Case Information
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA UNITED STATES OF AMERICA, Case No. 11-cr-00573-JSW-7-10 Plaintiff, ORDER DENYING SECOND MOTION TO DISMISS THIRD SUPERSEDING v. INDICTMENT AND CONTINUING STATUS HEARING PANGANG GROUP COMPANY, LTD., Re: Dkt. No. 1295 PANGANG GROUP STEEL VANADIUM & TITANIUM COMPANY, LTD.; PANGANG GROUP TITANIUM INDUSTRY, LTD; and PANGANG GROUP INTERNATIONAL ECONOMIC & TRADING COMPANY, Defendants.
Now before the Court for consideration is the motion to dismiss filed by Pangang Group
Company, Ltd. (“Pangang Group”), Pangang Group Steel Vanadium & Titanium Company, Ltd. (“PGSVTC”), Pangang Group Titanium Industry, Ltd. (“PGTIC”), and Pangang Group International Economic & Trading Company (“PGIETC”) (collectively “Pangang Defendants”). The Court has considered the parties’ papers, relevant legal authority, the record in this case, and it has had the benefit of oral argument. For the reasons that follow, the Court HEREBY DENIES the Pangang Defendants’ motion.
BACKGROUND
The Government alleges the Pangang Defendants violated the Economic Espionage Act (“EEA”), 18 U.S.C. section 1831, based on their alleged efforts to obtain trade secrets belonging to E.I. Dupont de Nemours and Company (“DuPont”)’s relating to DuPont’s chloride-route titanium dioxide (“TiO2”) pigment manufacturing process. ( See generally Dkt. No. 971, Third Superseding Indictment (“Third SI”).) The Government alleges the Pangang Defendants are “foreign instrumentalities” under the EEA. (Third SI ¶¶ 17.c, 56.c; see also id. ¶ 2 (alleging individuals conveyed information containing DuPont trade secrets to “companies controlled by the” Government of the People’s Republic of China (“PRC”)).)
In April 2011, DuPont filed a civil complaint against Walter Liew, U.S.A. Performance Technology, Inc. (“USAPTI”), and John Liu, alleging they misappropriated trade secrets relating to DuPont’s TiO2 pigment manufacturing process. See E.I. Dupont de Nemours and Company v. U.S.A. Performance Technology, Inc. , No. 11-cv-1665-JSW. [1] The Federal Bureau of Investigation subsequently opened a criminal investigation into alleged violations of 18 U.S.C. section 1832. On August 23, 2011, the Government charged Walter and Christina Liew (“the Liews”) with witness tampering and false statements. (Dkt. No 16, Indictment.) On February 7, 2012, the Government filed a superseding indictment, in which it charged Walter Liew, USAPTI, the Pangang Defendants, and others, with, inter alia , violations of the EEA, including conspiracy to commit economic espionage, in violation of 18 U.S.C. section 1831(a)(5), conspiracy to commit theft of trade secrets, in violation of Section 1832(a)(5), and attempted economic espionage, in violation of Section 1831(a)(3)-(4). (Dkt. No. 64, Superseding Indictment.) [2] 18 U.S.C. section 1831 provides: [w]hoever, intending or knowing that the offense will benefit any
foreign government, foreign instrumentality, or foreign agent, knowingly-- (1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains a trade secret; (2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys a trade secret; (3) receives, buys, or possesses a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization; (4) attempts to commit any offense described in any of paragraphs (1) through (3); or (5) conspires with one or more other persons to commit any offense described in any of paragraphs (1) through (3), and one or more of such persons do any act to effect the object of the conspiracy shall, except as provided in subsection (b), be fined not more than $5,000,000 or imprisoned not more than 15 years, or both.
(b) Organizations. -- Any organization that commits any offense described in subsection (a) shall be fined not more than the greater of $10,000,000 or 3 times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided.
On March 29, 2012, the Pangang Defendants moved to quash service of the superseding
indictment. The Court granted that motion on July 23, 2012.
United States v. Pangang Group
Co., Ltd.
,
On January 5, 2016, the Government filed the Third SI and charged the Pangang Defendants with one count of conspiracy to commit economic espionage, in violation of Section 1831(a)(5), and one count of attempted economic espionage, in violation of Section 1831(a)(1)- (4). The Government alleges that Pangang Group is a state-owned enterprise (“SOE”) controlled by the State-Owned Assets Supervision and Administration Commission of the State Council (“SASAC”) of the PRC. ( ¶ 4.) SASAC was created in 2003 “to exercise ownership of state- owned enterprises on the [PRC’s] behalf,” which at that time included Pangang Group. (Szamosszegi Decl., ¶¶ 7-8 13, 16, Exs. 6-7.)
The Government also alleges that Pangang Group’s Chairman and other senior managers were officials of the Communist Party. According to the Government, Pangang Group controls PGSVTC, “which shared senior management with Pangang Group.” (Third SI, ¶¶ 4, 5.a.) Pangang Group allegedly formed PGTIC in 2007 to develop a chloride-route TiO2 factory in Sichuan Province. Pangang Group and PGSVTC allegedly own and control PGTIC and PGIETC, the latter of which was a financing arm of Pangang Group. ( ¶¶ 5.b-5.c; see also Szamosszegi Decl., ¶ 17, Ex. 26.)
On December 19, 2016, Magistrate Judge Corley granted the Government’s application to
issue summonses to the Pangang Defendants. The Pangang Defendants did not appear for the
arraignment, and the Government filed a motion for sanctions. On April 17, 2017, while the
motion for sanctions was pending, the Pangang Defendants filed their third motion to quash
service and opposed the Government’s motion for sanctions. On July 18, 2017, based on recent
amendments to Rule 4, the Court denied the Pangang Defendants’ motion to quash and deferred
ruling on the Government’s motion for sanctions.
United States v. Pangang Group Co., Ltd.
, No.
11-cr-573-7-10-JSW,
Following the Pangang Defendants’ arraignment on the Third SI, the Government produced discovery, the parties negotiated a protective order, and the parties presented various (Dkt. No. 124, Declaration of Andrew Z. Szamosszegi (“Szamosszegi Decl.”), ¶ 3.) The Government submitted the Szamosszegi Declaration with its opposition to the Pangang Defendants’ first motion to quash. The Pangang Defendants have relied on that declaration and its exhibits, which are filed at Docket Nos. 125 through 127, in support of this motion. Many of the exhibits to Mr. Szamosszegi’s declaration have not been translated, and the Court relies only on cited exhibits that are in English. discovery disputes to Magistrate Judge Cousins. The parties also raised disputes with this Court about the timing of pretrial disclosures, and the Pangang Defendants filed a motion for bill of particulars, which the Court granted in part. ( See, e.g., Dkt. Nos. 1124, 1142.)
On July 9, 2019, the Pangang Defendants moved to dismiss the Third SI and, for first time,
argued they were immune from prosecution under the Foreign Sovereign Immunities Act
(“FSIA”), 28 U.S.C. sections 1330(a) and 1602 through 1611. On August 26, 2019, the Court
denied the motion. (Dkt. No. 1223, “
Pangang VI
”.) When it ruled on that motion, the Court
accepted as true the Government’s allegations that the Pangang Defendants were “foreign
instrumentalities” for purposes of the EEA. It also concluded that any differences between the
definitions of foreign instrumentalities in the EEA and in the FSIA were not material to resolution
of the motion. (
Id.
at 3:24-5:22, 11:4-8.) It did not reach the issue of whether the FSIA applied to
criminal cases but concluded that if the FSIA applied, so did its exceptions. The Court then
concluded that the FSIA’s commercial activity and waiver exceptions applied and, accordingly,
denied the motion. (
Id.
at 10:5-17:10.)
The Pangang Defendants appealed, and the Ninth Circuit affirmed on different grounds.
United States v. Pangang Group Co., Ltd.
,
The court also looked to the allegations that Pangang Group was “controlled” by SASAC and that it was “state-owned[.]” It concluded the former allegation was insufficient to establish Pangang Group was a foreign instrumentality for purposes of the FSIA because it did not speak to direct ownership. It concluded the latter term was too ambiguous to establish direct ownership. at 958-59. The court also took note of the Government’s theory that, at least by 2010, SASAC indirectly controlled Pangang Group, which was supported by Mr. Szamosszegi’s declaration. Id. at 959. It reasoned the Government’s position on indirect control “further underscore[d] the already amply-supported conclusion that the indictment’s use of the term ‘state-owned’ was not intended to speak to the corporate-structure issues that are dispositive[.]” Id.
Following remand from the Ninth Circuit, the Court held a status conference. Although the Court previously established a filing deadline for motions challenging the Third SI, it inquired whether there would be any further motion practice on the applicability of the FSIA. The Pangang Defendants indicated they were contemplating bringing a further motion to dismiss, and the Court stated that any such motion should be filed “as soon as possible.” (Dkt. No. 1290, Minute Order). On November 30, 2021, the Pangang Defendants filed their motion to dismiss.
The Court will address additional facts as necessary in the analysis. ANALYSIS The Pangang Defendants argue they have met their burden to make a prima facie showing
that they are foreign instrumentalities and, as such, are immune from prosecution under the FSIA
and under the common law.
See Pangang VII,
A. Applicable Legal Standards.
Under the Federal Rules of Criminal Procedure, “[a] party may raise by pretrial motion any
defense, objection, or request that the court can determine without a trial of the general issue,” and
a “motion that the court lacks jurisdiction may be made at any time while the case is pending.”
Fed. R. Crim. P. 12(b)(1)-(2). “A pretrial motion is generally ‘capable of determination’ before
trial if it involves questions of law rather than fact.”
United States v. Shortt Accountancy Corp.
,
The Pangang Defendants now make a factual attack on the Court’s jurisdiction and have
submitted evidence to support their motion. Accordingly, the Court has not presumed the
allegations in the Third SI are true.
See Pangang VII
,
always has been, ‘a matter of grace and comity on the part of the United States, and not a
restriction imposed by the Constitution.’”
Rep. of Argentina v. NML Cap., Ltd.
,
Beginning in 1952, the State Department began to adopt a “restrictive theory” of foreign sovereign immunity. Id. at 486-87.
Under this theory, 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. … This change threw immunity determinations into some disarray, because political considerations sometimes led the [State] Department to file suggestions of immunity in cases where immunity would not have been available under the restrictive theory. … Congress responded to the inconsistent application of sovereign immunity by enacting the FSIA in 1976.
Samantar v. Yousuf
,
28 U.S.C. § 1604. The FSIA also provides that “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 either under sections 1605-1607 of this title or under any applicable international agreement.” Id. § 1330(a).
The term “foreign state” includes an “agency or instrumentality of a foreign state.” § 1603(a). An “agency or instrumentality” of a foreign state is
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 (e) of this title, nor created under the laws of any third country.
Id. § 1603(b) (emphasis added).
In order for a corporation to show it is a foreign instrumentality based on the majority
ownership prong of Section 1603(a)(2), it must show “the foreign state
itself
owns a majority of
the corporation’s shares.”
Dole Food Co. v. Patrickson
,
C. The Pangang Defendants Fail to Make a Prima Facie Showing that they are Foreign
Instrumentalities.
The Court begins its analysis with whether any Pangang Defendant has established a
prima
facie
case that it is entitled to invoke sovereign immunity, either under the FSIA or under common
law.
See Pangang VII
,
1. FSIA.
There is no dispute that each Pangang Defendant is able to satisfy the first and third elements of the FSIA’s definition of foreign instrumentality. at 955. Therefore, the only question the Court must consider is whether any of the defendants can show the majority of “its shares or other ownership interest is owned by a foreign state or political subdivision thereof” or that it is “an organ of a foreign state or political subdivision thereof[.]” 28 U.S.C. § 1603(b)(2).
a. Ownership Theory.
Pangang Group is the only defendant that relies on the theory that it was directly owned by
SASAC when the Government filed the superseding indictment on February 7, 2012.
See
Pangang VII
,
The FSIA requires direct “majority” ownership,
i.e.
more than 50%. Assuming that
Angang did not obtain 100% of Pangang Group’s shares until 2014, that does not preclude
Angang from obtaining majority ownership prior to that time. The level of proof needed to
establish a
prima facie
showing is not particularly high.
See, e.g., Data Disc, Inc. v. Systems Tech.
Assocs., Inc.
,
declaration and its exhibits are sufficient to make a prima facie showing that they are “organs” of the PRC. The Government did not directly respond to this argument in its opposition to the motion to dismiss. In any other situation the Court would treat the argument as conceded. However, given the importance of the issues, the Court independently evaluated the record to
determine if the Pangang Defendants made a prima facie showing on this theory.
The term organ has been construed “broadly” and can embody a variety of forms including
“a state trading corporation, a mining enterprise, … a steel company, …, [or] an export
association.”
EIE Guam Corp. v. Long Term Credit Bank of Japan
,
In
EIE Guam
, the parties’ underlying dispute centered on a defaulted loan and failed
efforts to resolve the matter. Japan’s Resolution and Collection Company (“RCC”) had been
assigned the loan and removed the case to federal court, and the issue was whether RCC was a
foreign instrumentality entitled to remove the matter.
A company may be an organ of a foreign state for purposes of the FSIA even if its employees are not civil servants. … As discussed above, the RCC and the [Deposit Insurance Corporation of Japan] engage in exclusive functions that other loan collection companies may not perform. As to the commercial nature of the RCC’s work, we have held that Congress’ statement in the legislative history that a “state trading company” and “an export association” can be “organs” of a foreign state indicates Congress’ belief that an entity’s involvement in commercial affairs does not automatically render the entity non-governmental. … Finally, the district court’s key assertion that the RCC’s purpose is to carry out Japanese national policy related to the revitalization of the Japanese financial system is well supported in the record.
Id. at 641 (internal quotations and citations omitted). Accordingly, it found that, “on balance,” the relevant factors weighed in favor of a finding that the RCC was an “organ” of Japan. Id.
In
Gates v. Victor Fine Foods
, the Ninth Circuit concluded that a marketing board for hog
producers, Alberta Pork, was an organ of the Province of Alberta, Canada.
The Pangang Defendants argue that “a
prima facie
showing of [their] ‘organ’ status is
established by their alleged connection to the SASAC of the PRC.” (Mot. at 10:8-9.) They posit
that SASAC controlled Pangang Group and, through Pangang Group, SASAC indirectly
controlled PGSVTC, PGTIC, and PGIETC. This argument oversimplifies the inquiry a court must
make into whether an entity engages in a public activity for a foreign state. Instead, the Court
must engage in a “holistic evaluation of the circumstances[.]”
EIE Guam
,
criminal conduct and do not specifically address these factors. The Government alleges that SASAC supervises and manages SOEs, but PGSVTC, PGTIC, and PGIETC do not argue they are SOE’s. Moreover, the allegations do not suggest that the PRC formed PGSVTC, PGTIC, or PGIETC. (Third SI ¶¶ 5.a-c; see also Szamosszegi Decl., ¶ 17.) The Pangang Defendants’ reliance on Mr. Szamosszegi’s declaration do not add to the equation as to any defendant other than Pangang Group. Mr. Szamosszegi focuses primarily on the general level of control that SASAC exercises over SOE’s, which includes the appointment of executives and the development of five-year plans. Mr. Szamosszegi also attests that the government will sometimes provide funding to SOEs. ( See Szamosszegi Decl., ¶¶ 6-12, Exs. 7, 9- 12.) Mr. Szamosszegi’s declaration and the exhibits on which the Court has relied do not address several of the relevant factors, such as employment practices. For example, there is nothing to suggest that SASAC directed the Pangang Group to create these subsidiaries or that SASAC provides funding to them. He does attest that PGSVTC and PGIETC share management, which “is typical of the relationship between SOEs and their subsidiaries and a means by which the [Communist Party] and SASAC control the SOEs and their subsidiaries.” ( ¶ 22.)
The Court concludes the factual record here is not analogous to the factual record in either Gates or EIE Guam . Therefore, although the term “organ” is construed broadly and although a prima facie showing is not a high bar, the Court concludes that the allegations of the Third SI alone or in combination with the information contained in the Szamosszegi Declaration are not sufficient to make that showing for PGSVTC, PGTIC, and PGIETC. Although it is a closer question with respect to the Pangang Group, the Court also concludes it has not met its burden to make a prima facie case that it was an “organ” of the PRC at the time it was indicted.
Accordingly, the Court DENIES the motion to dismiss on this basis as well. 3. Common Law.
The Pangang Defendants rely on the same factual record to support their argument that
they can be considered foreign states under the common law as they do to support their argument
under the FSIA. The Court concludes that record is not sufficient to establish that they are entitled
to assert sovereign immunity under the common law.
See, e.g., In re Investigation of World
Arrangements with Relation to Prod., Transp., Ref. & Distrib. of Petroleum
,
Accordingly, the Court DENIES the motion to dismiss on this basis as well.
D. The Court Concludes the FSIA Does Not Apply to Criminal Cases.
Assuming for the sake of argument that any of the Pangang Defendants have made a
prima
facie
showing that they are “foreign instrumentalities” under the FSIA, the Court concludes it can
no longer avoid the question of whether the FSIA applies to criminal prosecutions. Therefore, it
wades into those “murky waters” by beginning, as it must, with the text of the FSIA.
See, e.g.,
United States v. Lopez
,
The Supreme Court has repeatedly stated that if the FSIA applies, it “is the ‘sole basis for
obtaining jurisdiction over a foreign state in federal court.’”
Samantar
,
Looking at the FSIA holistically, it contains a “panoply of provisions that are consistent
only with an application to civil cases and not to criminal proceedings[.]”
United States v.
Hendron
,
For example, Section 1602 uses the term litigants, which “ordinarily refers to a party in a
civil suit and not to the state or federal government as prosecutor of criminal charges.”
Id.
at 975.
As discussed in
Hendron
, other portions of the FSIA contain terms that are associated with civil
litigation, such as “action” and “money damages.”
See, e.g.,
28 U.S.C. §§ 1605(a)(5)-(6), 1605(g)
(addressing Attorney General’s ability to seek to stay discovery in “actions” filed that are subject
to exceptions set forth in 28 U.S.C. sections 1605A and 1605B and referring to motions filed
pursuant to Federal Rules of Civil Procedure 12(b)(6) and 56)), 1605A(c) (providing for “private
right of action” and “money damages”), 1606 (restricting liability for punitive damages but
allowing for compensatory and actual damages), 1607 (addressing counterclaims), 1608
(addressing service, time to answer, and default);
see also Hendron
,
The Pangang Defendants rely on
Amerada Hess
to argue that Section 1330(a) trumps any
other statutory jurisdictional provisions when a claim of foreign sovereign immunity is raised. In
Amerada Hess
, the plaintiff filed suit relying on the Alien Tort Statute, 28 U.S.C. section 1350, to
assert jurisdiction for an act for which the defendant normally be immune: bombing a ship during
the Falklands War.
It is a “settled proposition that the subject matter jurisdiction is determined by Congress in
the exact degrees and character which to Congress may seem proper for the public good.” at
433 (internal citations and quotations omitted). Although the FSIA provides for original
jurisdiction of non-jury actions, Congress also expressly granted district courts “original
jurisdiction, exclusive of the courts of the states, of
all
offenses against the laws of the United
States.” 18 U.S.C. § 3231 (emphasis added). In
In re Grand Jury Subpoena
, a corporation moved
to quash a grand jury subpoena and argued the FSIA “eliminated all criminal subject-matter
jurisdiction over foreign sovereigns[.]”
Although the D.C. Circuit did not decide whether the FSIA applied in criminal cases, it
aptly noted that “[i]t is hard to imagine a clearer textual grant of subject-matter-jurisdiction” than
18 U.S.C. section 3231.
Id.
“‘All’ means ‘all’; the provision contains no carve-out for criminal
process served on foreign defendants.”
Id.
;
accord Turkiye Halk Bankasi
,
The legislative history of the FSIA also supports the conclusion that it was not intended to
apply to criminal cases. Like the text of the statute, the legislative history is replete with terms
generally associated with civil cases. For example, Charles N. Brower, Legal Advisor to the
Department of State, and Bruno Ristau, Chief of the Foreign Litigation Unit of the DOJ’s Civil
Division, testified before a Congressional Subcommittee about a draft version of the FSIA.
Immunities of Foreign States: Hearing Before the Subcommittee on Claims and Governmental
Relations of the Committee on the Judiciary
, House of Representatives, Ninety-Third Congress,
First Session on H.R. 3493, at 19-20, 23-24, 29, 30-34 (June 7, 1973). Their testimony includes
references to “suits” or parties being sued, “plaintiffs” or “litigants”, removal, “actions for
damages,” “summons and complaint,” and the Federal Rules of Civil Procedure. at 19-20, 23-
24, 29, 30-34;
see also
H.R. Rep. 94-1487, at 6, 19, reprinted in 1976 U.S.C.C.A.N. 6604, at 6605,
6617-18 (1976) (in discussion of commercial activity referencing claims for unjust enrichment,
violations of securities law, and wrongful discharge).
Consistent with the statutory text, the section-by-section analysis in the House Report
contains references to terms that are consistent with civil litigation, including references to the
Federal Rules of Civil Procedure.
See, e.g.
, H.R. Rep. 94-1487, at 25-26, 28, 32, 1976
U.S.C.C.A.N. at 6623-24, 6627, 6631. The
Hendron
court also found support for its conclusion
within that legislative history.
The Court also has considered the cases cited in its previous order and the issue of the FSIA’s applicability to criminal cases anew. The Court still finds the reasoning in Hendron more persuasive than the reasoning of the Courts that have determined the FSIA does apply in criminal cases. [11] Accordingly, the Court concludes the FSIA does not apply in criminal proceedings, and it DENIES the Pangang Defendants’ motion on that basis.
E. If the FSIA, Its Exceptions Apply as Well.
Assuming for the sake of argument the FSIA does apply to criminal prosecutions, the
Court once again concludes that its exceptions would apply as well.
[12]
The Pangang Defendant
have not convinced the Court that it should revisit its conclusions on the applicability of the
commercial activity exception or the waiver exception. Accordingly, the Court incorporates by
reference its previous analysis on those exceptions and finds they would apply.
Pangang VI
at
11:9-17:8. The Court’s conclusion on the commercial activity exception is further supported by
the Second Circuit’s opinion in
Turkiye Halk Bankasi
rejecting the defendant’s argument that its
activities were sovereign in nature. The court found the defendant conflated the purpose of the act
with the act itself, and it determined the defendant’s “participation in money laundering schemes
designed to evade U.S. sanctions” were activities “that could be, and in fact regularly [are],
performed by private-sector businesses[.]”
The Pangang Defendants argue that under the common law the restrictive theory of
sovereign immunity does not apply and absolute immunity remains the rule.
Cf. Gould
, 750 F.
Supp. at 844 (“[I]n peacetime situations, this country does not bring criminal proceedings against
other nations.”);
see also
Hazel Fox & Philippa Webb,
The Law of State Immunity
at 92 & n. 67
(3d ed. 2015) (“legislation in common law countries introducing the restrictive approach of
immunity in civil proceedings excludes its application to criminal proceedings”);
Research
Handbook on Jurisdiction and Immunities in International Law
: Chapter 7, Elizabeth Helen
Franey,
Immunity from the criminal jurisdiction of national courts
, at 205 (2015) (“State immunity
from the criminal jurisdiction of foreign states is a matter of customary international law.”). The Court does not find it dispositive that the Department of Justice chose to prosecute this
case. However, that decision does factor into its analysis.
See, e.g., United States v. Sinovel Wind
Group Co.
,
The Second Circuit’s analysis of common law immunity in
Turkiye Halk Bankasi
is
minimal.
cited can be found at ECF p. 55. The Franey reference is attached as Exhibit 3 to Mr. Packard’s declaration. recognizes the restrictive theory of sovereign immunity, which would not protect commercial activity. at 351 n.70 (citing Rest. (Fourth), For. Rel. L. of the U.S. § 454 cmt. h). Because the Court has determined that the charged conduct is commercial in nature, it concludes the Pangang Defendants are not entitled to immunity under the common law.
Accordingly, the Court DENIES the motion to dismiss on this basis as well.
CONCLUSION
For the foregoing reasons, the Court DENIES the Pangang Defendants’ motion to dismiss. The Court CONTINUES the status hearing set for March 1, 2022, to March 15, 2022, at 12:00 p.m. The parties shall file a joint status report by March 8, 2022.
IT IS SO ORDERED.
Dated: February 25, 2022
__________________________________ JEFFREY S. WHITE United States District Judge
Notes
[1] DuPont never amended its complaint to include the Pangang Defendants as Defendants, and the parties stipulated to dismiss that case on May 29, 2019.
[2] On March 12, 2013, the Government filed a second superseding indictment, which did not 28 alter the charges against the Pangang Defendants. (Dkt. No. 269.)
[3] “State-owned enterprises … in China are enterprises whose assets are owned by the state.”
[4] As of October 1, 2019, SASAC does not directly own any of the Pangang Defendants. See, e.g., United States v. Pangang Group Co. Ltd., et al. , United States Court of Appeals for the Ninth Circuit No. 19-10306, Dkt. No. 9.
[5] Because the Pangang Defendants are contesting the Court’s jurisdiction, the Court shall not
hold the Pangang Defendants to the deadline it previously established for challenging the Third SI.
Subject matter jurisdiction is not an issue that can be waived.
See Pangang VII
,
[6] In contrast, the EEA defines “foreign instrumentality” as “any agency, bureau, ministry,
component, institution, association, or any legal, commercial, or business organization,
corporation, firm, or entity that is
substantially owned
,
controlled, sponsored, commanded,
managed, or dominated by a foreign government
[.]” 18 U.S.C. § 1839(a) (emphasis added);
see
also Pangang VII
,
[7] The Government objects to the exhibits attached to Mr. Wang’s declaration on the basis
23
that they are not admissible under Federal Rules of Evidence 902(3), 902(12), 803(3) or 803(8).
When a party raises a factual attack to jurisdiction, that party “must support … jurisdictional
24
allegations with competent proof under the same evidentiary standard that governs in the summary
judgment context.”
Leite v. Crane Co.
,
[8] If the FSIA does apply in criminal cases, that would preclude the Pangang Defendants 27 from relying on common law to support their claim of immunity. See What’sApp Inc. , 17 F.4th at 933. 28
[9] Pangang VI at 10:7; see also Megan Q. Liu, Note, The Scope of Sovereign Criminal 27 Immunity: Instrumentalities Under the Foreign Sovereign Immunities Act , 60 Colum. J. Transnat’l L. 276, 288 n.67 (2021) (arguing FSIA does not apply to criminal cases and offering framework to 28 address claims of foreign sovereign immunity in criminal cases).
[10] The D.C. Circuit also read
Amerada Hess
to give “no hint at all that [the Supreme Court]
26
intended to create a loophole where, in criminal cases clearly covered by an exception to
immunity, a district court would nevertheless lack subject-matter-jurisdiction.”
In re Grand Jury
27
Subpoena
,
[11]
See Pangang VI
at 6:2-4, 7:2-8:26 & n.4. The Ninth Circuit subsequently affirmed the
20
district court’s decision in
Broidy Capital Management, LLC v. State of Qatar
, on which the
Pangang Defendants relied in their first motion, albeit on different grounds.
[12] Some of the exceptions do appear more appropriate to civil proceedings, yet Section
1605(a) states they apply in “any case” rather than in any “civil action.”
See In re Grand Jury
26
Subpoena
,
[13] This argument rests on the Court’s conclusion that the FSIA does not apply to criminal 28 cases. Assuming the FSIA is not applicable, the Court concludes that the Ninth Circuit’s holding