(CN) - The 9th Circuit on Monday revived an indigenous Peruvian group's claim that Occidental Petroleum Corp. despoiled the Peruvian rainforest and its rivers during 30 years of intensive oil production.
The federal appeals panel in Pasadena, Calif., reversed a lower court's ruling that the action belonged in Peru, saying Occidental failed to show that Peru is a more convenient forum than California.
Twenty-five members of the Achuar communities, who live along the Corrientes and Mascusari rivers in a remote part of the Peruvian rainforest, claimed Occidental used outdated and illegal methods for separating crude oil during three decades of oil production in the region between 1971 and 2000.
Joined by the California-based nonprofit Amazon Watch, the indigenous plaintiffs sued the company and a subsidiary in 2007, claiming its substandard methods contaminated the area's rivers and made Achuar children and adults sick from lead and cadmium poisoning. They alleged that the pollution killed off fish and other animals used for food by the Achuar, and that the company knew about the dangers but failed to warn the people.
Occidental removed the complaint to federal court and asked the judge to dismiss it, arguing that the case should be tried in Peru, where the alleged actions occurred.
The federal judge agreed, but the three-judge appellate panel reversed, giving a long list of reasons why the case should potentially be tried in the United States, including that the lower court failed to consider "the glaring absence of a waiver of the statute of limitations."
"The district court abused its discretion by accepting at face value Occidental's 'stipulation and consent to jurisdiction in Peru' without considering the glaring absence of a waiver of the statute of limitations, which Occidental's own expert suggests may have run," Judge Kim McLane Wardlaw wrote for the panel.
"Dismissal on the basis of forum non conveniens is improper when a lawsuit would be timebarred in the alternative jurisdiction. Moreover, where there is reason to believe that a defendant will seek immediate dismissal based on the foreign forum's statute of limitations, dismissal should be conditioned on waiving any statute of limitations defenses that would not be available in the domestic forum."
Occidental's own expert testified that the Peruvian statute of limitations may have already run, according to the ruling.
"This caveat, together with Occidental's failure to waive the Peruvian statute of limitations, suggests that when plaintiffs do file in Peru, Occidental intends to argue that the Peruvian statute ran before this lawsuit was filed in 2007," Wardlaw wrote.
The district court also neglected to properly consider inherent problems with the Peruvian legal system raised by both parties -- especially the plaintiffs' charges of endemic corruption and bias against indigenous groups.
"While the district court did not err by weighing both sides' declarations and concluding that discrimination does not make Peru an inadequate forum, it overlooked important evidence related to corruption," Wardlaw wrote. "Plaintiffs' experts described unique barriers confronting the Achuar Plaintiffs in Peru due to their ethnicity, poverty, and isolation."
Occidental also argued that Amazon Watch, the only domestic plaintiff, did not deserve a strong presumption in favor of choice of forum, as it was only one of 26 plaintiffs.
But the nonprofit has been involved in the issue since 2001, and the district court failed to consider its "status as an organizational plaintiff representing numerous individual members," Wardlaw wrote. "Amazon Watch, therefore, was entitled to a strong presumption that its choice of forum was convenient."
She added that the lower court should have at least placed some "mitigating conditions" on its dismissal based on the plaintiffs' requests that Occidental be required to waive a statute-of-limitations defense in Peru and comply with U.S. discovery rules.
"When there is reason to think that enforcing a judgment in a foreign country would be problematic, courts have required assurances that a defendant will satisfy any judgment as a condition to a forum non conveniens dismissal," Wardlaw wrote.
"Here the district court erroneously relieved Occidental of its burden of showing that Peru is an adequate alternative forum. It accepted a flawed stipulation to Peruvian jurisdiction and overlooked strong evidence, including evidence from Occidental's own expert, calling into question the ability of the Peruvian courts to satisfactorily handle this case."
Writing in partial dissent, Judge Pamela Ann Rymer found the majority's standards too high.
"Peru permits litigation on the subject matter of the dispute, and there is no indication Amazon Watch would be unable to pursue its claim there," she wrote. "The defendant need not demonstrate that the plaintiff would succeed in the alternative forum; Occidental merely had to show that Peru would permit litigation on the subject matter of the dispute." (emphasis in original.)
Rymer added that "conditions such as accepting service, submitting to the jurisdiction, waiving the statute of limitations, making discovery, and agreeing to enforceability of the judgment" may be more appropriate in this case than reversal.
"I would, therefore, remand for the court specifically to consider whether its dismissal should be conditioned," she wrote. "Otherwise, I would affirm."