Butler v. Sukhoi Co.

• Decision Date: 19 August 2009
• Docket Number: No. 08-14523.,08-14523.
• Citation: 579 F.3d 1307
• Parties: James L. BUTLER, Jr., Bari L. Butler, Plaintiffs-Appellees, v. SUKHOI COMPANY, United Aircraft Manufacturing Corp., Irkut Corporation, Sukhoi Civil Aircraft, Russian Federation, Defendants-Appellants, Sukhoi Design Bureau, Defendant.
• Court: U.S. Court of Appeals — Eleventh Circuit

579 F.3d 1307

James L. BUTLER, Jr., Bari L. Butler, Plaintiffs-Appellees, v. SUKHOI COMPANY, United Aircraft Manufacturing Corp., Irkut Corporation, Sukhoi Civil Aircraft, Russian Federation, Defendants-Appellants Sukhoi Design Bureau, Defendant.

No. 08-14523.

United States Court of Appeals, Eleventh Circuit.

August 19, 2009.

Michael Peter Socarras, McDermott Will & Emery LLP, Washington, DC, Raquel A. Rodriguez, McDermott Will & Emery LLP, Miami, FL, for Defendants-Appellants.

Kelley B. Stewart, Krupnick, Campbell, Malone, P.A., Edward Royce Curtis, Tripp Scott, P.A., Ft. Lauderdale, FL, for Plaintiffs-Appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before DUBINA, Chief Judge, and BIRCH and WILSON, Circuit Judges.

BIRCH, Circuit Judge:

Sukhoi Company ("Sukhoi"), United Aircraft Manufacturing Corporation ("UAC"), Irkut Corporation ("Irkut"), Sukhoi Civil Aircraft ("SCA"), and The Russian Federation ("Russia") (collectively, "appellants") appeal the order of the district court denying their motion to dismiss the complaint filed by appellees James Butler and his wife, Bari Butler (hereinafter "the Butlers"), in which the Butlers sought to enforce a default judgment entered in their favor in a previous cause of action against appellants' alleged predecessor-in-interest, Sukhoi Design Bureau ("SDB"). Because the district court lacked subject matter jurisdiction over the Butlers' claims, we REVERSE and REMAND to the district court with instructions to dismiss the case.

I. BACKGROUND

The Butlers filed suit (hereinafter "Butler I") in 2003 in the United States District Court for the Southern District of Florida against SDB and Advanced Sukhoi Technologies¹ seeking damages for injuries James Butler sustained when a Sukhoi SU-29 aircraft he was piloting crashed in Broward County, Florida as a result of defects in the aircraft. The district court denied SDB's motion to dismiss for lack of personal jurisdiction and SDB answered the complaint. SDB admitted that it was a subject of the Russian Federation and asserted various affirmative defenses, including lack of personal jurisdiction and failure to state a claim, but did not invoke immunity under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1602, et seq. After SDB failed to respond to discovery or to comply with the district court's order compelling discovery, the Butlers filed a motion for default judgment, which the district court granted. Following a jury trial on damages, the district court entered an amended final judgment, in accordance with the jury's verdict, ordering SDB to pay damages to the Butlers in the amount of $3,592,500 plus post-judgment interest.

On 2 August 2007, the Butlers filed the instant action (hereinafter "Butler II") against SDB, naming as additional defendants Sukhoi, UAC, Irkut, SCA, and Russia.² In their complaint, the Butlers alleged that appellants were a foreign state and/or instrumentalities or agencies of a foreign state not entitled to immunity under the FSIA and sought a declaration that appellants — none of whom were parties in Butler I — were jointly and severally liable for the Butler I judgment as successors in interest to and/or alter-egos of SDB.³ Appellants filed a motion to dismiss, asserting immunity from liability and execution under the FSIA. They argued that the complaint's allegations were insufficient as a matter of law to establish the court's subject matter jurisdiction under the FSIA.⁴

The Butlers responded that SDB waived immunity from suit by failing to invoke the protections of the FSIA in Butler I. They argued additionally that they were merely seeking to execute a judgment entered against SDB and that Rule 69 of the Federal Rules of Civil Procedure allows for enforcement of such judgments in federal courts. They contended that they were entitled to limited jurisdictional discovery as to the alter-ego basis for subject matter jurisdiction and to discovery in aid of execution as to the location of the judgment debtors' assets. The Butlers did not, however, identify any specific undiscovered facts that were necessary to make an immunity determination.

The district court denied appellants' motion on 29 July 2008, finding that it would be "premature" to dismiss the complaint because the Butlers were entitled to discovery on the "jurisdictional issues" raised by appellants. R1-41. This appeal followed.

II. DISCUSSION

We have jurisdiction under 28 U.S.C. § 1291 only over appeals from "final decisions" of the district courts. W.R. Huff Asset Mgmt. Co. v. Kohlberg, Kravis, Roberts & Co., 566 F.3d 979, 984 (11th Cir.2009) (quotation marks and citation omitted). "[A] district court order is considered final and appealable only if it ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Id. Because the district court's order denying appellants' motion to dismiss did not end the litigation on the merits, we must, as an initial matter, determine whether we have jurisdiction over this appeal.

It is well-settled that a court of appeals has jurisdiction over interlocutory orders denying claims of immunity under the FSIA. See O'Bryan v. Holy See, 556 F.3d 361, 372 (6th Cir.2009) (noting that because sovereign immunity is immunity from trial, not merely a defense to liability, the denial of a claim of sovereign immunity is immediately appealable as a final decision under 28 U.S.C. § 1291); S & Davis Int'l, Inc. v. Republic of Yemen, 218 F.3d 1292, 1295, 1297 (11th Cir.2000). Inasmuch as the order on appeal required appellants to answer the complaint and called for discovery, it denied them immunity from suit under the FSIA. See McMahon v. Presidential Airways, Inc., 502 F.3d 1331, 1339 (11th Cir.2007) (noting that "immunity from suit entails a right to be free from the burdens of litigation"); Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841, 849 (5th Cir.2000) ("FSIA immunity is immunity not only from liability, but also from the costs, in time and expense, and other disruptions attendant to litigation."). Accordingly, we have jurisdiction over appellants' assertion of immunity under the FSIA, notwithstanding the lack of a final judgment in this case. We now turn to the merits.

Appellants argue that the district court erred in denying their motion to dismiss and abused its discretion in ordering jurisdictional discovery because the Butlers' complaint failed to allege a basis for subject matter jurisdiction. The Butlers, on the other hand, contend that the district court correctly denied the motion because they were entitled to limited jurisdictional discovery in order to further define appellants' alter-ego relationship with SDB. We conclude that, even accepting as true the Butlers' allegations that appellants are alter-egos of one another and of SDB, they are insufficient as a matter of law to demonstrate the existence of subject matter jurisdiction.

The FSIA provides "the sole basis for obtaining jurisdiction over a foreign state in [United States] courts." Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434, 109 S.Ct. 683, 688, 102 L.Ed.2d 818 (1989); see also Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534, 1543 (11th Cir.1993) (noting that FSIA is "[t]he only possible source of federal jurisdiction in suits against corporations owned by foreign states"). Under the FSIA, foreign states and their agencies and/or instrumentalities⁵ are immune from suit in the United States unless an FSIA statutory exception applies.⁶ See 28 U.S.C. §§ 1603, 1604, 1605; Aquamar, S.A. v. Del Monte Fresh Produce N.A., Inc., 179 F.3d 1279, 1290 (11th Cir.1999). If none of the exceptions applies, then the district court lacks subject matter jurisdiction over the plaintiff's claims. Mwani v. bin Laden, 417 F.3d 1, 15 (D.C.Cir.2005) (citing 28 U.S.C. § 1604). Conversely, "[i]f an exception does apply, the district court has jurisdiction." Id. (citing 28 U.S.C. § 1330(a)⁷). Thus, in order to establish subject matter jurisdiction under the FSIA, the plaintiff must overcome the presumption that the foreign state is immune from suit by producing evidence that "the conduct which forms the basis of [the] complaint falls within one of the statutorily defined exceptions." S & Davis Int'l, 218 F.3d at 1300; see also In re Terrorist Attacks on September 11, 2001, 538 F.3d 71, 80 (2d Cir.2008) (plaintiff has burden of producing evidence showing that, under exceptions to the FSIA, immunity should not be granted). Whether the plaintiff has satisfied his burden of production in this regard is determined by looking at "the allegations in the complaint [and] the undisputed facts, if any, placed before the court by the parties." In re Terrorist Attacks, 538 F.3d at 80 (quotation marks, alterations, and citation omitted). Once the plaintiff demonstrates that one of the statutory exceptions to FSIA immunity applies, the burden then shifts to the defendant to prove, by a preponderance of the evidence, that the plaintiff's claims do not fall within that exception. See S & Davis Int'l, 218 F.3d at 1300; Aquamar, 179 F.3d at 1290; Arango v. Guzman Travel Advisors Corp., 621 F.2d 1371, 1378 (5th Cir. Unit B 1980).

Because the Butlers sought to invoke the jurisdiction of the United States courts to enter a new judgment in a separate cause of action against appellants, they bore the burden of presenting a prima facie case that jurisdiction existed.⁸ See S & Davis Int'l, 218 F.3d at 1300. Where, as here, the party asserting immunity under the FSIA does not contest the alleged jurisdictional facts, but rather, challenges their legal adequacy, we review de novo the complaint's jurisdictional allegations to determine whether they were sufficient to eliminate the appellants' presumptive immunity. See Mwani, 417 F.3d at 15-16 (where foreign sovereign did not expressly concede plaintiffs' factual allegations but argued that the...