RUHRGAS AG V. MARATHON OIL CO. et al.
526 U.S. 574 (1999)
NATURE OF THE CASE: This was a dispute over jurisdictional issues and whether a court
must first determine subject matter jurisdiction and then determine issues related to
personal jurisdiction.
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 'relat[ing] 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 'respec[t]' 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.'
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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