Opinion ID: 781209
Heading Depth: 2
Heading Rank: 2

Heading: The Action By EIEG Is Against the RCC.

Text: 34 Title 28 U.S.C. § 1441(d) permits removal to federal district court 4 of [a]ny civil action brought in a State court 5 against a foreign state as defined [by the FSIA]. (Emphasis added.) EIEG asserts that this action was not removable under § 1441(d) because EIEG brought no claims against the RCC. In support, EIEG cites the well-worn maxim that the plaintiff's power to prevent removal 35 continues with the plaintiff throughout the litigation, so that whether such a case [is] nonremovable when commenced shall afterwards become removable depends not upon what the defendant may allege or prove or what the court may ... order, but solely upon the form which the plaintiff by his voluntary action shall give to the pleadings.... 36 Great N. Ry. Co. v. Alexander, 246 U.S. 276, 282, 38 S.Ct. 237, 62 L.Ed. 713 (1918); see also Self v. Gen. Motors Corp., 588 F.2d 655, 658-59 (9th Cir.1978) (citing Great N. Ry. Co. ). 37 We are not persuaded. EIEG clearly is asserting a claim against the RCC, even though EIEG did not explicitly name the RCC as a defendant. As the district court correctly observed: 38 The complaint asserts substantial claims against the RCC, as the assignee of [the Bank's] interest in the loans, mortgages, guarantees and security interests relating to the Hotel. Inter alia, EIE Guam's action seeks to preclude the RCC from enforcing those agreements and mortgages. EIE Guam also asserts that the RCC is affirmatively liable to EIE Guam for damages, at least through setoff. 39 The primary issue in dispute relates to the validity and enforceability of the loans, mortgages, guarantees and security interests executed by EIE Guam in favor of [the Bank] relating to the Hotel. [The Bank] has assigned the loans, mortgages, guarantees and security interests to the RCC. EIE Guam is no more willing to honor its obligations ... now that they have been assigned to the RCC.... 40 The district court cited the Second Circuit's decision in Citibank, N.A. v. Nyland (CF8) Ltd., 878 F.2d 620 (2d Cir.1989), for the proposition that minimal adversity between a foreign state and the plaintiff suffices to justify the foreign state's removal of the action pursuant to the FSIA. In Nyland, one defendant alleged that the Philippines was only a nominal defendant and that, therefore, the Philippines did not have the power to remove the case to federal court under § 1441(d). Id. at 624. The Second Circuit disagreed, stating: 41 There is nothing in the text of the statute or in the legislative history to support [appellant's] contention that the Philippines' interests must be completely adverse to those of the plaintiff in order to remove this case to a federal court.... The Philippines has adequately demonstrated that its interests are adverse to those of Citibank. We therefore reject appellant's contention that the case should have been remanded to state court. 42 Id. 43 We agree with the Second Circuit's approach. In this case, there is no question that the RCC's interests are adverse to EIEG's. Nor can there be any doubt that EIEG's claim is against the RCC in a logical sense—EIEG seeks rulings from the court that would permit it to avoid paying money to the RCC that the RCC claims it is owed. The only question is whether EIEG can avoid this obvious result simply by choosing not to name the RCC in its complaint. It cannot. 44 EIEG quotes the principle that, to determine whether an originally nonremovable case became removable, we must rely solely upon the form which the plaintiff by his voluntary action shall give to the pleadings. Self, 588 F.2d at 659. That passage does not support EIEG's assertion that its mere failure to name the RCC explicitly as a defendant means that this is not an action against the RCC. EIEG's voluntary action, for example its litigation efforts to avoid paying a debt to the RCC, have in fact created claims against the RCC. In Self, the same case on which EIEG relies, we made clear that the determination of whether federal subject-matter jurisdiction exists depends only upon plaintiff's complaint and the context in which it is found. Id. (emphasis added). We are not limited to the pleadings but must also examine the context of the case as a whole. 6 In other words, we do not exalt form over substance. The context of this case shows that it is in substance an action against the RCC, among other parties. 45 C. The RCC May Remove Despite the Fact That It Is a Voluntarily Joined Assignee. 46 EIEG argues that, even if the RCC is a foreign sovereign, the RCC may not remove because it obtained its interest voluntarily after the litigation had commenced. As a voluntarily joined assignee, EIEG claims, the RCC may exercise only the removal rights (if any) that were available to the original defendant, the Bank. The question we must answer is whether a foreign sovereign defendant who gained its interest in the litigation voluntarily, through an assignment after the suit had commenced, may remove the case to federal court under the FSIA's removal provision, 28 U.S.C. § 1441(d). 47
48 To answer that question, we begin with the text of the statute. See Coronado-Durazo v. INS, 123 F.3d 1322, 1324 (9th Cir.1997) (stating principle). The removal procedure established by 28 U.S.C. § 1441(d) reads: 49 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. 50 On its face, § 1441(d) contains no restrictions on a foreign sovereign's right to remove. Indeed, even the usual time limit on the right of removal is relaxed. Under the most natural reading of the statute, a foreign sovereign that obtained a defendant's interest by assignment satisfies the criteria contained in the removal provision. Here, for instance, the suit (1) is a civil action, (2) was brought in State court, (3) and is against the RCC, a foreign state. Under a straightforward reading of § 1441(d), then, a later-joined foreign sovereign assignee apparently enjoys the same right of removal as a foreign sovereign that is an original defendant in a suit filed in state court. 51 Nevertheless, there is another plausible reading of the statute that could justify an opposite conclusion. When a plaintiff sues a nonforeign sovereign defendant in state court, only to have the original defendant transfer an interest in the case to a foreign sovereign that then joins and removes, arguably the action was not brought ... against a foreign state, 28 U.S.C. § 1441(d), but rather was transformed into such an action after the case was brought. 52 That reading is not unreasonable theoretically, but it is inconsistent with the way courts have interpreted the statute in other contexts. For example, other circuits have held that a foreign state that is brought into an action as a third-party defendant, rather than as an original defendant by the plaintiff, may remove the entire action to federal court. See, e.g., Davis v. McCourt, 226 F.3d 506, 509 (6th Cir.2000) (We find that ... 28 U.S.C. § 1441(d) allows a foreign third-party defendant to remove an entire action from state court to district court.); In re Air Crash Disaster Near Roselawn, 96 F.3d 932, 942 (7th Cir.1996) (citing Nolan v. Boeing Co., 919 F.2d 1058, 1064 (5th Cir.1990), with approval); In re Surinam Airways Holding Co., 974 F.2d 1255, 1259 (11th Cir.1992) (The [FSIA] ... intended to render uniform in procedure and substance the treatment of foreign sovereigns subjected to suits in American courts. Making a federal forum available to a foreign state furthers this goal, whether the foreign state is a defendant or a third-party defendant. (citations and internal quotation marks omitted)); Nolan, 919 F.2d at 1065 ([W]e can perceive no significant distinction between the authorization for removal of an entire action by a sovereign co-defendant, and removal of an entire action by a sovereign third-party defendant.). Obviously, if a foreign state is brought into an action as a third-party defendant, the civil action was not originally against a foreign sovereign. Nevertheless, a foreign sovereign may remove pursuant to the FSIA in such circumstances. That the action is against the foreign sovereign at the time of the removal suffices to satisfy the requirements of the FSIA. 53 In short, there is nothing in the text of 28 U.S.C. § 1441(d), as interpreted by our sister circuits, to support EIEG's argument that a foreign state must be an original defendant in order to enjoy the power to remove under the FSIA. However, as EIEG points out, the RCC is not a third-party defendant, brought into this litigation without its active consent. Rather, it is a voluntarily joined defendant. 54 The fact that a foreign state that is brought into an action involuntarily may remove under § 1441(d) does not necessarily mean that a foreign state that chooses voluntarily to join litigation in progress, even as a defendant, enjoys the same right. 7 Because the text of the FSIA removal statute does not answer this question, we turn next to its legislative history to ascertain Congress' intent. See United States v. Davidson, 246 F.3d 1240, 1246 (9th Cir.2001) (Where the plain language of a statute is ambiguous, a court may go beyond the words of the statute to examine the textual evolution of the [contested language] and the legislative history that may explain or elucidate it. (citations and internal quotation marks omitted)).
55 The House Report for the FSIA states: In view of the potential sensitivity of actions against foreign states and the importance of developing a uniform body of law in this area, it is important to give foreign states clear authority to remove to a Federal forum actions brought against them in the State courts. H.R. Rep. No. 94-1487,  (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6631. Indeed, the House Report reflects Congress' belief that allowing foreign sovereigns to litigate in federal courts is so important that sovereigns should be permitted to drag along unconsenting co-defendants into federal court: 56 New subsection (d) of section 1441 permits the removal of any such action at the discretion of the foreign state, even if there are multiple defendants and some of these defendants desire not to remove the action or are citizens of the States in which the action has been brought. 57 Id. 58 The House Report indicates that Congress did not intend to allow foreign sovereigns to sit on their removal rights indefinitely, only to exercise them at a more strategic point in the litigation. However, although foreign sovereigns do not have carte blanche, the usual time limitations on removal are more relaxed for foreign states than for other defendants, clearly suggesting that Congress contemplated the possibility of late removal by a foreign state: 59 As with other removal provisions, a petition for removal must be filed with the appropriate district court in a timely manner. (28 U.S.C. 1446.) However, in the view of the 60-day period provided in section 1608(c) in the bill and in view of the bill's preference that actions involving foreign states be tried in federal courts, the time limitations for filing a petition of removal under 28 U.S.C. 1446 may be extended at any time for good cause shown. 60 Id. 61 Logically, Congress' twin concerns — the potential political sensitivity of actions against foreign states and the importance of developing a uniform body of federal law in this area — apply equally to a foreign state that is a voluntary defendant and to a foreign state that is an involuntary defendant. If the foreign sovereign's interests are at play, the voluntary nature of the sovereign's participation does nothing to diminish Congress' concerns about the need for sensitivity to foreign states and the need for uniformity of law in this area. 62 In this case, of course, the RCC knew that the present litigation was underway when it acquired its interest in the litigation. However, the RCC took on that interest pursuant to the policies of the government of Japan, and any obligations arising from a judgment in EIEG's favor would be borne by the government and the taxpayers of Japan. The need for sensitivity and uniformity is as strong here as in any other circumstance in which a foreign sovereign is a defendant. 63 EIEG counters that, despite the legislation's history and stated aims, Congress did not expressly allow voluntarily joining foreign states to remove under the FSIA. From this silence EIEG infers two things: First, that Congress must have meant to fall back on the default rule that an intervening party may not assert rights that could not have been asserted by the original parties and, second, that the existence of other statutes that do expressly permit post-joinder removal requires us to conclude that Congress intentionally forbade post-joinder removal here. We will address each of those arguments in turn. 64
65 As the main support for its first theory, EIEG cites two Supreme Court cases, dating from the mid-1880s, for the proposition that intervening assignees may not remove a case to federal court when the original defendant could not do so. Here, of course, it is undisputed that the Bank could not, and did not, remove the case to federal court. 66 The first case cited is Cable v. Ellis, 110 U.S. 389, 4 S.Ct. 85, 28 L.Ed. 186 (1884). There, an intervenor acquired, through assignment, rights in a diversity action that was already in progress. The Supreme Court held that the intervenor can do nothing that might not have been done for him by his representative without his intervention. [The intervenor] took his place by intervention in the suit subject to all the disabilities that rested at the time on the party in whose stead he is to act. Id. at 398, 4 S.Ct. 85. 67 The second case that EIEG cites is Jefferson v. Driver, 117 U.S. 272, 6 S.Ct. 729, 29 L.Ed. 897 (1886). Jefferson also was a diversity case, in which the assignee was brought into the suit as a purchaser of the property at issue in the action. The Supreme Court held that, under Cable, the intervenor was not entitled to remove, because [b]y purchasing pendente lite he connected himself with the suit, subject to the disabilities of the other parties in respect to a removal at the time he came in. Id. at 274-75, 6 S.Ct. 729. 68 Cable and Jefferson will not bear the weight for which EIEG contends. These cases were decided almost one hundred years before the enactment of the FSIA and the concomitant creation of removal rights in foreign states. Thus, these cases cannot and do not speak directly to the question of what Congress intended the FSIA rule to be. Their only potential value is, as EIEG claims, for the purpose of showing that there was a background rule against which Congress was acting, and thereby inferring from Congress' silence on the question of voluntarily joined foreign states that Congress understood and acquiesced in this background rule's application. Because of the legislative history showing that Congress rejected the diversity paradigm for foreign states when it passed the FSIA, we do not find these cases to be persuasive authority for even so limited a proposition. 69 Cable and Jefferson were diversity cases. In 1976, by enacting the FSIA, Congress indisputably removed foreign sovereigns from the diversity statutes. 70 Before the passage of the FSIA, the only source of a federal district court's subject matter jurisdiction in a case brought against a foreign state was the diversity jurisdiction provided by 28 U.S.C. § 1332(a)(2) and (3) (1970). See Jonathan Remy Nash, Pendent Party Jurisdiction Under the Foreign Sovereign Immunities Act, 16 B.U. Int'l L.J. 71, 75 (1998). Those provisions provided subject matter jurisdiction over 71 all civil actions where the matter in controversy exceeds the sum or value of $10,000, exclusive of interest and costs, and is between — 72 . . . . 73 (2) citizens of a State, and foreign states or citizens or subjects thereof; and 74 (3) citizens of different States and in which foreign states or citizens or subjects thereof are additional parties. 75 28 U.S.C. § 1332(a)(2), (3) (1970). 76 The basis of federal jurisdiction in a suit against a foreign citizen or state was thus grounded entirely in diversity. The requirements were the same as for a suit by a citizen of one State against a citizen of another state. Id. 77 In passing the FSIA, Congress removed foreign sovereigns from the diversity category altogether. Now, the FSIA is the sole basis of subject matter jurisdiction over suits involving foreign states and their agencies and instrumentalities. Phaneuf v. Republic of Indon., 106 F.3d 302, 304 (9th Cir.1997). Unlike diversity jurisdiction, where an amount-in-controversy threshold—now $75,000—remains, 28 U.S.C. § 1332, the FSIA contains no amount-in-controversy requirement, 28 U.S.C. § 1441(d). In other words, FSIA jurisdiction is its own special kind of federal jurisdiction and was intentionally divorced from diversity jurisdiction. 78 Significantly, Congress removed only foreign states — not foreign citizens — from the diversity statute. The only way for federal courts to exercise jurisdiction over controversies against foreign citizens still is through diversity. 28 U.S.C. § 1332. Congress clearly understood that it was singling out foreign sovereigns for special treatment when it created a new, exclusive basis of federal jurisdiction for cases involving foreign states. 79 Similarly, with respect to removal procedures, before the FSIA was enacted there was no special removal procedure available to a foreign state that was sued in state court. See Nash, 16 B.U. Int'l L.J. at 75. A foreign state could remove the action only under the actions removable generally provisions of 28 U.S.C. § 1441(a) (1970). When it passed the FSIA, Congress created a new removal statute, 28 U.S.C. § 1441(d). In short, not only did the FSIA create subject matter jurisdiction in the federal courts for actions against foreign states, but it also created an entirely new mechanism for removing such cases to the federal courts. The pre-FSIA diversity-based mechanisms were simply replaced for foreign states. 80 Even if Cable and Jefferson were the backdrop against which Congress acted in 1976, Congress demonstrated its intention to change the removal scenery. Congress transferred foreign states from diversity jurisdiction to their own special jurisdictional category. At the same time, Congress granted foreign sovereigns extraordinary removal rights. See Teledyne, Inc. v. Kone Corp., 892 F.2d 1404, 1409 (9th Cir.1989) (stating that Congress explicitly drafted subsection 1441(d) as a provision to which the generally-applicable rules of removal do not apply). 81
82 We next consider EIEG's argument that the FSIA, unlike some other federal statutes, does not explicitly grant a right of removal to foreign states after a transfer of a party's interest during the pendency of litigation. Citing the familiar canon of statutory construction that we should give effect to such a distinction, Gov't of Guam, ex rel. Guam Econ. Dev. Auth. v. United States, 179 F.3d 630, 638 (9th Cir.1999), EIEG argues that Congress' silence on the matter in the FSIA displays Congress' intent not to provide foreign states with a right of post-joinder removal to federal court. 83 EIEG points specifically to two provisions of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. The first provision permits the Resolution Trust Corporation (RTC) to remove an action to federal court after becoming a party: 84 The [RTC] ... may remove any action, suit, or proceeding from a State court to the United States district court.... The removal of any such suit or proceeding shall be instituted — 85 (i) not later than 90 days after the date the Corporation is substituted as a party, or 86 (ii) not later than 30 days after service on the Corporation, if the Corporation is named as a party in any capacity and if such suit is filed after August 9, 1989. 87 12 U.S.C. § 1441a( l )(3)(A). 88 The other provision that EIEG cites pertains to the Federal Deposit Insurance Corporation (FDIC) and allows the FDIC to remove after it has been substituted as a party: 89 [T]he Corporation may, without bond or security, remove any action, suit, or proceeding from a State court to the appropriate United States district court before the end of the 90-day period beginning on the date the action, suit, or proceeding is filed against the Corporation or the Corporation is substituted as a party. 90 12 U.S.C. § 1819(b)(2)(B). 91 EIEG reads too much into those statutes. Those statutes allow the RTC and the FDIC, respectively, to remove any state-court action to federal district court. The references to the RTC's and the FDIC's substitution as a party appear only as part of the timeliness calculation. The substantive grant of the right to remove is contained in the first portion of each statute, which sets out that the corporation may remove any state-court action; the later reference to substitution only clarifies when the corporation may remove after joining. Indeed, the later reference to time restrictions on the removal right of a substituted corporation would be nonsensical if the earlier portion of the statute, granting the right to remove, did not encompass the right to remove after substitution. 92 Similarly, the FSIA allows a foreign state to remove any action brought against it in a state court. Instead of measuring the timeliness of a foreign state's removal by reference to the date on which the foreign state was named as a party, or became a party by substitution or joinder, Congress referred back to the usual time limitations of section 1446(b) and said that those time limits may be enlarged at any time for cause shown. 28 U.S.C. § 1441(d) (emphasis added). If the time limits may be enlarged at any time, they may be enlarged after the foreign state has become a party by substitution or joinder so long as the district court concludes that the foreign state has showed good cause for the failure to meet the baseline time requirements of § 1446(b).
93 Title 28 U.S.C. § 1441(d) provides that [a]ny civil action brought in state court against a foreign sovereign may be removed by the sovereign to federal court. The legislative history of the FSIA reveals Congress' robust intention to allow foreign states access to the federal courts subject only to a reasonable enlargement of the time for removal, id., and the existing check on abuse of that right: 94 A district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court. 95 28 U.S.C. § 1359. 8 Section 1441(d) consistently has been interpreted to allow foreign states that are named as third-party defendants in a state case already in progress to remove to federal court. The policies that led Congress to provide a federal forum to foreign states is just as strong when those states acquire an interest in ongoing litigation, and when they voluntarily join such litigation, as when they are named originally as defendants. We hold that a foreign state that acquires a defendant's interest in state-court litigation by assignment may remove the case to federal court under the FSIA, even if the foreign state joins the litigation voluntarily. 96 D. The RCC Did Not Submit To the Jurisdiction of the Guam Superior Court. 97 Even though the RCC enjoyed the right to remove the case to federal court, it is possible that it waived that right. A party, generally the defendant, may waive the right to remove to federal court where, after it is apparent that the case is removable, the defendant takes actions in state court that manifest his or her intent to have the matter adjudicated there, and to abandon his or her right to a federal forum. Resolution Trust Corp. v. Bayside Developers, 43 F.3d 1230, 1240 (9th Cir.1994). A waiver of the right of removal must be clear and unequivocal. Id. (citation and internal quotation marks omitted). 98 The RCC did nothing to waive its right to remove this case. The RCC filed a motion to remove the action the day after it was joined as a defendant. EIEG claims that the RCC led EIEG to believe that the RCC would not remove the action, but those pre-joinder statements were not a clear and unequivocal abandonment of the right to a federal forum. Once the case became removable, the RCC removed it immediately. We already have held that the act of joining itself did not destroy the RCC's right to remove.