Court Opinion

ID: 4563602
Source: CourtListenerOpinion
Date Created: 2020-09-08 18:00:36.172717+00
Date Added: 2024-06-11T12:21:52.812656
License: Public Domain

Case: 19-40899     Document: 00515555277         Page: 1    Date Filed: 09/08/2020

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

                                                                           FILED
                                                                    September 8, 2020
                                  No. 19-40899                        Lyle W. Cayce
                                                                           Clerk

   William J. Adams; Ray Aikens, Sr.; Kathleen J. Aikens;
   Linda Pearl Akridge; Ronald W. Akridge; et al,

                                               Intervenor Plaintiffs—Appellants,

                                      versus

   Alcolac, Incorporated; Rhodia Incorporated,

                                                        Defendants—Appellees.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                            USDC No. 3:18-CV-185

   Before King, Stewart, and Southwick, Circuit Judges.
   Per Curiam:
          The plaintiffs are primarily former U.S. military personnel who were
   injured by Saddam Hussein’s use of mustard gas during the Gulf War. The
   plaintiffs seek to hold Alcolac, Inc. liable for these injuries because, they
   allege, it illegally provided the government of Iraq with thiodiglycol, which
   was then used to create mustard gas. Previous litigation has already
   foreclosed of all of the plaintiffs’ claims except two: (1) a claim under the
   Justice Against Sponsors of Terrorism Act and (2) a civil-conspiracy claim
   under Texas law. We hold that the first claim fails because the statute does
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   not provide a cause of action for injuries caused by acts of war, and the second
   fails because the plaintiffs have not demonstrated that Alcolac or anyone else
   committed a tort in furtherance of the alleged conspiracy. Accordingly, we
   AFFIRM the district court’s grant of summary judgment to Alcolac.
                                               I.
                                              A.
           Thiodiglycol (TDG) is a chemical with a variety of uses. It is used in
   the textile industry and to manufacture ink, but it can also be used to produce
   mustard gas. In the 1980s, Alcolac, an American chemical manufacturer,
   produced TDG and, through a wholly owned subsidiary, exported it. 1
   Because of TDG’s potential for misuse, its exportation to Iraq was legally
   prohibited.
           As relevant here, in 1987 and 1988, Alcolac sold 538 tons of TDG that
   its subsidiary then exported to Belgium and the Netherlands in four
   shipments. Although the buyer said that the TDG would be used in the textile
   industry in Western Europe, the TDG was subsequently transshipped to
   Jordan, and then to Iraq. According to the plaintiffs, Alcolac “knew or had
   reason to know that these massive shipments of TDG were likely bound for
   a prohibited destination.”
           In 1991, U.S. troops, including the plaintiffs, entered Iraq as part of
   Operation Desert Storm. There, the plaintiffs allege that they were exposed
   to, and injured by, mustard gas.

           1
             Alcolac disputes the extent to which it, rather than its subsidiary, can be held
   liable. Because we affirm on other grounds, we do not reach this issue.

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                                          B.
          The plaintiffs filed this case in Texas state court in 1994, seeking to
   hold Alcolac liable for their mustard-gas-related injuries via products-liability
   and negligence claims. See Alarcon v. Alcolac Inc., 488 S.W.3d 813, 816 (Tex.
   App.—Houston [14th Dist.] 2016, pet. denied). In 2011, Alcolac chose one
   plaintiff as a bellwether and sought summary judgment against him. See id.
   The trial court granted the motion, and the Texas Court of Appeals affirmed.
Id. at 816-17, 829. The basis for the ruling was causation: the plaintiff had
   failed to present sufficient evidence that the mustard gas to which he was
   allegedly exposed “was manufactured with TDG supplied by Alcolac.” Id. at
   818.
          Before Alcolac could move for summary judgment against the rest of
   the plaintiffs, they amended their complaint, adding two new claims. First,
   they alleged that “Alcolac and agents of the Iraqi government conspired with
   each other to knowingly violate provisions of the Export Administration Act
   . . . to accomplish the unlawful sale and shipment of large quantities of TDG
   to Iraq.” Second, they alleged that “Alcolac knowingly and/or recklessly
   sold large quantities of TDG to agents of the government of Iraq” in violation
   of the Justice Against Sponsors of Terrorism Act (JASTA).
          With a federal cause of action now in play, Alcolac removed the case
   to federal district court. Alcolac indicated that it would again seek summary
   judgment, and the district court obtained stipulations from the plaintiffs that
   their original products-liability and negligence claims were no longer viable
   in light of the Texas Court of Appeals’ decision. Accordingly, only the two
   new claims, plus a derivative claim under the Texas Uniform Fraudulent
   Transfer Act (TUFTA), remained to be decided.
          The magistrate judge recommended granting Alcolac’s motion for
   summary judgment. First, the magistrate judge observed that JASTA does

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   not allow claims “for injury or loss by reason of an act of war,” 18 U.S.C.
   § 2336(a), which would include the plaintiffs’ Gulf War injuries. Second, the
   magistrate judge concluded that the civil-conspiracy claim was not viable
   because, under Texas law, such a claim must be based on the defendant’s
   participation in actionable conduct, and the plaintiffs had merely alleged a
   violation of the Export Administration Act, which does not give rise to a
   private cause of action. 2 The district court adopted the magistrate judge’s
   report and recommendation in full and granted the motion for summary
   judgment, and this appeal followed.
                                               II.
           “This Court reviews a grant of summary judgment de novo and applies
   the same standard as the district court.” Lyles v. Medtronic Sofamor Danek,
   USA, Inc., 871 F.3d 305, 310 (5th Cir. 2017). “The court shall grant summary
   judgment if the movant shows that there is no genuine dispute as to any
   material fact and the movant is entitled to judgment as a matter of law.” Fed.
   R. Civ. P. 56(a). “‘Where the burden of production at trial ultimately rests
   on the nonmovant, the movant must merely demonstrate an absence of
   evidentiary support in the record for the nonmovant’s case.’ The nonmovant
   must then ‘come forward with specific facts showing that there is a genuine
   issue for trial.’” Lyles, 871 F.3d at 310-11 (citation omitted).
           We “view the evidence in the light most favorable to the nonmovant
   and draw all reasonable inferences in the nonmovant’s favor,” Star Fin.
   Servs., Inc. v. Cardtronics USA, Inc., 882 F.3d 176, 179 (5th Cir. 2018), but
   “[w]e may affirm a grant of summary judgment ‘based on any rationale
   presented to the district court for consideration,’” Nola Spice Designs, LLC

           2
              The magistrate judge also concluded that the fraudulent-transfer claims failed for
   lack of a successful underlying claim.

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   v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015) (quoting Terrebonne
   Par. Sch. Bd. v. Mobil Oil Corp., 310 F.3d 870, 887 (5th Cir. 2002)).
                                          III.
                                          A.
          Under JASTA, “liability may be asserted as to any person who aids
   and abets, by knowingly providing substantial assistance, or who conspires
   with [a] person who commit[s] . . . an act of international terrorism.” Pub. L.
   No. 114-222, § 4, 130 Stat. 852, 854 (2016) (codified at 18 U.S.C.
   § 2333(d)(2)). “No action shall be maintained under section 2333,”
   however, “for injury or loss by reason of an act of war.” § 2336(a). In this
   context, an “act of war” is defined as “any act occurring in the course of—
   (A) declared war; (B) armed conflict, whether or not war has been declared,
   between two or more nations; or (C) armed conflict between military forces
   of any origin.” 18 U.S.C. § 2331(4).
          Though the plaintiffs admit that their mustard-gas injuries occurred
   during the Gulf War, a military conflict between the United States, its allies,
   and Iraq, they argue that Iraq’s use of mustard gas “could not be an act of
   war because it grossly violated the basic norms and rules established by the
   laws of war.” Instead, they argue, Iraq’s use of mustard gas qualifies as
   “international terrorism,” because it was used to “‘intimidate or coerce a
   civilian population’ or [to] influence ‘the policy of a government.’” See
   § 2331(1).
          This argument is far removed from the statute’s plain text. Neither
   § 2336(a) nor § 2331(4) contains any suggestion that the act-of-war exception
   applies only to acts of war that conform to international law. See Stutts v. De
   Dietrich Grp., No. 03-CV-4058, 2006 WL 1867060, at *4 (E.D.N.Y. June 30,
   2006) (concluding that the act-of-war exception applied to use of chemical
   weapons on U.S. troops during Gulf War). But see Estate of Klieman v.

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   Palestinian Authority, 424 F. Supp. 2d 153, 166 (D.D.C. 2006) (“As a matter
   of law, an act that violates established norms of warfare and armed conflict
   under international law is not an act occurring in the course of armed
   conflict.”). Instead, the exception broadly covers “any act occurring in the
   course of . . . armed conflict, whether or not war has been declared.”
   § 2331(4) (emphasis added). And there can be no doubt that the Gulf War
   was an “armed conflict.” Accordingly, the JASTA claim is foreclosed
   because the plaintiffs’ injuries occurred “by reason of an act of war.”
   § 2336(a). 3
                                                B.
           “In resolving questions of Texas law, we rely on the authoritative
   decisions of the Texas Supreme Court.” Tummel v. Milane, 787 F. App’x
   226, 227 (5th Cir. 2019). Under Texas law, a civil conspiracy requires:
           (1) a combination of two or more persons; (2) the persons seek
           to accomplish an object or course of action; (3) the persons
           reach a meeting of the minds on the object or course of action;
           (4) one or more unlawful, overt acts are taken in pursuance of
           the object or course of action; and (5) damages occur as a
           proximate result.
   First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 222
   (Tex. 2017) (citing Tri v. J.T.T., 162 S.W.3d 552, 556 (Tex. 2005)). Proving
   a conspiracy means that each of the defendants can be held liable for “all acts
   done by any of the conspirators in furtherance of the unlawful combination.”
   Agar Corp. v. Electro Circuits Int’l, LLC, 580 S.W.3d 136, 140 (Tex. 2019)
   (citation omitted).

           3
              As a fallback position, the plaintiffs also suggest that they may have been injured
   not in attacks on U.S. troops but when Hussein used mustard gas on Iraqi civilians. The
   plaintiffs cite no evidence in the record to support this proposition, however.

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            But civil conspiracy is not an independent tort, so “the agreement
   itself” does not create a cause of action. Id. at 141-42 (quoting Carroll v.
   Timmers Chevrolet, Inc., 592 S.W.2d 922, 925 (Tex. 1979)). Rather, a plaintiff
   must demonstrate that he has been injured by some “act done pursuant to
   the common purpose” of the conspiracy. Id. at 141 (quoting Carroll, 592
S.W.2d at 925). In other words, damages “proximately caused by the
   conspiracy itself” are not enough; the plaintiff must show “some tortious act
   committed by a co-conspirator pursuant to the conspiracy.” Id. at 141-42;
   accord Carroll, 592 S.W.2d at 928 (“An alleged conspirator is not liable for an
   act not done in pursuance of the common purpose of the conspiracy.”).
            Though the complaint alleges a conspiracy to violate the Export
   Administration Act, 4 the plaintiffs “do not allege that the violation of the
   EAA is the underlying tort claim that caused them damages.” And with good
   reason. Although the alleged EAA violations may have proximately caused
   the plaintiff’s injuries, it is undisputed that the EAA does not provide a
   private right of action. See Coleman v. Alcolac, Inc., 888 F. Supp. 1388, 1397
   (S.D. Tex. 1995) (recognizing that “no private cause of action exists under
   the Export Administration Act”); Bulk Oil (Zug) A.G. v. Sun Co., 583 F.
   Supp. 1134, 1143 (S.D.N.Y. 1983) (same), aff’d mem., 742 F.2d 1431 (2d Cir.
   1984).
            Instead, the plaintiffs argue that the EAA violations led to Iraq’s use
   of mustard gas, which they claim constituted battery. 5 But even if that is so,

            4
              Specifically, the complaint alleges that Alcolac “entered into an agreement with
   agents of the government of Iraq to ship large quantities of TDG in late 1987 and early 1988.
   . . . Alcolac and agents of the Iraqi government conspired with each other to knowingly
   violate provisions of the Export Administration Act.”
            5
             We assume, without deciding, that the plaintiffs’ complaint adequately alleges
   battery as the tort underlying their civil-conspiracy claim.

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   the plaintiffs have provided no evidence that Alcolac conspired to commit
   that battery. Cf. Chu v. Hong, 249 S.W.3d 441, 446 (Tex. 2008) (“Chu could
   only be liable for conspiracy if he agreed to the injury to be accomplished;
   agreeing to the conduct ultimately resulting in injury is not enough.”).
   Although in their complaint the plaintiffs asserted that Alcolac “acted to aid
   and abet Iraq in its efforts to obtain chemical weapons,” the plaintiffs now
   concede that “Alcolac may not have known” that the TDG was destined for
   “Iraq and Saddam Hussein specifically.” Consequently, any conspiracy
   involving Alcolac could not have had as its “common purpose” the provision
   of mustard gas to Iraq, much less the use of mustard gas by Iraq in a war that
   had not yet begun. Instead, at most, the evidence demonstrates Alcolac’s
   participation in a conspiracy to illegally export large quantities of TDG in
   exchange for money. Because the plaintiffs have identified no tortious
   conduct involved in achieving that object, the plaintiffs have failed to
   establish the elements of civil conspiracy. Cf. Tri, 162 S.W.3d at 557
   (“[M]erely proving a joint ‘intent to engage in the conduct that resulted in
   the injury’ is not sufficient to establish a cause of action for civil conspiracy.”
   (quoting Juhl v. Airington, 936 S.W.2d 640, 644 (Tex. 1996))).
           The plaintiffs argue that it was foreseeable that the exported TDG
   would be turned into mustard gas by some “nefarious character” and that it
   would then be “used for terrorist activity.” Perhaps so, but that misses the
   point. The question is not whether the plaintiffs’ battery was a foreseeable
   result of the alleged conspiracy but whether the battery was “done in
   pursuance of the common purpose of the conspiracy,” Carroll, 592 S.W.2d
   at 928. 6 Because there is no evidence of a common purpose beyond the initial

           6
              For this reason, the plaintiffs’ reliance on Halberstam v. Welch, 705 F.2d 472
   (D.C. Cir. 1983), is misplaced. That case recognizes simply that “a conspirator can be liable
   even if he neither planned nor knew about the particular overt act that caused injury, so long

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   sale and exportation of the TDG, any eventual use of mustard gas on the
   plaintiffs, even if foreseeable, was not in furtherance of the alleged
   conspiracy. The plaintiffs’ conspiracy claim thus fails for lack of an
   underlying tort.
                                                   C.
            Under TUFTA, “an asset transferred with ‘actual intent to hinder,
   delay, or defraud’ a creditor may be reclaimed for the benefit of the
   transferor’s creditors.” Janvey v. Golf Channel, Inc., 487 S.W.3d 560, 562
   (Tex. 2016) (quoting Tex. Bus. & Com. Code § 24.005(a)(1)). This statute is
   “intended to prevent debtors from defrauding creditors by moving assets out
   of reach” and therefore “provides a comprehensive statutory scheme
   through which a creditor may seek recourse for a fraudulent transfer of assets
   or property.”Sargeant v. Al Saleh, 512 S.W.3d 399, 411-12 (Tex. App.—
   Corpus Christi 2016, orig. proceeding [mand. denied]). A “creditor” is an
   individual “who has a claim,” and a “claim” requires “a right to payment or
   property.” Tex. Bus. & Com. Code Ann. § 24.002(3)-(4).
            The plaintiffs argue only that because they “have viable underlying
   claims, the Court should also reverse the Trial Court[’s] order dismissing
   [their] claims under TUFTA.” Because the plaintiffs’ JASTA and civil-
   conspiracy claims fail, however, the plaintiffs do not have valid underlying
   claims. Accordingly, their TUFTA claims fail as well.
                                                  IV.
            For the foregoing reasons, we AFFIRM the judgment of the district
   court.

   as the purpose of the act was to advance the overall object of the conspiracy.” Id. at 487 (emphasis
   added).

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