Petrobras America v. Samsung Heavy ( 2021 )

Case: 20-20338 Document: 00515973760 Page: 1 Date Filed: 08/11/2021
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
August 11, 2021
No. 20-20338
Lyle W. Cayce
Clerk
Petrobras America, Incorporated,
Plaintiff—Appellant,
versus
Samsung Heavy Industries Company, Limited,
Defendant—Appellee.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:19-CV-1410
Before Elrod, Willett, and Engelhardt, Circuit Judges.
Per Curiam:
Petrobras appeals the Rule 12(b)(6) dismissal of its fraud claims,
arguing that Samsung did not establish that Petrobras’s claims are barred by
the applicable statute of limitations. Because the pleadings do not establish
as a matter of law that Petrobras had actual or constructive notice of its injury
before March 2015, dismissal at the pleading stage was improper. Therefore,
we REVERSE and REMAND.
Case: 20-20338 Document: 00515973760 Page: 2 Date Filed: 08/11/2021
No. 20-20338
I.
Petrobras America, Inc. is the American subsidiary of a Brazilian oil
and gas producer. It alleges that Samsung Heavy Industries, a Korean
shipbuilding company, secretly bribed Petrobras executives to finalize a
drilling-services contract between Petrobras and Pride Global Limited—the
lynchpin to Samsung’s own construction contract with Pride.
In 2007, Samsung entered into a construction contract with Pride
Global Limited. 1 The contract contained an option for Samsung to build a
deep-sea drillship if Pride secured a drilling-services contract with another
company. Hamylton Padilha Jr., an independent consultant retained by
Pride, initiated negotiations between Pride and Petrobras to secure the
drilling-services contract that would trigger the Samsung–Pride construction
option. Nestor Cuñat Cerveró and Renato de Souza Duque, Petrobras
executives, represented Petrobras in these negotiations.
Employees of the Petrobras International Division, headed by
Cerveró, objected that there was no need for drilling services from another
drillship. To overcome this hurdle, Padilha contacted a Samsung executive
in Houston, Texas to arrange a bribe. Samsung arranged to pay $10 million
to Cerveró and Duque and $10 million to Padilha as a commission. To fund
the bribes, Samsung increased the labor and material costs charged to Pride
for what later would become the “DS-5.” Pride passed these costs to
Petrobras by modifying its drilling-services contract proposal to reflect a $20
million cost increase.
Cerveró accepted this proposal on behalf of Petrobras. In December
of 2007, the Samsung–Pride contract for the construction of the DS-5 was
1
We construe all facts in the light most favorable to Petrobras, as we must at this
stage. Arnold v. Williams, 979 F.3d 262, 265 n.1 (5th Cir. 2020).
2
Case: 20-20338 Document: 00515973760 Page: 3 Date Filed: 08/11/2021
No. 20-20338
signed. In January 2008, the Petrobras–Pride drilling-services contract for
the DS-5 was finalized.
After the construction of the DS-5 was complete in 2011, Petrobras
had no work for the vessel. Petrobras therefore assigned the drilling-services
contract to two other companies to mitigate losses. In 2015, Petrobras
decided to put the DS-5 on permanent standby.
In March 2015, Petrobras began an internal audit to review the
contracting procedures for the DS-5 and three other drillships. 2 The audit
team discovered that a broker and Padilha visited with Cerveró during the
DS-5 negotiations. The team concluded that the DS-5 contract’s terms were
unfavorable to Petrobras and based on inaccurate forecasts. Lastly, they
recommended that Petrobras inform prosecutors of the audit’s findings. The
audit report was released May 18, 2015.
In October 2015, Brazilian prosecutors unsealed a plea agreement that
Padilha had entered into in July 2015. In the plea agreement, Padilha revealed
the details of the DS-5 bribery scheme. Three months later, Petrobras
notified Pride that they were cancelling the DS-5 drilling-services contract as
a product of fraud.
Meanwhile in 2014, news broke of “Operation Carwash,” 3 a
widespread investigation into corruption throughout Brazil. Operation
Carwash included a separate bribery scheme—which is not the subject of this
2
At the 12(b)(6) stage, the court may consider the complaint in its entirety,
including “documents incorporated into the complaint by reference.” Funk v. Stryker
Corp., 631 F.3d 777, 783 (5th Cir. 2011) (quoting Tellabs, Inc. v. Makor Issues & Rts., Ltd.,
551 U.S. 308, 322 (2007)); accord Doe v. United States, 853 F.3d 792, 800 (5th Cir. 2017).
Petrobras referenced the audit report in its amended complaint, and the parties do not
dispute that it is properly before the court on this motion to dismiss.
3
“Operação Lava Jato” in Portuguese.
3
Case: 20-20338 Document: 00515973760 Page: 4 Date Filed: 08/11/2021
No. 20-20338
case—in which Samsung contracted directly with Petrobras to construct two
other ships. According to a Reuters article, Samsung bribed Petrobras’s
Cerveró to finalize a contract between Petrobras and Samsung for the
construction of the Vitória 10,000 and the Petrobras 10,000. See Caroline
Stauffer, Another Former Petrobras Executive Charged in Brazil Scandal,
Reuters (Dec. 15, 2014). A Washington Post article reported that Petrobras’s
Duque was arrested in March 2014 for his actions in Operation Carwash. See
Dom Phillips, ‘Operation Carwash’ in Brazil Causes Normally Staid Business
Meeting to Go off Script, Wash. Post (Nov. 17, 2014). Petrobras noted the
Vitória 10,000 and Petrobras 10,000 bribery scheme, as well as related
criminal charges against its executives Duque and Cerveró, in a May 2015
filing with the Securities and Exchange Commission. Neither the newspaper
articles nor the SEC filing mentioned the DS-5.
On March 5, 2019, Petrobras filed a complaint in Texas state court
against Samsung for its role in the bribery that led to the Petrobras–Pride
contract for the DS-5’s drilling services. The complaint alleged that
Samsung engaged in both common-law fraud under Texas state law and
racketeering under the Racketeer Influenced and Corrupt Organizations Act
(RICO), 18 U.S.C. § 1962(c) and (d).
Samsung removed the case to federal court and moved to dismiss
under Federal Rule of Civil Procedure 12(b)(6) on statute-of-limitations
grounds. The district court took judicial notice of Petrobras’s 2014 SEC
filing and the two newspaper articles from the Washington Post and Reuters.
Each of these documents detailed the bribery scheme underlying the
Samsung–Petrobras contract for the construction of the Vitória 10,000 and
Petrobras 10,000, but they did not mention the Petrobras–Pride contract for
the DS-5’s drilling services. From these, the district court inferred that
Petrobras was on notice in 2014, at the latest, that the DS-5 contract was
suspect. Holding that “the specific drillship in this case is not subject to its
4
Case: 20-20338 Document: 00515973760 Page: 5 Date Filed: 08/11/2021
No. 20-20338
own limitations clock,” the district court granted Samsung’s motion to
dismiss. Petrobras timely appealed.
II.
We review orders on 12(b)(6) motions to dismiss for failure to state a
claim de novo. Life Partners Creditors’ Tr. v. Cowley (In re Life Partners
Holdings, Inc.), 926 F.3d 103, 116 (5th Cir. 2019). We accept all well-pleaded
facts as true, viewing them in the light most favorable to the plaintiff. Arnold
v. Williams, 979 F.3d 262, 265 n.1, 266 (5th Cir. 2020). We consider all
“documents incorporated into the complaint by reference, and matters of
which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rts.,
Ltd., 551 U.S. 308, 322 (2007). Rule 12(b)(6) dismissal under a statute of
limitation is proper only when the complaint makes plain that the claim is
time-barred and raises no basis for tolling. Jones v. Alcoa, Inc., 339 F.3d 359,
366 (5th Cir. 2003).
III.
Petrobras argues that the district court erred in its determination that
Petrobras was on notice in 2014 of the facts that gave rise to its RICO claims.
The statute of limitations is four years for both Texas fraud claims and civil
RICO claims. Tex. Civ. Prac. & Rem. Code § 16.004(a)(4); 18 U.S.C.
§§ 1962(c)–(d), 1964(c); Agency Holding Corp. v. Malley-Duff & Assocs., Inc.,
483 U.S. 143, 152 (1987). The statute of limitations for a RICO claim does
not accrue until a plaintiff discovers, or through reasonably diligent
investigation should discover, the injury. 4 Rotella v. Wood, 147 F.3d 438, 440
4
Knowledge of the wrongdoer is not required to start the clock on the statute of
limitations; knowledge of the injury alone suffices for the claim to accrue. See Love v. Nat’l
Med. Enters., 230 F.3d 765, 773 (5th Cir. 2000) (citing Rotella v. Wood, 147 F.3d 438, 440
(5th Cir. 1998), aff’d, 528 U.S. 549 (2000)) (“[A] civil RICO claim accrues when the
plaintiff discovers, or should have discovered, the injury.”). However, the plaintiff may be
5
Case: 20-20338 Document: 00515973760 Page: 6 Date Filed: 08/11/2021
No. 20-20338
(5th Cir. 1998), aff’d, 528 U.S. 549 (2000); Jensen v. Snellings, 841 F.2d 600,
607 (5th Cir. 1988) (“A plaintiff who has learned of facts which would cause
a reasonable person to inquire further must proceed with a reasonable and
diligent investigation, and is charged with the knowledge of all facts such an
investigation would have disclosed.”). The Texas discovery rule similarly
requires the limitations period to “run from the date the plaintiff [(1)]
discovers or should have discovered, in the exercise of reasonable care and
diligence, the nature of the injury,” or (2) “had knowledge of such facts as
would cause a reasonably prudent person to make an inquiry that would lead
to discovery of the cause of action.” Hoover v. Gregory, 835 S.W.2d 668, 671
(Tex. App.—Dallas 1992, writ denied); accord Exxon Corp. v. Emerald Oil &
Gas Co., 348 S.W.3d 194, 209 (Tex. 2011) (“Knowledge of injury initiates the
accrual of the cause of action and triggers the putative claimant’s duty to
exercise reasonable diligence to investigate the problem, even if the claimant
does not know the specific cause of the injury or the full extent of it.”).
In Petrobras’s view, it did not and could not have discovered its injury
until May of 2015, when it completed an internal audit of the drilling services
contract for DS-5. Samsung disagrees, arguing that Petrobras knew as far
back as 2007, and certainly no later than 2014, that it had been injured.
Because a “statute of limitations is an affirmative defense for which the
[defendant] has the burden of proof,” we will address Samsung’s proposed
dates of notice in turn. Trinity Marine Prods., Inc. v. United States, 812 F.3d
481, 486 (5th Cir. 2016); accord Fed. R. Civ. P. 8(c)(1).
entitled to tolling by fraudulent concealment when: (1) the wrongdoer fraudulently
conceals the “facts forming the basis for the claim,” including the wrongdoer’s own
identity as the wrongdoer; and (2) the plaintiff cannot access these facts through reasonably
diligent investigation. Texas v. Allan Constr. Co., 851 F.2d 1526, 1533–34 (5th Cir. 1988).
6
Case: 20-20338 Document: 00515973760 Page: 7 Date Filed: 08/11/2021
No. 20-20338
A.
In asserting that Petrobras had notice in 2007, Samsung argues that
Cerveró’s and Duque’s knowledge of the bribes is imputed to Petrobras.
According to Petrobras, only Cerveró and Duque knew about the DS-5
bribes; no other officials at Petrobras knew that Petrobras had been defrauded
in the DS-5 contract. Samsung says this is enough because Petrobras is
charged with the knowledge of its officers. See Askanase v. Fatjo, 130 F.3d
657, 666 (5th Cir. 1997). 5
An officer’s knowledge will not be imputed to his employer if he “was
acting adversely to the [employer] and entirely for his own or another’s
purpose.” Id. Taking the complaint’s factual allegations as true, Cerveró
and Duque acted in their own interests by accepting $10 million in bribes and
in Samsung’s interest “by causing Petrobras to hire a drillship it did not
need.” Thus, Cerveró and Duque are clearly adverse agents of Petrobras.
Their knowledge cannot be imputed to Petrobras. See id.On appeal, Samsung presents another basis for dismissal that the
district court did not rely on in its order: Petrobras’s injury lies in being stuck
with the unfavorable terms of the DS-5 contract despite not having enough
work for the vessel; Petrobras officials knew as early as 2007 that it might not
need the DS-5; thus Petrobras knew about its injury as far back as 2007.
In its reply, Petrobras attacks this argument on two fronts. First,
Petrobras contests the assertion that it knew from the start that there would
5
Samsung also points to a non-prosecution agreement Petrobras entered into in
which it accepted responsibility for certain corruption schemes involving Cerveró and
Duque. This agreement, however, did not address the DS-5 bribery scheme. The non-
prosecution agreement is simply inapplicable to this case.
7
Case: 20-20338 Document: 00515973760 Page: 8 Date Filed: 08/11/2021
No. 20-20338
not be enough work for the DS-5. Second, Petrobras objects to Samsung’s
characterization of its injury as a lack of work for the DS-5.
On the first front, Petrobras contests the inferences drawn from
Samsung’s evidence. Samsung relies primarily on internal Petrobras e-mails
from 2007, 6 in which the Petrobras International Division “discussed and
agreed that there was no need for a third drillship.” Petrobras, however, says
that those e-mails and related documents also included projections and
drilling plans that would support the need for the DS-5.
Regardless of whether Petrobras or Samsung is correct in its reading
of these e-mails and documents, they do not conclusively establish that the
statute of limitations had run by March 5, 2019. Rather, they create a fact
issue about Petrobras’s knowledge. The 2007 e-mails and related documents
are not a proper basis for 12(b)(6) dismissal. Cf. Trinity Marine, 812 F.3d at
490; Sec. Indus. Ins. Co. v. United States, 702 F.2d 1234, 1251 (5th Cir. 1983).
On the second front, Petrobras contends that Samsung
mischaracterizes Petrobras’s injury. n Samsung’s view, Petrobras was
injured by the “unfavorable terms” in the DS-5 contract, which it ultimately
did not need. In its reply brief, Petrobras characterizes the injury as “a wholly
unnecessary contract that was procured through Samsung’s fraud.”
Fraud is the key to Petrobras’s injury. An unfavorable contract alone
is not a legally cognizable injury. A contract procured through fraud is. See
Shandong Yinguang Chem. Indus. Joint Stock Co. v. Potter, 607 F.3d 1029,
1032–33 (5th Cir. 2010) (citing Ernst & Young, L.L.P. v. Pac. Mut. Life Ins.
Co., 51 S.W.3d 573, 577 (Tex. 2001)); Nat’l Enters., Inc. v. Mellon Fin. Servs.
Corp. No. 7, 847 F.2d 251, 254 (5th Cir. 1988) (determining that simple non-
6
Petrobras referred to these e-mails in its amended complaint and attached them
as exhibits 5, 7, 10, 13, and 14. Thus, they may be considered on 12(b)(6) review.
8
Case: 20-20338 Document: 00515973760 Page: 9 Date Filed: 08/11/2021
No. 20-20338
payment under a contract, without more, does not amount to “a cognizable
injury” under RICO). Petrobras’s complaint clearly alleges an injury of
fraud. We hold that Samsung “has not met its burden of conclusively
establishing that” Petrobras knew or should have known about its injury as
far back as 2007. Trinity Marine, 812 F.3d at 490.
B.
In support of its argument that Petrobras knew of its injury no later
than 2014, Samsung presented to the district court two newspaper articles
and Petrobras’s 2014 Form 20-F Annual Report, filed in 2015 with the U.S.
Securities and Exchange Commission. The district court took judicial notice
of these documents. We review a district court’s decision whether to take
judicial notice for abuse of discretion. See Taylor v. Charter Med. Corp., 162
F.3d 827, 829 (5th Cir. 1998).
Under Federal Rule of Evidence 201, a district court may take judicial
notice of facts that are “(1) generally known within the trial court’s territorial
jurisdiction; or (2) can be accurately and readily determined from sources
whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b)(1)–
(2). The newspaper articles in this case were not proper material for judicial
notice. It was not established that the accuracy of the articles could not
reasonably be questioned, nor that the facts were “generally known within
the” district court’s jurisdiction. Id.; see also Eberhardt v. Merck & Co., 106
F. App’x 277, 279 (5th Cir. 2004).
The SEC filings, however, may be properly judicially noticed to the
extent that they are “considered only for the purpose of determining what
statements the documents contain, not to prove the truth of the documents’
contents.” Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1018 (5th Cir.
1996). Petrobras itself prepared the SEC filings, so they are relevant to
Petrobras’s knowledge of the statements in the documents. Assuming that
9
Case: 20-20338 Document: 00515973760 Page: 10 Date Filed: 08/11/2021
No. 20-20338
the district court considered the documents only as evidence of what
Petrobras knew or should have known at the time, it did not abuse its
discretion. See id.Regardless of whether it was proper to consider these documents,
they do not conclusively establish that the statute of limitations began
running prior to March 5, 2015. The SEC filing and news articles do not
mention Pride or DS-5 at all. Pride—not Samsung—entered into the DS-5
contract with Petrobras. Samsung’s involvement was “camouflaged.” The
Samsung–Petrobras contract involved the construction of the Vitória 10,000
and Petrobras 10,000; the Petrobras–Pride contact involved the drilling
services of the DS-5. The separate bribery schemes involved separate
parties, separate contracts, and separate ships.
Because of the nature of the DS-5 bribery scheme, a reasonable person
may not have thought to inquire into the Pride drilling-services contract after
Cerveró was criminally charged in connection with the Vitória 10,000 and
Petrobras 10,000 fraud. See Jensen, 841 F.2d at 607. Nor can it be said as a
matter of law that a reasonably diligent investigation at the time, without the
benefit of a full audit or the details of Padilha’s plea agreement, would have
uncovered the basis for Petrobras’s fraud claim.
In short, Samsung’s arguments at best raise fact questions not suitable
for disposition under Rule 12(b)(6). See Acad. of Allergy & Asthma in Primary
Care v. Quest Diagnostics, Inc., 998 F.3d 190, 200 (5th Cir. 2021) (reversing
12(b)(6) dismissal on statute-of-limitations grounds because Defendants
failed to conclusively establish that Plaintiffs should have discovered their
injury through a diligent inquiry); cf. Abdul-Alim Amin v. Universal Life Ins.
Co. of Memphis, 706 F.2d 638, 640 (5th Cir. 1983) (“While a statute-of-
limitations defense may be raised in a motion to dismiss under Fed. R. Civ.
P. 12(b)(6), such a motion should not be granted unless ‘it appears beyond
10
Case: 20-20338 Document: 00515973760 Page: 11 Date Filed: 08/11/2021
No. 20-20338
doubt that the plaintiff can prove no set of facts in support of his claim which
would entitle him to relief.’” (quoting Mann v. Adams Realty Co., 556 F.2d
288, 293 (5th Cir. 1977))).
* * *
Samsung has not conclusively established at the 12(b)(6) stage that
Petrobras’s RICO and Texas fraud claims accrued before March 5, 2015.
Accordingly, we REVERSE and REMAND for proceedings consistent
with this opinion.
11