Petrobras America, Inc. v. Samsung Heavy Industries Company, Limited., No. 20-20338; 2021 WL 3521659, __4th __, (5th Cir. Aug. 11, 2021)
The Fifth Circuit reversed and remanded for further proceedings the district court determination that Plaintiff Petrobras America was barred from bringing a civil RICO lawsuit because of the statute of limitations. The lawsuit was filed on March 5, 2019 and Petrobras argued that they did not have notice of their injury until May 2015, within four years of the date of filing.
Petrobras argued that the district court erred in its determination that Petrobras was on notice in 2014 of the facts that gave rise to its RICO claims. The statute of limitations is four years for both Texas fraud claims and civil RICO claims. The statute of limitations for a RICO claim does not accrue until a plaintiff discovers, or through reasonably diligent investigation should discover, the injury.4 Rotella v. Wood, 147 F.3d 438, 440 (5th Cir. 1998), aff’d, 528 U.S. 549, 120 S.Ct. 1075, 145 L.Ed.2d 1047 (2000); Jensen v. Snellings, 841 F.2d 600, 607 (5th Cir. 1988) (“A plaintiff who has learned of facts which would cause a reasonable person to inquire further must proceed with a reasonable and diligent investigation, and is charged with the knowledge of all facts such an investigation would have disclosed.”).
In Petrobras’s view, it did not and could not have discovered its injury until May of 2015, when it completed an internal audit of the drilling services contract for DS-5. Samsung disagrees, arguing that Petrobras knew as far back as 2007, and certainly no later than 2014, that it had been injured. Because a “statute of limitations is an affirmative defense for which the [defendant] has the burden of proof,” we will address Samsung’s proposed dates of notice in turn. Trinity Marine Prods., Inc. v. United States, 812 F.3d 481, 486 (5th Cir. 2016); accord Fed. R. Civ. P. 8(c)(1).
In asserting that Petrobras had notice in 2007, Samsung argues that two Petrobras employees knowledge of the bribes is imputed to Petrobras, but the court found there employees’ knowledge cannot be imputed to Petrobras.*3.
Samsung presented another argument for dismissal, i.e., Petrobras officials knew as early as 2007 that it might not need the DS-5; thus Petrobras knew about its injury as far back as 2007. There were conflicting e-mail and documents, but the Court stated that regardless of whether Petrobras or Samsung is correct in its reading of these e-mails and documents, they do not conclusively establish that the statute of limitations had run by March 5, 2019. Rather, they create a fact issue about Petrobras’s knowledge and the 2007 e-mails and related documents are not a proper basis for 12(b)(6) dismissal.
The court also rejected Samsung’s view that Petrobras was injured by the “unfavorable terms” in the DS-5 contract, which it ultimately did not need. In its reply brief, Petrobras characterizes the injury as “a wholly unnecessary contract that was procured through Samsung’s fraud.” The Court thus held that Samsung “has not met its burden of conclusively establishing that” Petrobras knew or should have known about its injury as far back as 2007. *4.
The Court also rejected arguments that two newspaper articles and Petrobras’s 2014 Form 20-F Annual Report, filed in 2015 with the U.S. Securities and Exchange Commission finding that regardless of whether it was proper to consider these documents, they do not conclusively establish that the statute of limitations began running prior to March 5, 2015. The SEC filing and news articles do not mention Pride or DS-5 at all. Pride—not Samsung—entered into the DS-5 contract with Petrobras. Samsung’s involvement was “camouflaged.” The Samsung–Petrobras contract involved the construction of the Vitória 10,000 and Petrobras 10,000; the Petrobras–Pride contact involved the drilling services of the DS-5. The separate bribery schemes involved separate parties, separate contracts, and separate ships.
In short, the Court concluded that Samsung’s arguments at best raise fact questions not suitable for disposition under Rule 12(b)(6).*5, citing Acad. of Allergy & Asthma in Primary Care v. Quest Diagnostics, Inc., 998 F.3d 190, 200 (5th Cir. 2021) (reversing 12(b)(6) dismissal on statute-of-limitations grounds because Defendants failed to conclusively establish that Plaintiffs should have discovered their injury through a diligent inquiry). Samsung has not conclusively established at the 12(b)(6) stage that Petrobras’s RICO and Texas fraud claims accrued before March 5, 2015.