Petition for Writ of Certiorari — Pere v. Nuovo Pignone S.p.A.

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Supreme Court, U.S.

Ftlteob

No. 98 88 5 NOV4 1998

OFFICE OF THE CLERK

In The

Supreme Court of the United States

October Term, 1998

NANCY G. PERE, individually and on behalf of

her minor children,

Matthew Reed Peré and Marci Danielle Peré,

Petitioner,

versus

NUOVO PIGNONE S.p.A,

Respondent.

On Petition For Writ Of Certiorari

To Review Decision Of The

Fifth Circuit Court Of Appeals

PETITION FOR WRIT OF CERTIORARI

K. Wape TRAHAN #20474

Counsel of Record

CuHares R. SoNNIER #12260

FRANK W. Summers II #14755

SONNIER & TRAHAN

Post Office Drawer 700

Abbeville, LA 70511-0700

(318) 893-5973

Attorneys for Nancy Peré,

individually and on behalf of her

minor children, Matthew Reed Peré

and Marci Danielle Peré

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

> tN

QUESTIONS PRESENTED FOR REVIEW

TIERING: Whether Nuovo Pignone was ever a

sovereign agency or instrumentality of the Gov-

ernment of Italy when it exercised business, not

government functions, and was not created

directly by the sovereign but was only a creature

of a creature of the state. (SPLIT IN CIRCUITS -

Rule 10(a).)

TIMING: Whether an entity that is privatized

before commencement of the lawsuit may be con-

sidered a “foreign sovereign” under the FSIA.

(SPLIT IN CIRCUITS — Rule 10(a).)

COMMERCIAL ACTIVITY: Whether a defen-

dant engaged in purely commercial activities,

including substantial commercial activity in the

United States and purchase of a turbine starter

engine manufactured in the United States, then

installing it aboard a platform constructed at a

shipyard in Bayou Black, Louisiana, and shipped

off the coast of Africa for installation there, where

it was operated by a U.S. oil company, and later

redesigned, repaired and maintained under con-

tracts with U.S. service companies, can be said to

have engaged in an activity which has no

“nexus”, “material connection”, or “direct effect”

in the United States. (SPLIT IN CIRCUITS — Rule

10(a).)

WAIVER: Whether Nuovo Pignone’s repeated

agreements to arbitrate contract disputes in for-

eign forums and to be bound by the laws of other

states including Texas and Louisiana, constitute

“waiver” of its right to claim sovereign immunity.

(SPLIT IN CIRCUITS — Rule 10(a).)

iii ut

LIST OF ALL PARTIES

Nancy G. Peré Matthew Plaintiffs /

Reed Peré and Marci Petitioners

Danielle Peré

Tuthill Corporation and Defendants in

Coppus Engineering Principal Action

Aligned with

Plaintiffs on

writ application

Nuovo Pignone, S.p.A. Defendant /

Respondent

General Electric Company Defendants in

Principal Action

Cabinda Gulf Oil Company Defendants in

Division of the Chevron Principal Action

Company

ili

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW ........--. i

LIST OF ALL PARTIES .........----eeececececceees ii

TABLE OF CONTENTS.........--- +e eee eeeeeeeees ili

TABLE OF AUTHORITIES ..........------+e-eeeee: Vv

CITATIONS AND SUMMARIES OF DECISIONS BY

LOWER COURTS ...... ccc cece cece ccc cecenecces l

STATEMENT OF JURISDICTION........---+--++-+- 2

STATUTES INVOLVED ..........--+-- esse errr oe

STATEMENT OF THE CASE..........---+++00++00% 3

ME ee ce cnc ccectpesscetveveseneusesees 7

(1) Tiering .........-- cece cece cece e cece eeeeeeeees 7

(2) Timing. .......-.00cce eee e cece e cere eneeeeees )

(3) Commercial Activity ........-------eeeee eee ees 11

RS SS ee oe 22

RG oo ivan sndasnesecasenesseevenaneés 23

APPENDIX

A Opinion of Fifth Circuit....-......-++++-++++> Al

B Ruling of District Court...........-.+--+-++++: Bl

C Order Dismissing Nuovo Pignone..........-- Cl

D Original Complaint ........----.-+++eeeeee ees D1

E Agreement...........--s:2eereceereeereeerees El

F Deposition Excerpts .....---.---+++++e05eee00> Fl

TABLE OF CONTENTS - Continued

Page

DOE TE iis 00's Reb ake esdeaeuie Fl

Se SS oo nao Vv evedwedee bensess een F6

PE SHED be esa vintisennsien ied F9

WUD TUN «oc kc saccs donsstaaedicn F17

| ey errr rere eo F24

G Statutes - Text of Relevant Provisions of the

BR Ss avesvdes s deo onek oes bis Ces Gl

_ eS ee aoe ae

TABLE OF AUTHORITIES

Page

Cases

Castro v. Saudi Arabia, 510 F.Supp. 309 (W.D. Tex.

SON sku caccncvese ries exteckssareceeden scene? 23

Corporacion Mexicana de Servicios Maritimos v. M/T

Respect, 89 F.3d 650 (9th Cir. 1996).....-----+-+++:: 7

Delgado v. Shell Oil Company, 890 F.Supp 1315 (S.D.

Tee BOGS) oc ccc cccss vecetotsetvesverepeserevess sess 1

Gates v. Victor Fine Foods, 54 F.3d 1457 (9th Cir.

SOND ike lercnvisgeutexsdepenvcansseentet¥e ee Pe

General Electric Capital Corp. v. Grossman, 991 F.2d

1376 (8th Cir. 1993). ......-6- cece eee rere eee i, 2, 3

Gibbons v. Udaras na Gaeltrachta, 549 F.Supp. 1094

(S.D. N.Y. 1982) ......0- eee eee e eee nerereeeenreres 23

Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d

445 (6th Cir. 1988)......----- eee e cere rece cere rece 1

In Re: Aircrash Disaster Near Roselawn, Indiana on

October 31, 1994, 96 F.3d 932 (7th Cir. 1996)...... i, 7

In Re Rio Grande Transport, Inc., 516 F.Supp. 1155

(S.D. M.Y. 1981) .....-- ccc e cece ere e cee eeeecneeees 20

International Shoe Company v. Washington, 326 U.S.

310, 66 S.Ct. 154 (1945)...-.-. eee eee ee eee ees 18, 19

Joseph v. Office of the Consulate General of Nigeria,

830 F.2d 1018 (9th Cir. 1987).......---e ee reer eens 23

Maritime International Nominees Establishment v.

Republic of Guinea, 505 F.Supp. 141 (D.C. 1981) .... 22

Marlowe v. Argentine Naval Comm'n, 604 F.Supp.

703 (D.C. 1985).... 2. cece cece n ccc cecceeercerncee 23

Nelson v. Saudi Arabia, 923 F.2d 1528 (11th Cir.

ft PROPEL SPORE ION PTT Es Cee een! Pe ae 17

TABLE OF AUTHORITIES —- Continued

Page

Ocasek v. Flintkote Co., 796 F.Supp. 362 (N.D. Il.

SONU cis nds ee hae Re RVR LE > Cov phhen datas 0% renes 10

Ohntrup v. Firearms Center, Inc., 516 F.Supp. 1281

Ce Fn BR sy 0 ei es CS > 22

Oliver American Trading Company v. United States of

Mexico, 5 F.2d 659 (2nd Cir. 1924)................. 16

Rutkowski v. Occidental Chemical Corporation, 1988

U.S. Dist. LEXIS 11414 (N.D. Ill. 1988)............ 10

Siderman de Blake v. Republic of Argentina, 965 F.2d

GID COT Ge, SOG R a ois ovis ne cid apyees cb ¥a tusesensas 19

Stena Rederi A.B. v. Comision de Contratos, 923 F.2d

Rk go ke, |) Sen eer ey rer ry ot 2, 19

Straub v. A. P. Green, Inc., 38 F.3d 448 (9th Cir.

| EP OCPEE etre rr Teer Ty Pree ree epee) ae ae

Talbot v. Agsaipem A. G., 835 F.Supp. 352 (S.D. Tex.

PEs 50 644 aa 6 hee ORs COREA SAO RES OR aE ANCE OR WEE CAS 1

Texas Trading & Milling Corp. v. Federal Republic of

Nigeria, 647 F.2d 300 (2nd Cir. 1981).............. 21

United States v. Deutsches Kalisyndikat Gesellschaft,

ee Be eR A. | Re ry pe 16

United States v. Planters’ Bank of Georgia, 22 U.S. (9

WR Fe Ce a 5.586) bas os on 9k co dpa a eed 15

United World Trade v. Mangyshlakneft, 821 F.Supp.

SE EA Re shi eked ean wos Seed dei eed 20

Vencedora Oceania Navigacion v. Compagnie Nation-

ale Algerienne de Navigation, 730 F.2d 195 (5th

A, BOI ies oc erin nk esin ene tawianebaueveseee as 20

vil

TABLE OF AUTHORITIES - Continued

Page

Verlinden B. V. v. Central Bank of Nigeria, 461 U.S.

GOO {19BS) occ vcict en cece vecccesecsseveesss 14, 23

Zernicek v. Brown & Root, Inc., 826 F.2d 415 (5th

ORE PUN 6 cou cacadbubegnnasiean season sauketesaabe 21

STATUTES

28 USC § 1254(1)......- cece eee eee eee eee ree ceeees 2

28 USC § 1602 et seq. .....----- eee ee eee etter renee :

28 USC § 1605(a)(2) .....--- eee eee eee rece eens 18, 21

TREATISES

120 ALT Feel. S42 occ sn ccc icc cc eceeveserenscscuves 10

Comment: Retroactivity, Implied Waiver, and the

FSIA: Is it Time to Reform the Law of Sovereign

Immunity?, 24 Hofstra Law Review 515 (Winter

NOD go vn ccd cad eck veatseaweasdaweneey ys x ssexree eee? 14

Cordozo, International Law in the New York Courts —

1953, 40 Cornell LQ 97 (1955) .......---0e eee eeee 14

Dellapenna, Suing Foreign Governments and Their

Corporations (1988) pp. 157-160......----+++++-+++5 24

Ehrenzweif and Jayme, Private International Law

(1977) p. 113 2... . eee ee eee cee eee eect e cere eeeeees 25

Evanoff, “Direct Effect Jurisdiction Under the For-

eign Sovereign Immunities Act of 1976: Ending

the Chaos in the Circuit Courts,” 22 Houston

Law Review 629 (May 1991).......-----+++eeeeeees 9

viii

TABLE OF AUTHORITIES — Continued

Page

Exceptions to Jurisdictional Immunity of Foreign Sov-

ereigns and Their Property Under the Foreign Sov-

ereigns Immunity Act of 1976 (28 USC §§ 1602 et

OJ, OE ee PS OE vc rie os devntvseeksaisveiesss 17

Hardy, “Wipe Away the Tears: Determining

Agency or Instrumentality Status under the For-

eign Sovereign Immunities Act”, 31 Georgia

ge, we eS. . 22 ee eer 4 10

McCarthy, “The Commerical Activity Exception -

Justice Demands Congress Define a Line in the

Shifting Sands of Sovereign Immunity,” 77 Mar-

quette Law Review 893 (Summer ‘94)............. 21

Newman and Zaslowsky, Litigating International

Commercial Disputes p. 114 (West 1996)..... 20, 23, 24

Scoles and Hay, Conflict of Laws p. 333 (West 1982) .... 19

Simmons, “Nationalized and Denationalized

Commercial Enterprises Under the Foreign Sov-

ereign Immunities Act,” 90 Columbia Law Rev.

Tae Te. SOE 5 oa oo eer ee eee eae eka 10, 15

Teitz, Transnational Litigation (1996) p. 73............ 17

MISCELLANEOUS

26 Dep’t St. Bull. 984 (1952) (Quoting Letter from

Jack B. Tate, Acting Legal Advisor, Department

of State to Acting Attorney General Phillip B.

SUNN SOI RP ORES 6 i'n oc sacs cos kad bo Rie whee 16

H.R. Rep. No. 1489, 94th Cong. 2d Sess. 1 (1976) .... 16

Restatement (Third) of Foreign Relations § 443(1)

CRU cs ess Saas Nees OER ed Dia bia ee De dr 17

CITATIONS AND SUMMARIES

OF DECISIONS BY LOWER COURTS

(1) Decision by the Trial Judge: (Unreported - See

Appendix B)

Judge Doherty of the Western District of Louisiana,

Lafayette-Opelousas Division, denied Nuovo Pignone’s

exception to jurisdiction.

(a) Tiering: Judge Doherty recognized the split in the

circuits on the question of whether a twice-removed for-

eign government agency has the right to claim sovereign

immunity. The judge refused to follow the Ninth Circuit

decision in Gates v. Victor Fine Foods, 54 F.3d 1457 (9th Cir.

1995). She chose to follow decisions in the Fifth and

Seventh Circuits. See, In Re: Aircrash Disaster Near Rose-

lawn, Indiana on October 31, 1994, 96 F.3d 932 (7th Cir.

1996); Delgado v. Shell Oil Company, 890 F.Supp 1315 (S.D.

Tex. 1995); Talbot v. Agsaipem A. G., 835 F.Supp 352 (S.D.

Tex. 1993). She nevertheless commented that the Gates

analysis was “strong and persuasive”.

(b) Timing: Again the judge recognized the split in the

circuits on the question of whether sovereign status was

to be determined on the date of the accident or the date of

the filing of the lawsuit. The court chose to follow Straub

v. A. P. Green, Inc., 38 F.3d 448 (9th Cir. 1994), rather than

General Electric Capital Corp. v. Grossman, 991 F.2d 1376

(8th Cir. 1993) and Gould, Inc. v. Pechiney Ugine Kuhlmann,

853 F.2d 445 (6th Cir. 1988).

mercial activity exception applied and that Nuovo Pig-

none was subject to the jurisdiction of the court.

(2) Decision by the Fifth Circuit (Peré v. Nuovo Pig-

none, Inc., 150 F.3d 477 (5th Cir. 1998) —- Appendix A)

The Fifth Circuit reversed the trial court and has

dismissed plaintiff's claim against Nuovo Pignone for

lack of jurisdiction under the FSIA.

On the question of “timing” the court recognized the

split in the circuits and chose to follow Grossman rather

than Straub — as had the trial judge.

The court looked at the “commercial activities”

exception and applied the Fifth Circuit’s standard in

Stena Rederi A.B. v. Comision de Contratos, 923 F.2d 380 (5th

Cir. 1991), holding that the Perés had failed to meet the

weighty “material connection” requirement of Stena.

STATEMENT OF JURISDICTION

This litigation involves application of the Foreign

Sovereign Immunities Act, 28 USC § 1602 et seq. — the

United States courts have federal question jurisdiction.

The United States Supreme Court has jurisdiction to

review the judgment of the Fifth Circuit Court of Appeals

rendered September 21, 1998, by issuance of a writ of

certiorari under 28 USC § i254(1).

This writ application demonstrates that there are

SPLITS IN THE CIRCUITS on four issues which are

important to reaching a decision on the question of FSIA

jurisdiction. Therefore, the Court has jurisdiction to issue

a writ of certiorari under its Rule 10(a) because “a United

States court of appeals has entered a decision in conflict

fo ee Rect real ay

Pe ee hoe Re at tl ate

baie seve Lod Sa pbie ns Obst

with the decision of another United States court of

appeals on the same important matter”.

STATUTES INVOLVED

(See Appendix G.)

STATEMENT OF THE CASE

Marcus Daniel Peré was employed by Chevron Oil

Company in March of 1979. In 1993 he was working

aboard a production platform off the coast of Cabinda,

Angola, West Africa. On October 16, 1993, while in the

course and scope of his employment, Marcus Peré was

killed by the explosion of a turbine engine, which he and

a fellow employee were attempting to repair.

The turbine engine was owned by Nuovo Pignone,

Inc. and was part of the platform equipment which Chev-

ron Oil Company operated. It had been manufactured

and purchased in the United States, then was sent to Italy

for inclusion into a larger compressor system which was

shipped back to Bayou Black, Louisiana for further

assembly and installation aboard a platform, under

Nuovo Pignone’s supervision there (Appendix F, 18-22).

The assembled platform was then towed to Cabinda Gulf,

offshore Angola, West Africa. While on the platform, the

turbine was “reconfigured”, repaired, maintained and

serviced by U.S. service companies, under contracts with

Nuovo Pignone. Chevron operated the platform upon

which the turbine was installed, and Mr. Peré worked for

Chevron. The reconfigured turbine compressor exploded,

killing Mr. Peré; no study had been made to determine

whether the reconfiguration modifications were safe for

the compressor accessories — like the starter. (Appendix F,

11, 14-16.)

Mr. Peré is survived by his widow, Nancy Peré, and

their two minor children, Matthew Reed Peré and Marci

Danielle Peré. The Plaintiffs have brought suit against

Nuovo Pignone and its affiliate companies, as owners,

designers and manufacturers of the defective turbine sys-

tem, and against Coppus Engineering and Tuthill Corpo-

ration, as manufacturers of the defective turbine starter,

and against Agip Petroleum Company, as an owner-oper-

ator of the offshore platform; Defendants’ insurers are

also named as defendants.

Plaintiffs have stated a cause of action in negligence

for the faulty design, manufacture, modification and mar-

keting of the turbine system, alleging the defective sys-

tem had a propensity to explode and was dangerous, and

that Defendants failed to warn Plaintiff of these dangers;

and further that Defendants assembled, “customized”

and modified the system, improperly combining it with a

natural gas turbine system, causing it to explode and kill

Mr. Peré. Plaintiffs also allege that the Defendants acted

with wanton and gross negligence and intentional indif-

ference to the safety and welfare of persons who would

be operating the turbine system. Plaintiffs have sued

under Texas and Louisiana state tort laws, as well as

under contract warranty and relevant federal maritime

laws.

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Nuovo Pignone, as owner of the defective and dan-

gerous turbine system, filed an exception to federal juris-

diction, alleging its sovereign immunity from suit under

the Foreign Sovereign Immunities Act, 28 USC § 1602 et

seq.

Plaintiffs argued before the district court and the

court of appeals that Nuovo Pignone should not be

allowed to assert sovereign immunity, because it is not in

any sense a “sovereign” (QUESTION NO. 1). At the time

of the accident Nuovo Pignone was majority owned by a

commercial joint stock company which reported to the

Italian Ministry of Treasury. That entity, Ente Nazionale

Idrocabun (ENI), owned the majority of stock in Nuovo

Pignone; private entities owned the balance of the stock.

No evidence was introduced to show that Nuovo Pignone

was in any way especially controlled by the state or

engaged in any governmental or political functions.

Nuovo Pignone’s activities were purely of a private, com-

mercial nature. There is a split in the circuits, but Plain-

tiffs believe the best interpretation of the FSIA, as

recognized by commentators and by some of the circuits,

is that an entity which is twice-removed from the govern-

ment of Italy, as Nuovo Pignone is, should not be entitled

to claim sovereign immunity - this is referred to as the

“tiering” issue.

A second issue has to do with “timing”: whether

Nuovo Pignone can claim sovereign immunity though the

government of Italy, through ENI, did not have a majority

ownership in Nuovo Pignone at the time the lawsuit was

filed (QUESTION NO. 2). There is a split in the circuits on

this issue as well: Some circuits look at the ownership of

the defendant entity as of the date of the accident, other

circuits look at ownership as of the date of the filing of

the lawsuit.

A third legal issue over which the circuits are split

has to do with how courts weigh the “connection”

between a cause of action and the defendant’s contacts or

activities here in the United States (QUESTION NO. 3).

One commentator points out that there are “numerous

variations” in how the courts approach this question. The

Fifth Circuit has been requiring plaintiffs to show “sub-

stantial” and “material” connection between the particu-

lar event giving rise to the lawsuit and the defendant's

commercial activity in the United States. Other circuits

require less connection. The Fifth Circuit’s standard

seems more onerous and burdensome than need be,

resulting in an extension of sovereign immunity into

areas where that grant is no longer appropriate.

We are also confronted with the issue of “waiver”:

Whether Nuovo Pignone’s contractual consent to have

disputes between it and its business partners decided in

the forums of other states, or by arbitration, in accor-

dance with substantive laws of other states (including

Texas), constitute a waiver of its right to claim sovereign

immunity (QUESTION NO. 4).

FSIA jurisprudence is in disarray. Some commenta-

tors are referring to the present situation as intolerable

and disastrous. This lawsuit raises important issues span-

ning the spectrum of FSIA litigation. Plaintiffs believe

there are compelling reasons for the Court to grant writs.

ARGUMENT

(1) TIERING: Whether Nuovo Pignone was ever a sov-

ereign agency or instrumentality of the

Government of Italy when it exercised

business, not government functions, and

was not created directly by the sover-

eign but was only a creature of a crea-

ture of the state. (SPLIT IN CIRCUITS -

Rule 10(a).)

The trial judge has referred to this as a “difficult

issue”, and recognized a SPLIT IN THE CIRCUITS, citing

(a) Gates v. Victor Fine Foods, 54 F.3d 1457 (9th Cir. 1995),

and contrasting that decision to (b) In Re Aircrash Disaster

near Roselawn, Indiana on October 31, 1994, 96 F.3d (7th Cir.

1996).

The split in the circuits on this issue is being

lamented by the legal community:

Courts principally disagree as to whether to

allow “tiering” — classifying an entity as an

agency or instrumentality of a foreign state

when the state does not own a direct interest in

the entity. This particular split is solidifying as

these cases appear more frequently. In fact, since

September, 1996 the Ninth Circuit has reaf-

firmed its position that tiering should not be

allowed, while the Seventh Circuit has directed

that tiering is permissible, specifically disagree-

ing with the Ninth Circuit view. Joseph Hardy,

Jr., “Wipe Away the Tears: Determining Agency or

Instrumentality Status under the Foreign Sovereign

Immunities Act”, 31 Georgia Law Review 1121

(1997). Citing, Corporacion Mexicana de Servicios

Maritimos v. M/T Respect, 89 F.3d 650, 654-655

(9th Cir. 1996); In Re Air Crash Disaster Near

Roselawn, Indiana, 96 F.3d 932 (939-941) (7th Cir.

1996).

Mr. Hardy’s article finds the split troubling, and points

out that “tiering” is contrary to the policy and language

of the FSIA:

Both the language of the FSIA and its legis-

lative history indicate that tiered entities do not

qualify as “agencies or instrumentalities of a

foreign state” based solely upon their owner-

ship by an entity which is itself majority-owned

by a foreign state

+ + *

The statutory language of the FSIA suggests

that agencies or instrumentalities are included

in the immunities and federal jurisdiction of the

FSIA, but do not themselves become statutorily

defined foreign states able to grant instru-

mentality status to entities below them. “Wipe

Away the Tears... ”, supra, p. 1129.

The author cites Gates v. Victor Fine Foods, 54 F.3d 1457

(9th Cir. 1995), and believes that decision (disallowing

tiering) should be favored over rules developed in other

circuits.

There are compelling reasons for the Supreme Court

to take up this matter and to lay down a uniform stan-

dard. The rule in some circuits, and in the decision of the

lower courts in this case, allowing “tiering” is contrary to

the intent of Congress in enacting the FSIA and expands

the doctrine of sovereign immunity, which Congress

meant generally to restrict to the political activities of

foreign states. “Tiering” has the effect, not of restricting

sovereign immunity to state government activities, but of

Linnie cit a an eR Ne page RE RL AON Be 0

coe TW Mine aia ee

expanding the state’s sovereign immunity and extending

it to business entities created by state agencies for the

purpose of competing in international commerce. Aban-

donment of the “King can do no wrong” doctrine and

adoption of a “restrictive” immunity was meant to level

the playing field in international business competition.

Besides, application of the tiering principle penalizes the

Peré family; this Court should be solicitous to assure the

family is fairly and justly compensated for the death of its

husband-father.

The vast increase in international business activity by

state sponsored agencies of the emerging nations, as well

as by those of the long prosperous western nations, has

greatly increased recourse to the doctrine of sovereign

immunity in litigations in the United States:

As of 1986, state-owned trading enterprises

accounted for over 15% of international trade.

Thus .. . the FSIA is taking on increasing impor-

tance in the resolution of disputes arising out of

international trade. Nicholas Evanoff, “Direct

Effect Jurisdiction Under the Foreign Sovereign

Immunities Act of 1976: Ending the Chaos in the

Circuit Courts,” 22 Houston Law Review 629,

630-631 (May 1991).

(2) TIMING: Whether an entity that is privatized

before commencement of the lawsuit

may be considered a “foreign sover-

eign” under the FSIA. (SPLIT IN CIR-

CUITS - Rule 10(a).)

_. . [C]Jases have arisen in which a defendant

corporation has been nationalized or dena-

tionalized after performing the act on which a

plaintiff's complaint is based. Because the terms

of the FSIA do not recognize the possibility of a

change in status, courts in these cases have

found it difficult to determine whether these

“changed-status” defendants are “sovereigns”

under the FSIA. Simmons, “Nationalized and

Denationalized Commercial Enterprises Under the

Foreign Sovereign Immunities Act,” 90 Columbia

Law Rev. 2278, 2279 (Dec. 1990).

We are dealing here with the question of whether a

court should look to the alleged sovereign status of Nuovo

Pignone at the time of the accident, or at the time of filing

the lawsuit. Plaintiffs urge the Court to look at Defen-

dant’s status at the time the suit was filed, as was done in

Straub v. A.P. Green, Inc., 38 F.3d 448 (9th Cir. 1994).}

But the lower courts in the case at bar, recognizing

the split in circuits, have chosen to follow the rule

announced by the Eighth Circuit in General Electric Corp.

v. Grossman, 991 F.2d 1376 (8th Cir. 1993).2

Because there is a SPLIT IN THE CIRCUITS, there are

compelling reasons for this Court to take up this case, to

clarify and resolve the conflicting jurisprudence, and to

lay down a uniform standard.

Remember, the FSIA was enacted to restrict a com-

mercial defendant’s right to claim sovereign immunity.

Where we are dealing with causes of action which arise

outside the boundaries of a nation-state, causes of action

' See also, Rutkowski v. Occidental Chemical Corporation, 1988

U.S. Dist. LEXIS 11414 (N.D. IIL. 1988); Ocasek v. Flintkote Co., 796

F.Supp. 362 (N.D. Ill. 1992).

2 For a lengthy review of the “split”, see 120 ALR Fed. 542.

arising from business enterprise and competition in inter-

national commerce, the United States has no interest in

enlarging immunity for twice-removed agencies engaged

in such activities. The American understanding of justice,

and indeed the understanding of most nations in the

world today, does not expect that our courts protect

foreign governments from liability incurred in the con-

duct of commercial activities.

Nuovo Pignone is no longer the instrumentality of a

foreign sovereign. It is a large business enterprise capable

of shouldering responsibility for its past actions and neg-

ligence. A judgment against Nuovo Pignone today will

not offend Italian sovereignty in the least.

(3) COMMERCIAL ACTIVITY: Whether a defendant

engaged in purely commercial

activities, including substantial

commercial activity in the United

States and purchase of a turbine

starter engine manufactured in the

United States, then installing it

aboard a platform constructed at a

shipyard in Bayou Black, Louisi-

ana, and shipped off the coast of

Africa for installation there, where

it was operated by a U.S. oil com-

pany, and later redesigned,

repaired and maintained under

contracts with U.S. service com-

panies, can be said to have

engaged in an activity which has

no “nexus”, “material connection”,

or “direct effect” in the United

States. (SPLIT IN CIRCUITS -

Rule 10(a).)

Men of good will today do not believe the king can

do no wrong. Men of good will today believe that a

person, whoever he is, must be held accountable for the

consequences of his conduct. The United States and the

individual states of our country are subject to being sued

where they have acted wrongly, and must repair damages

which they cause to individuals, whether the individuals

be United States citizens or foreigners.

It is one thing to grant a foreign nation immunity

from suits in our courts where the cause of action arises

within the confines of that nation-state. It is quite another

thing to grant immunity for negligent acts committed far

beyond its borders, while it engaged in lucrative commer-

cial activities, after entering into contracts and working

agreements with various business enterprises of the

United States and other nations or with private multi-

national corporations.

Nuovo Pignone is engaged in oil and gas production

around the world. Like its private competitors, it pur-

chases equipment and invests capital in profitable ven-

tures wherever it chooses. Nuovo Pignone realizes about

$100 million in annual sales in North America; it has

offices in New York, Houston and Los Angeles, and

advertises in trade journals distributed in this country.

(Appendix F, 1-5, 22, 24-25.)

Nuovo Pignone is acting as a commercial business

corporation, not as an arm of the state of Italy. No one is

claiming that “King Italy” is invading their territorial

space or plundering their oil reserves by doing business.

Italy is not acting as a government for political ends, and

must be accountable for its conduct in foreign lands.

Having married itself to private business corporations in

a headlong rush for profits, is it fair and just for Nuovo

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Pignone to claim a “sovereign” status to shield itself from

ordinary accountability?

Whose interest should our courts be trying to pro-

tect? What policy considerations are paramount?

All over the world today, American workers are

being employed in the specialized work of exploring for,

developing and producing oil and gas resources. These

workers commute back and forth from the United States.

The U.S. Gulf Coast provides most of these workers, and

their participation is important to the economic future of

developing nations and to the balanced development of

the world’s supply of hydrocarbons.

Mr. Peré was not working for the state of Italy. He

was not aware of any “sovereign presence” on the plat-

form. He saw no royal seal stamped on the turbine

engines. He was working in a venture for profit. His co-

workers were not state officials and they brandished no

“diplomatic immunity”. They were employed by a

number of different business entities, and were all ordi-

nary people like himself. The equipment he worked with

was like the equipment owned by private enterprises all

over the world.

The turbine engine exploded because it was poorly

manufactured, designed, assembled and maintained, and

because it was being used improperly and in a dangerous

manner, without warning. Nuovo Pignone is responsible

for its defective equipment and its negligence in main-

taining and using that equipment.

Surely, our courts have more interest in recognizing

the rights of Mr. Peré and his family - who are U.S.

citizens, employed by a U.S. corporation — than in stretch-

ing the limits of the doctrine of sovereign immunity to

shield Nuovo Pignone. If there are conflicts in the cir-

cuits, if there are different positions being taken by the

courts, if the FSIA does not clearly exempt Nuovo Pig-

none from lawsuit, then all of these uncertainties and

variables should be interpreted and applied to protect the

Peré family, not to extend the archaic notion that “the

King can do no wrong”. Defendants claiming sovereign

immunity bear the burden of persuasion.

It hardly needs to be stated that summary judgment

is only appropriate where the law is clear and there are

no disputes on material facts. How can we pretend that

standard was reached in the case at bar? The law is not

clear; there are splits in the circuits on several of the

crucial legal standards this Court must apply. There are

serious disputes on almost every factual front. The Fifth

Circuit clearly erred in reversing the trial court and

extending sovereign immunity to Nuovo Pignone.

The doctrine of sovereign immunity continues to be

only “a matter of grace and comity on the part of the

United States, and not a restriction imposed by the Con-

stitution”. “Comment: Retroactivity, Implied Waiver, and the

FSIA: Is it Time to Reform the Law of Sovereign Immunity?,”

24 Hofstra Law Review 515, 519 (Winter ‘95). See also,

Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 486

(1983).

It is said that “the urge to grant sovereign immunity

has ... lost much of its force”. Cordozo, International Law

in the New York Courts — 1953, 40 Cornell LQ 97, 109

(1955).

It is .. . a sound principle, that when a govern-

ment becomes a partner in any trading com-

pany, it divests itself, so far as concerns the

transactions of that company, of its sovereign

character, and takes that of a private citizen.

Opinion by Chief Justice Marshall, United States v.

Planters’ Bank of Georgia, 22 U.S. (9 Wheat.) 904,

907 (1824).

With regard to the background and policies underly-

ing enactment of the Foreign Sovereign Immunities Act:

Until the mid-twentieth century the United

States followed the absolute theory of sovereign

immunity, under which all foreign states

enjoyed complete immunity from U.S. courts.

With the rise of international commerce and the

resulting increase in domestic claims against

foreign states for their commercial activities, the

United States in 1952 adopted the restrictive

theory of sovereign immunity - granting immu-

nity to foreign states and their instrumentalities

only for public, non-commercial activities. This

change in policy was affected by a statement of

intention expressed by the then U.S. Secretary of

State, Mr. Tate - viz., “Tate Letter”. “Wipe Away

the Tears... ”, supra, p. 1125.

Before the FSIA’s passage, there was a swing away

from the deference to sovereign immunity in situations

where a foreign entity was not acting for government or

political purposes but was engaged in commercial enter-

prise: “these enterprises were treated as private entities

and denied the privileges of sovereignty, including sover-

eign immunity, unless they could show that their activ-

ities were of a strictly public nature.” Simmons,

“Nationalized and Denationalized Commercial Enterprises

Under the Foreign Sovereign Immunities Act,” 90 Columbia

Law Review 2278 (December 1990).

The present application of the Doctrine of

Foreign Sovereign Immunity was significantly

influenced by the shift or change in United

States policy announced in the May, 1952 letter

from the Acting Legal Advisor of the Depart-

ment of State to the Acting Attorney General.

After referring to the classical or “absolute” the-

ory of sovereign immunity, the letter stated that

“it will hereafter be the Department's policy to

follow the restrictive theory of sovereign immu-

nity in the consideration of requests of foreign

governments for a grant of sovereign immu-

nity.” 26 Dep’t St. Bull. 984, 985 (1952) (Quoting

Letter from Jack B. Tate, Acting Legal Advisor,

Department of State to Acting Attorney General

Phillip B. Perlman (May, 1952)).

* * *

In the Restatement, it is stated that under

the act of state doctrine the courts of the United

States “will generally refrain from .. . sitting in

3 See also, Oliver American Trading Company v. United States

of Mexico, 5 F.2d 659 (2nd Cir. 1924); United States v. Deutsches

Kalisyndikat Gesellschaft, 31 F.2d 199 (S.D. N.Y. 1929). In the

report of the House Judiciary Committee hearings prior to

enactment of the FSIA, it was stated that a defense of sovereign

immunity is appropriate only where a defendant can show it is a

foreign state and “that the Plaintiff’s claim relates to a public act

of the foreign state — that is, an act within the exceptions in

sections 1605-1607.” H.R. Rep. No. 1489, 94th Cong. 2d Sess. 1,

12 (1976).

judgment on other acts of a governmental char-

acter done by a foreign state within its own

territory and applicable there.” Restatement

(Third) of Foreign Relations § 443(1) (1987).

= * *

The House Report . . . notes that the FSIA was

intended to codify the principle of international

law that a sovereign state is entitled to immu-

nity only for jure imperii, its public acts, but not

for jure gestionis, its commercial or private acts.”

Nelson v. Saudi Arabia, 923 F.2d 1528, 1531-1532

(11th Cir. 1991). See also, Teitz, Transnational

Litigation (1996) p. 73.

The drafters of the Act saw it as a response to

the need for legislation to deal with the increas-

ing contact of American citizens with foreign

states and entities, which contact called into

question whether American citizens would have

access to the courts in order to resolve ordinary

legal disputes. Among the major objectives of

the Act was the codification of the so-called

“restrictive” principle of sovereign immunity

under which the immunity of a foreign sover-

eign was “restricted” to suits involving a foreign

state’s public acts and did not extend to suits

based on its commercial or private acts, the Act

being intended to ensure that the restrictive

principle of immunity consistently was applied

in litigation before United States courts, thus

transferring the determination of sovereign

immunity from the Executive Branch to the Judi-

cial Branch. “Exceptions to Jurisdictional Immunity

of Foreign Sovereigns and Their Property Under the

Foreign Sovereigns Immunity Act of 1976 (28 USC

§§ 1602 et seq.)”, 59 ALR Fed. 99, 103-104.

The FSIA, 28 USC § 1605(a)(2) simply provides that

our courts have jurisdiction where the cause of action

involves “an act performed in the United States in con-

nection with a commercial activity of the foreign state

elsewhere”. There is no “material connection” standard

laid down.

Certainly, it is proper to require that there be some

connection between a cause of action brought in our

courts and the interests of people in the United States.

But this Court long ago threw aside stultifying protec-

tionist doctrines and attitudes sanctioning “forum disin-

terest” (“passing the buck”). In International Shoe Company

v. Washington, 326 U.S. 310, 66 S.Ct. 154 (1945) this Court

considered the requirements for accepting judicial com-

petence and jurisdiction over foreign corporations doing

business in a state:

Due process requires only that . . . a defen-

dant .. . have certain minimum contacts with

[the forum] such that the maintenance of the

suit does not offend “traditional notions of fair

play and substantial justice”. Id., U.S. p. 316,

S.Ct. p. 158.

....[T]o the extent that a corporation exercises

the privilege of conducting activities within a

state, it enjoys the benefits and protection of the

laws of that state. The exercise of that privilege

may give rise to obligations; and, so far as these

obligations arise out of or are connected with

the activities within the state, a procedure which

requires the corporation to respond to a suit

brought to enforce them can, in most instances

hardly be said to be undue. .. . Id., U.S. p. 319,

S.Ct. p. 160.

International Shoe has made justice possible in situa-

tions where technicality and protectionism had shielded

foreigners (out-of-staters) before. We may ask whether

the FSIA is being drafted into a revived protectionism.

There is no need to require an injured party to bear a

heavy burden in establishing a foreign corporation’s com-

mercial activity with the forum state. Foreign corpora-

tions are considered subject to the jurisdiction of our

federal courts whenever the corporation’s “aggregated

contacts with the United States as a whole are sufficient,

even though the contacts within the state in which the

federal court is sitting would not be sufficient if consid-

ered alone”. Scoles and Hay, Conflict of Laws (West.1982),

. Sas

The Fifth Circuit is requiring a heavy burden for

proving sufficient commercial activity and connection

between the cause of action and the United States or

forum state. The Fifth Circuit is asking for “substantial”

and “material” connection (Stena Rederi, supra). This is

bad policy, contrary to the spirit of the time and to the

policies underlying the FSIA. The whole purpose of the

FSIA was to extend the jurisdiction of our courts over the

commercial activities of foreign states and their agencies

and instrumentalities, where the interests of our people

were involved and judicial remedies were required.

Compare the Fifth Circuit’s “material connections”

standard with the Ninth Circuit’s decision in Siderman de

Blake v. Republic of Argentina, 965 F.2d 699 (9th Cir. 1992),

where the court held that slight, irregular contacts

(nexus) between a foreign state’s commercial activity in

the United States and the plaintiff’s grievance was suffi-

cient to give jurisdiction under the FSIA. In United World

Trade v. Mangyshlakneft, 821 F.Supp. 1405 (D.C. Colo.

1993), personal jurisdiction was determined under a

“minimum contacts” test.‘

Some courts are applying the “based upon” standard

by considering whether the foreign corporation is “doing

business” in the United States. This “doing business” test

“focuses on the connections between the defendant and

the United States; by definition it requires no specific

connection between the lawsuit and the United States.”

Newman and Zaslowsky, Litigating International Commer-

cial Disputes (West 1996), p. 114. The Fifth Circuit has

rejected the “doing business” test, and requires plaintiffs

to prove a more intense involvement between the activity

out of which the cause of action arises and the forum

state. See, Vencedora Oceania Navigacion v. Compagnie

4 In Re Rio Grande Transport, Inc., 516 F.Supp. 1155 (S.D.

M.Y. 1981), the federal court entertained an action brought by an

American corporation against a foreign shipping company

where the action arose out of a collision between the Plaintiff's

vessel and a vessel operated by the defendant on the high seas.

To establish jurisdiction over the foreign entity, the federal court

found the foreign shipping company had sufficient contact with

the United States, in that its vessels regularly call at United

States ports for loading and discharging of commercial cargoes,

that the shipping company earned substantial income from

those activities, and spent substantial monies in the United

States in connection with its shipping activities. The court

looked not only at the particular vessel and the particular

accident in question but at the foreign shipping company’s

worldwide operation of more than seventy vessels and their

connections with the United States.

Pe ee ee ee ee a ee ee ee a ne Ce ee a a ee ee ee ae —

Ce ee a ee ee ee ek oe eee

Nationale Algerienne de Navigation, 730 F.2d 195, 202 (Sth

Cir. 1984).

In applying the “direct effect” standard for establish-

ing a FSIA “commercial activity” exception, some circuits

say the “direct effect” in the United States need not be

“substantial” or “foreseeable” (Texas Trading & Milling

Corp. v. Federal Republic of Nigeria, 647 F.2d 300 (2nd Cir.

1981)); while other circuits (including the Fifth Circuit)

insist it must be “substantial” and “foreseeable” (Zernicek

v. Brown & Root, Inc. 826 F.2d 415 (5 Cir. 1987)).

The commentators recognize there is a problem here;

there are a multiplicity of standards in use among differ-

ent courts:

The lawsuit against the foreign state must also

be “based upon” that commercial activity [28

USC 1605 (a)(2)(1988)]. Congress found an act to

be based upon a commercial activity if the for-

eign state’s acts had substantial contact with the

United States. The Supreme Court has not

addressed what constitutes substantial contact

under the statute, allowing lower courts to cre-

ate numerous variations. Amelia McCarthy, “The

Commerical Activity Exception — Justice Demands

Congress Define a Line in the Shifting Sands of

Sovereign Immunity,” 77 Marquette Law Review

893, 903 (Summer ‘94).

(4) Waiver: Whether Nuovo Pignone’s repeated agree-

ments to arbitrate contract disputes in for-

eign forums and to be bound by the laws

of other states including Texas and Louisi-

ana, constitute “waiver” of its right to

claim sovereign immunity. (SPLIT IN CIR-

CUITS)

Nuovo Pignone has entered into a number of con-

tracts in which it agrees to arbitration of disputes in

foreign forums and the application of non-Italian laws in

the interpretation of contracts and resolution of disputes.

Plaintiffs have especially drawn attention to the

Reconfiguration Agreement entered into by Nuovo Pig-

none, effective June 10, 1985, under which the turbine

engine and associated compressor equipment were

“reconfigured” to increase horsepower and the flow of

gases through the compressor. (Faulty “reconfiguration”

may have caused the explosion.) Under several provi-

sions of that agreement, Nuovo Pignone agreed the law

of the State of Texas would apply in dispute resolution.

(See, Reconfiguration Agreement, Appendix E.)

Some courts have rejected “constricted views” which

limit a foreign sovereign’s “waivers”. Maritime Interna-

tional Nominees Establishment v. Republic of Guinea, 505

F.Supp. 141 (D.C. 1981).

In Ohntrup v. Firearms Center, Inc., 516 F.Supp. 1281

(E.D. Pa. 1981), the court acknowledged it would be

reasonable to conclude that an agreement with a foreign

country to arbitrate disputes in, or be governed by the

laws of, the United States would constitute an implicit

waiver by that foreign country of its sovereign immunity

in the courts of the United States. But Fifth Circuit courts

are applying a more rigorous standard. Castro v. Saudi

Arabia, 510 F.Supp. 309 (W.D. Tex. 1980). Again we see

differences of interpretation and application of FSIA stan-

dards in the circuits.5

Under a literal reading of Section 165 (a)(1), any

‘waiver’ by a foreign sovereign would establish

both subject-matter and personal jurisdiction in

U.S. courts. Newman and Zaslowsky, Litigating

International Commercial Disputes, (West 1996),

p. 120.

CONCLUSION

It has been said that Congress’ enactment of the FSIA

“did little more than produce a Statutory skeleton from

which the federal judiciary has been left to create,

through a case-by-case decisional process, a fully devel-

oped body of sovereign immunity law”. Gibbons v. Udaras

na Gaeltrachta, 549 F.Supp. 1094, 1106 (S.D. N.Y. 1982).

There have been twenty years of jurisprudential cre-

ativity, and a number of often conflicting standards have

been fashioned:

° Some courts have followed the Judiciary Committee's

Suggestion that a choice-of-law selection of the law of another

state constitutes an immunity waiver. Joseph v. Office of the

Consulate General of Nigeria, 830 F.2d 1018, 1022 (9th Cir. 1987);

Marlowe v. Argentine Naval Comm'n, 604 F.Supp. 703 (D.C. 1985).

Other courts reject that approach. Verlinden B.V. ». Central Bank

of Nigeria, 488 F.Supp. 1284, 1301-1302 (S.D. ». ¥. 1980).

... [T]he courts have been unable to agree as to

the meaning of the jurisdictional criteria. The

resulting ambiguity has been criticized as

threatening the important policy of uniformity

that underlies the FSIA. Newman and

Zaslowsky, Litigating International Commercial

Disputes, (West 1996), p. 114. See also, J.

Dellapenna, Suing Foreign Governments and Their

Corporations (1988), pp. 157-160.

The judicial application of the FSIA is in disarray.

The Supreme Court must do some housekeeping. There

are compelling reasons: the jurisprudence needs to be put

in order; relevant policies underlying the doctrine of

sovereign immunity must be identified and weighed; uni-

formity is essential. There are splits in the circuits on

several key standards which must be balanced to make

the FSIA fair and manageable.

This is an area of law where the Supreme Court is

particularly and uniquely suited to enter in and announce

standards. Can we imagine that the courts of Angola are

better situated to deal with the complexities presented in

this suit? Can we imagine that the courts of Italy are

better suited to deal with the question of proper opera-

tion of U.S. manufactured, assembled and maintained

turbine equipment operated by U.S. personnel offshore

Angola? A refusal by U.S. courts to accept jurisdiction in

this case will mean a denial of justice to Mr. Peré’s family

(and thousands like them), without good reason.®

6 Mr. Peré was killed by a defect in a product manufactured

and serviced by U.S. corporations. To deny his family’s right of

recovery flies in the face of justice and the “growing tendency”

to protect such victims — in product defect cases, commentators

“ae Rane ace a Baa

The Court should take this case up for review.

Respectfully submitted,

SONNIER & TRAHAN

K. Wave TRAHAN #20474

Counsel of Record

CuHartes R. Sonnier #12260

FRANK W. Summers II #14755

Post Office Drawer 700

Abbeville, LA 70511-0700

(318) 893-5973

Attorneys for Nancy Peré,

individually and on behalf of her

minor children, Matthew Reed Peré

and Marci Danielle Peré

have been counseling against “mechanical and clearly

inadequate formulas” in favor of “the application of the law

most favorable to the plaintiff.” Ehrenzweif and Jayme, Private

International Law (1977), p. 113.

Appendix

APPENDIX TABLE OF CONTENTS

Page

A = Fn Cecelt Osinion: 5556.55.65 Ss . Al

B - Judge Doherty Ruling............... Bl

C Order Dismissing Nuovo Pignone ....C1

i? ~ Atiginal Complaint. ...........<600. D1

i PN SCA P06 5c a eo oo Kea es, El

F Veposition Excerpts... ..........6s0s. Fl

G Statutes — Text of Relevant Provi-

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APPENDIX A

Nancy G. PERE, on behalf of Marci Danielle Pere, on

behalf of Matthew Reed Pere, individually and on

behalf of her minor children, Plaintiff-Appellee,

NUOVO PIGNONE, INC., et al., Defendants,

Nuovo Pignone S P A, Defendant-Appellant,

Coppus Engineering; Tuthill Corporation,

Defendants-Appellees.

No. 97-30572.

United States Court of Appeals,

Fifth Circuit.

Aug. 7, 1998.

Appeal from the United States District Court for the

Western District of Louisiana.

Before POLITZ, Chief Judge, and JONES and DUHE,

Circuit Judges.

DUHE, Circuit Judge:

Appellee’s husband was killed while working on a

platform off the coast of West Africa when a starter

turbine manufactured by Coppus Engineering exploded.

The starter turbine was a component of a turbine system

designed and manufactured by Nuovo Pignone. Appellee

sued for her husband’s wrongful death claiming that the

starter turbine and turbine system had been improperly

designed and/or manufactured. Appellant, Nuovo Pig-

none, an Italian company, claimed sovereign immunity

under the Foreign Sovereign Immunities Act. 28 U.S.C.

§ 1602, et seq. The district court found that, although

Appellant was a foreign state, the commercial activity

“

exception to immunity applied and Appellant could be

sued. We disagree, holding that the Appellee failed to

meet her burden of proof that the commercial activity

exception applied.

In 1974, Nuovo Pignone, an Italian company that

designs and manufactures turbine systems, bought a

starter turbine from Coppus Engineering, a United States

company. Nuovo Pignone then sold to Cabinda Gulf Oil

Company (“CABGOC”), FOB Italy, a turbine system that

incorporated the Coppus starter turbine. Nuovo Pignone

manufactured, tested, and inspected the turbine system

in Italy. It was then sent to Bayou Black, Louisiana for

final assembly by CABGOC’s contractor onto a platform.

The completed platform was sent to CABGOC in the

Molongo field off the coast of Angola, West Africa.

In 1993, Marcus Daniel Pere (“Pere”) was employed

by Chevron Overseas Petroleum and/or CABGOC as an

instrument technician in West Africa. Pere’s employer

ordered him to a gas injection platform to test the gas

turbine system. During the test, the starter turbine

exploded killing Pere. Pere’s widow sued! on behalf of

herself and her two children claiming that the Coppus

turbine and Nuovo Pignone’s turbine system caused

' Coppus Engineering is also suing; however, it is doing so

to ensure that Nuovo Pignone remains a party to the litigation.

To avoid confusion, this opinion will treat Coppus’ arguments

as Pere’s.

Pere’s death because they had been defectively designed

and/or manufactured.

Nuovo Pignone moved for summary judgement

claiming sovereign immunity by contending it was an

agent or instrumentality of the Italian government. It

established that Ente Nazionale Idrocaburi (“ENI”) was

the majority shareholder at the time of the accident and

that the Republic of Italy created ENI to lead Italy’s oil

and gas exploration and development. Thus, Nuovo Pig-

none argued, because ENI is an agent or instrumentality

of the Italian government, it was a foreign state entitled

to immunity. The district court agreed. It, however,

denied Nuovo Pignone’s request for dismissal concluding

that Nuovo Pignone was not entitled to sovereign immu-

nity because of its commercial activities in the United

States. Nuovo Pignone appeals.

II.

The Foreign Sovereign Immunities Act of 1976

(“FSIA”), 28 U.S.C. § 1602 et. seq., provides the sole basis

for obtaining jurisdiction over a foreign state. Argentine

Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 443,

109 S.Ct. 683, 102 L.Ed.2d 818 (1989). The FSIA includes

agents or instrumentalities? of a foreign state within the

* 28 U.S.C. § 1603(a), (b)(1), (b)(2) provide:

(a) A “foreign state” . . . includes a political

subdivision of a foreign state or an agency or

instrumentality of a foreign state as defined in

subsection (b).

definition of “foreign state”. To bring suit, the plaintiff

must establish that one of the exceptions listed in §§ 1605

and 1607 applies. This Court must decide whether Nuovo

Pignone is a foreign state, and if it is, whether it may still

be sued under the commercial activity and implicit

waiver exceptions, see § 1605(a)(1), (2) infra.

A. STANDARD OF REVIEW

We review a district court’s application of the FSIA

de novo. Tubular Inspectors, Inc. v. Petroleos Mexicanos, 977

F.2d 180, 184 (5th Cir.1992).

B. ANALYSIS

1. Whether the FSIA Applies

Pere argues that the district court erred in applying

the FSIA because it looked to Nuovo Pignone’s owner-

ship at the time the explosion occurred, rather than at the

time suit was filed. When Pere sued, Nuovo Pignone was

no longer a foreign state because ENI had transferred a

majority of the Nuovo Pignone stock to a consortium of

private companies. In support of her argument, Pere cites

Straub v. A.P. Green, 38 F.3d 448 (9th Cir.1994) which

(b) An “agency or instrumentality of a foreign state”

means 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{.]

looked at the defendant's identity at the time suit was

filed. She acknowledges that General Electric Capital Corp.

v. Grossman, 991 F.2d 1376 (8th Cir.1993) holds that

whether an entity qualifies as a foreign sovereign is

determined at the time the litigated event occurred. Pere

contends, however, that the Straub court's reasoning is

better because it is more in keeping with the FSIA’s

legislative history.

The FSIA’s purpose was to promote harmonious

international relations. Pullman Construction Industries,

Inc. v. United States, 23 F.3d 1166, 1169 (7th Cir.1994). Pere

argues that generally international relations would

remain unaffected when a plaintiff sues an entity which

was immune at the time of the disputed event but is now

private, therefore, giving Nuovo Pignone immunity does

not achieve any governmental purpose. We disagree.

Whether the FSIA covers an entity now private that

was state owned at the time of the disputed event(s) is a

first impression within this Circuit. Having studied both

Straub and General Electric, we are persuaded by the

Eighth Circuit’s reasoning in General Electric. As the

Eighth Circuit stated, “the doctrine of foreign state sover-

eign immunity was created to effectuate general notions

of comity among nations.” Jd. at 1381 (internal quotations

and citations omitted). The foreign policy concerns

underlying sovereign immunity do not necessarily disap-

pear when a defendant loses its foreign status before suit

is filed. Thus, courts are to look to the defendant's status

at the time the litigated events occurred. Straub is distin-

guishable because it addresses different facts. In Straub,

the Ninth Circuit was determining how to treat a corpo-

ration that became a foreign state for FSIA furposes after

the disputed events occurred but before suit was filed.*

Straub, 38 F.3d at 451. We, therefore, affirm the district

court’s finding that Nuovo Pignone is a foreign state

under the FSIA.

2. FSIA Exceptions

a. Commercial Activity

The district court found that the “commercial activ-

ities” exception to the FSIA applied. Under § 1605(a)(2), a

foreign state is not immune when the action is:

“based upon a commercial activity carried on in

the United States by the foreign state; or upon

an act performed in the United States in connec-

tion with a commercial activity of the foreign

state elsewhere; or upon an act outside the terri-

tory of the United States in connection with a

commercial activity of the foreign state else-

where and that act causes a direct effect in the

United States.”

“Commercial activity” is defined as “a regular course

of commercial conduct or a particular commercial trans-

action or act.” 28 U.S.C. § 1603(d). In determining the

commercial character of an activity, courts look to the

nature rather than the purpose of the act or transaction.

Id. For the commercial activity exception to apply here,

Nuovo Pignone’s actions must fall within the second

listed exception. In other words, the suit must be “based

upon .. . an act performed within the United States in

* This opinion does not address such a situation.

connection with a commercial activity of the foreign state

elsewhere”. The district court correctly found that the

commercial activity upon which the plaintiff's cause of

action was based was the design and manufacture of

turbine systems. It further found that the act performed

in the United States in connection with that activity was

Nuovo Pignone’s sending a representative to Bayou Black

to consult in the final assembly of the system onto the

platform. We disagree.

We turn first to the issue of each party’s burden of

proof. Initially, the party seeking immunity must show

the district court that it is a foreign state potentially

entitled to immunity under the FSIA. Once that party

makes such a showing, the burden shifts to the opposing

party to raise the exceptions to sovereign immunity and

to assert facts that would establish these exceptions. The

ultimate burden of proving that the FSIA applies, though,

remains upon the party seeking immunity. Stena Rederi

AB v. Comision de Contratos del Comite Ejecutivo General del

Sindicato Revolucionario de Trabajadores Petroleros de la

Republica Mexicana, 923 F.2d 380, 390 n. 14 (Sth Cir.1991);

Arriba Ltd. v. Petroleos Mexicanos, 962 F.2d 528, 533 (5th

Cir.1992). Here, Nuovo Pignone has proven that it is a

foreign state entitled to immunity; thus, the burden has

shifted to Pere to prove that Nuovo Pignone performed

an act within the United States in connection with the

commercial activity performed elsewhere. Pere asserts

that Nuovo Pignone’s sending representatives to Bayou

Black, Louisiana to consult on the final assembly was

such an act. Assuming arguendo that the consultation

was a commercial act performed within the United States,

Pere still fails to meet her burden of proof.

To determine whether the availability to consult dur-

ing the Bayou Black assembly was in connection with

Nuovo Pignone’s design/ manufacture in Italy, we look to

our prior cases to find the definition of “in connection

with”. In Stena, we held that the connection between the

commercial activity and the plaintiff's complaint had to

be material. Id. at 387. However, when the “in connection

with” prong applies, “any material connection between

‘commercial activity elsewhere’ and the plaintiff's com-

plaints . . . is irrelevant to the determination of subject

matter jurisdiction.” Id. at 388. Under this prong, the

material connection must exist between the act performed

in the United States and plaintiff’s cause of action. Here,

then, the material connection must exist between the

availability for consultation during final assembly in

Bayou Black and Pere’s allegations of wrongful death due

to improper design and/or manufacture. Pere fails to

show such a material connection. The components of the

turbine system were manufactured, tested, and delivered

to CABGOC in Italy. More importantly, once the compo-

nents arrived in Bayou Black, Nuovo Pignone did not

perform the final assembly; rather, it was CABGOC’s

contractor who performed this task. Concededly, Nuovo

Pignone did send representatives to consult on the

mechanical erection of the components onto the platform;

however, there is no indication in the record concerning

the extent or nature of the consultation or to show it as an

integral part of the design or manufacture. While this

Court is told that the Nuovo Pignone representatives

consulted, we are left to guess at what the consultation

involved. There is simply no indication that the final

assembly in Bayou Black was a part of the design or

—_—— eh Ue Ure

manufacture that occurred in Italy. Thus, we cannot say

that there is a material connection between Nuovo Pig-

none sending consultants to Bayou Black and Pere’s

wrongful death action.

b. Waiver

Pere argues that the district court did not have to

consider the commercial activity exception because

Nuovo Pignone has implicitly waived its immunity. The

FSIA allows a foreign state to waive its immunity either

explicitly or implicitly, 28 U.S.C. § 1605(a)(1), but it does

not state how implicit waiver occurs. The legislative his-

tory reveals, though, that implicit waiver may be found

in three situations: 1) when a foreign state agrees to

arbitration in another country; 2) when a foreign state

agrees that the laws of another country govern a contract;

and 3) when a foreign state files a responsive pleading

without raising the immunity defense. H. Rep. No. 1487,

94th Cong.2d Sess. 18, reprinted in 1976, U.S.C.C.A.N.

6604, 6617. See also, Arriba Ltd., 962 F.2d at 539 n. 22. The

waiver exception is to be narrowly construed. Joseph

Office of Consulate General of Nigeria, 830 F.2d 1018, 1022

(9th Cir.1987).

Here, Pere argues that Nuovo Pignone implicitly

waived its sovereign immunity by virtue of a 1985 con-

tract it made with CABGOC. That contract concerned the

overhaul of the FC-1C compressor train that included the

Starter turbine that exploded. In provision 19 of that

contract, Nuovo Pignone agreed that the laws of Texas

would govern questions concerning the performance or

Al0

execution of the overhaul contract. Pere contends that

this provision is an implied waiver. We disagree.

First, in cases in which implied waiver based upon a

contract has been found, the contract was between the

parties suing and being sued. See Eckert International v.

The Government of the Sovereign Democratic Republic of Fiji,

32 F.3d 77 (4th Cir.1994); Joseph v. Office of Consulate

General of Nigeria, 830 F.2d 1018 (9th Cir.1987); Kramer v.

Boeing, Co., 705 F.Supp. 1392 (D.Minn.1989). That is not

the case here. Moreover, when courts analyze whether a

contract’s choice of law provision constitutes implicit

waiver, they look to the implied intent of the parties. See

Eckert Int'l, 32 F.3d at 80. Having studied the 1985 agree-

ment, we find no implied intent of Nuovo Pignone to be

responsible to third parties. Hence, Nuovo Pignone has

not impliedly waived its sovereign immunity.

CONCLUSION

For the reasons stated, we AFFIRM IN PART,

REVERSE IN PART and REMAND.

iil ta ain i i pa te me

APPENDIX B

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

LAFAYETTE/OPELOUSAS DIVISION

NANCY G. PERE, ET UX CIVIL ACTION NUMBER:

VERSUS 94-1889

NUOVO PIGNONE, INC., JUDGE DOHERTY

ET AL MAGISTRATE JUDGE

METHVIN

MEMORANDUM RULING

(Filed Apr. 30, 1997)

Before this Court is Defendant’s Nuovo Pignone

S.p.A.’s (“Nuovo Pignone”) Motion for Summary Judg-

ment. Nuovo Pignone contends that it is immune under

the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.

C. § 1602, et seq., and therefore this Court lacks jurisdic-

tion over plaintiff’s, Nancy G. Peré’s, complaint against

Nuovo Pignone. Plaintiff opposes this motion and sub-

mits a cross-motion for summary judgment contending

Nuovo Pignone is not entitled to immunity under the

FSIA. Defendants Coppus Engineering and Tuthill Corpo-

ration have also submitted an opposition to Nuovo Pig-

none’s Motion for Summary Judgment.

Facts

The relevant, undisputed facts of this matter are as

follows. Marcus Daniel Peré was employed by Chevron

Overseas Petroleum and/or Cabinda Gulf Oil Co. (“CAB-

GOC”), a division of Chevron, as an instrument techni-

cian in West Africa. On the morning of October 16, 1993,

Peré was ordered to gas injection platform FOX (“GIP-

FOX”), located approximately seven to ten miles off the

coast of Cabinda, Angola (the coast of West Africa), to

administer testing procedures on a gas turbine system.

An explosion occurred during this procedure, killing

Peré. Peré’s widow, Nancy Peré, brings this suit.

Plaintiff's claim is that a defectively manufactured

and/or designed turbine system caused the accident and

death of Peré; consequently, the Court will review the

history of the turbine system. Coppus Engineering, and

its successor corporation, Tuthill, is a United States man-

ufacturer of starter turbines, which are part of the subject

turbine system. Nuovo Pignone is an Italian company

that designs and manufactures turbine systems. AGIP,

USA is a United States company that serves as a procure-

ment agent; it receives orders from foreign clients and

procures the necessary parts and products from United

States vendors. Cabinda Gulf Oil Company is an oil com-

pany operating, in all matters relevant to this action, off

the coast of West Africa.

AGIP, USA placed an order for starter turbines with

then Coppus Engineering Corporation (“Coppus”) on

behalf of Nuovo Pignone, located in Italy. Coppus deliv-

ered the starter turbines to AGIP, a delivery which

included the subject starter turbine, in approximately July

of 1974, and they were then apparently shipped to Nuovo

Pignone in Italy by AGIP.

Nuovo Pignone entered into an agreement with Cabi-

nda Gulf Oil Company (“CABGOC”) for the sale of the

subject turbine system. Nuovo Pignone then partially

manufactured and assembled the turbine systems and

shipped incomplete packages to Bayou Black, Louisiana

for final manufacturing and assembly onto the gas injec-

tion platform. Nuovo Pignone provided personnel to as-

sist in the installation of the turbine systems on the

platform. After completion and assembly on the platform,

the completed platform was shipped from Bayou Black,

Louisiana to CABGOC in the Molongo Field in Cabinda,

Angola, off the coast of West Africa.

Nancy G. Peré brought this action on October 17.

1994, on behalf of herself as the spouse of decedent and

as the mother of their two children. Plaintiff filed suit

against various entities for damages resulting from the

death of Peré.! Plaintiff sued Nuovo Pignone, Inc. (an

' Plaintiff's original Complaint filed in this Court seeks

recovery under only the Death on the High Seas Act, 46 U.S.C

761 et seq., and does not detail in any fashion the nature and

involvement of the various defendants sued. However, plaintiff

also filed suit against the same defendants in two United States

District Courts for the Southern District of Texas — before Judge

Kent of the Galveston Division and Judge Rosenthal of the

Houston Division. Judge Kent dismissed the Galveston action

without prejudice based upon the pendency of the Houston

action. Judge Rosenthal dismissed the Houston action based

upon the pendency of the action before this Court, however,

Judge Rosenthal then later reinstated the Houston action and

transferred it pursuant to 28 U.S.C. § 1404(a) to this Court. On

June 14, 1995, this Court noted that the transferred Houston

action and the action now before this Court were identical and

ordered that the Houston action be closed and all documents

filed in the action now pending before this Court. Therefore, the

Italian corporation also identified as Nuovo Pignone,

S.p.A.) Pignone, Inc. (a United States corporation), and

Coppus Engineering, Inc. (a United States corporation) as

designers and manufacturers of the subject turbine sys-

tem. Nuovo Pignone was 69% owned by Ente Nazionale

Idrocaburi (“ENI”) at the time of the explosion giving rise

to plaintiff's cause of action. ENI is a joint stock company

reporting to the Minister of Treasury in Italy.

Plaintiff also sued Tuthill Corp., as a successor corpo-

ration of Coppus Engineering. Plaintiff initially sued

AGIP Petroleum Co., Inc., however, said company was

voluntarily dismissed on August 9, 1995. Order granting

plaintiff’s Motion to Dismiss Defendant AGIP Petroleum

Co., Inc. without prejudice (No. 18). Plaintiff then

amended her Complaint to add as defendant AGIP, USA,

Inc., on January 19, 1996. Second Amended Complaint

(No. 27).

Analysis

Nuovo Pignone and the plaintiff have styled their

FSIA-based motions as motions for summary judgment.

complaints filed in this Court and in the Houston action have

been consolidated. The Complaint brought in the Houston

action listed several theories of recovery that are not present in

the Complaint filed originally in this Court. In the Houston

action, the plaintiff brought claims for strict products liability,

negligence, gross negligence, violations of the Texas Deceptive

Trade Practices Act, and for breach of express or implied

warranties. There was no claim brought under the DOHSA. In

addition, plaintiff provided much greater detail in the Houston

action regarding the identity of the various defendants sued and

the basis for plaintiff’s claims against them.

However, Nuovo Pignone’s motion is more properly

brought as a motion to dismiss for lack of subject matter

jurisdiction pursuant to Fed. R. Civ. Pro. 12(b)(1). Plain-

tiff’s cross-motion for summary judgment in opposition

to Nuovo Pignone’s motion is more properly considered

as an opposition to Nuovo Pignone’s motion to dismiss.

Case law has established the respective burdens

when a defendant claims immunity based upon the FSIA.

The defendant. asserting immunity carries the burden of

persuading the court that it is so entitled. Forsythe v. Saudi

Arabian Airlines Corp., 885 F.2d 285, 289 n. 6 (Sth Cir. 1989)

(per curiam). However, once the defendant makes a prima

facie showing of entitlement to FSIA immunity, the plain-

tiff must then assume the burden of producing facts

sufficient to show that an exception to immunity exists.

Id.; Arriba Ltd. v. Petroleos Mexicanos, 962 F.2d 528, 533 (5th

Cir. 1992). The ultimate burden of proof on immunity

remains at all times on the defendant. Petroleos Mexicanos,

962 F.2d at 533; Forsythe, 885 F.2d at 289 n. 6.

In determining whether a defendant is entitled to

immunity, and thus whether the court retains subject

matter jurisdiction over the plaintiff Is claims against the

defendant, “a district court may rely not only on the

pleadings; it may consider conflicting evidence - con-

tained in affidavits, for example - and make its own

resolution of disputed jurisdictional facts.” Forsythe, 885

F.2d at 289 n. 6 (citing Williamson v. Tucker, 645 F.2d 404,

413 (5th Cir.), cert. denied, 454 U.S. 897, 102 S.Ct. 396, 70

L.Ed.2d 212 (1981)).

I. Nuovo Pignone’s Status as a Foreign State

Congress passed the FSIA in 1976 as a codification of

the “restrictive theory” of foreign sovereign immunity.

Stena Rederi A.B. v. Comision de Contratos, 923 F.2d 380,

384-86 (Sth Cir. 1991). Under the “restrictive theory,” “a

foreign state’s immunity from suit in this country does

not extend to acts that are private in nature, such as

commercial activities, as opposed to those that are public

in nature.” Coleman v. Alcolac, Inc., 888 F.Supp. 1388, 1399

(S.D. Tex. 1995) (citing Verlinden B. V. v. Central Bank of

Nigeria, 461 U.S. 480, 487, 103 S.Ct. 1962, 1967, 76 L.Ed.2d

81 (1983)). The FSIA provides when and how parties can

bring actions against foreign states or their entities in the

courts of the United States or the various States, and also

provides when such foreign states are entitled to sover-

eign immunity. Alcolac, Inc., 888 F.Supp. at 1399 (citing

Jones v. Petty-Ray Geophysical Geosource, Inc., 954 F.2d

1061, 1064 (5th Cir.), cert. denied, 506 U.S. 867, 113 S.Ct.

193, 121 L.Ed.2d 136 (1992) (quoting H.R. Rep. No.

94-1487, 94th Cong., 2d Sess. 6, reprinted in 1976 U.S.

Code Cong. & at Mem. News 6604 (1976))). The FSIA

provides plaintiffs their sole basis for obtaining jurisdic-

tion over foreign state defendants in both federal and

state court. 28 U.S.C. § 1602.

The FSIA provides immunity only for “foreign

states.” 28 U.S.C. § 1602. The Act defines a “foreign

state”:

(a) A “foreign state”, except as used in § 1806

of this title, includes a political subdivision of a

foreign state or an agency or instrumentality of

a foreign state as defined in subsection (b).

via ShESge Suki +

(b) An “agency or instrumentality of a foreign

state” means any entity —

(1) which is a separate legal person, corpo-

rate 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 sub-

division thereof, and

(3) which is neither a citizen of a State of

the United States as defined in § 1332(c) and

(d) of this title, nor created under the laws

of any third country.

28 U.S.C. § 1603.

Nuovo Pignone contends that at the time of the acci-

dent in question, it was majority-owned by Ente

Nazionale Idrocaburi (“ENI”). Nuovo Pignone further

contends that ENI is an entity created by the Republic of

Italy to lead Italy’s endeavors in the fields of oil and gas

exploration and develupment. Therefore, Nuovo Pignone

contends that it was majority-owned by ENI, an agency

or instrumentality of Italy, and that it is therefore a for-

eign state under the FSIA and entitled to immunity. It is

undisputed that ENI is an agency or instrumentality of

Italy.

Plaintiff contends Nuovo Pignone is not a foreign

state under the FSIA. First, plaintiff argues that Nuovo

Pignone has not carried its burden to establish that it was

majority-owned by ENI at the time of the accident, and

that therefore Nuovo Pignone cannot claim that it was

owned by Italy at the time of the accident and therefore

entitled to immunity.

Second, plaintiff contends that even if Nuovo Pig-

none has carried its burden to establish that it was owned

by ENI at the time of the accident, Nuovo Pignone is still

not entitled to immunity under the FSIA. Plaintiff con-

tends that ENI is an agency or instrumentality of Italy,

and not Italy or a political subdivision of Italy, and there-

fore Nuovo Pignone cannot qualify as an “agency or

instrumentality of a foreign state” as a majority of its

shares are not owned by a foreign state or political subdi-

vision thereof. 28 U.S.C. § 1603(b).

Finally, plaintiff contends that the question is not

whether Nuovo Pignone qualified as a foreign state at the

time of the events giving rise to this action, but whether

Nuovo Pignone qualified as a foreign state at the time

plaintiff filed this action. Plaintiff contends Nuovo Pig-

none was owned by a consortium led by General Electric

as of the time of filing of plaintiff Is action, and not by

Italy or even an “agency or instrumentality” of Italy, and

therefore cannot qualify as a foreign state.

Plaintiff’s first argument is easily rejected. Nuovo

Pignone has carried its burden to establish that it was

majority-owned by ENI at the time of the events giving

rise to this action. The explosion which forms the basis of

plaintiff’s claim occurred on October 16, 1993. Nuovo

Pignone has produced uncontradicted evidence that it

was majority-owned by ENI at least as late as December

of 1993. Nuovo Pignone’s Mem. in Supp., Exhibit A at 29

(No. 56). Nuovo Pignone has also produced evidence that

before the sale of Nuovo Pignone stock to the private

consortium led by General Electric, ENI owned 69% of

Nuovo Pignone’s stock. Id., Exhibit B at 46. Nuovo Pig-

none has produced evidence that its sale to the consor-

tium led by General Electric was not officially announced

until December 22, 1993, and that the contract was per-

haps not final until May 24, 1994. Id. at 59-61. Nuovo

Pignone has carried its burden to establish that it was

majority-owned by ENI at the time of the events giving

rise to plaintiff’s action.

A. Tiering

A more difficult question is whether Nuovo Pignone,

as an entity majority-owned by an agency or instru-

mentality of Italy (“ENI”) and not Italy itself or a political

subdivision thereof can be considered a foreign state

under the FSIA. This problem of indirect ownership of

entities by foreign states through intermediary “agencies

or instrumentalities” has been referred to as one of

“tiered” ownership. Plaintiff cites Gates v. Victor Fine

Foods, 54 F.3d 1457 (9th Cir. 1995), in support of her

argument that Nuovo Pignone cannot be considered an

agency or instrumentality of Italy as Nuovo Pignone is

not owned by Italy or a political subdivision thereof, but

rather ENI, an agency or instrumentality of Italy.

In Gates, the Ninth Circuit considered whether

Fletcher’s Fine Foods (“FFF”), a pork processing plant

headquartered in British Columbia, qualified as a foreign

State under the FSIA. Alberta Pork Producers Develop-

ment Corporation (“Alberta Pork”), found to be an

agency or instrumentality of Canada, owned 106% of the

shares of FFF.

B10

The Ninth Circuit noted first that FFF, “an ordinary

pork processing plant,” could not be considered an

“organ” of the province of Alberta. Gates, 54 F.3d at 1461.

Therefore, FFF could only qualify for immunity under the

_ FSIA if it was found to be an agency or instrumentality of

the foreign state.-To so qualify, the majority of FFF’s

shares would have to be owned by “a foreign state or

political subdivision thereof.” The Ninth Circuit then

noted that FFF was wholly owned by Alberta Pork, that

Alberta Pork was not a foreign state or political subdivi-

sion thereof, but rather an agency or instrumentality of a

foreign state. Id. at 1462. The Ninth Circuit went on to

state:

One might argue that once we determine that

Alberta Pork is an agency or instrumentality,

then it ipso facto becomes a foreign state or

political subdivision thereof. However, the lit-

eral language of the statute requires us to reject

that argument. First, the statute provides that a

foreign state includes an agency or instru-

mentality, not that it is an agency or instru-

mentality or that it is defined as an agency or

instrumentality. Second, the remainder of the

statute contradicts any interpretation that would

equate “an agency or instrumentality” with “a

foreign state.” If Congress had intended “agen-

cies or instrumentalities of a foreign state” to

mean “a foreign state” for the purposes of

§ 1603, then it also would have intended a

“political subdivision” to mean “a foreign state”

because § 1603(a) defines a foreign state as

including both “a political subdivision of a for-

eign state or an agency or instrumentality of a

foreign state.” The statutory language strongly

oP idle Pein! hy Aa i SC MN ele eNga aL UNS aA Acai

B11

indicates that Congress did not intend this inter-

pretation, however, because the remainder of

the section differentiates between “foreign

States” and “political subdivisions thereof.”

Id. The Ninth Circuit quoted from the legislative history

of the FSIA in support of its argument:

The second criteria requires that the entity be

either an organ of a foreign state (or of a foreign

state’s political subdivision), or that a majority

of the entity’s shares or other ownership interest

be owned by a foreign state (or by a foreign

state’s political subdivision). If such entities are

entirely owned by a foreign state, they would of

course be included within the definition. Where

ownership is divided between a foreign state

and private interests, the entity will be deemed

to be an agency or instrumentality of a foreign

state only if a majority of the ownership interest

(shares of stock or otherwise) is owned by a

foreign state or by a foreign state’s political

subdivision.

Id. (quoting from the House Report, 1976 U.S.C.C.A.N.

6604, 6614). The Ninth Circuit stated that to find an entity

owned by an agency or instrumentality of a foreign state

to be an agency or instrumentality of a foreign state itself

would be to impermissibly expand the extent of potential

immunity beyond the intent of Congress in enacting the

FSIA.

The Fifth Circuit has not addressed this issue. How-

ever, it can fairly be said that Gates is relatively isolated.

The Seventh Circuit in In re Air Crash Disaster Near Rose-

lawn, Indiana on October 31, 1994, 96 F.3d 932 (7th Cir.

1996), rejected the Gates construction:

B12

Gates concludes that the phrase “or political

subdivision of” limits “foreign states” as used in

§ 1603(b)(2) to “foreign government.” This con-

flicts with our construction of the FSIA in Allen

Dale Mut. Ins. Co. v. Bull Data Systems. Inc., 10

F.3d 425 (7th Cir. 1993), in which we considered

whether two Zenith companies were “foreign

states” under the FSIA. Each was 100% owned

by another, single corporation, which in turn

was 90% owned by France. We ruled that the

two Zenith companies were “foreign states”

under § 1603(b)(2) because “the Act’s definition

includes companies a majority of whose shares

are owned by a foreign state.” Id. at 427. See also

State Bank of India v. NLRB, 808 F.2d 526, 535 (7th

Cir. 1986) (State Bank of India a “foreign state”

under FSIA because it was 92% owned by

Reserve Bank of India, which is in turn owned

by India), cert. denied, 483 U.S. 1005, 107 S.Ct.

3229, 97 L.Ed.2d 735 (1987)... . Our reading of

the Act also comports with the construction

other courts have given it in similar circum-

stances. E.g. Antoine v. Atlas Turner, Inc., 66 F.3d

105, 109 (6th Cir. 1995) (corporation owned by

another corporation in turn owned by political

subdivision of foreign state is “instrumentality

of a foreign state”); [Straub v. A.P. Green, Inc., 38

F.3d 448, 451 (9th Cir. 1994) (same)]. .. .

In re Air Crash Disaster, 96 F.3d at 941 (some citations

omitted). In essence, the Seventh Circuit found the use of

the word “includes” in § 1603(a) evinces Congress’ intent

to broadly define ‘foreign state.’” Id. at 940.

This is consistent with the statement in the legis-

lative history that instrumentalities could

assume “a variety of forms” (H Rep. at 6614),

including “a transport organization such as

a —P as

wpe te achat > a pany HG! Dine elas

BP Ze

¥ Nat

B13

laJn ... airline.” Plaintiffs claim that the refer-

ence to “political subdivisions” in § 1603(b)(2) is

rendered superfluous (or at least redundant) by

the district court’s construction. Even if so con-

strued, it cannot alter our reading of the entirety

of the FSIA, in which corporations with ATR’s

precise. characteristics may be considered an

agency or instrumentality of a foreign state.

In re Air Crash Disaster, 96 F.3d at 940-41.

The Gates court's statutory interpretation argument is

strong and persuasive. See Gardiner Stone Hunter Int'l v.

Iberia Lineas Aereas de Espana, S.A., 896 F.Supp. 125, 130-31

(S.D.N.Y. 1995) (finding the Gates tiering argument per-

suasive, but finding no “foreign state” status on other

grounds as well). It seems that the language of the FSIA,

by defining an “agency or instrumentality” as an entity

majority-owned by a “foreign state or political subdivi-

sion thereof,” does not allow for finding an entity an

“agency or instrumentality” if its shares are majority-

owned by a “agency or instrumentality” of a foreign

state, and not by a “foreign state or political subdivision

thereof.”

However, the weight of authority seems to be against

this interpretation of the FSIA. District courts within the

Fifth Circuit have found that entities indirectly owned by

a foreign state are “agencies or instrumentalities” of for-

eign states. See Delgado v. Shell Oil Co., 890 F.Supp. 1315,

1318 n. 5 (S.D. Tex. 1995); Talbot v. Saipem A.G., 835

F.Supp. 352, 353 n. 2 (S.D. Tex. 1993). Moreover, it appears

from the text of the FSIA as a whole and its legislative

history that Congress intended entities whose shares are

majority-owned by a foreign state to be considered

B14

“agencies or instrumentalities” of the foreign state. To say

an “agency or instrumentality” of a foreign state wholly

owns another entity, and not the foreign state or one of its

political subdivisions, does not necessarily lessen the for-

eign state’s control of the latter entity. Rather, the foreign

state still owns a majority of the shares of the latter entity,

it simply does so through an intermediary. If this Court

were confronted with a situation where an entity barely

owned by a “foreign state or political subdivision

thereof” itself has a bare majority interest in another

entity, an entity which then claims status itself as an

“agency or instrumentality,” this Court’s finding might

differ. However, ENI is an entity created by Italy and

reporting to the Minister of Treasury. ENI is 100% owned

by the Minister of Treasury of the Republic of Italy. ENI

had a 69% interest in Nuovo Pignone at the time of the

incident giving rise to this action. Therefore, Italy major-

ity-owned Nuovo Pignone, and Nuovo Pignone was an

“agency or instrumentality” of Italy.

B. Timing

Plaintiff next argues Nuovo Pignone is not entitled to

immunity as a “foreign state” under the FSIA because

Nuovo Pignone was not majority-owned by Italy at the

time of plaintiff’s filing of suit.2 It is undisputed that

2 Plaintiff also seems to argue that Nuovo Pignone has

presented no evidence regarding its ownership at the time of the

design and manufacture of the starter turbine in question.

However, this Court easily dismisses that argument as

plaintiff’s claim is necessarily based upon the explosion off the

coast of West Africa which resulted in the death of Peré, and not

B15

Nuovo Pignone was owned by a private consortium led

by General Electric at the time of plaintiff's filing. Plain-

tiff presents only one case in support of her argument. In

Straub v. A. P. Green, Inc., 38 F.2d 448 (9th Cir. 1994), the

Ninth Circuit held “the FSIA applies when a party is a

foreign state at the time the lawsuit is filed, even if that

party was not a foreign state at the time of the alleged

wrongdoing.” Id. at 451. The Ninth Circuit did not hold

the FSIA applies only if a party is a foreign state at the

time the lawsuit is filed. Indeed, the Ninth Circuit noted

its decision did not conflict with those of the only other

circuits to address the issue.

The Sixth and Eighth Circuits felt that the FSIA

is applicable where a defendant is a foreign state

at the time of the alleged wrong doing. See

General Elec. Capital Corp. v. Grossman, 991 F.2d

1376 (8th Cir. 1993); Gould, Inc. v. Pechiney Ugine

Kuhlmann, 853 F.2d 445 (6th Cir. 1988).

Straub, 38 F.3d at 451. Straub argues for a broader applica-

tion of the FSIA, and not a narrowing of its application.

This Court is persuaded by the reasoning of the

Eighth Circuit in General Elec. Capital Corp. v. Grossman,

991 F.2d 1376, 1380-82 (8th Cir. 1993), in which the court

noted the foreign policy concerns of the FSIA and the fact

that these concerns do not necessarily dissipate once an

entity leaves the control of the foreign state. Therefore,

this Court concurs with the holdings of the Sixth and

Eighth Circuits, and in the absence of any contrary

authority, finds the time when the events occurred giving

upon some hypothetical and unidentified time in the past when

the starter turbine was designed or manufactured.

B16

rise to this action is the time this Court should consider in

determining whether the FSIA applies. As seen earlier,

Nuovo Pignone was majority-owned by Italy at the time

of the events giving rise to this action, and therefore the

FSIA applies.

Il. “Commercial Activities” Exception to Sovereign

Immunity

Under the FSIA, Nuovo Pignone as a foreign state is

immune from the jurisdiction of the courts of the United

States. 28 U.S.C. § 1604. This Court may only exercise

subject matter jurisdiction over Nuovo Pignone if an

exception to sovereign immunity applies. Id. § 1330(a).

See Stena Rederi A.B. v. Comision de Contratos, 923 F.2d 380,

386 (5th Cir. 1991). One of the exceptions to sovereign

immunity recognized by the FSIA is “a broad ‘commer-

cial activities’ exception: Foreign sovereigns are not

immune from judicial process in any case in which the

action is based upon commercial activity that has a juris-

dictional nexus with the United States. [28 U.S.C.

§ 1605(a)(2)].” Stena Rederi, 923 F.2d at 386. The Fifth

Circuit has emphasized that the sovereign’s commercial

activity must have “a sufficient connection — a ‘jurisdic-

tional nexus’ — with the United States.” Id. The FSIA

identifies three commercial acts sufficiently connected to

the United States to satisfy the jurisdictional nexus

requirement:

(1) A commercial activity carried on in the

United States;

B17

(2) An act performed in the United States in

connection with a commercial activity carried

on outside the United States; and

(3) A commercial activity carried on outside

the United States that has a direct effect in the

United States.

28 U.S.C. § 1605(a)(2).

A foreign sovereign’s commercial activity in the

United States is not enough to remove that sovereign’s

immunity under the commercial activities exception.

There must be a material connection between the plain-

tiff’s cause of action and the defendant sovereign’s com-

mercial acts in the United States.

A foreign sovereign, however, does not abrogate

its sovereign immunity simply because it con-

ducts commercial operations that have a connec-

tion with the United States. Not only must there

be a jurisdictional nexus between the United

States and the commercial acts of a foreign sov-

ereign, there must be a connection between the

plaintiff’s cause of action and the commercial

acts of the foreign sovereign. . . . In order to

satisfy the commercial activities exception to

sovereign immunity, the commercial activity

that provides the jurisdictional nexus with the

United States must also be the activity on which

the lawsuit is based.

The requirement under the FSIA of a connection

between the plaintiff’s cause of action and the

commercial acts of the foreign sovereign is a

significant barrier to the exercise of subject mat-

ter jurisdiction in United States courts. We do

not suggest that the commercial activities excep-

tion requires a direct causal connection. . . .

B18

Nonetheless, the connection between the cause

of action and the sovereign’s commercial acts in

the United States must be material. Isolated or

unrelated commercial actions of a foreign sover-

eign in the United States are insufficient to sup-

port a commercial activities exception to

sovereign immunity.

Stena Rederi, 923 F.2d at 386-87 (citations omitted).

In the instant case, Nuovo Pignone does not dispute

that it carries on commercial activity in the United States.

The commercial activity related to the plaintiff’s cause of

action against Nuovo Pignone is the design and manufac-

ture of turbine systems for mineral production. Nuovo

Pignone does dispute that any of its commercial activities

in the United States concerned the design and manufac-

ture of the subject turbine system. This is a commercial

activity routinely engaged in by private companies

throughout the world. A “ ‘commercial activity’ means

either a regular course of commercial conduct or a partic-

ular commercial transaction or act. The commercial char-

acter of an activity shall be determined by reference to

the nature of the course of conduct or particular transac-

tion or act, rather than by reference to its purpose.” 28

U.S.C. § 1603(d). This Court is satisfied that Nuovo Pig-

none’s alleged design and manufacture of gas turbine

systems is a commercial activity as defined by the FSIA.

What remains to be decided is whether Nuovo Pig-

none engaged in the commercial activity of designing and

manufacturing gas turbine systems in the United States,

and whether there is a material connection between this

commercial activity and the plaintiff’s cause of action.

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B19

The plaintiff presents evidence that the gas turbine sys-

tem on which Peré was working when the explosion

occurred was shipped from Italy to Bayou Black, Louisi-

ana for final assembly before being shipped to West

Africa. Plaintiff’s Mem. in Opp., Exhibit J at 40-46 (No.

59). In addition, Nuovo Pignone sent a representative to

Louisiana to supervise or consult in the assembly of the

component parts of the turbine system onto a platform.

Id. at 82-83. While this Court cannot know that Nuovo

Pignone’s commercial activity in Louisiana regarding the

turbine system has a direct causal connection to the

explosion of the turbine system that forms the basis of

plaintiff’s action, this Court is convinced there is a mate-

rial connection between the plaintiff’s cause of action and

Nuovo Pignone’s commercial acts regarding the subject

turbine system in the United States. This Court finds the

commercial activity exception applies and Nuovo Pig-

none is thus not immune from judicial process in this

action.

Conclusion

Nuovo Pignone is a foreign state for Purposes of this

action, however, it engaged in commercial activity in the

United States materially connected to the plaintiff's cause

of action, and it is therefore not entitled to immunity

under the FSIA. Nuovo Pignone’s Motion for Summary

Judgment is DENIED. Plaintiff’s Motion for Summary

Judgment upon the FSIA immunity is in reality an Oppo-

sition to Nuovo Pignone’s motion, and not Properly a

Motion for Summary Judgment, and is therefore DENIED

as well.

B20

THUS DONE AND SIGNED this 29 day of April,

1997.

/s/ Rebecca F. Doherty

REBECCA F. DOHERTY

UNITED STATES DISTRICT

JUDGE

B21

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

LAFAYETTE/OPELOUSAS DIVISION

NANCY G. PERE, ET UX CIVIL ACTION NUMBER:

iia 94-1889

NUOVO PIGNONE, INC., JUDGE DOHERTY

ET AL MAGISTRATE JUDGE

METHVIN

ORDER

(Filed Apr. 30, 1997)

Considering the foregoing Memorandum Ruling;

IT IS HEREBY ORDERED, ADJUDGED AND

DECREED that Nuovo Pignone’s Motion for Summary

Judgment is DENIED. Plaintiff's Motion for Summary

Judgment upon the FSIA immunity is in reality an Oppo-

sition to Nuovo Pignone’s motion, and not properly a

Motion for Summary Judgment, and is therefore DENIED

as well.

Lafayette, Louisiana this 29 day of April, 1997.

/s/ Rebecca F. Doherty

REBECCA F. DOHERTY

UNITED STATES DISTRICT

JUDGE

APPENDIX C

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF LOUISIANA

LAFAYETTE-OPELOUSAS DIVISION

NANCY G. PERE, Individually Civil Action

and on behalf of her minor No:CV94-1889

children, MATTHEW REED

PERE’ and MARCI DANIELLE Division: L-O

PERE’

versus Judge

NUOVO, PIGNONE, INC., Rebecca F. Doherty

PIGNONE, INC., COPPUS

ENGINEERING, TUTHILL

CORPORATION, AGIP

PETROLEUM COMPANY, INC.,

ABC INSURANCE COMPANY,

DEF INSURANCE COMPANY,

GHI INSURANCE COMPANY,

JKL INSURANCE COMPANY,

MNO INSURANCE COMPANY

Magistrate Judge

Methvin

ORDER

(Filed Sep. 21, 1998)

Considering the Motion for Entry of Judgment on

behalf of Nuovo Pignone, S.p.A.:

IT IS ORDERED AND ADJUDGED that all claims of

plaintiffs and all claims of cross-claimants against Nuovo

Pignone, S.p.A. are hereby dismissed with prejudice. The

Clerk is instructed to enter a Judgment dismissing the

action as to defendant. Nuovo Pignone, S.p.A.

Lafayette, Louisiana, this 21 day of Sept, 1998.

/s/ Rebecca F. Doherty

Judge Rebecca F. Doherty

APPENDIX D

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

NANCY G. PERE, individually CIVIL ACTION

and on behalf of her minor NUMBER:

children, MATTHEW REED H 94 3550

PERE’ and MARCI DANIELLE JURY

PERE’

VERSUS

- COMPLAINT

NUOVO PIGNONE, INC.,

PIGNONE, INC., COPPUS

ENGINEERING, TUTHILL

CORPORATION, AGIP JUDGE

PETROLEUM COMPANY, INC., MAGISTRATE

ABC INSURANCE COMPANY,

DEF INSURANCE COMPANY,

GHI INSURANCE COMPANY,

JKL INSURANCE COMPANY,

MNO INSURANCE COMPANY

SESSA EEE EEE EEE EEE EEE EEE EEE EEA EEE EEE RE RES

COMPLAINT FOR DAMAGES

(Filed Oct. 19, 1994)

The complaint of NANCY G. PERE, a person of the

full age of majority and a domiciliary of Vermilion Parish,

Louisiana, who brings this suit individually, and on

behalf of her minor children, MATTHEW REED PERE’

and MARCI DANIELLE PERE’ (Petitioners) respectfully

avers the following:

JURISDICTION

This court is vested with jurisdiction over this matter

pursuant to 28 USC 1332 since there exists complete

diversity between the parties. The matter in controversy

exceeds $50,000.00.

VENUE

y a

This proper venue for this action if [sic] the United

States District Court for the Southern District of Texas,

Houston Division, in accordance with 28 USC 1391.

PARTIES

Made Defendants are:

a) NUOVO PIGNONE, INC., a foreign corpo-

ration doing business in the State of Texas

as PIGNONE, INC., who is subject to the

jurisdiction of this court under the Texas

Long Arm Statute;

b) PIGNONE, INC., a New York corporation

doing business within the State of Texas,

WHO IS SUBJECT TO THE JURISDICTION OF THIS

COURT UNDER THE Texas Lonc ARM STATUTE;

c) COPPUS ENGINEERING, a foreign corpo-

ration doing business within the State of

Texas, WHO Is suBJECT TO THE JURISDICTION OF

THIS COURT UNDER THE Texas LONG ARM STAt-

UTE;

TUTHILL CORPORATION, A Massa-

chusetts corporation, as the successor cor-

poration of COPPUS ENGINEERING, wuo

IS SUBJECT TO THE JURISDICTION OF THIS COURT

UNDER THE TEXAS LONG ARM STATUTE;

AGIP PETROLEUM COMPANY, INC., a

foreign corporation doing business within

the State of Texas, wHoO IS SUBJECT TO THE

JURISDICTION OF THIS COURT UNDER THE TEXAS

Lonc ARM STATUTE;

ABC INSURANCE COMPANY, a foreign

or domestic insurance company licensed to

do and doing business within the State of

Texas, WHO IS SUBJECT TO THE JURISDICTION OF

THIS COURT UNDER THE TExAS LONG Arm Srtat-

UTE;

DEF INSURANCE COMPANY, a foreign or

domestic insurance company licensed to do

and doing business within the State of

Texas, who is subject to the jurisdiction of

this court under the Texas Long Arm Stat-

ute;

GHI INSURANCE COMPANY, a foreign or

domestic insurance company licensed to do

and doing business within the State of

Texas, who is subject to the jurisdiction of

this court under the Texas Long Arm Stat-

ute;

JKL INSURANCE COMPANY, a foreign or

domestic insurance company licensed to do

and doing business within the State of

Texas, who is subject to the jurisdiction of

this court under the Texas Long Arm Stat-

ute; and

i) MNO INSURANCE COMPANY, a foreign

or domestic insurance company licensed to

do and doing business within the State of

Texas, who is subject to the jurisdiction of

this court under the Texas Long Arm Stat-

ute.

All of the aforementioned Defendants are liable

jointly, severally and insolido for the damages occasioned

by the Petitioners.

FACTS

Marcus Daniel Pere’ (Pere) was a resident and domi-

ciliary of Abbeville, Vermilion Parish, Louisiana.

Petitioners’ husband and father, Marcus Daniel Pere’

began his employment with Chevron Oil Company

(Chevron) on March 7, 1979.

On or about October 16, 1993, Marcus Daniel Pere’

was employed by Cabinda Gulf Oil Company (COPI), a

division of Chevron, as an instrument technician in the

Malongo maintenance department.

Pere’ was in the course and scope of his employment

off the coast of Cabinda, Angola, West Africa on October

16, 1993.

On the morning of October 16, 1993, PERE’ was

dispatched to the Gas Injection Platform Fox (GIP-FOX),

located approximately 7-10 miles off the coast of Cabinda,

Angola, Africa, to administer testing procedures on a gas

turbine system. While performing these procedures with

a co-employee, Clark Toups, an explosion occurred kill-

ing Marcus D. Pere.

FIRST CAUSE OF ACTION:

STRICT PRODUCTS LIABILITY

The gas turbine system (FC-1C) and its component

parts, which are the subject of this suit, were designed,

constructed, assembled, manufactured and modified by

NUOVO PIGNONE, INC., PIGNONE, INC. and COPPUS

ENGINEERING, INC. This turbine and its component

parts were defective, unsafe, and inadequate. In the fol-

lowing manner:

1. The design of the turbine system was defec-

tive in that it posed the propensity to

explode;

defendants’ failed to adequately warn users

of the hazardous propensities which

allowed for the turbine to explode;

3. the turbine system described above, had it

been properly designed, manufactured and

modified, would not ordinarily be inher-

ently dangerous; however, because of its

defective design and construction, the tur-

bine system was dangerous to life and limb

of MARCUS DANIEL PERE; who was

unaware of its dangers, hazards and perils;

4. the composition of the turbine blades were

defectively designed, manufactured and

modified;

5. the starter turbine was defectively designed,

manufactured, modified and improperly

combined with natural gas turbine system

(FC-1C); and

6. such other defects as may be identified dur-

ing further investigation and discovery.

The Defendants’ introduced the turbine system into

the stream of commerce by selling them to consumers all

over the world. The turbine system and its component

parts were defectively designed. The design defect ren-

dered the turbine system and its components parts unrea-

sonably dangerous for use by consumers. The defectively

designed turbine system and its component parts were

producing cause of the damages suffered by the Peti-

tioners.

SECOND CAUSE OF ACTION: NEGLIGENCE

10.

PIGNONE, INC., its parent corporation, NUOVO

PIGNONE, INC., COPPUS ENGINEERING, INC.,

TUTHILL CORPORATION, and AGIP PETROLEUM

COMPANY, INC., are in the business of providing turbine

systems for the public. PIGNONE, INC., its parent corpo-

ration, NUOVO PIGNONE, INC., COPPUS ENGINEER-

ING, INC., TUTHILL CORPORATION, and AGIP

PETROLEUM COMPANY were negligent in designing,

manufacturing, modifying, and/or marketing the FC-1C

turbine system in question. Specifically, Defendants’

designed, manufactured, modified, and/or marketed the

turbine system in question without proper regard for the

safety of users of the product and members of the public

present during their usage specifically, MARCUS DAN-

IEL PERE. The death of PERE’ and the injuries to the

Petitioners were proximately caused by the negligence of

PIGNONE, INC., NUOVO PIGNONE, INC., COPPUS

ENGINEERING, INC., TUTHILL CORPORATION, and

AGIP PETROLEUM COMPANY and their insurers,

agents, servants, and/or employees, including but not

limited to the following acts or omissions:

1. The design of the turbine system was defec-

tive in that it posed the propensity to

explode;

2. defendants failed to adequately warn users

of the hazardous propensities which

allowed for the turbine to explode;

3. the turbine system described above, had it

been properly designed, manufactured, and

modified, would not ordinarily be inher-

ently dangerous however, because of its

defective design and construction, the tur-

bine system was dangerous to life and limb

of MARCUS DANIEL PERE, who. was

unaware of its dangers, hazards and perils;

4. the composition of the turbine blades were

defectively designed, manufactured and

modified;

5. the starter turbine was defectively designed,

manufactured, modified and ‘mproperly

combined with the natural gas turbine sys-

tem (FC-1C); and

6. such other defects as may be identified dur-

ing further investigation and discovery.

7. failed to otherwise exercise due care with

respect to designing, manufacturing, assem-

bling, customizing and/or modifying and

distributing the turbine system in this

action; and

8. such other acts of negligence as may be

identified during further investigation.

Such negligence by the Defendants’ was the proxi-

mate cause of the damages sustained by the Petitioners.

GROSS NEGLIGENCE

11.

Additionally, NUOVO PIGNONE, INC., PIGNONE,

INC., COPPUS ENGINEERING, INC., TUTHILL CORPO-

RATION, AGIP PETROLEUM COMPANY, ABC INSUR-

ANCE COMPANY, DEF INSURANCE COMPANY, GHI

INSURANCE COMPANY, JKL INSURANCE COMPANY,

and MNO INSURANCE COMPANY and their agents,

servants, and/or employees were grossly negligent in

designing, manufacturing, modifying and/or customiz-

ing and marketing the turbine system made the basis of

this suit. By designing, manufacturing, modifying and/or

customizing and marketing the turbine system without

proper regard for the safety of users of the turbine sys-

tems and those present during its usage, the Defendants

displayed such an entire want of care that the design,

manufacture, modification, and/or customization and

marketing of the turbine system was a result of the con-

scious indifference to the rights, safety or welfare of

MARCUS DANIEL PERE. Such gross negligence was a

proximate cause of the death of MARCUS DANIEL PERE’

and the damages suffered by the Petitioners, pursuant to

the provisions of Chapter 41 of the Texas Civil Practice &

Remedies Code, the Defendants are liable to the Peti-

tioner for the exemplary damages.

VIOLATIONS OF TEXAS DECEPTIVE

TRADE PRACTICES ACT (D.T.P.A.)

12.

In addition to the above stated grounds of liability,

NUOVO PIGNONE, INC., PIGNONE, INC., COPPUS

ENGINEERING, INC., TUTHILL CORPORATION, AGIP

PETROLEUM COMPANY, ABC INSURANCE COM-

PANY, DEF INSURANCE COMPANY, GHI INSURANCE

COMPANY, JKL INSURANCE COMPANY, and MNO

INSURANCE COMPANY and their agents, servants,

and/or employees also violated the Texas Deceptive

Trade Practices - Consumer Protection Act, Article 17.14

et. seq. of the Texas Business and Commerce Code. Speci-

tically, the Defendants engaged in the following false,

misleading or deceptive acts or practices:

§ 17.46(b)(5): representing that goods or services

have sponsorship, approval, characteristics,

ingredients, uses, benefits or quantities which

they do not have;

D10

§ 17.46(b)(7): representing that goods or services

are of a particular standard, quality or grade, or

that goods are of the particular style or model, if

they are of another;

§ 17.46(b)(9): advertising goods or services with

intent not to sell them as advertised;

§ 17.46(b)(23): the failure to disclose the infor-

mation concerning goods or services which as

known as the time of the transaction if such

failure to disclose such information was

intended to induce the consumer into a transac-

tion into which the consumer would not have

entered had the information been disclosed.

Each of the foregoing false, misleading, or deceptive

acts was a producing cause of damages suffered by the

Petitioners. The Defendants’ conduct in the design and

manufacturing in the sale of the turbine system in ques-

tions [sic] was a producing cause of PERES death. There-

fore, since the Defendants’ conduct was “knowing”, the

Petitioners are entitled to treble damages under the Act,

in addition to attorney’s fees and costs.

BREACH OF EXPRESS OR IMPLIED WARRANTIES

13.

The Petitioners incorporate each and every allegation

contained in the paragraphs above as though again fully

set forth.

By engaging in the business of designing, manufac-

turing, distributing, modifying and/or customizing, mar-

keting, selling and supplying the turbine system, the

Defendants, NUOVO PIGNONE, INC., PIGNONE, INC.,

D11

COPPUS ENGINEERING, INC., TUTHILL CORPORA-

TION, AGIP PETROLEUM COMPANY, ABC INSUR-

ANCE COMPANY, DEF INSURANCE COMPANY, GHI

INSURANCE COMPANY, JKL INSURANCE COMPANY,

and MNO INSURANCE COMPANY and their agents,

servants, and/or employees expressly and impliedly war-

ranted that such products were free of defects, were of

merchantable quality, were suitable for the purpose for

which they were fabricated, manufactured, modified,

and/or customized and sold, and were safe for use for

their intended purpose. The defective condition of the

turbine system constituted a breach of the express and

implied warranties of merchantability, fitness and suit-

ability for the purpose for which they were sold. This

breach of express and implied warranties was a proxi-

mate cause of the death of MARCUS DANIEL PERE.

14.

In addition, NUOVO PIGNONE, INC., PIGNONE,

INC., COPPUS ENGINEERING INC., TUTHILL CORPO-

RATION, AGIP PETROLEUM COMPANY, ABC INSUR-

ANCE COMPANY, DEF INSURANCE COMPANY, GHI

INSURANCE COMPANY, JKL INSURANCE COMPANY,

and MNO INSURANCE COMPANY and their agents,

servants, and/or employees knew, or in the exercise of

reasonable care, should have known that the turbine sys-

tem was a dangerous instrumentality if not properly

designed, manufactured, tested, inspected, modified

and/or customized and that the turbine system presented

the probability of harm to any users and others unless it

was free from defects. As a result. the aforementioned

D1i2

Defendants had a duty to foreseeable users and to

MARCUS DANIEL PERE’ in particular to:

1. Inspect the turbine System that it sold and

placed in commerce to determine whether it

would be reasonable [sic] fit for its intended

uses before exposing the public to his

unnecessary risk; and

2. Warn or give fair and adequate notice to the

inherently dangerous condition existing as a

result of the negligent design, manufacture

and modification/customization of the tur-

bine system and all mechanism pertaining

thereto.

and/or employees breached this duty in that they negli-

gently and carelessly failed to warn MARCUS DANIEL

PERE’ of the inherently dangerous condition of the tur-

bine system, and failed to inspect or test the same to

determine whether it was reasonably fit for the intended

use.

DAMAGES

15.

Upon the trial of this case, it will be shown that

MARCUS DANIEL PERE’ died as a result of Defendants’

negligence. The Petitioners respectfully requests [sic] that

Court and Jury to determine the amount of losses that

D13

NANCY G. PERE, individually and on behalf of her

minor children, MATTHEW REED PERE’ and MARCI

DANIELLE PERE’ suffered as a result of the death of

MARCUS DANIEL PERE. There are certain elements of

damages provided by law that the Petitioners are entitled

to have the Jury in this case separately consider to deter-

mine the sum of money for each element that will fairly

and reasonably compensate the Petitioners for the inju-

ries, damages and losses incurred in the past and to be

incurred in the future, since the date of the accident. The

elements of damages to be considered separately and

individually for the purpose of determining the sum of

money that will fairly and reasonably compensate the~

Petitioners for each element are as follows:

1. The loss of counsel, training, support and

advice;

2. mental anguish;

3. loss of society;

4. loss of consortium; and

5. other damages to be proven at trial.

Additionally, Petitioners are entitled to recover exem-

plary damages for the gross negligence of the Defen-

dants. Petitioners are also entitled to recover reasonable

and necessary attorney’s fees and court costs pursuant to

the Texas Deceptive Trade Practices-Consumer Protection

Act.

Because of all of the above and foregoing, Petitioners

have been [sic] damages and will be damages in the

amount in excess of the minimum jurisdictional limits of

this Court, for which Petitioners now brings [sic] suit.

D14

16.

Petitioners demand a trial by Jury on all issues.

WHEREFORE, Petitioners pray that the Defendants

be duly cited to appear and answer this complaint, and

that Defendants, NUOVO PIGNONE, INC., PIGNONE,

INC., COPPUS ENGINEERING, TUTHILL CORPORA-

TION, AGIP PETROLEUM COMPANY, INC., ABC

INSURANCE COMPANY, DEF INSURANCE COMPANY.

GHI INSURANCE COMPANY, JKL INSURANCE COM-

PANY, MNO INSURANCE COMPANY, be served in

accordance with the Texas Long Arm Statute with a copy

of the same in accordance with law and that after all legal

delays and proceedings are had, that there be judgment

rendered herein and in favor of the Petitioners, ordering

NUOVO PIGNONE, INC., PIGNONE, INC., COPPUS

ENGINEERING, TUTHILL CORPORATION, AGIP

PETROLEUM COMPANY, INC., ABC INSURANCE

COMPANY, DEF INSURANCE COMPANY, GHI INSUR-

ANCE COMPANY, JKL INSURANCE COMPANY, MNO

INSURANCE COMPANY, to pay unto Petitioners actual

damages which are reasonable and equitable in the prem-

ises, including exemplary damages, for the gross negli-

gence of the Defendants, together with all costs and

disbursements in this action with post-judgment and pre-

judgment interest until paid to the fullest extent allowed

by law. Petitioners are entitled to recover exemplary dam-

ages for the gross negligence of the Defendants. Peti-

tioners are also entitled to recover reasonable and

necessary attorney's fees and court costs pursuant to the

Texas Deceptive Trade Practices-Consumer Protection Act

D15

as well as such other relief to which the law and equity

entitles the Petitioners.

Respectfully submitted,

SONNIER & TRAHAN

By: /s/ K. Wade Trahan

K. WADE TRAHAN

LA. Bar Roll #20474 TA

CHARLES R. SONNIER

LA. Bar Roll #12260

Two South Magdalen Square

P. O. Drawer 700

Abbeville, LA 70511-0700

(318) 893-5973

ATTORNEYS FOR

THE PETITIONERS

LUNDY & DAVIS

BY: /s/ Matthew Lundy

MATTHEW LUNDY

Tx. Bar Roll #12697300

13101 Northwest Freeway, Ste. 322

Houston, Texas 77040

(713) 690-8949

ATTORNEY FOR THE PETITIONERS

APPENDIX E

AGREEMENT NO. 133

WHEREAS, Operator is engaged in oil and gas explo-

ration and development drilling operations and is in need

of certain material, equipment, and services in connection

therewith; and

WHEREAS, Contractor represents that it is qualified

to furnish the aforementioned material, equipment, and

services, and is desirous of providing the same on the

terms and conditions set forth below:

NOW, THEREFORE, for and in consideration of the

mutual promises and covenants herein contained, opera-

tor and Contractor do hereby agree as follows:

* * *

‘OS Comply with all applicable U.S. or foreign laws,

rules, regulations, or decrees, including the U.S. For-

eign Corrupt Practices Act, and any amendments to

any of the same which are now or may in the future

become applicable to Contractor in connection with

this Agreement or the performance hereof.

+ » *

-11 Warrant and guarantee that all items of equipment

and all component parts thereof, and all materials

furnished to Operator as part of Contractor’s perfor-

mance of this Agreement shall be free of defects in

materials and workmanship; shall conform in all

respects to the descriptions, specifications, and

drawings, if any, contained in this Agreement, or in

any Schedule or Attachment made a part hereof, or

in any other document, if any, specifically incorpo-

rated herein by reference, and shall function and

perform as specified. This warranty is in addition to,

and not in lieu of, the implied warranties of mer-

chantability and fitness for a particular purpose of

the Uniform Commercial Code of the State of Texas

or of any State of the U.S. having jurisdiction hereof.

For purposes of the warranties and other statutory

matters provided for in the said Uniform Commer-

cial Code the Parties contemplate, agree and under-

stand that that portion of Contractor’s performance

hereunder involving the furnishing of equipment

and/or materials shall be deemed a sale of goods.

The warranty remedies mentioned in this subsection

are in addition to, and not in substitution of, any

other remedies to which operator might be entitled

by virtue of any other provision(s) of this Agree-

ment, or under applicable law.

* * *

To indemnify operator, and its directors, officers,

and employees, and hold the same harmless from all

loss or damage resulting from charges, claims,

demands, liens, suits, causes of action, arbitration, or

other form of litigation and the cost of the same,

including legal fees and the cost of settlement, alleg-

ing injury to, or death of, or damage to any property,

or derogation of the legal interest of any person,

including Contractor’s employees, when such claim

for loss or damage is asserted against Operator or

operator’s directors, officers, employees, agents, or

contractors, in connection with the performance by

Contractor of, or failure properly to perform, this

Agreement during the execution of the service work

in Angola. This indemnity shall be in effect with

respect to loss or damage arising from, or alleged to

arise from Contractor’s actions. This indemnity shall

be effective regardless of the legal theory on which

such loss or damage is predicated, or the particular

form of remedy sought or claimed. If this Agreement

18.

19.

is governed by Texas law, this indemnity provision

adopts, and incorporates by reference, the excep-

tions to the limiting provisions of Texas Civil Stat-

ute, Article 2212(b) contained in said Article

2212(b)(4).

* * *

ARBITRATION. Any dispute, controversy, or differ-

ence between the Parties arising out of, or relating

to, this Agreement which cannot be settled by

mutual agreement shall be finally determined by

arbitration in Zurich, Switzerland under the rules of

the International Chamber of Commerce by a three-

member arbitration panel appointed in accordance

with the rules of the said International Chamber of

Commerce. The arbitration award shall be final and

binding on the Parties. Judgment upon the award

may be entered pursuant to any treaty or conven

tion, or international, or competent national or local

basis of jurisdiction in any court or tribunal, for

judicial acceptance or an order of enforcement, as

the case may be.

GOVERNING LAW. Questions concerning the per-

formance or execution of this Agreement shall be

governed by the laws of The State of Texas, U.S.A.

7 * *

APPENDIX F

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

LAFAYETTE-OPELOUSAS DIVISION

NANCY G. PERE, et al * CIVIL ACTION

VERSUS : NO. CV94-1889

NUOVO PIGNONE * JUDGE REBECCA

ET AL . DOHERTY

E MAGISTRATE JUDGE

METHVIN

SAE RE AE AEE AEA EEA AAA ERA EERE E EAE AEE ERS

DEPOSITION OF SENIO PECCHI

(10-16-96)

» * *

[p. 23] Q Nuovo Pignone SpA?

A Yes.

Q And after 1994, in what capacity did you serve

Nuovo Pignone SpA?

A Well, because I was involved in the privatization

of Pignone, I continued to develop the similar activity,

but for a more limited area that was in MEACE. That

means Middle East, Africa, Central Europe.

Q Okay. All right. And that is what you’ve been

doing since 1994?

A This was since the begin of 1994.

Q And do you serve in that capacity today?

A Today, no. Up until the end of June, because now

I am retired.

Q Oh, okay. All right.

A The end of June.

All right. Let’s go back to your marketing from 1985,

on — Well, strike that.

Let’s go back from 1979 until 1985. Did Nuovo Pig-

none SpA advertise its products, to the best of your

knowledge, in any trade journals within the United

States?

A Our advertising was made only in technical mag-

azines [p. 24] that were distributed all over the world.

Q And were those periodicals or journals distrib-

uted in the United States?

A_ Yes, of course.

MR. CANTER:

Were those described distributed in the United States

or distributed to the United States from Italy?

THE WITNESS:

Well, no. These are well-known technical magazines

that are distributed all over the world and sometimes are

published in the United States or published elsewhere.

BY MR. TRAHAN:

Q So your advertisements ran in these technical

journals?

A Yes.

Q Nuovo Pignone SpA would purchase an adver-

tisement in that journal?

A Yes of course.

United States?

A Yes.

Q And this was from 1979 through 1985?

A This is also the common practice.

lp. 25] Q All right. And that was my next question.

You jumped ahead of me, Doctor.

Has the customary practice, as far as Nuovo Pignone

SpA’s advertising practices, changed any since you

became familiar with them in 1979?

A I would like to understand better, your question.

Q All right. And it was a very long question.

Has the practice - Nuovo Pignone SpA’s practice of

advertising in these technical journals, changed at all

since 1979?

A No. It’s the same as we've performed in the past.

Q Were there any other forms of advertisement

besides the technical journals, that Nuovo Pignone uti-

lized to showcase their products?

A Our advertising is mainly done in technical mag-

azines.

Q Do you recall any of the names of these technica]

magazines?

A Yes, of course. “Hydrocarbon Processing.”

Q “Hydrocarbon Processing”?

MR. CANTER:

It’s on my coffee table.

MR. TRAHAN:

I'm going to get my subscription tomorrow.

BY MR. TRAHAN:

[p. 26] Q Any others?

A A “Oil and Gas Journal,” “Chemical Engineer-

ing.”

MR. DAIGLE:

Oh, I have that one in the men’s room.

THE WITNESS:

“Oil and Gas Process,” “Gas Turbine Journal,” and

some Italian technical magazines.

BY MR. TRAHAN:

Q Now, the ones you named earlier, “Hydrocarbon

Processing,” “Oil and Gas Journal,” “Oil and Gas Pro-

cess,” and “Gas Turbine Journal,” are those all United

States technical journals?

A Not necessarily United States. | mean, they have

a very large diffusion all over the world.

Q But are they published by an American pub-

lisher?

A According to my knowledge, not necessarily. The

editor is in the U.S. But sometimes they are translated in

another language and published outside of the United

States.

Q Okay. But does the original publication - is it

generated in the United States?

A Yes, I think so.

Q Okay. All right. Some forms may be translated

into other languages and distributed around the world,

but the origin of it is the United States?

* * *

APPENDIX F

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

LAFAYETTE-OPELOUSAS DIVISION

NANCY G. PERE, et al * CIVIL ACTION

VERSUS 4 NO. CV94-1889

NUOVO PIGNONE, ‘ JUDGE REBECCA

ET AL ‘ DOHERTY

» | MAGISTRATE JUDGE

: METHVIN

nuucececeucasendeseqpnaceneueenseseoeneeeseescadeaseneseusedeuccceoce

DEPOSITION OF CARLO BRESCI

(10-16-96)

* aa *

[p. 40] A It began on March Ist, for 12 months

duration.

Q Okay.

A No, 18 months duration.

Q Okay. From March Ist of ’93 —

A Up until September, ‘94.

Q Okay. Doctor, let’s go back and let’s leave these

agreements alone for a minute, and let's talk about your

service to the company as a sales representative.

Did you or any of your employees in the sales divi-

sion solicit business in the United States?

A I did not understand. Sorry.

NUNS PEL ELE INE LLLP SOLE SES ALE LIE LODED

Q Okay. While you were representing Nuovo Pig-

none in the sales department or sales division for compo-

nent parts -

A Parts and services.

Q_ did you or anyone under your supervision solicit

business in the United States?

A Yes. We have one person that actually visits the

American users in the States.

Q Who is that individual?

A The individual is Mr. Lighetti.

Q Spell that for me, please.

A L-I-G-H-E-T-T-I.

Q And he’s employed by Nuovo Pignone, SpA?

[p. 41] A Yes, he is.

Q And he was employed in that capacity when you

served in the sales of component parts or in the sale -

A No. He doesn’t sell. He acts as a facilitator of this,

visiting users, looking at their needs and keeping in

touch with headquarters and soliciting quotations pro-

viding the right personnel. He asks for the right person-

nel for a venture.

Q Does he live in the United States?

A He lives in Houston.

Q And, if I understand you correctly, Doctor, his

function was to visit various potential users of your

equipment?

A Not potential - Users. Because to send parts, they

are users.

Q Was anyone else besides this gentleman that you

named — Did anyone else besides this gentleman that you

named serve in that capacity while you were with the

sales division?

A_ I don’t understand. Sorry.

Q You named a gentleman just now -

Yes.

- who visited various users of your equipment.

Uh-huh (affirmative response).

Pe D>

Correct? Was there anyone else besides that

+ * ~

APPENDIX F

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

LAFAYETTE-OPELOUSAS DIVISION

NANCY G. PERE, et al * CIVIL ACTION

VERSUS : NO. CV94-1889

NUOVO PIGNONE, . JUDGE REBECCA

ET AL * DOHERTY

- MAGISTRATE JUDGE

METHVIN

ie ae ee ae ae a a a a a a ae a ee a A

DEPOSITION OF RAFFAELLO GUSSO

(11-6-96)

* * *

[p. 14] A Yes.

MR. CANTER:

Just for the Record, it’s marked “Exhibit 24.”

BY MR. TRAHAN:

Q Did you participate in the negotiation of Agree-

rent No. 133?

A Only from a technical point of view, yes.

Q And when you say, “from a technical point of

view,” describe your involvement in the negotiation.

A Yeah. Since the beginning of the negotiation, I

was especially involved in the selection of the gas turbine

and the centrifugal compressor from a technical point of

view to comply with the requirements for the customer.

F10

Q Did you - The technical aspect that you have

testified thai you negotiated, who was the other party

negotiating with you?

A Mr. Donovan of Gulf Oil.

Q And how did those negotiations take place?

A There were several meetings. One — The first one.

in Florence, in August of ’83. The second one, in Houston,

in October of ‘83. And all the others, in Florence. The

most important one was in March, ’84, during which we

put — defined the supply carefully, [p. 15] both from a

technical point of view and a commercial point of view.

Q Altogether, Mr. Gusso — Now, did you participate

in all of these negotiations?

A Yes.

Q_ Okay. Were there other negotiations between — To

the best of your knowledge, were there other negotiations

between Nuovo Pignone SpA and Gulf Oil that may have

transpired either in Florence or Houston that you did not

participate in?

MR. CANTER:

Objection, but you can answer it.

THE WITNESS:

As for as I know, no.

BY MR. TRAHAN:

Q So it’s your belief that you participated in all of

the negotiations between or all of the negotiation meet-

ings between Gulf Oil and Nuovo Pignone SpA?

Fll

A Yes. At least the most important ones.

Q All right. What, generally, was the - as you

understand it and are sitting here today, what was your

understanding of the obligations of Nuovo Pignone SpA

as to Agreement No. 133?

A The obligations were to supply three sets of gas

turbines, plus one spare and to replace a previous [p. 16]

type of the same gas turbine.

The first one was called MS1002-B, “B” for “Boston.”

And the upgraded type was 1002-“D” for “Denver.” This

had the possibility of operating the unit from 5200 horse-

power to 6400 horsepower and allowed the customer to

have a higher flow through the compressors — the driving

compressors. Also, the driving compressors had to be

replaced, as far as the internal bundles were concerned;

not the casings.

Q My understanding also, after reviewing the con-

tract, is this was designated as a reconfiguration agree-

ment.

A Yes. It was an upgrade, actually, of the three units

of the FOX platform.

Q So the entire - in a layman’s sense, Mr. Gusso, the

FOX platform underwent a major overhaul?

A Yes.

Q Now, under the terms of this agreement, what is

your understanding of what Cabinda Gulf Oil’s respon-

sibilities were?

F12

A Gulf, as far as I can remember, made the com-

pany with the Government of Angola, if I could remem-

ber, Sonangol. And the company name was CABGOC.

And that was our - how can you say — operator and the

[p. 17] second part of the agreement, the counterpart of

the signed agreement. And they had the responsibility for

all of the units installed in the platforms and also the

operation and maintenance of these units.

Q Okay. But under the terms of Agreement No. 133,

as I read it, my understanding is you would provide all of

the parts, services and replacements for these turbines,

and their obligation was to pay you to do that?

A Right.

Q_ So that is an accurate summary of the agreement,

as far as the obligations of the parties?

A Sure.

Q_ Okay. All right. Now, under the terms, there are

different provisions in this contract, Mr. Gusso, that I’m

sure you're familiar with. And one of which is a possible

cancellation provision. Do you know whether or not at

anytime, whether this reconfiguration agreement, Agree-

ment No. 133, was canceled?

A I don’t know. But I don’t think so.

Q_ Okay. Do you recall the consideration of the price

that Cabinda Gulf Oil was to pay to Nuovo Pignone for

Nuovo Pignone SpA’s satisfaction of their obligation

under this contract?

F13

[p. 18] A Yes.

How much was it?

3.2 million dollars.

And that’s in U.S. dollars?

> O O

Yes.

Q Okay. And after reviewing the contract, it

appeared that the 3.2 million dollar consideration or price

was solely for the parts and materials. Is that description

inaccurate, and was there an additional charge for the

services rendered by Nuovo Pignone SpA employees?

A Yes, there would be an additional contract or

agreement for the services of our people over there.

Q There’s a separate agreement aside from this No.

133 for personnel?

A_ I never saw it.

Q Okay. So you don’t know if it exists?

A Yes.

Q Okay. But am I correct in summarizing the agree-

ment in that, the obligations of Nuovo Pignone SpA

under this agreement, Agreement No. 133, would have

furnished materials, equipment and personnel to recon-

figure the G-FOX platform?

MR. CANTER:

Objection as to form. The agreement speaks

* * *

[p. 40] case?

A Yes.

Q All right. Let’s turn to “Schedule G,” Dr. Gusso.

And I’m going to ask you if you can identify what

“Schedule G” is.

A Yes.

Q What is it?

A Well, it probably is an effort to better identify the

type of supply that are revisions of the agreement — of the

content of the agreement.

Q So it is a more - would it be fair for me to

describe this schedule as a more accurate and specific

representation of the work to be performed and materials

to be provided by Nuovo Pignone SpA?

A From some aspects, yes.

Q Okay. All right. Now, I have highlighted, at the

top of that document, Doctor, I think that FC-1C. Does

that designation mean anything to you, or can you tell me

what it represents?

A If I can remember, FC-1A, 1B and 1C are the three

trains — turbocompressor trains that had to be upgraded.

Q Upgraded, okay. So these are the three com-

pressor trains that underwent reconfiguration?

A Right.

F15

[p. 75] Thank you. That's all of the questions that I

have.

MR. TRAHAN:

I have a few follow-ups, in light of the last set.

Doctor, would you retain that document, please?

BY MR. TRAHAN:

Q For the reconfiguration to be effective, would it

be a fair assessment for me to say that you had to take

into account the accessories or other components of the

FC-1C train?

A They remained exactly as they were. The only

modification occurred in the inlet duct and the expansion

joint.

Q But the specifications of those accessories would

be valuable information in determining the ramifications

or the specifics of the reconfiguration of the turbines?

A They were only checked from an engineering

point of view, if they were sufficient and in agreement

with the new parts that were put in the gas turbine and in

the compressors. And they were found right, because

they add sufficient margin to satisfy the requirements of

both machines.

[p. 76] Q So certainly, before the reconfiguration

process began, Nuovo Pignone SpA had to determine

whether the other components of the skid were compati-

ble with the items to be installed?

A Yes, of course. As usual, we do.

F16

Q So, in effect, the entire skid and its accessories

had to be reviewed to determine whether the accessories

were compatible with the proposed reconfiguration?

A Yes.

Q So the physical modifications may have only

been to the portions highlighted by Mr. Daigle?

A Yes.

QO But the entire skid was evaluated?

A Was checked.

MR. TRAHAN:

I think that’s all I have.

Jim, do you have any?

MR. DILL:

No, I don’t.

MR. DAIGLE:

Sam?

MR. MASUR:

No questions.

(Whereupon, the Deposition was concluded at 11:45

* * *

F17

APPENDIX F

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

LAFAYETTE-OPELOUSAS DIVISION

CIVIL ACTION

NO. CV94-1889

NANCY G. PERE, et al

VERSUS ;

NUOVO PIGNONE, . JUDGE REBECCA

ET AL : DOHERTY

. MAGISTRATE JUDGE

METHVIN

hh hhh bbb banana na bee ee ee eee eee eeree rere ieee eee eee eee ee eee S|

DEPOSITION OF MARCO CIONCOLINI

(6-6-96)

* * »

[p. 30] A Yes.

Q Okay.

MR. CANTER:

What page are you on?

MR. TRAHAN:

The Doctor indicates that the price is located on page

31.

MR. CANTER:

What exhibit is it?

THE WITNESS:

Thirty-one.

F18

MR. TRAHAN:

Nineteen.

CONTINUATION OF EXAMINATION BY MR.

TRAHAN:

Q What was the price, Doctor?

A The price is $21,140,482.

Q And that was the total price for the entire project

which Nuovo Pignone was contracted to perform on?

A It was the price of this contract.

Q The price of just this contract?

A Yes.

Q Correct. Now, Doctor, on page 3 of the contract,

under equipment specifications 1.1, subsection B, and I

have a star by it, Doctor.

MR. CANTER:

[p. 40] A This document is a commercial invoice.

Q Okay. And who's it to?

A It’s to Sonangol and CABCOC, care of Cabinda

Gulf Oil Company in Luanda.

Q Okay. And what other information is reflected on

that invoice, Doctor?

A There is the designation of the goods shipped.

Q Okay. Does it indicate where the goods were

shipped?

F19

A No, I don’t see the shipment date here.

Q Doctor, do you know where these turbine com-

pressor systems were shipped to?

A lam not able to identify that from this document.

Q But outside of this document, do you have per-

sonal knowledge as to whether these compressors ~ for

lack of a better term, turbine and compressor systems

shipped to?

MR. DAIGLE:

Excuse me. Let’s go off the record a minute.

(Whereupon, a brief off-the-record discussion was

had by Counsel.)

THE WITNESS:

You're asking the date?

MR. TRAHAN:

[P. 41] No. No. Just where.

CONTINUATION OF EXAMINATION BY MR.

TRAHAN:

Q Doctor, do you know where the document, I

mean, the compressor and turbine system shipped to?

A Shipped to Louisiana.

Q And what was the purpose for them being

shipped to Louisiana?

A In Louisiana there was the building of the deck of

the platform.

F20

Q Doctor - Okay. I’m sorry. Continue.

A The turbine has to be put on the deck for final

shipment to Luanda.

Q_ I reviewed several of the purchase - the shipping

documents that were produced by Chevron. It appears,

Doctor, from those documents — And I want you to cor-

rect me if I’m wrong - that Nuovo Pignone packed those

turbines and compressors?

A Yes. Nuovo Pignone packed them.

Q Nuovo Pignone?

A Nuovo Pignone.

Q Were those items —- And when I say “items,” I’m

talking about compressors and turbines. It appeared from

the documents that compressors were packed in a crate

and the turbines were packed in a separate crate; is that

accurate?

* * t

[p. 82] CONTINUATION OF EXAMINATION BY

MR. DILL:

Q This particular one, yes. I’m very specific here.

A I told before that in this case, several components

had been shipped individually - gas turbine, com-

pressors, ducting, electric panels for each individual gas

turbine compressor tank.

Q Were you involved with the Cabinda Gulf Oil

project when those components were shipped to the

United States?

F21

A Yes. I was in the position -

MR. CANTER:

Next question.

CONTINUATION OF EXAMINATION BY MR. DILL:

Q What was your position?

A I was Manager of gas turbine and compressor

sales.

Q Did you send or did Nuovo Pignone S.p.A. send

a representative of Nuovo Pignone S.p.A. to Louisiana to

supervise or consult in the assembly of the component

parts onto the platform?

A_ I think, yes.

Q Do you know how long that representative or

those representatives stayed in Louisiana?

A_ I don’t know the time.

Q Do you know how many were sent?

A No, I don’t remember.

[p. 83] Q Was it more than for just a day or two

days?

A Yes, certainly. Yes.

Q Do you know the name of the person or persons

that were sent?

A No.

Q Do you know the capacity that that person had

when they were here, whether it was a representative to

consult or did they actually do the assembly?

assembly. And the consultant is for mechanical erection.

I'm doing clean-up here, we're going to bounce around a

little bit and I apologize. Are you still an employee of

Nuovo Pignone S.p.A?

-. ©

none S.p.A. — I’m sorry - PIGNONE, INCORPORATED in

the United States are also considered to be employees of

Nuovo Pignone S.p.A.?

Considered by whom?

By Nuovo Pignone S.p.A.

F22

They consult, but they do not make a physical

Okay. I’m going to change gears a little bit. Since

Yes.

You are considered to still be a payroll employee?

[ am in the payroll of Nuovo Pignone S.p.A.

But you are assigned to Turbotecnica?

I am assigned to Turbotecnica S.p.A.

Do you know if those persons working for Pig-

[p. 84] MR. CANTER:

MR. DILL:

THE WITNESS:

I cannot give you a legal answer.

CONTINUATION OF EXAMINATION BY MR. DILL:

Do you receive a paycheck from Nuovo Pignone

S.p.A. on a regular basis today?

Yes.

F23

Q Do you know if the persons at PIGNONE,

INCORPORATED in the United States receive a paycheck

from Nuovo Pignone S.p.A.?

I don’t know.

Are you familiar with any of the other wholly-

owned subsidiaries of Nuovo Pignone S.p.A. and how

their personnel are associated to the parent company?

In any country or in the United States?

In any country.

Yes, | am familiar with this.

Which of the subsidiaries are you familiar with?

For instance, with Pignone, Espanol.

Do you know if the persons that work for that

company receive their paycheck from Nuovo Pignone

S.p.A.?

F24

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

LAFAYETTE-OPELOUSAS DIVISION

NANCY G. PERE, et al * CIVIL ACTION

VERSUS : NO. CV94-1889

NUOVO PIGNONE, ‘ JUDGE REBECCA

ET AL ; DOHERTY

. . MAGISTRATE JUDGE

METHVIN

SESSA AEE SEA EEE EE EEA EES EASES ESSE ESSA EEE EEE EE EE EE SEER EEE EEE RE

DEPOSITION OF MARIO SONCINI

(5-30-96)

* * oa

[p. 35] motors.

Q Okay. What does it manufacture according to -

A What is in this page are centrifugal and axial

compressors. This is one of the products designed and

manufactured by Nuovo Pignone SpA.

Q Doctor, turn to page 47, if you don’t mind. I think

I've got it marked. Yeah, under the title, “Subsidiary

Companies and Sales Offices” - Again, we're in “Exhibit

#9,” page 47. It indicates that PIGNONE has American

organizations, PIGNONE, INC. and Pignone Textile

Machinery, Inc. in Spartanburg. Is that in South Carolina?

A That's correct.

F25

Q Okay. What, in the brochure you're holding, what

is the purpose or the designated function of the Houston

office of PIGNONE, INC., according to that document?

A Houston or -

A Houston.

A As I said before, PIGNONE, INC. headquarters

are in [p. 36] New York. The other two offices are in Los

Angeles and Houston.

Q Okay.

A And these offices promote and market all Pig-

none products — Nuovo Pignone products, with the exclu-

sion of the textile machinery, which is another product of

Nuovo Pignone in Italy. And this activity of promoting

and selling textile machinery in the States is done

through PTMI, Pignone Textile Machinery, Incorporated

in Spartanburg South -

Q Carolina, right.

A Correct.

And that’s all.

Q Okay. Doctor, in this document, it also states that

the Houston office runs a spares depot which serves all

machines installed in the American area.

What is a “spares depot”?

A This is a — is not a depot. It’s more an area where

we have very, very few parts for small machines

* * *

APPENDIX G - STATUTES - text of relevant

provisions of the FSIA

This litigation involves the interpretation and appli-

cation of provisions of the Foreign Sovereign Immunities

Act:

28 USCS § 1602. Finding and declaration of purpose

The Congress finds that the determination by United

States courts of the claims of foreign states to immunity

from the jurisdiction of such courts would serve the

interests of justice and would protect the rights of both

foreign states and litigants in United States courts. Under

international law, states are not immune from the juris-

diction of foreign courts insofar as their commercial activ-

ities are concerned, and their commercial property may

be levied upon for the satisfaction of judgments rendered

against them in connection with their commercial activ-

ities. Claims of foreign states to immunity should hence-

forth be decided by courts of the United States and of the

States in conformity with the principles set forth in this

chapter.

28 USCS § 1603. Definitions

For purposes of this chapter [28 USCS §§ 1602 et seq] -

(a) A “foreign state”, except as used in section

1608 of this title, includes a political subdivision

of a foreign state or an agency or instru-

mentality of a foreign state as defined in subsec-

tion (b).

(b) An “agency or instrumentality of a foreign

state” means any entity -

(1) which is a separate legal person, corpo-

rate 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 sub-

division thereof, and

(3) which is neither a citizen of a State of

the United States as defined in section

1332(c) and (d) of this title nor created

under the laws of any third country.

and waters, continental or insular, subject to the

jurisdiction of the United States.

(d) A “commercial activity” means either a

regular course of commercial conduct or a par-

ticular commercial transaction or act. The com-

mercial character of an activity shall be

determined by reference to the nature of the

course of conduct or particular transaction or

act, rather than by reference to its purpose.

(e) A “commercial activity carried on in the

United States by a foreign state” means com-

mercial activity carried on by such state and

having substantial contact with the United

States.

28 USCS § 1605. General exceptions to the jurisdic-

tional immunity of a foreign state

(a) A foreign state shall not be immune from the juris-

diction of the courts of the United States or of the States

in any case -

(1) in which the foreign state has waived its

immunity either explicitly or by implication,

notwithstanding any withdrawal of the waiver

which the foreign state may purport to effect

except in accordance with the terms of the

waiver;

(2) in which the action is based upon a com-

mercial activity carried on in the United States

by the foreign state; or upon an act performed in

the United States in connection with a commer-

cial activity of the foreign state elsewhere; 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 United States;

ae Ss.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.