Straub v. A P Green, Inc., 92-16204

• Decision Date: 17 October 1994
• Docket Number: No. 92-16204,92-16204
• Parties: Harold E. STRAUB, et al., Plaintiffs-Appellees, v. A P GREEN, INC., et al., Defendants, and Atlas Turner, Inc., a foreign corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 448

38 F.3d 448

Harold E. STRAUB, et al., Plaintiffs-Appellees, v. A P GREEN, INC., et al., Defendants, and Atlas Turner, Inc., a foreign corporation, Defendant-Appellant.

No. 92-16204.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Sept. 14, 1994.

Decided Oct. 17, 1994.

Paul W. Holloway & Kevin B. Sweeney, Holloway, Odegard & Sweeney, Phoenix, AZ, for defendant-appellant, Atlas Turner, Inc.

Robert George Begam, Dena Rosen Epstein, Begam, Lewis, Marks, Wolfe & Dasse, Paul A. Jozef, Phoenix, AZ, for plaintiffs-appellees, Harold E. Straub, et al.

Appeal from the United States District Court for the District of Arizona.

Before: FARRIS, BEEZER, Circuit Judges, and McLAUGHLIN ^*, District Judge.

FARRIS, Circuit Judge.

Atlas Turner appeals the district court's denial of its motion to set aside a default judgment. Atlas Turner contends that the district court lacked jurisdiction because service of process was not effective under the Foreign Sovereign Immunities Act. We have jurisdiction of the timely appeal under 28 U.S.C. Sec. 1291. We remand to determine whether Atlas Turner had actual notice in 1986 of the complaint.

I. BACKGROUND

Plaintiff Harold Straub sued Atlas Turner for asbestos-related injuries. He claims his injuries were caused by exposure to Atlas Turner's products in Arizona (from 1967 to 1968) and in Illinois (from 1948 to 1959) while he was employed by Armstrong Contracting & Supplying Company. He mailed a copy of the summons and complaint in the English language by registered mail, return receipt requested, to Atlas Turner in Montreal, Quebec, Canada. The mail receipt was signed by "C. Benoit" and returned to Straub.

Atlas Turner did not respond to the suit. A default judgment was entered against it on April 1, 1991. Atlas Turner's motion to set aside the judgment for lack of jurisdiction was denied by the district court on May 27, 1992. Atlas appeals. We review de novo. Nike, Inc. v. Comercial Iberica de Exclusivas Deportivas, S.A., 20 F.3d 987, 990 (9th Cir.1994). The district court's findings of fact relevant to its determination of subject matter jurisdiction are reviewed for clear error. Id.

II. APPLICABILITY OF FOREIGN SOVEREIGN IMMUNITIES ACT

To determine whether Straub's service of process was effective, we must initially decide whether the Foreign Sovereign Immunities Act applies. The FSIA applies to lawsuits against "foreign states." 28 U.S.C. Sec. 1602. The term foreign state includes an "agency or instrumentality of a foreign state." ¹ The facts are undisputed. At the time Straub filed his lawsuit, Atlas Turner was fully owned by Societe Nationale de L'Amiante, a Crown Corporation of the Province of Quebec. It was therefore an instrumentality of a foreign state. It is not disputed that Atlas Turner was not a foreign state at the time Straub was exposed to the asbestos.

Straub contends that the FSIA does not apply because Atlas Turner was not an instrumentality of Quebec at the time of the acts giving rise to this lawsuit. We reject the argument. Without directly addressing the issue, we have applied the FSIA to cases in which foreign governments acquired control over private entities after the conduct underlying the lawsuit has occurred. See West v. Multibanco Comermex, S.A., 807 F.2d 820, 823 (9th Cir.), cert. denied, 482 U.S. 906, 107 S.Ct. 2483, 96 L.Ed.2d 375 (1987). In Wolf v. Banco Nacional de Mexico, S.A., 739 F.2d 1458, 1460 (9th Cir.1984), cert. denied, 469 U.S. 1108, 105 S.Ct. 784, 83 L.Ed.2d 778 (1985), the court went even further, and implied that the FSIA may be applicable if a party that becomes a "foreign state" after the commencement of a lawsuit promptly brings its status as a "foreign state" to the district court's attention.

Straub's reliance on cases from other circuits does not support his argument. The Sixth and Eighth Circuits have held that the FSIA is applicable where a defendant is a foreign state at the time of the alleged wrongdoing. See General Elec. Capital Corp. v. Grossman, 991 F.2d 1376 (8th Cir.1993); Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445 (6th Cir.1988). Neither court addressed the issue of whether the FSIA applies when a party is not a foreign state at the time of the alleged wrongdoing but becomes one prior to the date on which the lawsuit is filed. Straub's argument derives some support from In re Chase & Sanborn Corp. v. Granfinanciera, 835 F.2d 1341, 1347-48 (11th Cir.1988), reversed on other grounds, 492 U.S. 33, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989), where the court held that the defendant "was not an instrumentality of the Colombian government at the time of the transactions and thus would not be protected by the provisions of FSIA." However, in Granfinanciera the court also took into account the fact that the plaintiffs filed their lawsuit before the defendant was nationalized by the Colombian government. See id. at 1347 ("FSIA is inapplicable to the case at bar because the transfers in question and the suit to recover those transfers occurred before Granfinanciera was nationalized.") (emphasis added). Unlike Granfinanciera, Straub filed his lawsuit after Atlas became a "foreign state." Straub has cited no precedent holding that a party that is a foreign state when the litigation commences is not entitled to the protections of the FSIA. We have found none. We hold that the FSIA applies when a party is a foreign state at the time the lawsuit is filed, even if that party was not a foreign state at the time of the alleged wrongdoing.

III. SERVICE OF PROCESS REQUIREMENTS UNDER THE FSIA

If the FSIA is applicable, Atlas Turner recognizes that it is not entitled to immunity from suit because one of the exceptions to foreign sovereign immunity in Sec. 1605 applies. It also recognizes that it has minimum contacts with the relevant geographical area, the United States. Meadows v. Dominican Republic, 817 F.2d 517, 523 (9th Cir.) (relevant geographical area for evaluating a party's contacts under the FSIA is "the entire United States, not merely [the forum state]"), cert. denied, 484 U.S. 976, 108 S.Ct. 486, 98 L.Ed.2d 485 (1987). Atlas Turner argues instead that we should set aside the default judgment because Straub did not properly serve Atlas Turner with either the summons and complaint or a copy of the default judgment.

A. Service of the Summons and Complaint

1. Service under Sec. 1608(b)(2).

Section 1608(b)(2) provides that if no special arrangement for service between the parties exists, service may be effected by

delivery of a copy of the summons and complaint either to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process in the United States; or in accordance with an applicable international convention on service of judicial documents.

The district court ruled that Straub had complied with the service requirements of Sec. 1608(b)(2). The basis for the court's ruling was that (1) Atlas was served in accordance with the Hague Convention and (2) both Canada and the United States are signatories to the Hague Convention. Canada, however, did not become a signatory to the Hague Convention until May 1, 1989 ²; Atlas was allegedly served in 1986. Thus, the district court's ruling cannot be affirmed on the basis of compliance with the Hague Convention.

Straub asserts that service was effected in compliance with the first clause of Sec. 1608(b)(2). He contends that the phrase "any other agent authorized by appointment or by law to receive service of process in the United States" refers to a class of agents who have the general authority to receive service of process in the United States but who are not necessarily in the United States at the time they are served.

Although Straub's interpretation of the statute is certainly plausible, it is also plausible that Congress meant for the modifying phrase "in the United States" to apply to the "by delivery" language. When interpreting a statute, we ordinarily first look to the plain meaning of the language used by Congress. See Whilshire Westwood Assocs. v. Atlantic Richfield, 881 F.2d 801, 803 (9th Cir.1989). But if the statute is ambiguous, we consult the legislative history, to the extent that it is of value, to aid in our interpretation. Stanton Rd. Assocs. v. Lohrey Enters., 984 F.2d 1015, 1019 (9th Cir.1993). Because of the ambiguity in the plain meaning of the language, we examine the legislative history and the structure of Sec. 1608. The House Report makes abundantly clear that "subsection (b)(2) ... provides for service upon ... agents in the United States of the agency or instrumentality." See 1976 U.S.Code Cong. & Ad.News 6604, 6624. Further, Sec. 1608(b)(3), which applies if service cannot be made under subsections (b)(1) and (b)(2), establishes a procedure for serving an instrumentality of a foreign state in a foreign country. One of the requirements of Sec. 1608(b)(3) is that a copy of the complaint be translated into the official language of that country. See 28 U.S.C. Sec. 1608(b)(3). The translation requirement in Sec. 1608(b)(3) would have little meaning if parties could circumvent it by claiming they served an "authorized agent" in the foreign country pursuant to Sec. 1608(b)(2).

Thus, we hold that the first clause of Sec. 1608(b)(2) only authorizes service of process in the United States. Straub did not serve an authorized agent in the United States, and therefore service of process was not effective under Sec. 1608(b)(2).

2. Service under Sec. 1608(b)(3)

Straub also contends that he properly served Atlas under Sec. 1608(b)(3). That section provides that if service cannot be made under subsections (b)(1) and (b)(2), service can be effected

if reasonably calculated to give actual notice, by delivery of a copy of the summons and complaint, together with a translation of each into the official language of the foreign state--

....

(B) by any form of mail...