BP Chemicals Ltd. v. Jiangsu Sopo Corp. ( 2005 )


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  •                       United States Court of Appeals
    FOR THE EIGHTH CIRCUIT
    ___________
    No. 04-1814
    ___________
    BP Chemicals Ltd.,                    *
    an English Corporation,               *
    *
    Plaintiff-Appellee,       *
    * Appeal from the United States
    v.                              * District Court for the
    * Eastern District of Missouri.
    Jiangsu SOPO Corporation              *
    (Group) Ltd.,                         *
    *
    Defendant-Appellant.      *
    ___________
    Submitted: January 10, 2005
    Filed: August 25, 2005
    ___________
    Before WOLLMAN, FAGG, and BYE, Circuit Judges.
    ___________
    BYE, Circuit Judge.
    This case, in which BP Chemicals (BP) alleges Jiangsu SOPO Corporation
    misappropriated its trade secrets, is before us a second time. In the first appeal, we
    held BP's pleadings survived a facial jurisdictional challenge brought by SOPO
    pursuant to the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. §§ 1602-1611
    & 1330. BP Chems., Ltd. v. Jiangsu SOPO Corp. (Group), 
    285 F.3d 677
    , 688 (8th
    Cir. 2002). In this appeal, we must determine whether BP marshaled sufficient facts
    in support of its pleadings to survive SOPO's factual jurisdictional challenge under
    the FSIA, and whether SOPO had sufficient contacts with the State of Missouri for
    the district court1 to exercise personal jurisdiction over it. We affirm the district
    court's denial of SOPO's motion to dismiss on both counts.
    I
    The factual background is important to our resolution of the issues before us,
    and more developed than it was when we first heard this case; we therefore delve into
    it in some detail, and caution the reader we may repeat facts set forth in our first
    opinion which we deem necessary to understand the background upon which this
    decision is to be decided.
    This case involves the alleged misappropriation of trade secrets for a process
    used to manufacture acetic acid, a chemical component used in inks, plastics, resins,
    and fabrics. The process is known as the methanol carbonylation process, and was
    developed by Monsanto in the 1960s and 1970s. BP bought the process from
    Monsanto in 1986. Like Monsanto had done, BP licensed the process to third parties.
    For example, in the 1990s, BP licensed four acetic acid plants in Asia, including two
    in China. One of the Chinese plants was the Shanghai-Wujing Chemical plant, which
    acquired a license from BP in 1993. When BP bought the methanol carbonylation
    process from Monsanto, it also stepped into Monsanto's shoes with respect to existing
    license agreements Monsanto had with third parties. One of those licenses had been
    granted to a Taiwanese company known as China Petrochemical Development
    Corporation (CPDC).
    In 1988, a business enterprise called the Shanghai Petrochemical Engineering
    Company (SPECO) was formed to engage in major chemical engineering projects in
    China. In 1990, the People's Republic of China (China) approved the building of a
    1
    The Honorable Catherine D. Perry, United States District Judge for the Eastern
    District of Missouri.
    -2-
    major acetic acid factory in Zhenjiang City. This project became known as the 921
    project (the "92" signifying the year 1992, and the "1" signifying the month of
    January). In 1992, SOPO, a chemical company organized under the laws of China
    and wholly-owned by the Chinese government, contracted with SPECO for the latter
    to design and construct the 921 plant for SOPO as the ultimate end user and owner.
    SPECO thereafter contracted with a number of vendors in the United States to
    fabricate the specialized equipment needed for a methanol carbonylation acetic acid
    plant, supposedly utilizing "home-grown" technology, that is, technology developed
    by a Chinese chemical research institute for a low-pressure methanol carbonylation
    process.
    The group of vendors who specialize in fabricating equipment needed for a
    methanol carbonylation acetic acid plant is relatively small. Monsanto and BP (and
    their licensees) had used these same vendors for all of their licensed plants
    worldwide. Thus, the vendors were familiar with the specifications they would
    regularly receive utilizing BP's trade secrets for its methanol carbonylation process.
    At some point in 1995, BP learned some of the specialized vendors had
    received bid specification packages from SPECO for SOPO's 921 plant that were very
    similar to specifications used by Monsanto and BP in prior licensed projects, in
    particular the Shanghai-Wujing project and the CPDC project. In fact, the record now
    shows certain specifications for the 921 project were shameless copies of either
    CPDC or Shanghai-Wujing specs, in some cases replicating typographical errors
    made in the specs used on those projects. Appellee's App. at 1708-23.
    In February 1999, BP filed this action in Missouri district court against SOPO,
    SPECO, and Nooter Corporation. Nooter was one of the American vendors, located
    in St. Louis, Missouri, who supplied the SOPO plant with nineteen key pieces of
    -3-
    equipment consisting of: a drying column2; two reactors, one main reactor and one
    promoter reactor; five reboilers; four condensors; two coolers; one heater3; and
    zirconium and hastelloy material on three columns and one separator.
    BP alleged, among other things, the parties misappropriated BP's trade secrets
    in violation of the Missouri Uniform Trade Secrets Act (MUTSA), Mo. Ann. Stat.
    §§ 417.450 through 417.467. BP obtained a default judgment of $16 million against
    SPECO, which is now defunct. Nooter eventually settled with BP for an undisclosed
    sum, and the terms of the settlement, in part, require Nooter to cooperate with BP in
    its action against SOPO. BP initially had trouble obtaining service against SOPO
    under the Hague Convention, but SOPO eventually appeared voluntarily in the action
    under the threat of a default judgment being entered against it.
    SOPO brought a motion to dismiss the action for lack of subject matter
    jurisdiction alleging immunity from suit under the FSIA. SOPO contended the
    pleadings were insufficient on their face to fall within the "commercial activity
    carried on in the United States" exception to immunity under the FSIA. 28 U.S.C.
    § 1605(a)(2). The district court agreed and granted the motion, holding BP's suit
    against SOPO focused on the wrongful acquisition of BP's trade secrets, and SOPO
    did not acquire any of BP's trade secrets in the United States.
    2
    Most of the "shameless copy" exhibits presented by BP relate to specifications
    on drying columns. Three relate to a "hastelloy B-2 reactor." Appellee's App. at
    1717, 1721-22. Two relate to "pump specifications." 
    Id. at 1712-13.
    One relates to
    "sheet, plate, and strip" specifications. 
    Id. at 1714.
    One relates to "piping"
    specifications. 
    Id. at 1715.
    One relates to "material" specifications in general. 
    Id. at 1716.
    One relates to a "light ends column." 
    Id. at 1720.
          3
    The reboilers, condensors, coolers and heater are collectively referred to as
    "heat exchangers" in some documents in the record.
    -4-
    BP appealed. On appeal, we held BP's theory was based on more than just the
    wrongful acquisition of the trade secrets. BP also claimed SOPO "used" or
    "disclosed" the trade secrets in meetings with the American vendors which occurred
    in the United States, acting through its alleged agent, SPECO. See BP 
    Chems., 285 F.3d at 683
    (explaining these alternate forms of misappropriation under the MUTSA).
    Taking as true BP's allegation that SPECO was SOPO's agent, we held the allegations
    regarding SPECO's activities within the United States were sufficient to fall within
    the FSIA's commercial activity exception, and remanded the case to the district court
    for further proceedings. 
    Id. at 687-88.
    Back in the district court, with the benefit of additional discovery, BP realized
    it might not be able to muster sufficient facts to show SPECO acted as SOPO's agent
    when it met with American vendors. Significantly, discovery revealed the contracts
    between SOPO and SPECO left the design and construction of the 921 plant,
    including the selection of vendors and equipment, totally in the hands of SPECO
    without any control exercised by SOPO. BP then amended its complaint to add
    allegations of a civil conspiracy between SOPO and SPECO.
    SOPO again moved to dismiss, this time raising a factual challenge to subject
    matter jurisdiction under the FSIA. SOPO contended the facts failed to show SPECO
    was its agent. SOPO also argued it had not conducted sufficient commercial activity
    within the United States on its own to fall within the commercial activity exception
    to FSIA immunity. SOPO also challenged the personal jurisdiction of the district
    court, arguing it did not have sufficient minimum contacts with the forum of Missouri
    to expect to be haled into court there.4
    4
    SOPO also moved to dismiss on grounds of forum non conveniens, arguing the
    proper forum should be the courts of China. The district court's denial of that motion
    is not at issue in this appeal.
    -5-
    BP opposed the motion. With respect to the FSIA claims, BP argued SPECO
    was SOPO's agent, and thus SPECO's contacts with American vendors could be
    imputed to SOPO; SPECO and SOPO were co-conspirators; and SOPO's own
    activity in the United States was sufficient to show SOPO "used" or "disclosed" BP
    trade secrets. BP also opposed the motions to dismiss based on lack of personal
    jurisdiction.
    After holding an evidentiary hearing, the district court found the facts
    presented by BP were insufficient to establish SPECO acted as SOPO's agent when
    it dealt with American vendors. The district court also rejected BP's conspiracy
    theory. The district court agreed with BP, however, that SOPO's own activity within
    the United States was sufficient for jurisdiction under the FSIA. The district court
    focused on a number of vendor meetings in which SOPO representatives directly
    participated. These vendors meetings can be broken into two main categories – the
    Nooter meetings, and the meetings with all other vendors.
    A.    The Nooter Meetings in Missouri
    1) The Spring 1994 Meetings
    The district court found "[i]n February or March of 1994, the President of
    SOPO, Mr. Song, was the Deputy Head of a delegation that visited Nooter. During
    this meeting, which lasted two days, preliminary technical issues were discussed,
    including sizing and thickness of the equipment that was specified on detailed
    documents previously provided to Nooter for the project." Addendum at 11-12. The
    record shows a second SOPO representative was also present during the Spring 1994
    meeting, Mr. Lang, who is listed as the "Deputy Chief Engineer" of the 921 plant.
    Appellee's App. at 3083.
    -6-
    2) The June 1995 Inspection Visit
    The district court found "[i]n June of 1995 SOPO's Vice Director [Mr. Zhao]
    visited Nooter to inspect the equipment being built for the project, and the SOPO
    representative participated in testing the equipment." 
    Id. at 12.
    3) The August 1995 Inspection Visit
    The district court found "[i]n August of 1995 another Chinese delegation, again
    including SOPO's Vice Director, as well as engineers from SPECO and PRC
    government agencies, visited Nooter for more equipment inspection." 
    Id. With respect
    to all three visits to Nooter by SOPO representatives, the district
    court generally found "[t]he discussions at the meetings related to equipment being
    built by the vendors using the allegedly stolen trade secrets. Since the discussions
    concerned equipment being built from stolen specifications, BP's trade secrets were
    'used' during these meetings." 
    Id. at 21.
    The district court, however, did not identify
    the specific equipment inspected, or which specific BP trade secrets were
    incorporated into that equipment, during the Nooter visits.
    B.     The Other Vendor Meetings
    The district court also discussed ten other meetings where one or more SOPO
    representatives visited various vendors in the United States. Below follows a
    summary of the district court's findings with respect to each visit:
    -7-
    1) Measurementation, Inc., Chino, California
    In May of 1996, four SOPO representatives visited Measurementation for a
    factory acceptance test, during which over thirty detailed tests were run on process
    analyzer equipment.
    2) Fisher-Rosemount, Burnsville, Minnesota
    In the summer of 1995, one SOPO representative was part of a contingent of
    engineers who visited the Fisher-Rosemount plant for two full weeks of testing and
    training on a computerized control system built for the 921 plant.
    3) BW/IP plant, Tulsa, Oklahoma
    In September of 1995, one SOPO engineer visited this facility to inspect
    equipment being built for the 921 plant.
    4) Phoenix Co., Houston, Texas
    In the summer of 1996, one SOPO engineer was part of a delegation that
    visited this facility to inspect zirconium pipe and fittings.
    5) Haynes International, Kokomo, Indiana
    On two different occasions – one in 1995 and another in late 1996 or early
    1997 – a SOPO representative accompanied a delegation of several SPECO
    employees to this company's facilities for "source inspections" of material.
    -8-
    6) Hobart Corp., Troy, Ohio
    In May of 1995, two SOPO welders, along with others, obtained training on
    welding hastelloy materials at this company's facilities.
    7) Lightnin, Rochester, New York
    In August of 1995, a SOPO engineer went to this company's facilities to inspect
    the motors and spare parts being built for the 921 project.
    8 ) Baird Co.
    In July of 1995, three SOPO employees were part of a delegation that visited
    this company "in connection with the 921 project."
    9) A Company Near Boston, Massachusetts
    SOPO admitted sending at least one of its representatives to "a company near
    Boston" in September of 1995 to "check adjustment of valves."
    10) ABB Co.,Ohio
    In August of 1996, two SOPO employees traveled to Ohio with a SPECO
    delegation "for training on vendor equipment."
    As noted above, the district court entered a general finding with respect to all
    these vendor visits (including the Nooter visits) finding:
    At least twenty employees of SOPO traveled to at least eleven vendors
    between 1994 and 1996. During these meetings, among other things,
    -9-
    SOPO employees inspected and tested equipment for the 921 Plant and
    trained for its ultimate use. SOPO's personnel on numerous occasions
    participated in technical discussions regarding the construction of the
    plant and the equipment being ordered from the U.S. vendors. The
    discussions at the meetings related to equipment being built by the
    vendors using the allegedly stolen trade secrets. Since the discussion
    concerned equipment being built from stolen specifications, BP's trade
    secrets were "used" during these meetings.
    
    Id. With respect
    to SOPO's "sufficient contacts" personal jurisdiction challenge,
    the district court focused on this same commercial activity, in particular the Nooter
    meetings which occurred in Missouri, and concluded SOPO had sufficient minimum
    contacts with Missouri for the court to exercise personal jurisdiction over SOPO.
    SOPO filed a timely appeal asserting its immunity from suit under the FSIA,
    and asserting the district court lacked personal jurisdiction over it.
    II
    A.     Immunity under the FSIA
    Because SOPO is an entity wholly-owned by China, it is considered a "foreign
    state" under the FSIA, and is presumptively immune from suit in American courts.
    A claim can be brought against a foreign sovereign, however, if the action is "based
    upon a commercial activity carried on in the United States." 28 U.S.C. § 1605(a)(2).
    BP has the burden to prove an exception applies. See Gen. Elec. Capital Corp. v.
    Grossman, 
    991 F.2d 1376
    , 1382 (8th Cir. 1993) ("Once a foreign state makes a prima
    facie showing of immunity, the plaintiff seeking to litigate in the United States then
    has the burden of showing that an exception applies."). Significantly, however, only
    one element of BP's trade secrets claim must concern commercial activity conducted
    -10-
    in the United States; BP need not show that each element of its claim is connected to
    commercial activity in the United States. BP 
    Chems., 285 F.3d at 682
    (citing Sun v.
    Taiwan, 
    201 F.3d 1105
    , 1109 (9th Cir. 2000)).
    The relevant claim for purposes of this appeal is BP's claim SOPO improperly
    "used" its trade secrets. Under the MUTSA, BP's claim consists of the following
    elements: 1) SOPO used BP's trade secrets without BP's express or implied consent;
    and 2) at the time of the use, SOPO knew or had reason to know that knowledge of
    the trade secret was derived from or through a person (SPECO) who had utilized
    improper means to acquire it. Mo. Stat. Ann. § 417.453(2)(b). BP contends the
    evidence considered by the district court demonstrates SOPO used BP's trade secrets
    without BP's consent, and the use is connected to SOPO's own commercial activity
    in the United States.
    SOPO counters that BP's evidence and the district court's fact findings are not
    specific enough to survive its factual challenge to jurisdiction. SOPO claims proof
    that its representatives were present during the various vendor meetings, and that
    equipment for the 921 plant was discussed during those meetings, is insufficient to
    show that SOPO itself used BP trade secrets during the meetings. Citing Young
    Dental Mfg. Co. v. Q3 Special Prods., Inc., 
    891 F. Supp. 1345
    , 1349 (E.D. Mo.
    1995), and Electro-Craft Corp. v. Controlled Motion, Inc., 
    332 N.W.2d 890
    , 897
    (Minn. 1983), SOPO argues it was incumbent upon the district court to identify
    which specific trade secrets SOPO used during the meetings. Reviewing the district
    court's findings of disputed jurisdictional facts for clear error, Hunter v. Underwood,
    
    362 F.3d 468
    , 477 (8th Cir. 2004), and the district court's ultimate determination
    regarding immunity under the FSIA de novo, BP 
    Chems., 285 F.3d at 682
    , we
    disagree.
    Young Dental and Electro-Craft are distinguishable from this case, and do not
    support the proposition that the district court's fact findings lack specificity. Young
    -11-
    Dental dealt with the alleged infringement of a patent on a dental device called a
    disposable prophy angle (DPA), brought by a dental manufacturing company against
    a former employee. The district court granted summary judgment in part because
    "[t]he complaint fails to identify with any particularity the nature of the trade secrets
    and confidential information allegedly taken and used by the defendants." 891 F.
    Supp. at 1349. The court noted "Dental Young's President, G. Richmond, could not
    identify a single trade secret or piece of confidential information that he was aware
    of that defendant Carron had taken or used." 
    Id. Here, in
    contrast, BP's complaint
    identifies with particularity the nature of the trade secrets and confidential
    information allegedly used and taken by SPECO and SOPO. The Second Amended
    Complaint contains a four-page description of the trade secrets, divided into Process
    Information, Equipment Specifications, Materials of Construction, and Engineering
    Drawings. Appellee's App. at 71-74. Furthermore, BP's evidence specifically
    identifies multiple instances in which its engineering drawings were copied and used
    by SPECO and SOPO. 
    Id. at 1708-23.
    Electro-Craft stands for nothing more than the general proposition "[w]ithout
    a proven trade secret there can be no action for misappropriation, even if defendants'
    actions were 
    wrongful." 332 N.W.2d at 897
    . Here, BP clearly identified page after
    page of proprietary information which was copied for use in the 921 plant.
    SOPO also cites several cases for the proposition that it was incumbent upon
    the district court to identify the specific conduct of SOPO representatives during the
    vendor meetings to show they used BP's trade secrets. See Sip-Top, Inc. v. Ekco
    Group, Inc., 
    86 F.3d 827
    , 831 (8th Cir. 1996) (affirming JAML because there was
    no direct evidence the defendant actually used its confidential information with a
    third party); Pere v. Nuovo Pignone, Inc., 
    150 F.3d 477
    , 482 (5th Cir. 1998)
    (reversing denial of motion to dismiss based on FSIA immunity where, although
    foreign sovereign sent consultants to United States in connection with final assembly
    of product, there was no direct evidence the consultation addressed an integral part
    -12-
    of the product's design or manufacture); Sanchez v. Banco Central De Nicaragua,
    
    770 F.2d 1385
    , 1391 (5th Cir. 1985) (holding plaintiff must "define with precision
    the relevant commercial activity" to establish FSIA's commercial activity exception,
    which "requires focusing on the acts of the named defendant, not on other acts that
    may have had a causal connection with the suit."); Nat'l Rejectors, Inc. v. Trieman,
    
    409 S.W.2d 1
    , 33 (Mo. 1996) (finding no direct evidence that drawings for a
    particular part were used by defendants and refusing to "speculate just which
    drawing" may have been used).
    We believe these cases are all factually distinguishable from the present case.
    The district court identified the specific acts of SOPO which it determined
    constituted commercial activity in the United States, that is, SOPO's direct
    participation in vendor meetings during which equipment utilizing trade secrets
    stolen from BP was discussed, inspected and tested. The record shows specific and
    direct evidence of SPECO providing engineering drawings and other protected
    information for the specifications on the equipment discussed during the vendor
    meetings. And while the district court did not identify the specific equipment
    discussed at each vendor meeting, it is reasonable to infer, at least with respect to the
    two-day meeting at Nooter, that all the equipment provided by Nooter was discussed.
    The record demonstrates the high level of formality required by the Chinese
    government for the acceptance of the equipment. Indeed, this high level of formality
    appears to be the primary reason SOPO representatives, rather than just SPECO
    representatives, were required to attend the vendor meetings in the United States
    before approving the equipment. It would be odd, indeed, if the Chinese government
    required SOPO to attend these meetings and inspections, and then not require them
    to inspect all the equipment.
    In sum, the district court found BP trade secrets were used and discussed
    during multiple vendor meetings in the United States. The district court found at
    least twenty SOPO representatives attended these meetings, actively participating in
    -13-
    technical discussions, and inspections and tests of the equipment. These findings are
    not clearly erroneous, and are sufficient to show commercial activity by SOPO in the
    United States connected to SOPO's use of BP trade secrets.5
    B.     Personal Jurisdiction
    SOPO also challenges the district court's denial of its motion to dismiss for
    lack of personal jurisdiction. Although the denial of a motion to dismiss for lack of
    personal jurisdiction is generally not immediately appealable, United States v.
    Brakke, 
    813 F.2d 912
    , 913 (8th Cir. 1987), personal jurisdiction is "inextricably
    intertwined" with FSIA immunity and thus can be raised in an appeal addressing that
    issue. S & Davis Int'l, Inc. v. The Republic of Yemen, 
    218 F.3d 1292
    , 1297 (11th
    Cir. 2000).
    We dispose of this issue in quick fashion. The district court found SOPO had
    sufficient contacts with the United States to fit within the commercial activity
    exception of the FSIA. We believe this is dispositive of the related issue whether
    SOPO had sufficient minimum contacts with an American forum that it could be
    expected to be haled into court there. See Price v. Socialist People's Libyan Arab
    Jamahiriya, 
    294 F.3d 82
    , 89-90 (D.C. Cir. 2002) (collecting cases which hold the
    5
    SOPO further claims the evidence is insufficient to show SOPO had actual or
    constructive knowledge that BP's trade secrets were derived from or through a person
    who had utilized improper means to acquire it. That, however, is a separate element
    of BP's claim, see Mo. Stat. Ann. § 417.453(2)(b), and as noted above, at this stage
    of the litigation BP need only show that one element of its claim is connected to
    commercial activity in the United States. Thus, we need not, and do not, address the
    issue of SOPO's knowledge at this time.
    -14-
    "exercise of personal jurisdiction over foreign states under the [FSIA]" also satisfies
    the "minimum contacts" requirements of the Due Process Clause).6
    III
    We affirm the order denying SOPO's motion to dismiss, and remand this case
    to the district court for further proceedings.
    ______________________________
    6
    Indeed, the nexus requirements imposed by the FSIA probably exceed the
    constitutional standard. See In re Papandreou, 
    139 F.3d 247
    , 253 (D.C. Cir. 1998)
    (holding "substantial contact" required by 28 U.S.C. § 1603(e), which defines
    "commercial activity," requires more than the "minimum contacts" necessary to
    satisfy due process requirements).
    -15-