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Case of the Day: Walton v. Bilisnki

The case of the day is Walton v. Bilinski (E.D. Mo. 2015). The plaintiff, Cody Walton, alleged that he was sexually assaulted by another inmate when he was being held in the Macon County, Missouri jail in pretrial detention. He sued Ryszard Bilinski, a former Macon County deputy sheriff, alleging a constitutional violation because Bilinski, he claimed, “failed to properly secure the inmates in their cells on the night of the assault.” At the time of the suit, Bilinski lived in Alberta, Canada.

Walton sought to server process by delivering the summons and complaint to Bilinski’s wife at their home, by leaving the summons and complaint taped to Bilinski’s door, and by emailing Bilinski’s lawyers the documents. Bilinski moved to dismiss.
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Shahrazade Dream

Case of the Day: Ocean Partners Holdings v. Doe Run Resources

Sharazade Dream
The Sharazade Dream
The case of the day is Ocean Partners Holdings Ltd. v. Doe Run Resources Corp. (E.D. Mo. 2012). We previously saw a case against Doe Run, A.O.A. v. Doe Run Resources Corp. (E.D. Mo. 2011), the case of the day from December 13, 2011. In today’s case of the day, Ocean Partners sought confirmation of an international arbitral award against Doe Run.

The parties had a contract for the sale of lead and copper concentrates. Doe Run shipped the lead concentrates by barge down the Mississippi River to New Orleans, where they were loaded onto a ship, the Shahrazade Dream, for shipment to China. While the ship was being loaded, observers saw water leaking from the cargo. The vessel agent halted the loading and ordered the wet cargo set aside. Ocean Partners hired an investigator, but then decided to finish loading the cargo without waiting for the results of the tests. After the ship left port, water appeared in the hold. The master sought refuge at the port of Cristobal, in Panama, where the water was pumped from the holds. But when the ship was passing through the Panama Canal, water appeared again. The ship therefore put in to port, this time in Manzanillo, Mexico. There, the cargo was unloaded and dried, and ultimately shipped to China on another ship.

The contract had an agreement to arbitrate requiring arbitration in London under the rules of the London Metal Exchange. Doe Run’s claim was that Ocean Partners owed it the unpaid shipping charges. Ocean Partners claimed it was not liable because the goods did not conform to the moisture level specifications in the contract. The tribunal agreed that the goods were nonconforming but found that Ocean Partners knew of the nonconformity and that a prudent shipper would not have loaded the cargo in the circumstances. The award found that Doe Run was entitled to the unpaid balance but that Ocean Partners was entitled to the costs of removing, drying, and reloading the cargo.

Ocean Partners sought confirmation in Missouri. Ocean Partners proceeded on the assumption that the award was an international award subject to the New York Convention, but Doe Run challenged this conclusion on the grounds that the original contract had been signed by Doe Run and Pechiney USA, Inc., both US citizens. This issue mattered because the statute of limitations for confirmation of a domestic award is one year, but the statute of limitations for confirmation of a foreign award is three years. If Ocean Partners was right, then the award could be confirmed. If Doe Run was right, then the motion for confirmation was untimely.

Pechiney had later assigned its interest to Ocean Partners USA, Inc., another US entity, not to Ocean Partners Holdings, the firm that was seeking confirmation, and Doe Run argued that the award was, therefore, domestic under 9 U.S.C. § 202. The judge dismissed this argument, noting that Doe Run had admitted to the tribunal that the parties had agreed that Ocean Partners Holdings, the foreign firm that brought the action to confirm, “would assume the rights of Pechiney under the Sales Contract.” As a backstop, Doe Run also argued that because it had not admitted, in its papers, that Ocean Partners Holdings was a UK company, the court could not find that it was. The judge correctly rejected this argument, which was a misapplication of ideas relevant to Rule 12(b)(6) motion practice but not to motions to confirm.

Last, Doe Run argued manifest disregard of the law. The judge adopted what I will call the emerging majority view that manifest disregard is not an available defense under the New York Convention.

Photo credit: Ivan Meshkov

Case of the Day: A.O.A. v. Doe Run Resources Corp.

La Oroya, PeruThe case of the day, A.O.A. v. Doe Run Resources Corp. (E.D. Mo. 2011), is a little outside the official Letters Blogatory Scope of Coverage, but I cover it because it concerns two of our recurring themes: aggressive use of the FAA’s statute permitting removal of New York Convention cases, and Latin American toxic torts such as the Lago Agrio case in Ecuador or the banana pesticide case in Nicaragua.

For nearly a century, La Oroya, Peru has been home to smelters and refineries that produce copper, lead, zinc, and other metals from ores mined in the Andes Mountains. In 1974, the government of Peru nationalized the facility and transferred it to a Peruvian state-owned firm, Centromin. In the 1990s, Centromin determined that the refineries had caused significant pollution, including lead contamination in the soil, and Peru enacted a law known as the Programa de Adecación y Manejo Ambiental, which required Centromin to do a bunch of environmental remediation by 2007.

Meanwhile, in 1997, American investors including the Renco Group purchased shares in the enterprise from Centromin. As part of the deal, Centromin indemnified Renco and the other purchasers from third-party claims arising from toxic emissions before the date of the sale, and Peru guaranteed Centromin’s obligation. Renco and the other investors, in turn, agreed to perform some clean-up work and to be responsible to third parties for damage that they themselves caused.

In 2008, several Peruvian children sued Renco and others (Doe Run Resources Corp, D.R. Acquisition Corp., Renco Holdings, and several of their executives—Marvin Kaiser, Albert Bruce Neil, Jeffrey Zelms, Theodore Fox, Daniel Vornberg, and Ira Rennert) in the Circuit Court for the City of St. Louis, Missouri. The defendants removed the case, but it was remanded. Back in the state court, the defendants tried to get Peru to defend them against the plaintiffs’ claims, and they asserted that Peru had not completed the promised environmental clean-up. Peru refused to enter the case, and Renco notified Peru of its intent to arbitrate under the US/Peru Trade Promotion Agreement.

After the arbitration commenced, Renco again removed the underlying case from the Missouri state court to the US District Court for the Eastern District of Missouri. The plaintiffs unsuccessfully challenged the removal. Renco then moved to stay the case pending the outcome of the arbitration.

Section 3 of the FAA requires the court to stay an action if the action involves issues “referable to arbitration under … an agreement.” This is a narrower test than the test for removal, which asks only whether the claims “relate to” the arbitration. Renco and the others argued that the arbitration would decide whether Peru or the defendants ultimately should be liable for defending the US action and potentially paying the plaintiffs, but the judge accepted the plaintiff’s argument that the arbitration was really about arbitration, and that the issue of indemnification was an issue between Renco and Peru, not between the plaintiffs and Renco. Nor did the judge accept that there was a sufficient relationship between the US lawsuit and the arbitration to make a discretionary stay sensible. The factors, under Eighth Circuit precedent, are (1) the risk of inconsistent outcomes; (2) whether the parties will be bound by the arbitrator’s decision; and (3) prejudice resulting from delay. The judge found little risk of inconsistent rulings, found that the plaintiffs would not be bound by the arbitrator’s decision, and found that the plaintiffs would be prejudiced b a further delay, as their case had already been delayed for years and no court had yet reached the merits.

Photo credit: Darío Torres (license)