American Bonded Warehouse Corp. v. Compagnie Nationale Air France

• Decision Date: 17 February 1987
• Docket Number: No. 86 C 4780.,86 C 4780.
• Citation: 653 F. Supp. 861
• Parties: AMERICAN BONDED WAREHOUSE CORP., a corporation, d/b/a Asian Airlift, Plaintiff, v. COMPAGNIE NATIONALE AIR FRANCE, d/b/a Air France, a corporation of France, Francois Bachelet, and Joe Miller, Defendants.
• Court: U.S. District Court — Northern District of Illinois

653 F. Supp. 861

AMERICAN BONDED WAREHOUSE CORP., a corporation, d/b/a Asian Airlift, Plaintiff, v. COMPAGNIE NATIONALE AIR FRANCE, d/b/a Air France, a corporation of France, Francois Bachelet, and Joe Miller, Defendants.

No. 86 C 4780.

United States District Court, N.D. Illinois, E.D.

February 17, 1987.

George B. Collins, Donald L. Bertelle, Deborah M. Jervis, Collins, Uscian & Bertelle, Chicago, Ill., Theodore J. Jarz, McKeown, Fitzgerald, Zollner, Buck, Sangmeister & Hutchison, Joliet, Ill., for plaintiff.

Michael J. Sehr, Andrew Kochanowski, Haskell & Perrin, Chicago, Ill., for defendants.

MEMORANDUM ORDER

BUA, District Judge.

This order concerns defendants' motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons stated herein, defendants' motion is denied in part and granted in part.

I. FACTS

American Bonded Warehouse Corporation ("Asian Airlift") is one of several companies comprising an industry of freight forwarders specializing in consolidating shipments from people residing in America to their relatives and friends in Vietnam. After receiving packages from persons in America, freight forwarders such as Asian Airlift assemble the packages into containers and deliver them to Compagnie Nationale Air France ("Air France") for shipment to Vietnam. Because Air France is the only western airline having landing rights at Ho Chi Minh City (formerly Saigon), all freight forwarders, including Asian Airlift, utilize Air France to make their shipments to Vietnam.

Plaintiff Asian Airlift alleges that sometime in late 1985 or early 1986, defendant Air France, through its employees, defendants Francois Bachelet, Joe Miller, and others, determined that Air France would enter the freight consolidation and forwarding industry, eliminate all the existing companies in the industry, including Asian Airlift, and thereby obtain an absolute vertical monopoly on the entire commercial process of sending gift packages from this country to Vietnam. Plaintiff asserts that defendants devised and engaged in a continuous series of related fraudulent schemes in violation of sections 1962(a) and (c) of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968. According to plaintiff, defendants' wrongful conduct included publishing, circulating, and mailing two different documents that made false statements about freight forwarders as well as engaging in false advertising in Vietnamese newspapers to the detriment of Asian Airlift and other freight forwarders.

II. DISCUSSION

Defendants assert several reasons why plaintiff's complaint fails to state a claim upon which relief can be granted. Initially, defendants argue they are entitled to immunity from suit under the Foreign Sovereign Immunities Act, 28 U.S.C. § 1330 et seq. ("FSIA"). The FSIA essentially provides that, subject to certain exceptions, a foreign state is immune from the jurisdiction of courts in the United States. A foreign state is defined in § 1603 of the FSIA, to include

... an agency or instrumentality of a foreign state ... which is a separate legal person, corporate or otherwise ... a majority of whose shares or other ownership interest is owned by a foreign state ... which is neither a citizen of the United States ... nor created under the laws of any third country.

Defendant Air France, a French corporation which is 98 percent owned by the Republic of France, is a foreign state under § 1603 and, therefore, is entitled to the protection afforded by the FSIA. Defendants Francois Bachelet and Joe Miller, sued in their respective capacities as employees of Air France, are also protected by the FSIA. Rios v. Marshall, 530 F.Supp. 351, 371, 374 (S.D.N.Y.1981) (official of British West Indies Central Labour Organization, an instrumentality of the named states, held equally protected under the FSIA).

However, § 1605 outlines various exemptions to the jurisdictional immunity of a foreign state, one of which is directly applicable to the instant case. Section 1605(a)(2) specifically exempts a foreign state from immunity in any case "in which the action is based upon a commercial activity carried on in the United States by the foreign state...." This exception recognizes that sovereign immunity should be confined to a foreign sovereign's truly governmental acts and not extended to strictly commercial activities. Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 488, 103 S.Ct. 1962, 1968, 76 L.Ed.2d 81 (1983). Commercial activity is defined in § 1603(d) of the FSIA as

either a regular course of commercial conduct or a particular commercial transaction or act. The commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose.

Under § 1603(e), commercial activity is carried on in the United States by a foreign state when there is "substantial contact with the United States."

In the instant case, the complaint alleges that defendants implemented a scheme to eliminate its competition in the freight forwarding industry in violation of RICO. Such allegations clearly set forth a cause of action based on commercial activity conducted by the defendants. Therefore, defendants are not entitled to jurisdictional immunity under the FSIA.

Next, defendants argue that Air France, as an instrumentality or agency of a foreign sovereign, is not a person under RICO. RICO defines person to include "any individual or entity capable of holding a legal or beneficial interest in property." 18 U.S.C. § 1961(3). On its face, this definition clearly includes Air France. Therefore, defendants have the burden of showing that the statutory language should be interpreted differently than its plain and literal meaning.

In support of their claim that person as defined in RICO should be narrowly construed so as to exclude an agency or instrumentality of a foreign sovereign, defendants advance three arguments. First, defendants argue that Air France is not involved in the "organized crime" which Congress intended to fight with RICO and that nothing in RICO's legislative history suggests that it is applicable to a foreign state. This court finds defendants' argument unpersuasive. A nexus with organized crime is simply not a requirement of a RICO violation. Bennett v. Berg, 685 F.2d 1053, 1063-64 (8th Cir.1982), aff'd on reh. en banc, 710 F.2d 1361 (8th Cir.), cert. denied, 464 U.S. 1008, 104 S.Ct. 527, 78 L.Ed.2d 710 (1983); Moss v. Morgan Stanley, Inc., 719 F.2d 5, 20-21 (2d Cir.1983), cert. denied, 465 U.S. 1025, 104 S.Ct. 1280, 79 L.Ed.2d 684 (1984). Examining the plain language of the statute makes clear that the broad definition of "person" drafted by Congress does not exempt instrumentalities of a foreign sovereign or limit "persons" to those connected with "organized crime." Lode v. Leonardo, 557 F.Supp. 675, 680 (N.D.Ill. 1982). Similarly, the legislative history of RICO fails to support any such exemption or limitation. With RICO, "Congress chose to attack the problem of organized crime in terms of patterns of behavior characteristic of racketeers rather than attempt definition of the amorphous concept `organized' crime and to make membership therein unlawful." Hunt International Resources Corp. v. Binstein, 559 F.Supp. 601, 602 (N.D.Tex.1982). Thus, RICO must be given the broad effect mandated by its plain language. Morgan v. Bank of Waukegan, 804 F.2d 970, 974 (7th Cir.1986).

Second, defendants argue that since RICO is ostensibly modeled after antitrust laws under which the Supreme Court has determined a foreign sovereign cannot be liable, a similar interpretation of RICO should follow. Defendants rely on Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), which holds that a domestic sovereign is not a person who may be sued under antitrust laws, and subsequent cases expanding the Parker v. Brown doctrine to include foreign sovereigns. However, even assuming, arguendo, that there is a close relationship between RICO and antitrust laws which suggests that RICO provisions should be interpreted consistent with antitrust law, defendants are still "persons" amenable to suit. In Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975) and Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978), the Supreme Court made it clear that the Parker v. Brown doctrine is limited to state action or official action by the state. Moreover, none of the post-Goldfarb cases on which defendants rely that expand the Parker v. Brown doctrine to include foreign sovereigns exempts foreign sovereigns from liability under antitrust laws for activity which is not cognizable as an act of state.¹

In the instant case, Air France is clearly not acting pursuant to any state directive or engaged in any state action. Rather, it is acting independently as a commercial corporation. The mere fact that nearly all of the corporation's stock is owned by the French government does not make all of its actions "acts of state." U.S. v. Deutches Kalisyndikat Gesellschaft, 31 F.2d 199 (S.D.N.Y.1929). Even if this court were to adopt defendants' argument concerning the application of Parker v. Brown to RICO actions, Air France would still be a "person" amenable to suit because the conduct complained of does not constitute an act of state. Thus, any relationship between antitrust law and RICO is no help to defendants in claiming that Air France is not a "person" under RICO.²

Third, defendants claim that interests of comity dictate that a foreign sovereign should not be considered a person under RICO. As previously discussed, a foreign sovereign or an agency thereof is not afforded immunity from suit under the Foreign Sovereign Immunities Act when the suit is based on its commercial activity conducted in the United States. 28 U.S.C. § 1605(a)(2). Neve...