United States v. Sinovel Wind Grp. Co., s. 14–3013

• Decision Date: 23 July 2015
• Docket Number: 14–3105.,Nos. 14–3013,s. 14–3013
• Citation: 794 F.3d 787,115 U.S.P.Q.2d 1582
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. SINOVEL WIND GROUP CO., LTD., Defendant–Appellant. In re Sinovel Wind Group Co., Ltd., Petitioner.
• Court: U.S. Court of Appeals — Seventh Circuit

794 F.3d 787

115 U.S.P.Q.2d 1582

UNITED STATES of America, Plaintiff–Appellee

v. SINOVEL WIND GROUP CO., LTD., Defendant–Appellant.In re Sinovel Wind Group Co., Ltd., Petitioner.

Nos. 14–3013

14–3105.

United States Court of Appeals, Seventh Circuit.

Argued April 1, 2015.

Decided July 23, 2015.

Rehearing En Banc Denied Sept. 17, 2015.

Brian Levine, Department of Justice, Washington, DC, Timothy M. O'Shea, Munish Sharda, Office of the United States Attorney, Madison, WI, for Plaintiff–Appellee.

John P. Elwood, Vinson & Elkins, Washington, DC, Michael J. Fitzgerald, Fitzgerald Law Firm, S.C., Milwaukee, WI, Matthew J. Jacobs, Vinson & Elkins LLP, San Francisco, CA, for Defendant–Appellant.

Before WOOD, Chief Judge, FLAUM, Circuit Judge, and KENNELLY, District Judge.^*

Opinion

WOOD, Chief Judge.

In June 2013, the United States delivered a criminal summons to the office of Sinovel Wind Group (USA) Company in Texas. It did so in order to serve process on Sinovel Wind Group Company, a Chinese corporation and the owner of 100% of the shares of Sinovel Wind Group (USA). (To avoid confusion, we refer to the subsidiary Sinovel USA and the parent as Sinovel.) The summons revealed that Sinovel had been indicted in the Western District of Wisconsin for crimes including criminal copyright infringement and trade secret theft. Sinovel contested jurisdiction and moved to quash service of the summons. Concluding that Sinovel USA was the alter ego of Sinovel and that service on Sinovel USA was proper, the district court denied Sinovel's motion. Sinovel appealed (No. 14–3013), and shortly thereafter filed a petition for a writ of mandamus in this court (No. 14–3105), asking us to direct the district court to vacate its order refusing to quash service of process. We conclude that we have no jurisdiction to hear Sinovel's appeal. We also conclude that this case does not meet the high standards for issuance of a writ of mandamus. Sinovel will be free to raise all relevant arguments on appeal from final judgment, should it be convicted and wish to pursue the matter.

I

A grand jury in the Western District of Wisconsin indicted Sinovel and three individuals in June 2013 on charges of conspiracy to commit trade secret theft, wire fraud, trade secret theft, and criminal copyright infringement. See 18 U.S.C. §§ 371, 1343, 1832(a)(2), 2319 ; 17 U.S.C. § 506(a)(1)(A). The charges arose from Sinovel's alleged scheme to steal (among other things) computer source code from a company called AMSC, formerly known as American Superconductor; the pilfered code was allegedly going to be used to assist in operating Sinovel's wind turbines. FBI reports indicate that the government served a summons on Sinovel USA's registered agent in Dover, Delaware, in June 2013; it also mailed a summons to Sinovel USA's office in Houston via FedEx and served Sinovel USA's registered agent in Austin. (Sinovel USA was incorporated in Delaware and registered to transact business in Texas.)

In August 2013, Sinovel specially appeared in the district court to file a motion pursuant to Federal Rule of Criminal Procedure 12 to quash service of the summonses, complaint, and indictment. The record indicates that the individual defendants do not reside in the United States and are not expected to appear; they have not been served and play no part in either proceeding before us. We thus have nothing further to say about them.

Sinovel argued that the government had not complied with Rules 4 and 9, because service of process on Sinovel USA and its registered agents was not equivalent to service on Sinovel itself. The magistrate judge to whom the case was assigned was unpersuaded; he concluded that Sinovel USA was the alter ego of Sinovel under Delaware law and thus that service upon Sinovel USA sufficed for service upon Sinovel. Sinovel filed objections to the magistrate judge's order denying the motion to quash service, along with a motion for reconsideration. The district court rejected the objections and denied the motion. It decided three critical points: first, the facts alleged demonstrated that Sinovel USA was not independent of Sinovel; second, Delaware law governed the question whether Sinovel USA was Sinovel's alter ego for service of process purposes; and third, under Delaware law, alter ego status had been proven.

Sinovel filed a notice of appeal from this interlocutory ruling in September 2014. It also filed a petition for a writ of mandamus directly with this court. We instructed the parties to address the question of appellate jurisdiction in their consolidated briefs, along with the merits. The two proceedings have been consolidated for decision.

II

We have jurisdiction over appeals from all final decisions of the district courts. 28 U.S.C. § 1291. Criminal defendants, like others, must ordinarily wait for a final judgment before they may bring an appeal. The “core application” of section 1291 “is to rulings that terminate an action.” Gelboim v. Bank of Am. Corp., ––– U.S. ––––, 135 S.Ct. 897, 902, 190 L.Ed.2d 789 (2015). There is, however, a “small class” of decisions that “finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.” Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). The Supreme Court has imposed three requirements for a collateral order to be appealable: the decision must be conclusive; it must resolve important questions separate from the merits; and it must be effectively unreviewable on appeal from the eventual final judgment in the underlying action. Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100, 106, 130 S.Ct. 599, 175 L.Ed.2d 458 (2009). The Court has stressed that the orders qualifying for appeal under this doctrine comprise a “small category,” Swint v. Chambers Cty. Comm'n, 514 U.S. 35, 42, 115 S.Ct. 1203, 131 L.Ed.2d 60 (1995), and that the collateral order doctrine “must never be allowed to swallow the general rule that a party is entitled to a single appeal, to be deferred until final judgment has been entered.” Mohawk, 558 U.S. at 106, 130 S.Ct. 599 (quotations omitted).

Sinovel argues that its appeal ticks all the boxes that Cohen and other cases require for appellate jurisdiction. Recognizing the Court's recent warning in Mohawk against expanding the set of appealable collateral orders, it urges nonetheless that its case fits the bill. We are unconvinced. The “small class” of non-final orders that may be appealed is to be policed carefully. Cohen, 337 U.S. at 546, 69 S.Ct. 1221. Sinovel's position would lead to the opposite result: there would be no principled way to avoid the conclusion that every denial of a motion to quash service of process is appealable. Such an outcome would be inconsistent with the Court's guidance. See Will v. Hallock, 546 U.S. 345, 350, 126 S.Ct. 952, 163 L.Ed.2d 836 (2006) (“[W]e have meant what we have said; although the Court has been asked many times to expand the ‘small class' of collaterally appealable orders, we have instead kept it narrow and selective in its membership.”). Sinovel realizes the challenge before it, and so it has tried to craft a narrower rule into which its case would fit. Here is its proposal: denials of motions to quash service in cases in which the moving party is “a foreign, partially state-owned corporation ... [and] prosecutors have plainly failed to comply with the unambiguous requirements of [Criminal Rule 4 ]” are appealable. That is a mouthful, but even if we were to find this anything but jury-rigged, there can be no denying that this would create a new category of appealable collateral orders—precisely what the Supreme Court has strongly discouraged.

Sinovel otherwise rests its position mainly on what it contends is the practical unreviewability of the district court's denial of its motion to quash after a judgment on the merits. That overstates the case considerably. It is true that the district court's ruling has eliminated the option of avoiding the proceeding altogether, but Sinovel never had such a right. (This is not like double jeopardy, or the immunity doctrines whose purpose is to avert an unauthorized proceeding.) This is, in effect, a branch of personal-jurisdiction law. People routinely raise personal-jurisdiction objections at the district-court level, their argument is rejected, and they argue on appeal that the district court erred. If the appellate court agrees with them, the judgment is set aside. That is just what would happen if Sinovel is convicted after a trial and if it decides to take an appeal. If the court of appeals concludes that the district court should have granted the motion to quash, it will set aside the judgment.

Even if all this is true, Sinovel argues, there is an exception for cases in which the importance of the particular value at stake is sufficiently great that an immediate appeal must be allowed to protect that value. See Mohawk, 558 U.S. at 107, 130 S.Ct. 599 (“[T]he decisive consideration is whether delaying review until the entry of final judgment ‘would imperil a substantial public interest’ or ‘some particular value of a high order.’ ”) (quoting Hallock, 546 U.S. at 352–53, 126 S.Ct. 952 ). This is such a case, Sinovel continues, because the litigation imperils the foreign relations of the United States and will harm comity between the United States and China. It emphasizes that the government of China has a minority (18%) stake in Sinovel; if Sinovel must endure proceedings in a U.S. court, the Chinese government's dignity will be adversely affected.

A big problem with this argument is the fact that the Foreign Sovereign Immunities Act (FSIA) in the United States does not recognize any special rights for foreign-government ownership of less than a majority of the shares (or their equivalent). See...