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BPA International, Inc. v. Sweden

September 5, 2003

BPA INTERNATIONAL, INC., ET AL., PLAINTIFFS,
v.
SWEDEN, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge

MEMORANDUM OPINION

David Blackwell and Lisa Renda each own fifty percent (50%) of the stock of BPA International, Inc., a New York corporation that is a consultancy firm specializing in the development of telephone call centers. BPA opened a Swedish branch in 2001. Plaintiffs allege that defendant Validation, A.B., a Swedish corporation ("Validation"),*fn1 initiated negotiations in October 2001 to acquire BPA's Swedish branch but used the information gained through those negotiations to learn the business, access confidential materials, and obtain copies of copyrighted publications. Validation is alleged to have abruptly ceased negotiations and effectively taken control of BPA's Swedish operations by hiring BPA's Managing Director; taking over negotiations of pending BPA business; using BPA's copyrighted publications, client lists and other materials; and using BPA's confidential files, notes and contacts. See Compl. ¶ 16.

BPA International, Mr. Blackwell and Ms. Renda sue for compensatory damages, the return of their property, a cease and desist order on using BPA materials and publications, and punitive damages.

Defendant Kingdom of Sweden ("Sweden") allegedly owns and controls defendant Telia, A.B. ("Telia") which, in turn, allegedly owns and controls Validation. Defendants Sweden and Telia have moved to dismiss, and BPA International has opposed their motions.

After carefully reviewing the complaint, the motions and the oppositions thereto, the Court will grant Sweden's and Telia's motions to dismiss.

Background Facts

The facts are taken from the complaint and the affidavits of the parties. Mr. Blackwell is a citizen of the United Kingdom and Ms. Renda is a citizen of New York. They each own 50% of the common stock of BPA International. Compl. ¶¶ 4, 5. BPA opened a branch office in Stockholm, Sweden, in 2001, named BPA Scandinavia. Validation initiated negotiations to acquire BPA Scandinavia in October 2001 and the parties executed an interim agreement allowing them to work together until a final agreement was reached. The interim agreement specified a purchase price and a royalty for use of BPA International's copyrighted publications. Compl. ¶ 13. The negotiations and interim agreement were allegedly a subterfuge for seizure of BPA Scandinavia assets. Validation is alleged to have cut off negotiations, hired BPA Scandinavia's Managing Director, and taken over its business. Compl. ¶ 16. Without a Managing Director, BPA Scandinavia was unable to operate under the laws of Sweden. Compl. ¶ 17. Defendants are all alleged to have used BPA International's copyrighted materials, client lists and confidential information and to have taken its property without compensation. Compl. ¶ 18, 19.

Sweden owns an unspecified interest in Telia, the Swedish national telephone company. While the complaint alleges that Telia is actively engaged in business in Washington, D.C., and throughout the United States, Compl. ¶ 7, Telia has submitted affidavit evidence that Telia does not do business in the United States. These affidavits establish that Telia's principal place of business is Farsta, Sweden. Telia does have a wholly-owned U.S. subsidiary, Telia International Carrier, Inc. ("TICI"). TICI is a Delaware corporation located in Reston, Virginia. BPA International cites to what it alleges is Telia's website as proof that Telia engages in business in the United States, but it is actually TICI's website that BPA International identifies. Telia avers without contradiction that there are no shared directors or officers between the corporations, that TICI maintains separate financial records and account books, and that Telia is not involved in TICI's day-to-day operations. TICI is not an agent of Telia authorized to receive service of court process in the United States.

Validation is a Swedish company alleged to be actively engaged in business in Washington, D.C. Validation is alleged to be "owned and controlled by Telia, A.B. which in turn is controlled by Sweden." Compl. ¶ 8. The affidavits submitted by Telia establish, without contradiction, that Telia owns 49% of Telefos AB, another Swedish company. Telefos, and not Telia, owns the defendant Validation. Telia asserts that it does not directly own any interest in Validation and does not elect or appoint any directors or officers to Validation. Telia and Telefos do not share directors, financial records or reports, or other operational aspects. Telia is entitled to elect only two of the seven directors of Telefos.

The complaint asserts that Telia and Validation are engaged in commercial activities in telecommunications and that, since they are "owned and controlled by Sweden," Sweden is also engaged in commercial activity. Comp. ¶ 22. The property allegedly taken by the defendants diminished the value of BPA International's assets and thereby allegedly had a direct effect in the United States. Compl. ¶ 23.

Jurisdiction is posited on 28 U.S.C. §§ 1331 (federal question), 1332 (diversity), 1350 (alien tort) and 1605 (Foreign Sovereign Immunity Act ("FSIA")), and the Berne Convention for the Protection of Literary and Artistic Works.

Standard of Review

Rule 12(b)(1) of the Federal Rules of Civil Procedure provides that a party may raise by motion the threshold defense of lack of subject matter jurisdiction. Once subject matter jurisdiction is challenged, the plaintiff has the burden of establishing the jurisdictional facts by competent proof. See McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Soeken v. Herman, 35 F. Supp. 2d 99, 102 (D.D.C. 1999); United States v. Nat'l Acad. of Sciences, Civ. A. No. 90-2568, 1992 WL 247587 *4 (D.D.C. Sept. 15, 1992). The submission of matters outside the pleadings does not convert a Rule 12(b)(1) motion to one for summary judgment but, rather, permits the court to conduct an independent review of the evidence to resolve factual disputes concerning whether subject matter jurisdiction exists. See Land v. Dollar, 330 U.S. 731, 735 n.4 (1947); Matthews v. Automated Bus. Sys. & Serv., 558 A.2d 1175, 1179 (D.C. 1989).

In addition, a party may assert lack of personal jurisdiction under FED. R. CIV. P. 12(b)(2) and insufficiency of process under FED. R. CIV. P. 12(b)(4). By considering matters outside of the pleadings in evaluating motions brought under these subsections, the Court does not convert them into motions for summary judgment. See Hasse v. Sessions, 835 F.2d 902, 905 (D.C. Cir. 1987) ("the plain language of Rule 12(b) permits only a 12(b)(6) motion to be converted into a motion for summary judgment.") (emphasis in original).

Analysis

Telia argues that the Court has no personal jurisdiction over it, process was not properly served, the complaint fails to state a claim on which relief may be granted, and the case should be brought, if anywhere at all, in Sweden where all the action occurred. The Court agrees that it has no personal jurisdiction over Telia, that process was not properly served, that the complaint fails to state a claim under FSIA, ...


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