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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1994
- **Citation:** 513 U.S. 1018

## Text

~ Bupreme Court, Us
.
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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386012_0606%3A5. Public record. Not legal advice.