Domenico RUGGIERO, Plaintiff-Appellant,
v.
COMPANIA PERUANA DE VAPORES "INCA CAPAC YUPANQUI",
Defendant-Appellee.
Simon DODSON, Plaintiff-Appellant,
v.
POLSKI LINIE OCEANICZNE GDYNIA, "DOMEYKO", Defendant-Appellee.
Ciro LOCASCIO, Plaintiff-Appellant,
v.
P. M. JAKARTA LLOYD "DJATIPRANA", Defendant-Appellee.
Nos. 577, 698 and 699, Dockets 80-7595, 80-7597 and 80-7599.
United States Court of Appeals,
Second Circuit.
Argued Jan. 5, 1981.
Decided Jan. 15, 1981.
Irving B. Bushlow, Brooklyn, N. Y., for plaintiffs-appellants.
Thomas Healey, New York City, Healey & McCaffrey, New York City, for defendant-appellee Polski Linie Oceaniczne Gdynia, "Domeyko".
Giallorenzi & Campbell, New York City, for defendant-appellee P. M. Jakarta Lloyd "Djatiprana".
Cichanowicz & Callan, New York City, for defendant-appellee Compania Peruana De Vapores "Inca Capac Yupanqui".
Bruno A. Ristau, Dept. of Justice, Washington, D. C., Alice Daniel, Asst. Atty. Gen., Eloise E. Davies, Dept. of Justice, Washington, D. C., Edward R. Korman, U. S. Atty., E. D. New York, Brooklyn, N. Y., for intervenor-appellee United States of America.
Before FEINBERG, Chief Judge, and FRIENDLY and KEARSE, Circuit Judges.
FRIENDLY, Circuit Judge:
The plaintiffs in these three cases are longshoremen seeking damages for personal injuries incurred in New York due to the alleged negligence of a shipowner, as authorized by the Longshoremen's and Harbor Workers' Compensation Act (LHWCA), 33 U.S.C. § 905(b).1 In each case the defendant is a shipping company incorporated under the laws of and wholly owned by a foreign government Peru, Poland and Indonesia, respectively. In each case the plaintiff made a jury demand, F.R.Civ.P. 38(b), and the defendant moved to strike it as inconsistent with the Foreign Sovereign Immunities Act of 1976 (the "Immunities Act"), 90 Stat. 2891 (1976). In a well-considered opinion,
The Immunities Act was intended to be a comprehensive revision of the law with respect to suits against foreign states or entities owned by them. As said in the report of the House Committee, House Report No. 94-1487, 94th Cong.2d Sess., p. 6, reprinted in, (1976) 5 U.S.Code Cong. & Ad.News, pp. 6604, 6604:
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.
The extent of the changes wrought by the Immunities Act so far as concerns the question before us can be best understood by comparing 28 U.S.C. § 1332, as it stood before the 1976 enactment (below, on the left), so far as here pertinent, with 28 U.S.C. §§ 1330(a) and 1332(a) as they existed thereafter (on the right).
Sec. 1332. Diversity of Sec. 1330. Actions against
citizenship; amount in foreign states
controversy; costs
(a) The district courts shall
(a) The district courts have original jursidiction
shall have original without regard
jurisdiction of all to amount in
civil actions where the controversy of any nonjury
matter in controversy civil action against a foreign
exceeds the sum or value of $10,000, state as defined in section
exclusive of interest and costs, 1603(a) of this title as to any
and is between- claim for relief in personam
with respect to which the
(1) citizens of different foreign state is not entitled to
States; immunity either under sections
(2) citizens of a State, and 1605-1607 of this title or#
foreign states or citizens or under any applicable
subjects thereof: and international agreement
(3) citizens of different Sec. 1332. Diversity of citizenship
States and in which foreign amount in Controversy; costs
states or citizens or subjects
thereof are additional parties (a) The district courts shall
have original jurisdiction of all
civil actions where the matter
in controversy exceeds the sum
or value of $10,000, exclusive
of interest and costs, and is
between
(1) citizens of different
States;
(2) citizens of a State and
citizens or subjects of a
foreign state;
(3) citizens of different
States and in which citizens or
subjects of a foreign state are
additional parties; and
(4) a foreign state, defined
in section 1603(a) of this title,
as plaintiff and citizens of a
State or of different States.
To this must be added some of the provisions referred to in the new § 1330(a).4 Sections 1603(a) and (b) provide:
§ 1603. Definitions
For purposes of this chapter
(a) A 'foreign state', except as used in section 1608 of this title, 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 1605(a)(2) provides:
§ 1605. General exceptions to the jurisdictional immunity of a foreign state
(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case
(2) 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.
The Immunities Act also added a new 28 U.S.C. § 1441(d), reading as follows:
§ 1441. Actions removable generally
(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. Where removal is based upon this subsection, the time limitations of section 1446(b) of this chapter may be enlarged at any time for cause shown.
One need scarcely go beyond this to conclude that, as a matter of statutory construction, no jury can be had in an action in a federal court against a foreign state as broadly defined in § 1603 a definition within which the defendants here concededly fall when, as here, federal jurisdiction is sought to be predicated on § 1332(a). The provisions of former § 1332(a)(2) and (3), which would have provided a basis of jurisdiction over actions by a citizen against a foreign state prior to 1976, were deleted and were replaced by § 1330(a), which by its clear terms provides only for a non-jury civil action against foreign states as the statute generously defines them.
We find no force in plaintiffs' argument that their actions may be maintained against state-owned corporations, although not as against states themselves, under § 1332(a)(2) authorizing suits between "citizens of a State and citizens or subjects of a foreign state", which imposes no restriction on jury trial. It had long been settled that a corporation created under the laws of a foreign state was regarded for purposes of diversity jurisdiction as a "citizen or subject" of that state. Steamship Co. v. Tugman,
We are convinced that so such option exists. The argument ignores the provision of § 1330(a) which defines each of these defendants as a foreign state. The same entity cannot be both a foreign state and a citizen or subject of a foreign state. The historic justification for considering foreign corporations to be citizens or subjects of the state of incorporation was that their shareholders were citizens or subjects of that state, see note 5 supra, and that the suit must be regarded as against them. Section 1603 destroys that fiction with respect to the entities therein defined by providing that for the purposes of the Immunities Act they are to be regarded as states themselves.6 The conclusion is inescapable from the language of the statute that Congress meant § 1330 to be the exclusive means whereby a plaintiff may sue any foreign state as defined in § 1603(a), at least on the basis of diversity jurisdiction theretofore provided in § 1332(a)(2), and that this entails a non-jury trial.7
The district court in Rex v. Compania Peruana de Vapores, supra,
These conclusions, emerging with sufficient clarity from the language of the Immunities Act, are fortified by the House and Senate Reports. Although these can profitably be read in their entirety, a few passages deserve special emphasis.
Under the heading "Statement", the reports note:
At present, there are no comprehensive provisions in our law available to inform parties when they can have recourse to the courts to assert a legal claim against a foreign state. Unlike other legal systems, U.S. law does not afford plaintiffs and their counsel with a means to commence a suit that is specifically addressed to foreign state defendants. It does not provide firm standards as to when a foreign state may validly assert the defense of sovereign immunity; and, in the event a plaintiff should obtain a final judgment against a foreign state or one of its trading companies, our law does not provide the plaintiff with any means to obtain satisfaction of that judgment through execution against ordinary commercial assets.
House Report, supra, (1976) 5 U.S.Code Cong. & Ad.News at 6605, Senate Report No. 94-1310, 94th Cong.2d Sess. at 8. The bill aimed to remedy these evils. An important goal was to "codify the so-called 'restrictive' principle of sovereign immunity", wherein "the immunity of a foreign state is 'restricted' to suits involving a foreign state's public act (jure imperii) and does not extend to suits based on its commercial or private acts (jure gestionis)." A "principal purpose" of the bill was "to transfer the determination of sovereign immunity from the executive branch to the judicial branch, thereby reducing the foreign policy implication of immunity determinations and assuring litigants that these often crucial decisions are made on purely legal grounds and under procedures that insure due process."
The reports' discussion of § 1330(a) is of particular relevance. They state:
(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 will tend to promote a uniformity in decision where foreign governments are involved.
House Report, supra, at 6611-12, Senate Report, supra, at 12. Of almost equal importance is the discussion of § 3 of the bill, entitled "Diversity Jurisdiction as to Foreign States":
Section 3 of the bill amends those provisions of 28 U.S.C. 1332 which relate to diversity jurisdiction of U.S. district courts over foreign states. Since jurisdiction in actions against foreign states is comprehensively treated by the new section 1330, a similar jurisdictional basis under section 1332 becomes superfluous. The amendment deletes references to 'foreign states' now found in paragraphs (2) and (3) of 28 U.S.C. 1332(a), and adds a new paragraph (4) to provide for diversity jurisdiction in actions brought by a foreign state as plaintiff. These changes would not affect the applicability of section 1332 to entities that are both owned by a foreign state and are also citizens of a state of the United States as defined in 28 U.S.C. 1332(c) and (d). See analysis to section 1603(b).
House Report, supra, at 6613, Senate Report, supra, at 13-14. Discussing the new § 1441(d) the reports state that this broadens the removal rights of a foreign state but that:
Upon removal, the action would be heard and tried by the appropriate district court sitting without a jury. (Cf. 28 U.S.C. 2402, precluding jury trials in suits against the United States.) Thus, one effect of removing an action under the new section 1441(d) will be to extinguish a demand for a jury trial made in the state court. (Cf. rule 81(c), F.R.Civ.P.) Because the judicial power of the United States specifically encompasses actions 'between a State, or the Citizens thereof, and foreign States' (U.S. Constitution, art. III, sec. 2, cl. 1), this preemption of State court procedures in cases involving foreign sovereigns is clearly constitutional.
House Report, supra, at 6632, Senate Report, supra, at 32. The reports thus confirm what is patent from the statutory language Congress wished to provide a single vehicle for actions against foreign states or entities controlled by them, to wit, § 1330 and § 1441(d), its equivalent on removal, and to bar jury trial in each. In return for conferring upon plaintiffs this clear basis of jurisdiction in actions against foreign states (even in suits for $10,000 or less), codifying the restrictive principle of sovereign immunity and vesting its determination in the courts §§ 1602-05, providing a feasible method of service of process, § 1608, and authorizing execution of a judgment upon property of a foreign state, § 1610, Congress intended that the foreign state, defined broadly in § 1603, was not to be subjected to jury trial a form of trial alien to most of them in civil cases and from which the United States, in granting consent to suit, has generally exempted itself. 28 U.S.C. § 2402.
This brings us to the plaintiffs' arguments that deprivation of jury trial in actions such as these violates the Seventh Amendment or, at least, that this claim has sufficient substance that we should endeavor to construe the statute so as to avoid the constitutional question. United States v. Thirty-Seven Photographs,
The Seventh Amendment provides, so far as here pertinent, that "(i)n Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved...." It is undisputed that a suit against a foreign state was unknown to the common law. As said by Chief Justice Marshall in The Schooner Exchange v. McFaddon, (7 Cranch)
We think the principles are applicable alike to all ships held and used by a government for a public purpose, and that when, for the purpose of advancing the trade of its people or providing revenue for its treasury, a government acquires, mans and operates ships in the carrying trade, they are public ships in the same sense that war ships are. We know of no international usage which regards the maintenance and advancement of the economic welfare of a people in time of peace as any less a public purpose than the maintenance and training of a naval force.
However, international usage did change, see Victory Transport, Inc. v. Comisaria General de Abastecimientos y Transportes,
As Professor Moore has stated, "The Seventh Amendment creates no right of trial by jury", 5 Moore, Federal Practice P 38.08(5) at 38-55. Its function rather is preservation. "(I)f the action is a common law suit or the particular issues arise in a common law suit, but no right of jury trial existed under the common law of England as to that type of action, then there is no right to jury trial by virtue of the Seventh Amendment." Id. We have been pointed to nothing to show that a right of jury trial existed under the common law in 1791 with respect to a suit against a foreign government or an instrumentality thereof; such a suit could not be maintained at all.
The Supreme Court has applied this analysis in instances when the United States has from time to time waived its immunity from suit but has not provided for a jury trial. In McElrath v. United States,
Suits against the government in the Court of Claims, whether reference be had to the claimant's demand, or to the defence, or to any set-off, or counter-claim which the government may assert, are not controlled by the Seventh Amendment. They are not suits at common law within its true meaning.
The Court reiterated this view in Galloway v. United States,
It may be noted, first, that the Amendment has no application of its own force to this case. The suit is one to enforce a monetary claim against the United States. It hardly can be maintained that under the common law in 1791 jury trial was a matter of right for persons asserting claims against the sovereign.
See also Glidden Co. v. Zdanok,
Plaintiffs challenge the validity of this analogy on the basis of a difference between a sovereign's submitting itself to suit in its own courts by consent and compelling other sovereigns to submit to suit in its courts because of a changed climate in international law. Some differences there doubtless are,11 but they are not significant for the issue here at hand. A suit against a foreign state was just as much unknown to the common law of 1791 as was a suit against the United States. The two situations are also alike in that denial of jury trial may rationally enter into the decision to create jurisdiction. Surely one reason why the United States has coupled its waiver of sovereign immunity in certain types of cases with a refusal to submit itself to jury trial was the fear that juries might draw too heavily on a deep pocket. See 86 Cong.Rec. 12028 (1940) (remarks of Rep. Celler). By the same token Congress could legitimately consider that a partial withdrawal of sovereign immunity from foreign states would interfere with United States' international relations unless such states were accorded protection similar to what it had given itself. Foreign countries can hardly object to the United States' subjecting them to trial by a judge in commercial cases when the United States itself is subject to the same sort of trial in its own courts and in theirs. Subjection to trial by jury, especially with the restraints on review of jury findings also imposed by the Seventh Amendment, would be a different matter, especially since the great majority of countries do not use a civil jury.12 We do not at all mean by this that the Seventh Amendment can be avoided simply because that seems a good idea; we mean rather that there are sufficient reasons why newly authorized suits against foreign sovereigns, authoritatively determined to have been unknown to the common law in 1791, are sui generis and should not be deemed to be within the scope of the Seventh Amendment's preservation of jury trial.
Against this, plaintiffs rely on Curtis v. Loether,
We likewise reject the argument that the Immunities Act must be read to afford a jury trial to these plaintiffs in order to avoid grave constitutional doubts. As Justice Cardozo stated in George Moore Ice Cream Co. v. Rose,
(A)voidance of a difficulty will not be pressed to the point of disingenuous evasion. Here the intention of the Congress is revealed too distinctly to permit us to ignore it because of mere misgivings as to power. The problem must be faced and answered.
See to the same effect Swain v. Pressley,
The orders striking the jury demands are affirmed.
Notes
The district court's statement that the suits sought damages under the Jones Act was mistaken. It has been suggested, however, that " § 905(b) incorporates the Jones Act", Gilmore & Black, The Law of Admiralty 455 (2d ed. 1975). See also note 8 infra
Icenogle v. Olympic Airways,
Appeal from the decision in Rex v. Cia. Peruana de Vapores, supra, is pending in the Third Circuit. Appeals from the decisions in Williams v. Shipping Corporation of India, supra, and Houston v. Murmansk Shipping Co., supra, are pending in the Fourth
These provisions, found in Chapter 97 of Title 28, are preceded by a preamble, 28 U.S.C. § 1602, reading as follows:
§ 1602. Findings and declaration of purpose
The Congress finds that the determination by United States courts of the claims of foreign states to immunity from the jurisdiction of such courts would serve the interests of justice and would protect the rights of both foreign states and litigants in United States courts. Under international law, states are not immune from the jurisdiction of foreign courts insofar as their commercial activities are concerned, and their commercial property may be levied upon for the satisfaction of judgments rendered against them in connection with their commercial activities. Claims of foreign states to immunity should henceforth be decided by courts of the United States and of the States in conformity with the principles set forth in this chapter.
This ruling was thought,
Some argument is made that since § 1603 begins with the words "For purposes of this chapter", to wit, Chapter 97, the reach of the definition of "foreign state" does not extend to Chapter 85 where § 1332 is located. This reasoning is obviously flawed since § 1330(a), which is also in Chapter 85, itself refers to § 1603(a), and sections 1330 and 1332 must be read together
Counsel also argues, somewhat inconsistently, that Congress' direct reference to § 1603 in §§ 1330(a) and 1441(d) and the absence of such a reference in § 1332(a)(2) somehow show that Congress did not intend to withdraw jurisdiction under § 1332 in this class of cases. This argument fails also since there simply was no reason for Congress to refer to § 1603 in § 1332(a)(2).
An additional consideration strongly supporting this conclusion is the new § 1441(d) dealing with removal. It is transparently clear that if an entity like these defendants had been sued in a state court and had removed to federal court on the basis that diversity jurisdiction existed under § 1332(a)(2), jury trial in federal court would be barred by § 1441(d). Williams v. Shipping Corp. of India, supra; Jones v. Shipping Corp. of India, Ltd., supra. We can perceive no reason why Congress should have wished the situation to be different when suit was initiated in federal court
Defendants point to another anomaly consequent on plaintiffs' construction, namely, that corporations owned by foreign states would be subject to jury trial in suits when the amount in controversy exceeded $10,000, but not when it was $10,000 or less.
The court may well have been mistaken in assuming there would be a right to jury trial in such cases when § 905(b) afforded the sole basis for federal jurisdiction. Unlike the Jones Act, 46 U.S.C. § 688, 33 U.S.C. § 905(b) does not explicitly provide for a jury trial. The lack of any such reference would seem to require that in suits where no other basis for federal jurisdiction exists, the courts would have to consider the problems dealt with in Romero v. International Terminal Operating Co.,
We also do not understand the fear of the district judge in Rex, supra
(a) district court would not only no longer have jurisdiction over a suit against a commercial corporation that happened to be owned fifty-one percent by a foreign state under 28 U.S.C. § 1332, but in addition there would be no jurisdiction in federal question cases (28 U.S.C. § 1331); civil rights actions (28 U.S.C. § 1343); or other actions relating to regulation of interstate commerce (28 U.S.C. § 1337), all of which traditionally are tried by a jury.
Under § 1330 the district courts have jurisdiction of all actions against commercial corporations owned by foreign states as defined in § 1603. All that is prohibited is jury trial.
Our conclusion with respect to § 1331 jurisdiction is reinforced by § 1441(d), see note 7 supra. Clearly if a foreign state, as defined in § 1603(a), were to base removal on the existence of a federal question, § 1441(d) would bar a jury trial. As stated in 1 Moore, Federal Practice P 0.66(4) at 700.180, "Of course it would be within the power of Congress to provide for a jury trial in original actions but not in removed actions, but the reason for such a distinction is obscure."
Plaintiffs' reply brief calls our attention to a recent article, Kirst, Jury Trial and the Federal Tort Claims Act: Time to Recognize the Seventh Amendment Right, 58 Texas L.Rev. 549 (1980). Conceding that "(e)very federal district court and court of appeals that has faced the issue has concluded that the denial of jury trial in FTCA actions does not violate the seventh amendment", id. at 550, Professor Kirst attacks the rather cryptic statements of the Supreme Court in McElrath and Galloway on grounds of both history and principle. He argues, id. at 563,
E. g., Mr. Justice Holmes' explanation that "(a) sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right as against the authority that makes the law on which the right depends." Kawananakoa v. Polyblank,
Whatever our enthusiasm over the jury may be, this is not necessarily shared by foreign governments particularly those which may fear that at one time or another they may be politically unpopular with Americans
The lack of any provision safeguarding jury trial in the Constitution as originally adopted was, as is well known, a principal basis for objection in the state ratification debates. We have been cited to nothing in these or in the legislative history of the Seventh Amendment to indicate that the true believers in jury trial had given any thought to the problem here at issue