Big Sky Network v. Sichuan Provincial

• Decision Date: 15 July 2008
• Docket Number: No. 07-4014.,07-4014.
• Citation: 533 F.3d 1183
• Parties: BIG SKY NETWORK CANADA, LTD., a British Virgin Islands corporation, Plaintiff-Appellant, v. SICHUAN PROVINCIAL GOVERNMENT, a subdivision of the People's Republic of China, and Qingyang District Government, a subdivision of the People's Republic of China, a foreign state, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

533 F.3d 1183

BIG SKY NETWORK CANADA, LTD., a British Virgin Islands corporation, Plaintiff-Appellant, v. SICHUAN PROVINCIAL GOVERNMENT, a subdivision of the People's Republic of China, and Qingyang District Government, a subdivision of the People's Republic of China, a foreign state, Defendants-Appellees.

No. 07-4014.

United States Court of Appeals, Tenth Circuit.

July 15, 2008.

Matthew N. Evans of Ray Quinney & Nebeker P.C. (Maria E. Heckel, with him on the brief), Salt Lake City, UT, for Plaintiff-Appellant.

Christopher T. Handman of Hogan & Hartson LLP, Washington, D.C. (Craig A. Hoover and Jake M. Shields of Hogan & Hartson LLP, Washington, D.C., and Robert S. Clark and Kara M. Houck of Parr Waddoups Brown Gee & Loveless, Salt Lake City, UT, with him on the brief), for Defendants-Appellees.

Before MURPHY, HARTZ, and GORSUCH, Circuit Judges.

GORSUCH, Circuit Judge.

Seeking to capitalize on the growth of broadband cable access in China, Big Sky Network Canada ("Big Sky") formed a joint venture with a Chinese company to provide cable services to Chengdu City, the capital of Sichuan Province in central China. In response to a subsequent national directive banning foreign ownership of cable companies, two sub-national governments — the defendants in this action— allegedly required Big Sky's Chinese partner to terminate the joint venture. Rather than negotiate a dissolution of the joint venture, however, Big Sky's Chinese partner purportedly pocketed Big Sky's investment. Big Sky brought suit in Utah state court, not against its business partner or the Chinese government, but against the defendant sub-national governments. The governments sought to remove the case to federal court, but filed their removal request three weeks late. Finding sufficient cause for the delay, the district court accepted the governments' tardy removal. The governments then filed a motion to dismiss for lack of subject matter jurisdiction, which the district court also granted. Big Sky now appeals both rulings. Because the governments have offered reasons beyond simply their status as foreign sovereigns to support the extension of the removal period, and because Big Sky cannot identify any statutory exception to the sovereign immunity Congress has granted foreign sovereigns in our courts, we affirm.

I

Assuming for purposes of this appeal the truth of the allegations in Big Sky's complaint, they suggest that, in 2000, Big Sky, a British Virgin Islands corporation with offices in Canada, formed a joint venture with Chengdu Huaya Information Industry Co., Ltd. ("Huaya"). The purpose of the joint venture was to supply cable broadband services to Chengdu City, the capital of Sichuan Province in central China. At the time, Huaya represented that it owned the "Huaya HFC Network," a fiber-optic network, along with associated hardware and software platforms, and had the right to use the network for Internet and data transmissions within Chengdu City. Huaya contributed its rights to the Huaya HFC Network to the joint venture, while Big Sky made a capital contribution totaling approximately $1,875,000. The initial term established for the joint venture was 20 years, with profits during that period expected to exceed $20,000,000.

On May 11, 2001, the Chinese State Administration of Radio Film and Television issued a "notice" prohibiting the operation of cable television networks "by foreign-funded, Sino-foreign joint and Chinese-Foreign Contractual Joint Ventures or by private capitals." Aplt.App. at 14. The notice required that the

Radio Film and Television Administration Department of the provinces, autonomous regions and special municipalities must clear up the financing on its radio and TV cable network against regulations, differentiate the various situations, come up with applicable solutions and submit to the State Administration of Radio Film and Television before June 10.

Id. On June 4, less than a month later, the Sichuan Province Administration of Radio Film and Television issued a notice that mirrored in substance the national notice.

Despite the national and regional edicts to the contrary, Huaya did not immediately take any steps to "clear up the financing" of the joint venture. Apparently unknown to Big Sky, however, it turned out that Huaya was not the sole owner of the Huaya HFC Network; Sichuan Huashi Cultural Development Co., Ltd. ("Sichuan Huashi"), a corporation controlled by the defendant Qingyang District, a local district of Chengdu City, owned some portion of the Huaya HFC Network and decided to withdraw control of its portion from Huaya's control, citing the provincial notice of June 4 as compelling its action. On December 12, 2002, Huaya and Sichuan Huashi signed a division agreement memorializing Huaya's loss of control. Remarkably, Huaya tried to reassure Big Sky that all was well. In a letter to Big Sky dated December 16, Huaya indicated that their joint venture retained the right to use the network. Huaya also assured Big Sky that if early termination of the joint venture did become necessary, the parties would negotiate a settlement. Despite these assurances, in July 2003 Huaya notified Big Sky that it was terminating the joint venture and no effort at a financial settlement would be forthcoming.

Big Sky responded by filing suit in state court in Utah in 2005. Curiously, it did not sue Huaya, its erstwhile business partner, Sichuan Huashi, or the Chinese national government responsible for the edict banning its foreign investment. Instead, it targeted its state lawsuit against the two sub-national defendant governments before us, asserting state-law claims for intentional interference with contractual relations and unjust enrichment, and the parties agree that Big Sky successfully effected service on the defendant governments on February 6, 2006.

On March 30, 2006, the defendant governments filed a notice of removal and a motion for enlargement of the removal period in federal district court in Utah. Normally, an eligible defendant has thirty days in which to effect removal of its case to federal court. 28 U.S.C. § 1446(b). But where the defendant is a foreign state as defined by the Foreign Sovereign Immunities Act ("FSIA"), Congress has expressly indicated that the removal period may be enlarged for cause. 28 U.S.C. § 1441(d). In this case, the district court found that the governments had demonstrated sufficient cause to warrant enlarging the removal period by what amounted to roughly three weeks. Having successfully found a federal venue in which to mount their defense, the governments next filed a motion to dismiss for, among other things, lack of subject matter jurisdiction under the FSIA, which the district court also granted. Big Sky now appeals both the district court's removal and dismissal decisions, and we address each in turn.

II

A

Because we have not previously reviewed a district court decision respecting the enlargement of the FSIA removal period, we must pause briefly to consider what our standard of appellate review should be. Unfortunately, the FSIA does not expressly provide a standard of review. But this is hardly an uncommon occurrence, see Pierce v. Underwood, 487 U.S. 552, 558, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988), and the plain language of the statute offers useful clues suggestive of Congress's intent.

In particular, the FSIA's removal provision provides that "[w]here removal is based upon this subsection, the time limitations of section 1446(b) of this chapter may be enlarged at any time for cause shown." 28 U.S.C. § 1441(d). Notably, the language of the statute is permissive, rather than mandatory: a district court "may" enlarge the removal period if cause is shown, but is not required to do so. See United States v. Rodgers, 461 U.S. 677, 706, 103 S.Ct. 2132, 76 L.Ed.2d 236 (1983) ("The word `may,' when used in a statute, usually implies some degree of discretion."). Nothing else in the statute refutes this common sense reading; to the contrary, the fact that removals may be taken "at any time" for "cause" shown underscores that Congress intended the district court to exercise a degree of discretion in assessing requests to enlarge the removal period.

When Congress commits a decision to the discretion of the district court, our review is properly limited to assessing only whether the district court's decision amounts to an abuse of that discretion. The formulation may appear opaque, but it is one we have long understood to mean that we will reverse a district court's determination only if the court exceeded the bounds of the rationally available choices given the facts and the applicable law in the case at hand. United States v. McComb, 519 F.3d 1049, 1053-54 (10th Cir.2007). That is to say, we recognize that in many cases there will not necessarily be a single right answer, but a range of possible outcomes the facts and law at issue can fairly support; rather than pick and choose among them ourselves, we will defer to the district court's judgment so long as it falls within the realm of these rationally available choices. Id.; see also Romero v. Peterson, 930 F.2d 1502, 1505 (10th Cir.1991) (reviewing extension of time to file a notice of appeal for abuse of discretion); Teigen v. Renfrow, 511 F.3d 1072, 1077 n. 2 (10th Cir.2007) (reviewing extension of time to file brief for abuse of discretion).

From both this statute in particular and analogous areas of law, we discern some principles that help delimit the range of permissible choices available to a district court under Section 1441(d), and thus assist in defining our appellate role. Under the terms of the statute, the defendant bears the burden of establishing a "cause" for its extension. 28 U.S.C. § 1441(d). The defendant, in other words, must come forward with an affirmative justification for its delay. Further, the application of Section 1441(d) to all foreign states compels the conclusion that mere...