239 F.3d 440 (2nd Cir. 2000), 98-9058, Bigio v Coca-Cola Co.

Docket Nº:Docket No. 98-9058
Citation:239 F.3d 440
Party Name:RAPHAEL BIGIO, BAHIA BIGIO, FERIAL SALMA BIGIO and B. BIGIO & CO., Plaintiffs-Appellants, v. THE COCA-COLA COMPANY and THE COCA-COLA EXPORT COMPANY, Defendants-Appellees.
Case Date:December 07, 2000
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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239 F.3d 440 (2nd Cir. 2000)

RAPHAEL BIGIO, BAHIA BIGIO, FERIAL SALMA BIGIO and B. BIGIO & CO., Plaintiffs-Appellants,

v.

THE COCA-COLA COMPANY and THE COCA-COLA EXPORT COMPANY, Defendants-Appellees.

Docket No. 98-9058

United States Court of Appeals, Second Circuit

December 7, 2000

Argued: November 1, 1999

Amended: January 2, 2001

Appeal from a judgment of the United States District Court for the Southern District of New York (John S. Martin, Jr., Judge) dismissing the plaintiffs' complaint for lack of subject matter jurisdiction. The district court held that jurisdiction does not lie under the Alien Tort Claims Act, 28 U.S.C. §1350, and is otherwise barred by the act of state doctrine. We hold, inter alia, (i)that although the district court does not have jurisdiction over the controversy under the Alien Tort Claims Act, it does have jurisdiction by reason of the diversity of citizenship of the parties, and (ii)that the act of state doctrine does not bar the court from exercising that jurisdiction. We reverse and remand for the district court to determine whether principles of international comity dictate against exercising jurisdiction and, if they do not, for the court to decide the case on its merits.

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NATHAN LEWIN, Miller, Cassidy, Larroca & Lewin, L.L.P., Washington, DC (Grant R. Vinik, Miller, Cassidy, Larroca & Lewin, L.L.P., of counsel; Edward L. Sadowsky and Andrew M. Zeitlin, Tenzer, Greenblatt, L.L.P., New York, NY, of counsel), for Plaintiffs-Appellants.

WILLIAM M. DREYER, The Coca-Cola Company, Atlanta, GA (Laurence V. Senn, Jr., and Richard F. Hans, King & Spalding, New York, NY, of counsel), for Defendants-Appellees.

Heather J. Friedman, New Haven, CT, submitted a brief for Amicus Curiae Allard K. Lowenstein International Human Rights Law Clinic.

Robert L. Weinberg, Washington, DC, submitted a brief for Amicus Curiae International Association of Jewish Lawyers and Jurists, American Section.

Before: McLAUGHLIN, JACOBS, AND SACK, Circuit Judges.

AMENDED OPINION

SACK, Circuit Judge:

This case arises out of a seizure and confiscation of foreign property allegedly in violation of New York State and international law. The plaintiffs, Raphael Bigio, Bahia Bigio, Ferial Salma Bigio and B. Bigio & Co. (collectively, "the Bigios") seek damages from the defendants, The Coca-Cola Company and The Coca-Cola Export Corporation (collectively, "Coca-Cola"), for their conduct in connection with the nationalization of the Bigios' property by the Egyptian government in the early 1960's. The plaintiffs' complaint invokes jurisdiction under the Alien Tort Claims Act, 28 U.S.C. §1350,1 and diversity of citizenship under 28 U.S.C. §1332. The defendants moved for an order dismissing the complaint on several grounds, including lack of subject matter jurisdiction. The United States District Court for the Southern District of New York (John S. Martin, Judge) granted the defendants' motion, concluding that the plaintiffs had not satisfied the prerequisites for jurisdiction under the Alien Tort Claims Act, and that the act of state doctrine barred the court's exercise of jurisdiction despite the parties' diversity of citizenship. See Bigio v. Coca-Cola Co., No. 97 Civ. 2858 (JSM), 1998 WL 293990, 1998 U.S. Dist. LEXIS 8295 (S.D.N.Y. June 5, 1998).

Addressing jurisdictional questions first, we hold that the district court does have jurisdiction over this action. We agree with the district court that jurisdiction does not lie under the Alien Tort Claims Act, but hold that the court has jurisdiction by reason of the diversity of citizenship of the parties under 28 U.S.C. § 1332. We assume that the "local action doctrine" is jurisdictional, but conclude that it does not prevent the district court from exercising jurisdiction in this case.

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Two types of abstention, the act of state doctrine and principles of international comity, could be applicable to this case nonetheless and, if so, may counsel against the district court's exercise of jurisdiction. We hold, contrary to the conclusion of the district court, that the act of state doctrine does not apply. Because the district court relied in part on the act of state doctrine in dismissing this action, it did not decide whether principles of international comity permit the case to be heard. We remand for the court to make that determination.

Finally, we decline to address in the first instance the remaining issues argued by the parties on appeal, including whether this case should have been dismissed for failure of the plaintiff to join two indispensable parties, failure timely to file, failure to state a claim upon which relief can be granted, or failure to produce adequate evidence to survive a motion for summary judgment. We leave it to the district court to decide those issues if necessary.

BACKGROUND

Plaintiffs Raphael Bigio and Ferial Salma Bigio are brother and sister, and plaintiff Bahia Bigio is their mother. All three are citizens and residents of Canada. Plaintiff B. Bigio & Co. is owned by the Bigio family and organized under the laws of Egypt. Defendants the Coca-Cola Company and the Coca-Cola Export Company are incorporated in the State of Delaware. The Coca-Cola Export Company is a wholly owned subsidiary of the Coca-Cola Company.

The property that is the subject of this action consists of land and factories located in Heliopolis, Egypt. The first factory on the Heliopolis land, which was then owned by the Bigio family, was built by the Bigios in 1932. Between 1938 and the Egyptian government's confiscation of the Bigios' property in the 1960's, Coca-Cola did business with the Bigios, buying various goods from their factory. During the 1930's and 1940's, Coca-Cola was a tenant on the Bigios' land. In 1959, only a few years before the Bigios' property was seized, Coca-Cola entered into a written licensing agreement with the Bigios permitting them to manufacture Coca-Cola bottle caps for sale to Coca-Cola and its authorized bottlers.

According to the complaint in this action, the Bigios' property was seized by the Egyptian government in 1962. The Bigios contend that the Egyptian government, then led by President Gamal Abdel-Nasser, sequestered and nationalized their property because they were Jewish. The defendants have not disputed this contention on appeal. Deprived of their property, the Bigio family left Egypt in 1965.2

The complaint alleges that in or after 1993, Coca-Cola either purchased or leased the plaintiffs' property with full knowledge of the unlawful manner in which it had been seized from the plaintiffs. This assertion forms the sole basis for the plaintiffs' claims against Coca-Cola.

Material submitted by the plaintiffs to the district court provides additional background for an understanding of the plaintiffs' claims. According to this material, once the plaintiffs' property was seized by the Egyptian government, ownership of the property was transferred to the Misr Insurance Company ("Misr"), a company wholly owned by the Egyptian government. Misr in turn leased the property to the El-Nasr Bottling Company ("ENBC"), another company wholly owned by the Egyptian government, which operated the manufacturing plants.

In 1970, while ENBC was leasing the Bigios' former property from Misr, President Nasser died. In 1977, the Egyptian government apparently issued an edict revoking

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the contracts of sale that had effected the transfer of the Bigios' property to Misr.3 In 1979, purportedly pursuant to this edict, the Egyptian Ministry of Finance issued Decision Number 335, which ordered Misr to return the Bigios' property, along with any rental burden and active occupants, or to forward to the Bigios the proceeds of any sale of the property that might have occurred. On February7, 1980, the Ministry of Finance sent a letter to Misr urging it to follow the instructions contained in Decision Number 335. That letter states:

[T]he real estate properties owned by [the Bigios] and which were sold through Sequestration must now be physically returned to [the Bigios] unless the Company has already disposed of the assets through sale to a third party in the private sector. In such a case, the amount representing the price of sale must be reimbursed to [the Bigios] . . . .

Misr did not honor these instructions.

In 1993, the Egyptian government offered ENBC for sale. As of 1993, ENBC consisted of thirteen bottling plants and a number of distribution and warehousing facilities throughout Egypt. One of the bottling plants was located on the Bigios' former property.

Coca-Cola submitted a bid to purchase the shares of ENBC through its wholly owned subsidiary Atlantic Industries. A rival bid was submitted by MAC Investments S.A.E. ("MAC"), an Egyptian company unrelated to Coca-Cola. MAC previously had been in the business of bottling soft-drink products in competition with Coca-Cola in the Middle East.The Egyptian government accepted MAC's bid.

Though MAC won the bidding, it and Atlantic Industries thereafter reached an agreement to purchase the shares of ENBC jointly. Made with the knowledge and consent of the Egyptian government, the agreement was memorialized in a Share Sale and Purchase Agreement effective April 20, 1994. Pursuant to that agreement, MAC, together with a company named MAC Beverages, purchased 58% of ENBC's shares. Atlantic Industries, together with another Coca-Cola subsidiary, the Soft Drink Services Company, purchased the remaining 42% of ENBC's shares. The Share Sale and Purchase Agreement provided that following the acquisition, 30% of ENBC's total shares would be resold to the...

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