Global Tech., Inc. v. Yubei (Xinxiang) Power Steering Sys. Co.

• Decision Date: 07 December 2015
• Docket Number: No. 14–2319.,14–2319.
• Parties: GLOBAL TECHNOLOGY, INC., a Michigan Corporation, Plaintiff–Appellee, v. YUBEI (XINXIANG) POWER STEERING SYSTEM CO., LTD., et al., Defendants, Aviation Industry Corporation of China, a People's Republic of China Corporation, Defendant–Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

807 F.3d 806

GLOBAL TECHNOLOGY, INC., a Michigan Corporation, Plaintiff–Appellee,

v.YUBEI (XINXIANG) POWER STEERING SYSTEM CO., LTD., et al., Defendants,Aviation Industry Corporation of China, a People's Republic of China Corporation, Defendant–Appellant.

No. 14–2319.

United States Court of Appeals, Sixth Circuit.

Argued: July 29, 2015.

Decided and Filed: Dec. 7, 2015.

ARGUED: Paul D. Hudson, Miller, Canfield, Paddock and Stone, P.L.C., Troy, Michigan, for Appellant. Victoria A. Valentine, Valentine & Associates, P.C., West Bloomfield, Michigan, for Appellee. ON BRIEF: Paul D. Hudson, Matthew P. Allen, Conor T. Fitzpatrick, Miller, Canfield, Paddock and Stone, P.L.C., Troy, Michigan, for Appellant. Victoria A. Valentine, Stephen K. Valentine, Valentine & Associates, P.C., West Bloomfield, Michigan, for Appellee.

Before: BATCHELDER, GIBBONS, and WHITE, Circuit Judges.

OPINION

ALICE M. BATCHELDER, Circuit Judge.

Aviation Industry Corporation of China ("AVIC") brings this interlocutory appeal of the district court's denial of its motion to dismiss asserting immunity under the Foreign Sovereign Immunities Act (FSIA). Because we conclude that AVIC's challenge to federal jurisdiction under Federal Rule of Civil Procedure 12(b)(1) is a factual challenge rather than a facial one, we hold that the district court erred by treating it as a facial challenge and thus taking the plaintiff's factual allegations as true. And although the parties agree on a number of important facts, there remain material factual disputes that the district court must decide in order to determine whether it has jurisdiction. We therefore VACATE the district court's judgment and REMAND for further proceedings consistent with this opinion.

I.

A district court's denial of foreign sovereign immunity is immediately appealable under the collateral-order doctrine. O'Bryan v. Holy See, 556 F.3d 361, 372 (6th Cir.2009). A motion to dismiss for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) involves either a facial attack or a factual attack. Am. Telecom Co., LLC v. Republic of Lebanon, 501 F.3d 534, 537 (6th Cir.2007). "When reviewing a facial attack, a district court takes the allegations in the complaint as true." Gentek Bldg. Prods. v. Sherwin–Williams Co., 491 F.3d 320, 330 (6th Cir.2007). This approach is identical to the approach used by the district court when reviewing a motion invoking Federal Rule of Civil Procedure 12(b)(6). McCormick v. Miami Univ., 693 F.3d 654, 658 (6th Cir.2012).

When a Rule 12(b)(1) motion attacks a complaint's factual predicate, the court does not presume that the plaintiff's factual allegations are true. Russell v. Lundergan–Grimes, 784 F.3d 1037, 1045 (6th Cir.2015). As always, the party invoking federal jurisdiction has the burden to prove that jurisdiction. See id. When examining a factual attack under Rule 12(b)(1), "the court can actually weigh evidence to confirm the existence of the factual predicates for subject-matter jurisdiction." Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 440 (6th Cir.2012). For Rule 12(b)(1) factual attacks, we accept the district court's findings of fact unless the findings are clearly erroneous. See Russell, 784 F.3d at 1045. We review de novo the district court's legal conclusions regarding those facts. Id.

II.

AVIC claims immunity under the Foreign Sovereign Immunities Act of 1976 (FSIA), Pub.L. No. 94–583, 90 Stat. 2891 (codified as amended at 28 U.S.C. § 1602 et seq. ). "Foreign states are generally immune from suit in United States courts." Triple A Int'l, Inc. v. Democratic Republic of Congo, 721 F.3d 415, 416 (6th Cir.2013). "[F]oreign sovereign immunity is a matter of grace and comity rather than a constitutional requirement[.]" Republic of Austria v. Altmann, 541 U.S. 677, 689, 124 S.Ct. 2240, 159 L.Ed.2d 1 (2004). The FSIA, "if it applies, is the sole basis for obtaining jurisdiction over a foreign state in federal court." Samantar v. Yousuf, 560 U.S. 305, 314, 130 S.Ct. 2278, 176 L.Ed.2d 1047 (2010) (internal quotation marks omitted). "Under the FSIA, a foreign state is presumptively immune from suit unless a specific exception applies." Permanent Mission of India to the United Nations v. City of New York, 551 U.S. 193, 197, 127 S.Ct. 2352, 168 L.Ed.2d 85 (2007). The FSIA thus codifies a "general grant of immunity," then "carves out certain exceptions." Altmann, 541 U.S. at 691, 124 S.Ct. 2240.

The federal statutory provision that potentially confers jurisdiction on the district court here provides:

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 [Title 28] 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 [Title 28] or under any applicable international agreement.

28 U.S.C. § 1330(a). Section 1603(a) provides that "[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)." 28 U.S.C. § 1603(a). Subsection (b) defines "an agency or instrumentality of a foreign state" as

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 (e) of this title, nor created under the laws of any third country.

28 U.S.C. § 1603(b). Section 1604 then provides that "a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607" of Title 28 or as mandated by any international agreement to which the United States is a party.

The FSIA "establishes a comprehensive framework for determining whether a court in this country ... may exercise jurisdiction over a foreign state." Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 610, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992). A state-owned corporation can invoke certain protections under the FSIA if it is an instrumentality of a foreign nation. Dole Food Co. v. Patrickson, 538 U.S. 468, 470, 473, 123 S.Ct. 1655, 155 L.Ed.2d 643 (2003). We employ a burden-shifting approach in FSIA cases where the named defendant is not a sovereign state. See O'Bryan, 556 F.3d at 376.

Ordinarily, the defendant bears the burden of claiming its status as a foreign state, see id., but here, the parties agree that AVIC is a foreign state for purposes of the FSIA. AVIC is therefore presumed to be immune from suit, and the burden of production shifts to the plaintiff to rebut this presumption by showing that an enumerated exception applies. If the plaintiff succeeds, the burden shifts to AVIC to demonstrate that its actions do not satisfy the claimed exception. Id. "The party claiming immunity under FSIA retains the burden of persuasion throughout this process." Id.; accord Peterson v. Islamic Republic Of Iran, 627 F.3d 1117, 1125 (9th Cir.2010) ; Orient Mineral Co. v. Bank of China, 506 F.3d 980, 991–92 (10th Cir.2007) ; Cargill Int'l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1016 (2d Cir.1993) ; Arriba Ltd. v. Petroleos Mexicanos, 962 F.2d 528, 533 (5th Cir.1992). In short, whether the district court here has jurisdiction "depends on the existence of one of the specified exceptions to foreign sovereign immunity." Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 493, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983).

The "most significant of the FSIA's exceptions," Weltover, 504 U.S. at 611, 112 S.Ct. 2160, and the exception relevant here, provides that a foreign state is not immune when a suit:

is based [1] upon a commercial activity carried on in the United States by the foreign state; or [2] upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or [3] 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.

28 U.S.C. § 1605(a)(2).

"A commercial activity carried on in the United States by a foreign state" is defined as "commercial activity carried on by such state and having substantial contact with the United States." 28 U.S.C. § 1603(e). And "[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." Id. § 1603(d).

Under the FSIA's commercial activity exception, a foreign nation "is immune from the jurisdiction of foreign courts as to its sovereign or public acts (jure imperii ), but not as to those that are private or commercial in character (jure gestionis )." Saudi Arabia v. Nelson, 507 U.S. 349, 359–60, 113 S.Ct. 1471, 123 L.Ed.2d 47 (1993). Such commercial activity is that involving "only those powers that can also be exercised by private citizens" in contrast to "powers peculiar to sovereigns." Weltover, 504 U.S. at 614, 112 S.Ct. 2160 (internal quotation marks omitted). The rule is that "when a foreign government acts, not as regulator of a market, but in the manner of a private player within it, the foreign sovereign's actions are ‘commercial’ within the meaning of the FSIA." Id. These actions are assessed in terms of the types of actions by which private actors participate in the marketplace. The motive or purpose of the state-owned actor—that is, whether it was acting pursuant to a private corporate motive (e.g., profit-seeking) as opposed to a governmental motive (e.g., regulating the economy)—is not...