GSS GROUP LTD, also known as Global Security Seals Group Ltd, Appellant v. NATIONAL PORT AUTHORITY, Appellee.
No. 11-7093.
United States Court of Appeals, District of Columbia Circuit.
Argued March 2, 2012. Decided May 25, 2012.
680 F.3d 805
Jessica L. Ellsworth argued the cause for appellee. With her on the brief was Lindsay D. Breedlove.
Before: GARLAND, Circuit Judge, and WILLIAMS and RANDOLPH, Senior Circuit Judges.
Opinion for the Court filed by Senior Circuit Judge RANDOLPH.
Concurring opinion filed by Senior Circuit Judge WILLIAMS, with whom Senior Circuit Judge RANDOLPH joins.
RANDOLPH, Senior Circuit Judge:
GSS Group, Ltd., brought this action to confirm a foreign arbitration award against the National Port Authority of Liberia. The district court dismissed the petition for lack of personal jurisdiction after concluding that the Port Authority did not have sufficient contacts with the United States. We affirm.
The Port Authority is a public corporation, organized under the laws of Liberia, responsible for the management, operation, and maintenance of Liberia‘s port facilities. It is wholly owned by the Liberian government, but, like many state-owned enterprises, operates at some remove from the government itself. The precise extent of this separation is a contested issue, taken up in greater detail below.
On June 9, 2005, the Port Authority entered into an agreement with GSS Group, a construction company incorporated in the British Virgin Islands and headquartered in Israel. The agreement called on GSS Group to build and operate a container park at the port of Monrovia, Liberia‘s capital. Several later amendments resulted in a final contract dated October 28, 2005. Although the parties intended the contract to run for twelve and one-half years, it remained in effect for only a few months.
The contract‘s early demise resulted from a change in Liberia‘s government. The National Transitional Government of Liberia-installed in 2003, during the aftermath of a four-year civil war-handed over control to a new, democratically-elected government in January 2006. Just a few weeks later, the new government determined that the contract was “null and void ab initio” because it had been awarded in violation of competitive bidding requirements. Although GSS Group and the Port Authority had secured a single-source exemption from those requirements, the new government claimed that the waiver was “based on misrepresentation[s]” by GSS Group and “collusion” between GSS Group and Transitional Government officials.
GSS Group denied the new government‘s allegations and protested the contract‘s cancellation. After attempting to resolve the dispute informally, GSS Group invoked the contract‘s arbitration clause on March 15, 2006. That clause required the parties to submit disputes regarding the contract‘s “formation, validity, interpretation, performance, termination, enforcement or breach” to “binding arbitration” in London, England. The arbitration clause further stated that disputes would be decided “in accordance with the laws of England and Wales.”
The Port Authority resisted GSS Group‘s arbitration demand. It maintained that parallel proceedings in the Liberian court system1 prevented Lord
On June 16, 2009, GSS Group filed a petition in the United States District Court for the District of Columbia to confirm the London arbitration award. The Port Authority moved to dismiss the petition on several grounds, including lack of personal jurisdiction. Its personal jurisdiction argument focused on two main points. First, the Port Authority asserted that it was “legally separate from the Liberian government.”2 Memorandum of Points and Authorities, GSS Grp. Ltd. v. Nat‘l Port Auth., No. 1:09-cv-01322-PLF, at 16 (D.D.C. Oct. 30, 2009) (“NPA Memorandum“). Separate legal status was important since foreign sovereigns and their extensively-controlled instrumentalities are not “persons” under the Fifth Amendment‘s Due Process Clause-and thus have no right to assert a personal jurisdiction defense. See TMR Energy Ltd. v. State Prop. Fund of Ukraine, 411 F.3d 296, 300-01 (D.C. Cir. 2005); Price v. Socialist People‘s Libyan Arab Jamahiriya, 294 F.3d 82, 96-97 (D.C. Cir. 2002). In contrast to the Liberian government and its agencies, the Port Authority portrayed itself as an independent, albeit state-owned, corporation entitled to the full panoply of due process protections. Second, the Port Authority claimed that it could not be haled into the district court because it did not have “minimum contacts” with the United States. See Goodyear Dunlop Tires Operations, S.A. v. Brown, --- U.S. ----, 131 S.Ct. 2846, 2853, 180 L.Ed.2d 796 (2011). This contention relied on the fact that the Port Authority had no offices or personnel in the United States and “ha[d] never engaged in commercial activity in the United States.” NPA Memorandum at 20.
GSS Group‘s reply did not contest the Port Authority‘s claim of juridical separateness or assert that the Port Authority had minimum contacts with the United States. Instead, it argued that the Port Authority satisfied all of the jurisdictional prerequisites set forth in the Foreign Sovereign Immunities Act. See
The district court granted the motion to dismiss. GSS Grp. Ltd. v. Nat‘l Port Auth., 774 F.Supp.2d 134 (D.D.C. 2011). It
Considering the Port Authority an independent entity, the district court concluded that it was a “person” covered by the Fifth Amendment. Id. at 139-41. “[C]ountless judicial opinions,” the court explained, had afforded minimum contacts protections to foreign corporations. Id. at 138 (citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 107, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987); Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-15, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)). Although none of these cases involved state-owned corporations, the court found no basis for treating them differently-at least in the absence of evidence that the corporation acted as an agent of its sovereign owner. Id. at 139-41 (distinguishing Price, 294 F.3d at 96-97). GSS Group had not attempted to demonstrate such a relationship, and did not identify any minimum contacts between the Port Authority and the United States.3 Id. at 140-41. The court therefore held that the Due Process Clause prevented it from exercising personal jurisdiction over the Port Authority. Id.; see also
In passing, the district court noted a possible doctrinal inconsistency between the Helicopteros line of civil procedure cases and other decisions holding that aliens without property or presence in the United States are not entitled to constitutional protection. Id. at 139; see TMR Energy, 411 F.3d at 302 n. * (citing United States v. Verdugo-Urquidez, 494 U.S. 259, 271, 110 S.Ct. 1056, 108 L.Ed.2d 222 (1990); Jifry v. FAA, 370 F.3d 1174, 1182 (D.C. Cir. 2004)). It was “not clear” to the district court “why foreign defendants, other than foreign sovereigns, should be able to avoid the jurisdiction of United States courts by invoking the Due Process Clause when it is established in other contexts that nonresident aliens without connections to the United States typically do not have rights under the United States Constitution.” 774 F.Supp.2d at 139. Nonetheless, the court concluded that it was “in no position to reject” the personal jurisdiction rule “enshrined in” Helicopteros and similar cases. Id.
GSS Group moved to alter or amend the judgment under
This appeal concerns both of the district court‘s orders. We review the order of dismissal de novo, see Second Amendment Found. v. U.S. Conference of Mayors, 274 F.3d 521, 523 (D.C. Cir. 2001), and the
I
GSS Group‘s petition arises under the Federal Arbitration Act,
The petition also relies on the Foreign Sovereign Immunities Act‘s jurisdictional provisions. Under the Act, district courts have subject-matter jurisdiction over “any nonjury civil action against a foreign state ... as to any claim for relief in personam with respect to which the foreign state is not entitled to immunity.”
The Port Authority‘s “foreign state” status has personal jurisdiction ramifications as well. The Foreign Sovereign Immunities Act specifies that “[p]ersonal jurisdiction over a foreign state shall exist as to every claim for relief over which the district courts have [subject-matter] jurisdiction under”
This brings us to the question presented: does the Constitution impose additional, non-statutory personal jurisdiction requirements, and if so, have those requirements been met here?
II
GSS Group‘s briefs dedicate significant attention to three arguments raised for the first time in its
These contentions misapprehend the role of
GSS Group insists that its
In the event, however, that this Court considers it material whether and to what extent the Government of Liberia controls the NPA‘s decision-making, then GSS reserves the right to conduct appropriate discovery to that end. The manner in which the NPA‘s new management cancelled the Contract strongly suggests that the Government does in fact control the NPA to a significant degree.
The district court did not abuse its discretion in rejecting this argument. Firestone, 76 F.3d at 1208. The footnote‘s “reservation” had no effect; “[t]o get discovery” GSS Group had to “ask for it.” Second Amendment Found., 274 F.3d at 525. As for the bare, unsubstantiated suggestion that the Liberian government controlled the Port Authority‘s actions, the court had no obligation to consider it. See Hutchins v. District of Columbia, 188 F.3d 531, 539 n. 3 (D.C. Cir. 1999) (en banc) (courts “need not consider cursory arguments made only in a footnote“).
These shortcomings do not matter, GSS Group says, because the district court committed “legal error” in its jurisdictional analysis. We do not agree. The district court faithfully applied the same minimum contacts standard used in prior cases involving foreign corporations. See 774 F.Supp.2d at 141 (citing Asahi, 480 U.S. at 102, 107; World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)). GSS Group could have urged the court to apply a different standard, but it failed to do so in a timely fashion. It cannot avoid the consequences of that omission by labeling the district court‘s lack of telepathic powers as “legal error.” United States v. Hewlett, 395 F.3d 458, 460 (D.C. Cir. 2005).
GSS Group also claims that “[a]ny question of waiver is ... moot” because
III
The sole argument GSS Group has preserved for our consideration is its claim that foreign, state-owned corporations have no due process rights. Distilled to its essence, GSS Group‘s point is that state-owned firms should be treated no differently than their sovereign shareholders.
In Price, we held that “foreign states are not ‘persons’ protected by the Fifth Amendment.” 294 F.3d at 96. Several factors influenced this conclusion, including the Supreme Court‘s ruling that the States of the Union are not “persons” for Fifth Amendment purposes. See id. (citing South Carolina v. Katzenbach, 383 U.S. 301, 323-24, 86 S.Ct. 803, 15 L.Ed.2d 769 (1966)). We explained that “it would be highly incongruous to afford greater Fifth Amendment rights to foreign nations, who are entirely alien to our constitutional system, than are afforded to the states, who help make up the very fabric of that system.” Id. We also emphasized that foreign governments interact with the United States “as juridical equals on the level of international law and diplomacy outside the constitutional system.” Id. at 97 (emphasis added) (quoting Lori Fisler Damrosch, Foreign States and the Constitution, 73 VA. L. REV. 483, 521 (1987)). These considerations put foreign sovereigns in a separate constitutional category from “private entities“-one in which “[t]he constitutional limits that have been placed on the exercise of personal jurisdiction” do not apply. Id. at 98-99.
GSS Group contends that the same logic applies to foreign, state-owned corporations. These entities, GSS Group claims, are just as “alien to our constitutional system” as the sovereigns that own them. Appellant‘s Br. 24-25. Thus, “[i]f a [foreign] sovereign does not have a ‘due process trump,’ neither does an alien state-owned agency or instrumentality.” Id. at 26. Under this rule, the Port Authority would be unable to oppose enforcement of the arbitration award on jurisdictional grounds, because it would not have a constitutional status different from the Liberian government.
Binding precedent forecloses GSS Group‘s argument. Both the Supreme Court and this court have repeatedly held that foreign corporations may invoke due process protections to challenge the exercise of personal jurisdiction over them. See, e.g., Goodyear, 131 S.Ct. at 2850-51, 2853; J. McIntyre Mach., Ltd. v. Nicastro, --- U.S. ----, 131 S.Ct. 2780, 2785, 2789-90, 180 L.Ed.2d 765 (2011); Asahi, 480 U.S. at 113-16; Helicopteros, 466 U.S. at 413-14; FC Inv. Grp. LC v. IFX Mkts., Ltd., 529 F.3d 1087, 1091-92 (D.C. Cir. 2008); Koteen v. Bermuda Cablevision, Ltd., 913 F.2d 973, 974-75 (D.C. Cir. 1990).5 In each of those instances, the foreign defendant was just as “alien to our constitutional system” as the Libyan government was in Price.
It is true that these cases do not speak to the due process rights of state-owned corporations. We addressed that issue in TMR Energy, a case involving facts quite similar to those presented here.6 TMR Energy, a Cyprian development corporation, sought to enforce a foreign arbitration award against the State Property Fund of Ukraine, an agency responsible for Ukraine‘s privatization program. TMR Energy, 411 F.3d at 298-99, 302. The State Property Fund conceded that it was an “agency or instrumentality” subject to statutory personal jurisdiction under the Foreign Sovereign Immunities Act. Id. at 299. It nonetheless moved to dismiss because it lacked minimum contacts with the United States, as required by the Fifth Amendment‘s Due Process Clause. Id. at 299-300 (citing Int‘l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)).
The State Property Fund was able to make this argument because Price‘s limit on due process protections “applie[d] only to ‘an actual foreign government.‘” Id. at 300 (quoting Price, 294 F.3d at 99). Left open was the question “whether other entities that fall within the FSIA‘s definition of ‘foreign state[,]’ including corporations in which a foreign state owns a majority interest, could yet be considered persons under the Due Process Clause.” Price, 294 F.3d at 99-100 (internal citation omitted). TMR Energy claimed that Transaero, Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148 (D.C. Cir. 1994), a case interpreting the Foreign Sovereign Immunities Act‘s service of process provisions,
We rejected the argument, explaining that “a different analysis is indicated where the issue is not service of process under the FSIA but whether an agency or instrumentality of a foreign state is entitled to the protection of the [D]ue [P]rocess [C]lause.” Id. at 301. To answer that question, we relied instead on the Supreme Court‘s decision in First National City Bank v. Banco Para el Comercio Exterior de Cuba, 462 U.S. 611, 103 S.Ct. 2591, 77 L.Ed.2d 46 (1983) (“Bancec“). Id. Bancec addressed the liability of a foreign, state-owned firm for the acts of its sovereign parent. See 462 U.S. at 613-14, 620-30. The Supreme Court held that “due respect for the actions taken by foreign sovereigns and for principles of comity between nations” required a baseline rule “that government instrumentalities established as juridical entities distinct and independent from their sovereign should normally be treated as such.” Id. at 626-27. In other words, state-owned firms generally are not liable for their government‘s actions. This presumption of separateness gives way only if a foreign “corporate entity is so extensively controlled by its owner that a relationship of principal and agent is created,” id. at 629, or when “broader equitable principle[s]” dictate that separate treatment “would work fraud or injustice,” id. (quoting Taylor v. Standard Gas & Electric Co., 306 U.S. 307, 322, 59 S.Ct. 543, 83 L.Ed. 669 (1939)).
TMR Energy extended the Bancec analysis to the constitutional
GSS Group responds that “this Court has not hitherto suggested much less held that an agency or instrumentality loses due process protection only if, as in TMR Energy, it is controlled by its foreign-state parent.” Appellant‘s Reply Br. 8. The implication is that there are other reasons why a foreign instrumentality might not fall within the Fifth Amendment‘s protective sweep. For instance, a footnote in TMR Energy suggested, while “express[ing] no view upon the question,” that “[i]t is far from obvious that even an independent [foreign instrumentality] would be entitled to the protection of the [F]ifth [A]mendment.” 411 F.3d at 302 n. *.
The footnote cites two cases, each of which held that aliens without property or presence in the sovereign territory of the United States have no constitutional rights. Id. (citing Verdugo-Urquidez, 494 U.S. at 271; Jifry, 370 F.3d at 1182). Similar cases abound. See, e.g., Zadvydas v. Davis, 533 U.S. 678, 693, 121 S.Ct. 2491, 150 L.Ed.2d 653 (2001); Johnson v. Eisentrager, 339 U.S. 763, 783-84, 70 S.Ct. 936, 94 L.Ed. 1255 (1950); Kiyemba v. Obama, 555 F.3d 1022, 1026 (D.C. Cir. 2009), vacated and remanded, --- U.S. ----, 130 S.Ct. 1235, 175 L.Ed.2d 1070 (2010) (per curiam), reinstated, 605 F.3d 1046 (D.C. Cir. 2010); 32 Cnty. Sovereignty Comm. v. Dep‘t of State, 292 F.3d 797, 799 (D.C. Cir. 2002); Harbury v. Deutch, 233 F.3d 596, 603-04 (D.C. Cir. 2000), rev‘d on other grounds sub nom. Christopher v. Harbury, 536 U.S. 403, 122 S.Ct. 2179, 153 L.Ed.2d 413 (2002); People‘s Mojahedin Org. of Iran v. U.S. Dep‘t of State, 182 F.3d 17, 22 (D.C. Cir. 1999); Pauling v. McElroy, 278 F.2d 252, 254 n. 3 (D.C. Cir. 1960) (per curiam). The district court in this case observed that these decisions, if taken to their logical conclusion, might mean that no foreign entity could assert a due process-personal jurisdiction defense, at least so long as it lacked property or presence within the United States. See 774 F.Supp.2d at 139. Others have also suggested that the decisions just cited could be seen as in conflict with the rule expressed in the Helicopteros line of civil procedure cases; if a foreign entity has no constitutional rights, its lack of minimum contacts is immaterial. See Austen L. Parrish, Sovereignty, Not Due Process: Personal Jurisdiction Over Nonresident Alien Defendants, 41 WAKE FOREST L. REV. 1, 28-33 (2006); Gary A. Haugen, Personal Jurisdiction and Due Process Rights for
Yet it may be that the cases can be reconciled. When a foreign corporation is summoned into court, it is being forced to defend itself. To do so, the corporation must appoint a representative to act for it-that is, an attorney. See Bristol Petroleum Corp. v. Harris, 901 F.2d 165, 166 n. 1 (D.C. Cir. 1990). In opposing personal jurisdiction on due process grounds the corporation, through its attorney, makes itself present. See Int‘l Shoe, 326 U.S. at 316. And since it has been forced to appear in the United States, at least for that limited purpose,7 it is entitled to the protection of the Due Process Clause as interpreted in International Shoe and later decisions involving foreign corporate defendants. Cf. Zadvydas, 533 U.S. at 693. An alternative reconciliation might lie in the idea that when a United States court exercises jurisdiction over a foreign corporate defendant it inflicts damage on that defendant (at a minimum in the form of legal costs, but possibly in the form of a judgment) in the United States.
We need not embrace this line of reasoning or resolve the possible conflict described above, for three reasons. First, GSS Group waived any reliance on Verdugo-Urquidez and its progeny at oral argument. See Oral Arg. Recording at 11:50-12:55, 22:25-22:46. Second, Bancec is the exclusive means for determining whether a foreign, state-owned corporation is a “person” for Fifth Amendment purposes. TMR Energy‘s holding that Bancec “must govern” is a precedent binding on us.
The bottom line is this: the Port Authority claimed to be an independent juridical entity in its motion to dismiss, and GSS Group failed to contest that characterization. GSS Group‘s omission left intact the Bancec presumption, which, under TMR Energy, guarantees the Port Authority treatment as a separate “person” entitled to due process protection. That protection includes the right to assert a minimum contacts defense. GSS Group has not identified any connection between the Port Authority and the United States; indeed, its brief concedes that none exists. The district court therefore correctly dismissed the petition for lack of personal jurisdiction.
Affirmed.
WILLIAMS, Senior Circuit Judge, with whom Senior Circuit Judge RANDOLPH joins, concurring:
I concur in the court‘s opinion and judgment but write separately to express concern about our decision in TMR Energy v. State Prop. Fund of Ukraine, 411 F.3d 296 (D.C. Cir. 2005), which extended First National City Bank v. Banco Para el Comercio Exterior de Cuba (“Bancec“), 462 U.S. 611, 103 S.Ct. 2591, 77 L.Ed.2d 46 (1983), to a wholly new domain. The result was to constitutionalize an issue quite unnecessarily.
In Bancec the Court considered whether a U.S. firm, sued in New York by a bank wholly owned by the Cuban government, could claim as a “set off” the losses inflicted on it by the Cuban government‘s seizure of its Cuban assets. The Court held that it could do so, invoking a set of corporate veil-piercing principles. While “government instrumentalities established as juridical entities distinct and independent from their sovereign should normally be treated as such,” 462 U.S. at 626-27, that norm could be overcome under a variety of circumstances-namely, where the “corporate entity is so extensively controlled by its owner that a relationship of principal and agent is created,” id. at 629, and where honoring the distinction “would work fraud or injustice” or “defeat legislative policies,” id. at 629-30.
At the time we decided TMR, three arguably relevant lines of authority were outstanding. First was Bancec‘s veil-piercing decision in the context of U.S. firms’ efforts to set off foreign states’ obligations against claims by a state-owned entity. Second was our own decision in Price v. Socialist People‘s Libyan Arab Jamahiriya, 294 F.3d 82 (D.C. Cir. 2002), holding that a foreign state was not a “person” for purposes of the due process clause and its requirement of “minimum contacts” for personal jurisdiction. In doing so we pointed out that foreign states were the juridical equals of the United States, and that if a state perceived that it had been improperly dragged into a U.S. court, it would have available to it “a panoply of mechanisms in the international arena through which to seek vindication or
Third were Supreme Court applications of the due process clauses’ “minimum contacts” analysis to private foreign corporations in determining whether they could be subject to U.S. courts’ jurisdiction. See, e.g., Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987).
In TMR Energy we noted both (1) that the cases applying minimum contacts analysis to foreign corporations appeared to rest on a hitherto unchallenged assumption of the due process clauses’ applicability, and (2) that in light of decisions by this court and the Supreme Court that aliens without property or presence in the United States do not receive constitutional protections, see, e.g., United States v. Verdugo-Urquidez, 494 U.S. 259, 271, 110 S.Ct. 1056, 108 L.Ed.2d 222 (1990), it was “far from obvious that [a wholly independent foreign state-owned corporation] would be entitled to the protection of the fifth amendment.” 411 F.3d at 302 n. *. But, partly because of TMR‘s failure to argue the point and partly because of the approach we took (finding against the foreign entity on other grounds, described below), we had no need to resolve either point.
Instead, we looked at the foreign entity in question through the lens of Bancec. We posed the question “whether the SPF [the State Property Fund of Ukraine] has a constitutional status different from that of the State of Ukraine.” Id. at 301. Finding that “the State of Ukraine had plenary control over the SPF,” we ruled that the SPF, “like its principal ... is not a ‘person’ for purposes of the due process clause and cannot invoke the minimum contacts test to avoid the personal jurisdiction of the district court.” Id. at 301-02.
But we never really explained the metamorphosis of Bancec, which arose as the solution to a set-off issue, into a constitutional doctrine for foreign state-owned entities. That extension yields several anomalies. While Bancec explicitly took note of “legislative policies,” 462 U.S. at 630, constitutionalization of the issue of suing foreign state-owned corporations stands as a potential obstacle to solutions that Congress might find sensible. Our own decision in Price, noting the availability of diplomatic measures, invites us as a country (courts as well as the political branches) to take note of the behavior of foreign states and the structure of international relations. Some countries have adopted “statutes that authorize their courts to exercise jurisdiction over a foreign defendant whenever the defendant‘s nation would do the same in analogous situations.” Austen L. Parrish, Sovereignty, Not Due Process: Personal Jurisdiction over Nonresident Alien Defendants, 41 WAKE FOREST L. REV. 1, 49 (2006). A U.S. statute mimicking such foreign solutions, however sensible as a negotiating strategy, would run afoul of TMR‘s constitutionalization of the issue-as applied, for instance, to corporations of a state that allowed suits against our corporations regardless of minimum contacts. State-owned corporations, of course, will often have access to the diplomatic mechanisms alluded to in Price, and their use of that access might well precipitate the sort of negotiated solutions contemplated there.
More generally, we reasoned in Price that extending due process protections to foreign states would “frustrate the United States government‘s clear statutory command” to subject foreign states to the
These concerns suggest that in a suitable case it may be valuable for courts to reconsider both the merits of the assumption in Asahi Metal and kindred cases that private foreign corporations deserve due process protections, and (perhaps more significantly) the application of that assumption to entities owned by a foreign state but not subject to the state‘s plenary control or otherwise treated as a state.
This said, if the Supreme Court were to find the due process clauses inapplicable to the question of jurisdiction over private foreign corporations, or if we were to do the same for state-owned but not state-equivalent entities, it would not follow ineluctably that they could henceforth be exposed to the United States courts’ jurisdiction regardless of minimum contacts. Quite apart from the instances where the FSIA itself imposes requirements substantially equivalent to minimum contacts, see
RANDOLPH
Senior Circuit Judge