Court Opinion

ID: 987006
Source: CourtListenerOpinion
Date Created: 2013-07-02 14:55:33.170987+00
Date Added: 2024-06-11T12:36:40.226073
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
                          Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                 File Name: 13a0171p.06

              UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT
                                _________________

                                                 X
                           Plaintiff-Appellant, -
 TRIPLE A INTERNATIONAL, INC.,
                                                  -
                                                  -
                                                  -
                                                      No. 12-1595
           v.
                                                  ,
                                                   >
                                                  -
                          Defendant-Appellee. -
 THE DEMOCRATIC REPUBLIC OF THE CONGO,
                                                 N
                   Appeal from the United States District Court
                  for the Eastern District of Michigan at Detroit.
            No. 2:10-cv-15137—Gerald E. Rosen, Chief District Judge.
                               Argued: January 16, 2013
                           Decided and Filed: July 2, 2013
   Before: BATCHELDER, Chief Judge; MERRITT and KETHLEDGE, Circuit
                                Judges.
                                 _________________
                                      COUNSEL
ARGUED: Davidde A. Stella, KERR, RUSSELL AND WEBER, PLC, Detroit,
Michigan, for Appellant. ON BRIEF: Davidde A. Stella, Robert E. Forrest, KERR,
RUSSELL AND WEBER, PLC, Detroit, Michigan, for Appellant. Eric Linden, Patrice
S. Arend, JAFFE RAITT HEUER & WEISS, P.C., Southfield, Michigan, for Appellee.
         KETHLEDGE, J., delivered the opinion of the court in which, BATCHELDER,
C. J., and MERRITT, J., joined. MERRITT, J. (pg. 5), delivered a separate concurrence.
                                 _________________
                                      OPINION
                                 _________________

       KETHLEDGE, Circuit Judge. Triple A International sued the Democratic
Republic of the Congo for failing to pay for military equipment that Triple A sold to the
Congo’s predecessor, Zaire. The Congo filed a motion to dismiss for lack of subject-
matter jurisdiction, arguing that it was immune from suit under the Foreign Sovereign
Immunities Act, 28 U.S.C. § 1602 et seq. Triple A opposed the motion, arguing that its

                                           1
No. 12-1595         Triple A Int’l, Inc. v. Dem. Rep. Congo                        Page 2

suit was based upon Zaire’s commercial activity in the United States. The district court
granted the Congo’s motion and dismissed the case. We affirm.

                                            I.
       Triple A is a Michigan corporation with offices in Dearborn, Michigan, the
Congo, and Sierra Leone. The Democratic Republic of the Congo is an African country
that, until 1997, was known as Zaire. In late 1993, Zaire ordered $14,070,000 worth of
military equipment from Triple A. At Triple A’s request, a South Korean manufacturer
shipped the equipment to Zaire. For the next seventeen years, Triple A sought payment
from Zaire (and then the Congo) without success.

       Finally, in 2010, Triple A sued the Congo in federal court for breach of contract.
The district court dismissed the case on grounds of sovereign immunity. This appeal
followed.

                                            II.

       We review de novo the district court’s determination that it lacked subject-matter
jurisdiction. O’Bryan v. Holy See, 556 F.3d 361, 372 (6th Cir. 2009).

       Foreign states are generally immune from suit in United States courts. See
28 U.S.C. § 1604; Republic of Iraq v. Beaty, 556 U.S. 848, 851 (2009). But the Foreign
Sovereign Immunities Act provides a number of exceptions to that general rule,
including one for suits involving certain kinds of commercial activity by a foreign state.
See 28 U.S.C. § 1605. Specifically, federal courts have jurisdiction “in any case in
which the action is based upon” the following:

       [1] a commercial activity carried on in the United States by the foreign
       state; or [2] upon an act performed in the United States in connection
       with a commercial activity of the foreign state elsewhere; or [3] 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 United States[.]

Id. § 1605(a)(2).
No. 12-1595         Triple A Int’l, Inc. v. Dem. Rep. Congo                          Page 3

        Thus, the first clause comprises cases where the foreign state’s commercial
activity occurs in the United States. See, e.g., Globe Nuclear Servs. & Supply (GNSS),
Ltd. v. AO Techsnabexport, 376 F.3d 282, 291–92 (4th Cir. 2004). The second and third
clauses concern cases where the foreign state’s commercial activity occurs “elsewhere”:
specifically, the second clause comprises cases where such activity has some
“connection” with an act performed in the United States, see, e.g., Siderman de Blake
v. Republic of Arg., 965 F.2d 699, 709–10 (9th Cir. 1992); and the third comprises cases
where such activity causes a direct effect in the United States. See, e.g., Republic of Arg.
v. Weltover, Inc., 504 U.S. 607, 618–19 (1992).

        Triple A argues that the first clause applies here. But this case is not based upon
commercial activity that the Congo (or Zaire) “carried on in the United States[.]”
28 U.S.C. § 1605(a)(2). Indeed Triple A does not argue the contrary. In its complaint,
Triple A alleges that Zaire ordered military equipment from Triple A, that Triple A then
arranged for a South Korean supplier to send the equipment directly from South Korea
to Zaire, and that the supplier did so. None of these allegations describe commercial
activity that Zaire or the Congo conducted in the United States.

        Triple A’s argument, instead, is based upon a definitional section of the Foreign
Sovereign Immunities Act. Section 1603(e) of the Act defines “commercial activity
carried on in the United States by a foreign state” to mean “commercial activity carried
on by such state and having substantial contact with the United States.” 28 U.S.C.
§ 1603(e). Triple A argues that Zaire’s purchase of the military equipment (which is
itself commercial activity, albeit overseas) had “substantial contact with the United
States” because Zaire contracted with an American-based company and because that
company—Triple A—performed some of its contractual obligations here.

        The term “commercial activity carried on by such state and having substantial
contact with the United States[,]” as used in § 1603(e), is far from clear. The definition
only confuses the statute’s meaning. For purposes of this case, however, what the
definition does not mean is clear enough. According to Triple A, the definition means
that the first clause of § 1605(a)(2)—which permits suits “based upon a commercial
No. 12-1595          Triple A Int’l, Inc. v. Dem. Rep. Congo                         Page 4

activity carried on in the United States by [a] foreign state”—permits suits, like this one,
in which the foreign state conducted no commercial activity at all in the United States.
Triple A’s reading of § 1603(e) would thus make nonsense of the language that
§ 1603(e) is supposed to define.

          Triple A’s reading of § 1603(e) would likewise knock out the structure of
§ 1605(a)(2). “Distinctions among descriptions juxtaposed against each other are
naturally understood to be significant[.]” Saudi Arabia v. Nelson, 507 U.S. 349, 357
(1993) (citation omitted). The most basic distinction within § 1605(a)(2) is the
distinction between a foreign state’s commercial activity in the United States (which is
governed by the first clause) and a foreign state’s commercial activity overseas (which
is governed by the second and third). Triple A’s reading of § 1603(e) would largely do
away with that distinction, by allowing the first clause to govern any case where the
foreign state’s activity has “substantial contact” with the United States, regardless of
whether that activity occurs here or overseas. Moreover, in doing so, the first clause
would render the second and third clauses largely superfluous. Cases where a foreign
state’s overseas activity has “substantial contact” with the United States are likely to
encompass cases where that activity has a “connection” with (second clause) or causes
a “direct effect” (third clause) in the United States. That is yet another reason for
rejecting Triple A’s interpretation. See, e.g., TRW Inc. v. Andrews, 534 U.S. 19, 31
(2001).

          Triple A otherwise directs us to the Act’s legislative history in arguing that
§ 1605(a)(2)’s first clause applies here. But no amount of legislative history can rescue
an interpretation that does as much damage to the enacted text as Triple A’s
interpretation does here.

          The district court’s judgment is affirmed.
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                              ______________________

                                   CONCURRENCE
                              ______________________

       MERRITT, Circuit Judge, concurring. I agree with the court that the Foreign
Sovereign Immunities Act is ambiguous and somewhat unclear. The facts as alleged
here, however, seem to me to demonstrate that the Congo itself — as distinguished from
Triple A — does not even have sufficient commercial activity “contacts” with the United
States to create personal jurisdiction under ordinary due process concepts which the
Act’s legislative history appears to incorporate: The legislative history explains that the
“requirements of minimum jurisdictional contacts and adequate notice are embodied in
the provision” and that these “immunity provisions, therefore, prescribe the necessary
contacts which must exist before our courts can exercise personal jurisdiction.” H.R.
Rep. No. 94-1487, at 13 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6612. The
language suggests that Congress was thinking in familiar terms of “contacts” to establish
“personal jurisdiction.” We have no claim here that the Congo representatives came to
the United States or had any products shipped to or from the United States. We have no
claim that the Congo ordered any products in the United States, and Triple A does not
claim that the Congo’s order had a “direct effect” in the United States. Without
itemizing Congo contacts that would justify bringing it into a federal court, Triple A
must lose the jurisdictional battle. Whether the Constitution — as distinguished from
the Act — requires such “contacts” is not the point. The Act itself explicitly requires
such contacts.