Term: 2002
Docket: 01-593
Dole Food Company, Et Al. v. Gerardo Dennis Patrickson Et Al.
- Pro
01-593 DOLE FOOD COMPANY v. PATRICKSON Ruling below: CA 9, 251 F.3d 795. QUESTION PRESENTED The Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1330, 1332(a), 1391(f), 144I(d), 1602-11, affords "foreign states" various substantive and procedural protections in suits in American courts. The Act defines the term "foreign state" to include certain foreign corporations "a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision." 28 U.S.C. §1603(b)(2). In this case, the State of Israel controlled more than 65% of the shares in two Israeli corporations through ownership of their ultimate parents. Contrary to at least four other circuits (including the Fifth in a case involving the same Israeli corporations), the Ninth Circuit refused to treat the corporations as foreign states under the Act because Israel did not directly own their shares. As a consequence, this case presents the following question: Whether a corporation in which a foreign sovereign controls a majority of the shares indirectly through ownership of the corporation's ultimate parent may qualify as a "foreign state" under the Foreign Sovereign Immmmunities Act. 01-594 DEAD SEA BROMINE CO. v. PATRICKSON Ruling below: CA 9, 251 F.3d 795. QUESTION PRESENTED The Foreign Sovereign Immunities Act (the " Act") establishes the ground rules for claims against a foreign state and, also, an "agency or instrumentality of a foreign state." 28 U.S.C. §§ 1330(a), 1603(a).The Act grants a foreign state or its agency or instrumentality the right to remove an action against it to federal court, immunity from suit absent an exception for certain types of claims and, in those cases where a lawsuit can be brought, certain substantive and procedural protections. Id. §§1330(a), 1441(d). The term "agency or instrumentality of a foreign state" is defined in pertinent part as "any entity ... a majority of whose shares or other ownership interest is owned by a foreign state. ..." Id. §1603(b)(2). Because the State of Israel at all relevant times held a majority ownership interest in Petitioners Dead Sea Bromine Company Ltd. and Bromine Compounds Limited by owning virtually all of their parent corporation 's stock, Petitioners assert that each of them is an "agency or instrumentality of a foreign state" pursuant to §1603(b)(2) and that the district court therefore had subject matter jurisdiction under the Act. The single question presented is whether the Act's definition of "agency or instrumentality" requires direct ownership by the foreign state, or whether an entity that is majority owned by the foreign state through one or more tiered subsidiaries is an entity "a majority of whose shares or other ownership interest is owned by a foreign state" within the meaning of 28 U .S.C. § 1603(b )(2). CERT. GRANTED: 6/28/02 Limited to the following questions: 1. Whether a corporation is an "agency or instrumentality" if a foreign state owns a majority of the shares of a corporate enterprise that in turn owns a majority of the shares of the corporation. 2. Whether a corporation is an "agency or instrumentality" if a foreign state owned a majority of the shares of the corporation at the time of the events giving rise to litigation, but the foreign state does not own a majority of those shares at the time that a plaintiff commences a suit against the corporation. The cases are consolidated and a total of one hour oral argument.
In the case of Dole Food Company, et al. v. Gerardo Dennis Patrickson et al., 2002, the U.S. Supreme Court ruled that a corporation is not considered a "citizen or subject" of its parent company's country for purposes of federal jurisdiction under the Foreign Sovereign Immunities Act (FSIA). The plaintiffs were banana plantation workers from Costa Rica and Panama who alleged they had been harmed by exposure to pesticides used by Dole and other companies on their plantations in Central America. They filed suit against these corporations in Hawaii state court; however, defendants removed it to federal court arguing that they qualified as “foreign states” under FSIA due to indirect ownership by foreign governments at some point during litigation process. The District Court agreed but was reversed on appeal with Ninth Circuit holding only direct ownership qualifies for immunity under FSIA . On further appeal, Supreme Court affirmed this decision stating only current direct corporate owners can claim sovereign immunity protection - past or indirect owners cannot.
In the dissenting opinion for Dole Food Company v. Patrickson, Justice Breyer argued that a foreign state's direct ownership of shares in a corporation should be enough to grant it "foreign sovereign" status under the Foreign Sovereign Immunities Act (FSIA). He disagreed with the majority's interpretation that only corporations majority-owned by foreign states could enjoy such immunity. According to him, this narrow reading was not supported by FSIA’s language or its legislative history and would lead to arbitrary results. Furthermore, he pointed out potential negative implications on international comity and reciprocity if U.S courts denied immunity where other nations granted it. Thus, he concluded that any corporate entity directly owned by a foreign state should be considered an organ of that state under FSIA regardless of whether it is also indirectly owned through another company.
