Amicus Curiae Brief — Exportadora de Sal, S. A. de C. V. v. Sugimoto

~ Bupreme Court, Us

<a FILED

No. A 94-651 NOV 10 1994

OIE OF The CLERK

In the Supreme Court ies

OF THE

United States

OcrToBeR TERM, 1994

ExporTADorRA De Sat, S.A. De C.V.,

Petitioner,

Vv.

Hiroko SuGIMOTO, et al.,

Respondents,

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF OF AMICUS CURIAE

UNITED MEXICAN STATES

IN SUPPORT OF PETITION

FOR A WRIT OF CERTIORARI

John H. Stephens

Kit J. Gardner

Ropsins & KEEHN, APC

530 “B” Street, Suite 2400

San Diego, California 92101

Telephone: (619) 232-1700

Attorneys for Amicus Curiae

United Mexican States

ie

EDITOR'S NOTE

THE FOLLOWING PAGES WERE POOR HARD COPY

_ AT THE TIME OF FILMING. —_ IF AND WHEN A

BETTER COPY CAN BE OBTAINED, A NEW FICHE

WILL BE ISSUED.

QUESTIONS PRESENTED

Amicus curiae adopts the questions presented for

review as they appear in the petition for a writ of

certiorari filed by Exportadora de Sal, S.A. de C.V.

(Exportadora), with the following addition:

Whether an agreement between the Government of

Mexico and the Government of Japan for technical

cooperation, which requires Mexico, when receiving

scientists, to provide transportation and accommodations,

makes the provision of such transportation under the

direction of Mexico “public” acts that are immune from

jurisdiction in the United States?

TABLE OF CONTENTS

INTEREST OF AMICUS CURIAE ........... 1

SUMMARY OF ARGUMENT

ARGUMENT ...... MIMS 5k x win 06 ee a 8 5

I. THE FSIA GRANTS IMMUNITY TO

SOVEREIGNS ENGAGED IN PUBLIC

ESO a ae 6

Il. THE SUPREME COURT SHOULD TAKE

JUDICIAL NOTICE OF MEXICO’S

RECORDS OR REMAND THE CASE ..... 10

Ill. PLAINTIFFS’ CLAIMS ARE NOT BASED

UPON EXPORTADORA’S COMMERCIAL

ACTIVITY IN THE UNITED STATES .... 11

A. Plaintiffs’ Tort Claims Do Not

Support Jurisdiction Under the

Commercial Activities Exception ...... 13

B. The Aviones Flight Should Not Be

Imputed to Exportadora as a Basis

FOe MOIRGICHNOE F065 dai, Shh RK ele 15

IV. THE COMMERCIAL ACTIVITY RELIED ON

FOR JURISDICTION DID NOT HAVE

SUBSTANTIAL CONTACT WITH THE U.S. 17

CONCLUSION

ve

TABLE OF AUTHORITIES

Case Law:

Arango v. Guzman Travel Advisors Corp.,

Gar Pia: 1573: Ce, See. 6 ok a a es

Argentine Republic v. Amerada Hess,

488 U.S. 428, 109 S.Ct. 683,

102. L.Ed. 26-S55 CI9Gep ee a

Banco Nacional De Cuba v. Sabbatino,

376,U.S. 398, 84 S.Ct. 923,

1] Lae ee Cie rere

Burger King Corp. v. Rudzewicz,

471 U.S. 462, 105 S.Ct. 2174,

SS LiEGge cee tiseer ee

Cary v. Curtis,

3 How. 236, 11 L.Ed.2d 576 (i845) ......

Curtis v. Beatrice Foods Co.,

461 F.Supp. 1273 (3.D.N.Y. 1980)... . e.

Federal Ins. Co. v. Richard Il. Rubin & Co.,

ta Peon tere Oe Cat: ee SP See ek

First Nat. City Bank v. Banco Para El Com.,

462 U.S. 611, 103 S.Ct. 2591,

V4. Ri Te. te eee en

ete Ye

Fourth National Bank Of The City Of New York v.

Francklyn,

1a0 WS. 747, 75. $.Ck.. 757,

cS MS Se Es re area es anes

-li-

Helicopteros Nacionales de Colombia, S.A. v. Hall,

444 U.S. 408, 104 S.Ct. 1868,

80 L.Ed.2d 404 (1984) ..--- eee rete 18

In the Matter of Fotochrome, Inc.,

377 F.Supp. 26 (E.D.N.Y. 1974), affd.,

517 F.2d 512 (2nd Cir. 1975) ..- +--+ esse: 10

International Shoe Co. v. Washington,

326 U.S. 310, 66 S.Ct. 154,

90 L.Ed.2d 95 (1945) 2... ee eet ee eee 18

Lilly v. Grand Trunk Western Railroad Company,

317 U.S. 481, 63 S.Ct. 347 87 L.Ed. 411 (1943) . Il

McGee v. International Life Ins. >.

355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957) 18

Mila v. District Director Of Denver Colorado

District of the INS,

494 F.Supp. 998 (D. Utah, C.D. 1980),

rev’d. on other grounds., 678 F.2d 623

(10th Cir. 1982), cert. den., 459 U.S. 1104,

1035 S.Ct. 726, 74 L.Ed.2d 952 (1983) ...--- 11

Mongold v. Commissioner,

43 T.C.M. (CCH) 117, T.C. Memo 1981-715;

eC heme. (Py BIST IDs is ne et 10

Ramirez v. Autobuses Blancos Flecha Roja,

S.A. de C.V.,

486 F.2d 493 (Sth Cir. 1973) .--. +--+ ee ees 10

Republic of Argentina v. Weltover,

504 U.S. __,_ H12 S.Ct. 2160

119 L.Ed.2d at 394 (1992) ...--- see eres 7,8

Romero v. The United States,

68 U.S. 721, 1 Wall 721, 17 L.Ed 627 (1864) ... Il

-lii-

Saudi Arabia v. Nelson,

507 U.S. __, 113 S.Ct. 147],

fas Sas Ge Clemence ce (8S 5-8, 12-14, 17

Schoenberg v. Exportadora de Sal,

S.A. de C.V.,

930 F.2d 777 (9th Cir. 1991) . 1, 3, 6-8, 12, 15, 16

Sosna v. State of Iowa,

419 U.S. 393, 95 S.Ct. 553,

Gd Lue ee eee fn ke 6 RU A. 9

Sugimoto v. Exportadora de Sal,

S.A. de C.V.,

19 F.3d 1309 (9th Cir. 1994) .. 1, 5, 12, 13, 15, 16

U.S. v. Pink,

315 U.S. 203, 62 S.Ct. 552, 86 L.Ed. 796 (1941) . 10

Verlinden B.V. v. Central Bank of Nigeria,

461 U.S. 480, 103 S.Ct. 1962,

FO Lede OG) Gieee chee so ON. SG 8 2, 6, 9

Walter Fuller Aircraft Sales, Inc. v.

Republic of Philippines,

965 F.2d 1375 (5th Cir. 1992)

-jV-

Statutes:

Se fees B Aaoe CE his HOY hoe a es e's l

2B U.S.C, § JOURN i siiiitecs ed, tase! oie Wes KE ws 2

2B USC. .§: HR eb ectie ms: OE ESR. 60 rraadles l

Be ere ES ow he Ee oes Ce es 8

ee ee re ear ar era a 15

pe EE Perr a ee rary eer er ee 3

California Code of Evidence §§ 452(f) & 453 .... 10

Federal Rules of Civil Procedure Rule 44.1

Miscellaneous:

Black’s Law Dictionary (6th ed. 1990)

Article 28 of the Mexican Constitution ......... 2

House Report No. 94-1487, reprinted in 1976

U.S. Code Cong. and Admin. News. .......... 6

In the Supreme Court

OF THE

United States

Ocroser TERM, 1994

Exportapora De Sat, S.A. De C.V.,

Petitioner,

v.

Hiroko Sucimoro, et al.,

Respondents,

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF OF AMICUS CURIAE

UNITED MEXICAN STATES

IN SUPPORT OF PETITION

FOR A WRIT OF CERTIORARI

4

a

‘

INTEREST OF AMICUS CURIAE

Pursuant to Supreme Court Rule 37, the United

Mexican States (Mexico) respectfully submits this brief

amicus curiae in support of the petition for a writ of

certiorari filed by Exportadora. Consent to the filing of

this brief has been granted by counsel for both parties.

Copies of the letters of consent have been lodged with

the Clerk of this Court as part of Mexico’s Appendix.

Mexico is the majority shareholder of Exportadora.

The respondents are all Japanese citizens, and are the

survivors of three passengers who died in an aircrash

which led to this wrongful death action. Exportadora is

a foreign sovereign under the Foreign Sovereign

Immunities Act of 1976 (FSIA) (28 U.S.C. §§ 1330,

1603 et seq.), and, as such, is presumptively immune

from jurisdiction in the United States unless one of the

exceptions to immunity applies.

Jurisdiction originally was challenged by

Exportadora in response to the complaint. The motion to

dismiss was denied, and Exportadora timely filed an

interlocutory appeal with the Ninth Circuit under the

collateral order doctrine. The court of appeals held that

jurisdiction existed under the "commercial activities"

exception of the FSIA (28 U.S.C. § 1605(a)(2)) and

affirmed the district court’s denial of Exportadora’s

motion to dismiss. Schoenberg v. Exportadora de Sal,

S.A. de C.V., 930 F.2d 777 (9th Cir. 1991)

(Schoenberg).

The case proceeded to trial with only the survivors

of the Japanese passengers, Sugimoto, Kodani and

Omachi, after two of the plaintiff groups who are the

survivors of the two California passengers settled their

claims. Following trial, judgment was entered against

Exportadora, leading to the second appeal. Again, the

Ninth Circuit found jurisdiction under the commercial

a

nny Pee eS ee ee ee ee 3

activities exception, this time on a different basis.

, 19 F.3d

1309 (9th Cir. 1994) (Sugimoto).

Under Article 28 of the Mexican Constitution, the

profits which the Mexican government derives from

Exportadora’s operation belong to the people of Mexico.

Mexico assert’s the right of its people to determine how

these public resources are to be spent.

Mexico also is a member of the family of nations

and as such has an interest in upholding international

law. Mexico firmly believes that its departments and

public corporations should not be subject to the

jurisdiction of United States courts except under

principles consistent with customary international law.

Mexico respectfully submits that the Ninth Circuit has

carved out a new exception to the principle of sovereign

immunity which is not consistent with international law

as codified in the FSIA.

The Ninth Circuit has created this new exception by

grafting tort principles, in particular those of vicarious

liability, onto the commercial activities exception,

(28 U.S.C. 1602(a)(2)), with the extraordinary result of

finding a Mexican public corporation vicariously liable

for the tortious conduct of a private corporation solely

because of remotely related and relatively insignificant

commercial activity in this country.

Mexico believes the Ninth Circuit’s imputation of

jurisdiction based on a finding of vicarious liability

erodes one of the primary purposes of the FSIA, which

was to establish a uniform body of law needed because

of the potential sensitivity of actions against foreign

sovereigns. i Vv i

461 U.S. 480, 489, 103 S.Ct. 1962, 76 L.Ed.2d 81

(1983), citing House Report No. 94-1487, p.32 (1976).

The Ninth Circuit’s approach requires courts to first

determine liability before jurisdiction can be considered,

contrary to the FSIA which states that liability is

considered only in instances where the foreign state is

not entitled to immunity. 28 U.S.C. §1606.

Perhaps most important, Mexico finds the

circumstances of this case prevented the introduction of

__ evidence that would conclusively establish Exportadora

.’§ engaged in immune “public” activity, not commercial

activity, as to two of the three passengers. The

passengers were being transported by Exportadora at the

instruction of the Government of Mexico, which

instryction was made pursuant to an agreement between

Mexico and Japan pledging technical cooperation between

the governments and, complimentary travel and

accommodations for Japanese experts while in Mexico.

The agreement was signed on December 2, 1986, in

Tokyo and was published in Mexico’s federal register

("Diario Oficial") on April 25, 1988.

Although Exportadora argued that it had been

directed to transport the scientists on behalf of Mexico

when-its original motion to dismiss in Schoenberg was

denied, the formal agreement was not known to

Exportadora at the time. However, Exportadora was

later deprived of the opportunity to introduce the

agreement at trial in Sugimoto, because the district court

refused to revisit jurisdictional issues.

Finally, Mexico submits that the Ninth Circuit

applied American concepts of insurance and liability to a

Mexican corporation, which could not have insured itself

against this risk in Mexico. Part of the Ninth Circuit’s

finding of vicarious liability was based on the holding

that "the enterprise...is free to insist upon [a contractor]

who is financially responsible, and to demand indemnity

from him." Sugimoto, 19 F.3d at 1312. Amicus

informs this Court that Aviones carried the insurance

, required by Mexican law, and paid benefits to some of

a

the same plaintiffs who have sought additional

compensation in the courts of this country. These

considerations have no application to a Mexican public

corporation which could not have insisted on a carrier

having more financial responsibility than Aviones.

Mexico respectfully finds the Ninth Circuit’s comments

insensitive to the laws of a sovereign nation.

Because of the foregoing interests and concerns,

Mexico believes that Exportadora was improperly

subjected to jurisdiction in the United States, and that the

case properly should have been brought in Mexico.

SUMMARY OF ARGUMENT

The FSIA provides the exclusive means for

acquiring jurisdiction over foreign sovereigns in United

States courts. An exception to the immunity presumed

by the FSIA is necessary for both personal and subject

matter jurisdiction.

In initially challenging jurisdiction, Exportadora

argued that transporting two scientists from Japan at the

instruction of the Government of Mexico was a public

act outside the commercial activities exception. The

district court and the Ninth Circuit on Exportadora’s

interlocutory appeal disagreed, and held that Exportadora

was appeasing its majority shareholder, which the courts

found not to be an inherently public act.

After the interlocutory appeal but before trial,

Exportadora learned of an agreement that had been

entered into between Japan and Mexico. The agreement

requires Mexico to provide transportation for experts

from Japan while in Mexico to conduct studies. Mexico

submits that Exportadora’s activities in transporting the

Japanese experts is immune "public" activity.

Wa oe tka | ei

Mexico further submits that the Ninth Circuit’s

subsequent decision in Sugimoto is inconsistent with this

Court’s recent opinion in Saudi Arabia v. Nelson,

_U.S._, 113 S.Ct. 1471, 123 L.Ed.2d 47 (1993) and

with the Third Circuit’s opinion in Federal Ins, Co. v.

Richard L. Rubin & Co., 12 F.3d 1270 (3d Cir. 1993).

Those cases explain that courts must consider whether a

plaintiff's claims are "based upon" the commercial

activity asserted as the basis for jurisdiction. In Nelson,

this Court reasoned that the defendants’ tortious conduct

itself failed to qualify as commercial activity.

,Mexico respectfully believes the Ninth Circuit in

Sugimoto also improperly created a new exception to

immunity by basing jurisdiction on the acts of an

independent contractor (i.e., Aviones), which were

attributed to Exportadora. This Court in First Nat. City

Bank v, Banco Para El Com., 462 U.S. 611, 103 S.Ct.

2591, 77 L.Ed.2d 46 (1983) discouraged such an

approach to jurisdiction explaining that separate legal

personalities are "an almost indispensable aspect of the

public corporations."

Finally, this case provides the Supreme Court with

an opportunity to define the "substantial contact" element

of the FSIA’s commercial activity exception. In Nelson,

the Court expressly left the question for another day.

ARGUMENT

In considering immunity of foreign states, this Court

explained that “subject-matter jurisdiction of the lower

federal courts is determined by Congress, ‘in the exact

degrees and character which to Congress may deem

proper for the public good.’" Argentine Republic v.

Amerada Hess, 488 U.S. 428, 433, 109 S.Ct. 683, 102

L.Ed.2d 818, 827 (1989), quoting Cary v. Curtis, 3

How. 236, 245, 11 L.Ed.2d 576 (1845). The FSIA

provides the exclusive standards for resolving immunity

RE

od Pe A eo weed atte SO & oe 4 ae! 2 oo

questions raised by sovereigns in United States courts.

House Report No. 94-1487, reprinted in 1976 U.S. Code

Cong. and Admin. News, p.i2. (House Report).

The FSIA codifies the “restrictive theory” of

immunity, under which foreign sovereigns are absolutely

immune from liability for suits involving public acts, but

not those involving the foreign state’s commercial

activity. Verlinden B.V. v, Central Bank of Nigeria, 461

U.S. 480, 487, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983).

I. THE FSIA GRANTS IMMUNITY TO

SOVEREIGNS ENGAGED IN PUBLIC ACTIVITY

In analyzing immunity since the adoption of the

FSIA, courts first determine whether the foreign

sovereign’s activity was public or commercial. A state

engages in commercial activity only where it acts as a

private person in the market and exercises powers that

also can be exercised by a private person. Saudi Arabia

y. Nelson, 507 U.S. _, 60, 113 S.Ct. 1471, 123

L.Ed.2d 47 (1993).

In this case, Exportadora’s activity as to Sugimoto

and Kodani can best be described as transporting

scientists at the direction of the government to fulfill

Mexico’s agreement with Japan concerning technical

cooperation. The activity is not commercial because

private persons do not undertake to transport foreign

scientists to fulfill an international agreement.

The Ninth Circuit in Schoenberg, however,

reasoned that an activity is public and noncommercial if

only a sovereign state can perform it and that the activity

is commercial if it is of the type customarily carried on

by an individual for profit. Schoenberg, 930 F.2d. at

780. The Schoenberg court then concluded:

a ae a se, Oe A ee ie S|

Exportadora arranged transportation for [Sugimoto

and Kodani] at the behest of its majority

stockholder, the Mexican government. Appeasing

one’s majority stockholder is an activity that a

private entity can perform...

Id. In reaching its conclusion, the Schoenberg court

relied on the elusive test that the commercial character of

an activity is determined by reference to the nature of

the conduct and not to its purpose. Id. Although the

court acknowledged the scientists had a public purpose at

their destination, that was found to be irrelevant, and

instead the court focused on the transportation and found

it to be commercial in nature.

Mexico starts with the proposition that it, most

certainly, would not have been engaged in commercial

activity had it transported the scientists itself, because

both the nature and purpose of its activity would have

been public. Mexico would have been providing

transportation to scientists pursuant to a formal agreement

with Japan. It naturally follows that Exportadora was

not engaged in commercial activity when it fulfilled the

government’s public obligation when directed to do so.

Cf. gre am RR 621 F.2d

1371 (Sth Cir. 1980).

Mexico believes the Ninth Circuit’s opposite

conclusion resulted, in part, from the difficulty courts

face in distinguishing the purpose of an activity from its

nature. The Supreme Court has recognized the problem,

but acknowledged that the FSIA commands courts to

observe the distinction. Saudi Arabia v. Nelson, 507

U.S. __, 113 S.Ct. 1471, 123 L.Ed.2d 47 (1993);

i v. Weltover, 504 U.S. __, 112

S.Ct. 2160, 119 L.Ed.2d 394 (1992).

In grappling with this issue, the Court in Weltover

offered direction by explaining that:

om

[T]he question is not whether the foreign

government is acting with a profit motive or instead

with the aim of fulfilling uniquely sovereign

objectives. Rather, the issue is whether the

particular actions that the foreign state performs

(whatever the motive behind them) are of the type

of actions by which a private party engages in

"trade and traffic or commerce [cites]."

Id., 119 L.Ed. at 405 (emphasis in original).

The Ninth Circuit’s reasoning in Schoenberg

conflicts directly with Nelson and Weltover. As quoted

above, the Schoenberg court stated that an activity is

public if it is one that only a sovereign state can

perform, and that it is commercial if it is of the type an

individual would carry on for profit. Schoenberg, 930

F.2d at 780. The Supreme Court, on the other hand,

held that the question is not whether the sovereign is

acting with a profit motive or to fulfill a uniquely

sovereign objective.

In applying instead the Supreme Court's test,

Mexico submits that Exportadora’s transportation of the

scientists to satisfy Mexico’s obligation under an

international agreement, is not the type of action by

which private parties engage in trade and traffic or

commerce. Private parties do not provide air

transportation to scientists who happen to be conducting

experiments on adjacent property.

Mexico urges the Supreme Court to address, as

well, what Mexico perceives as an inclination by some

courts to treat foreign government-owned corporations as

commercial businesses for all purposes.

Public enterprises are essential to developing

countries. Justice O’Connor explained in a different

context, that public entities in the form of development

-8-

corporations are essential to economic progress in

underdeveloped countries.

Para El Com., 462 U.S. 611, 625, 103 S.Ct. 2591, 77

L.Ed.2d 46 (1983) (Bancec). As Bancec notes, in more

desperate times, the U.S. also relied on public

corporations such as the Tennessee Valley Authority.

While Exportadora might be one of the world’s

largest salt producers, a point of questionable relevance

that plaintiffs’ counsel repeatedly raises, it also is part of

an economy that cannot absorb damages such as those

allowable in a dynamic economy like California’s. If

Mexico is to prosper and to generate an economy that

will encourage more of its citizens to remain at home

and not seek a better life enjoyed in the United States, a

now politically-charged issue, Mexico’s definition of

appropriate governmental activity should be respected.

Mexico believes that the characterization of Exportadora’s

activity as commercial usurps Mexico’s right to determine

for itself how best to fulfill its international agreements

entered to promote the common good of its people.

The Agreement of Technical Cooperation entered

between Mexico and Japan should eliminate any doubt

that Exportadora’s activity as to Sugimoto and Kodani

was public. Exportadora should have been allowed the

opportunity to introduce this evidence at:trial.'

Regardless, Mexico asks the Supreme Court to take

judicial notice of the agreement, an authenticated copy of

‘Subject matter jurisdiction Over Exportadora turns on the

existence of an exception to sovereign immunity. Verlinden, 461 U.S.

480, 493-494 & fn. 20. Objections to subject matter jurisdiction may

be raised at any stage of the proceedings, including in the Supreme

Court. See, e.g., Sosna v. State of lowa, 419 U.S. 393, 395-396 & fn.

2, 95 S.Ct. 553, 42 L.Ed.2d 532 (1975). An issue not addressed

below, even if not of a jurisdictional nature, may also be addressed by

the Supreme Court when it invoives national policy concerning foreign

relations. Banco Nacional De Cuba v. Sabbatino, 376 U.S. 398, 407-

408, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964).

which is included in Mexico’s Appendix to Brief of

Amicus Curiae.

Il. ‘THE SUPREME COURT SHOULD TAKE

JUDICIAL NOTICE OF MEXICO’S RECORDS

OR REMAND THE CASE

Counsel has not located any case on appeal from a

circuit court where the Supreme Court has taken judicial

notice of a foreign statute. However, in a case on

appeal from a state court, the Supreme Court took

judicial notice of a declaration of Russia’s Commissariat

for Justice. U.S. v. Pink, 315 U.S. 203, 217-221, 62

S.Ct. 552, 86 L.Ed. 796 (1941). The Court considered

the official declaration because it could take the same

judicial notice available to the state court pursuant to a

provision of the New York Civil Practice Act which

allowed judicial notice of foreign law at any stage of the

proceedings. Id. at 220-221. Both the Federal Rules of

Civil Procedure (Rule 44.1) and the California Code of

Evidence (§§ 452(f) & 453) have similar statutes.

Rule 44.1 allows a district court determining foreign

law to consider any relevant material or source, whether

submitted by a party or admissible under the Federal

Rules of Evidence, as long as the party gives reasonable

notice in writing. The written notice need not be in the

pleadings and may be given at any stage in the

proceeding. Notes Of Advisory Committee On Rule of

Civil Procedure 44.1. Judicial notice has been permitted

by this Rule in a number of cases’, even when the issue

? See, e.g., In the Matter of Fotochrome, inc., 377 F.Supp. 26,

29 (E.D. N.Y. 1974), aff'd., 517 F.2d 512 (2nd Cir. 1975)}(Japanese

Code of Civil Procedure); Mongold v. Commissioner, 43 T.C.M. (CCH)

117, T.C. Memo 1981-715; T.C. Mem. (P-H) 810715 (United States

Tax Court 1981)(Mexican criminal code); Ramirez v. Autobuses Blancos

Flecha Roja, S.A. de C.V., 486 F.2d 493, 497 (5th Cir.

1973)(unauthenticated Mexican civil code).

-10-

of foreign law arose after trial or on appeal.’

Without Rule 44.1, the Supreme Court also has

consistently used judicial notice to consider federal and

state statutes and administrative rules and regulations,

even when they were not relied on at trial. The

Supreme Court has consulted Mexican archives sua

sponte to settle land disputes. Romero v. The United

States, 68 U.S. 721, 1 Wall 721, 17 L.Ed 627 (1864).

Mexico requests that if the Court does not take judicial

notice of the agreement, it should remand this case to the

district court for judicial notice under Rule 44.1.

The third Japanese passenger on the Aviones flight,

Omachi, was a purchasing agent for Asahi Chemical

Company of Japan, who had asked permission to visit

Exportadora’s facility.

Because Exportadora was not engaged in any public

activity as to Omachi, Exportadora’s immunity also must

be evaluated in the context of th © ommercial activities

exception alleged by plaintiffs as the basis of jurisdiction.

See, 28 U.S.C. § 1605(a)(2). That section states:

* See, e.g., Mila v. District Director Of Denver Colorado District

of the INS, 494 F.Supp. 998, 999 (D. Utah, C.D. 1980), rev'd. on other

arnds., 678 F.2d 623 (10th Cir. 1982), cert. den., 459 U.S. 1104, 1035

S.Ct. 726, 74 L.Ed.2d 952 (1983) (the adoption laws of the island of

Tonga although they were not before the Board of Immigration Appeals

hearing below); Curtis v. Beatrice Foods Co., 481 F.Supp. 1275, 1285

(S.D. N.Y. 1980)(the Columbian Labor Code although materials were not

presented until after trial).

“See, e.g., Lilly v. Grand Trunk Western Rajiroad Company, 317

U.S. 481, 488-489, 63 S.Ct. 347, 87 L.Ed. 411 (1943); Fourth Nationa!

Bank Of The City Of New York vy. Francklyn, 120 U.S. 747, 751, 75

S.Ct. 757, 30 L.Ed. 825 (1887).

-}]-

we eee 4 ~~ S e e e a? Pee eS e ee eee fOr a ee te ae

(a) A foreign state shall not be immune from

the jurisdiction of courts of the United States or of

the States in any case --

{ 7 cad ~ * *”

(2) in which the action is based upon a

commercial activity carried on in the United

States by the foreign state; ...

Mexico finds it significant that two panels of the

Ninth Circuit in analyzing plaintiffs’ complaints arrived at

different conclusions as to the basis alleged for

jurisdiction -- even though both panels were evaluating

the allegations in the context of the same exception to

immunity. The Schoenberg court held that arranging

transportation for the passengers through Exportadora’s

San Diego office was the relevant activity for

jurisdictional purposes of plaintiffs’ tort claims.

After the trial and before briefing commenced in the

Sugimoto appeal, this Court issued its opinion in Saudi

Arabia v, Nelson, 507 U.S. _, 113 S.Ct. 1471, 123

L.Ed.2d 47 (1993). In Nelson, this Court explained that

a plaintiff's claim must be directly "based upon" the

commercial activity alleged for the exception to immunity

to apply. The opinion clarifies that the commercial

activity alleged as the basis for jurisdiction under the

FSIA, must include “those elements of a claim that, if

proven, would entitle a plaintiff to relief." Id. 123

L.Ed.2d at 59.

Because plaintiffs’ wrongful death claim is not

based upon the arrangement of transportation through

Exportadora’s San Diego office, jurisdiction was raised

again in the Sugimoto appeal. Instead of directing that

the case be dismissed because plaintiffs’ claims are not

based upon the commercial activity as found by the

Schoenberg court on the previous appeal, the Ninth

Circuit in Sugimoto held that “Exportadora was engaged

in commercial activity in the United States when the air

*

wary . mi is

if2.

taxi flew in United States airspace ...". Sugimoto, 19

F.3d at 1311. By basing jurisdiction on a ground that

was never addressed in the district court, the Ninth

Circuit found jurisdiction over Exportadora.

This holding is erroneous and should be reversed.

First, the plaintiffs never alleged that jurisdiction arose

from Aviones’ brief flight into United States airspace.

Second, as discussed below, the Ninth Circuit’s analysis

of the relevant commercial activity is at odds with this

Court's opinion in Nelson. Finally, as further discussed

below, jurisdiction was exerted over Exportadora only

becayse the Sugimoto court first imputed Aviones’

negligence to Exportadora. This is the first known case

where the commercial activities of a third party have

been attributed to a foreign sovereign as a basis for

jurisdiction under the commercial activities exception.

A. Plaintiffs’ Tort Claims Do Not Support

Jurisdiction Under the Commercial Activities

Exception

—

The plaintiffs in Nelson also alleged the commercial

activities exception as the basis for jurisdiction over their

tort claims. This Court explained, however, that the

plaintiffs did not allege breach of contract, but personal

injuries, and that the torts and not the commercial

activities that preceded the torts formed the basis of the

suit. Nelson, 123 L.Ed.2d at 59. The Court held that

tortious conduct “fails to qualify as “commercial activity’

within the meaning of the Act,..."

In this case, the plaintiffs allege pilot negligence as

the basis of their claims. It is the activity that, if

proven, would entitle plaintiffs to relief under their

theory of the case. See id, 123 L.Ed.2d at 59. The

plaintiffs’ claims, therefore, are “based upon" pilot error,

and not Exportadora’s commercial activities that may

have preceded the accident. In this regard, the Nelson

-]3-

opinion cautioned that the conduct upon which a

plaintiff's claims are based must present more than "a

mere connection with, or relation to, commercial

activity.” Id. The Court found that while the Saudi

government’s recruitment and employment of the plaintiff

constituted the activities that led to the tortious conduct,

they were not in themselves the basis for the plaintiff's

suit.

Similarly, although Exportadora hired Aviones in

Mexico to transport the plaintiffs’ decedent, those

activities merely “led to" the eventual accident, and did

not form the “basis” for the suit. Exportadora’s

commercial acts, in themselves, entitle the plaintiffs to

nothing under their theory of the case. See id. 123

L.Ed.2d at 59.

The Third Circuit is the only other circuit court

since Nelson to consider whether tort claims support

jurisdiction under the first clause of the commercial

activities exception. See, Federal Ins. Co. v. Richard L.

Rubin & Co., Inc., 12 F.3d 1270 (3rd Cir. 1993). In

Federal Insurance, various plaintiffs attempted to hold

two Dutch government-owned corporations liable for

personal injuries resulting from a fire in a building in

Philadelphia owned by subsidiaries of the corporations.

The Dutch corporations had created the subsidiaries to

invest in and manage the property. The plaintiffs argued

that their claims were based upon these commercial acts.

The Federal Insurance court, consistent with

Nelson, found that the plaintiffs’ claims were based upon

allegations of negligence, recklessness, nuisance, and

strict liability. Id. at 1289. The court held that the

claims were not “based upon" the defendants’ commercial

activity, since that was irrelevant to the plaintiffs’ tort

claims. Similarly, the plaintiffs’ claims in this case are

"based upon” allegations of pilot error for which

Exportadora is alleged to be vicariously liable. The only

-/4-

commercial act undertaken by Exportadora was in

contracting for the flight -- which occurred in Mexico,

and does not form the "basis" of the plaintiffs’ suit.

B. The Aviones Flight Should Not Be Imputed

Ag eM er Rosia dow leudadiell

Even if "commercial activity" can take the form of

"tortious flying," as the Ninth Circuit held in Sugimoto,

this act was carried on in the United States by Aviones,

not Exportadora. Therefore, the plaintiffs’ claims are not

based on any commercial activity of Exportadora. The

Ninth Circuit in Sugimoto, however, found that,

"Exportadora was engaged in commercial activity within

the United States when the air taxi [Aviones] flew in

United States air space,...". Sugimoto, 19 F.3d at 1311.

Exportadora and Aviones are . arate juridical

entities. The Ninth Circuit acknowledged Aviones was

an independent contractor, yet the court never explained

why the commercial acts of a separate entity should be

imputed to a foreign sovereign for jurisdictional

purposes. It appears the court relied on principles of

vicarious tort liability that it used to attribute Aviones’

liability to Exportadora.* Whether jurisdiction over a

foreign sovereign can rest on principles of "vicarious

liability," however, is an issue that seems germane only

to the noncommercial tort exception (28 U.S.C. §

1605(a)(5)) and not the commercial! activities exception.®

‘The court separately analyzed, later in the opinion, Exportadora’s

tort liability for the acts of Aviones, the independent contractor.

‘The noncomniercial tort exception, however, was not factually

developed in the district court, nor was it relied on by the Ninth Circuit

in either Schoenberg or Sugimoto. It is doubtful that jurisdiction would

exist under the noncommercial tort exception, because the lariguage of

§ 1605(a)(5) is specifically limited to cases involving torts committed by

" the sovereign’s officials and employees.

'

oo Se eee eee ee

f%

By contrast, no such theory of "vicarious

commercial acts" has ever been developed, or can be

said to have ever existed, within our system of

jurisprudence; this is an issue arising solely within the

context of the commercial activities exception of the

FSIA. The Ninth Circuit in Sugimoto unwittingly

developed this unprecedented expansion in our law, and

erred in doing so. Indeed, the Ninth Circuit's earlier

opinion in Schoenberg expressly avoided the issue of

vicarious liability, finding that it was an issue which had

no bearing on jurisdiction under the commercial activities

exception. See Schoenberg, 930 F.2d at 782 n.3.

In attributing the commercial acts of Aviones to

Exvortadora, the Sugimoto court also failed to heed the

separate juridical status of these entities in accordance

with this Court’s cautionary words in First National City

Bank v. Banco Para El Com. (Bancec), 462 U.S. 611,

103 S. Ct. 2591, 77 L. Ed. 2d 46 (1983). Bancec urged

a restrained approach in imputing liability, much less

jurisdiction, to separate foreign juridical entities.

Although Bancec involved the attribution of substantive

liability, it has provided guidance to courts in

determining the attribution of jurisdiction under the

commercial activities exception. See, €.g., Federal Ins.

Co. v. Richard I. Rubin & Co., Inc., 12 F.3d 1270,

1287 (3rd Cir. 1993); Walter Fuller Aircraft Sales, Inc.

v. Republic of Philippines, 965 F.2d 1375, 1382 (Sth

Cir. 1992).

The circumstances in Federal Insurance are

analogous to those in the present case in considering

whether jurisdiction may be imputed to a foreign

sovereign under the commercial activities exception. The

Federal Insurance court identified the relevant commercial

activity as “the formation of two wholly owned Dutch

subsidiaries" -- activity not directly undertaken in the

United States -- and held that the district court erred in

attributing the acts of the subsidiaries to the parent

corporations as a basis for jurisdiction. Id. at 1286.

First Insurance therefore directs that the commercial

acts of one entity inhere to that entity alone and may not

be attributed to another, no matter how closely related,

to establish jurisdiction under the commercial activities

exception. Since Exportadora and Aviones are not

related foreign instrumentalities, but are separate legal

entities, jurisdiction based on the attribution of Aviones’

commercial acts is more tenuous.

IV.

FOR JURISDICTION DID NOT HAVE

SUBSTANTIAL CONTACT WITH THE U.S.

This Court in Nelson expressly left open the issue

of what constitutes "substantial" activity under section

1603(e) of the FSIA. Nelson, 123 L.Ed.2d at 58. The

FSIA itself provides little guidance in defining the term

"substantial." The examples in the FSIA’s legislative

history contemplate only the execution of commercial

transactions, indicating that Congress may not have

envisaged the burgeoning efforts of plaintiffs to base

personal injury claims on the slightest commercial activity

conducted in the United States. Nevertheless, the plain

meaning of the term "substantial" means "[o]f real worth

and importance.... [s]omething worthwhile as

distinguished from something ... merely nominal."

Black’s Law Dictionary (6th ed. 1990). Cf. Saudi

Arabia_v. Nelson, 123 L.Ed.2d at 58-59 ("Although the

Act contains no definition of the phrase ‘based upon,’

and the relatively sparse legislative history offers no

assistance, guidance is hardly necessary") citing Black’s

Law Dictionary (6th ed. 1990).

Whatever the significance of the actual aircrash, the

commercial activity did not have "substantial contact”

with the United States to justify the exercise of

-] 7-

jurisdiction pursuant to the commercial activities

exception. The air taxi’s commercial contact with the

United States was not “substantial” within the ordinary

meaning of that word, since it was only a brief intrusion

into U.S. airspace. Otherwise, jurisdiction could be

based on the most de minimis contacts, contrary to the

meaning of the term "substantial," and contrary to the

Constitutional mandate that personal jurisdiction comport

with due process notions of “fair play and substantial

justice." International Shoe Co, v, Washington, 326

U.S. 310, 66 S. Ct. 154, 90 L.Ed.2d 95 (1945).

The exceptions for exercising jurisdiction under the

FSIA track the Constitutional requirements for in

personam jurisdiction.’ It appears that the first clause of

the FSIA tracks the requirements for exercising "specific

jurisdiction,"* in which the plaintiff's claim must be

"based upon," or “arise out of” a "substantial

connection" with the forum state. See Burger King

Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct.

2174, 85 L.Ed.2d 528, 542 (1985); McGee v.

International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199,

2 L.Ed.2d 223 (1957). The FSIA cannot require a

lesser showing without violating Exportadora’s rights to

due process.

In McGee, the Court found that the defendant’s

contacts with the forum state were “substantial,” where

the defendant had deliberately solicited insurance from

California residents, and because the contract was

delivered in California and all payments were made from

California. The defendant had "purposefully availed"

"See, e.g., House Report at 13, stating that the immunity

provisions of the FSIA require “some connection with the lawsuit and the

United States,” and “prescribe the necessary contacts which must exist

before our courts can exercise personal jurisdiction.”

"See Helicopteros Nacionales de Colombia, S.A. v. Hall, 444 U.S.

408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)idiscussing distinction

between general and specific jurisdiction).

-18-

itself of the benefits of California’s law. This Court has

explained that "purposeful availment"

[E]nsures that a defendant will not be haled

into a jurisdiction solely as a result of

"random," "fortuitous," or "attenuated"

contacts [cites], or of the “unilateral activity of

another party or a third person. [Cite]. Thus

where the defendant “deliberately” has engaged

in significant activities within a State [cite], or

has created "continuing obligations" between

himself and residents of the forum [cite], he

manifestly has availed himself of the privilege

of conducting business there, and because his

activities are shielded by "the benefits and

protections" of the forum’s laws it is

presumptively not unreasonable to require him

to submit to the burdens of litigation in that

forum as well.

Burger King Corp. v. Rudzewicz, 471 U.S. at 475-76,

105 S.Ct. 2174, 85 L.Ed.2d at 542-43.

Under this analysis, jurisdiction over Exportadora is

improper. Exportadora’s activities were not

“purposefully” and "deliberately" directed to California

when it hired the air taxi that fortuitously flew into U.S.

airspace, nor could Exportadora have foreseen that the

air taxi would enter U.S. airspace. Moreover, due

process requires that the contacts "proximately result

from actions by the defendant himself,” and not by the

"unilateral actions of a third person." Burger King

Corp. v. Rudzewicz, 471 U.S. at 475-76, 105 S.Ct.

2174, 85 L.Ed.2d at 542-43 (emphasis in original).

CONCLUSION

The Ninth Circuit’s decision in Sugimoto threatens

to expand jurisdiction over foreign sovereigns in United

-]9-

Pe ee OP eT ee ee” ee

States courts and to undermine the intent of Congress in |

enacting the FSIA to establish uniform law, by creating a 4

new exception to immunity that would derive from state

laws for attributing liability of third parties to foreign

entities. As a separate issue of equal significance, the

unique proceedings in this case eliminated Exportadora’s

ability to establish that its activity was "public" and not

“commercial” in fulfilling Mexico’s governmental

obligations to Japan. Mexico respectfully urges the

Court to grant certiorari for this case allowing

comprehensive briefing on the issues of far reaching

international significance.

Respectfully submitted,

Dated: November ~, 1994 ROBBINS & KEEHN

Byi::< ) o ee he

John H. Stephens ~

Counsel of Record

Kit J. Gardner

Robbins & Keehn

530 "B" Street

: Suite 2400

San Diego, CA 92101

(619) 232-1700

Counsel for Amicus

Curiae