292 F. Supp. 3d 157
D.C. Cir.2017Background
- Sharp (Japanese) licensed its brand to Hisense (Chinese) in a 2015 Trademark Licensing Agreement (TLA) that required SIAC arbitration for disputes.
- Sharp terminated the TLA in April 2017 alleging quality/regulatory failures by Hisense; Hisense sought emergency relief from SIAC to keep the TLA in force.
- SIAC emergency arbitrator issued an interim award (May 2017) ordering Sharp to continue performance and to refrain from disparaging or disrupting Hisense or approaching third parties (including regulators) about matters before arbitration (the asserted "gag order").
- Sharp filed in D.D.C. seeking a declaratory judgment that the interim award is unenforceable in the U.S. as contrary to U.S. public policy (First Amendment and right to petition) and moved for a preliminary injunction; Hisense moved to dismiss for lack of subject-matter and personal jurisdiction and on the merits.
- The court found federal subject-matter jurisdiction exists over Sharp’s declaratory claim but concluded it lacked personal jurisdiction over Hisense in D.C.; alternatively, the court held the award does not violate a well-defined, dominant U.S. public policy (First Amendment) because no state action exists; it also declined to exercise declaratory-judgment discretion given pending SIAC proceedings and dismissed the complaint.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction under the New York Convention / FAA for declaratory relief | Sharp contends declaratory relief that the emergency award is unenforceable in the U.S. is proper in secondary-jurisdiction courts and is not a disguised vacatur | Hisense contends the suit effectively seeks to vacate/modify the award (beyond secondary court power) and is untimely | Court: Jurisdiction exists — a U.S. court in a secondary state may decide whether to enforce an award in the U.S.; Sharp’s request is for non-enforcement here (not global vacatur), so federal question jurisdiction exists under the FAA/Convention |
| Personal jurisdiction over Hisense in D.C. | Sharp argues Hisense’s sales and FCC filings in D.C. connect the dispute to the forum (sales of Sharp-branded TVs, communications with FCC) | Hisense argues the arbitration and award arise from foreign conduct with no sufficient nexus to D.C.; FCC filings do not confer jurisdiction (and no fraud pleaded) | Court: Dismissed for lack of personal jurisdiction — contacts too attenuated; government-contacts/fraud exception not satisfied; foreign-state arguments fail as named subsidiaries are not shown to be state agents |
| First Amendment / public-policy defense to enforcement under New York Convention Art. V(2)(b) | Sharp argues the gag-like emergency award violates dominant U.S. public policy protecting speech and petition rights and thus should not be enforced in U.S. courts | Hisense argues First Amendment applies only to state action; enforcement of a private arbitration award by courts is not state action | Court: Held First Amendment does not establish a free-floating public-policy bar to enforcement of private arbitration awards absent state action; plaintiff fails to show state action; Article V public-policy exception not met |
| Discretion under Declaratory Judgment Act given concurrent SIAC proceedings | Sharp seeks preemptive declaratory relief to avoid domestic enforcement actions | Hisense emphasizes ongoing SIAC process (motion to vacate/consideration by full SIAC panel) and comity/stay principles | Court: Even if jurisdiction and merits were closer, discretion counsels against declaratory relief while foreign arbitral proceedings and a motion before SIAC are pending; dismissal appropriate |
Key Cases Cited
- Sparrow v. United Air Lines, Inc., 216 F.3d 1111 (D.C. Cir. 2000) (12(b)(6) pleading/inference standard)
- Trudeau v. Federal Trade Commission, 456 F.3d 178 (D.C. Cir. 2006) (court need not accept legal conclusions as factual allegations)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (plaintiff bears burden to establish jurisdiction)
- TermoRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928 (D.C. Cir. 2007) (distinction between primary and secondary Convention courts; limited powers of secondary courts)
- Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274 (5th Cir. 2004) (secondary-jurisdiction courts may only refuse or stay enforcement)
- Daimler AG v. Bauman, 571 U.S. 117 (2014) (general jurisdiction standard — corporation "at home")
- Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (relatedness requirement for specific jurisdiction)
- Shelley v. Kraemer, 334 U.S. 1 (1948) (state-action via judicial enforcement of private covenants limited to race-discrimination context)
- Medtronic, Inc. v. Mirowski Family Ventures, LLC, 571 U.S. 191 (2014) (jurisdictional inquiry for declaratory-judgment actions considers the nature of the threatened coercive action)