Exxon Mobil Corp. V. Saudi Basic Industries Corp. - Background

Background

In 1980, two subsidiaries of Exxon Mobil Corporation (the plaintiff and petitioner in this matter) formed a joint venture with defendant/respondent Saudi Basic Industries Corporation (SABIC). Twenty years later, a dispute arose over royalties SABIC had charged Exxon Mobil's subsidiaries for sublicenses to a polyethylene manufacturing method, and SABIC sued the two subsidiaries in Delaware Superior Court in July 2000.

Instead of first filing a counterclaim in the Delaware state court system, Exxon Mobil and its subsidiaries chose to sue SABIC in the United States District Court for the District of New Jersey. There, they alleged that SABIC had overcharged the subsidiaries for the sublicenses. Exxon Mobil claimed subject-matter jurisdiction in federal court under 28 U.S.C. § 1330, which gives the United States district courts jurisdiction over foreign states.

In January 2002, Exxon Mobil filed an answer to SABIC's complaint in the Delaware state court, asserting the same counterclaims that they had filed in federal court. Meanwhile, SABIC moved to dismiss the federal suit. The district court denied the motion. The state suit reached trial first, and the jury returned a huge verdict for Exxon Mobil, totalling over $400 million. SABIC then appealed the judgment to the Delaware Supreme Court.

SABIC also filed an interlocutory appeal with the United States Court of Appeals for the Third Circuit of the denial of their motion to dismiss the federal suit. The Third Circuit raised, sua sponte (on its own motion), the issue of subject-matter jurisdiction, and concluded that the Rooker-Feldman doctrine precluded the district court from proceeding, on the grounds that Exxon Mobil's claims had already been heard in state court—even though Exxon Mobil was not seeking to have the state court verdict overturned.