American Oil Company Defendants Had No Control Over Iranian Oil Company, Summary Judgment Upheld on Appeal

Court of Appeal of California, Second Appellate District, Division Seven, October 28, 2020

Houshang Sabetian and his wife, Soraya, (the plaintiffs) filed this action on March 28, 2018 alleging causes of action for negligence, strict liability, premises liability, negligent joint venture, alter ego, and loss of consortium. The complaint alleged Houshang contracted mesothelioma caused by exposure to asbestos while he was an Iranian citizen working for the National Iranian Oil Company (NIOC) from about 1960 to 1979. The complaint further alleged the Chevron and Exxon defendants (the defendants) are the successors in interest to consortium members that were signatories to a 1954 contractual agreement between the Iranian government and a consortium of international oil companies, including the defendants’ predecessors in interest (the Agreement). 

By way of background, in 1951 the government of Iran nationalized its oil assets, assuming control from the Anglo-Iranian Oil Company, which was majority-owned by the government of Great Britain. In 1952, Iran formed NIOC to own and supervise all of Iran’s oil assets. But NIOC did not have access to the global oil markets. To avoid possible influence from the former Union of Soviet Socialist Republics, the United States “devised a plan in which a consortium of newly-formed international corporations would operate the Abadan refinery and some of the other Iranian Oil Premises, under Iranian supervision.” The defendants are successors in interest to various American oil companies (consortium members) who entered into the Agreement with Iran and NIOC.

The defendants filed motions for summary judgment arguing that they owed no duty of care to Houshang because the defendants did not own, possess, or control the facilities in which Houshang alleged he was exposed to asbestos. The plaintiffs opposed the defendants’ motions, arguing the Agreement and the defendants’ control over operations at the Abadan refinery created a duty of care owed by the defendants to Houshang to protect him from asbestos exposure.

The plaintiffs did not dispute that Houshang was employed by NIOC, not by the defendants or their predecessors, and Houshang was never supervised or directed by an employee of the defendants or their predecessors. Nor did the plaintiffs dispute the defendants did not control the basic functions necessary for refining oil and natural gas at the refinery. Likewise, the plaintiffs did not dispute that the defendants did not “select, procure, manufacture, distribute, sell, or install any asbestos-containing products or equipment” at the Iranian facilities.

On November 1, 2018 the trial court granted the defendants’ motions for summary judgment. In its written ruling, the court found the parties to the Agreement “did not intend to provide Iranian oil refinery workers with a direct remedy against the American oil companies sued here.” 

The plaintiffs appealed the trial court’s decision granting the motions for summary judgment filed by the defendants. The plaintiffs argued the defendants owed Houshang a duty of care based on the defendants’ predecessors’ control over the Abadan refinery in which Houshang worked.

On appeal, the court must “review the trial court’s decision de novo, considering all the evidence set forth in the moving and opposing papers except that to which objections were made and sustained. We liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Hampton v. County of San Diego (2015) 62 Cal.4th 340, 347; accord, Valdez v. Seidner-Miller, Inc. (2019) 33 Cal.App.5th 600, 607 (Valdez).

Here, the court found that the defendants owed no duty of care to the plaintiff. The Agreement does not grant the consortium members supervisorial or managerial control the NIOC or the Abadan refinery. Accordingly, the court affirmed the trial court’s decision.