Court Opinion

ID: 9463550
Source: CourtListenerOpinion
Date Created: 2023-08-04 23:09:48.230738+00
Date Added: 2024-06-11T17:38:10.006174
License: Public Domain

VAN GRAAFEILAND, Circuit Judge,
dissenting:
While I am far from convinced that plaintiffs, given the opportunity, would have been able to establish the cause of action which was. dismissed, the possible precedential impact of the majority’s opinion prompts me to briefly record my dissent.
The “classic” definition of the act of state doctrine, reiterated by the Supreme Court in Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 416, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964) and First National City Bank v. Banco Nacional de Cuba, 406 U.S. 759, 763, 92 S.Ct. 1808, 32 L.Ed.2d 466 (1972), is found in Underhill v. Hernandez, 168 U.S. 250, 252,18 S.Ct. 83, 84, 42 L.Ed. 456 (1897), where the court said:
Every sovereign state is bound to respect the independence of every other sovereign state, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves.
Despite the broad language of this accepted definition, the doctrine does not purport to set up a jurisdictional bar to judicial review. Ricaud v. American Metal Co., 246 U.S. 304, 309, 38 S.Ct. 312, 62 L.Ed. 733 (1918). Neither does it prohibit judicial scrutiny of the conduct of foreign officials. Indeed, the very assertion of an act of state defense requires the court to examine into the nature of the conduct complained of and its relationship to the foreign sovereign. See Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 96 S.Ct. 1854,48 L.Ed.2d 301 (1976); Banco de Espana v. Federal Reserve Bank, 114 F.2d 438 (2d Cir. 1940). Federal courts have not hesitated to receive evidence concerning the acts of foreign officials and the role played by American citizens in motivating such *80acts. See, e. g., United States v. Lira, 515 F.2d 68 (2d Cir.), cert. denied, 423 U.S. 847, 96 S.Ct. 87, 46 L.Ed.2d 69 (1975); United States v. Cotten, 471 F.2d 744, 746 n.4 (9th Cir.), cert. denied, 411 U.S. 936, 93 S.Ct. 1913, 36 L.Ed.2d 396 (1973); Stonehill v. United States, 405 F.2d 738 (9th Cir. 1968), cert. denied, 395 U.S. 960, 89 S.Ct. 2102, 23 L.Ed.2d 747 (1969). The proscription of the doctrine is against judicial determination of the validity of the acts of a foreign sovereign, Alfred Dunhill of London, Inc. v. Republic of Cuba, supra, 425 U.S. at 697, 706, 96 S.Ct. 1854; Banco Nacional de Cuba v. Sabbatino, supra, 376 U.S. at 428, 84 S.Ct. 923, and judicial redress of grievances predicated upon a finding of invalidity. Underhill v. Hernandez, supra, 168 U.S. at 252,18 S.Ct. 83.
It is difficult to anticipate what plaintiffs’ proof would have been in this case, because the district court dismissed their cause of action, under Fed.R.Civ.P. 12(b)(1), for failure to state a claim on which relief could be granted. However, plaintiffs’ contention appears to be that the Libyan Producers’ Agreement was used by the defendants to impose competitive disadvantages upon the independent oil producers and to prevent them from reaching an agreement with Libya which would have been adverse to the defendants’ Persian Gulf interests. Plaintiffs argue that they were induced thereby to reject Libyan demands in order that defendants could negotiate more favorable terms for their Persian Gulf wells and that, because of defendants’ illegal conduct, they were caused to take a position in their own dealings with Libya which resulted in the nationalization of their interests.
Although plaintiffs make no claim of wrongdoing upon the part of the Libyan government in effecting the expropriation of their property, my brothers reject this concession to Libyan sensibilities. They say that, in order to prove damages, plaintiffs will be required to establish the motivation for the Libyan expropriation and that this inevitably involves its validity. It is at this point that my brothers and I part company.
In Cantor v. Detroit Edison Co., 428 U.S. 579, 592, 96 S.Ct. 3110, 49 L.Ed.2d 1141 (1976), the Supreme Court made it clear that “state authorization, approval, encouragement, or participation in restrictive private conduct confers no antitrust immunity” upon the wrongdoer. The Court’s citation of Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962) indicates that this rule applies in both foreign and domestic states.1 At the same time, the state itself is guilty of no wrongdoing under the Sherman Act because of the role which it plays. Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943).
In the instant case, as Judge Mulligan correctly observes, plaintiffs have the burden of establishing causal relation between the private violations alleged and the injuries suffered. Salerno v. American League of Professional Baseball Clubs, 429 F.2d 1003 (2d Cir. 1970), cert. denied, 400 U.S. 1001, 91 S.Ct. 462, 27 L.Ed.2d 452 (1971)2 However, under the teaching of Cantor and Parker, supra, plaintiffs’ success in this effort does not entail a finding that the acts of the Libyan government were invalid.
In Continental Ore Co. v. Union Carbide & Carbon Corp., supra, 370 U.S. at 704, 82 S.Ct. at 1412, the Court rejected as erroneous the Court of Appeals’ holding that “such efforts as appellants claim defendants took to persuade and influence the Canadian Government” were not within the purview of the Sherman Act. The Court *81said that appellants’ offer of proof on this issue “presented an issue for the jury’s resolution as to whether the loss of Continental’s Canadian business was occasioned by respondents’ activities.” Id. at 706, 82 S.Ct. at 1414.
The defendants in Continental, as in the instant case, relied upon American Banana Co. v. United Fruit Co., 213 U.S. 347, 29 S.Ct. 511, 53 L.Ed. 826 (1909) to shield them from liability. Referring to American Banana, the Court said, 370 U.S. at 704, 82 S.Ct. at 1413:
This Court there held that an antitrust plaintiff could not collect damages from a defendant who had allegedly influenced a foreign government to seize plaintiff’s properties. But in the light of later cases in this Court respondent’s reliance upon American Banana is misplaced.
I find appellees’ reliance upon American Banana here to be equally misplaced. If the validity of the conduct of a foreign government is not placed in issue, its participation in the wrongdoing of individual defendants should not be permitted to screen the latter from accountability for their illegal acts.3
Domestic corporations play a variety of roles in the affairs of foreign nations, some of which may be forbidden under our laws. Where, as here, the wrong complained of is the role played rather than the possible political reaction thereto, I think it wrong to predicate an act of state defense upon the face of the pleadings. A complaint “should not be dismissed for failure to state a claim unless it appears beyond doubt that 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, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957).
I would reverse the order dismissing the third claim of the complaint.

. The Court’s reference to Continental as an example of state “participation” indicates that it reads its decision in Continental differently than do my brothers, who find no act of the sovereign to have been involved in that case.

. In Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 114 n. 9, 89 S.Ct. 1562, 1571, 23 L.Ed.2d 129 (1969) the Court said:
It is enough that the illegality is shown to be a material cause of the injury; a plaintiff need not exhaust all possible alternative sources of injury in fulfilling his burden of proving compensable injury under § 4.

. In Occidental Petroleum Corp. v. Buttes Gas & Oil Co., 331 F.Supp. 92 (C.D.Cal.1971), aff’d per curiam, 461 F.2d 1261 (9th Cir.), cert. denied, 409 U.S. 950, 93 S.Ct. 272, 34 L.Ed.2d 221 (1972), relied upon by the majority, the complaint alleged that the ruler of Sharjah, at the instigation of defendants, falsely asserted a claim to certain off-shore drilling areas not within its territorial waters. Since plaintiffs’ claim was premised upon this assertion of wrongdoing and called into question the location of Sharjah’s territorial boundaries, I find this case clearly distinguishable from the one before us.