BP Chemicals Ltd. v. Jiangsu Sopo Corp.

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________

Nos. 01-2738 and 01-2894
___________

BP Chemicals Ltd., *
an English corporation, *
*
Appellant, *
*
v. *
*
Jiangsu Sopo Corporation (Group) Ltd., *
also known as Jiangsu Sopo (Group) *
Corp., also known as Jiangsu Sopo * Appeals from the United States
(Group) Co. Ltd.; Zhenjiang Chemical * District Court for the
Plant, a wholly owned subsidiary of * Eastern District of Missouri.
Jiangsu Sopo Corporation *
(Group) Ltd., * [TO BE PUBLISHED]
*
Appellees, *
*
Shanghai Petrochemical *
Engineering Co., also known as *
Shanghai Petro-Chemical Engineering *
Corporation, *
*
Defendant. *
___________

Submitted: February 13, 2002
Filed: April 3, 2002
___________

Before WOLLMAN, RICHARD S. ARNOLD and BYE, Circuit Judges.
___________
BYE, Circuit Judge.

This action between an English plaintiff and Chinese defendants requires us
to navigate a jurisdictional minefield. BP Chemicals Ltd. sued Jiangsu Sopo
Corporation (Sopo) alleging violations of the Lanham Act, the International
Convention for the Protection of Intellectual Property, the Missouri Uniform Trade
Secrets Act and Missouri common law. Sopo claimed immunity from suit under the
Foreign Sovereign Immunities Act of 1976 (FSIA), Pub. L. No. 94-583, 90 Stat.
2891, because it is owned by the government of the People’s Republic of China. The
district court agreed and dismissed BP’s action for lack of subject matter jurisdiction.
BP Chems. Ltd. v. Jiangsu Sopo Corp., 144 F. Supp. 2d 1140 (E.D. Mo. 2001). We
reverse the district court’s decision and remand for further proceedings.

I

A few words about the procedural posture of this case are appropriate at the
outset of our discussion, for that posture regulates our consideration of the facts.
Sopo moved to dismiss BP’s action on several grounds soon after an amended
complaint was filed in October 2000. Sopo contended the district court lacked
subject matter jurisdiction, personal jurisdiction, and should dismiss the action under
the forum non conveniens doctrine. In this appeal, we consider only Sopo’s challenge
to the district court’s subject matter jurisdiction, which we construe as a facial, not
factual, challenge because Sopo limited its attack to the allegations in BP’s amended
complaint. See Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990)
(explaining the difference between facial and factual jurisdictional challenges).

We observe that the parties presented the district court with a robust
evidentiary record from which competing accounts of the underlying events can be
discerned. It may seem odd, then, that we construe Sopo’s motion as a facial
jurisdictional challenge. Having closely examined the record, however, we believe

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the parties proffered affidavits, testimony, and documentary materials to assist the
district court in deciding the ancillary issues presented in Sopo’s motion, questions
of personal jurisdiction and forum non conveniens. The portion of Sopo’s motion
devoted to subject matter jurisdiction does not draw upon facts presented in the
evidentiary record. JA 480-92. Instead, Sopo contested the district court’s subject
matter jurisdiction by arguing the allegations in BP’s amended complaint failed to
erode its presumptive foreign sovereign immunity. The district court tracked Sopo’s
facial challenge and did not make findings of fact pertinent to establishing subject
matter jurisdiction. The manner in which the district court resolved Sopo’s motion
obliges us to accept as true the allegations in BP’s amended complaint, Titus v.
Sullivan, 4 F.3d 590, 593 (8th Cir. 1993), so we will not delve into possible disputes
of fact brought to our attention in the parties’ appellate briefs.

II

BP’s amended complaint reveals that this action stems from its interest in
certain trade secret practices and technologies. In 1986, BP acquired Monsanto
Corporation’s proprietary interests in the methanol carbonylation process for making
acetic acid, a chemical used in making paints, plastics, resins, pharmaceutical and
agrochemical products. That process entails a combination of special design features
and exotic metals that cannot be found in standard texts or design manuals. BP
retains trade secret interests in these combinations, features, and technologies used
to design and operate an acetic acid-producing plant employing this process.

BP has licensed its trade secrets worldwide, enabling other companies to build
acetic acid production plants using the methanol carbonylation process. To build
those plants, BP and its licensees often relied upon outside engineering firms
(vendors) to produce high-alloy equipment and other intricate components. It appears
that many of these vendors operated in the United States. The vendors operated at all

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times under strict, contractual duties to maintain the secrecy of BP’s methods and
technologies during and after the construction process.

In the mid-1990s—the amended complaint is not specific—BP learned that
Nooter Corporation in St. Louis, a vendor, had been asked to manufacture high-alloy
equipment in connection with an acetic acid plant under construction in China.
Through its own investigation, BP learned that other American vendors had received
similar product specifications and directions to prepare materials needed in building
an acetic acid plant. Those product specifications closely resembled trade secrets
developed by Monsanto and BP. In some instances, the specifications disclosed to
American vendors replicated typographical errors in original BP documents.

BP’s investigation traced the disclosures to Sopo and Shanghai Petrochemical
Engineering Company (SPECO), another government-owned business. Sopo
allegedly worked in concert with SPECO to build the “921 plant” in China using BP’s
trade secret designs. BP believes SPECO acted as Sopo’s purchasing agent by
procuring sophisticated engineering products and equipment in the United States for
Sopo to use in constructing the 921 plant. BP claims SPECO disclosed BP’s trade
secrets to American vendors to permit them to assess the cost and feasibility of
manufacturing the requested components. SPECO also apparently signed contracts
with several vendors to manufacture components used to build the 921 plant.

In February 1999, BP filed this action against Sopo, SPECO, and Nooter. BP
quickly settled its claims against Nooter and SPECO defaulted. When Sopo moved
to dismiss BP’s complaint on the grounds mentioned above, BP opposed the motion
and, in the alternative, moved to file a second amended complaint and to conduct
additional discovery in China pertaining to jurisdictional facts. The district court
reasoned Sopo was immune from suit in federal court under the FSIA and dismissed
BP’s action for lack of subject matter jurisdiction. The district court declined to reach
Sopo’s alternative personal jurisdiction and forum non conveniens arguments; the

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district court also denied BP’s motion to amend its complaint and its request for
further jurisdictional discovery. BP now appeals from these adverse decisions.

III

From the earliest days of our Republic, courts have distinguished between the
public and private acts of government. See Bank of the United States v. Planters’
Bank of Ga., 22 U.S. (9 Wheat.) 904, 907-908 (1824). Public acts, such as punishing
criminals and printing money, emanate from the power inherent in sovereignty.
Private acts, such as commercial transactions, are not unique to government and could
be performed by an individual. Jurisdictional consequences flow from this distinction
between public and private acts. A nation is generally immune from suit in another
nation’s courts in matters arising from its public or sovereign acts, but not its private
or commercial acts. Saudi Arabia v. Nelson, 507 U.S. 349, 359-60 (1993);
Restatement (Third) of the Foreign Relations Law of the United States § 451 (1987).
The FSIA endorsed this understanding of sovereign immunity: a foreign sovereign
is presumptively immune from suit in federal court, 28 U.S.C. § 1604, but this
presumption erodes when the suit concerns the sovereign’s commercial activities and
transactions, id. §§ 1602, 1605(a)(2).

Sopo is considered a “foreign sovereign” because it is owned by the
government of the People’s Republic of China. See id. § 1603(a)-(b). Though Sopo
is ostensibly immune from suit, BP believes the district court possessed subject matter
jurisdiction because its action satisfied two of the FSIA’s three commercial activity
exceptions that deprive a foreign sovereign of its immunity from suit. The district
court disagreed, holding it lacked jurisdiction because BP’s action fit neither
exception. We review the district court’s decision de novo. Gen. Elec. Capital Corp.
v. Grossman, 991 F.2d 1376, 1380 (8th Cir. 1993).

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 Our review concentrates upon the first commercial activity exception, which
vitiates a foreign sovereign’s immunity in an action “based upon a commercial
activity carried on in the United States.” 28 U.S.C. § 1605(a)(2). This plain statutory
language naturally lends itself to analysis in two parts. To rebut a foreign sovereign’s
presumption of immunity, a plaintiff’s action must be (1) based upon (2) a
commercial activity carried on in the United States. See id. BP contends its action
meets both elements of this exception and thereby eliminates Sopo’s presumptive
immunity, a contention we shall explore in detail below.

A

The FSIA contains no definition of “based upon,” so we must accord that
phrase its plain and ordinary meaning in interpreting the statute. Nelson, 507 U.S. at
357. “[A] claim is ‘based upon’ events in the United States if those events establish
a legal element of the claim. . . . An action is based upon the elements that prove the
claim, no more and no less. If one of those elements consists of commercial activity
within the United States or other conduct specified in the Act, this country’s courts
have jurisdiction.” Santos v. Compagnie Nationale Air France, 934 F.2d 890, 893
(7th Cir. 1991) (cited approvingly on this point in Nelson, supra). We emphasize that
only one element of a plaintiff’s claim must concern commercial activity carried on
in the United States. “The entire case need not be based on the commercial activity
of the defendant.” Sun v. Taiwan, 201 F.3d 1105, 1109 (9th Cir. 2000).

Because our task is to discern whether any of BP’s claims (or any elements of
those claims) are based upon commercial activity carried on in the United States, we
turn our attention first to BP’s amended complaint. The amended complaint includes
a formidable array of claims with roots in state law, federal law, and international
law. We need not consider each of these claims separately, since only one claim or
element of a claim need concern commercial activity in the United States to erode
Sopo’s presumptive immunity. Following BP’s lead, we train our focus upon its state

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law claims that Sopo misappropriated BP trade secrets. In particular, according to
Count III of the amended complaint, Sopo violated the Missouri Uniform Trade
Secrets Act (MUTSA) by improperly disclosing BP’s trade secrets to numerous
American vendors without BP’s express or implied consent, while Sopo knew or
should have known the trade secrets were stolen or were derived from a person owing
a duty to maintain their secrecy. JA 400-402.

The Missouri legislature adopted the MUTSA in 1995. The MUTSA—like
nearly every set of state trade secret laws—derives from the Uniform Trade Secrets
Act, first promulgated by the National Conference of Commissioners on Uniform
State Laws in 1979. The Uniform Act provides that misappropriation of trade secrets
may occur in any of three forms: improper acquisition, disclosure, or use. Its
Prefatory Note explains that liability for misappropriation exists when “either a
person’s acquisition of the trade secret, disclosure of the trade secret to others, or use
of the trade secret [is] improper.” 14 Uniform Laws Annotated 434 (West 1990).

The MUTSA generally follows the Uniform Act by acknowledging these
alternative forms of misappropriation, though the MUTSA lumps improper disclosure
and use into a single category. Thus, the MUTSA defines misappropriation to take
two forms:

(a) Acquisition of a trade secret of a person by another person who
knows or has reason to know that the trade secret was acquired by
improper means; or

(b) Disclosure or use of a trade secret of a person without express or
implied consent by another person who:
a. Used improper means to acquire knowledge of the trade
secret; or
b. Before a material change of position, knew or had reason to
know that it was a trade secret and that knowledge of it had
been acquired by accident or mistake; or

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 c. At the time of disclosure or use, knew or had reason to know
that knowledge of the trade secret was:
i. Derived from or through a person who had utilized
improper means to acquire it;
ii. Acquired under circumstances giving rise to a duty to
maintain its secrecy or limit its use; or
iii. Derived from or through a person who owed a duty to
the person seeking relief to maintain its secrecy or limit
its use.

Mo. Stat. § 417.453(2). A recent decision from a district court within our circuit
cogently explains the two forms of misappropriation recognized by the MUTSA.

The first is when one acquires a trade secret through “improper means,”
that is, through such means as theft, bribery or inducing one to breach
a duty of secrecy. Id. § 417.453(2)(a) . . . . The second example of
misappropriation occurs when one disclosing a trade secret without
consent, inter alia, knew or had reason to know that the secret was
“[a]cquired under circumstances giving rise to a duty to maintain its
secrecy or limit its use.” Id. § 417.453(2)(b)c.(ii).

H & R Block E. Tax Servs., Inc. v. Enchura, 122 F. Supp. 2d 1067, 1074 (W.D. Mo.
2000). Applying similar state law, we have previously recognized these alternate
means of proving misappropriation, Sip-Top, Inc. v. Ekco Group, Inc., 86 F.3d 827,
833 (8th Cir. 1996) (defining misappropriation of trade secrets under Minnesota law
as either “(1) improper acquisition of a trade secret; or (2) disclosure or use of a trade
secret without consent”), as have other circuits, e.g., Sokol Crystal Prods., Inc. v.
DSC Communications Corp., 15 F.3d 1427, 1429 (7th Cir. 1994) (same); accord
DTM Research, L.L.C. v. AT&T Corp., 245 F.3d 327, 332 (4th Cir. 2001); Nora
Beverages, Inc. v. Perrier Group of Am., Inc., 164 F.3d 736, 750 (2d Cir. 1998).

BP has elected to pursue a misappropriation claim against Sopo stemming from
Sopo’s purported wrongful disclosure of BP trade secrets to American engineering

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firms. BP might have chosen to pursue theft-type claims against Sopo, but BP elected
not to do so and that strategic, legal choice is well within BP’s discretion as the
master of its complaint. It may be true that many misappropriation claims arise when
one party steals another’s trade secret. Such theft is often followed by disclosure, as
the thief attempts to cash in on his ill-gotten gains. In that case, we believe the
MUTSA permits a trade secret holder to pursue both theft and disclosure claims for
misappropriation. One type of claim does not preclude the other. Our review of trade
secret law confirms that the MUTSA is hardly novel in this respect: a plaintiff may
premise his misappropriation claim on any or all of these alternate forms of improper
conduct.

We believe BP’s disclosure-type MUTSA claim is “based upon” Sopo’s
commercial activity carried on in the United States. The claim requires BP to prove
Sopo disclosed BP’s trade secrets to others without consent, while having reason to
know the trade secrets were acquired under circumstances giving rise to a duty to
maintain their secrecy. See Mo. Stat. § 417.453(2)(b)(c). In the course of proving
that claim, BP says it will demonstrate Sopo disclosed BP’s trade secrets to American
vendors in the United States while procuring equipment to fabricate the 921 plant.
BP’s MUTSA claim satisfies the required nexus with the United States because the
claim is linked to Sopo’s procurement activities in the United States. Therefore, we
have little difficulty concluding that an element of BP’s claim is based upon events
transpiring in the United States—Sopo’s disclosures to American vendors.

Both Sopo and the district court disagree with our line of reasoning, but for
slightly different reasons. Sopo contends BP’s reliance on disclosure to American
vendors is immaterial to BP’s misappropriation claim and that BP’s claim actually
turns on whether Sopo’s acquisition of BP trade secrets was tortious. Appellee’s
Brief 20. (Sopo urges this distinction because it claims BP’s trade secrets were stolen
outside the United States, hence BP’s action would not concern commercial activities
in the United States.) Sopo appears to argue that the MUTSA does not provide a

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misappropriation cause of action based entirely upon improper disclosure, but rather
requires every trade secret plaintiff to prove the defendant stole its proprietary
information—a contention we have rejected in the preceding discussion. We believe
the MUTSA provides for misappropriation claims based upon wrongful disclosure
of trade secrets, and we conclude Sopo’s disclosure of trade secrets lies at the very
heart of BP’s action.

Unlike Sopo, the district court acknowledged BP could ground a
misappropriation claim upon Sopo’s wrongful disclosures in the United States. But
the district court believed BP’s reliance on a disclosure theory was merely a
“semantic ploy” because BP’s true claim was captured by a theft theory. “At its core,
this lawsuit concerns Sopo’s acquisition of BP’s technology in an unknown place and
Sopo’s commercial exploitation of that technology in China.” BP Chems., 144 F.
Supp. 2d at 1144. The district court effectively recast BP’s misappropriation claim
under the rubric of theft, rather than wrongful disclosure. And because Sopo’s
alleged theft likely occurred outside the United States, the district court held BP’s
misappropriation claim was not “based upon” commercial activity occurring in the
United States.

The district court’s reference to a semantic ploy derives from Nelson, in which
the Court rejected a plaintiff’s artful attempt to refashion an intentional tort claim as
a negligent failure to warn claim. 507 U.S. at 363 (“For aught we can see, a plaintiff
could recast virtually any claim of intentional tort committed by sovereign act as a
claim of failure to warn, simply by charging the defendant with an obligation to
announce its own tortious propensity before indulging it.”). Nelson refused to
consider the failure to warn claim as a proper basis for proving a foreign sovereign’s
contacts with the United States.

Nelson’s “semantic ploy” discussion requires delicate handling. One might
read the Court’s discussion as extending to a district judge broad discretion to recast

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a plaintiff’s claims to fit the judge’s understanding of the case. Yet we can scarcely
imagine the Court intended that result. Such an expansion of judicial power is at
loggerheads with liberal notice pleading rules and our settled understanding that a
plaintiff is the master of his complaint. The repercussions of this interpretation of the
“semantic ploy” discussion are simply too severe for us to accept it as the Court’s
intended meaning.

Rather, it appears the Court fixed its sights on a slightly different target—the
legal merits of the underlying claim. The Court’s discussion suggests a plaintiff may
not premise the absence of sovereign immunity upon a legally invalid claim. Some
of the dissenters in Nelson, who attacked the semantic ploy discussion with gusto,
apparently understood the Court’s discussion in these terms. 507 U.S. at 373
(Kennedy, J., dissenting) (“The Court’s summary treatment may stem from doubts
about the underlying validity of the negligence cause of action.”). Nelson described
the absurdity of the plaintiff’s claim that a foreign sovereign bore him a duty to warn
of its indulgence in intentionally tortious conduct. The absurdity of Nelson’s claim
had a legal (not factual) dimension for there is generally no claim of negligence that
flows from intentionally tortious conduct. See Restatement (Second) of Torts § 282
cmt. d (1965); see also United Nat’l Ins. Co. v. Tunnel, Inc., 988 F.2d 351, 353 (2d
Cir. 1993) (recognizing the “mutual exclusivity of negligence and battery”);
Hockensmith v. Brown, 929 S.W.2d 840, 845 (Mo. Ct. App. 1996) (“The theories of
negligence and intentional tort are contradictory and mutually exclusive.”). As a
matter of law, Nelson’s failure to warn claim was apparently invalid because it rested
upon the sovereign’s performance of intentionally tortious acts. Thus, we glean from
Nelson the principle that a plaintiff may not undo a foreign sovereign’s immunity
simply by pleading a legally untenable claim whose elements would happen to
demonstrate the sovereign’s contacts with the United States.

Interpreted in this fashion, Nelson’s semantic ploy doctrine does no violence
to our settled expectations. In fact, the approach finds a home in the Court’s ongoing

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oversight of federal court jurisdiction. We perceive an implicit analogy between this
aspect of Nelson and the venerable doctrine that a plaintiff may not defeat a
defendant’s right of removal based upon diversity of citizenship jurisdiction by
fraudulently joining a non-diverse defendant. See Wilson v. Republic Iron & Steel
Co., 257 U.S. 92, 97-99 (1921). We recently explained that “[j]oinder is fraudulent
and removal is proper when there exists no reasonable basis in fact and law
supporting a claim against the resident defendants.” Wiles v. Capitol Indem. Corp.,
280 F.3d 868, 871 (8th Cir. 2002). Thus, fraudulent joinder forbids a plaintiff from
avoiding a federal court by raising a claim devoid of legal merit; the semantic ploy
doctrine forbids a plaintiff from remaining in a federal court by asserting a dubious
legal claim. The doctrines occupy opposite poles of the jurisdictional globe. Both
protect the integrity of our jurisdiction by ensuring it is neither expanded nor retracted
by sham pleadings.

It is obvious that Nelson’s semantic ploy doctrine has no application in this
case. The failure to warn claim in Nelson was a facially-invalid tort and was
therefore dissimilar to BP’s wrongful disclosure misappropriation claim rooted in the
precise words of a Missouri statute. BP has elected to pursue a misappropriation
claim under a disclosure theory and we believe that course of action is BP’s legal and
strategic prerogative. For this reason, BP’s misappropriation claim does not compare
to Nelson’s legally invalid failure to warn claim. The district court failed to heed the
importance of BP’s choice of misappropriation theory and improperly invoked the
specter of Nelson’s semantic ploy doctrine. Contrary to the district court’s holding,
BP’s action is indeed “based upon” commercial transactions that occurred within the
United States.

B

BP has satisfied the first element of the commercial transaction exception we
identified above, so we turn to the second element—“a commercial activity carried

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on in the United States.” The FSIA defines this phrase to mean “commercial activity
carried on by [a foreign] state and having substantial contact with the United States.”
28 U.S.C. § 1603(e). This definition has two parts. First, there must be commercial
activity, which the FSIA further defines as “either a regular course of commercial
conduct or a particular commercial transaction or act.” Id. § 1603(d). Second, that
commercial activity must have substantial contact with the United States. We believe
Sopo’s alleged contacts with American vendors satisfy both parts of this definition.

1

Sopo does not seriously question the commercial character of its alleged acts,
and wisely so. Sopo’s attempts (through its agent SPECO) to contact American
vendors to produce goods needed to build the 921 plant were obviously “commercial”
in character. Prior cases suggest that a foreign state’s contract to buy equipment from
an American manufacturer constitutes a “commercial activity” within the meaning of
the statutory exception. E.g., McDonnell Douglas Corp. v. Islamic Republic of Iran,
758 F.2d 341, 349 (8th Cir. 1985); accord Walter Fuller Aircraft Sales, Inc. v.
Republic of the Philippines, 965 F.2d 1375, 1384-85 (5th Cir. 1992) (collecting cases
and opining that contracts for the procurement of goods and services typically satisfy
the commercial activity requirement in the FSIA); Restatement (Third) of the Foreign
Relations Law of the United States § 453 cmt. b (1987) (“An activity is deemed
commercial . . . if it is concerned with production, sale, or purchase of goods . . . .”).
These authorities readily confirm that Sopo’s recruitment of American vendors to
manufacture products for its 921 plant was “commercial activity.”

2

We likewise believe Sopo’s efforts to obtain the fruits of American engineering
know-how constitute “substantial contact” with the United States.

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 At the margins, defining the term “substantial contact” has proven difficult.
The District of Columbia Circuit has suggested that proof of substantial contact
requires more than the minimum contacts sufficient to satisfy due process in
establishing personal jurisdiction. Maritime Int’l Nominees Establishment v.
Republic of Guinea, 693 F.2d 1094, 1109 n.23 (D.C. Cir. 1983). Perhaps for this
reason, courts have been reluctant to declare single visits to the United States by
representatives of foreign sovereigns to constitute substantial contact. E.g., Soudavar
v. Islamic Republic of Iran, 186 F.3d 671, 674 (5th Cir. 1999), cert. denied, 528 U.S.
1157 (2000). Even two visits have not always been deemed substantial contact.
Maritime Int’l Nominees, 693 F.2d at 1109.

We are not faced with a single- or double-visit case, however, nor must we
resolve a case of comparable difficulty. Contacts much more significant than isolated
visits should, we believe, satisfy the FSIA’s requirement. For example, “[s]olicitation
of business within the United States is generally a sufficient nexus” to meet the
substantial contacts test. 15 Moore’s Federal Practice ¶ 104.12[2][c][ii] (Matthew
Bender 3d ed. 2001); see also In re Papandreou, 139 F.3d 247, 253 (D.C. Cir. 1998)
(“[O]ur cases do not foreclose the possibility that some degree of solicitation in the
U.S. might satisfy the ‘substantial contact’ requirement.”).

In this case, BP alleges Sopo (through its agent, SPECO) solicited business
from vendors in the United States on an ongoing basis. A foreign state can surrender
its immunity by virtue of activities committed by its agent, Maritime Int’l Nominees,
693 F.2d at 1105-1107, but Sopo contends this principle does not apply here because
SPECO was not its agent. And because BP’s proof of substantial contact rests
entirely upon the agency allegations, Sopo contends BP cannot meet the substantial
contact requirement. Sopo therefore posits SPECO’s American contacts cannot be
used to hale it into federal court.

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 BP’s amended complaint pleads an agency between Sopo and SPECO.
According to that complaint, SPECO procured essential materials from American
vendors on Sopo’s behalf. Without these materials, BP contends, Sopo could not
have copied BP’s trade secret designs and constructed an acetic acid plant in China.
It may fairly be inferred from BP’s amended complaint that SPECO’s contacts with
American firms were regular and sizeable in number. We therefore believe BP’s
allegations amply support Sopo’s substantial contact with the United States.

Sopo acknowledges, as it must, that BP’s amended complaint plainly alleges
SPECO operated as its American purchasing agent. But Sopo contends BP has not
pleaded this agency relationship with particularity, as is required by federal law. We
find little support for Sopo’s contention that allegations of agency are subject to
heightened pleading standards. Federal Rule of Civil Procedure 9(b) requires
allegations of “fraud or mistake” to be pleaded with particularity, but allegations of
agency are not mentioned in the text of this Rule. In our view, the Rule’s silence is
meaningful, for the Supreme Court recently refused an invitation to extend Rule
9(b)’s heightened pleading standard beyond the two categories enumerated in the
Rule. Swierkiewicz v. Sorema N.A., 122 S. Ct. 992, 998-99 (2002).

We are cognizant of cases requiring plaintiffs to allege the existence of an
agency with particularity, but the heightened pleading requirement in these cases
stems from the connection between the agency and allegations of fraud. “[W]hen the
plaintiff relies upon the same circumstances to establish both the alleged fraud and
the agency relationship of a defendant, the reasons for more particularized pleading
that animate Rule 9(b) apply with equal force to the issue of agency and to the
underlying fraud claim.” Lachmund v. ADM Investor Servs., Inc., 191 F.3d 777, 783
(7th Cir. 1999); cf. Abels v. Farmers Commodities Corp., 259 F.3d 910, 916 (8th Cir.
2001) (assuming, without deciding, that “a plaintiff seeking to hold a principal liable
for an agent’s fraud must plead not only fraud but also agency with particularity”).
These cases are of no value in resolving the present dispute because BP has not

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alleged fraud in its amended complaint. Even under the rationale propounded in the
cases cited above, BP would not have been obliged to plead the Sopo-SPECO agency
relationship with particularity in its amended complaint.

BP’s amended complaint is replete with allegations that SPECO acted as
Sopo’s agent. These allegations suffice—at least in the infancy of this litigation—to
bring SPECO’s conduct into play in analyzing whether Sopo had “substantial contact
with the United States.” We believe Sopo’s contacts were indeed substantial.

We therefore hold Sopo is not immune from BP’s suit in federal court because
the suit is based upon Sopo’s commercial activity carried on in the United States. See
id. § 1605(a)(2). Because Sopo lacks sovereign immunity, the district court had
subject matter jurisdiction and erred in dismissing the action.

C

Sopo devotes much of its brief to alternative grounds for affirmance that the
district court declined to address. Sopo argues the district court lacks personal
jurisdiction over it; Sopo also argues the doctrine of forum non conveniens precludes
BP’s suit in federal court when the essential controversy arose in China.

The force of these arguments depends entirely upon the facts of the case, facts
that have not yet been established by the district court. For example, proper
resolution of the forum non conveniens argument will depend heavily upon whether
BP could receive a fair hearing in the Chinese courts. Both BP and Sopo offered
expert witnesses in the district court to testify about the relative quality and
independence of the Chinese judiciary. Not surprisingly, these experts’ accounts
differed. We believe it would be imprudent to address Sopo’s alternative arguments
bereft of the considered views and factual findings of the district court. We therefore

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decline to consider these arguments at this juncture; in so ruling, we wish to make
explicit that Sopo may renew these arguments at an appropriate time.

IV

We reverse the judgment of the district court and remand for appropriate
further proceedings. BP’s additional arguments that the district court should have
permitted it to file a second amended complaint and to take further jurisdictional
discovery are mooted by our disposition.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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