Havensight Capital LLC v. The Peoples Republic of China et al

Filing 21

ORDER DISMISSING CASE FOR IMPROPER VENUE AND LACK OF JURISDICTION by Judge Dean D. Pregerson. (Made JS-6. Case Terminated.) (lc). Modified on 4/30/2015 (lc).

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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HAVENSIGHT CAPITAL LLC, a
USVI Limited Liability
Corporation,

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Plaintiff,

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v.
THE PEOPLE'S REPUBLIC OF
CHINA,

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Defendant.
___________________________

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Case No. CV 15-01206 DDP (FFMx)
ORDER DISMISSING CASE FOR
IMPROPER VENUE AND LACK OF
JURISDICTION

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Plaintiff asserts several causes of action against the

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People’s Republic of China (“PRC”).

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the alleged causes of action appear to arise out of a commercial

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transaction between Plaintiff and a shoe supplier in China, no

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defendant other than PRC is named.

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begun service of process on the PRC via Hague Convention

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procedures; however, as of the date of this order, the PRC has not

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returned a certificate of receipt.

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subsequently filed numerous motions, styled “requests,” for both

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entry of default by the Clerk of Court and default judgment by the

(Compl. generally.)

(Id. at 4.)

Although

Plaintiff has

(Dkt. No. 10.)

Plaintiff has

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Court.

(Dkt. Nos. 13, 15, 16, 18.)

These documents are deficient

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in numerous ways, some of which are noted on the docket.

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to addressing those motions, the Court, on its own motion,1 issued

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an Order to Show Cause (“OSC”) as to venue and jurisdiction, which

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did not seem apparent on the face of the complaint.

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The same day, Plaintiff filed an “Ex Parte Application for Show of

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Cause for Proper Venue,” which the Court takes to be a response to

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the OSC.

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I.

But prior

(Dkt. No. 19.)

(Dkt. No. 20.)

VENUE

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In its complaint, Plaintiff asserts that venue is proper

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“pursuant to 28 U.S.C. § 1603(b) because Defendant is licensed to

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do trade in the district, and maintains a consulate office in this

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district, along with other substantial contacts.”

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As the Court noted in its OSC, § 1603(b) is not a venue statute,

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but 28 U.S.C. § 1391(f), which deals with venue in actions against

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foreign states, does permit a case to be brought “against an agency

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or instrumentality of a foreign state as defined in section 1603(b)

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of this title” if “the agency or instrumentality is licensed to do

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business or is doing business” in the district where the case is

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brought.

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(Compl. at 2.)

In its response, Plaintiff argues that venue is proper because

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“the torts alleged are both against the State itself, and a

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corporate citizen of the state, which in the case of the Defendant,

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all commercial entities and actors, are either, agents for, or

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Plaintiff argues that lack of venue is an affirmative
defense, to be argued by the defendant. This is not correct; a
court is entitled to raise the issue of defective venue sua sponte
prior to a defendant’s responsive pleading. Costlow v. Weeks, 790
F.2d 1486, 1487-88 (9th Cir. 1986).
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property of the state.”

(Response at 5.)

There are two problems

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with this argument.

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citizen of the State” as a defendant; thus, the case is not brought

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against it.

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states and their agents.

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suits against agents), with 28 U.S.C. § 1391(f)(4) (venue for suits

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against states).

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argument that venue can be proper under § 1391(f)(3) when only the

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foreign state itself is a named defendant, in this case Plaintiff

First, Plaintiff does not name the “corporate

The rule in § 1391(f) clearly distinguishes between
Compare 28 U.S.C. § 1391(f)(3) (venue for

Second, even if the Court were to entertain the

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has not plausibly alleged that the “corporate citizen” – i.e., the

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shoe company – is an agent or instrumentality of the PRC.

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“agency or instrumentality of a foreign state” must be “a separate

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legal person, corporate or otherwise” and either an “organ” of the

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state or a company in which the state holds a controlling interest.

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28 U.S.C. § 1603(b).

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entities in China are not necessarily agents of or owned by the

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state.

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Statement (China) (June 2014), available at

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http://www.state.gov/documents/organization/228504.pdf (discussing

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both private and state-owned enterprises in the PRC).2

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has not even named the Chinese shoe company involved, let alone set

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out facts that would allow the Court to plausibly conclude that it

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is an agent or instrumentality of the PRC.

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An

Contrary to Plaintiff’s assertions, corporate

See, e.g., U.S. Dept. of State, 2014 Investment Climate

Plaintiff

The Court concludes that venue is improper.

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The Court takes judicial notice of the facts in the State
Department white paper under F.R.E. 201(b). The State Department,
as the nation’s expert on foreign business environments, is a
source “whose accuracy cannot reasonably be questioned” on this
point. The Court is entitled to take judicial notice on its own.
F.R.E. 201(c).
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II.

JURISDICTION
In its complaint, Plaintiff asserts that subject matter

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jurisdiction exists under 28 U.S.C. § 1332.

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pointed out in its OSC,3 the correct jurisdictional statute for

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suits against foreign states is 28 U.S.C. § 1330.

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to the OSC, Plaintiff argues that jurisdiction exists under § 1330,

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because this case falls under certain exceptions to the presumed

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jurisdictional immunity of foreign states under 28 U.S.C. §

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1605(a)(2)-(5).

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However, as the Court

In its response

The relevant exceptions to a foreign state’s jurisdictional
immunity apply to cases:

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(2) in which the action is based upon a commercial activity

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carried on in the United States by the foreign state; or upon

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an act performed in the United States in connection with a

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commercial activity of the foreign state elsewhere; or upon an

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act outside the territory of the United States in connection

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with a commercial activity of the foreign state elsewhere and

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that act causes a direct effect in the United States;

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(3) in which rights in property taken in violation of

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international law are in issue and that property or any

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property exchanged for such property is present in the United

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States in connection with a commercial activity carried on in

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the United States by the foreign state; or that property or

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Plaintiff argues in its Response that “the burden, here, is
on the defendant to make an assertion of an affirmative defense,
such as . . . sovereign immunity.” (Response at 11.) This is
incorrect. The question of immunity is a jurisdictional question.
28 U.S.C. § 1330(a). “If the court determines at any time that it
lacks subject-matter jurisdiction, the court must dismiss the
action.” Fed. R. Civ. P. 12(h)(3).
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any property exchanged for such property is owned or operated

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by an agency or instrumentality of the foreign state and that

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agency or instrumentality is engaged in a commercial activity

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in the United States;

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(4) in which rights in property in the United States acquired

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by succession or gift or rights in immovable property situated

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in the United States are in issue;

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(5) not otherwise encompassed in paragraph (2) above, in which

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money damages are sought against a foreign state for personal

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injury or death, or damage to or loss of property, occurring

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in the United States and caused by the tortious act or

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omission of that foreign state or of any official or employee

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of that foreign state while acting within the scope of his

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office or employment; except this paragraph shall not apply

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to--

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(A) any claim based upon the exercise or performance or

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the failure to exercise or perform a discretionary

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function regardless of whether the discretion be abused,

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or

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(B) any claim arising out of malicious prosecution, abuse

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of process, libel, slander, misrepresentation, deceit, or

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interference with contract rights . . . .

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28 U.S.C. § 1605(a).

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Plaintiff argues that jurisdiction exists under subsection (2)

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because Plaintiff alleges that Defendant interfered with a contract

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“which was made in the Central District of California” and also

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interfered with other “business” that “also occurred in this

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district.”

(Response at 9.)

There are, however, no facts in the
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complaint to show that any of the alleged incidents took place in

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California.

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“of” or “carried on . . . by” the foreign state itself.

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has not plausibly alleged that the PRC has carried on any

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commercial activity relating to this case.

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has not been shown or even alleged that the shoe company involved

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was an agent of the PRC.)

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Moreover, subsection (2) refers to commercial activity
Plaintiff

(As discussed above, it

Plaintiff also argues that jurisdiction exists under
subsection (3), because “the alleged tort of unfair business

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practices affects our commercial property, which is located in the

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United States.”

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deals with “property taken in violation of international law.”

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Plaintiff has not identified the affected property or alleged a

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taking in violation of any particular international law.

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Subsection (3) also only covers situations where the property is

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“present in the United States in connection with a commercial

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activity carried on in the United States by the foreign state” or

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“is owned or operated by an agency or instrumentality of the

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foreign state.”

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(Response at 9.)

Subsection (3), however, only

Nothing of the sort is alleged here.

Plaintiff also argues that jurisdiction exists under

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subsection (4) because “the Plaintiff’s company can be classified

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as immoveable [sic] property.”

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oddity of a corporate entity referring to itself as its own

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property, “immovable property” as used by the statute means real

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estate within the United States.

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Mission of India to the United Nations, 446 F.3d 365, 369 (2d Cir.

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2006).

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on private property of family members of Plaintiff’s manager,” that

(Response at 10.)

Apart from the

City of New York v. Permanent

Although Plaintiff does allege that “Defendant trespassed

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trespass does not appear to be the basis for any of Plaintiff’s

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causes of action and does not appear to involve Plaintiff’s rights

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in any real estate.

(Compl. at 6.)

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Finally, Plaintiff argues that jurisdiction exists under

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subsection (5) because Plaintiff alleges various torts and that the

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complaint “references damage to corporate property for a specified

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amount.”

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can find no claims based on property damage in the complaint;

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Plaintiff’s claims are all commercial torts, with the possible

(Response at 10.)

To the contrary, however, the Court

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exception of the sixth cause of action for extortion.

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commercial also appear to be based on actions allegedly taken by

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the Chinese government in China – e.g., failing to respond to

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Plaintiff’s complaints and censoring phone calls to parties in

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China.

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requires not only that personal injury or property damages occur in

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the United States, but that the tortious act or omission occur

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here.”

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Cir. 1989).

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too, mostly amounts to an allegation of commercial wrongdoing, with

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the exception of the bizarre allegation, unsupported by any factual

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specifics, that Defendant “fund[ed] . . . sexual torture of the

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Plaintiff’s manager,” possibly by shoe company Nike.

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19.)

“The fifth exception applies to non-commercial torts and

Sec. Pac. Nat. Bank v. Derderian, 872 F.2d 281, 287 (9th
As to the sixth cause of action, for extortion, it,

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These

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(Compl. at 6,

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III. CONCLUSION
Because the Court finds that venue is improper, and because it

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cannot discern in Plaintiff’s complaint or response to the OSC any

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legitimate grounds for subject matter jurisdiction, the complaint

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is hereby DISMISSED WITH PREJUDICE.

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IT IS SO ORDERED.

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Dated: April 30, 2015
DEAN D. PREGERSON
United States District Judge

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