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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1999
- **Citation:** 525 U.S. 1141

## Text

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
a
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

ii

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

iv

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

Vv

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

vi

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).

(c) Commercial Activity: the court found that the com-
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.

Y

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

10

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.

11

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

12

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

a ee Pe ee

oe eS eee

Se en Ae ee ee ee ee ee ee ee ee eee A

ss PS |? Pe ee er See - =. es oe: hE

ait

13

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.

14

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).

15

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

16

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).

17

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

18

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

19

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

20

(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

21

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).

22

(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

|

23

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).

24

... [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

25

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
Appendix
Appendix
Appendix
Appendix

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-

Spee Oe Se WE so ok oe ee

ONE ee Lee Ri eee we

muta hey ob tase

Al

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,

V.

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

“
x

&
4

A2

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.

A3

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).

A4

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{.]

A5

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

A6

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.

A7

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.

A8

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

AY

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

Bl

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

B2

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.

B3

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

B4

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.

B5

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)).

B6

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 +

B7

(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.

B8

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

B9

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

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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

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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

Cl

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.

C2

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

/s/ Rebecca F. Doherty
Judge Rebecca F. Doherty

D1

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:

D2

JURISDICTION
1.

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
3.

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;

d)

e)

f)

g)

h)

i)

D3

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

D4

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
4.

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.

6.

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.

D5

a;

Pere’ was in the course and scope of his employment
off the coast of Cabinda, Angola, West Africa on October
16, 1993.

8.

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

9.

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;

Nm

defendants’ failed to adequately warn users
of the hazardous propensities which
allowed for the turbine to explode;

D6

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

D7

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;

D8

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

D9

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.,

ee

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

El

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,

O4

E2

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.

E3

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 * *

Fl

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

A

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?

F2

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

Q Oh, okay. All right.
A The end of June.
© A smart man.

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.

© And some of those journals were generated in the
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

[Text truncated at 120,000 characters. The full text is on the page linked above.]

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386005_1470%3A1. Public record. Not legal advice.