Dole Food Company v. Patrickson

PETITIONER: Dole Food Company
RESPONDENT: Patrickson
LOCATION: Apartment of John Lawrence

DOCKET NO.: 01-593
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 538 US 468 (2003)
ARGUED: Jan 22, 2003
DECIDED: Apr 22, 2003

ADVOCATES:
Jonathan S. Massey - Argued the cause for the respondents
Jeffrey P. Minear - Department of Justice, argued the cause for the United States, as amicus curiae, supporting the respondents
Peter R. Paden - Argued the cause for the petitioners

Facts of the case

In 1997, a group of farm workers from Costa Rica, Ecuador, Guatemala, and Panama, who alleged injury from chemical exposure, filed a state-court action against Dole Food Company and others. Subsequently, Dole impleaded Dead Sea Bromine Co. and Bromine Compounds, Ltd., or the Dead Sea Companies. Dole successfully removed the action to federal court, arguing that the federal common law of foreign relations provided federal-question jurisdiction. The District Court rejected the argument that the Dead Sea Companies were instrumentalities of a foreign state, Israel, as defined by the Foreign Sovereign Immunities Act of 1976 (FSIA) and thus entitled to removal. In reversing, the Court of Appeals concluded that Dole could not base removal on the federal common law of foreign relations and that the Dead Sea Companies were not instrumentalities of Israel because they did not meet the FSIA's instrumentality definition.

Question

May a corporate subsidiary claim instrumentality status where the foreign state does not own a majority of its shares but does own a majority of the shares of a corporate parent one or more tiers above the subsidiary? Is a corporation's instrumentality status defined as of the time an alleged tort or other actionable wrong occurred?

Media for Dole Food Company v. Patrickson

Audio Transcription for Oral Argument - January 22, 2003 in Dole Food Company v. Patrickson

Audio Transcription for Opinion Announcement - April 22, 2003 in Dole Food Company v. Patrickson

William H. Rehnquist:

The opinion of the Court in No. 01-593, Dole Food Company against Patrickson and the companion case will be announced by Justice Kennedy.

Anthony M. Kennedy:

This case requires us to interpret the Foreign Sovereign Immunities Act, and under that Act foreign states can claim certain immunities and rights when they are sued in the State or a Federal Court.

A corporation that is an instrumentality of a foreign state can also claim some of those same rights, and the right that is in question here is the right to remove a suit that is filed in State Court to a Federal Court.

These are two cases and in 01-594, the petitioners are two foreign corporations organized under the lawsuit of State of Israel.

They were sued in State Court of Hawaii and they invoked the Act in order to removed the Federal District Court.

And there are two questions: the first is, Does Israel's relationship to these companies make them instrumentalities of a foreign state so that they can come within in this act?

The statute says a corporation is an instrumentality of a majority of its shares or other ownership interests as owned by the foreign state.

The problem for these petitioners is that Israel did not own their shares directly.

Instead, Israel, at the relevant time, owned the majority of shares in the corporation that was removed from these corporations by several tiers of ownerships. They were subsidiaries several years then.

So they were subsidiaries of a corporation that was owned by Israel and we hold that this indirect ownership does not suffice to bring the companies under the Act, and the petitioners say, well, since you can trace down the corporate latter, and show that each parent own the majority of the subsidiary immediately beneath then in effect and certainly in common parlance these companies were owned by Israel.

In matters of corporate law, the structure is of great importance, and as a general rule, a corporate parent that owns shares of this subsidiary does not own the subsidiaries assets, and if those assets happen to be shares in some other corporation, the parent does not own them either.

The same rule applies.

These petitioners could not claim to be instrumentalities of Israel for a second alternative reason.

That is because even if they are indirect ownership theory had been correct, Israel had divested itself of its ownership in the corporate parent by the time the suit was filed, and we hold that at the time of filing suite, not the time of the alleged wrong that is controlling.

This is the same rule we follow in other cases where jurisdiction is being tested, for instance, in the diversity cases as the time of suit has filed that is controlling.

So it follows that under the relevant provision of the Act which is 28 U.S.C. Sections 1603(b), the petiioners cannot claim instrumentalities status under the Act and they cannot invoke its protections and they cannot invoke the right to remove.

In No. 01-594, then the judgment of the Court of Appeals for the Ninth Circuit is affirmed.

The portion of the opinion for the Court referring to the time for assertaining ownerships status is unanimous.

As to the portion of the opinion discussing direct ownership, Justice Breyer has filed a dissenting opinion which is joined by Justice O'Conner.

In No. 01-593, the petitioners relied on a different theory for removal.

That theory involves an issue which is not the subject of our writ of certiorari, so that case is dismissed by order of the unanimous Court.