Exxon Mobil Corp. v. Saudi Basic Industries Corp.
544 U.S. 280 (2005)

Annotate this Case
  • Syllabus  | 
  • Opinion (Ruth Bader Ginsburg)

SYLLABUS
OCTOBER TERM, 2004
EXXON MOBIL CORP. V. SAUDI BASIC INDUSTRIES CORP.


SUPREME COURT OF THE UNITED STATES

EXXON MOBIL CORP. et al. v. SAUDI BASIC INDUSTRIES CORP.

certiorari to the united states court of appeals for the third circuit

No. 03–1696.Argued February 23, 2005—Decided March 30, 2005

The Rooker-Feldman doctrine, at issue in this case, has been applied by this Court only twice, in Rooker v. Fidelity Trust Co., 263 U. S. 413, and in District of Columbia Court of Appeals v. Feldman, 460 U. S. 462. In Rooker, plaintiffs previously defeated in state court filed suit in a Federal District Court alleging that the adverse state-court judgment was unconstitutional and asking that it be declared “null and void.” 263 U. S., at 414–415. Noting preliminarily that the state court had acted within its jurisdiction, this Court explained that if the state-court decision was wrong, “that did not make the judgment void, but merely left it open to reversal or modification in an appropriate and timely appellate proceeding.” Id., at 415. Federal district courts, Rooker recognized, are empowered to exercise only original, not appellate, jurisdictions. Id., at 416. Because Congress has empowered this Court alone to exercise appellate authority “to reverse or modify” a state-court judgment, ibid., the Court affirmed a decree dismissing the federal suit for lack of jurisdiction, id., at 415, 417. In Feldman, two plaintiffs brought federal-court actions after the District of Columbia’s highest court denied their petitions to waive a court Rule requiring D. C. bar applicants to have graduated from an accredited law school. Recalling Rooker, this Court observed that the District Court lacked authority to review a final judicial determination of the D. C. high court because such review “can be obtained only in this Court.” 460 U. S., at 476. Concluding that the D. C. court’s proceedings applying the accreditation Rule to the plaintiffs were “judicial in nature,” id., at 479–482, this Court ruled that the Federal District Court lacked subject-matter jurisdiction, id., at 482. However, concluding also that, in promulgating the bar admission Rule, the D. C. court had acted legislatively, not judicially, id., at 485–486, this Court held that 28 U. S. C. §1257 did not bar the District Court from addressing the validity of the Rule itself, so long as the plaintiffs did not seek review of the Rule’s application in a particular case, 460 U. S., at 486. Since Feldman, this Court has never applied Rooker-Feldman to dismiss an action for want of jurisdiction. However, the lower federal courts have variously interpreted the Rooker-Feldman doctrine to extend far beyond the contours of the Rooker and Feldman cases, overriding Congress’ conferral of federal-court jurisdiction concurrent with jurisdiction exercised by state courts, and superseding the ordinary application of preclusion law under 28 U. S. C. §1738.

      In this case, two subsidiaries of petitioner Exxon Mobil Corporation formed joint ventures with respondent Saudi Basic Industries Corp. (SABIC) to produce polyethylene in Saudi Arabia. When a dispute arose over royalties that SABIC had charged the joint ventures, SABIC preemptively sued the two subsidiaries in a Delaware state court, seeking a declaratory judgment that the royalties were proper. ExxonMobil and the subsidiaries then countersued in the Federal District Court, alleging that SABIC overcharged them. Before the state-court trial, which ultimately yielded a jury verdict of over $400 million for the ExxonMobil subsidiaries, the District Court denied SABIC’s motion to dismiss the federal suit. On interlocutory appeal, over eight months after the state-court jury verdict, the Third Circuit, on its own motion, raised the question whether subject-matter jurisdiction over the federal suit failed under the Rooker-Feldman doctrine because ExxonMobil’s claims had already been litigated in state court. The court did not question the District Court’s subject-matter jurisdiction at the suit’s outset, but held that federal jurisdiction terminated when the Delaware court entered judgment on the jury verdict.

Held: The Rooker-Feldman doctrine is confined to cases of the kind from which it acquired its name: cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the federal district court proceedings commenced and inviting district court review and rejection of those judgments. Rooker-Feldman does not otherwise override or supplant preclusion doctrine or augment the circumscribed doctrines allowing federal courts to stay or dismiss proceedings in deference to state-court actions. Pp. 10–13.

   (a) Rooker and Feldman exhibit the limited circumstances in which this Court’s appellate jurisdiction over state-court judgments, §1257, precludes a federal district court from exercising subject-matter jurisdiction in an action it would otherwise be empowered to adjudicate under a congressional grant of authority. In both cases, the plaintiffs, alleging federal-question jurisdiction, called upon the District Court to overturn an injurious state-court judgment. Because §1257, as long interpreted, vests authority to review a state-court judgment solely in this Court, e.g., Feldman, 460 U. S., at 476, the District Courts lacked subject-matter jurisdiction, see, e.g., Verizon Md. Inc. v. Public Serv. Comm’n of Md., 535 U. S. 635, 644, n. 3. When there is parallel state and federal litigation, Rooker-Feldman is not triggered simply by the entry of judgment in state court. See, e.g., McClellan v. Carland, 217 U. S. 268, 282. Comity or abstention doctrines may, in various circumstances, permit or require the federal court to stay or dismiss the federal action in favor of the state-court litigation. See, e.g., Colorado River Water Conservation Dist. v. United States, 424 U. S. 800. But neither Rooker nor Feldman supports the notion that properly invoked concurrent jurisdiction vanishes if a state court reaches judgment on the same or a related question while the case remains sub judice in a federal court. Disposition of the federal action, once the state-court adjudication is complete, would be governed by preclusion law. Under 28 U. S. C. §1738, federal courts must “give the same preclusive effect to a state-court judgment as another court of that State would give.” Parsons Steel, Inc. v. First Alabama Bank, 474 U. S. 518, 523. Preclusion is not a jurisdictional matter. See Fed. Rule Civ. Proc. 8(c). In parallel litigation, a federal court may be bound to recognize the claim- and issue-preclusive effects of a state-court judgment, but federal jurisdiction over an action does not terminate automatically on the entry of judgment in the state court. Nor does §1257 stop a district court from exercising subject-matter jurisdiction simply because a party attempts to litigate in federal court a matter previously litigated in state court. If a federal plaintiff presents an independent claim, even one that denies a state court’s legal conclusion in a case to which the plaintiff was a party, there is jurisdiction and state law determines whether the defendant prevails under preclusion principles. Pp. 10–12.

   (b) The Rooker-Feldman doctrine does not preclude the federal court from proceeding in this case. ExxonMobil has not repaired to federal court to undo the Delaware judgment in its favor, but appears to have filed its federal-court suit (only two weeks after SABIC filed in Delaware and well before any judgment in state court) to protect itself in the event it lost in state court on grounds (such as the state statute of limitations) that might not preclude relief in the federal venue. Rooker-Feldman did not prevent the District Court from exercising jurisdiction when ExxonMobil filed the federal action, and it did not emerge to vanquish jurisdiction after ExxonMobil prevailed in the Delaware courts. The Third Circuit misperceived the narrow ground occupied by Rooker-Feldman, and consequently erred in ordering the federal action dismissed. Pp. 12–13.

364 F. 3d 102, reversed and remanded.

   Ginsburg, J., delivered the opinion for a unanimous Court.

Primary Holding
The scope of the Rooker-Feldman doctrine is limited to cases brought by parties that lose at the state court level before federal court proceedings have begun and that have been harmed by the judgments at that level, which they are seeking to reverse at the federal level.
Facts
Two subsidiaries of Exxon Mobil planned to produce polyethylene in Saudi Arabia through joint ventures with Saudi Basic Industries Corp. SABIC sued the subsidiaries in state court when they fell into a dispute over the royalties that it had charged them. SABIC sought a declaratory judgment that the royalties were proper, while Exxon Mobil brought a counterclaim in federal court two weeks later on the basis that its subsidiaries had been overcharged by SABIC. Exxon Mobil received a jury verdict in state court of over $400 million, and the federal court denied SABIC's motion to dismiss the claim there. Eight months after the jury verdict in state court, the court of appeals resolved an interlocutory appeal on its own motion by considering whether the Rooker-Feldman doctrine precluded subject-matter jurisdiction over the federal suit, since Exxon Mobil already had the opportunity to litigate its claims in state court.

The appeals court eventually ruled that the lower court lost its jurisdiction when the state court entered judgment on the jury verdict, even though the lower court held subject-matter jurisdiction at the outset of the action. This decision created a circuit split over the proper application of the Rooker-Feldman doctrine.

Opinions

Majority

  • Ruth Bader Ginsburg (Author)
  • William Hubbs Rehnquist
  • John Paul Stevens
  • Antonin Scalia
  • Clarence Thomas
  • Sandra Day O'Connor
  • Stephen G. Breyer
  • Anthony M. Kennedy
  • David H. Souter

The Rooker-Feldman doctrine originates from the precedents of Rooker v. Fidelity Trust Co. (1923) and District of Columbia Court of Appeals v. Feldman (1983). It has not been applied in any other situation, and it should not be triggered whenever a state court judgment precedes a federal judgment on the same claim. The decision in Rooker provided that federal district courts may exercise only original rather than appellate jurisdiction, and only the Supreme Court may have appellate authority over a state court judgment. The decision in Feldman prevented a federal district court from reviewing a final decision by the District of Columbia's highest court for similar reasons, since the proceedings were judicial in nature. However, that precedent allowed lower courts to consider the validity of the rule that the District of Columbia court had used, as long as it did not address its application to the parties in that particular case.

The lower courts have applied the Rooker-Feldman doctrine too liberally, failing to notice that it never has arisen outside those two cases. This is problematic because Congress has provided for federal courts to have jurisdiction concurrent with jurisdiction exercised by state courts, and its application threatens to undermine preclusion doctrines under 28 U.S.C. Section 1738. The distinctive features of Rooker and Feldman were that the plaintiffs requested a federal district court to overturn an adverse judgment in a state court on the basis of federal-question jurisdiction. In most circumstances, the Rooker-Feldman doctrine will not be activated because proceedings may unfold in federal court even if an action based on the same transaction is pending in state court. Preclusion law then applies once judgment is entered in state court. While this may require the federal court to give preclusive effect to the judgment in state court, this does not mean that federal jurisdiction ends automatically. Any independent claim presented by a plaintiff in federal court, even if it directly clashes with a state court's legal conclusions in a case to which the plaintiff was a party, may be properly heard in federal court, which then would apply preclusion principles.

Therefore, the Rooker-Feldman doctrine does not trump preclusion rules or give federal courts additional reasons to dismiss claims through deference to state courts. In this instance, the plaintiff did not try to use a federal court to overrule the judgment that it had won in state court. The purpose of its federal action was to protect itself if it lost in state court on grounds that would not trigger preclusion in a federal forum. Jurisdiction was proper at the time that the action was filed, and it remained proper after the plaintiff prevailed in state court.

Case Commentary

This limitation of a rule that previously had been applied generously reduced the authority of the federal district courts and restored more power to the state courts.

Disclaimer: Justia Annotations is a forum for attorneys to summarize, comment on, and analyze case law published on our site. Justia makes no guarantees or warranties that the annotations are accurate or reflect the current state of law, and no annotation is intended to be, nor should it be construed as, legal advice. Contacting Justia or any attorney through this site, via web form, email, or otherwise, does not create an attorney-client relationship.

Disclaimer: Official Supreme Court case law is only found in the print version of the United States Reports. Justia case law is provided for general informational purposes only, and may not reflect current legal developments, verdicts or settlements. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or information linked to from this site. Please check official sources.