Court Opinion

ID: 218546
Source: CourtListenerOpinion
Date Created: 2011-06-10 00:01:35+00
Date Added: 2024-06-11T17:28:36.586624
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             JUN 09 2011

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

AHPW, INC.; ROBERT C. ARTHUR;                    No. 09-17871
PATRICIA B. ARTHUR; BETHWELL
HENRY; MARIHNE HENRY,                            D.C. No. 1:09-cv-00018

              Plaintiffs - Appellants,
                                                 MEMORANDUM *
  v.

STATE OF POHNPEI; FEDERATED
STATES OF MICRONESIA
DEVELOPMENT BANK; HILLARY
RODHAM CLINTON, Secretary of State;
KEN SALAZAR, Secretary of Interior, in
their official capacities,

              Defendants - Appellees.

                   Appeal from the United States District Court
                  for the District of the Northern Mariana Islands
                  Alex R. Munson, Chief District Judge, Presiding

                      Argued and Submitted October 14, 2010
                                Honolulu, Hawaii

Before: HAWKINS, McKEOWN, and RAWLINSON, Circuit Judges.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      AHPW, Inc., Robert C. Arthur, Patricia B. Arthur, Bethwell Henry, and

Marihne Henry (collectively Appellants), a business and its co-owners in the State

of Pohnpei, Federated States of Micronesia (FMA), challenge the district court’s

grant of Defendants-Appellees’ motion to dismiss for lack of subject matter

jurisdiction. Appellants also challenge the district court’s dismissal of their

complaint without leave to amend.

1.    The district court correctly ruled that it lacked subject matter jurisdiction

pursuant to the Compact of Free Association (Compact) or the Agreement

Regarding the Investment Development Fund (Agreement). Congress did not

explicitly or implicitly provide for a private right of action or a private remedy

pursuant to the Compact or the Agreement, whether classified as a treaty or a

statute. See Cort v. Ash, 422 U.S. 66, 78 (1975) (setting forth the factors to be

considered in determining the existence of an implied right of action); see also

Touche Ross & Co. v. Redington, 442 U.S. 560, 575 (1979) (clarifying that the

ultimate test is “whether Congress intended to create, either expressly or by

implication, a private cause of action”). Nothing in the language of the Compact or

the Agreement expresses an intent to benefit individual business owners. Rather,

the intent of the Compact and Agreement is to encourage commercial enterprises in

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the FMA and increase economic development and trade between the United States

and the FMA. See 48 U.S.C. § 1921 (2003) (focusing on the relationship between

the FMA and the United States).

       The same analysis applies when considering treaty provisions. See Cornejo

v. County of San Diego, 504 F.3d 853, 856-57 (9th Cir. 2007) (focusing on whether

“Congress, by ratifying the [treaty] intended to create private rights and remedies .

. .”). Because there is no express or implied Congressional intent to that effect in

either the Compact or the Agreement, the district court lacked subject matter

jurisdiction. See 28 U.S.C. § 1331; see also Merrill Dow Pharm. Inc. v.

Thompson, 478 U.S. 804, 808 (1986) (explaining that a suit “arises under” federal

law if federal law creates the cause of action or if plaintiff’s right to relief turns on

a question of federal law) (citation omitted).

2.     Neither did the district court err when it dismissed the case for lack of

subject matter jurisdiction under the Foreign Sovereign Immunities Act (FSIA).

The State of Pohnpei would not be immune from suit if the “action is based upon a

commercial activity carried on in the United States by the foreign state; . . . or upon

an act outside the territory of the United States in connection with a commercial

activity of the foreign state elsewhere and that act causes a direct effect in the

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United States.” 28 U.S.C. § 1605(a)(2); see also 28 U.S.C. § 1330 (conferring

jurisdiction where state not entitled to sovereign immunity); see also Lyon v.

Agusta S.P.A., 252 F.3d 1078, 1082-83 (9th Cir. 2001), as amended.

      The commercial activity conducted by the Appellants (exporting

peppercorns and trochus buttons) occurred entirely in the FMA and had no direct

effect in the United States. The asserted commercial activities by the State of

Pohnpei (depriving the American market of peppercorns and trochus buttons)

was totally distinct from the allegedly negligent act (failure to correctly complete

loan documents) and also occurred solely in the FMA. Neither activity met the

requirements of a commercial activity carried on in the United States by a foreign

state or a commercial activity in a foreign state that causes a direct effect in the

United States. Therefore, the commercial activity exception did not apply, and no

jurisdiction existed over the foreign state. See Holden v. Canadian Consulate, 92

F.3d 918, 920 (9th Cir. 1996) (explaining that the FSIA does not confer

jurisdiction under the “commercial activities” exception unless the cause of action

is based upon “the commercial activity in question”) (citation omitted).

      Appellants’ reliance on the FSIA’s exception for tortious acts by a foreign

state, see 28 U.S.C. § 1605(a)(5), is also unavailing. “The tortious activity

exception provides jurisdiction over tort actions not encompassed in the

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commercial activity exception in which money damages are sought against a

foreign state for damage to or loss of property, occurring in the United States and

caused by the tortious act or omission of that foreign state.” Joseph v. Office of

Consulate General of Nigeria, 830 F.2d 1018, 1025 (9th Cir. 1987) (citation,

alteration, and internal quotation marks omitted). Because the tortious activities

did not occur in the United States, the tortious activity exception does not apply.

See id.

3.    The district court acted within its discretion when it dismissed the action

with prejudice. Pursuant to Fed. R. Civ. P. 15(a)(2), it is within the discretion of

the district court to deny leave to amend when it determines that amendment would

be futile. Calvalho v. Equifax Information Services, LLC, 615 F.3d 1217, 1232

(9th Cir. 2010), amended by 629 F.3d 876 (9th Cir. 2010). “When the district

court denies leave to amend because of futility of amendment, we will uphold such

denial if it is clear, upon de novo review, that the complaint would not be saved by

any amendment.” Id. (citation and internal quotation marks omitted).

      AFFIRMED.

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