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One indication of the importance of forum selection is the U.S. Supreme Court’s interest in the subject. Over the past several years, and again this past term, the Supreme Court decided several cases involving forum selection. In this column, I will review two additional cases that explore more of the arcane problems that arise when a party decides that the place to be is federal court: Dole Food Co. v. Patrickson, 123 S. Ct. 1655 (2003), and Jinks v. Richland County, 123 S. Ct. 1667 (2003). When is a ‘foreign state’ entitled to immunity? Dole involves the rather technical question of when an entity can be characterized as a foreign state entitled to the protection of sovereign immunity in U.S. courts. Provisions of the Foreign Sovereign Immunities Act of 1976 (FSIA) provide certain rights and immunities for foreign states in litigation. The FSIA includes “agency or instrumentality of a foreign state” in the definition of “foreign state.” � 1603(a). “Agency or instrumentality of a foreign state” is defined as “[a]ny entity . . . which . . . a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof.” � 1603(b)(2). Thus, a corporate entity that is an “instrumentality” of a foreign state under the FSIA may also invoke some of the FSIA’s protections. Additionally, when a foreign state or its instrumentality is sued in state court, the foreign state may remove the case to federal court pursuant to � 1441(d). Dole involved the definition of an “instrumentality of a foreign state.” Dole was filed in Hawaii state court by a group of foreign farm workers against Dole who alleged injury from exposure in their home countries to a chemical used in agricultural pesticides. Dole impleaded two Israeli pesticide makers (Dead Sea Bromine Co. Ltd. and Bromine Compounds Ltd., the “Dead Sea companies”), who removed the case to the federal district court of Hawaii claiming to be instrumentalities of a foreign state as defined by the FSIA. The district court held, and the 9th U.S. Circuit Court of Appeals affirmed, that the Dead Sea companies were not instrumentalities of a foreign state under the FSIA, and were thus not entitled to removal on that basis. In a 7-2 decision, the Supreme Court affirmed. Utilizing corporate law structure and relying on the definition of “entity” in Sec. 1603(b)(2), Justice Anthony M. Kennedy, writing for the Supreme Court majority, found that “a subsidiary of an instrumentality is not itself entitled to instrumentality status.” Dole Food Co., 123 S. Ct. at 1659. Rather, he continued, “only direct ownership of a majority of shares by the foreign state satisfies the statutory requirement” of the FSIA. Id. at 1660. While the State of Israel owned a majority of shares in companies one or more tiers above the Dead Sea companies, Israel at no time owned a majority of shares in the Dead Sea companies themselves. Looking to the FSIA’s text, the court finds that Congress’ reference to ownership of “shares” shows Congress’ intent for statutory coverage to “turn on formal corporate ownership.” Id. at 1661-62. While recognizing the statute was written for various forms of ownership in other countries, the majority interprets the words “other ownership interest” to “accomplish this objective.” That “other ownership interest” follows the word “shares should be interpreted to refer to a type of interest other than ownership of stock.” Id. at 1661. But because Congress did not include language such as “direct or indirect,” there was no indication that Congress intended “to disregard structural ownership rules.” Id. at 1661. The dissent on this point, written by Justice Stephen G. Breyer, argued that the subsidiaries of a foreign parent corporation fall within FSIA’s definition when, as in this case, “a majority of . . . shares or other ownership interest is owned by” the foreign state. Relying on previous holdings of the court and the policy behind the FSIA, the dissent suggests that “other ownership” may “arise when one owns the shares of a parent that, in turn, owns a subsidiary.” Id. at 1664. According to Breyer, the majority’s narrow reading of the statute may imperil the accomplishment of the FSIA’s purpose. He writes that the FSIA is designed to assure foreign states’ access to federal courts, even when engaging in commercial activity, not only when a foreign state acts directly, but when it acts via separate legal entities. Id. at 1665-1666. The court agreed on one practical point. Despite the disagreement on the ownership issue, the court unanimously held that instrumentality status be determined at the time suit is filed, consistent with the “long-standing principle that the jurisdiction of the Court depends upon the state of things at the time of the action brought.” Id. at 1662. Accordingly, the ownership relationships at the time of the conduct giving rise to the suit is immaterial to the jurisdictional question. The practical result of the court’s holding is that it narrows the kind of foreign corporate subsidiaries that can claim instrumentality status under the FSIA, thus denying them access to the federal courts. Furthermore, such defendants sued in state court will have to remain there, as removal under 1441(d) will be improper due to the court’s lack of jurisdiction. The court, in Jinks v. Richland Co., S.C., unanimously held the tolling provision of the supplemental jurisdiction statute, 28 U.S.C. 1367(d), is constitutional. Section 1367(d) states: “The period of limitations for any claim asserted under subsection (a), and for any other claim in the same action that is voluntarily dismissed at the same time as or after the dismissal of the claim under subsection (a), shall be tolled while the claim is pending and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period.” The plaintiff in Jinks brought a timely � 1983 claim in the federal district court for South Carolina against the county’s detention center, its director and its medical physician for the wrongful death of her husband. She also asserted supplemental state law claims under South Carolina’s Tort Claims Act. The district court granted the defendants’ motion for summary judgment on the � 1983 claims, and declining to exercise jurisdiction over the remaining state law claims, dismissed them pursuant to � 1367(c)(3). The plaintiff then filed the state law claims in state court, which, although otherwise time-barred under South Carolina law, were within � 1367(d)’s tolling provision time limit. Upon a jury verdict in the plaintiff’s favor, the defendants appealed. The South Carolina Supreme Court reversed, holding the � 1367(d) tolling rule unconstitutional as applied in state court against a state’s political subdivision because it “interferes with the State’s sovereign authority to establish the extent to which its political subdivisions are subject to suit.” Jinks, 123 S. Ct. at 1670 quoting Jinks v. Richland County, 349 S.C. 298, 304, 563 S.E.2d 104, 107 (2002). The U.S. Supreme Court squarely rejected this reasoning, relying on the necessary and proper clause, Art. I, � 8, cl. 18. While acknowledging that � 1367(d) is not necessary for the existence and functioning of the federal courts, the court found that “it suffices that � 1367(d) is ‘conducive to the due administration of justice’ in federal court, and is ‘plainly adapted’ to that end.” Id. at 1671. Moreover, as such, � 1367(d) is a proper exercise of Congress’ power, and does not violate the principles of state sovereignty by regulating state court procedure. Section 1367(d) is conducive to the efficient administration of justice essentially because it removes statute of limitations issues as a factor when a district court is deciding whether to exercise supplemental jurisdiction. Before the enactment of � 1367(d), federal judges deciding to retain jurisdiction over supplemental state claims had difficult choices to make: They could dismiss on the condition that the defendants waived any statute of limitations defense in state court; or, if refused, could retain jurisdiction of a case more appropriately heard in state court; or dismiss the state law claims, allowing the plaintiff to reopen the federal case if the state court later held that the case is time barred. Section 1367(d) eliminated these inefficiencies, and plaintiffs are assured that their state law claims grounded under � 1367(a) will not become time barred while pending in federal court. No encroachment on ‘state sovereignty’ Consistent with the court’s finding in Monell v. New York City Dept. of Social Servs., 436 U.S. 658 (1978), subjecting municipalities to suit as “persons” under � 1983, the court saw no reason that the application of � 1367(d) to state law claims against municipalities “represents a greater intrusion on ‘state sovereignty’ than the undisputed power of Congress to override state law immunity when subjecting a municipality to suit under a federal cause of action.” Id. at 1673. Absent “unmistakably clear” language of the statute in interpreting � 1367(d), there is no constitutional doubt about holding that the plaintiff’s claim against a political subdivision of a state “falls under the definition of ‘any claim asserted under subsection (a).’ ” Id. Federal district court judges ought to be happy with these opinions, including the previously reviewed Roell v. Withrow, 123 S. Ct. 1696 (2003), in which the court held that prior consent to trial before a magistrate judge was not required. The Supreme Court is reducing its caseload by facilitating the migration of cases to magistrate judges, keeping cases in state courts that otherwise could be removed to federal court and assuring efficient administration when determining to decline supplemental claims. In some respects, the decisions also support the axiom that a plaintiff is entitled to its choice of forum, but with a twist in Roell-whether they like the result there or not. Georgene M. Vairo is a professor of law and William M. Rains fellow at Loyola Law School, Los Angeles. Victoria Brunn of the Loyola class of 2004 assisted in the preparation of this column.

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