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REISS v. SOCIETE CENTRALE DU GROUPE

February 13, 2002

BRAD M. REISS, PLAINTIFF,
V.
SOCIETE CENTRALE DU GROUPE DES ASSURANCES NATIONALES, A/K/A DECISION AND SOCIETE CENTRALE DU GAN, A/K/A ORDER SOCIETE DE GESTION DE GARANTIES ET DE PARTICIPATIONS, UNION POUR LE FINANCEMENT D'IMMEUBLES DE SOCIETES, UNION INDUSTRIELLE DE CREDIT AND GAN S.A., DEFENDANTS.



The opinion of the court was delivered by: VICTOR Marrero, United States District Judge:

DECISION AND ORDER

Plaintiff Brad M. Reiss ("Reiss") filed this action in 1998, to recover a "finder's fee" allegedly owed to him by defendants Societe Centrale du Groupe des Assurances Nationales ("Societe") Union pour le Financement D'Immeubles de Societe ("UIS"), Union Industrielle de Credit ("UIC"), and GAN S.A. (hereinafter collectively referred to as "Defendants"), all of which are French governmental entities. Reiss claims that Defendants' obligation arose from an agency relationship for his work, performed in the United States, in soliciting an American corporation, GECC, to purchase UIC and UIS from Defendants. According to Reiss, his agency agreement was consummated on behalf of Defendants by Alaine Juliard ("Juliard") UIS's chairman, at several meetings with him, in the United States, that occurred from 1992 through 1995.

Defendants filed a motion to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction under the New York state long-arm statute, N Y C.P.L.R. § 302, and Fed. R. Civ. P. 12(b)(6) for failure to state a claim on the ground that Reiss did not establish that Defendants had authorized Reiss to act as their agent. The district court granted Defendants' motion. See Reiss v. GAN S.A., 78 F. Supp.2d 147 (S.D.N.Y. 1999). Although given leave to replead, Reiss instead appealed the district court's ruling.

On appeal, the Second Circuit reversed the dismissal and instructed the parties to engage in discovery on the issue of subject matter jurisdiction under the Foreign Sovereign Immunities Act ("FSIA"). See Reiss v. Societe Centrale du Groupe Des Assurances Nationales, 235 F.3d 738, 747-48 (2d Cir. 2000).*fn1 In particular, the Second Circuit instructed that:

The question here is whether Reiss can demonstrate a significant nexus between his engagement by Societe and/or GAN S.A. as a marketing agent in the United States and his action to recover a finder's fee for the deal that culminated in the sale of UIC and UIS by Societe to GECC. That question cannot be resolved without a determination as to whether Reiss was in fact retained by Societe and/or GAN S.A. . . . Although Juliard was the chairperson of UIS, it may very well be that he acted on behalf of Societe and/or GAN S.A. in his dealings with Reiss, whose claim basically is that he was hired by Juliard on behalf of Societe and/or GAN S.A. and performed services that led to the sale of UIS and UIC to GECC. . . . Reiss should be permitted to go forward with the discovery to which he is entitled.

On remand, the case was assigned to this Court. The Court assumes familiarity with the detailed description of the identities of the parties and other underlying facts set forth in the Second Circuit's decision.

Following up on the Circuit Court's holding, Reiss arranged for discovery proceedings before the Tribunal de Grande Instance in Paris — Service des Commissiones Rogatoires Internationales that are scheduled to commence on February 25, 2002. At those proceedings, Reiss contemplates examining three executives of Defendants, Philippe Rosio, Guy de Chavanne, and Juliard (collectively hereinafter the "French Officials"), as the Second Circuit encouraged him to do. See id., at 747 ("We think it would be helpful to have the depositions of Juliard and de Chavanne . . . to assist the court in undertaking an FSIA jurisdiction analysis.").

In anticipation of those proceedings, Reiss filed a letter brief seeking clarification on the scope of permissible discovery. (Letter from Richard E. Haftel to the Court, dated Jan. 2, 2002). Reiss indicated that he would seek discovery of matters occurring in 1992 through 1995. (Letter from Richard F. Haftel to the Court, dated January 25, 2002 ("Haftel Letter").) At a status conference held before the Court on January 4, 2002, Defendants stated that they would oppose Reiss's efforts to obtain discovery regarding any matter beyond the events that occurred following Reiss's initial meeting with Juliard in July of 1992. Defendants assert that Reiss may seek discovery only on the alleged date of his engagement by Juliard, which Reiss identifies in the complaint as July 1992, and may not pursue any inquiry that may touch upon the merits of the action in any way.

The Court ordered further briefing to assist it in identifying the scope of discovery to which Reiss is entitled at this stage of litigation.

DISCUSSION

Because federal courts are courts of limited jurisdiction, they must police subject matter delineations on their own initiative. See Fed. R. Civ. P. 12(h); Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999) (citing Fed. R. Civ. P. 12(h)); Lyndonville Savings Bank & Trust Co. v. Lussier, 211 F.3d 697, 700 (2d Cir. 2000) ("[F]ailure of subject matter jurisdiction is not waivable and may be raised at any time by a party or by the court sua sponte.") Creaciones Con Idea, S.A. de C.V. v. Confecciones, S.A. de C.V., 75 F. Supp.2d 279, 280-81 (S.D.N.Y. 1999) (sua sponte dismissal for lack of subject matter jurisdiction under 28 U.S.C. § 1332). The Court is now asked to decide whether, in furtherance of the Court's jurisdictional analysis, Reiss's examination of the French Officials should be limited to the events that occurred in 1992 and only in the United States, or, encompass matters during the time period of 1992 through 1995 both in the United States and, to the extent bearing on the jurisdictional issue, in France as well.

According to Defendants, "the only relevant question pertaining to this Court's jurisdiction over Societe Centrale is whether Mr. Juliard, as a representative of Societe Centrale, hired Mr. Reiss in July of 1992 in the United States." (Letter of Lawrence W. Newman to the Court, dated January 18, 2002 (emphasis in original).) The Court finds that Defendants' position on this point is untenable. Defendants would have FSIA jurisdiction inquiry limited to acts taken by individuals pre-authorized to represent foreign states and taken only when physically present in the United States. Neither the FSIA, the Second Circuit case law or holding in this action, nor the rules of agency compel such a convergence of time, place and authorization.*fn2 As the Court explains below, a party's ratification, that is, subsequent approval of an agent's performance, may support a finding of jurisdiction under the FSIA, even if such approval is granted and transmitted from abroad.

Under the FSIA, "a foreign state is presumptively immune from the jurisdiction of the United States courts; unless a specified exception applies, a federal court lacks subject matter jurisdiction over a claim against a foreign state." Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993); see also 28 U.S.C. § 1604, 1605; Reiss, 235 F.3d at 746. As the Second Circuit held and the parties here agree, "the only arguable exception upon which Reiss may rely is the `commercial activity' exception" which confers subject matter jurisdiction upon federal courts in any case:

[I]n which the action is based upon a commercial activity carried on in the United States by a foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of ...

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