract with Pride
   Global Limited. 1 The contract contained an option for Samsung to build a
   deep-sea drillship if Pride secured a drilling-services contract with another
   company. Hamylton Padilha Jr., an independent consultant retained by
   Pride, initiated negotiations between Pride and Petrobras to secure the
   drilling-services contract that would trigger the Samsung–Pride construction
   option. Nestor Cuñat Cerveró and Renato de Souza Duque, Petrobras
   executives, represented Petrobras in these negotiations.
           Employees of the Petrobras International Division, headed by
   Cerveró, objected that there was no need for drilling services from another
   drillship. To overcome this hurdle, Padilha contacted a Samsung executive
   in Houston, Texas to arrange a bribe. Samsung arranged to pay $10 million
   to Cerveró and Duque and $10 million to Padilha as a commission. To fund
   the bribes, Samsung increased the labor and material costs charged to Pride
   for what later would become the “DS-5.” Pride passed these costs to
   Petrobras by modifying its drilling-services contract proposal to reflect a $20
   million cost increase.
           Cerveró accepted this proposal on behalf of Petrobras. In December
   of 2007, the Samsung–Pride contract for the construction of the DS-5 was

           1
            We construe all facts in the light most favorable to Petrobras, as we must at this
   stage. Arnold v. Williams, 979 F.3d 262, 265 n.1 (5th Cir. 2020).

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   signed. In January 2008, the Petrobras–Pride drilling-services contract for
   the DS-5 was finalized.
           After the construction of the DS-5 was complete in 2011, Petrobras
   had no work for the vessel. Petrobras therefore assigned the drilling-services
   contract to two other companies to mitigate losses. In 2015, Petrobras
   decided to put the DS-5 on permanent standby.
           In March 2015, Petrobras began an internal audit to review the
   contracting procedures for the DS-5 and three other drillships. 2 The audit
   team discovered that a broker and Padilha visited with Cerveró during the
   DS-5 negotiations. The team concluded that the DS-5 contract’s terms were
   unfavorable to Petrobras and based on inaccurate forecasts. Lastly, they
   recommended that Petrobras inform prosecutors of the audit’s findings. The
   audit report was released May 18, 2015.
           In October 2015, Brazilian prosecutors unsealed a plea agreement that
   Padilha had entered into in July 2015. In the plea agreement, Padilha revealed
   the details of the DS-5 bribery scheme. Three months later, Petrobras
   notified Pride that they were cancelling the DS-5 drilling-services contract as
   a product of fraud.
           Meanwhile in 2014, news broke of “Operation Carwash,” 3 a
   widespread investigation into corruption throughout Brazil.                     Operation
   Carwash included a separate bribery scheme—which is not the subject of this

           2
             At the 12(b)(6) stage, the court may consider the complaint in its entirety,
   including “documents incorporated into the complaint by reference.” Funk v. Stryker
   Corp., 631 F.3d 777, 783 (5th Cir. 2011) (quoting Tellabs, Inc. v. Makor Issues & Rts., Ltd.,
   551 U.S. 308, 322 (2007)); accord Doe v. United States, 853 F.3d 792, 800 (5th Cir. 2017).
   Petrobras referenced the audit report in its amended complaint, and the parties do not
   dispute that it is properly before the court on this motion to dismiss.
           3
               “Operação Lava Jato” in Portuguese.

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   case—in which Samsung contracted directly with Petrobras to construct two
   other ships. According to a Reuters article, Samsung bribed Petrobras’s
   Cerveró to finalize a contract between Petrobras and Samsung for the
   construction of the Vitória 10,000 and the Petrobras 10,000. See Caroline
   Stauffer, Another Former Petrobras Executive Charged in Brazil Scandal,
   Reuters (Dec. 15, 2014). A Washington Post article reported that Petrobras’s
   Duque was arrested in March 2014 for his actions in Operation Carwash. See
   Dom Phillips, ‘Operation Carwash’ in Brazil Causes Normally Staid Business
   Meeting to Go off Script, Wash. Post (Nov. 17, 2014). Petrobras noted the
   Vitória 10,000 and Petrobras 10,000 bribery scheme, as well as related
   criminal charges against its executives Duque and Cerveró, in a May 2015
   filing with the Securities and Exchange Commission. Neither the newspaper
   articles nor the SEC filing mentioned the DS-5.
          On March 5, 2019, Petrobras filed a complaint in Texas state court
   against Samsung for its role in the bribery that led to the Petrobras–Pride
   contract for the DS-5’s drilling services.       The complaint alleged that
   Samsung engaged in both common-law fraud under Texas state law and
   racketeering under the Racketeer Influenced and Corrupt Organizations Act
   (RICO), 18 U.S.C. § 1962(c) and (d).
          Samsung removed the case to federal court and moved to dismiss
   under Federal Rule of Civil Procedure 12(b)(6) on statute-of-limitations
   grounds. The district court took judicial notice of Petrobras’s 2014 SEC
   filing and the two newspaper articles from the Washington Post and Reuters.
   Each of these documents detailed the bribery scheme underlying the
   Samsung–Petrobras contract for the construction of the Vitória 10,000 and
   Petrobras 10,000, but they did not mention the Petrobras–Pride contract for
   the DS-5’s drilling services. From these, the district court inferred that
   Petrobras was on notice in 2014, at the latest, that the DS-5 contract was
   suspect. Holding that “the specific drillship in this case is not subject to its

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   own limitations clock,” the district court granted Samsung’s motion to
   dismiss. Petrobras timely appealed.
                                                II.
           We review orders on 12(b)(6) motions to dismiss for failure to state a
   claim de novo. Life Partners Creditors’ Tr. v. Cowley (In re Life Partners
   Holdings, Inc.), 926 F.3d 103, 116 (5th Cir. 2019). We accept all well-pleaded
   facts as true, viewing them in the light most favorable to the plaintiff. Arnold
   v. Williams, 979 F.3d 262, 265 n.1, 266 (5th Cir. 2020). We consider all
   “documents incorporated into the complaint by reference, and matters of
   which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rts.,
   Ltd., 551 U.S. 308, 322 (2007). Rule 12(b)(6) dismissal under a statute of
   limitation is proper only when the complaint makes plain that the claim is
   time-barred and raises no basis for tolling. Jones v. Alcoa, Inc., 339 F.3d 359,
   366 (5th Cir. 2003).
                                                III.
           Petrobras argues that the district court erred in its determination that
   Petrobras was on notice in 2014 of the facts that gave rise to its RICO claims.
   The statute of limitations is four years for both Texas fraud claims and civil
   RICO claims. Tex. Civ. Prac. & Rem. Code § 16.004(a)(4); 18 U.S.C.
   §§ 1962(c)–(d), 1964(c); Agency Holding Corp. v. Malley-Duff & Assocs., Inc.,
   483 U.S. 143, 152 (1987). The statute of limitations for a RICO claim does
   not accrue until a plaintiff discovers, or through reasonably diligent
   investigation should discover, the injury. 4 Rotella v. Wood, 147 F.3d 438, 440

           4
              Knowledge of the wrongdoer is not required to start the clock on the statute of
   limitations; knowledge of the injury alone suffices for the claim to accrue. See Love v. Nat’l
   Med. Enters., 230 F.3d 765, 773 (5th Cir. 2000) (citing Rotella v. Wood, 147 F.3d 438, 440
   (5th Cir. 1998), aff’d, 528 U.S. 549 (2000)) (“[A] civil RICO claim accrues when the
   plaintiff discovers, or should have discovered, the injury.”). However, the plaintiff may be

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   (5th Cir. 1998), aff’d, 528 U.S. 549 (2000); Jensen v. Snellings, 841 F.2d 600,
   607 (5th Cir. 1988) (“A plaintiff who has learned of facts which would cause
   a reasonable person to inquire further must proceed with a reasonable and
   diligent investigation, and is charged with the knowledge of all facts such an
   investigation would have disclosed.”). The Texas discovery rule similarly
   requires the limitations period to “run from the date the plaintiff [(1)]
   discovers or should have discovered, in the exercise of reasonable care and
   diligence, the nature of the injury,” or (2) “had knowledge of such facts as
   would cause a reasonably prudent person to make an inquiry that would lead
   to discovery of the cause of action.” Hoover v. Gregory, 835 S.W.2d 668, 671
   (Tex. App.—Dallas 1992, writ denied); accord Exxon Corp. v. Emerald Oil &
   Gas Co., 348 S.W.3d 194, 209 (Tex. 2011) (“Knowledge of injury initiates the
   accrual of the cause of action and triggers the putative claimant’s duty to
   exercise reasonable diligence to investigate the problem, even if the claimant
   does not know the specific cause of the injury or the full extent of it.”).
           In Petrobras’s view, it did not and could not have discovered its injury
   until May of 2015, when it completed an internal audit of the drilling services
   contract for DS-5. Samsung disagrees, arguing that Petrobras knew as far
   back as 2007, and certainly no later than 2014, that it had been injured.
   Because a “statute of limitations is an affirmative defense for which the
   [defendant] has the burden of proof,” we will address Samsung’s proposed
   dates of notice in turn. Trinity Marine Prods., Inc. v. United States, 812 F.3d
   481, 486 (5th Cir. 2016); accord Fed. R. Civ. P. 8(c)(1).

   entitled to tolling by fraudulent concealment when: (1) the wrongdoer fraudulently
   conceals the “facts forming the basis for the claim,” including the wrongdoer’s own
   identity as the wrongdoer; and (2) the plaintiff cannot access these facts through reasonably
   diligent investigation. Texas v. Allan Constr. Co., 851 F.2d 1526, 1533–34 (5th Cir. 1988).

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                                            A.
          In asserting that Petrobras had notice in 2007, Samsung argues that
   Cerveró’s and Duque’s knowledge of the bribes is imputed to Petrobras.
   According to Petrobras, only Cerveró and Duque knew about the DS-5
   bribes; no other officials at Petrobras knew that Petrobras had been defrauded
   in the DS-5 contract. Samsung says this is enough because Petrobras is
   charged with the knowledge of its officers. See Askanase v. Fatjo, 130 F.3d
   657, 666 (5th Cir. 1997). 5
          An officer’s knowledge will not be imputed to his employer if he “was
   acting adversely to the [employer] and entirely for his own or another’s
   purpose.” Id. Taking the complaint’s factual allegations as true, Cerveró
   and Duque acted in their own interests by accepting $10 million in bribes and
   in Samsung’s interest “by causing Petrobras to hire a drillship it did not
   need.” Thus, Cerveró and Duque are clearly adverse agents of Petrobras.
   Their knowledge cannot be imputed to Petrobras. See id.
          On appeal, Samsung presents another basis for dismissal that the
   district court did not rely on in its order: Petrobras’s injury lies in being stuck
   with the unfavorable terms of the DS-5 contract despite not having enough
   work for the vessel; Petrobras officials knew as early as 2007 that it might not
   need the DS-5; thus Petrobras knew about its injury as far back as 2007.
          In its reply, Petrobras attacks this argument on two fronts. First,
   Petrobras contests the assertion that it knew from the start that there would

          5
            Samsung also points to a non-prosecution agreement Petrobras entered into in
   which it accepted responsibility for certain corruption schemes involving Cerveró and
   Duque. This agreement, however, did not address the DS-5 bribery scheme. The non-
   prosecution agreement is simply inapplicable to this case.

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   not be enough work for the DS-5. Second, Petrobras objects to Samsung’s
   characterization of its injury as a lack of work for the DS-5.
           On the first front, Petrobras contests the inferences drawn from
   Samsung’s evidence. Samsung relies primarily on internal Petrobras e-mails
   from 2007, 6 in which the Petrobras International Division “discussed and
   agreed that there was no need for a third drillship.” Petrobras, however, says
   that those e-mails and related documents also included projections and
   drilling plans that would support the need for the DS-5.
           Regardless of whether Petrobras or Samsung is correct in its reading
   of these e-mails and documents, they do not conclusively establish that the
   statute of limitations had run by March 5, 2019. Rather, they create a fact
   issue about Petrobras’s knowledge. The 2007 e-mails and related documents
   are not a proper basis for 12(b)(6) dismissal. Cf. Trinity Marine, 812 F.3d at
   490; Sec. Indus. Ins. Co. v. United States, 702 F.2d 1234, 1251 (5th Cir. 1983).
          On     the    second     front,    Petrobras     contends     that    Samsung
   mischaracterizes Petrobras’s injury.           n Samsung’s view, Petrobras was
   injured by the “unfavorable terms” in the DS-5 contract, which it ultimately
   did not need. In its reply brief, Petrobras characterizes the injury as “a wholly
   unnecessary contract that was procured through Samsung’s fraud.”
          Fraud is the key to Petrobras’s injury. An unfavorable contract alone
   is not a legally cognizable injury. A contract procured through fraud is. See
   Shandong Yinguang Chem. Indus. Joint Stock Co. v. Potter, 607 F.3d 1029,
   1032–33 (5th Cir. 2010) (citing Ernst & Young, L.L.P. v. Pac. Mut. Life Ins.
   Co., 51 S.W.3d 573, 577 (Tex. 2001)); Nat’l Enters., Inc. v. Mellon Fin. Servs.
   Corp. No. 7, 847 F.2d 251, 254 (5th Cir. 1988) (determining that simple non-

          6
             Petrobras referred to these e-mails in its amended complaint and attached them
   as exhibits 5, 7, 10, 13, and 14. Thus, they may be considered on 12(b)(6) review.

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   payment under a contract, without more, does not amount to “a cognizable
   injury” under RICO). Petrobras’s complaint clearly alleges an injury of
   fraud. We hold that Samsung “has not met its burden of conclusively
   establishing that” Petrobras knew or should have known about its injury as
   far back as 2007. Trinity Marine, 812 F.3d at 490.
                                          B.
          In support of its argument that Petrobras knew of its injury no later
   than 2014, Samsung presented to the district court two newspaper articles
   and Petrobras’s 2014 Form 20-F Annual Report, filed in 2015 with the U.S.
   Securities and Exchange Commission. The district court took judicial notice
   of these documents. We review a district court’s decision whether to take
   judicial notice for abuse of discretion. See Taylor v. Charter Med. Corp., 162
   F.3d 827, 829 (5th Cir. 1998).
          Under Federal Rule of Evidence 201, a district court may take judicial
   notice of facts that are “(1) generally known within the trial court’s territorial
   jurisdiction; or (2) can be accurately and readily determined from sources
   whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b)(1)–
   (2). The newspaper articles in this case were not proper material for judicial
   notice. It was not established that the accuracy of the articles could not
   reasonably be questioned, nor that the facts were “generally known within
   the” district court’s jurisdiction. Id.; see also Eberhardt v. Merck & Co., 106
   F. App’x 277, 279 (5th Cir. 2004).
          The SEC filings, however, may be properly judicially noticed to the
   extent that they are “considered only for the purpose of determining what
   statements the documents contain, not to prove the truth of the documents’
   contents.” Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1018 (5th Cir.
   1996). Petrobras itself prepared the SEC filings, so they are relevant to
   Petrobras’s knowledge of the statements in the documents. Assuming that

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   the district court considered the documents only as evidence of what
   Petrobras knew or should have known at the time, it did not abuse its
   discretion. See id.
          Regardless of whether it was proper to consider these documents,
   they do not conclusively establish that the statute of limitations began
   running prior to March 5, 2015. The SEC filing and news articles do not
   mention Pride or DS-5 at all. Pride—not Samsung—entered into the DS-5
   contract with Petrobras. Samsung’s involvement was “camouflaged.” The
   Samsung–Petrobras contract involved the construction of the Vitória 10,000
   and Petrobras 10,000; the Petrobras–Pride contact involved the drilling
   services of the DS-5. The separate bribery schemes involved separate
   parties, separate contracts, and separate ships.
          Because of the nature of the DS-5 bribery scheme, a reasonable person
   may not have thought to inquire into the Pride drilling-services contract after
   Cerveró was criminally charged in connection with the Vitória 10,000 and
   Petrobras 10,000 fraud. See Jensen, 841 F.2d at 607. Nor can it be said as a
   matter of law that a reasonably diligent investigation at the time, without the
   benefit of a full audit or the details of Padilha’s plea agreement, would have
   uncovered the basis for Petrobras’s fraud claim.
          In short, Samsung’s arguments at best raise fact questions not suitable
   for disposition under Rule 12(b)(6). See Acad. of Allergy & Asthma in Primary
   Care v. Quest Diagnostics, Inc., 998 F.3d 190, 200 (5th Cir. 2021) (reversing
   12(b)(6) dismissal on statute-of-limitations grounds because Defendants
   failed to conclusively establish that Plaintiffs should have discovered their
   injury through a diligent inquiry); cf. Abdul-Alim Amin v. Universal Life Ins.
   Co. of Memphis, 706 F.2d 638, 640 (5th Cir. 1983) (“While a statute-of-
   limitations defense may be raised in a motion to dismiss under Fed. R. Civ.
   P. 12(b)(6), such a motion should not be granted unless ‘it appears beyond

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   doubt that the plaintiff can prove no set of facts in support of his claim which
   would entitle him to relief.’” (quoting Mann v. Adams Realty Co., 556 F.2d
   288, 293 (5th Cir. 1977))).
                                   *        *         *
          Samsung has not conclusively established at the 12(b)(6) stage that
   Petrobras’s RICO and Texas fraud claims accrued before March 5, 2015.
   Accordingly, we REVERSE and REMAND for proceedings consistent
   with this opinion.

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