Gould, Inc. v. Pechiney Ugine Kuhlmann

• Citation: 853 F.2d 445
• Decision Date: 27 September 1988
• Docket Number: Nos. 86-3649,86-8327,s. 86-3649
• Parties: GOULD, INC., Plaintiff-Appellee, (86-3649), Plaintiff-Respondent, (86-8327), v. PECHINEY UGINE KUHLMANN and Trefimetaux, Defendants-Appellants, (86-3649), Defendants-Petitioners, (86-8327).
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 445

853 F.2d 445

GOULD, INC., Plaintiff-Appellee, (86-3649) Plaintiff-Respondent, (86-8327), v. PECHINEY UGINE KUHLMANN and Trefimetaux Defendants-Appellants, (86-3649) Defendants-Petitioners, (86-8327).

Nos. 86-3649, 86-8327.

United States Court of Appeals Sixth Circuit.

Argued Nov. 13, 1987.

Decided Aug. 2, 1988.

Rehearing Denied Sept. 27, 1988.

Patricia A. Hemann, Hahn, Loeser, & Parks, Richard Zellner, Cleveland, Ohio, Brice M. Clagett (argued), Herbert Dym, James R. Atwood, Steven J. Rosenbaum, Carlos M. Vazquez, Covington & Burling, Washington, D.C., for defendants-petitioners in No. 86-8327.

Brice M. Clagett (argued), Herbert Dym, James R. Atwood, Steven J. Rosenbaum, Carlos M. Vazquez, Covington & Burling, Washington, D.C., Harry C. Nester, Mark E. Staib, Patricia A. Hemann, Hahn, Loeser & Parks, Cleveland, Ohio, for defendants-appellants in No. 86-3649.

Edward E. Sachs, Gould, Inc., Rolling Meadows, Ill., Phillip H. Mayer (argued), Lawrence S. Wick, Leydig, Voit & Mayer, Chicago, Ill., Maynard F. Thomson, Robert P. Ducatman, Jones, Day, Reavis & Pogue, Cleveland, Ohio, for Gould, Inc.

Before MERRITT and NORRIS, Circuit Judges, and CELEBREZZE, Senior Circuit Judge.

ALAN E. NORRIS, Circuit Judge.

Defendants-appellants, Pechiney Ugine Kuhlmann ("Pechiney") and Trefimetaux, appeal the denial of their motion to dismiss the complaint of plaintiff-appellee, Gould, Inc. The motion was predicated upon lack of subject matter and personal jurisdiction under the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. Secs. 1330, 1332(a)(2), (4), 1391(f), 1441(d), 1602-1611 ("FSIA"), improper venue, forum non conveniens, and failure to state a claim upon which relief can be granted.

Gould, a Delaware corporation, claimed that defendants had engaged in unfair competition; interfered with Gould's contractual relationship with its former employee, Dale C. Danver; unlawfully appropriated Gould's proprietary information and trade secrets; became unjustly enriched due to the misappropriation; and violated the Racketeer Influence and Corrupt Organizations Act. Defendants, French corporations with a majority of shares owned directly or indirectly by the Republic of France at the time these events took place, moved to dismiss Gould's complaint before filing an answer. The district court denied the motion, stating that Gould had established subject matter and personal jurisdiction, that venue was proper, and that the district court was not a forum non conveniens, and reserved ruling on the Fed.R.Civ.P. 12(b)(6) aspect of the motion.

For the reasons stated below, we reverse and remand to the district court that portion of its order which denied defendants' motion to dismiss for lack of subject matter jurisdiction and personal jurisdiction, and for improper venue, and affirm the district court's denial of defendants' motion to dismiss on the basis of forum non conveniens.

I.

Gould manufactures electrolytic copper foil, which is used in producing printed computer circuit boards, at its foil division in Eastlake, Ohio. Dale C. Danver was an engineer in Gould's foil division from June 1981 until August 1983, when he left to form Danver Technologies Group, Inc. Danver then entered into negotiations regarding copper foil manufacturing with Trefimetaux, a wholly owned subsidiary of Pechiney at the time these events took place, and with Pechiney itself or its agents. Although Trefimetaux manufactured copper and copper alloy products, neither Pechiney nor Trefimetaux had ever produced copper foil. Sometime in late 1984, Trefimetaux informed Danver that it was not interested in entering into a joint venture with Danver because it believed that his technique for manufacturing copper foil might actually belong to Gould.

According to Gould's complaint, prior to Danver's negotiations with defendants, he entered into agreements with two Japanese corporations, Mitsui Mining and Smelting Co., Ltd., and its subsidiary, Miyakoshi Machine Tools Co., Ltd., to sell information describing a manufacturing process for copper foil. In 1985, after terminating its relationship with Danver, Pechiney, presumably through its subsidiary Trefimetaux, entered into a joint venture with Mitsui for the construction of a copper foil plant in northern France, which allegedly would use the information from Danver.

In support of their motion to dismiss Gould's complaint, Pechiney and Trefimetaux filed an affidavit of Marcel H. Paul, assistant to the president of Trefimetaux. In it, Paul said that Danver initiated contact with Trefimetaux regarding a proposed joint venture to establish a copper foil factory in France; that most of the discussions between Danver and representatives of Trefimetaux took place in France; that Trefimetaux indicated to Danver from the outset that Trefimetaux did not want to deal with Danver if his information infringed on the rights of any third party; that Danver repeatedly told Trefimetaux that the information he wanted to sell did not belong to any third parties, and denied that his employment contract with Gould prohibited his activities; that Trefimetaux received information from Gould that Danver's employment contract prohibited his use of any information relating to Gould's technique for processing copper foil; that representatives from Trefimetaux, Gould and Danver Technologies met in late 1984 to discuss Gould's employment contract with Danver; and that Trefimetaux terminated its relations with Danver during 1985.

Gould did not file a response to defendants' motion to dismiss. Instead, it sought discovery on several issues, including jurisdictional issues. Defendants objected to some of Gould's discovery demands. Gould filed a motion to compel discovery, and defendants moved for a protective order staying discovery until the court resolved defendants' claims of forum non conveniens and failure to state a claim upon which relief could be granted, which would not require further factual development. Gould filed a response to defendants' motion for a protective order, and submitted an affidavit from Lawrence S. Wick, one of Gould's attorneys. This lengthy affidavit detailed the dates, locations, and purposes of the numerous discussions between Trefimetaux and Danver, several of which took place in Ohio, and indicated that defendants had several other commercial contacts in the United States.

Defendants filed a reply to Gould's response and moved for leave to file a reply brief instanter. In their reply, defendants objected to several statements contained in the Wick affidavit, and to its admissibility. On the same day, the district court issued its opinion and order denying defendants' motion to dismiss. The district court apparently based its opinion upon both the Paul and Wick affidavits. The court certified its order for an interlocutory appeal under 28 U.S.C. Sec. 1292(b). Defendants appealed the denial of their motion to dismiss under both 28 U.S.C. Sec. 1291, as an appeal from a final order, and Sec. 1292(b).

The parties agree that, during the pendency of this appeal, Pechiney sold a majority of the shares of Trefimetaux to a newly formed, privately owned Italian company, Europa Metalli-LMI. The Republic of France continues to own 100 percent of Pechiney, and Pechiney now owns 20 percent of Europa Metalli-LMI. Societa Metallurgia Italiana S.p.A., an Italian corporation, owns 40 percent of Europa Metalli-LMI, and the remaining 40 percent of Europa is owned through a public offering. Pechiney has indicated that Trefimetaux's interest in the joint venture with Mitsui was acquired in its entirety by Pechiney.

II.

Jurisdictional immunity of a foreign state is restricted to suits involving its public acts, and does not extend to commercial or private acts. McKeel v. Islamic Republic of Iran, 722 F.2d 582 (9th Cir.1983), cert. denied, 469 U.S. 880, 105 S.Ct. 243, 83 L.Ed.2d 182 (1984); see 28 U.S.C. Sec. 1602. "The purpose of the FSIA is to facilitate suits in the United States courts arising from the commercial conduct of foreign sovereigns." Transamerican S.S. v. Somali Democratic Republic, 767 F.2d 998, 1001 (D.C.Cir.1985). Under the statutory scheme of the FSIA, a foreign state is immune from suit unless the case involves certain commercial activity or other exceptions set out in the FSIA itself or by international agreements. 28 U.S.C. Sec. 1604. At issue below was whether defendants were foreign states as that status is defined in 28 U.S.C. Sec. 1603, ¹ and if so, whether they engaged in conduct which would operate as an exception to immunity under 28 U.S.C. Sec. 1605(a)(2). ² On appeal, Gould also contends that, as the result of the sale of Trefimetaux's shares, defendant can no longer qualify as a foreign state and so clearly would not be immune as regards its conduct after the change of ownership interests.

The subject matter jurisdiction granted to the district courts by the FSIA in 28 U.S.C. Sec. 1330(a) ³ is neither diversity nor alienage jurisdiction, but federal question jurisdiction. It is a statutory grant of jurisdiction enacted by Congress pursuant to the "arising under" clause of Article III, Section 2, of the Constitution. Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983). When subject matter jurisdiction is predicated upon the diversity of the parties, citizenship of the parties is determined at the time the action is commenced. E.g., Anderson v. Watts, 138 U.S. 694, 702-03, 11 S.Ct. 449, 451, 34 L.Ed. 1078 (1891). It would appear that the determination of whether a party is subject to the court's jurisdiction under 28 U.S.C. Sec. 1330 should be based upon a party's status at the time the act complained of occurred. See Morgan Guar. Trust Co. of N.Y. v. Republic of Palau, 639 F.Supp. 706, 712 (S.D.N.Y.1986) (rejecting date of complaint as time to determine status of defendant for purpose of defining "foreign state"). Cf. The Western Maid, ...