Gilson v. Republic of Ireland

• Decision Date: 29 June 1981
• Docket Number: Civ. A. No. 79-2647.
• Citation: 517 F. Supp. 477
• Parties: James K. GILSON, Plaintiff, v. The REPUBLIC OF IRELAND, et al., Defendants.
• Court: U.S. District Court — District of Columbia

517 F. Supp. 477

James K. GILSON, Plaintiff, v. The REPUBLIC OF IRELAND, et al., Defendants.

Civ. A. No. 79-2647.

United States District Court, District of Columbia.

June 29, 1981.

Sheldon Z. Kaplan, Joseph H. Sharlitt, Washington, D. C., for plaintiff.

J. P. Janetatos, Baker & McKenzie, Edward A. McDermott, William A. Bradford, Jr., Washington, D. C., for defendants.

MEMORANDUM OPINION

NORMA HOLLOWAY JOHNSON, District Judge.

This matter is before the Court upon the motion of defendants Gaeltarra Eireann, Leictron Teoranta, and Industrial Development Authority to dismiss the complaint, the parties' cross-motions for summary judgment and the defendant Republic of Ireland's second motion for summary judgment. In this action brought pursuant to the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. § 1602, et seq., all four defendants have invoked the defense of sovereign immunity. For the reasons more fully set forth below, the Court finds it lacks subject matter jurisdiction over this action as to defendants Leictron Teoranta, Industrial Development Authority, and the Republic of Ireland. In addition, the Court finds it lacks personal jurisdiction over defendant Gaeltarra Eireann. Accordingly, the complaint against all defendants to this action must be dismissed with prejudice.

BACKGROUND OF THE LITIGATION

The amended complaint¹ in this action was filed in January 1980, and names as defendants, the Republic of Ireland (Ireland), Gaeltarra Eireann (GE) and Leictron Teoranta (LT), both as instrumentalities of the Republic of Ireland, and Industrial Development Authority of Ireland (IDA), as a political subdivision and instrumentality of the Republic of Ireland. Jurisdiction is averred to be based on 28 U.S.C. § 1330 and 28 U.S.C. § 1602, et seq., the Foreign Sovereign Immunities Act of 1976. The plaintiff, a mechanical engineer, alleges that defendants GE and IDA induced him to enter into a commercial venture for the development of quartz crystals in Ireland, to move himself, his family, equipment, technology to Ireland, and to reveal to defendants certain proprietary information. The complaint further contends that subsequent to the plaintiff's move to Ireland, defendant GE breached its contract with plaintiff, turned over to defendant LT his patent rights and proprietary information, and along with LT, converted his equipment to their own use. Plaintiff also alleges the interference by defendants GE and LT with his ongoing contractual relations with another Irish corporation. The complaint charges that defendant Republic of Ireland is liable to plaintiff for the acts of the agents of the other defendants because such acts were allegedly committed within their scope of employment by Ireland. The plaintiff seeks damages in an amount totalling three million dollars, in addition to an accounting by defendants GE and LT for all revenues inured to them by virtue of their wrongful conduct.

Through motions to dismiss and for summary judgment the defendants, inter alia, raise the defenses of sovereign immunity and the statute of limitations. Because the Court finds it lacks jurisdiction over this matter under the Foreign Sovereign Immunities Act, the Court makes no findings as to the other issues raised by the parties.

DISCUSSION

The stated purpose of the Foreign Sovereign Immunities Act of 1976 is:

to provide when and how parties can maintain a lawsuit against a foreign state or its entities in the courts of the United States and to provide when a foreign state is entitled to sovereign immunity.

H.R. Rep. No. 94-1487, 94th Cong., 2d Sess. 6 (1976), reprinted in 1976 U.S.Code Cong. & Admin.News, p. 6604-6635 (House Report). The Act is designed to codify the restrictive principle of sovereign immunity that makes a foreign state amenable to suit for the consequences of its commercial or private acts, as opposed to its public or governmental acts. Also, a principal purpose of the Act is:

to transfer the determination of sovereign immunity from the executive branch to the judicial branch, thereby reducing the foreign policy implications of immunity determinations and assuring litigants that these often crucial decisions are made on purely legal grounds and under procedures that insure due process.

House Report, supra at 7, U.S.Code Cong. & Admin.News 1976, p. 6606. The FSIA added section 1330 to Title 28 of the United States Code to provide district courts with both subject matter and personal jurisdiction over nonjury civil actions that involve claims against foreign states that are not entitled to immunity under 28 U.S.C. §§ 1605-07, or under any international agreement. Title 28 U.S.C. § 1330 provides:

(a) The district courts shall have original jurisdiction without regard to amount in controversy of any nonjury civil action against a foreign state as defined in section 1603(a) of this title as to any claim for relief in personam with respect to which the foreign state is not entitled to immunity either under sections 1605-1607 of this title or under any applicable international agreement.

(b) Personal jurisdiction over a foreign state shall exist as to every claim for relief over which the district courts have jurisdiction under subsection (a) where service has been made under section 1608 of this title.

(c) For purposes of subsection (b), an appearance by a foreign state does not confer personal jurisdiction with respect to any claim for relief not arising out of any transaction or occurrence enumerated in sections 1605-1607 of this title.

The Act thereby creates an identity of substance and procedure; that is, it requires the court to examine the underlying claim in light of the immunity exceptions set forth in sections 1605-1607 whenever a jurisdictional defense of sovereign immunity is interposed. Upton v. Empire of Iran, 459 F.Supp. 264, 265 (D.D.C.1978); Yessenin-Volpin v. Navosti Press Agency, 443 F.Supp. 849, 851 (S.D.N.Y.1978).

The initial inquiry to be made is whether the entities sued in this case may be classified as foreign states within the meaning of 28 U.S.C. § 1603, entitling them to invoke the protection of the FSIA. Section 1603 of the FSIA states:

(a) A `foreign state' ... includes a political subdivision of a foreign state or an agency or instrumentality of a foreign state as defined in subsection (b).

(b) An `agency or instrumentality of a foreign state' means any entity —

(1) which is a separate legal person, corporate or otherwise, and

(2) which is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof, and

(3) which is neither a citizen of a State of the United States as defined in section 1332(c) and (d) of this title, nor created under the laws of any third country.

Pursuant to these provisions, all four defendants in this case are foreign states. There is no question as to this status of the Republic of Ireland. Defendants Gaeltarra Eireann² and Industrial Development Authority are corporate instrumentalities of Ireland, having been created by legislation. Leictron Teoranta is a corporate entity organized under the laws of Ireland. These three defendants are separate legal persons, owned in whole or in substantial part by Ireland, and are capable of suing or being sued in their corporate names. It is undisputed between the parties that all defendants are foreign states within the meaning of section 1603.

All defendants in this action have interposed the defense of sovereign immunity. The validity of this defense is dependent upon the Court's classification of the cause of action. If the claims alleged by Gilson as to the various defendants fall within the exceptions to immunity set out in the Act, the Court has subject matter jurisdiction over those claims.

Section 1605 of the FSIA provides in pertinent part:³

(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case —

(2) in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.

The FSIA states in section 1603:

(d) A `commercial activity' means 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.

(e) A `commercial activity carried on in the United States by a foreign state' means commercial activity carried on by such state and having substantial contact with the United States.

The legislative history of the FSIA provides further insight into the meaning of commercial activity stating that,

a `regular course of commercial conduct' includes the carrying on of a commercial enterprise such as a mineral extraction company, an airline or a state trading corporation. Certainly, if an activity is customarily carried on for profit, its commercial nature could be readily assumed. At the other end of the spectrum, a single contract, if of the same character as a contract which might be made by a private person, could constitute a `particular transaction or act'.

House Report, supra, at 16, U.S.Code Cong. & Admin.News 1976, p. 6614.

The plaintiff has asserted that this Court has subject matter jurisdiction, as well as personal jurisdiction, over all the defendants pursuant to section 1605(a)(2). Moreover, the plaintiff claims that all of the provisions of that section apply to this case. It is against these claims that the Court will examine the stated causes...