L.A. judge to issue oral ruling on Unocal's liability in human rights case

By Paul Chavez, The Miami Herald, Thursday 22 January 2004

LOS ANGELES—A Superior Court judge said she will issue an oral ruling Friday on whether Unocal Corp. or its subsidiaries should be held accountable for alleged human rights abuses carried out in the 1990s by the Myanmar military during a pipeline project.

Judge Victoria Gerrard Chaney heard closing arguments Wednesday in which lawyers for a group of Myanmar villagers said El Segundo-based Unocal should be held liable for slavery, murder and rape allegedly committed by the military to aid the $1.2 billion Yadana pipeline project.

Dan Stormer, an attorney for the plaintiffs, said that Unocal had “complete and utter control” over the subsidiaries that were created to build and operate the pipeline.

Unocal lawyer Daniel Petrocelli said in his closing arguments that the subsidiaries—not Unocal—should be held accountable.

“This case is very simple, if the subs can pay, this case goes away,” he said.

California law holds that subsidiaries with vast financial resources can not be bypassed in order to get to a parent company, Petrocelli said.

In court documents, Unocal lawyers said the subsidiaries have assets and revenues worth hundreds of millions of dollars and could easily pay any judgment.

The claims are being pushed by activists opposed to Unocal's investment in Myanmar, Petrocelli told the packed courtroom.

“This is not about suing the right parties that can make payment,” Petrocelli said. “It's about getting Unocal.”

Terry Collingsworth, another lawyer for the plaintiffs, said Unocal could have created a real corporation to participate in the pipeline project, but instead created “simply empty vessels” that relied on Unocal employees and officers to make decisions.

“There are legitimate business reasons for setting up a shell,” Collingsworth said. “But the trade-off, if you go the corporate shell option, is that you don’t get the option of limited liability.”

Chaney divided the civil trial into two phases. The first non-jury phase, which started Dec. 9, has focused on whether Unocal or its subsidiaries should be held accountable.

The second phase will center on the issue of “vicarious liability” involving whether Unocal would pay any damages and would include the villagers' allegations of human rights abuses.

Collingsworth told the judge that if Unocal prevails in the first phase of the trial, the tactic of creating subsidiaries to escape liability would become known as “doing a Unocal.”

Petrocelli said that if the judge rules in favor of Unocal that it would end the case and he would file motions asking that it be dismissed with prejudice, which would prevent it from being refiled.

Villagers from the nation formerly known as Burma first filed their lawsuit in 1996 alleging federal and state claims. A judge found Unocal had no liability and dismissed the federal case, which prompted the plaintiffs to pursue their claims under state law in Los Angeles County Superior Court.

The federal case was reinstated last year by a three-judge panel of the 9th Circuit Court of Appeal.

Unocal argued in June before the full 11-judge panel that the case wrongly relies on the obscure 1789 federal Alien Tort Claims Act, which allows foreign nationals access to U.S. courts to sue for damages. The appeals court has not yet issued a ruling.