Shell Offshore Inc. v. Eni Petroleum US LLC
2:16-cv-15537
E.D. La.Oct 25, 2017Background
- Shell Offshore, Inc. sued Eni Petroleum US LLC (Eni-LLC) and Eni US Operating Co., Inc. (Eni-Operating) asserting breach of contract and open-account claims arising from work on the Popeye field and obligations under a Unit Operating Agreement (UOA).
- Eni-LLC is a party to the UOA and holds lease interests; Eni-Operating is not a UOA party and has no ownership interest in the Popeye leases but is an affiliate within the Eni corporate structure.
- Shell alleges Eni-Operating performed operational and administrative functions for Eni-LLC, commingled funds, shared offices and directors, paid salaries, and otherwise functioned as a single business enterprise with Eni-LLC.
- Defendants moved to dismiss under Rule 12(b)(6), arguing (1) Eni-Operating is not a UOA party and Shell failed to plead facts sufficient to pierce corporate separateness, and (2) Shell’s open-account claim is improper because the UOA governs payment terms.
- The Court applied Louisiana substantive law under OCSLA and evaluated Shell’s single business enterprise allegations under the 18-factor Green test.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Eni-Operating can be held liable for breach of contract via single business enterprise doctrine | Shell: Eni-Operating was "functioning as one" with Eni-LLC (shared ownership chain, common directors/offices, commingled funds, performed services) so corporate separateness should be disregarded | Defs: Eni-Operating is not a UOA party, has no lease interest, and Shell fails to plead facts sufficient to pierce corporate veil/establish single business enterprise | Court: Denied dismissal as to breach — Shell pleaded sufficient Green-factor allegations to state a plausible claim against Eni-Operating under Louisiana single business enterprise theory |
| Choice of law to assess corporate separateness | Shell: Louisiana substantive corporate law should apply | Defs: Delaware law (state of incorporation) should govern corporate structure questions | Court: OCSLA governs; Louisiana substantive law applies, so Green test controls |
| Whether the UOA dispute qualifies as an "open account" under LA R.S. § 9:2781 allowing attorney fees | Shell: Payment overdue on joint account; open-account statute applies to recover fees | Defs: Claims arise under a written joint operating agreement (UOA), which is a contract, not an open account | Court: Granted dismissal with prejudice of open-account claims — UOA is a contract, not an open account; open-account statute does not apply |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (established plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (confirmed Twombly pleading principles; courts need not accept legal conclusions)
- Caddo Oil & Gas Co. v. O’Brien, 908 F.2d 13 (5th Cir.) (claims under a joint operating agreement are contract claims, not open-account claims)
- Cambridge Toxicology Group, Inc. v. Exnicios, 495 F.3d 169 (5th Cir.) (distinguishes contract claims from open-account claims; discusses strict construction of open-account statute)
- Green v. Champion Ins. Co., 577 So. 2d 249 (La. App.) (articulates 18-factor test for single business enterprise doctrine)
- Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473 (OCSLA choice-of-law principles relevant to applying state law to offshore disputes)