GSS Grp. Ltd. v. Nat'l Port Auth.

• Decision Date: 25 May 2012
• Docket Number: No. 11–7093.,11–7093.
• Citation: 401 U.S.App.D.C. 1,680 F.3d 805
• Parties: GSS GROUP LTD, also known as Global Security Seals Group Ltd, Appellant v. NATIONAL PORT AUTHORITY, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

680 F.3d 805

401 U.S.App.D.C. 1

GSS GROUP LTD, also known as Global Security Seals Group Ltd, Appellant

v.NATIONAL PORT AUTHORITY, Appellee.

No. 11–7093.

United States Court of Appeals, District of Columbia Circuit.

Argued March 2, 2012.

Decided May 25, 2012.

Appeal from the United States District Court for the District of Columbia (No. 1:09–cv–01322).

Stanley McDermott III, pro hac vice, argued the cause for appellant. On the brief was Charles B. Wayne.

Jessica L. Ellsworth argued the cause for appellee. With her on the brief was Lindsay D. Breedlove.

Before: GARLAND, Circuit Judge, and WILLIAMS and RANDOLPH, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge RANDOLPH.

Concurring opinion filed by Senior Circuit Judge WILLIAMS, with whom Senior Circuit Judge RANDOLPH joins.

RANDOLPH, Senior Circuit Judge:

GSS Group, Ltd., brought this action to confirm a foreign arbitration award against the National Port Authority of Liberia. The district court dismissed the petition for lack of personal jurisdiction after concluding that the Port Authority did not have sufficient contacts with the United States. We affirm.

The Port Authority is a public corporation, organized under the laws of Liberia, responsible for the management, operation, and maintenance of Liberia's port facilities. It is wholly owned by the Liberian government, but, like many state-owned enterprises, operates at some remove from the government itself. The precise extent of this separation is a contested issue, taken up in greater detail below.

On June 9, 2005, the Port Authority entered into an agreement with GSS Group, a construction company incorporated in the British Virgin Islands and headquartered in Israel. The agreement called on GSS Group to build and operate a container park at the port of Monrovia, Liberia's capital. Several later amendments resulted in a final contract dated October 28, 2005. Although the parties intended the contract to run for twelve and one-half years, it remained in effect for only a few months.

The contract's early demise resulted from a change in Liberia's government. The National Transitional Government of Liberia—installed in 2003, during the aftermath of a four-year civil war—handed over control to a new, democratically-elected government in January 2006. Just a few weeks later, the new government determined that the contract was “null and void ab initio” because it had been awarded in violation of competitive bidding requirements. Although GSS Group and the Port Authority had secured a single-source exemption from those requirements, the new government claimed that the waiver was “based on misrepresentation[s]” by GSS Group and “collusion” between GSS Group and Transitional Government officials.

GSS Group denied the new government's allegations and protested the contract's cancellation. After attempting to resolve the dispute informally, GSS Group invoked the contract's arbitration clause on March 15, 2006. That clause required the parties to submit disputes regarding the contract's “formation, validity, interpretation, performance, termination, enforcement or breach” to “binding arbitration” in London, England. The arbitration clause further stated that disputes would be decided “in accordance with the laws of England and Wales.”

The Port Authority resisted GSS Group's arbitration demand. It maintained that parallel proceedings in the Liberian court system ¹ prevented Lord Mustill—the London arbitrator selected by GSS Group—from adjudicating the dispute. Lord Mustill rejected this argument in a March 3, 2008, “Ruling on Jurisdiction” and went on to reach the merits of GSS Group's claim, without further participation by the Port Authority. Ultimately, he held that the Port Authority had breached the contract and was liable to GSS Group for $44,347,260 in damages—a sum representing GSS Group's project expenditures and future lost profits.

On June 16, 2009, GSS Group filed a petition in the United States District Court for the District of Columbia to confirm the London arbitration award. The Port Authority moved to dismiss the petition on several grounds, including lack of personal jurisdiction. Its personal jurisdiction argument focused on two main points. First, the Port Authority asserted that it was “legally separate from the Liberian government.” ² Memorandum of Points and Authorities, GSS Grp. Ltd. v. Nat'l Port Auth., No. 1:09–cv–01322–PLF, at 16 (D.D.C. Oct. 30, 2009) (“NPA Memorandum”). Separate legal status was important since foreign sovereigns and their extensively-controlled instrumentalities are not “persons” under the Fifth Amendment's Due Process Clause—and thus have no right to assert a personal jurisdiction defense. See TMR Energy Ltd. v. State Prop. Fund of Ukraine, 411 F.3d 296, 300–01 (D.C.Cir.2005); Price v. Socialist People's Libyan Arab Jamahiriya, 294 F.3d 82, 96–97 (D.C.Cir.2002). In contrast to the Liberian government and its agencies, the Port Authority portrayed itself as an independent, albeit state-owned, corporation entitled to the full panoply of due process protections. Second, the Port Authority claimed that it could not be haled into the district court because it did not have “minimum contacts” with the United States. See Goodyear Dunlop Tires Operations, S.A. v. Brown, ––– U.S. ––––, 131 S.Ct. 2846, 2853, 180 L.Ed.2d 796 (2011). This contention relied on the fact that the Port Authority had no offices or personnel in the United States and “ha[d] never engaged in commercial activity in the United States.” NPA Memorandum at 20.

GSS Group's reply did not contest the Port Authority's claim of juridical separateness or assert that the Port Authority had minimum contacts with the United States. Instead, it argued that the Port Authority satisfied all of the jurisdictional prerequisites set forth in the Foreign Sovereign Immunities Act. See28 U.S.C. §§ 1330(b), 1603(a) & (b). The minimum contacts standard did not “trump” these requirements, GSS Group maintained, because foreign, state-owned corporations “do[ ] not have a constitutional status different from” their sovereign shareholders, “whether the[y] [are] independently managed or not.” Memorandum in Opposition, GSS Grp. Ltd. v. Nat'l Port Auth., No. 1:09–cv–01322–PLF, at 15 (D.D.C. Dec. 22, 2009).

The district court granted the motion to dismiss. GSS Grp. Ltd. v. Nat'l Port Auth., 774 F.Supp.2d 134 (D.D.C.2011). It agreed that the Port Authority was subject to statutory personal jurisdiction under the Foreign Sovereign Immunities Act. Id. at 137. This did not end the inquiry, however, because the “question remain[ed] whether the Constitution permit [ted] the exercise of personal jurisdiction over the [Port Authority].” Id. (emphasis added). In answering this question, the court stressed the Port Authority's uncontested claim of juridical separateness. Id. at 139–41. Because GSS Group had not argued that the Port Authority was an agent of the Liberian government, the rule that closely-controlled instrumentalities have no due process rights did not apply. Id. at 139 (citing TMR Energy, 411 F.3d at 301);see also id. at 141.

Considering the Port Authority an independent entity, the district court concluded that it was a “person” covered by the Fifth Amendment. Id. at 139–41. “[C]ountless judicial opinions,” the court explained, had afforded minimum contacts protections to foreign corporations. Id. at 138 (citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987); Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414–15, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)). Although none of these cases involved state-owned corporations, the court found no basis for treating them differently—at least in the absence of evidence that the corporation acted as an agent of its sovereign owner. Id. at 139–41 (distinguishing Price, 294 F.3d at 96–97). GSS Group had not attempted to demonstrate such a relationship, and did not identify any minimum contacts between the Port Authority and the United States.³Id. at 140–41. The court therefore held that the Due Process Clause prevented it from exercising personal jurisdiction over the Port Authority. Id.; see alsoFed.R.Civ.P. 12(b)(2).

In passing, the district court noted a possible doctrinal inconsistency between the Helicopteros line of civil procedure cases and other decisions holding that aliens without property or presence in the United States are not entitled to constitutional protection. Id. at 139;see TMR Energy, 411 F.3d at 302 n. * (citing United States v. Verdugo–Urquidez, 494 U.S. 259, 271, 110 S.Ct. 1056, 108 L.Ed.2d 222 (1990); Jifry v. FAA, 370 F.3d 1174, 1182 (D.C.Cir.2004)). It was “not clear” to the district court “why foreign defendants, other than foreign sovereigns, should be able to avoid the jurisdiction of United States courts by invoking the Due Process Clause when it is established in other contexts that nonresident aliens without connections to the United States typically do not have rights under the United States Constitution.” 774 F.Supp.2d at 139. Nonetheless, the court concluded that it was “in no position to reject” the personal jurisdiction rule “enshrined in” Helicopteros and similar cases. Id.

GSS Group moved to alter or amend the judgment under Federal Rule of Civil Procedure 59(e), based on three new arguments. The district court held that GSS Group had waived these arguments by failing to raise them in its opposition to the motion to dismiss. Accordingly, it denied the motion.

This appeal concerns both of the district court's orders. We review the order of dismissal de novo, see Second Amendment Found. v. U.S. Conference of Mayors, 274 F.3d 521, 523 (D.C.Cir.2001), and the Rule 59(e) decision for abuse of discretion, Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C.Cir.1996) (per curiam).

I

GSS Group's petition arises under the Federal Arbitration Act, 9 U.S.C. §§ 201 et seq.,...