The opinion of the court was delivered by: Kimba M. Wood, U.S.D.J.
Defendants Shell Petroleum, N.V. and Shell Transport and Trading Co., Ltd. ("Defendants") in Wiwa v. Royal Dutch Petroleum Co., 96 Civ. 8386 ("Wiwa"), move, pursuant to Federal Rule of Civil Procedure 12(b)(1), to dismiss the Racketeer Influenced and Corrupt Organizations Act ("RICO") claims brought by Wiwa plaintiffs Owens Wiwa and Karololo Kogbara ("Plaintiffs") for lack of subject matter jurisdiction. (96 Civ. 8386 D.E. ("96-D.E.") 308.)
Among the ways that plaintiffs can establish that a court has subject matter jurisdiction over a RICO claim that involves foreign parties and racketeering activity that occurred outside the United States (an "extraterritorial" RICO claim), is to establish that the alleged racketeering activity had sufficient effects in the United States. They may also have to establish that these effects were intentional.
Here, Plaintiffs argue that Defendants' alleged racketeering activity, which occurred primarily in Nigeria, was intended to and did affect the United States by lowering Defendants' costs for producing Nigerian oil, which, in turn, gave Defendants a competitive advantage and/or increased profits in the United States. (See generally Pls.' Mem. L. Opp'n Defs.' Mot. Dismiss RICO Claims ("Pls.' Opp'n"), 96-D.E. 313.)
Defendants contend that Plaintiffs have failed to demonstrate that the racketeering activity Plaintiffs allege had effects in the United States sufficient to give the Court subject matter jurisdiction over Plaintiffs' extraterritorial RICO claims. (See generally Defs.' Mem. L. Supp. Rule 12 (b)(1) Mot. Dismiss Pls.' RICO Claim for Lack Subj. Matter Jd. ("Defs.' Mem. L."), 96-D.E. 309; Defs.' Reply Mem. L. Supp. Rule 12(b)(1) Mot. Dismiss Pls.' RICO Claim for Lack Subj. Matter Jd. ("Defs.' Reply"), 96-D.E. 328.)
As explained in further detail below, the Court GRANTS Defendants' Rule 12(b)(1) motion to dismiss Plaintiffs' RICO claims because Plaintiffs have not established that Defendants' alleged racketeering activity had sufficient effects in the United States to give the Court subject matter jurisdiction.
A. Relevant Procedural History
Previously, Defendants moved, under Rule 12(b)(1), for the Court to dismiss Plaintiffs' extraterritorial RICO claims for lack of subject matter jurisdiction. In this prior 12(b)(1) motion, Defendants made a facial challenge, arguing that Plaintiffs had failed to allege sufficient effects on the United States.
The Court denied Defendants' prior Rule 12(b)(1) motion. Wiwa v. Royal Dutch Petroleum Co., No. 96 Civ. 8386, 2002 WL 319887, at *20-21 (S.D.N.Y. Feb. 28, 2002).
Since then, the parties have completed extensive discovery. Now Defendants make a factual challenge to the Court's subject matter jurisdiction over these same claims.*fn1 Specifically, Defendants argue that Plaintiffs lack evidence that the alleged racketeering activity had sufficient intended and actual effects in the United States to fall within the Court's subject matter jurisdiction.
Plaintiffs' allegations span the period between 1990 and 1998, inclusive. (Pls.' Fourth Am. Compl. ¶¶ 38-108.) A general description of their allegations can be found in the Court's previous orders, familiarity with which is assumed. See, especially, Wiwa, 2002 WL 319887. Facts established through discovery that are relevant to deciding Defendants' Rule 12(b)(1) motion, particularly the intended and actual effects of Defendants' alleged racketeering activity in the United States, are described below.*fn2
1. Defendants Oil Operations in Nigeria
During 1990 to 1993, a company affiliated with Defendants, Shell Petroleum Development Company ("SPDC"),*fn3 was extracting oil from the Ogoni region of Nigeria ("Ogoni"), located in that country's Niger Delta. During some or all of this period, SPDC operated in Nigeria pursuant to a joint venture agreement with the Nigerian government. (Pls.' Opp'n, Ex. 1-13.) SPDC sold oil that it produced in Nigeria to another Shell Group company for export from Nigeria. (Pls.' Opp'n, Exs. 1-55; 3-21 at 5686.)
In 1993, SPDC ceased extracting oil from Ogoni, but it continued to extract oil in Nigeria, including from other areas of the Niger Delta. (see, e.g., id. at Exs. 1-5 at app. 1; 1-9 at 20232-33, 20236-37, 20239; 1-12.) SPDC also continued work on a pipeline running through Ogoni. (Id. at Ex. 1-3 at 105-111.) In 1996, SPDC developed a plan for restarting oil production in Ogoni, but by 1998, the plan was still far from complete. (Id. at Ex. 1-48 at 1850.)
Between January 1990 and June 1996, SPDC shipped an average of approximately 3.5 million barrels of crude oil per month from Nigeria to the United States.*fn4 (Pls.' Opp'n, Ex. 3-22.)
2. Ogoni Opposition to Defendants' Nigerian Oil Operations
In the early 1990s, Ken Saro-Wiwa, the deceased father of Plaintiff Ken Wiwa, and an organization named Movement for the Survival of the Ogoni People ("MOSOP"), made demands on Defendants. Mr. Saro-Wiwa and MOSOP protested various effects of SPDC's oil extraction, including gas flaring. (See, e.g., Pls.' Opp'n Exs. 1-2 at 3116; 1-16 at 955; 1-17 at 290.) In 1992, they sent a list of demands to SPDC, including a demand that the company pay to the people of Ogoni ten billion American dollars in royalties for past oil extraction and to compensate the Ogoni for SPDC's environmental damage to their land. (See id. at Ex. 1-15.) MOSOP's list particularly emphasized the detrimental environmental effects of SPDC's gas flares. (See id.)
3. Defendants' Response to the Ogoni Opposition*fn5
Beginning in 1992, there was significant international attention paid to Defendants' operations in Nigeria, including to the issue of gas flaring. (See id. at Exs. 1-3 at 102-03; 1-5 at 58; 1-14 at 2738; 1-16 at 955; 1-17 at 290.) Even after SPDC ceased extracting oil from Ogoni in 1993, Defendants determined that the Ogoni protests were a threat to their ...