Ruhrgas Ag v. Marathon Oil Co. Et Al.

526 U.S. 574 (1999)

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Nature of the Case

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Facts

In 1976, Marathon Oil Company and Marathon International Oil Company acquired Marathon Petroleum Company (Norway) (MPCN) and respondent Marathon Petroleum Norge (Norge). Norge held a license to produce gas in the Heimdal Field; following the transaction, Norge assigned the license to MPCN. MPCN contracted to sell 70% of its share of the Heimdal gas production to a group of European buyers, including petitioner Ruhrgas AG. Marathon Oil Company, Marathon International Oil Company, and Norge (Ps) filed this lawsuit against Ruhrgas (D) in Texas state court on July 6, 1995, asserting state-law claims of fraud, tortious interference with prospective business relations, participation in breach of fiduciary duty, and civil conspiracy. P alleged that Ds induced them with false promises of 'premium prices' and guaranteed pipeline tariffs to invest over $300 million in MPCN for the development of the Heimdal Field and the erection of a pipeline to D's plant in Germany. D removed the case to the District Court for the Southern District of Texas. D asserted three bases for federal jurisdiction: diversity of citizenship, federal question, and 9 U. S. C. §205, which authorizes removal of cases 'relating to' international arbitration agreements. D moved to dismiss the complaint for lack of personal jurisdiction. P moved to remand the case to the state court for lack of federal subject-matter jurisdiction. The District Court dismissed the case for lack of personal jurisdiction. It relied on Fifth Circuit precedent allowing district courts to adjudicate personal jurisdiction without first establishing subject-matter jurisdiction. A panel of the Court of Appeals for the Fifth Circuit concluded that 'respect' for 'the proper balance of federalism' impelled it to turn first to 'the formidable subject matter jurisdiction issue presented.' The Court of Appeals vacated the judgment of the District Court and ordered the case remanded to the state court. This Court denied D's petition for a writ of certiorari, which was limited to the question whether subject-matter jurisdiction existed under 9 U. S. C. §205. The Fifth Circuit, on its own motion, granted rehearing en banc, thereby vacating the panel decision. The en banc court held that, in removed cases, district courts must decide issues of subject-matter jurisdiction first, reaching issues of personal jurisdiction 'only if subject-matter jurisdiction is found to exist.'