Sun v. Taiwan, 98-17166

• Decision Date: 03 February 2000
• Docket Number: No. 98-17166,98-17166
• Citation: 201 F.3d 1105
• Parties: (9th Cir. 2000) TEI YAN SUN; YEH HWA SUN, Individually and as Personal Representatives of Peter Sun, deceased; PHILIPE SUN, Plaintiffs-Appellants, v. TAIWAN; TAIPEI ECONOMIC AND CULTURAL REPRESENTIVE OFFICE IN THE U.S.; CHINA YOUTH CORPS; OVERSEAS CHINESE AFFAIRS COMMISSION, Defendants-Appellees
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1105

201 F.3d 1105 (9th Cir. 2000)

TEI YAN SUN; YEH HWA SUN, Individually and as Personal Representatives of Peter Sun, deceased; PHILIPE SUN, Plaintiffs-Appellants, v. TAIWAN; TAIPEI ECONOMIC AND CULTURAL REPRESENTIVE OFFICE IN THE U.S.; CHINA YOUTH CORPS; OVERSEAS CHINESE AFFAIRS COMMISSION, Defendants-Appellees.

No. 98-17166

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted November 2, 1999

Filed February 3, 2000

COUNSEL: Paul Gary Sterling (argued), Sterling & Clack, San Francisco, California, for the plaintiffs-appellants.

David Yang (argued), San Francisco, California, Charles Bond (argued), Greogry A, Mase, Trin A. Dorros, Bond, Gamma & Associates, PC, Berkeley, CB, for the defendants-appellees.

Appeal from the United States District Court for the Northern District of California

Before: Harry Pregerson, John T. Noonan, and Diarmuid F. O'Scannlain, Circuit Judges.

OPINION

O'SCANNLAIN, Circuit Judge:

We must decide whether the United States courts have jurisdiction to hear claims brought by a participant in a cultural tour organized and operated by a foreign government in its own country.

I

On August 8, 1993, Peter Sun, an American student of Taiwanese descent, drowned off the coast of Ken-Ting National Park in Taiwan where he was participating in a cultural tour sponsored by the government of Taiwan. His family ("the Suns") brought a wrongful death action against Taiwan, Taipei Economic and Cultural Representative Office ("TECRO," formerly Coordination Counsel for North American Affairs ("CCNA")), Overseas Chinese Affairs Commission ("OCAC"), and Chinese Youth Corps ("CYC") (collectively "Taiwan") in district court alleging jurisdiction under the Foreign Sovereign Immunities Act, 28 U.S.C. SS 1330, 1602 et seq. ("FSIA").

Since 1967, Taiwan has organized and sponsored a summer-long study tour for youth of Taiwanese descent (the vast majority of whom have been American) to promote understanding of Chinese culture and history. In exchange for $400, Taiwan provided classes in Chinese language and culture, tours, sightseeing trips, room, and board. The promotional and application materials were sent from TECRO's office in Chicago and the applications were returned to the San Francisco office. As air transportation was the responsibility of the participants, the entire tour began and ended in Taiwan.

During the final sightseeing event of the program, Sun drowned. After the district court dismissed with leave to amend the Suns' first complaint for lack of subject matter jurisdiction and for failure to state a claim against CCNA, theSuns filed the complaint at issue here. The Suns' second amended complaint alleged that Taiwan's negligence in failing to provide a reasonably safe tour with adequate supervision and failure to warn their son about the dangerous swimming conditions off the beach caused the death of their son. Taiwan filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction claiming that the Suns' suit was not based on commercial activity by Taiwan in the United States, as required by the FSIA. The district court found that the defendants' actions constituted "commercial activity," but concluded that the Suns' cause of action was not based on this commercial activity. Accordingly, the district court dismissed the complaint for lack of subject matter jurisdiction.

The Suns timely appealed.¹

II

The FSIA "provides the sole basis for obtaining jurisdiction over a foreign state in the courts of this country." Argentine Republic v. Amerada Hess Shipping Co., 488 U.S. 428, 443 (1988). This Act codifies the restrictive, as opposed to absolute theory, of sovereign immunity in which "immunity is confined to suits involving the foreign sovereign's public acts, and does not extend to cases arising out of a foreign state's strictly commercial acts." Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 487 (1983). Under the FSIA, unless a statutory exception applies, no court has subject matter jurisdiction over a claim brought against a foreign country or its instrumentalities. See 28 U.S.C. S 1604. The exception to immunity relevant to this case provides that "[a] foreign state shall not be immune from the jurisdiction of courts of the United States . . . in any case . . . in which the action is based upon a commercial activity carried on in the United States by the foreign state . . . ." 28 U.S.C. S 1605(a)(2). No party on this appeal disputes the characterization of all the defendants as falling within the FSIA's definition of a foreign state, which includes "an agency or instrumentality of a foreign state." 28 U.S.C.SS 1603(a), (b). Thus the question on appeal is whether the Suns'"action is based upon a commercial activity carried on in the United States."

III

A

First, therefore, we must decide whether the district court correctly held that the conduct of Taiwan constituted "commercial activity." The FSIA defines commercial activity as "either a regular course of commercial conduct or a particular commercial transaction or act." 28 U.S.C.S 1603(d). Further, "[t]he 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. The Supreme Court has held "that a state engages in commercial activity . . . where it exercises only those powers that can also be exercised by private citizens, as distinct from those powers peculiar to sovereigns. " Saudi Arabia v. Nelson, 507 U.S. 349, 360 (1993) (quotations and citations omitted).

The district court found that Taiwan engaged in commercial activity. Promoting and operating a cultural tour is an activity that could be and regularly is conducted by private players in the market. Taiwan argues that its activities are not commercial because it operates this tour without charging the participants and runs it in order to promote understanding of Chinese culture and foster closer ties among Chinese people. The Supreme Court, however, has declared both of these considerations irrelevant. First, "the question is not whether the foreign government is acting with a profit motive or instead with the aim of fulfilling uniquely sovereign objectives." Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 614 (1992) (holding that state refinancing of government bonds is commercial activity despite the governmental motivation). Second, "whether a state acts in the manner of a private party is a question of behavior, not motivation." Nelson, 507 U.S. at 360; see also 28 U.S.C. S 1603(d) ("The commercial character of an activity shall be determined by reference to its nature, rather than by reference to its purpose."). Thus in evaluating Taiwan's activities we look to the state's acts as opposed to the reason for its acts. Here, Taiwan may be acting in order to promote Chinese culture and this may in fact be a motivation that would inspire very few private tour operators, but its actions as a promoter, organizer and guide are undoubtedly acts of a kind that are undertaken regularly by private parties. This activity "is of the type that an individual would customarily carry on for profit." Schoenberg v. Exportadora de Sal, S.A. de C.V., 930 F.2d 777, 780 (9th Cir. 1991) (holding that jurisdiction existed under the act where the Mexican government's activity consisted of maintaining a transportation link between its plant in Mexico and the plant's San Diego office). Thus the district court correctly held that Taiwan's conduct constituted commercial activity.

B

Taiwan argues that the activity is not commercial because no private party would sponsor a non-profit cultural tour tofoster ties with individuals of Chinese descent overseas and promote understanding of Chinese culture. The Act requires, however, that we look only to the nature, not the purpose, of the activity. See 28 S 1603(d). Trying to blur this distinction, Taiwan relies on Joseph v. Office of the Consulate, 830 F.2d 1018 (9th Cir. 1987), for the proposition that "the purpose of an act may be relevant in defining its nature: often the essence of an act is defined by its purpose." 830 F.2d at 1023 (quotations and citations omitted). It also analogizes its activities to the compilation of a linguistic treatise found to be noncommercial in Intercontinental Dictionary Series, Inc. v. De Gruyter, 822 F. Supp. 662 (C. D. Cal. 1992). These arguments are unpersuasive.

Joseph's mention that the nature and purpose of an act are interrelated should be read as little more than an observation. Taiwan's suggestion that this statement downplays the distinction between the two flies in the face of the Supreme Court's blunt admonition that the clear statutory language of the FSIA "unmistakably commands" distinguishing nature from purpose. Weltover, 504 U.S. at 617. In fact, in Weltover the Supreme Court cast serious doubt on the specific language quoted in Joseph and relied on by Taiwan, as well as the notion that the distinction between the two is formalistic. See id. "We think this line of argument is squarely foreclosed by the language of the FSIA." Id. Reading this statement in Joseph to say no more than that nature and purpose are related is also consistent with its holding that a foreign sovereign leasing its land for its consulate is by its nature a commercial activity despite its obvious sovereign purpose. Furthermore it comports with the later statement in that case that "an activity is public and noncommercial if it is one which only a sovereign state can perform." Joseph, 830 F.2d at 1024 (emphasis added). Thus understood, the case offers Taiwan little support. While the purpose of Taiwan's tour may not be one that would motivate a private tour promoter, the operation of a cultural tour--the nature of the activity in question--is a type of activity a private party would undertake for profit.

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