Schoenberg v. Exportadora de Sal, S.A. de C.V.

Decision Date19 April 1991
Docket NumberNos. 89-55973,90-55073,s. 89-55973
Citation930 F.2d 777
PartiesDoreen S. SCHOENBERG; Martin Schoenberg; Dan A. Schoenberg; Adriana Schoenberg, et al., Plaintiffs-Appellees, v. EXPORTADORA de SAL, S.A. de C.V., a foreign corporation, Defendant-Appellant. Doreen S. SCHOENBERG, Plaintiff-Appellee, v. EXPORTADORA de SAL, S.A de C.V., Defendant-Appellant.
CourtU.S. Court of Appeals — Ninth Circuit

John H. Stephens, Robbins & Keehn, San Diego, Cal., for defendant-appellant.

Robin E. Foor, Belmont, Cal., Gerald C. Sterns, Sterns & Walker, San Francisco, Cal., Peter Nakahara, Nakahara & Hinoki, San Jose, Cal., Eugene Schneider, Oakland, Cal., for plaintiffs-appellees.

Appeal from the United States District Court for the Southern District of California; J. Lawrence Irving, District Judge.

Before CANBY and RYMER, Circuit Judges, and LEVI *, District Judge.

RYMER, Circuit Judge:

This is a consolidated appeal arising out of an airplane crash in San Diego, California as the plane approached an airport in Tijuana, Mexico. Exportadora de Sal, S.A. de C.V. ("Exportadora") challenges two rulings of the district court: (1) that Exportadora does not have sovereign immunity, and (2) that California law applies to these actions. We affirm.

I

Exportadora is a corporation which produces salt in Mexico. The Mexican government owns 51% of the corporation and the Mitsubishi Corporation of Japan owns the remainder. Exportadora maintained an office in San Diego, which communicated with outside parties on behalf of the Exportadora plant in Guerrero Negro, Mexico because the plant had no telephone service. In September 1987, five relatives of the plaintiffs traveled from San Diego to Exportadora's Guerrero Negro facility. Exportadora drove them from San Diego to the Tijuana airport and then flew them from there to Guerrero Negro on its own airplane. For the return trip, Exportadora's plane was unavailable. It chartered another plane from Aviones de Sonora, S.A., a Mexican corporation, to fly the travelers back from Guerrero Negro to Tijuana.

On that flight back, fog at Tijuana necessitated an instrument landing approach to the Tijuana airport. Such an approach requires an airplane to fly into United States airspace in order to land from the west. The plane failed to maintain a sufficient altitude and crashed short of the Tijuana airport, in United States territory near the Mexican border, killing all aboard. The plaintiffs in this action are the survivors of five travelers killed in the crash. Each group of survivors brought a separate action, two of them in state court. The state court actions were removed to federal court. See 28 U.S.C. Sec. 1441(d) (removal of civil actions against foreign states). 1 Once all five actions were in federal court, the district court consolidated them.

The five travelers made the trip to Guerrero Negro for different purposes. Ramon Schoenberg and Manuel Hernandez, both California residents, worked for a pump manufacturer and traveled to Guerrero Negro to solicit business. Hideo Omachi, a resident of Japan, was a purchasing agent for a Japanese company. Katsuo Sugimoto and Yoshihito Kodani, also residents of Japan, were representatives of Tottori University in Japan and were visiting an agricultural experiment in Guerrero Negro adjacent to Exportadora's salt production facility.

Exportadora moved to dismiss the suit, claiming sovereign immunity under the Foreign Sovereign Immunities Act (FSIA). The district court's denial of that motion was entered on July 7, 1989, and Exportadora timely appealed. As the action continued, Exportadora moved for partial summary judgment, claiming that the laws of Mexico apply to this case. The district court denied that motion, but granted permission to appeal pursuant to 28 U.S.C. Sec. 1292(b), having determined that the choice of law issue "involves a controlling question of law as to which there is substantial ground for difference of opinion." This court granted permission to appeal the choice of law issue by order of January 18, 1990, and consolidated that appeal with Exportadora's appeal of the denial of its motion to dismiss.

II

We first consider whether Exportadora is immune from this lawsuit in United States courts, depriving the district court of jurisdiction. Because Exportadora made its motion to dismiss on the grounds that sovereign immunity applied, the denial of that motion is an appealable interlocutory order under the collateral order doctrine. Compania Mexicana de Aviacion, S.A. v. United States Dist. Court, 859 F.2d 1354, 1358 (9th Cir.1988) (per curiam).

The existence of subject matter jurisdiction is a question of law reviewed de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 3217, 110 L.Ed.2d 664 (1990). We accept the district court's factual findings on jurisdictional issues unless they are clearly erroneous. Stock West, Inc. v. Confederated Tribes of the Colville Reservation, 873 F.2d 1221, 1225 (9th Cir.1989).

Congress has declared that foreign states "shall be immune from the jurisdiction of the courts of the United States and of the States" unless an exception applies. 28 U.S.C. Sec. 1604. The relevant exceptions to which plaintiffs point are the "commercial activity" and the "noncommercial tort" exceptions. "Once the plaintiff offers evidence that an FSIA exception to immunity applies, the party claiming immunity bears the burden of proving by a preponderance of the evidence that the exception does not apply." Joseph v. Office of the Consulate General of Nigeria, 830 F.2d 1018, 1021 (9th Cir.1987), cert. denied, 485 U.S. 905, 108 S.Ct. 1077, 99 L.Ed.2d 236 (1988).

The commercial activity exception of the FSIA provides that a foreign state is not immune from suit in any case

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.

28 U.S.C. Sec. 1605(a)(2). If the commercial activity exception does not apply, we then look to the noncommercial tort exception. 28 U.S.C. Sec. 1605(a)(5).

Our analysis begins with the first clause of the commercial activity exception, which the district court concluded controls the immunity claim in this case. If we conclude that plaintiffs based their action on commercial activity of Exportadora in the United States in transporting decedents on the ill-fated flight, there is no immunity.

The FSIA requires two components for this exception to apply: (1) that the foreign entity be engaged in commercial activity, and (2) that that commercial activity have "substantial contact with the United States." 28 U.S.C. Sec. 1603(e); see Compania Mexicana, 859 F.2d at 1360 (must be a "significant 'nexus' " between cause of action and commercial activity).

A. Commercial Activity

"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." 28 U.S.C. Sec. 1603(d); see Joseph, 830 F.2d at 1023; see generally International Ass'n of Machinists and Aerospace Workers v. OPEC, 649 F.2d 1354, 1357 n. 6 (9th Cir.1981) (discussing nature and purpose), cert. denied, 454 U.S. 1163, 102 S.Ct. 1036, 71 L.Ed.2d 319 (1982). The district court concluded that transporting people to and from Exportadora's plant, by its nature, constituted commercial activity.

In our review of that conclusion, we must focus on what is the nature of a corporation's transporting people from one place to another. "An activity is public and 'noncommercial' if it is one which only a sovereign state can perform." Joseph, 830 F.2d at 1024. But it is commercial if it "is of the type an individual would customarily carry on for profit." Letelier v. Republic of Chile, 748 F.2d 790, 797 (2d Cir.1984), cert. denied, 471 U.S. 1125, 105 S.Ct. 2656, 86 L.Ed.2d 273 (1985).

The district court did not clearly err in finding that Exportadora arranged the transportation of the decedents to and from Guerrero Negro and transported them. Arranging transportation and transporting people is not an act that "only a sovereign can perform." Exportadora engaged in commercial activity in arranging transportation for its prospective business partners, Schoenberg, Hernandez and Omachi; bringing them to Guerrero Negro facilitated potential commercial dealings. As for the university representatives, Sugimoto and Kodani, Exportadora arranged transportation for them at the behest of its majority stockholder, the Mexican government. Appeasing one's majority stockholder is an activity that a private entity can perform and benefits future commercial dealings in other contexts by maintaining goodwill. Exportadora has failed to show why such an act is not commercial in nature.

Exportadora's contention that the transportation of Sugimoto and Kodani, the university representatives, was public in nature and therefore sovereign activity is unpersuasive. Exportadora argues that the agricultural experiment site, for which Sugimoto and Kodani were bound, constituted public activity--namely, government-sponsored research. It analogizes to Arango v. Guzman Travel Advisors Corp., 621 F.2d 1371 (5th Cir.1980). In that case, two vacationers flew from the United States to the Dominican Republic via Dominicana, the wholly government-owned airline of the destination country. Upon arrival in the Dominican Republic, however, the Arangos were denied entry as "undesirable...

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