Gilson v. Republic of Ireland

• Citation: 682 F.2d 1022
• Decision Date: 19 January 1977
• Docket Number: No. 79-2647,No. 81-1815,81-1815,79-2647
• Parties: James K. GILSON, Appellant, v. The REPUBLIC OF IRELAND, Gaeltarra Eireann, an instrumentality of the Republic of Ireland, Industrial Development Division, Furbo, et al. . Argued 26 March 1982. Decided 16 July 1982. Appeal from the United States District Court for the District of Columbia (D.C. Civil Action). Joseph H. Sharlitt, Washington, D. C., with whom Harvey A. Levin and Sheldon Z. Kaplan, Washington, D. C., were on the brief, for appellant. William A. Bradford, Jr., Washington, D. C., with whom Edward A. McDermott, Washington, D. C., was on the brief, for appellee The Republic of Ireland. Robert B. Davidson, New York City, with whom Jack P. Janetatos, Washington, D. C., was on the brief, for appellees, Gaeltarra Eireann, et al. Before WRIGHT and WILKEY, Circuit Judges, and CELEBREZZE, * Senior Circuit Judge for the Sixth Circuit. Opinion for the Court filed by Circuit Judge WILKEY. WILKEY, Circuit Judge: Plaintiff James K. Gilson brought suit against four defendants-the Republic of Ireland and three Irish corporations-for a variety of alleged commercial misdeeds. This action was brought pursuant to, and plaintiff argues that jurisdiction is proper under, the Foreign Sovereign Immunities Act of 1976. 1 The district court, 517 F.Supp. 477, dismissed the complaint, however, since it found that it lacked subject matter jurisdiction over three of the four defendants, and personal jurisdiction over the fourth. 2 We affirm the district court's dismissal with respect to four of the six counts brought by plaintiff, but in doing so rely on the statute of limitations, not FSIA. 3 With respect to the remaining two counts we think that, under a generous reading of the facts as alleged in the complaint, both subject matter jurisdiction and personal jurisdiction properly lie in this court. 4 Since so far the district court has undertaken only limited fact-finding on its own, on these two counts we reverse the district court's decision and remand for further proceedings. I. F
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 1022

682 F.2d 1022

221 U.S.App.D.C. 73

James K. GILSON, Appellant, v. The REPUBLIC OF IRELAND, Gaeltarra Eireann, an instrumentality of the Republic of Ireland Industrial Development Division, Furbo, et al.

No. 81-1815.

United States Court of Appeals District of Columbia Circuit.

Argued 26 March 1982.

Decided 16 July 1982.

Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 79-2647).

Joseph H. Sharlitt, Washington, D. C., with whom Harvey A. Levin and Sheldon Z. Kaplan, Washington, D. C., were on the brief, for appellant.

William A. Bradford, Jr., Washington, D. C., with whom Edward A. McDermott, Washington, D. C., was on the brief, for appellee The Republic of Ireland.

Robert B. Davidson, New York City, with whom Jack P. Janetatos, Washington, D. C., was on the brief, for appellees, Gaeltarra Eireann, et al.

Before WRIGHT and WILKEY, Circuit Judges, and CELEBREZZE, ^* Senior Circuit Judge for the Sixth Circuit.

Opinion for the Court filed by Circuit Judge WILKEY.

WILKEY, Circuit Judge:

Plaintiff James K. Gilson brought suit against four defendants-the Republic of Ireland and three Irish corporations-for a variety of alleged commercial misdeeds. This action was brought pursuant to, and plaintiff argues that jurisdiction is proper under, the Foreign Sovereign Immunities Act of 1976. ¹ The district court, 517 F.Supp. 477, dismissed the complaint, however, since it found that it lacked subject matter jurisdiction over three of the four defendants, and personal jurisdiction over the fourth. ²

We affirm the district court's dismissal with respect to four of the six counts brought by plaintiff, but in doing so rely on the statute of limitations, not FSIA. ³ With respect to the remaining two counts we think that, under a generous reading of the facts as alleged in the complaint, both subject matter jurisdiction and personal jurisdiction properly lie in this court. ⁴ Since so far the district court has undertaken only limited fact-finding on its own, on these two counts we reverse the district court's decision and remand for further proceedings.

I. FACTS

Plaintiff James K. Gilson is a mechanical engineer, an American citizen, and a resident of Massachusetts. He alleges that defendants Gaeltarra Eireann ("GE") and Industrial Development Authority of Ireland ("IDA")-both instrumentalities of the government of the Republic of Ireland, organized under Irish law-induced him to enter into a commercial venture for the development of quartz crystals in Ireland, to move himself, his family, equipment, and technology to Ireland, and to reveal to defendants certain proprietary information. The complaint further contends that subsequent to the plaintiff's move to Ireland, defendant GE breached its contract with plaintiff, turned over to defendant Leictron Teoranta ("Leictron" or "LT")-a third Irish corporation now wholly owned by defendant GE-his patent rights and proprietary information, and along with LT converted his equipment to its own use. Plaintiff also alleges interference by GE and LT in his ongoing contractual relations with another Irish corporation. Finally, the complaint alleges that "Defendant IDA, acting alone and then jointly with Defendant GE, were agents of the Defendant Republic (of Ireland) at all times pertinent to this complaint," and that the acts by GE, IDA, and LT of which plaintiff complains were performed "within the scope of (their) employment by Defendant Republic." ⁵ Plaintiff seeks damages in an amount totalling three million dollars, in addition to an accounting by GE and LT for all revenues inured to them by virtue of their wrongful conduct.

II. ANALYSIS

Plaintiff lists six causes of action in his amended complaint. ⁶ We find that all but two are barred by that statute of limitations. For the two remaining, however, we think that under the facts alleged subject matter and personal jurisdiction exist, and accordingly reverse their dismissal and remand to the district court for further proceedings.

A. Effect of the Statute of Limitations

In our case the relevant statute of limitations would bar an action on matters arising more than three years before the complaint was filed. ⁷ In his motion for partial summary judgment plaintiff stated in the first paragraph of the required Statement of Material Facts As to Which There is No Genuine Issue: "The events in this case on which the various Counts rest (within the exception of Counts 3 and 4) occurred on or before March of 1975." Since the original complaint was not filed until 3 October 1979-or over four and a half years later-it would appear that, except for counts 3 and 4, plaintiff is too late. ⁸

Plaintiff argues that because prior to FSIA-which became effective on 19 January 1977 ⁹-he could not have successfully maintained an action against defendants, the statute was tolled until that time and that therefore his filing in October 1979, a mere two and a half years later, was timely.

We reject this argument. While FSIA was by all accounts an important piece of legislation, it is a great exaggeration to say that plaintiff was without remedy before it became effective. Plaintiff asserts that "prior to January 19, 1977, the restrictive principle of sovereign immunity (allowing foreign state entities to be sued for actions undertaken by them in a commercial capacity) ... was not yet the law of our land." ¹⁰ But, as the House Report on the Act points out, "This principle was adopted by the Department of State in 1952 and has been followed by the courts and by the executive branch ever since." ¹¹ It may be true, as plaintiff argues, that the Act curtailed the possibility of the Department of State intervening here with its own plea of sovereign immunity for defendants, removed certain procedural obstacles, and increased the property available to plaintiff for judgment. But to say that any action was effectively barred before FSIA is not true. The passage of any statute will have some effect on the likelihood of success of many actions; we must require the effect to be substantial or the exception plaintiff invokes will swallow the rule. We do not think that the passage of FSIA changed plaintiff's position so much that it was only at that time that "the right to maintain the action accrue(d)." ¹²

We therefore conclude that the statute of limitations bars all but counts 3 and 4 of plaintiff's complaint. ¹³

B. FSIA Jurisdiction

Count 3 is labelled "Accounting by Defendant GE for Use of Patent Rights and Proprietary Information," and count 4 is "Accounting by Defendant Leictron for Unlawful Use of Patent Rights and Proprietary Information." ¹⁴ In them plaintiff alleges that GE-in contravention of U. S. and Irish law, and without plaintiff's consent-turned over to Leictron the use of patent rights and proprietary information owned by plaintiff, and that Leictron used and infringed these rights and information. Leictron is also accused of wrongfully converting and using equipment belonging to plaintiff, and of wrongfully manufacturing and selling quartz crystals with personnel trained by plaintiff. Defendant Leictron is said to have "benefitted from the continuing and substantial profits generated by its usurpation (with the active collusion of Defendant GE) of the patent rights, proprietary information and equipment owned by Plaintiff." ¹⁵

In a word, plaintiff accuses GE and Leictron of stealing his expertise and equipment and making money from them.

In determining whether under these alleged circumstances a federal court may properly exercise jurisdiction under FSIA, we must undertake a bifurcated analysis, asking first whether a United States court has subject matter jurisdiction, and second whether it can exercise personal jurisdiction over the defendants. ¹⁶

Before we ask these questions, however, we should make clear the effect of our answers. We are not making a final factual determination of whether jurisdiction exists, on either count, for any defendant. Only the factual determinations which the district court may undertake later can determine this, one way or another. Our conclusion that the district court's dismissal for lack of jurisdiction was improper is based on our finding that the facts as alleged -and generously interpreted-make a dismissal at least premature in light of the dearth of fact-finding done by the district court thus far. Further fact-finding by the district court, which it should make explicit, may yet render dismissal proper. ¹⁷

1. Subject matter jurisdiction

The existence vel non of subject matter jurisdiction will be determined by sections 1604 and 1605 of the Act. ¹⁸ Section 1604 states the general FSIA rule that "a foreign state shall be immune from the jurisdiction of the courts of the United States," and section 1605 then carves out exceptions to this general rule. It is clear that each of the four defendants is a "foreign state" within the meaning of section 1604, ¹⁹ so the question is whether any of the exceptions in section 1605 apply. The relevant exceptions are:

(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case-

(2) in which the action is based (clause 1) upon a commercial activity carried on in the United States by the foreign state; or (clause 2) upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere ; or (clause 3) upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States .... ²⁰

Recall that in counts 3 and 4 plaintiff accuses GE and Leictron of stealing his expertise, patent rights, and equipment and making money from them, and that at the time this happened all parties were in Ireland. But the complaint alleges an unbroken chain of events beginning when plaintiff contracted...