Base Metal Trading Ltd. v. OJSC "Novokuznetsky Aluminum Factory"

Opinions of the United
2002 Decisions States Court of Appeals
for the Third Circuit
9-5-2002
Base Metal Trading v. OJSC
Precedential or Non-Precedential: Non-Precedential
Docket No. 01-3348
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NO. 01-3348
BASE METAL TRADING LTD.,
Appellant
v.
OJSC "NOVOKUZNETSKY ALUMINUM FACTORY";
*NOVARCO LTD.,
Intervenor
*(Pursuant to Court dated 8/7/01)
On Appeal From the United States District Court
For the District of New Jersey
(D.C. Civil Action No. 01-cv-01085)
District Judge: Honorable Joseph E. Irenas
Argued August 15, 2002
BEFORE: AMBRO, and STAPLETON, Circuit Judges,
and O’NEILL, District Judge*
(Opinion Filed: September 5, 2002)
_________________________________________
* Honorable Thomas N. O’Neill, Jr., United States District Judge, Eastern District of
Pennsylvania, sitting by designation.
Bruce S. Marks (Argued)
Dennis Scanlon
Marks & Sokolov, LLC
1835 Market Street, 28th Floor
Philadelphia, PA 19103
Attorneys for Appellant
Base Metal Trading, Ltd.
William M. Tambussi
Joseph T. Carney (Argued)
Brown & Connery, LLP
360 Haddon Avenue
P. O. Box 539
Westmont, NJ 08108
Attorneys for Appellee
OJSC "Novokuznetsky Aluminum Factory"
David P. Langlois
Piper Rudnick
1251 Avenue of the Americas
29th Floor
New York, NY 10020
Attorney for Intervenor
Novarco, Ltd.
OPINION OF THE COURT
STAPLETON, Circuit Judge:
Appellant, Base Metal Trading Ltd. ("Base Metal"), challenges the District
Court’s dismissal of its suit for lack of personal jurisdiction over the defendant OJSC
Novokuznetsky Aluminum Factory ("NKAZ"), and the District Court’s denial of Base
Metal’s request for jurisdictional discovery. We will affirm.
I.
Base Metal is a Guernsy, Channel Island, Great Britain corporation which
trades in raw materials associated with the aluminum industry. NKAZ is a Russian
corporation engaged in the manufacture and sale of aluminum.
Base Metal seeks to have a Russian arbitration award confirmed and
enforced by the United States District Court for the District of New Jersey. The Russian
arbitration award was entered by the Commercial Arbitration Court of the Moscow
Chamber of Commerce in December 1999. The arbitration award arose from a dispute
that is unrelated to any conduct or property in New Jersey or the United States. Two
issues are presented in this appeal: (1) whether the District Court had personal
jurisdiction over NKAZ under Federal Rule of Civil Procedure 4(k)(2); and (2) whether
the District Court abused its discretion in refusing to permit jurisdictional discovery.
In support of its assertion that the District Court had personal jurisdiction
over NKAZ, Base Metal submitted an affidavit from Dimitry Chirakadze. Chirakadze
was the General Director of NKAZ from 1995 to 1996 and the Vice President of
NKAZ’s managing company from 1998 until February 2000. App. at 126. Chirakadze
submitted the following information relating to NKAZ’s contacts with the United States:
NKAZ negotiated with ALCOA about the prospective reconstruction of the
smelting production facilities at NKAZ and a potential joint venture
between the two companies. Individuals from NKAZ traveled to
Pittsburgh on approximately two occasions but no deal was ever made.
Chirakadze attended a trade show in Chicago in 1995.
NKAZ officials went to Washington DC on one occasion to solicit
business.
In 1994 and 1995 NKAZ purchased secondary aluminum from a U.S.
company.
Aluminum manufactured by NKAZ was shipped to New Orleans.
Aluminum manufactured by NKAZ was shipped to Baltimore.
Aluminum manufactured by NKAZ was shipped to New Jersey.
This Court reviews a dismissal of a suit due to lack of personal jurisdiction
de novo. IMO Ind., Inc v. Kiekert AG, 155 F.3d 254, 258 (3d Cir. 1998). A District
Court’s denial of a request for jurisdictional discovery is reviewed for abuse of
discretion. Fraley v. Chesapeake & O.R. Co., 397 F.2d 1 (3d Cir. 1968).
II.
Rule 4(k)(2) states:
[i]f the exercise of jurisdiction is consistent with the
Constitution and laws of the United States, serving a
summons . . . is also effective, with respect to claims arising
under federal law, to establish personal jurisdiction over the
person of any defendant who is not subject to the jurisdiction
of the courts of general jurisdiction of any state.
In order to establish that the District Court had personal jurisdiction over NKAZ
pursuant to this rule, Base Metal must demonstrate that (1) its claim arises under federal
law, (2) NKAZ is beyond the jurisdictional reach of any state court of general
jurisdiction, and (3) the federal courts’ exercise of personal jurisdiction over the
defendant does not offend the Constitution or other federal law. United States v. Swiss
American Bank, Ltd., 191 F.3d 30, 40 (1st Cir. 1999). The parties agree that Base
Metal’s claim arises under federal law. They dispute which party bears the burden of
proving the NKAZ is beyond the jurisdictional reach of any state court of general
jurisdiction, otherwise known as the negation requirement. Because we agree with the
District Court that the third requirement of Rule 4(k)(2) was not satisfied, we do not
reach the negation issues.
Due Process requires that a defendant "have certain minimum contacts with
[the forum] such that the maintenance of the suit does not offend traditional notions of
fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310,
316 (1945). For these minimum contacts to exist, there must "be some act by which the
defendant purposely avails itself of the privilege of conducting activities withing the
forum, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357
U.S. 235, 253 (1958).
There are two types of personal jurisdiction that a court may assert over a
defendant, specific or general. "Specific personal jurisdiction exists when the defendant
has ’purposely directed his activities at residents of the forum and the litigation results
from alleged injuries that arise out of or related to those activities." BP Chemicals Ltd.
v. Formosa Chemical & Fibre Corp., 229 F.3d 254, 259 (3d Cir. 2000). Both parties
agree that specific personal jurisdiction is inapplicable here. "General personal
jurisdiction exists when the defendant’s contacts with the forum, whether or not related
to the litigation, are ’continuous and systematic." Id. Any jurisdiction under Rule
4(k)(2) in this matter must be general personal jurisdiction. In order to determine
whether general jurisdiction exists under Rule 4(k)(2), a court examines the defendant’s
nationwide contacts to determine if they are sufficient to support a holding that those
contacts constitute "continuous and systematic" presence in the United States. Id.III.
Base Metal’s Opening Brief before us describes the nature of its appeal as
follows:
The District Court erred by failing to properly apply
the legal standard for granting jurisdictional discovery
because it did not take into consideration the nature and
extent of Novokuznetsky Aluminum Zavod’s (NKAZ)
United States contacts to determine whether Base Metal
Trading, Ltd.’s (Base Metal) claim to jurisdiction was "not
clearly frivolous." Base Metal sought only to meet its
obligations of showing personal jurisdiction by conducting a
limited inquiry into the contacts that could reasonably be said
to flow from NKAZ’s known contacts and affiliates in the
United States so as to demonstrate that NKAZ is
continuously and systematically conducting business in this
country and thereby establishing general jurisdiction,
pursuant to Fed.R.Civ.P. 4(k)(2).
Ultimately this case is Base Metal’s effort collect a
$12 million private commercial arbitration award, pursuant to
the 1958 New York Convention on Enforcement of Foreign
Arbitral Awards. Base Metal brought this action in the
United States because it traced NKAZ business activity to
this country, including solicitation of business, purchases
from United States companies, and shipments to several
seaports, including New Jersey, New Orleans and Baltimore.
The validity of the underlying award has never been
challenged nor has NKAZ disputed any of its many contacts
with the United States, as detailed in plaintiff’s affidavits.
Appellant’s Brief pp. 2-3.
This characterization of its appeal reflects the jurisdictional theory Base
Metal argued to the District Court in this case and to the Fourth Circuit Court of Appeals
in Base Metal Trading v. OJSC Novokuznetsky Aluminum, 283 F.3d 208 (4th Cir.
2002), a case involving the same parties and a very similar record: The contacts of
NKAZ reflected in the record, including those described in the affidavit and the presence
in New Jersey of aluminum T-bars owned by it, are sufficient "to demonstrate that
NKAZ is continuously and systematically conducting business in the" United States, and
even if they aren’t, they are sufficient to warrant jurisdictional discovery.
The District Court found that the contacts of NKAZ reflected in the record
did not come close to demonstrating a "continuous and systematic presence in the United
States." App. pp. 103, 105. Indeed, the Court determined that there had not been even a
"minimal showing [that] there [was] a reasonable basis to think there might be
jurisdiction" and refused to permit what it characterized as "a fishing expedition." App.
106.
The Court of Appeals for the Fourth Circuit reached similar conclusions:
. . .Even when the allegations and declarations before the
district court are credited, the contacts relied upon by Base
Metal are insufficient. . . . As we have explained, NKAZ’s
alleged contacts with the United States appeal sparse and
limited to a few shipments of aluminum arriving in American
ports. . . . Therefore, a finding of jurisdiction in this case
would turn the notion of "fair play and substantial justice" on
its head.3
3Base Metal also contends that the district court
abused its discretion by failing to permit
jurisdictional discovery. However, the decision
of whether or not to permit jurisdictional
discovery is a matter committed to the sound
discretion of the district court. See, e.g., Cent.
States, Southeast & Southwest Areas Pension
Fund v. Reimer Express World Corp., 230 F.2d
934, 946 (7th Cir. 2000); Erdmann v. Preferred
Research, Inc.., 852 F.2d 788, 792 (4th Cir.
1988). And where, as here, the plaintiff simply
wants to conduct a fishing expedition in the
hopes of discovering some basis of jurisdiction,
we see no reason to overturn the district court’s
exercise of discretion.
For essentially the reasons given by the District Court and the Fourth
Circuit, we agree with their resolution of the issues here presented.
IV.
Base Metal has advanced an additional argument before us that it did not
press in the District Court or before the Fourth Circuit: Even if NKAZ does not have a
continuous and systematic presence in the United States, the presence of aluminum T-
bars owned by it in New Jersey provides a sufficient and independent basis of
jurisdiction because a proceeding to confirm and enforce a foreign arbitration award in a
jurisdiction where the award debtor has property is the same as a proceeding to execute
on an in personam judgment in a jurisdiction where the judgment debtor has property. In
neither case, according to Base Metal, is the continuous and systematic presence of the
opposing party necessary. In support of this theory, Base Metal relies upon footnote
dicta in Shaffer v. Heitner, 433 U.S. 186, 210-11 n. 36 (1977), which it did not press
before the District Court.
An appellant cannot "advance new theories or raise new issues in order to
secure a reversal of the lower court’s determination." Union Pacific Railroad Co. v.
Greentree Transportation Trucking Co., 293 F.3d 120, 126 (3d Cir. 2002). Accordingly,
we decline to address this issue which could and should have been directed to the District
Court.
V.
The District Court’s order of August 7, 2001, will be affirmed.______________________
TO THE CLERK:
Please file the foregoing Not Precedential opinion.
/s/ Walter K. Stapleton
Circuit Judg