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Nanko Shipping v. Alcoa, Inc.

United States Court of Appeals, District of Columbia Circuit

March 10, 2017

Nanko Shipping, USA, Parent Company of Nanko Shipping Guinea, et al., Appellants
Alcoa, Inc. and Alcoa World Alumina, LLC, Appellees

          Argued September 23, 2016

         Appeal from the United States District Court for the District of Columbia (No. 1:14-cv-01301)

          Donald M. Temple argued the cause and filed the briefs for appellants.

          Thomas E. Birsic argued the cause for appellees. With him on the brief were Matthew J. Louik and David T. Case.

          Before: Rogers, Brown and Pillard, Circuit Judges.


          Pillard, Circuit Judge:

         The Republic of Guinea is one of the world's principal sources of bauxite, an aluminum ore. After Guinea declared independence from France in the middle of the last century, it sought to ensure that the exploitation of its natural resources would not only provide business for multinational corporations based overseas that invested in the ore's extraction, but would also benefit the Guinean economy. Plaintiff Nanko Shipping Guineé (Nanko) claims to be the beneficiary of one of Guinea's legal undertakings to that end, and contends in this case that defendants (collectively, Alcoa) violated corresponding obligations. Other named plaintiffs- Nanko's owners, Nanko Shipping USA and Mori Diané, an American of Guinean descent-are not before us, having not appealed the district court's order dismissing them for lack of standing.

         The district court granted Alcoa's motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(7) for failure to join Guinea, which Alcoa asserts is a Rule 19 required party. The district court concluded that Guinea could not be joined because it is entitled to sovereign immunity. But it is not apparent why Guinea is a required party and, if it is, whether Nanko's allegations bring Guinea within the commercial-activity exception to foreign sovereign immunity such that its joinder would be feasible. We accordingly reverse and remand for further proceedings.


         On review of the order granting the motion to dismiss, we assume-as did the district court-the truth of the facts alleged in Nanko's proposed Second Amended Complaint. According to that complaint, in 1963 the Republic of Guinea and the Harvey Aluminum Company of Delaware (now Halco) signed an agreement establishing the Compagnie des Bauxites de Guinée (CBG) for the purpose of developing Guinea's rich bauxite mines.[1] CBG is a corporation of which Guinea owns a 49 per cent share and Halco 51 per cent. Nanko alleges that defendant Alcoa, in turn, is somehow both the minority owner and alter ego of Halco. Over the last half century, CBG has extracted and exported more than 600 million tons of Guinean bauxite.

         Under Article 9 of the CBG Agreement, Guinea reserved the right to require that up to 50 per cent of the Republic's bauxite be shipped on vessels flying the Guinean flag or chartered by the Guinean government, provided that the freight rates those Guinean shippers offered are no higher than, and the services equal to, those otherwise available on the international shipping market. That clause presumably was designed to ensure that some of the business generated by the bauxite mines would go to qualified Guinean shipping firms and thereby benefit the Guinean economy.

         Nanko alleges that, in August 2011, Guinea entered into a Technical Assistance Agreement (TAA) with Nanko. That document is neither quoted in nor attached to the pleadings, nor is it otherwise in the record. Pursuant to the TAA, Nanko alleges, it "assumed Guinea's rights" under Article 9 of the CBG Agreement "to manage, control and ship" up to 50 per cent of Guinean-produced bauxite. Prop. Second Am. Compl. at 2.

         Later in 2011, CBG's Board of Directors allegedly invited its constituent corporations, including Halco and Alcoa, to contact Nanko to make shipping arrangements. Nevertheless, Halco and Alcoa refused to deal with Nanko, offering "only a few limited micro-tender shipping opportunities" that were "substantially less in value and volume than the shipping rights and contracts" to which Nanko claims it is entitled under the TAA. Prop. Second Am. Compl. ¶¶ 26, 46. Halco and Alcoa allegedly added insult to injury, posing questions about Nanko's "background and capacity" that were not asked of other shipping companies and then refusing to credit Nanko's responses. Id. at ¶¶ 42, 65. Guinea, for its part, "repeatedly urged" Halco and Alcoa to hire Nanko to ship their bauxite. Id. at ¶ 76.

         In this action, Nanko initially brought two claims: one for breach of the CBG Agreement, asserting that it is a third-party beneficiary thereof, and another for racial discrimination in violation of 42 U.S.C. § 1981. Alcoa moved to dismiss on a variety of grounds, including lack of standing, failure to state a claim, and failure to join a required party. Nanko responded with a proposed Second Amended Complaint adding Halco as a defendant and asserting an additional claim against Alcoa for tortious interference with contractual relations.

         The district court dismissed the case under Rule 12(b)(7) for failure to join a Rule 19 party. Guinea was a required party under Rule 19(a), the court concluded, because resolving Nanko's claims would depend on defining Guinea's rights under its CBG Agreement with Halco, which might "impair or impede Guinea's right to protect its interests" under that Agreement. Nanko Shipping, USA v. Alcoa, Inc., 107 F.Supp.3d 174, 181 (D.D.C. 2015) ("Nanko I"). Proceeding to the Rule 19(b) inquiry, the court concluded Guinea could not be joined because it is entitled to sovereign immunity, and that the case could not "in equity and good conscience" proceed in Guinea's absence. Id. at 181-82. Although it considered the allegations of the proposed Second Amended Complaint in its analysis, the district court denied ...

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