Chevron Class Action Survives – Just Barely

SAN FRANCISCO (CN) - A federal judge refused to dismiss a $5 billion class action against Chevron over a six-week-long oil rig blaze in Nigeria.

U.S. District Judge Samuel Conti ruled on Nov. 25 that he was "ill-suited" to address specifics of the injuries. It was the plaintiffs' third go-round with Conti, who'd slammed them in no uncertain terms twice this year.

Lead plaintiff Foster Ogala sued Chevron in January, seeking to represent an estimated 65,000 residents of the Niger Delta region of southern Nigeria.

The KS Endeavor, an offshore natural gas rig drilling in the North Apoi Field exploded on Jan. 16, 2012, causing a fire that burned for 46 days.

Ogala claims that he and others suffered "losses to their livelihood, environmental damage, and health problems as a result of the explosion and fire."

Chevron Corp., Chevron Investments and Chevron U.S.A. (CUSA) were named as defendants, but not Chevron Nigeria Ltd., a wholly owned subsidiary of Chevron Investments.

Conti dismissed the lawsuit in May for failure to state claims against the defendant companies as alter egos of Chevron Nigeria Ltd.

"Plaintiffs claim that defendants are liable for CNL's actions," Conti wrote. "However, '[i]t is a general principle of corporate law deeply ingrained in our economic and legal systems that a parent corporation ... is not liable for the acts of its subsidiaries.'"

Conti also found that the plaintiffs failed to "claim anywhere in the complaint to represent a class."

In August, Conti slammed the Nigerians' amended complaint, finding that it copied the original complaint "almost verbatim."

Conti found, again, that the plaintiffs failed to state specific injuries.

"Plaintiffs 'must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent,'" Conti wrote. "Plaintiffs appear to be aware of that requirement. But their FAC [first amended complaint] includes only allegations of injury to unidentified class members. Nowhere does the FAC ever describe any injury to any of the named plaintiffs. Plaintiffs must describe a specific injury to each of the named plaintiffs. Because they fail to do so, their FAC is insufficient to establish standing for their negligence claims."

On Nov. 25, Conti granted in part Chevron's motion to dismiss or strike a second amended complaint.

Having twice dismissed the lawsuit for failure to state injury specifics, Conti again scolded the plaintiffs and dismissed their public nuisance claim with prejudice.

"Plaintiffs generally claim that members of the alleged class suffered four types of injuries: illness, contamination of fish stocks, pollution of water supplies, and contamination of farmland," the 9-page ruling states. "None of the named plaintiffs asserts any injury different in kind from those injuries generally suffered throughout their communities. The court has now directed plaintiffs to fix this defect in their pleadings twice. Plaintiffs have failed to do so both times. Accordingly, plaintiffs' public nuisance claim is dismissed with prejudice." (Citations omitted.)

Conti granted Chevron's motion to strike, to the extent that the second amended complain asserted claims on behalf of communities rather than the communities' individual members.

But he denied Chevron's motion to strike a paragraph that refers to the "individuals" and "residents" who live in the Niger Delta.

Conti rejected Chevron's claim that material discharged from the Endeavor explosion polluted ocean, rivers and air around the site of the rig.

Ogala claimed, specifically, that contamination caused by the explosion destroyed five of his fish ponds and polluted his farms in Yenogoa City, 60 miles from the coast.

"Chevron's argument that it is impossible for the explosion to have caused the alleged injury is improper at this stage," the ruling states. "Indeed, the court is ill-suited to make that sort of determination; this is precisely the sort of matter on which expert testimony is warranted. The court cannot conclude that plaintiffs' allegations of causation are facially implausible."

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