Summary
The Ninth Circuit affirmed the denial of a motion to dismiss an indictment charging four Chinese-affiliated companies with conspiracy and attempted economic espionage involving DuPont titanium dioxide trade secrets. The court held that the companies failed to make a prima facie showing that they were entities within the domain of foreign sovereign immunity under federal common law. The court did not reach whether any immunity would extend to the charged conduct.
Topics
Practice areas
Questions Presented
- Whether the district court had jurisdiction over the criminal prosecution despite the Pangang Companies' assertion of foreign sovereign immunity.
- Whether the FSIA provides immunity to foreign states or their instrumentalities in criminal proceedings.
- Whether the Pangang Companies were entitled to foreign sovereign immunity from criminal prosecution under federal common law.
- Whether the Pangang Companies made a prima facie showing that they were corporations exercising functions comparable to those of an agency of the People's Republic of China.
- Whether principles of deference to the political branches reinforced the conclusion that the Pangang Companies were not entitled to immunity.
Holdings
- Federal common law may provide foreign sovereign immunity to foreign states and their instrumentalities in criminal proceedings, but an entity must first establish that it falls within the domain of entities eligible for immunity and then that the challenged conduct falls within the scope of that immunity.
- The Pangang Companies did not make a prima facie showing that they exercised functions comparable to those of an agency of the People's Republic of China and therefore were not entities eligible for foreign sovereign immunity from criminal prosecution.
- The district court had subject matter jurisdiction under 18 U.S.C. § 3231 notwithstanding the Pangang Companies' assertion of foreign sovereign immunity.
Key quotations
“Under federal common law, an entity must satisfy, at minimum, two conditions to enjoy foreign sovereign immunity from suit.” (135 F.4th 1142)
“We hold that the Pangang Companies have not made a prima facie showing that they exercise functions comparable to those of an agency of the PRC.” (135 F.4th 1142)
“The commercial espionage alleged here more closely resembles this latter kind of theft: the indictment and other documents filed in this case, on their face, indicate that the stolen information was sought and subsequently used for commercial gain.” (135 F.4th 1142)
Factual background
The Pangang Companies are affiliated Chinese companies involved in producing steel and non-ferrous metals. The indictment alleged that they conspired with individuals to steal E.I. du Pont de Nemours & Company's trade secrets concerning chloride-route titanium dioxide production and to use those secrets in a production plant being built in China. The indictment further alleged that the companies were state-owned or controlled through China's State-Owned Assets Supervision and Administration Commission and that the offenses were intended to benefit the People's Republic of China and the Pangang Companies.
Procedural history
The district court denied the Pangang Companies' motion to dismiss the indictment under the Foreign Sovereign Immunities Act and on the ground that the indictment failed to state an offense. In a prior appeal, the Ninth Circuit held that the companies had not made a prima facie showing that they were covered foreign instrumentalities under the FSIA. On remand, the district court again denied immunity, including immunity under federal common law. While the second appeal was pending, the Supreme Court held in Turkiye Halk Bankasi A.S. v. United States that federal common law, rather than the FSIA, governs foreign sovereign immunity in criminal proceedings.