Unocal Myanmar-Pipeline Trial Resumes Today

December 9, 2003

The Daily Journal

LOS ANGELES - The second phase of a trial in which workers are accusing Unocal Corp. of human rights violations in the construction of a natural-gas pipeline in Myanmar proceeds today to determine who is the proper defendant - the oil giant or its subsidiaries.

The case, in which the plaintiffs attempt to hold a multinational corporation accountable for abuses committed on foreign soil, is the first of its kind to go to trial, according to the plaintiffs' attorney, Dan Stormer of Pasadena-based Hadsell & Stormer. Doe v. Unocal Corp. BC237980 (L.A. Super. Ct., filed Oct. 4, 2000).

The plaintiffs will attempt to use the Alien Tort Claims Act, enacted in 1789, which gives district courts jurisdiction over cases in which aliens allege acts were committed "in violation of the law of nations or a treaty of the United States."

Unocal's subsidiaries partnered with the Myanmar military government to build the $1.2 billion pipeline linking the country with Thailand. (The Southeast Asian country of Burma was renamed Myanmar after the military overthrew the government in a coup in 1988.)

Unocal has been arguing against culpability by claiming that five of its subsidiaries are the proper defendants. The subsidiaries partnered with the military regime, which provided security for construction of the pipeline.

The subsidiaries, Stormer said, were shell corporations "operated for Unocal's benefit."

"These are entities that had no employees, no assets, nothing," Stormer said. "The evidence is absolutely clear that Unocal controlled every aspect of these companies. It is incontrovertible that [the subsidiaries] are the agents [of Unocal]."

All of the companies have employees or are holding companies, responded Daniel Petrocelli, Unocal's attorney.

The plaintiffs' strategy to sue the parent company for the actions of its subsidiaries based in other jurisdictions will "backfire," Petrocelli said, because "no court in 200 years of alter-ego-reported decisions has ever pierced a corporation of this type."

Stormer's legal argument is usually directed at small businesses that try to operate through corporate shells commingling funds and operations, Petrocelli said.

George Genzmer, a business torts and commercial litigation attorney at Murchison & Cumming in Los Angeles, agreed.

"It's hard to [use the alter ego theory] when you have a major corporation like that because they're pretty good about keeping the subsidiaries separate."

The plaintiffs can proceed with their lawsuit only if they can prove the "alter ego" theory that Unocal International Pipeline Co., Unocal Global Ventures Ltd., Unocal International Corp., Unocal Myanmar Offshore Co. and Moattama Gas Transportation Co. were shams, Petrocelli said.

"We don't think a trial on the merits will ever take place because the [plaintiffs] can't prove that these are alter ego[s]," Petrocelli said.

But the case will go forward regardless of who prevails at this stage, Stormer said.

"While this phase of the trial does not address the core facts of the case, it brings the plaintiffs one step closer to justice," he said.

If Unocal prevails, Petrocelli said, he will argue that the rest of the case should be thrown out.

The case was brought on behalf of 14 Burmese villagers who say that the Southeast Asian country's military government raped and murdered workers who were helping construct the 41-mile pipeline.

In the first phase of the trial that has dragged on for seven years, Judge Victoria Chaney ruled in July that Unocal and its subsidiaries could face charges in California for unlawful acts committed on foreign soil.

The phase that follows will address the issue of liability and damages associated with the joint venture and whether Unocal's subsidiaries acted as its agent, Stormer said. A date has not yet been set.

The trial in this phase is expected to last two weeks.