Opinion ID: 343367
Heading Depth: 1
Heading Rank: 2

Heading: issues

Text: 10 As stated by the Supreme Court, there are two issues remaining for consideration: 11 1. Does the reciprocity provision bar the claim of a foreign corporation which is 99% owned by American citizens? 12 2. Does the reciprocity provision deny due process of law to a foreign corporation under the facts of this case? APPLICABILITY OF THE RECIPROCITY PROVISION 13 Appellant contends that since 99% of its corporation is owned by American citizens, this court should treat appellant as an American shipowner and accord it the rights and liabilities of an American shipowner, thereby precluding the effect of the reciprocity provision. 14 In support of its position, appellant cites Hellenic Lines, Ltd. v. Rhoditis, 398 U.S. 306, 90 S.Ct. 1731, 26 L.Ed.2d 252 (1970). In Hellenic, a seaman, injured in the Port of New Orleans, filed suit under the Jones Act, 46 U.S.C. § 688, against the Greek corporate shipowner. 95% of Hellenic's stock was owned by a United States domiciliary who was also a Greek citizen. The corporation was managed from New York by this 95% stockholder. The injured seaman was a Greek citizen and his contract of employment provided that Greek law would apply and all claims would be adjudicated by a Greek court. The issue presented was whether there were substantial contacts with the United States so as to render Hellenic an employer under the Jones Act. 15 The Supreme Court disregarded the corporate nationality of the shipowner, finding that the shipowner had substantial and significant contacts with the United States. The Supreme Court stated: 16 The flag, the nationality of the seaman, the fact that his employment contract was Greek, and that he might be compensated there are in the totality of the circumstances of this case minor weights in the scales compared with the substantial and continuing contacts that this alien owner has with this country. 17 398 U.S. at 310, 90 S.Ct. at 1734. 18 Emphasizing that its owners are American citizens, appellant seeks to apply this contacts test applicable in Jones Act cases to the present case arising under the Public Vessels Act. 19 We reject this invitation for two reasons: First, appellant is seeking to pierce its own veil for its own benefit. Appellant has cited no authority and we have found none which allows such a procedure. Hellenic, supra, involved just the opposite situation the corporate veil was pierced for the benefit of the injured seaman, a result objected to by the corporate owner. The reasons for disallowing such a practice are obvious, the corporation could receive the benefits of the corporate structure when it was to its benefit to claim such an existence. On the other hand, the corporation could disregard the commensurate liabilities when such existence was not favorable simply by pointing to its significant contacts with the United States. 20 Secondly, the Jones Act is distinguishable from the Public Vessels Act. The purpose of the Jones Act was remedial in nature for the benefit and protection of seamen who are peculiarly wards of admiralty. The Arizona v. Anelich, 298 U.S. 110, 56 S.Ct. 707, 80 L.Ed. 1075 (1936); Cox v. Roth,348 U.S. 207, 75 S.Ct. 242, 99 L.Ed. 260 (1954). The Act was designed for this specific class of plaintiffs who are subject to rigorous discipline and an obligation to follow orders inherent in their profession. To further effectuate this purpose of protecting seamen the contacts test was announced to broaden the jurisdictional reach of the statute where there is a sufficient nexus between the defendant and this country so as to justify the assertion of jurisdiction. Lauritzen v. Larsen, 345 U.S. 571, 73 S.Ct. 921, 97 L.Ed. 1254 (1953). When sufficient contacts are found, after analyzing the relevant factors, the ward of admiralty may sue a foreign shipowner in a United States Court. 21 In contrast, the Public Vessels Act was not designed for a particular class of plaintiffs. The Act was enacted to circumvent the rigors of sovereign immunity previously enjoyed by the potential defendant, the United States. Canadian Aviator, Ltd. v. United States, 324 U.S. 215, 65 S.Ct. 639, 89 L.Ed. 901 (1945). Although a seaman, if injured by an act of a United States public vessel, could recover under this Act, it was not specifically enacted for the seaman's sole benefit, as was the Jones Act. The underlying concern for the protection of the seaman is not present in the Public Vessels Act and certainly not in the present case. Implementing the contacts test as utilized in Jones Act cases would not further the central purpose of the Public Vessels Act. The Act itself has achieved its purpose removal of the sovereign immunity defense. 22 Additionally, the eight American shareholders, of their own volition, chose to incorporate under the laws of the Philippines. Appellant argues that they did so because Congress provided tax and other incentives to encourage Americans to invest in businesses in the Philippines and other friendly underdeveloped countries. Nonetheless, it was appellant's choice to partake in such incentives and to incorporate under the laws of the Philippines. By such choice appellant has excluded itself from that class of plaintiffs who enjoy the removal of the sovereign immunity defense. CONSTITUTIONALITY OF THE RECIPROCITY PROVISION 23 It must first be pointed out, as conceded by appellant, that this contention was not raised in the district court and therefore will not be reviewed by this court unless there are significant questions of general impact or when injustice might otherwise result. Krause v. Sacramento Inn,479 F.2d 988 (9th Cir. 1973). Since appellant is being denied access to the only forum available to litigate its claims by the very statute claimed to be unconstitutional, we will review its contentions to avoid this possible injustice. 24 Appellant argues that the reciprocity provision, 46 U.S.C. § 785, denies it due process in violation of the Fifth Amendment. The thrust of this argument is that there is no basis to include in the class of persons who are prohibited by the reciprocity statute from suing the United States, those citizens of countries who can be sued by the United States Government even though their country does not allow a suit against it by a United States citizen. In effect, they argue that there is no true reciprocity in the present case the United States Government can sue a Philippine national, but a Philippine national cannot sue the United States Government. 25 The Fifth Amendment, as well as the Fourteenth Amendment, protects aliens from deprivation of life, liberty or property without due process of law. Wong Yang Sung v. McGrath, 339 U.S. 33, 70 S.Ct. 445, 94 L.Ed. 616 (1950). However, as stated recently by the Supreme Court in Mathews v. Diaz,426 U.S. 67, 96 S.Ct. 1883, 48 L.Ed.2d 478 (1976): 26 The fact that all persons, aliens and citizens alike, are protected by the Due Process Clause does not lead to the further conclusion that all aliens are entitled to enjoy all the advantages of citizenship or, indeed, to the conclusion that all aliens must be placed in a single homogenous legal classification. For a host of constitutional and statutory provisions rest on the premise that a legitimate distinction between citizens and aliens may justify attributes and benefits for one class and not the other; 2 . . . 426 U.S. at 78, 96 S.Ct. at 1890. The Mathews court also stated: 27 . . . the party challenging the constitutionality of the particular line Congress has drawn has the burden of advancing principled reasoning that will at once invalidate that line and yet tolerate the different line separating some aliens from others. 426 U.S. at 82, 96 S.Ct. at 1892. 28 The obvious purpose for the reciprocity statute is that Congress did not want to open our courts to foreign nationals when their countries would not allow United States citizens access to their courts. This is a rational classification and allows the legitimate distinction here between aliens of different countries. The position advanced by appellant which would allow a foreign national to sue our government when our government is able to sue that foreign national in that country's court would defeat this purpose. Our citizens would still be unable to sue in the foreign country's courts, a situation Congress hoped to remedy by the reciprocity statute. 29 Moreover, we perceive this situation to be one where the judiciary should refrain from attempting to draw its own lines and to expand the classification made, especially when the classification has a sound rational basis. The following language from Mathews v. Diaz, supra, is most appropriate: 30 For reasons long recognized as valid, the responsibility for regulating the relationship between the United States and our alien visitors has been committed to the political branches of the Federal Government. Since decisions in these matters may implicate our relations with foreign powers, and since a wide variety of classifications must be defined in the light of changing political and economic circumstances, such decisions are frequently of a character more appropriate to either the legislature or the executive than to the judiciary. 31 For the reasons stated above, the original proceeding in the District Court, which granted summary judgment in favor of the government, is AFFIRMED.