Williams v. Shipping Corp. of India, Civ. A. No. 79-821-N.

• Decision Date: 10 March 1980
• Docket Number: Civ. A. No. 79-821-N.
• Citation: 489 F. Supp. 526
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Lenwood WILLIAMS, Jr., Plaintiff, v. The SHIPPING CORPORATION OF INDIA, Defendant.

489 F. Supp. 526

Lenwood WILLIAMS, Jr., Plaintiff, v. The SHIPPING CORPORATION OF INDIA, Defendant.

Civ. A. No. 79-821-N.

United States District Court, E. D. Virginia, Norfolk Division.

March 10, 1980.

Breit, Rutter & Montagna, Norfolk, Va., for plaintiff.

Seawell, McCoy, Dalton, Hughes, Gore & Timms, Norfolk, Va., for defendant.

MEMORANDUM ORDER

CLARKE, District Judge.

This matter is before the Court on defendant's motion to dismiss plaintiff's demand for a jury trial. This case originally was filed in state court, with the motion for judgment being served on August 1, 1979. Plaintiff is a Virginia citizen, and defendant is a corporation owned by the Government of India. The defendant timely exercised its right to remove this case from state to federal court by filing a petition for removal on August 31, 1979.

Defendant contends that it had a right to remove the case under 28 U.S.C. §§ 1330 and 1441(d). Plaintiff, on the other hand, asserts that this Court's jurisdiction is based upon 28 U.S.C. § 1332(a)(2) (diversity of citizenship). Plaintiff further argues that even if this Court's jurisdiction is based upon 28 U.S.C. §§ 1330 and 1441(d), and not upon 28 U.S.C. § 1332(a)(2), that Congress has enacted a law in violation of his Seventh Amendment right to trial by jury. The Court will set forth and analyze these relevant Code sections in addressing the merits of these contrary positions.

28 U.S.C. § 1330 reads in pertinent part:

(a) 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 this title as to any claim for relief in personam with respect to which the foreign state is not entitled to immunity . . ..

Section 1603 defines a "foreign state" as follows:

(a) 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).

(b) An "agency or instrumentality of a foreign state" means 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 (d) of this title, nor created under the laws of any third country.

Section 1330 was enacted by Congress in 1976, when it amended 28 U.S.C. § 1332.¹ Prior to the Congressional amendments of 28 U.S.C. § 1332 in 1976, § 1332(a)(2) read:

The district court shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of ($10,000.00) Dollars . . . and is between . . .

(2) citizens of a State, and foreign states or citizens or subjects thereof. (emphasis added).

Federal jurisdiction with regard to "foreign states" was deleted from § 1332 and placed in a new section, 28 U.S.C. § 1330, as quoted previously in this Order. By eliminating "foreign state" from § 1332 and placing it in § 1330, it is obvious that Congress intended jurisdiction over a foreign state to be limited to the provisions of § 1330. See 1976 U.S.Code Cong. & Admin.News at 6604, 6613. Contra Icenogle v. Olympic Airways, S. A., 82 F.R.D. 36 (D.D.C.1979) (court reached a different result from that of this Court, but analysis focused on original jurisdiction and not on removal).

Therefore, if defendant in this case is a "foreign state," or instrumentality thereof, rather than a private citizen or corporation merely domiciled in a foreign state, then this Court's jurisdiction rests upon 28 U.S.C. § 1330 and not upon 28 U.S.C. § 1332. Defendant here is a corporation owned by the Government of India, a foreign state. Section 1330 specifically cross-references to § 1603, which section defines a foreign state to include a corporation such as defendant. Section 1332(a) contains no parallel cross-reference to § 1603. Icenogle v. Olympic Airways, S. A., supra at 38. Therefore, when analyzing §§ 1330, 1332, and 1603 in conjunction with one another, this Court concludes that defendant is a foreign state as defined in § 1603, which in turn gives this Court jurisdiction under § 1330 and not under § 1332.

More importantly, defendant had a right to remove this case pursuant to 28 U.S.C. § 1441(d), which reads:

(d) Any civil action brought in a State court against a foreign state as defined in section 1603(a) of this title may be removed by the foreign state to the district court of the United States for the district and division embracing the place where such action is pending. Upon removal the action shall be tried by the court without jury. . . .

The language of this section clearly indicates that a case so removed shall be tried by the Court without a jury.

Finally, the legislative history in regard to the 1976 Congressional amendments previously discussed, entitled the "Foreign Sovereign Immunities Act of 1976,"² also clearly reveals Congress' intent to provide a foreign nation sued in the United States both the right to remove the case to federal court and the right to have the matter tried by the Court without a jury. In effect, a foreign nation is being accorded the same type of sovereign immunity as our government is accorded in our courts, as well as the type of reciprocal immunity we would like to be accorded in a foreign court. This sovereign immunity extends to actions taken by the foreign nation in a governmental capacity but not for acts taken in a commercial capacity.³ Moreover, the legislative history supports this Court's initial determination that new section 1330 supersedes old section 1332(a)(2). The foregoing aspects of the legislative history are set forth below:

PURPOSE

The purpose of the proposed legislation, as amended, is to provide when and how parties can maintain a lawsuit against a foreign state or its entities in the courts of the United States and to provide when a foreign state is entitled to sovereign immunity.

. . . . .

First, the bill would codify the so-called "restrictive" principle of sovereign immunity, as presently recognized in international law. Under this principle, the immunity of a foreign state is "restricted" to suits involving a foreign state's public acts (jure imperii) and does not extend to suits based on its commercial or private acts (jure gestonis). This principle was adopted by the Department of State in 1952 and has been followed by the courts and by the executive branch ever since. Moreover, it is regularly applied against the United States in suits against the U. S. Government in foreign courts.

. . . . .

SECTION-BY-SECTION ANALYSIS

This bill, entitled the "Foreign Sovereign Immunities Act of 1976," sets forth the sole and exclusive standards to be used in resolving questions of sovereign immunity raised by foreign states before Federal and State courts in the United States. It is intended to preempt any other State or Federal law (excluding applicable international agreements) for according immunity to foreign sovereigns, their political subdivisions, their agencies, and their instrumentalities. It is also designed to bring U. S. practice into conformity with that of most other nations by leaving sovereign immunity decisions exclusively to the courts, thereby discontinuing the practice of judicial deference to "suggestions of immunity" from the executive branch. (See Ex Parte Peru, 318 U.S. 578, 588-589, 63 S.Ct. 793, 799-800, 87 L.Ed. 1014 (1943)).

. . . . .

Constitutional authority for enacting such legislation derives from the constitutional power of the Congress to prescribe the jurisdiction of Federal courts (art. I, sec. 8, cl. 9; art. III, sec. 1); to define offenses against the "Law of Nations" (art. I, sec. 8, cl. 10); to regulate commerce with foreign nations (art. I, sec. 8, cl. 3); and "to make all Laws which shall be necessary and proper for carrying into Execution * * * all * * * Powers vested * * * in the Government of the United States," including the judicial power of the United States over controversies between "a State, or the Citizens thereof, and foreign States * * *." (art. I, sec. 8, cl. 18; art. III, sec. 2, cl. 1). See National Bank v. Republic of China, 348 U.S. 356, 370-71, 75 S.Ct. 423, 432, 99 L.Ed. 389 (1955) (Reed, J., dissenting); cf. Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 425, 84 S.Ct. 923, 938, 11 L.Ed.2d 804 (1964).

. . . . .

SEC. 2. JURISDICTION IN ACTIONS AGAINST FOREIGN STATES

Section 2 of the bill adds a new section 1330 to title 28 of the United States Code, and provides for subject matter and personal jurisdiction of U. S. district courts over foreign states and their political subdivisions, agencies, and instrumentalities. Section 1330 provides a comprehensive jurisdictional scheme in cases involving foreign states. Such broad jurisdiction in the Federal courts should be conducive to uniformity in decision, which is desirable since a disparate treatment of cases involving foreign governments may have adverse foreign relations consequences. Plaintiffs, however, will have an election whether to proceed in Federal court or in a court of a State, subject to the removal provisions of section 6 of the bill.

(a) Subject Matter Jurisdiction. — Section 1330(a) gives Federal district courts original jurisdiction in personam against foreign states (defined as including political subdivisions, agencies, and instrumentalities of foreign states). The jurisdiction extends to any claim with respect to which the foreign state is not entitled to immunity under sections 1605-1607 proposed in the bill, or under any applicable international agreement of the type contemplated by the proposed section 1604.

As in suits against the U. S. Government, jury trials are excluded. See 28 U.S.C. 2402. Actions tried by a court without jury...