Opinion
No. C 01-00892 CRB.
June 20, 2003.
MEMORANDUM AND ORDER
Plaintiffs in these cases brought suit against the United States, Mexico, and Wells Fargo Bank seeking recovery of wages that they earned as "braceros" during and immediately after World War II. On August 23, 2002, this Court issued an order dismissing the complaint. All of plaintiffs' causes of action against the Mexican Defendants and Wells Fargo Bank, as well as their claim against the United States for breach of fiduciary duty, were dismissed without leave to amend. All remaining claims against the United States were found to be barred by the applicable statutes of limitations, but leave was granted to file an amended complaint that set forth a factual basis for equitable tolling of those claims.
Now before the Court is plaintiffs' motion for leave to file a third amended complaint. In addition to amendments intended to provide a foundation for equitable tolling, plaintiffs' proposed amended complaint contains causes of action that the Court previously dismissed with prejudice as well as new causes of action against the Mexican Defendants and the United States. Accordingly, plaintiffs' motion also seeks reconsideration of the Court's August 23, 2002 order to the extent that dismissal of certain claims was without leave to amend.
The factual setting in which these claims arose and the procedural background of these cases were set forth in detail in the Court's August 23, 2002 order and will not be repeated here.
DISCUSSION
Plaintiffs' proposed third amended complaint contains an amended class definition and other amendments intended to establish a basis for equitable tolling. The Court having previously granted leave to make these amendments, they will not be addressed herein. Should the United States wish to challenge the sufficiency of these amendments, it must do so by way of a motion to dismiss.
In addition, the proposed third amended complaint: (1) repleads causes of action against the Mexican Defendants in light of the Ninth Circuit's decision in Altmann v. Republic of Austria, 317 F.3d 954 (9th Cir. 2002); (2) repleads a cause of action against the United States for breach of fiduciary duty in light of evidence purportedly showing a trust relationship between the United States and the braceros; and (3) adds causes of action for negligence against the United States, Mexico, and the Mexican Bank Defendants.
Because the Court's order of dismissal dismissed the fiduciary-duty claim against the United States and all claims against the Mexican Defendants with prejudice, plaintiffs seek reconsideration of those portions of the order.
I. Reconsideration
Under Civil Local Rule 7-9(b), a party seeking reconsideration of an interlocutory order must show either (1) that "a material difference in fact or law exists from that which was presented to the Court before entry of the interlocutory order . . . [and] that in the exercise of reasonable diligence the party . . . did not know such fact or law at the time of the interlocutory order," or (2) "[t]he emergence of new material facts or a change of law occurring after the time of such order." Civ. L.R. 7-9(b)(2).
A. Claims Against the Mexican Defendants
The Court's dismissal of the Mexican Defendants was based on the Court's finding that they were entitled to absolute immunity. In reaching this conclusion, the Court rejected plaintiffs' argument that the more restrictive immunity scheme codified in the Foreign Sovereign Immunities Act (FSIA) can be applied retroactively to events occurring prior to 1952.
Plaintiffs seek reconsideration of the Court's ruling in light of the Ninth Circuit's decision in Altmann v. Republic of Austria, 317 F.3d 954 (9th Cir. 2002), which was issued four months after this Court dismissed all claims against the Mexican Defendants. Altmann was a lawsuit brought by the American heir of an Austrian Jew against the Republic of Austria and the state-owned Austrian Gallery to recover paintings that were confiscated by the Nazis in violation of international law. The Ninth Circuit held that the defendants were not entitled to absolute immunity even though the events at issue occurred prior to 1952 because Austria could not have expected such immunity for its complicity in the "pillaging and retention of treasured paintings from the home of a Jewish alien who was forced to flee for his life." Id. at 964. Seizing on a statement in Altmann that the determination "whether the FSIA may properly be applied [to pre-1952 events] . . . turns on the question whether [the sovereign] could legitimately expect to receive immunity from the executive branch of the United States for [the alleged conduct]," id. at 965, plaintiffs argue that reconsideration is warranted so that the Court may consider the Mexican Defendants' "settled expectations" regarding immunity for the conduct alleged.
Plaintiffs also seek reconsideration on the grounds that the Court erred in finding that plaintiffs' claims accrued before 1952. Plaintiffs contend that their claims did not accrue until their demands for payment were formally repudiated in 2001. This argument was raised in opposition to defendants' motion to dismiss, and the Court considered it at that time. As such, it is not a proper basis for seeking reconsideration.
In order for a subsequently issued circuit decision to justify reconsideration of a district court ruling, the circuit decision must effect a "change of law." Civ. L.R. 7-9(b)(2). ThoughAltmann held that the FSIA could be applied retroactively under certain limited circumstances, it did not thereby change the law. The court in Altmann expressly declined, in fact, to hold that "the FSIA may be generally applied to events predating the 1952 Tate Letter." Altmann, 317 F.3d at 962. Instead, the court based its conclusion that Austria was not entitled to absolute immunity on the "narrower rationale" espoused by D.C. Circuit Judge Wald in a 1994 dissent. See id. (citing Princz v. Federal Rep. of Germany, 26 F.3d 1166 (D.C. Cir. 1994) (Wald, J., dissenting)). In Princz, Judge Wald opined that because congressional intent regarding the retroactivity of the FSIA was unclear, its application in that case turned on the second step of the Landgraf retroactivity analysis, viz., whether retroactive application of the statute "would `impair rights a party possessed when he acted,' i.e., whether in 1942-45 Germany would have been entitled to immunity for imprisoning and enslaving Princz." Princz, 26 F.3d at 1178-79 (citing Landgraf v. USI Film Prods., 511 U.S. 244, 280 (1994)). Judge Wald then characterized the "operative question" as "whether the executive branch would have recommended immunity for perpetrators of the Holocaust." Id. at 1179. "The intuitive answer," she said, "is no." Id.
The Ninth Circuit's holding in Altmann followed a similar approach. Since the conduct at issue explicitly violated the Hague Convention and Austria formally repudiated all Nazi transactions in 1946, said the court, Austria "could not expect such immunity." Altmann, 317 F.3d at 965. Under those specific circumstances, retroactive application of the FSIA did not violate the "presumption against retroactive legislation [that] is deeply rooted in our jurisprudence." Id. at 963 (quotingINS v. St. Cyr, 533 U.S. 289, 316 (2001)).
As such, the Altmann decision did not change the law that prevailed at the time this Court ruled on the Mexican Defendants' motion to dismiss. Rather, the Ninth Circuit simply applied well-established principles of retroactivity to find that absolute sovereign immunity was not available under the narrow set of facts presented in that case.
In considering whether the FSIA could be applied retroactively in this case, the Court performed precisely the same analysis as the Ninth Circuit in Altmann. Acknowledging that the FSIA "does not contain a clear expression of statutory intent in favor of application to events occurring before 1952," the Court, like the court in Altmann, based its decision on the second step of the Landgraf analysis. See Cruz, 219 F. Supp.2d at 1035. Considering whether application of the FSIA would attach "new legal consequences" to past actions, id. (citingLandgraf, 511 U.S. at 270), the Court found that application of the FSIA under the facts of this case "would have impermissible retroactive effect." Id. at 1036.
Since Altmann changed neither the law of sovereign immunity nor the analysis that the Court was required to conduct in order to determine whether the FSIA applied to the claims at issue, the Ninth Circuit's decision in Altmann is not grounds for reconsideration of the Court's order of dismissal.
The Court notes, however, that even if it were to conclude that reconsideration of the immunity issue were warranted in light of Altmann, the Court's ruling that the Mexican Defendants are immune from suit would remain undisturbed. As the Ninth Circuit recognized in Altmann, "Latin-American nations did not accept the restrictive approach to immunity [until] well into the 1980s." Altmann, 317 F.3d at 967. The evidence that plaintiffs have marshaled in order to show that Mexico had no such "settled expectations" of immunity in connection with the bracero program consists primarily of internal correspondence among mid-level State Department bureaucrats discussing the possibility that the bracero program might give rise to lawsuits in U.S. courts. That evidence-which was before the Court when it dismissed these claims with prejudice-is insufficient to establish that Mexico "could [not] legitimately expect to receive immunity from the executive branch of the United States" for bracero-related lawsuits. Id. at 965.
B. Breach of Fiduciary Duty Claim Against the United States
Plaintiffs also seek reconsideration of the Court's August 23, 2002 order insofar as it dismissed with prejudice plaintiffs' claim against the United States for breach of fiduciary duty. Plaintiffs' motion is based on an excerpt from the standard contract between the United States and growers who participated in the bracero program. That portion of the contract stated:
The Employer [growers] shall pay to the Administrator [the War Food Administration, i.e., the U.S. government] in trust for each such Worker who has been transported by the Administrator from Mexico for employment in the United States, ten percent (10%) of his wages, which portion of his wages such Worker will have assigned to the Administrator in trust, to be held or controlled and disposed of by the Administrator under the terms of its agreement with the worker. . . . The Administrator shall make the official audit and transmit [checks covering this payment] to the bank for deposit.
3d Am.Compl. Ex. H (emphasis added). In plaintiffs' view, this document demonstrates that, contrary to the Court's finding, the United States explicitly manifested its intent to act in a fiduciary capacity vis-a-vis the braceros.
Plaintiffs contend that they were unaware of this document until it was appended to the motion to dismiss that the Court adjudicated in August 2002. Plaintiffs therefore concede that their first exposure to this evidence was prior to entry of the Court's order of dismissal. While plaintiffs are thus barred from seeking reconsideration under Local Rule 7-9(b)(1), reconsideration may instead be appropriate under Local Rule 7-9(b)(3), which provides for reconsideration when a court fails to consider "material facts" that were before the court at the time it issued its order. Although the contract excerpted above was presented to the Court in connection with defendants' motion to dismiss, the Court did not focus upon it in reaching its decision.
Accordingly, plaintiffs' motion for reconsideration of the Court's dismissal of this claim with prejudice will be granted. Plaintiffs may replead this claim in their third amended complaint. Defendants' arguments concerning the merits of the claim should be presented by way of a motion to dismiss.
II. Leave to Amend
Rule 15(a) of the Federal Rules of Civil Procedure governs the submission of amended pleadings. Although at this stage of the litigation amended pleadings may be filed only "by leave of court or by written consent of the adverse party," Rule 15(a) states that "leave shall be freely given when justice so requires." Four factors govern a court's determination as to whether to grant leave to amend: (1) whether the amendment was made in good faith; (2) whether there was undue delay in making the amendment; (3) whether amendment would prejudice the opposing party; and (4) whether amendment would be futile. See Roth v. Marquez, 942 F.2d 617, 628 (9th Cir. 1991). Leave to file an amended cause of action should not be granted "when the movant present[s] no new facts but only `new theories' and `provide[s] no satisfactory explanation for [its] failure to fully develop [its] contentions originally.'" Allen v. City of Beverly Hills, 911 F.2d 367, 374 (9th Cir. 1990) (citation omitted).
A. Breach of the Implied Covenant of Good Faith
Plaintiffs seek leave to amend their first cause of action against the United States for breach of contract to include the allegation that the United States "breached . . . the obligation of good faith and fair dealing that inheres in every contract." 3d Am.Compl. ¶ 58. Leave to do so will be granted.
B. Negligence
Plaintiffs also wish to add a claim for negligence against the United States. The United States opposes this amendment on the grounds that plaintiffs have not satisfied the requirements to assert a tort claim against the United States under the Federal Tort Claims Act. These requirements include the filing of a claim with the appropriate federal agency within two years of the claim's accrual, and the filing of any lawsuit within six months of the claim's denial. See 28 U.S.C. § 2401(b); Dyniewicz v. United States, 742 F.2d 484, 485 (9th Cir. 1984). Since plaintiffs concede that no claim was filed with any federal agency prior to initiating this suit, the United States argues that amendment to add a tort claim against it would be futile.
Plaintiffs also seek to add claims for negligence against the Mexican Defendants. Since the Court denies plaintiffs' motion to reconsider the Court's order dismissing all claims against the Mexican Defendants with prejudice on grounds of sovereign immunity, leave to add these claims will be denied as well.
Plaintiffs respond that the failure to file an administrative claim should be excused in this case because of the futility of filing such a claim now that the appropriate federal agencies ( e.g., the War Manpower Commission and War Food Commission) are defunct. As an initial matter, the Court notes that had plaintiffs filed a claim within two years of its accrual, the appropriate agency might not have been defunct. In any event, "[a] plaintiff's claim that administrative remedies were not pursued because pursuit would have been futile does not excuse this [filing] requirement." Industrial Constructors Corp. v. United States Bureau of Reclamation, 15 F.3d 963, 967 (10th Cir. 1994). Besides, neither plaintiffs' concern about the potential difficulty of identifying the proper successor agency nor their conjecture that the claim would be forwarded by that agency to a higher "institutional level" is sufficient to show futility. Accordingly, leave to amend to state a claim against the United States for negligence will be denied.
Plaintiffs' futility argument is not supported by the caselaw they cite. In Spawr v. United States, 796 F.2d 279 (9th Cir. 1986), the Ninth Circuit found that the plaintiffs' futility argument "ha[d] no merit" and distinguished the out-of-jurisdiction case that the plaintiffs relied upon for a "futility principle." Id. at 281. The Third Circuit case cited by plaintiffs, which involved a prisoner who filed a Bivens claim without first exhausting the prison's complaint resolution processes, see Lyons v. U.S. Marshals, 840 F.2d 202, 205 (3d Cir. 1988), is inapposite.
CONCLUSION
For the reasons stated above, plaintiffs' motion for reconsideration of the Court's August 23, 2003 order of dismissal is granted in part and denied in part. Reconsideration of the dismissal with prejudice of all claims against the Mexican Defendants is hereby DENIED. Reconsideration of the dismissal with prejudice of plaintiffs' breach-of-fiduciary claim against the United States is hereby GRANTED.
As stated in the Court's August 23, 2002 order, plaintiffs may amend their complaint to plead such facts as would entitle them to equitable tolling of the statute of limitations. Leave to amend plaintiffs' first cause of action against the United States for breach of contract to include an allegation of breach of the implied covenant of good faith is also GRANTED. In all other respects, plaintiffs' motion for leave to file an amended complaint is hereby DENIED.