Saudi Basic Industries Corporation, individually v. Exxon Corporation

PRECEDENTIAL
UNITED STATES
COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 03-2201
SAUDI BASIC INDUSTRIES
CORPORATION,
individually, And In The Name of,
And On Behalf Of;
AL-JUBAIL PETROCHEMICAL
COMPANY, A Partnership
Appellant
v.
EXXON CORPORATION;
EXXON MOBIL CORPORATION
On Appeal from the
United States District Court
for the District of New Jersey
D.C. Civil Action No. 98-cv-04897
(Honorable William H. Walls)
Argued December 9, 2003
Before: AMBRO, FUENTES and
CHERTOFF, Circuit Judges
(Filed March 24, 2004)
Gregory A. Castanias, Esq. (Argued)
William K. Shirey II, Esq.
Jones Day
51 Louisiana Avenue, N.W.
Washington, D.C. 20001
Kenneth R. Adamo, Esq.
Michael W. Vary, Esq.
Leozino Agozzino, Esq.
Jones Day
North Point
901 Lakeside Avenue
Cleveland, OH 44114
Attorneys for Appellant
Elizabeth J. Sher, Esq.
Pitney, Hardin, Kipp & Szuch
P.O. Box 1945
Morristown, NJ 07962
James W. Quinn, Esq. (Argued)
David J. Lender, Esq.
Weil, Gotshal & Manges
767 Fifth Avenue, 27th Floor
New York, NY 10153
Andrew S. Pollis, Esq.
David J. Michalski, Esq.
Hahn, Loeser & Parks
3300 BP America Building
200 Public Square
Cleveland, OH 44114
K.C. Johnson, Esq.
Exxon Mobil Corporation
800 Bell Street, Suite 1686J
Houston, TX 77002
Attorneys for Appellees

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OPINION OF THE COURT
AM BRO, Circuit Judge
For over five years plaintiff-
appellant Saudi Basic Indu stries
Corporation (“SABIC”) and defendant-
appellee ExxonM obil C orpo ration
(“ExxonMobil”) have been litigating the
ownership rights to supercondensed mode
technology (“SCM-T”), a process for
manufacturing polyethylene patented by
ExxonMobil. On June 5, 2002, the United
States District Court for the District of
New Jersey issued an interlocutory order
(the “June 2002 Order”) enforcing a
private stipulation agreement between
SABIC and ExxonMobil under which
SABIC agreed that its affiliates would not
practice the SCM-T process. On appeal,
SABIC has requested that we vacate the
June 2002 Order. Because the District
Court did not require ExxonMobil to
satisfy the requisites for the injunctive
relief it requested, we vacate that order and
remand to the District Court.
I.
Facts and Procedural Posture
In 1994 and 1995, the United States
Patent and Trademark Office issued two
patents—No. 5,352,749 and No. 5,436,304
(called, for simplicity, the ’749 patent and
the ’304 patent)—to Exxon Corporation
(now ExxonMobil) for SCM-T. Each
patent has two elements, and the first
element of each patent is the same: “a
level of liquid in the fluidizing medium
entering the reactor which is in the range
of from 17.4 to 50 weight percent based on
the total weight of the fluidizing medium”
(or in the party’s shorthand, operating
reactors “above 17.4 weight percent
condensed”).1
In 1998, SABIC filed a declaratory
judgment action in the United States
District Court for the District of New
Jersey on behalf of its (and ExxonM obil’s)
partially-owned subsidiary, Kemya,2
alleging that ExxonMobil used technology
developed for Kemya to obtain the patents
in breach of its service agreement with
Kemya. SABIC sought a declaratory
judgment that Kemya owns the patents and
an injunction directing ExxonMobil to turn
over legal title to Kemya.
E x x o n M obil f i l e d s e v e r a l
counterclaims, and sought, inter alia, a
declaratory judgment of its ownership
rights in the ’749 patent. The fourth of
these counterclaims, filed derivatively on
Kemya’s behalf, accused SABIC of
1The second element of the ’749 patent
is the maintenance of a specific ratio of
fluidized bulk density to settled bulk
density (“FBD/SBD ratio”). The second
element of the ’304 patent is the
maintenance of a certain bulk density
function (called the “Z function”).
2Formed in 1980 as a joint venture
between SABIC and Exxon Chemical
Arabia, Inc. (then a subsidiary of Exxon
Corporation), Kemya is now a wholly-
owned subsidiary of ExxonMobil.

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breaching its fiduciary duty to Kemya by
encouraging SABIC affiliates (including
one called SHARQ) to practice the SCM -T
p r o c e ss ( t h e “ F o u r t h A m e n d e d
Counterclaim”).
In February 2000, SABIC moved to
d i s m i s s t h e F o u r t h A m e n d e d
Counterclaim. ExxonMobil agreed to the
dismissal in exchange for SABIC’s
promise that its affiliates would not
practice the SCM-T process while the
litigation was pending. On March 10,
2000, the parties entered into a stipulation
that “neither SABIC, SHARQ . . . nor any
other SABIC affiliate (other than Kemya)
will use or practice SCM-T Information3
until the ownership rights thereto are
established and the owner expressly
authorizes such use . . . .” (the “March
2000 Stipulation”).
The parties tendered the March
2000 Stipulation to the District Court on
March 13, 2000. The District Court wrote
“so ordered” on the March 10 Stipulation
and later entered it as a court order on
April 3, 2000 (the “April 2000 Order”).
In the summer of 2000, SABIC’s
affiliate, SHAR Q, began operating
reactors above 17.4 weight percent
condensed. Upon learning of this, SABIC
moved the District Court to clarify the
March 2000 Stipulation (the “M otion to
Clarify”) by confirming that it did not
prohibit SHARQ’s operations because
SHARQ had received permission to
perform them as the third-party beneficiary
of agreements between ExxonMobil and
another party.
While SABIC’s Motion to Clarify
was pending, ExxonMobil filed a motion
to dismiss SABIC’s claims (the “Motion to
Dismiss”), alleging that SABIC violated
the April 2000 Order by allowing SHARQ
to practice SCM-T. SABIC opposed the
Motion to Dismiss by urging the District
Court to confirm its interpretation of the
March 2000 Stipulation: that a SABIC
affiliate did not practice SCM-T by
operating above 17.4 weight percent
condensed if it was not also practicing the
second element of either patent (either by
maintaining a specific FBD/SBD ratio or a
specific Z function).
In a d d i t i o n t o o p p o s i n g
ExxonMobil’s Motion to Dismiss, SABIC
cross-moved under Federal Rule of Civil
Procedure 60 to vacate the Court’s “so
ordered” notation on the March 2000
Stipulation, in order to convert the April
2000 Order into a private agreement (the
“Motion to Vacate”). SABIC argued that
the District Court entered the March 2000
Stipulation as a court order mistakenly and
contrary to the parties’ intent. The District
Court agreed and granted SABIC’s Motion
to Vacate in April 2001. Saudi Basic
Indus. Corp. v. ExxonMobil Corp., No. 98-
4897 (D.N.J. Apr. 26, 2001) (vacating the
“so ordered” notation that was appended to
the March 2000 Stipulation as entered
“inadvertently and without the parties’
express agreement”). But at the same
hearing, the District Court also noted
3SCM-T Information was defined in the
Stipulation as the processes described in
the ’749 and ’304 patents.

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SABIC’s representation that it was not
contesting the Court’s right to continue to
enforce the March 2000 Stipulation. JA at
437–38 (Apr. 26, 2001 hearing transcript).
A year later, on April 3, 2002, the
District Court denied SABIC’s Motion to
Clarify after finding no legal justification
(such as mutual mistake) to clarify or
reform the March 2000 Stipulation. Saudi
Basic Indus. Corp. v. ExxonMobil Corp.,
194 F. Supp. 2d 378, 389–90 (D.N.J.
2002). The District Court further stated
that SABIC had been violating the March
2000 Stipulation since August 1, 2000, by
allowing SHARQ to operate its reactors
above 17.4 weight percent condensed. Id.
at 390. The District Court did not address
S A B IC’s arg um ent, advanced in
opposition to ExxonMobil’s Motion to
Dismiss, that to practice the SCM-T
process a reactor has to employ both
elements of either patent, not just operate
above 17.4 weight percent condensed.
SABIC moved for reconsideration
of this decision, while ExxonMobil,
seizing on the District Court’s statement
that SABIC had violated the March 2000
Stipulation, moved for the District Court to
enforce that Stipulation. On June 5, 2002,
the District Court denied SABIC’s motion
for reconsideration and gra nte d
ExxonMobil’s motion to enforce the
March 2000 Stipulation. This action—the
June 2002 Order— did not address
SABIC’s argument that only by practicing
both elements of one of the patents would
its affiliate be violating the March 2000
Stipulation’s terms.
SABIC appealed the June 2002
Order pursuant to 28 U.S.C. § 1292(a)(1).
ExxonMobil moved for partial dismissal of
the appeal “for want of appellate
jurisdiction, or in the alternative, for
partial summary affirmance.” That motion
was referred to a merits panel and is
consolidated with SABIC’s appeal of the
June 2002 Order.
II.
Jurisdiction
As threshold matters, ExxonMobil
challenges our appellate jurisdiction and
the timeliness of SABIC’s appeal. We
conclude that our appellate jurisdiction is
proper under 28 U.S.C. § 1292(a)(1)
because the June 2002 Order is effectively
an injunction. And we conclude that
SABIC’s appeal was timely because it was
filed within the 30-day appellate window
that began with the issuance of the June
2002 Order.
A. We have appellate jurisdiction
under 28 U.S.C. § 1292(a)(1).
As the June 2002 Order is an
interlocutory decision of the District Court,
its appealability is governed by 28 U.S.C.
§ 1292. Section 1292(a)(1) provides
appellate jurisdiction over interlocutory
orders “granting, continuing, modifying,
refusing or dissolving injunctions, or
refusing to dissolv e or m odif y
injunctions.” Thus, our appellate
jurisdiction is proper under § 1292(a)(1) if
the June 2002 Order is an injunction.
An order need not have the “literal
characterization” of an injunction for

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§ 1292(a)(1) to apply, as long as it has the
same practical effect. Hershey Foods
Corp. v. Hershey Creamery Co., 945 F.2d
1272, 1276 (3d Cir. 1991). We have
previously defined an injunctive order as
one that is “[1] directed to a party, [2]
enforceable by contempt, and [3] designed
to accord or protect ‘some or all of the
substantive relief sought by a complaint’ in
more than a temporary fashion.” Cohen v.
Bd. of Trs. of the Univ. of Med. &
Dentistry of N.J., 867 F.2d 1455, 1465 n.9
(3d Cir. 1989) (en banc) (quoting W right
& Miller, et al., Federal Practice and
Procedure § 3922 (1977)); see also
Hershey Foods, 945 F.2d at 1277 (“[I]n
order to be an injunction for purposes of §
1292(a)(1), the order must grant part of the
relief requested by the claimant and must
b e i m m e d i a t el y e n f o r c ea b l e b y
contempt.”). In contrast, “[o]rders that in
no way touch on the merits of the claim
but only relate to pretrial procedures” are
not interlocutory injunctions within the
meaning of § 1292(a)(1). Hershey Foods,
945 F.2d at 1277 (citing Switzerland
Cheese Ass’n v. E. Horne’s Market, Inc.,
385 U.S. 23 (1966)).
We conclude that the June 2002
Order satisfies the three Cohen factors for
an effective injunction appealable under
28 U.S.C. § 1292(a)(1). First, because the
June 2002 Order requires that “SABIC
shall fully comply with the terms of the
March [2000] Stipulation, which are
incorporated herein by reference,” it is
expressly directed to a party. Second, by
granting ExxonMobil’s motion to enforce
the March 2000 Stipulation, the June 2002
Order imposes an equitable remedy against
SA BIC , whose noncompliance is
punishable by contempt. See Cohen, 867
F.2d at 1465; see also Harley-Davidson,
Inc. v. Morris, 19 F.3d 142, 146 (3d Cir.
1994) (“Failure to obey a court judgment
is an indirect contempt . . . .” (citing
Black’s Law Dictionary 319 (6th ed.
1990))). Third, the June 2002 Order was
“designed to accord or protect some or all
of the substantive relief sought by a
complaint.” In its amended counterclaims,
ExxonMobil sought substantive relief that
included a declaration of ownership of the
’749 patent, one of the patents for the
SCM-T process. The June 2002 Order
enforced the parties’ stipulated agreement
that neither SABIC nor its affiliates would
practice the SCM-T process, as defined by
the ’749 and ’304 patents, until ownership
rights to them are established. In this
context, the June 2002 Order was
“designed to accord or protect some or all
of the substantive relief sought” by
ExxonMobil in its amended counterclaims,
namely, the right, as its purported owner,
to exclude SABIC and its affiliates from
ownership or practice of the ’749 patent.4
Thus the June 2002 Order is, in effect, an
injunction appealable under 28 U.S.C. §
1292(a)(1).
4We reject as groundless ExxonMobil’s
argument that only the relief sought in the
Fourth Amended Counterclaim (which was
dismissed), as opposed to the amended
counterclaims as a whole, could have been
the substantive relief protected by the June
2002 Order.

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Finally, we reject ExxonM obil’s
argument that SABIC must demonstrate
“ s e r i o u s , p e r h a p s i r r e p a r a b l e
consequences” from the June 2002 Order
in order to sustain an appeal. ExxonMobil
points to Carson v. American Brands, Inc.,
450 U.S. 79 (1981), in which the Supreme
Court stated that “[u]nless a litigant can
show that an interlocutory order of the
district court might have a ‘serious,
perhaps irreparable, consequence,’ and
that the order can be ‘effectually
challenged’ only by immediate appeal, the
general congressional policy against
p i e ce m e a l r e v i e w w i l l p r e c l u de
interlocutory appeal.” Id. at 84 (citing
Baltimore Contractors, Inc. v. Bodinger,
348 U.S. 176, 181 (1955)). But we have
since recognized that Carson required the
showing of a “serious, perhaps irreparable
consequence” in the context o f
determining the appealability of an order
denying injunctive relief. Cohen, 867 F.2d
at 1467. We have consistently refused to
require such a showing of an enjoined
party appealing an order granting an
injunction. See Casey v. Planned
Parenthood of S.E. Pa., 14 F.3d 848, 855
(3d Cir. 1994) (“Unlike a denial, a grant of
injunctive relief subjects the losing party to
contempt, and provides some or all of the
relief sought by the claimant, two of the
key features we identified in Cohen as
justifying an interlocutory appeal.”); Ross
v. Zavarella, 916 F.2d 898, 902 (3d Cir.
1990); Cohen, 867 F.2d at 1467. Thus,
because the June 2002 Order granted
injunctive relief, SABIC need not show
“serious, perhaps irreparable consequence”
to sustain its appeal.
B. SABIC’s appeal was timely.
Under Federal Rule of Appellate
Procedure 4(a)(1)(a), a party has 30 days
after an order is entered in which to file an
appeal. SABIC filed its Notice of Appeal
on June 21, 2002, within the same month
that the District Court entered the June
2002 Order. But ExxonMobil construes
the June 2002 Order as a reinstatement of
the previously-vacated order enforcing the
March 2000 Stipulation,5 and argues that
the reinstatement of a previously vacated
order cannot revive an expired appeal
period. Thus, ExxonMobil suggests,
SABIC’s 30-day period in which to appeal
the enforcement of the March 2000
Stipulation began to run on April 3, 2000,
the day the District Court entered the
March 2000 Stipulation as an order. We
do not agree.
ExxonM obil relies on tw o
cases—West v. Keve, 721 F.2d 91 (3d Cir.
1983), and Hall v. Commonwealth Mental
Health Center, 772 F.2d 42 (3d Cir.
1985)—in support of its argument that the
reinstatement of a previously vacated order
cannot revive an expired appellate period.
Both cases miss the mark here. In West
and Hall we rejected as untimely appeals
from reinstated, previously vacated orders.
But in both of those cases, unlike here, a
5Recall that the District Court entered
the Stipulation as an order on April 3,
2000, but vacated the “so ordered”
notation a year later. Saudi Basic Indus.
Corp. v. ExxonMobil Corp., No. 98-4897
(D.N.J. Apr. 26, 2001) (order).

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party sought reinstatement of an earlier
judgment for the express purpose of
reviving an appellate window. In West,
our holding rejecting the timeliness of
such an appeal was expressly limited to
that circumstance:
We hold, therefore, that
because the avowed purpose
of the Rule 60(b) motion in
this case was to extend the
time for appeal, it had to
meet the time limitations of
Rule 4(a). We expressly do
not decide whether a Rule
60(b) motion must meet the
time constraints of Rule 4(a)
under other circumstances
not present here.
721 F.2d at 97. Similarly, in Hall, we
affirmed the district court’s denial of an
order to vacate and reenter an earlier
judgment which a party sought “in order to
permit timely appeal on the merits.” 772
F.2d at 42.
In our case the record clearly
indicates that the purpose for vacating the
“so ordered” notation was not to revive
SABIC’s appeal rights but rather to allow
SABIC to avoid contempt. Nor could the
sequence of vacate-then-reinstate possibly
have been engineered by SABIC to revive
its appellate window, as it was
ExxonMobil, not SABIC, who moved to
enforce the previously vacated stipulation
order—and did so more than a year after
the order to vacate was entered. In West
and Hall, the same party who moved to
vacate the order also moved to reinstate it,
and did so simultaneously. This case
presents circumstances not present in West
and Hall, and therefore is not controlled by
their holdings.
I n s u m m a r y , w e r e j e c t
ExxonMobil’s argument that SABIC’s
appeal period began on April 3, 2000, the
day the District Court entered the March
2000 Stipulation as a court order. SABIC
may appeal from the June 2002 Order
enforcing a previously vacated stipulation
order. That appeal, filed within 30 days of
the June 2002 Order, is timely.
III.
Application of the Injunction Standard
The District Court’s June 2002
Order required SABIC to “fully comply
with the terms of the March [2000]
Stipulation.” On appeal, SABIC argues
that the District Court erred in rendering
this order without requiring ExxonMobil
to satisfy the required elements for
granting an injunction.6
In the context of the appellate
jurisdiction question discussed above, we
6To satisfy the injunction standard, the
moving party must demonstrate the classic
four elements: (1) a reasonable probability
of success on the merits; (2) that denial of
injunctive relief will result in irreparable
injury; (3) that granting injunctive relief
will not result in even greater harm to the
nonmoving party; and (4) that granting
injunctive relief will be in the public
interest. Allegheny Energy, Inc. v. DQE,
Inc., 171 F.3d 153, 158 (3d Cir. 1999).

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determined that the June 2002 Order was,
in effect, an injunction. The fact that it
enforced a contractual settlement did not
render it any less of an injunction, as we
have recognized that “[a] district court
may enter injunctive relief on a party’s
behalf to enforce a settlement agreement
when it determines that one of the parties
has failed to perform its obligations.”
Wilcher v. City of Wilmington, 139 F.3d
366, 372 (3d Cir. 1998).
We review a district court’s grant of
a preliminary injunction for “whether the
court abused its discretion, committed an
obvious error in applying the law, or made
a clear mistake in considering the proof.”
Am. Civil Liberties Union v. Ashcroft, 322
F.3d 240, 250 (3d Cir. 2003) (citing In re
Assets of Martin, 1 F.3d 1351, 1357 (3d
Cir.1993)), cert. granted, 124 S. Ct. 399
(2003). Because the June 2002 Order was
effectively an injunction, it was a “clear
mistake” for the District Court not to have
required ExxonMobil, the moving party, to
prove the requisites for granting an
injunction. We thus remand to the District
Court for this consideration. See Rolo v.
Gen. Dev. Corp., 949 F.2d 695, 704 (3d
Cir. 1991).
We also agree with SABIC that the
District Court should hold a hearing prior
to enforcing the March 2000 Stipulation.
In requiring SABIC to comply with the
March 2000 Stipulation, the June 2002
Order incorporated its terms. But the
parties dispute whether, under the terms of
the March 2000 Stipulation, “practicing
SCM -T Information,” as defined by the
’749 and ’304 patents, means practicing
the second elements of either patent in
addition to operating above 17.4 weight
percent condensed. “Where material facts
concerning the existence or terms of an
agreement to settle are in dispute, the
parties must be allowed an evidentiary
hearing.” See Tiernan v. Devoe, 923 F.2d
1024, 1031 (3d Cir. 1991) (citing Callie v.
Near, 829 F.2d 888, 890 (9th Cir. 1987)
(emphasis in original)); see also Hensley v.
Alcon Labs., Inc., 277 F.3d 535, 541 (4th
Cir. 2002) (“If there is a factual dispute
over the existence of an agreement, over
the authority of attorneys to enter into an
agreement, or over the agreement’s terms,
the district court may not enforce a
settlement agre em en t su mmar ily.”
(emphasis omitted)). Thus the District
Court should have a hearing to resolve the
disputed terms of the March 2000
Stipulation prior to enforcing it.
IV.
Conclusion
We have jurisdiction over SABIC’s
appeal, which was timely. Because the
District Court did not properly apply the
i n j u n ct i o n s t a n d a rd i n grantin g
ExxonMobil’s motion to enforce the
March 2000 Stipulation, we hereby vacate
its June 2002 Order and remand to the
District Court for a hearing to resolve the
March 2000 Stipulation’s disputed terms
before determining whether injunctive
relief should issue under the standards
long extant for so determining.

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