Rogers v. Petroleo Brasileiro, S.A.
673 F.3d 131
| 2d Cir. | 2012Background
- Petrobrás is a Brazilian state-owned company immune under FSIA; district court denied immunity and allowed breach actions to proceed.
- Bonds issued 1954–1957 linked to Brazil Law 2004, with Series 1, 3, and 4 bearer bonds providing interest and optional conversion to preferred shares.
- Plaintiffs Rogers and Burlew, U.S. citizens, sought to convert bonds; they alleged Petrobrás’ refusal to convert breached the contracts.
- Petrobrás communicated its position via a New York investor-relations email in 2009 attaching a Brazil-based notice.
- District court held two FSIA commercial-activity exceptions (clause two and clause three) justified jurisdiction.
- Court of Appeals reverses, holding Petrobrás remains immune under FSIA; neither clause two nor clause three applies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether clause two supports jurisdiction | Rogers/ Burlew: act in U.S. linked to Brazilian commercial activity satisfies clause two | Petrobrás: email in U.S. is not an act performed in U.S.; breach occurs abroad | No jurisdiction under clause two |
| Whether clause three supports jurisdiction | Rogers/Burlew: direct U.S. effect since bonds payable in U.S. via New York office | Petrobrás: no U.S. performance or design to pay in U.S.; no direct effect | No jurisdiction under clause three |
| Whether the complaint plausibly states a breach of contract given bond terms | Bonds created ongoing obligations and breach when conversion denied | Obligations expired; no current breach | Complaint not deemed jurisdictional basis; focus remains FSIA immunity |
Key Cases Cited
- Saudi Arabia v. Nelson, 507 U.S. 349 (U.S. 1993) (based upon requires substantial contact with U.S.)
- Guirlando v. T.C. Ziraat Bankasi A.S., 602 F.3d 69 (2d Cir. 2010) (act performed in U.S. not an act in U.S. when it is a nonperformance in the foreign state)
- Weltover, Inc. v. Argentina, 504 U.S. 607 (U.S. 1992) (direct effect when U.S. designated place of payment and rescheduling affects U.S.)
- Kensington Int'l Ltd. v. Itoua, 505 F.3d 147 (2d Cir. 2007) (based upon requires sufficient contact; 'direct effect' analysis in FSIA context)
- United States Fid. & Guar. Co. v. Braspetro Oil Servs. Co., 199 F.3d 94 (2d Cir. 1999) (direct effects based on payment in U.S. accounts and contractual mechanism)