Gould, Inc. v. Mitsui Min. & Smelting Co., 90-3942

Decision Date10 December 1991
Docket NumberNo. 90-3942,90-3942
Citation947 F.2d 218
PartiesGOULD, INC., Plaintiff-Appellee, v. MITSUI MINING & SMELTING COMPANY, Japan; Miyakoshi Machine Tools Company, Ltd., Japan, Defendants, Pechiney Ugine Kuhlmann, France; Trefimetaux, France, Defendants-Appellants.
CourtU.S. Court of Appeals — Sixth Circuit

Lance Gotthoffer, Marks, Murase & White, New York City, Robert S. Walker, Robert P. Ducatman, Jones, Day, Reavis & Pogue, Cleveland, Ohio, Richard Linn, Washington, D.C., John D. Jolliffe, Black, McCuskey, Souers & Arbaugh, Canton, Ohio, Maynard F. Thomson (argued and briefed), Samuel J. Najim, Jones, Day, Reavis & Pogue, Cleveland, Ohio, Lawrence M. Harnett, Marks, Murase & White, New York City, for plaintiff-appellee.

Richard A. Zellner, Patricia A. Hemann, Hahn, Loeser & Parks, Cleveland, Ohio, Brice M. Clagett (argued and briefed), Herbert Dym, Richard Wm. Buchanan, Seth A. Tucker, Covington & Burling, Carlos M. Vazquez, Washington, D.C., for defendants-appellants.

Before MERRITT, Chief Judge, KENNEDY and NORRIS, Circuit Judges.

ALAN E. NORRIS, Circuit Judge.

This is the second appeal by defendants Pechiney Ugine Kuhlmann and Trefimetaux from an order of the district court finding that they are not immune from suit under the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. §§ 1330, 1332(a)(2), (4), 1391(f), 1441(d), 1602-1622 ("FSIA"). On the prior occasion, we remanded the cause for a factual inquiry into circumstances relevant to application of the FSIA in this case.

BACKGROUND

Because the facts underlying plaintiff's lawsuit are set out in our opinion resolving the prior appeal, Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445 (6th Cir.1988), our recitation here will be brief.

Plaintiff Gould manufactures electrolytic copper foil, which is used in producing printed computer circuit boards, at its foil division in Eastlake, Ohio. Dale C. Danver was an engineer in plaintiff's foil division until August 1983, when he left to form Danver Technologies Group, Inc. Danver then entered into negotiations regarding copper foil manufacturing with Trefimetaux, a wholly owned subsidiary of Pechiney, and with Pechiney. A majority of the shares of the defendant corporations was owned directly or indirectly by the Republic of France. Although neither Pechiney nor Trefimetaux had ever produced copper foil, they were interested in doing so. In late 1984, after Danver had transferred plaintiff's foil manufacturing trade secrets to defendants, 1 they informed Danver that they were no longer interested in entering into a joint venture with him to construct a foil manufacturing plant in France.

According to plaintiff's complaint, prior to Danver's negotiations with defendants, he sold information to Mitsui Mining & Smelting Co. describing Gould's manufacturing process for copper foil. In 1985, after terminating its relationship with Danver, Pechiney, presumably through its subsidiary Trefimetaux, entered into a joint venture with Mitsui for the construction of a copper foil plant in Northern France (the "Eurocel plant"). Plaintiff alleged that defendants were using the information transferred from Danver to them and Mitsui.

Defendants moved to dismiss plaintiff's complaint for lack of subject matter and personal jurisdiction, claiming that, as foreign states, they were immune from suit under the FSIA. Their motion was supported by an affidavit from the assistant to the president of Trefimetaux. Plaintiff filed a response, supported by an affidavit from one of its attorneys. The district court concluded that defendants were not immune from suit and denied the motion. We concluded that, while the methodology used by the district judge to analyze the issues was sound, those issues were not ripe for resolution. Accordingly, the cause was remanded for the production of evidence more probative and reliable than that which was then before us.

Upon remand, the district court referred the matter to a magistrate judge to conduct appropriate evidentiary proceedings and to submit proposed findings of fact to the court. The magistrate judge did so in a comprehensive seventy-page recommendation which was accepted, for the most part, by the district court. Based upon this more extensive evidentiary record, the trial court again found that it had both subject matter and personal jurisdiction over defendants and that venue was proper. It therefore denied defendants' motion to dismiss.

DISCUSSION

As we pointed out in our earlier opinion, jurisdictional immunity of a foreign state is restricted to suits involving its public acts and does not extend to commercial or private acts. The FSIA is designed to facilitate suits in courts in the United States arising from commercial or private acts of foreign states. Gould at 449. In the first appeal, we determined that defendants qualified as foreign states under the FSIA. Gould at 450. Under that Act, foreign states are immune from suit unless the case involves certain commercial activity or other exceptions set out in the FSIA itself. 28 U.S.C. § 1604. Among the issues raised by the first appeal was the question of whether defendants had engaged in conduct which would operate as an exception to immunity under 28 U.S.C. § 1605(a)(2). 2 It was for clarification of that issue that the cause was remanded, and it is that issue upon which the present appeal is before us.

In the order first appealed from, the district court had found jurisdiction under both the first and third clauses of 28 U.S.C. § 1605(a)(2). The order before us now is based upon a conclusion by the district court that jurisdiction can be grounded upon the first clause--the court did not consider jurisdiction under the third clause.

When sections 1605(a)(2) and 1603(d) and (e) of Title 28 are read together, it is clear that a foreign state will not be immune from jurisdiction, pursuant to the exception found in the first clause of section 1605(a)(2), if the plaintiff's action is based upon a regular course of commercial conduct or a particular commercial transaction or act having substantial contact with the United States carried on by a foreign state.

In our earlier opinion, we began our review of the jurisdictional evidence upon which the district court had based its ruling with a cautionary note:

[T]he commercial activity relied upon by plaintiff for jurisdictional purposes must be also the activity upon which the lawsuit is based; that is, there must be a connection between that activity and the act complained of in the lawsuit. Accordingly, a finding that defendants have been "doing business" which might be sufficient to satisfy the personal jurisdiction requirements of many "long-arm statutes," may not meet the jurisdictional nexus requirements of 28 U.S.C. § 1605(a)(2).

Gould, 853 F.2d at 452 (citation omitted).

When the district court found that it had jurisdiction of plaintiff's claims under the first clause of 28 U.S.C. § 1605(a)(2), it did so under a scenario of facts different from the one which appeared to be raised by the sketchy facts we had before us on the first appeal.

The district court first determined that our conclusion on the first appeal, that the activity upon which plaintiff's claim is based was commercial rather than governmental, continued to be supported by the facts as found on remand. On the first appeal, we concluded that the evidence on whether the commercial activity complained of had "substantial contact with the United States," as required by 28 U.S.C. § 1603(e), required further development. On the basis of the extensive evidence developed on remand, the district court found that, in their transactions with Danver, defendants indeed had substantial contact with the United States. That finding is clearly supported by the evidence and is not disputed by defendants on appeal.

The remaining issue concerning the first-clause exception, which the district court resolved on remand, and which is the source of defendants' appeal, is its determination that plaintiff's claim "is based upon" the commercial activity which defendants carried on in the United States with Danver--the "Danver transaction."

As pointed out in the first appeal, the "based upon" requirement of 28 U.S.C. § 1605(a)(2) means that there must be a connection between the commercial activity sought to be proved for jurisdictional purposes and the activity upon which the lawsuit is predicated. In contrast to the requirements of many "long-arm statutes," the evidence relied upon to confer jurisdiction must be of activity having some connection or relationship to the activity giving rise to the lawsuit. Proof that defendants were involved on another occasion in the United States in commercial activity that has no connection with, or relationship to, the conduct which gave rise to plaintiff's cause of action will not suffice. Plaintiff is not required to prove every element of its case on the merits in order to satisfy the jurisdictional proof requirements of the first clause of 28 U.S.C. § 1605(a)(2). Instead, it must satisfy the court that its claim is based upon a commercial activity which had substantial contact with the United States; it needs to convince the court that it is not relying upon one episode for jurisdiction and another one for its claim.

The statute in question says only that a foreign sovereign is not immune "in any case in which the action is based upon a commercial activity carried on in the United States by the foreign state." An "action based upon commercial activity" should not be read as meaning an "action the elements of which are proven" or read to require the plaintiff to prove the merits of the case at the jurisdictional phase of the case.

In the instant case, upon the insistence of the defendant, the district court restricted plaintiff's merits discovery. It would be grossly unfair, therefore, as...

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    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • September 18, 2012
    ...this first clause. Gen. Elec. Capital Corp. v. Grossman, 991 F.2d 1376, 1383 (8th Cir.1993) (quoting Gould, Inc. v. Mitsui Mining & Smelting Co., 947 F.2d 218, 221 (6th Cir.1991)) (internal quotation marks omitted); see also Am. W. Airlines, 877 F.2d at 797 (upholding sovereign immunity bec......
  • McDaniel v. Chevron
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • February 9, 2000
    ...synonymous with "arising from" and ordinarily refers to a "starting point" or a "foundation." See, e.g., Gould, Inc. v. Mitsui Min. & Smelting Co., 947 F.2d 218, 221 (6th Cir. 1991) (stating that "based upon" as used in the Foreign Sovereign Immunities Act should be read plainly as "arising......
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    • U.S. Court of Appeals — Eighth Circuit
    • April 14, 1993
    ...West Airlines, Inc., 877 F.2d at 797 (acts were not the "specific acts that form the basis of the suit"); Gould, Inc. v. Mitsui Mining & Smelting Co., 947 F.2d 218, 221 (6th Cir.1991) ("Proof that defendants were involved on another occasion in the United States in commercial activity that ......
  • Randolph v. Budget Rent-A-Car, RENT-A-CA
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • September 23, 1996
    ...the plaintiff's cause of action must arise from the defendant's commercial activity in the United States. Gould, Inc. v. Mitsui Mining & Smelting Co., 947 F.2d 218, 221 (6th Cir.1991), cert. dismissed, 503 U.S. 978, 112 S.Ct. 1657, 118 L.Ed.2d 317 (1992). In other words, not only must the a......

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