Peré Ex Rel. Peré v. Nuovo Pignone, Inc. ( 1998 )

Revised August 24, 1998
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 97-30572
NANCY G. PERÉ, on behalf of Marci Danielle Peré,
on behalf of Matthew Reed Peré, individually and
on behalf of her minor children,
Plaintiff-Appellee,
VERSUS
NUOVO PIGNONE, INC., et al.,
Defendants-Appellants,
VERSUS
COPPUS ENGINEERING; TUTHILL CORPORATION,
Defendants-Appellees.
Appeal from the United States District Court
For the Western District of Louisiana
August 7, 1998
Before POLITZ, Chief Judge, JONES, and DUHÉ, Circuit Judges:
JOHN M. DUHÉ, JR., 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 Pignone, an Italian company,
claimed sovereign immunity under the Foreign Sovereign Immunities
Act. 28 U.S.C. § 1602, et seq. The district court found that,
although Appellant was a foreign state, the commercial activity
exception to immunity applied and Appellant could be sued. We
disagree, holding that the Appellee failed to meet her burden of
proof that the commercial activity exception applied.
I.
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 Peré (“Peré”) was employed by Chevron
Overseas Petroleum and/or CABGOC as an instrument technician in
West Africa. Peré’s employer ordered him to a gas injection
platform to test the gas turbine system. During the test, the
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starter turbine exploded killing Peré. Peré’s widow sued1 on
behalf of herself and her two children claiming that the Coppus
turbine and Nuovo Pignone’s turbine system caused Peré’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 Pignone 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 immunity 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 Co., 488 U.S. 428, 4443 (1989). The FSIA includes
1
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
Peré’s.
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agents or instrumentalities2 of a foreign state within the
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 Inspection, Inc. v. Petroleos Mexicanos, 977 F.2d 180, 184
(5th Cir. 1992).
B. ANALYSIS
1. Whether the FSIA Applies
Peré argues that the district court erred in applying the FSIA
because it looked to Nuovo Pignone’s ownership at the time the
explosion occurred, rather than at the time suit was filed. When
2
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).
(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[.]
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Peré 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, Peré
cites F. Straub v. A.P. Green, 38 F.3d 448 (9th Cir. 1994) which
looked at the defendant’s identity at the time suit was filed. She
acknowledges that General Electric 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.
Peré 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). Peré 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 an issue of 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 sovereign immunity was created to
effectuate general notions of comity among nations.” Id. at 1381
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(internal quotations and citations omitted). The foreign policy
concerns underlying sovereign immunity do not necessarily disappear
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 distinguishable because it
addresses different facts. In Straub, the Ninth Circuit was
determining how to treat a corporation that became a foreign state
for FSIA purposes after the disputed events occurred but before
suit was filed.3 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 activities”
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 connection with a
commercial activity of the foreign state elsewhere;
or upon an act outside the territory of the United
States in connection with a commercial activity of
the foreign state elsewhere and that act causes a
direct effect in the United States.”
“Commercial activity” is defined as “a regular course of commercial
conduct or a particular commercial transaction or act.” 28 U.S.C.
3
This opinion does not address such a situation.
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§ 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 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 (5th Cir. 1991); Arriba Ltd. v. Petroleos Mexicanos, 962
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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 Peré to prove that Nuovo Pignone performed an act within
the United States in connection with the commercial activity
performed elsewhere. Peré 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, Peré still
fails to meet her burden of proof.
To determine whether the availability to consult during 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 complaints. .
. 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 Peré’s allegations of
wrongful death due to improper design and/or manufacture. Peré
fails to show such a material connection. The components of the
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turbine system were manufactured, tested, and delivered to CABGOC
in Italy. More importantly, once the components 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
manufacture that occurred in Italy. Thus, we cannot say that there
is a material connection between Nuovo Pignone sending consultants
to Bayou Black and Peré’s wrongful death action.
b. Waiver
Peré 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 history 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
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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 v. Office of the Consulate General of Nigeria,
830 F.2d 1018, 1022 (9th Cir. 1987).
Here, Peré argues that Nuovo Pignone implicitly waived its
sovereign immunity by virtue of a 1985 contract 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
execution of the overhaul contract. Peré 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 the Consulate 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 agreement, we find
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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.
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