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Shell Offshore Inc., A Delaware Corporation, and v. Greenpeace

May 29, 2012

SHELL OFFSHORE INC., A DELAWARE CORPORATION, AND
SHELL GULF OF MEXICO INC., A DELAWARE CORPORATION,
PLAINTIFFS,
v.
GREENPEACE, INC., A CALIFORNIA CORPORATION, AND JOHN AND JANE DOES 1-20,
DEFENDANTS.



The opinion of the court was delivered by: Sharon L. Gleason United States District Judge

ORDER RE ALL PENDING MOTIONS

TABLE OF CONTENTS

Introduction ................................................................................................................... 3 I. Greenpeace USA's Rule 12(b)(1) Motion to Dismiss ....................................... 4 A. Admiralty Jurisdiction ............................................................................................ 6 B. OCSLA Jurisdiction .............................................................................................. 9 C. Diversity Jurisdiction ........................................................................................... 12 D. Is There a Case or Controversy? ........................................................................ 14 II. Greenpeace USA's Rule 12(b)(6) Motion to Dismiss ..................................... 15 A. Nuisance ............................................................................................................ 17 B. Tortious Interference with Contractual Relations ................................................ 24 C. Trespass and Trespass to Chattels .................................................................... 27 D. Conversion ......................................................................................................... 32 E. Interference with Maritime Navigation ................................................................ 34 III. Shell's Motion for Additional Preliminary Injunctive Relief, or Alternatively, for an Indicative Ruling ............................................................ 35 IV. Shell's Motion for Preliminary Injunction ....................................................... 41 Conclusion ................................................................................................................... 43

Introduction

On March 28, 2012, this court entered a Preliminary Injunction Order solely with respect to the United States twelve-mile territorial waters and ports.*fn1 That order precludes Greenpeace Inc. ("Greenpeace USA"), and those acting in concert with it from coming within certain designated distances of certain ships that Shell Offshore Inc. and Shell Gulf of Mexico Inc. (collectively "Shell") intend to use this summer for exploratory Arctic drilling operations. This court deferred consideration of the scope of any injunctive relief with regard to Shell's planned operations at shore-based facilities and within the waters of the 200-mile United States Exclusive Economic Zone ("EEZ") pending the completion of the parties' briefing on two alternative motions to dismiss this action that had been filed by Greenpeace USA. Meanwhile, Greenpeace USA has filed an interlocutory appeal of the March 28, 2012 Preliminary Injunction Order to the Ninth Circuit Court of Appeals.*fn2

Three motions that are now fully briefed include: (I) that portion of Greenpeace USA's motion to dismiss this action pursuant to Federal Rule of Civil Procedure 12(b)(1) that was deferred when this court entered the Preliminary Injunction Order on March 28, 2012,*fn3 (II) Greenpeace USA's motion to dismiss this action pursuant to Civil Rule 12(b)(6),*fn4 and (III) that portion of Shell's motion for injunctive relief that was deferred in this court's order of March 28, 2012.*fn5 Most recently, on May 14, 2012, Shell filed a Motion for Additional Preliminary Injunctive Relief, or Alternatively, for an Indicative Ruling, on shortened time.*fn6 That motion has now been fully briefed as well. All four pending motions are addressed in this order.

I. Greenpeace USA's Rule 12(b)(1) Motion to Dismiss

After Greenpeace USA had filed its two motions to dismiss, Shell filed its Second Amended Verified Complaint in this action.*fn7 That complaint deleted some of the causes of action that Shell had initially asserted. Shell now alleges five causes of action against Greenpeace USA: nuisance, tortious interference with contractual relations, trespass and trespass to chattels, conversion, and interference with maritime navigation.*fn8 For the first four of these causes of action, Shell's Second Amended Complaint has alleged subject matter jurisdiction "under admiralty and maritime law, federal common law, and state law."*fn9 As to the fifth cause of action, interference with maritime navigation, Shell has alleged subject matter jurisdiction under "admiralty and maritime law, and federal statutory law."*fn10

Federal Rule of Civil Procedure 12(b)(1) provides that a party may seek dismissal of an action based on the assertion that the court lacks subject matter jurisdiction. Greenpeace USA maintains that none of the asserted bases for subject matter jurisdiction exists here. It maintains that diversity jurisdiction has not been demonstrated by the face of Shell's complaint and that there is no federal question jurisdiction under either 28 U.S.C. § 1331 or § 1333. Greenpeace USA also asserts that 43 U.S.C. § 1349(b), a provision from the Outer Continental Shelf Lands Act ("OCSLA"), does not support subject matter jurisdiction in this instance. And Greenpeace USA asserts that the International Regulations for Preventing Collisions at Sea ("COLREGS") do not confer subject matter jurisdiction with this court and that international law does not permit the exercise of United States law in this instance. Finally, Greenpeace USA argues that the requisite case or controversy is lacking.

"[W]hen considering a motion to dismiss pursuant to Rule 12(b)(1) the district court is not restricted to the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction."*fn11 With respect to the alleged future tortious conduct by Greenpeace USA-the focus of the immediate dispute between the parties-this court has relied upon the assertions in the pleadings to determine the scope of subject matter jurisdiction. With regard to the role that Greenpeace USA may have had in the incidents in New Zealand and Finland, the current record on this topic is limited, but it demonstrates a genuine issue of material fact as to the role, if any, that Greenpeace USA may have had in those incidents. Resolution of that factual dispute is not necessary to the determination of this Rule 12(b)(1) motion at this time.*fn12

This court's March 28, 2012 Preliminary Injunction Order denied Greenpeace USA's Rule 12(b)(1) motion in part, and held that at a minimum, this court had admiralty jurisdiction pursuant to 28 U.S.C. § 1333 within the United States twelve-mile territorial sea and ports.*fn13 The balance of Greenpeace USA's 12(b)(1) motion is now addressed.

A. Admiralty Jurisdiction

Shell has asserted that this court's admiralty or maritime jurisdiction under 28 U.S.C. § 1333 extends beyond the twelve-mile territorial sea with respect to each of the five causes of action it has pled in its Second Amended Complaint. Greenpeace USA asserts that this court's admiralty jurisdiction does not extend beyond the territorial sea and an additional twelve-mile contiguous zone.*fn14

There are two components to the test for admiralty tort jurisdiction.*fn15 First, the incident must occur on navigable waters.*fn16 It is well established that this locality requirement includes the high seas as well as the United States Exclusive Economic Zone ("EEZ").*fn17 Second, a party seeking to invoke maritime jurisdiction must show "a substantial relationship between the activity giving rise to the incident and traditional maritime activity."*fn18 In this regard, "a court must assess the general features of the type of incident involved to determine whether such an incident is likely to disrupt [maritime] commercial activity."*fn19

The underlying bases of each of Shell's causes of action in its Second Amended Complaint are allegations that Greenpeace USA has interfered, and intends in the future to interfere, with the free passage of Shell's owned and contracted vessels and its planned Arctic drilling activities. Greenpeace USA has separately analyzed subject matter jurisdiction with respect to the past alleged tortious conduct in the Gulf of Mexico, New Zealand, and Finland, and the alleged future threatened conduct within the United States EEZ and at land-based facilities. As noted above, this court will not decide the full scope of subject matter jurisdiction with respect to the alleged past tortious conduct by Greenpeace USA in other locations at this time. Rather, such analysis would be more effectively undertaken if and when a greater factual record with respect to Greenpeace USA's role in those actions is before the court. But with respect to Shell's allegations of threatened future tortious conduct as set forth in the five causes of action of the Second Amended Complaint, this court finds that admiralty jurisdiction clearly applies to allegations of such misconduct directed toward Shell's vessels when they are in transit and unattached to the subsoil or seabed and within the United States EEZ.*fn20

Greenpeace USA asserts that the Noble Discoverer and the Kulluk do not fall under admiralty jurisdiction because they are drilling rigs, and have no traditional maritime purpose.*fn21 But these movable drilling rigs are vessels,*fn22 as to which admiralty jurisdiction applies to claims of intentional tortious acts, at least while such vessels are underway to a drilling operation.*fn23 Further, admiralty jurisdiction would extend to aircraft to the extent such aircraft were being used for traditional maritime activity, such as bringing workers and supplies to off-shore vessels.*fn24

With respect to Shell's fifth cause of action, interference with maritime navigation, Shell cites to the federal statutes, 33 U.S.C. § 1601 et seq., which codify the COLREGS, as a separate basis for federal jurisdiction in addition to admiralty jurisdiction. This court was unpersuaded that these provisions serve as an independent basis to establish federal subject matter jurisdiction separate and apart from admiralty jurisdiction. Rather, this court concurs with the analysis of the import of the COLREGS in the recent District Court decision of The Institute of Cetacean Research v. Sea Shepherd Conservation Society.*fn25 The court there readily found admiralty jurisdiction applicable to the plaintiff's tort claims regarding alleged tortious conduct on the high seas that arose from traditional maritime activities. The COLREGS were discussed not as a separate basis for subject matter jurisdiction, but in the context of the plaintiff's safe navigation claim, with the court noting that "admiralty courts in the United States use the COLREGS to determine fault in maritime collision cases."*fn26

B. OCSLA Jurisdiction

43 U.S.C. § 1349(b)(1) establishes federal jurisdiction over OCSLA disputes as follows:

Except as provided in subsection (c) of this section, the district courts of the United States shall have jurisdiction of cases and controversies arising out of, or in connection with (A) any operation conducted on the outer Continental Shelf which involves exploration, development, or production of the minerals, of the subsoil and seabed of the outer Continental Shelf, or which involves rights to such minerals, or (B) the cancellation, suspension, or termination of a lease or permit under this subchapter. Proceedings with respect to any such case or controversy may be instituted in the judicial district in which any defendant resides or may be found, or in the judicial district of the State nearest the place the cause of action arose.

43 U.S.C. § 1333(a)(1) defines the physical areas of the OCS to which the OCSLA applies, as it provides in pertinent part:

The Constitution and laws and civil and political jurisdiction of the United States are extended to the subsoil and seabed of the outer Continental Shelf and to all artificial islands, and all installations and other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for, developing, or producing resources therefrom, or any such installation or other device (other than a ship or vessel) for the purpose of transporting such resources, to the same extent as if the outer Continental Shelf were an area of exclusive Federal jurisdiction located within a State . . .

Thus, Section 1333(a)(1) establishes a situs requirement that extends OCSLA jurisdiction to the subsoil and seabed of the OCS and artificial islands, installations, or other devices that are permanently or temporarily attached to the seabed in order to explore for, develop, or produce resources from the OCS.*fn27 Accordingly, with respect to the operations of Shell's drilling rigs after they are temporarily attached to the seabed at the OCS, the OCSLA, and not admiralty law, is the primary source of subject matter jurisdiction over Shell's claims of threatened torts.*fn28

Distinct from the question of subject matter jurisdiction conferred by the OCSLA is the question of the applicable law to apply to disputes within OCSLA jurisdiction. All law applicable to the OCS is federal law, but to fill the substantial "gaps" in the coverage of federal law, the OCSLA borrows the "applicable and not inconsistent" laws of the adjacent state as surrogate federal law.*fn29 Thus, a tort action that did not bear a significant relationship to traditional maritime activities that involved events occurring at an OCS drilling site would be governed by federal law, the content of which could be borrowed from the law of the adjacent state.*fn30

Greenpeace USA asserts that the OCSLA only accords subject matter jurisdiction after operations have commenced on the OCS.*fn31 It maintains that the "OCSLA provides no basis for an action for preparing an operation on the OCS, and provides no basis for a cause of action when nothing has yet occurred, or before the operation on the OCS has even begun."*fn32 In this regard, Shell candidly notes that [t]he full reach of OCSLA jurisdiction in the context of this litigation cannot be determined with certainty based upon existing cases. Shell is aware of no case considering the jurisdictional application of OCSLA in the context of torts committed by a party with the intent of preventing an OCS leaseholder from accessing and exploring upon its leases, as is the case here.*fn33

Yet the OCSLA was intended to facilitate the orderly development of resources on the Outer Continental Shelf.*fn34 Consistent with that intent, this court finds that to the extent that the surrogate law borrowed from Alaska pursuant to 43 U.S.C. § 1333(a)(2)(A) would recognize a cause of action for a threatened tort at a prospective drilling site subject to OCSLA jurisdiction, the OCSLA confers subject matter jurisdiction with respect to such threatened torts before such drilling operations have commenced.

For the foregoing reasons, this court concludes that it has subject matter jurisdiction in the EEZ over Shell's tort claims pursuant to admiralty jurisdiction as well as federal question jurisdiction under the OCSLA, with the applicable jurisdiction depending on the situs of the alleged prospective tort and the nature of the alleged tortious activity.

C. Diversity Jurisdiction

Pursuant to 28 U.S.C. § 1332(a), a federal court has diversity jurisdiction of all civil actions in which there is complete diversity of citizenship among the parties and the amount in controversy exceeds the sum or value of $75,000. Greenpeace USA does not dispute that it is incorporated in a different state from Shell.*fn35 And Shell's Second Amended Verified Complaint expressly alleges that the amount in controversy exceeds $75,000.*fn36 Accordingly, diversity jurisdiction has now been adequately pled.

But Greenpeace USA asserts that if Shell obtains the preliminary injunctive relief it seeks, "then none of the other alleged speculative damages will come to fruition."*fn37 In its response, Shell cites to United States Supreme Court precedent that when a party seeks injunctive relief, "it is well established that the amount in controversy is measured by the value of the object of the litigation."*fn38 In other words, "the test for determining the amount in controversy is the pecuniary result to either party which the judgment would directly produce."*fn39 Here, the object of the litigation is Greenpeace USA's alleged intent to interfere with Shell's planned exploration activities for this summer in the Arctic. Shell's Second Amended Complaint asserts that its drilling plans for the limited 2012 Arctic summer season have been "an enormous and costly effort."*fn40 And "a complaint that a plaintiff files in federal court against a diverse defendant invokes diversity jurisdiction unless it appears to a 'legal certainty' that the amount in controversy is less than $75,000."*fn41 No such showing has been made here so as to defeat diversity jurisdiction. Accordingly, this court has diversity jurisdiction to consider the causes of action that are cognizable under Alaska law as pled in Shell's complaint.*fn42 Specifically with regard to Shell's request for injunctive relief at the aviation facilities on the North Slope, this court finds that it has subject matter jurisdiction over such claims based on diversity of citizenship.

D. Is There a Case or Controversy?

Greenpeace USA asserts that this court lacks subject matter jurisdiction because there was no actual controversy between the parties at the time the complaint was filed.*fn43 It asserts that there is no justiciable controversy that is sufficiently definite and concrete so as to warrant relief. As this court previously noted, this argument is closely related to the requirement that a plaintiff seeking a preliminary injunction must establish that there is a likelihood of irreparable harm in the absence of preliminary relief.*fn44 As this court had concluded that there is such likelihood,*fn45 it follows that there is a case or controversy that is justiciable before the court.

For the foregoing reasons, Greenpeace USA's motion to dismiss for lack of subject matter jurisdiction under ...


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