Sharp Corporation v. Hisense USA Corporation

• Court: District Court, District of Columbia
• Decided: November 13, 2017
• Docket: Civil Action No. 2017-1648
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

SHARP CORPORATION

and

SHARP ELECTRONICS CORPORATION,

Plaintiffs, v. Civil Action No. 17-1648 (JEB)

HISENSE USA CORPORATION

HISENSE INTERNATIONAL (HONG KONG) AMERICA INVESTMENT CO. LTD.,

Defendants.

MEMORANDUM OPINION

Should a federal court stand idly by when a foreign arbitral commission issues an order

restricting the speech of a private party? Actually, yes. Here, two Asian television

manufacturers, Sharp and Hisense, entered into a 2015 licensing agreement under which Hisense

would make and market televisions bearing Sharp’s name. In 2017, alleging that Hisense had

violated various regulatory standards and failed to maintain the quality of its television sets,

Sharp terminated the agreement. A week later, under a provision of the licensing agreement

providing that all disputes would be arbitrated by the Singapore International Arbitration Center,

Hisense filed an arbitration action there. Among other relief, Hisense sought an emergency order

requiring that Sharp abide by the agreement while the full arbitration was pending and enjoining

1 it from making disruptive or disparaging statements about Hisense or the licensing dispute. In

May 2017, an emergency arbitrator in Singapore issued an interim award granting that injunctive

request.

Sharp thereafter filed suit here and now seeks a preliminary injunction declaring that the

interim award is not enforceable in the United States because it contradicts U.S. public policy.

Specifically, Sharp argues that the emergency award – which it deems a “gag order” – would

prevent it from communicating with both consumers and the Federal Communications

Commission, and is thus against the policies enshrined in the First Amendment of the U.S.

Constitution. Hisense opposes the Motion for a Preliminary Injunction and has moved to dismiss

the case, asserting that this Court lacks both subject-matter and personal jurisdiction, and that the

award does not violate our public policy. Although subject-matter jurisdiction exists here,

personal jurisdiction does not; in any event, the interim award does not contradict any

fundamental public policy that would allow Sharp to prevail. The Court will therefore dismiss

the Complaint in its entirety.

I. Background

Given the Court’s ruling here, it must consider the facts as set forth in the Complaint.

The relationship between Sharp and Hisense started on amicable terms. In July 2015, Sharp, a

Japanese electronics company, entered into a limited trademark-licensing agreement (TLA) with

Hisense, a Chinese manufacturer. See ECF 1 (Complaint), ¶ 24. The TLA allows Hisense to

“manufacture, assemble, promote, market, distribute, [and] sell” Sharp-branded televisions. See

ECF No. 28-2 (Licensing Agreement), ¶ 2.1. It also provides that “[a]ny disputes arising out of

or in connection with this Agreement, including any question regarding its validity or

termination, shall be referred to and finally resolved in Singapore by Singapore International

2 Arbitration Centre in accordance with the Arbitration Rules of [the Centre,] . . . which rules are

deemed to be incorporated by reference.” TLA, ¶ 28.1.

According to Sharp, “immediately” after entering into the TLA, Hisense began to fall

short of its contractual obligations. See Mot. for PI at 2. It allegedly “fail[ed] to comply with

regulations and maintain the required standards and quality of its television sets.” Id. Based on

these violations, Sharp terminated the TLA on April 17, 2017. Id. at 3. On April 24, Hisense

filed for arbitration in Singapore with the SIAC, seeking emergency relief to reinstate the TLA.

Id. On May 9, an arbitrator appointed to consider the emergency motion issued a 33-page

“emergency” interim award. See ECF No. 8-3 (Emergency Award). The interim award

prohibited Sharp from terminating the TLA, required it to continue to perform under the

agreement while the arbitration was pending, and imposed an order stating:

[Sharp] shall refrain from, directly or indirectly through its affiliates, disparaging [Hisense] and/or disrupting its business, including by making public statements or press releases about this arbitration and/or the dispute between [Hisense] and [Sharp], or approaching [Hisense’s] business associates and/or other third parties (including, but not limited to, [Hisense’s] customers, suppliers, content and service providers, and/or regulatory authorities, except as required by law), in respect of any matters that are to be addressed in arbitration under the [License Agreement].

Emergency Award, ¶ 135 (iii). It is this portion of the award, which Sharp characterizes as a

“one-sided Gag Order,” Mot. for PI at 3, that Plaintiffs now contest.

On August 15, 2017, Plaintiffs Sharp Corporation and Sharp Electronics Corporation

filed a Complaint in this Court, alleging that the emergency order “is contrary to the public

policy of the United States embodied in the First Amendment of the Constitution, including (1)

the public policy that prohibits a prior restraint on speech absent extraordinary circumstances,

and (2) the public policy that favors the right to petition the Government.” Compl., ¶ 5. Sharp

3 requested declaratory and injunctive relief pursuant to the Declaratory Judgment Act, 28 U.S.C.

§§ 2201-02, seeking an “order declaring that the Gag Order against Sharp is not recognizable or

enforceable in the United States” and “enjoin[ing] Hisense from taking any action to enforce the

Gag Order in the United States.” Id., ¶¶ 2,5. The same day they submitted their Complaint,

Plaintiffs also filed a Motion for Preliminary Injunction, asking the Court to enjoin the

enforcement of the “gag order” and declare that it is “contrary to the public policy of the United

States and is thus unenforceable.” Mot. for PI at 2.

In response, Defendants Hisense USA Corporation and Hisense International filed an

Opposition to Plaintiffs’ Motion for Preliminary Injunction, see ECF No. 22, as well as a Motion

to Dismiss, or, alternatively, stay the action. See ECF No. 21. On October 27, this Court heard

oral argument on the Motions and now issues this expedited Opinion.

II. Legal Standard

Because the Court grants Hisense’s Motion to Dismiss, it need not address the standards

governing a preliminary injunction and will instead consider this case under Rules 12(b)(6),

12(b)(1), and 12(b)(2).

In evaluating Defendants’ Motion to Dismiss for failure to state a claim pursuant to Rule

12(b)(6), the Court must “treat the complaint’s factual allegations as true . . . and must grant

plaintiff ‘the benefit of all inferences that can be derived from the facts alleged.’” Sparrow v.

United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (quoting Schuler v. United States,

617 F.2d 605, 608 (D.C. Cir. 1979)) (internal citation omitted). The Court need not accept as

true, however, “a legal conclusion couched as a factual allegation,” nor an inference unsupported

by the facts set forth in the Complaint. Trudeau v. Fed. Trade Comm’n, 456 F.3d 178, 193 (D.C.

4 Cir. 2006) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986) (internal quotation marks

omitted)).

To survive a motion to dismiss under Rule 12(b)(1), conversely, Plaintiffs bear the

burden of proving that the Court has subject-matter jurisdiction to hear their claims. See Lujan

v. Defenders of Wildlife, 504 U.S. 555, 561 (1992); U.S. Ecology, Inc. v. U.S. Dep’t of Interior,

231 F.3d 20, 24 (D.C. Cir. 2000). A court has an “affirmative obligation to ensure that it is

acting within the scope of its jurisdictional authority.” Grand Lodge of Fraternal Order of Police

v. Ashcroft, 185 F. Supp. 2d 9, 13 (D.D.C. 2001). For this reason, ‘“the [p]laintiff’s factual

allegations in the complaint . . . will bear closer scrutiny in resolving a 12(b)(1) motion’ than in

resolving a 12(b)(6) motion for failure to state a claim.” Id. at 13–14 (quoting 5A Charles A.

Wright & Arthur R. Miller, Federal Practice and Procedure § 1350 (2d ed. 1987) (alteration in

original)). Additionally, unlike with a motion to dismiss under Rule 12(b)(6), the Court “may

consider materials outside the pleadings in deciding whether to grant a motion to dismiss for lack

of jurisdiction.” Jerome Stevens Pharm., Inc. v. Food & Drug Admin., 402 F.3d 1249, 1253

(D.C. Cir. 2005).

Finally, under Rule 12(b)(2) a defendant may move to dismiss a suit if the court lacks

personal jurisdiction over him. Personal jurisdiction determines the court’s “authority over the

parties . . . , so that the court’s decision will bind them.” Ruhrgas AG v. Marathon Oil Co., 526

U.S. 574, 577 (1999). The plaintiff bears the burden of establishing that such jurisdiction exists.

See FC Inv. Grp. LC v. IFX Markets, Ltd., 529 F.3d 1087, 1091 (D.C. Cir. 2008). In deciding

whether the plaintiff has shown a factual basis for personal jurisdiction over a defendant, the

court resolves factual discrepancies in favor of the plaintiff. See Crane v. N.Y. Zoological

Soc’y, 894 F.2d 454, 456 (D.C. Cir. 1990). When personal jurisdiction is challenged, “the

5 district judge has considerable procedural leeway in choosing a methodology for deciding the

motion.” 5B Charles A. Wright & Arthur R. Miller et al., Federal Practice and Procedure § 1351

(3d ed. 2004). The Court may rest on the allegations in the pleadings, collect affidavits and other

evidence, or even hold a hearing. Id.

III. Analysis

As it must address jurisdictional concerns first, the Court begins with Defendants’

assertion that the Court does not have subject-matter jurisdiction over this case. It moves next to

Hisense’s arguments on personal jurisdiction and concludes with an analysis of the merits of

Plaintiffs’ suit.

A. Subject-Matter Jurisdiction

Hisense first argues that the New York Convention, which governs the enforcement of

international arbitration awards, does not give the Court jurisdiction to grant the remedy Sharp

seeks. Plaintiffs, of course, see things differently. They assert that the strictures of the

Convention do not preclude the Court from providing the requested declaratory relief. In

analyzing the issue, the Court starts with the Convention and then considers the Declaratory

Judgment Act.

1. New York Convention

The enforcement of foreign arbitral awards falls under the Convention on the Recognition

and Enforcement of Foreign Arbitral Awards, better known as the “New York Convention,”

1958, 21 U.S.T. 2517, T.I.A.S. No. 6997, 330 U.N.T.S. 38. The Convention controls “the

recognition and enforcement of arbitral awards made in the territory of a State other than the

State where the recognition and enforcement of such awards are sought.” Chevron Corp. v.

Republic of Ecuador, 949 F. Supp. 2d 57, 62 (D.D.C. 2013), aff’d sub nom. Chevron Corp. v.

6 Ecuador, 795 F.3d 200 (D.C. Cir. 2015). In the United States, the New York Convention has

been codified in Chapter 2 of the Federal Arbitration Act. See 9 U.S.C. §§ 201–08. Together,

the Convention and its implementing legislation “encourage the recognition and enforcement of

commercial arbitration agreements in international contracts.” TermoRio S.A. E.S.P. v.

Electranta S.P., 487 F.3d 928, 933 (D.C. Cir. 2007) (citation omitted).

Pursuant to the FAA, United States district courts have original jurisdiction over an

“action or proceeding falling under the Convention.” 9 U.S.C. § 203. The scope of that

jurisdiction, however, is governed by the terms of the Convention, which distinguishes between

“primary” and “secondary” courts. TermRio, 487 F.3d at 935 (citation omitted). The former are

those courts of the country in which, or under the law of which, an award is rendered. The latter

are those courts of all other signatory countries. The distinction between these two categories

determines the jurisdictional and remedial authority of a given court. Under the Convention,

primary-jurisdiction courts have the exclusive authority to affirmatively set aside or annul an

arbitration award, while secondary-jurisdiction courts have a more limited authority to review

and decide whether to enforce such an award. Id., 487 F.3d at 935; Gulf Petro Trading Co., Inc.

v. Nigerian Nat’l Petroleum Corp., 512 F.3d 742, 747 (5th Cir. 2008) (holding that “a United

States court sitting in secondary jurisdiction lacks subject matter jurisdiction over claims seeking

to vacate, set aside, or modify a foreign arbitral award” and “may only refuse or stay

enforcement of an award”); Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas

Bumi Negara, 364 F.3d 274, 287 (5th Cir. 2004) (noting that in courts of secondary jurisdictions

“parties can only contest whether that state should enforce the arbitral award”); M & C Corp. v.

Erwin Behr GmbH & Co., KG, 87 F.3d 844, 848 (6th Cir. 1996) (holding that plaintiff “may not

seek to vacate the arbitral award in the district court” of a secondary jurisdiction).

7 In this case, both parties agree that this Court, unlike Singapore, is a secondary

jurisdiction. Defendants, consequently, maintain that Plaintiffs’ suit falls outside of the authority

of secondary-jurisdiction courts because it ultimately seeks to “void, annul, or modify” the

arbitral award. See Hisense Reply at 3. Yet Sharp seeks no such broad relief. Rather, it has

requested only that this Court declare the gag order unenforceable in the United States, a

permissible goal in a secondary jurisdiction. See Compl., ¶ 6

This limited remedial request distinguishes this case from those relied upon by Hisense,

in which plaintiffs sought, at least in part, to vacate the underlying award in toto. In Kolel Beth

Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Trust, 863 F. Supp. 2d 351 (S.D.N.Y.

2012), for example, the plaintiff sought a declaration that the arbitration decision was “void and

unenforceable,” a remedy that the court held would “essentially accomplish” the goal of vacating

the award. Id. at 356. Similarly, in Stedman v. Great Am. Ins, Co., 2007 U.S. Dist. LEXIS

25973 (D.N.D. Apr. 3, 2007), the court faced a motion asking for the functional equivalent of

vacatur. Plaintiffs there initially brought a motion to vacate, amend, or correct the arbitration

award, which they later recharacterized as a motion to “confirm [the award] to the extent

confirmable.” Id. at *11. The court concluded that it lacked subject-matter jurisdiction over this

motion, as Plaintiffs still sought to “vacate” the portions of the award that were “indefinite or

ambiguous” or “beyond the arbitrator’s authority.” Id. at *11-12. Finally, Defendants’ citation

to Gemini Consulting Group v. Horan Keogan Ryan, 2007 U.S. Dist. LEXIS 39509 (N.D. Ill.

May 30, 2007), is unavailing, as the plaintiff there sought “a declaration that the Awards issued

by the arbitrator are invalid and not enforceable against Gemini.” Id. at *12 (emphasis added).

The court in that case noted that entering such an order “would be akin to setting aside or

vacating the awards,” and it therefore found that it lacked the requisite jurisdiction. Id.

8 Once again, Sharp does not seek such a drastic remedy here. Granting the motion for a

declaratory judgment would not “set aside” or “vacate” the underlying award. Instead, it would

determine only whether the emergency order is enforceable in the United States, see Compl. at 2,

not whether it is valid worldwide. Such a determination clearly falls within the purview of

secondary-jurisdiction courts.

The Court’s conclusion that Plaintiffs are not seeking to vacate the arbitration award also

resolves Defendants’ alternative contention that Sharp’s suit is untimely. Although the New

York Convention does not contain a statute of limitations for petitions to vacate arbitration

awards, the FAA, which supplements the Convention, requires that such actions be filed within

three months after the award is filed or delivered. See 9 U.S.C. § 12. Hisense asserts that Sharp

is, in fact, suing to vacate the emergency award, and that Plaintiffs’ action is untimely because it

was filed one week after the three-month period expired. See Hisense Reply at 12-13. As the

Court concludes that Sharp is seeking only to have the emergency order declared unenforceable

in the United States – and the FAA contains a three-year statute of limitations for such

enforcement actions – its suit is therefore timely. See 9 U.S.C. § 207.

2. Declaratory Judgment Act

Determining that Plaintiffs are not seeking to vacate the arbitration award, however, does

not fully resolve the jurisdictional inquiry. This is because Sharp’s suit comes before the Court

in a somewhat unusual posture – a motion for a declaratory judgment that the emergency order is

unenforceable. As Defendants note, the New York Convention discusses the power of a court in

a secondary jurisdiction over actions to enforce arbitration awards and the ability of defendants

to raise certain affirmative defenses in such enforcement proceedings. The Convention does not,

however, expressly address suits in which a party preemptively seeks to have an award declared

9 unenforceable, as is the case here. Hisense argues that this distinction matters, and that the Court

therefore lacks jurisdiction over Sharp’s “proactive” action. See MTD at 12. Yet this assertion

ignores Plaintiffs’ chosen vehicle for bringing this suit – the Declaratory Judgment Act.

It has long been clear that the Act is not a jurisdiction-conferring statute. See Skelly Oil

Co. v. Phillips Petroleum Co., 339 U.S. 667, 671 (1950); C & E Servs., Inc. of Washington v.

D.C. Water & Sewer Auth., 310 F.3d 197, 201 (D.C. Cir. 2002) (“[T]he Declaratory Judgment

Act ‘is not an independent source of federal jurisdiction.’”) (citation omitted). Rather, a party

seeking declaratory relief must “have valid grounds for federal jurisdiction independent of the

Act.” Comm. on Oversight & Gov’t Reform v. Holder, 979 F. Supp. 2d 1, 22 (D.D.C. 2013). In

determining whether such a basis for jurisdiction exists, federal courts look to “the nature of the

threatened action in the absence of the declaratory judgment suit.” Medtronic, Inc. v. Mirowski

Family Ventures, LLC, 134 S. Ct. 843, 848 (2014). Put otherwise, they “ask whether a coercive

action brought by the declaratory judgment defendant would necessarily present a federal

question” or otherwise give rise to federal jurisdiction. Id. If the anticipated suit by a defendant

would give rise to federal jurisdiction, there is also such jurisdiction over the action for a

declaratory judgment. Id.; see also Comm. on Judiciary, U.S. House of Representatives v. Miers,

558 F. Supp. 2d 53, 83 n.21 (D.D.C. 2008) (citing Franchise Tax Bd. v. Construction Laborers

Vacation Trust, 463 U.S. 1, 19 (1983), for proposition that federal courts have jurisdiction over

declaratory-judgment suits in which “if the declaratory judgment defendant brought a coercive

action to enforce its rights, that suit would necessarily present a federal question”); Wisconsin v.

Ho–Chunk Nation, 512 F.3d 921, 935 (7th Cir. 2008) (stating that jurisdiction under Act is

“determined by whether federal question jurisdiction would exist over the presumed suit by the

declaratory judgment defendant”). It is irrelevant for the purposes of the Declaratory Judgment

10 Act that “the parties are transposed,” Surefoot LC v. Sure Foot Corp., 531 F.3d 1236, 1245 (10th

Cir. 2008), as it is “the nature of the controversy, not the method of its presentation or the

particular party who presents it, that is determinative.” Aetna Life Ins. Co. of Hartford, Conn. v.

Haworth, 300 U.S. 227, 244 (1937).

To determine whether it has jurisdiction over Plaintiffs’ declaratory-judgment action,

then, the Court must imagine the anticipated suit Sharp seeks to avoid by requesting such relief.

Here, Plaintiffs are asking for a declaration that the interim relief issued by the emergency

arbitrator – the so-called “gag order” – is unenforceable in the United States. Presumably, the

suit Sharp wishes to disable is an action by Defendants to enforce the emergency order in U.S.

courts. The question is thus whether this Court would have subject-matter jurisdiction over that

“hypothetical threatened action.” Medtronic, 134 S. Ct. at 849.

It requires no gift of premonition to see that the answer is yes. The implementing

provisions of the FAA state that, when a court has primary or secondary jurisdiction under the

New York Convention, “[a]n action or proceeding falling under the Convention shall be deemed

to arise under the laws and treaties of the United States.” 9 U.S.C. § 203. As discussed above,

this Court would clearly have secondary jurisdiction over an enforcement action by Hisense in

U.S. courts. The Court, accordingly, has federal-question jurisdiction over this corollary action

for a declaratory judgment. Indeed, in a remarkably similar case, Hospira, Inc. v. Therabel

Pharma N.V., 2013 WL 381148 (N.D. Ill. July 19, 2013), the plaintiff sought a “declaration . . .

pursuant to the Declaratory Judgment Act . . . that it ha[d] no agreement to arbitrate with”

Defendant. Id. at *1. The court in Hospira addressed the interaction between the Declaratory

Judgment Act and the New York Convention, noting that the plaintiff’s complaint “anticipates a

suit by [Defendant] . . . to compel [Plaintiff] into arbitration before the ICC.” Id. at *7. Finding

11 that it would have jurisdiction over such “anticipated claims,” the court concluded that it had

subject-matter jurisdiction over the action for a declaratory judgment. Id. at *8. The facts of this

case nearly mirror those in Hospira. Plaintiffs are asking for a declaratory judgement in

anticipation of an enforcement claim by Defendants under the New York Convention. As this

Court would have jurisdiction over such a case pursuant to the FAA and the Convention, it thus

has federal-question jurisdiction over the instant suit.

Finally, the Court at oral argument independently raised the issue of whether a particular

SIAC rule precludes Sharp’s challenge to the emergency interim award. SIAC Schedule 1, Rule

12 states that an emergency award “shall be binding on the parties from the date it is made” and

that the parties “irrevocably waive their rights to any form of appeal, review or recourse to any

State court or other judicial authority with respect to such Award insofar as such waiver may be

validly made.” SIAC Rules, http://www.siac.org.sg/our-rules/rules/siac-rules-2016. Although

the text of this rule would appear to preclude Plaintiffs’ suit contesting the scope of the

emergency award, Defendants did not raise this issue in their papers. The Court will therefore

consider this argument forfeited and need not determine the effect of the SIAC rules on Sharp’s

ability to file the instant suit.

B. Personal Jurisdiction

The Court turns next to Defendants’ position that Sharp has not demonstrated personal

jurisdiction in the District over Hisense International and Hisense USA. See MTD at 13-16.

1. Legal Framework

Personal jurisdiction may take the form of general or specific jurisdiction. The former

exists where a non-resident defendant maintains sufficiently systematic and continuous contacts

with the forum state, regardless of whether those contacts gave rise to the claim in the particular

12 suit. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414–15 (1984).

General jurisdiction is permitted based on “only a limited set of affiliations with a forum,” all of

which are tantamount to Defendant’s domicile. See Daimler AG v. Bauman, 134 S. Ct. 746, 760

(2014). For corporations, general jurisdiction may be asserted if the forum is one in which the

corporation is “fairly regarded as at home,” which has been defined as generally being either its

“place of incorporation” or its “principal place of business.” Id. (quoting Goodyear Dunlop Tires

Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011)). Here, Defendants are both multi-national

corporations: Hisense International is incorporated and has its principal place of business in

China, and Hisense USA is similarly connected to Georgia. See Compl., ¶¶ 9-10. Because

neither Defendant is functionally “at home” in the District, general jurisdiction does not apply.

This leaves the possibility of specific jurisdiction. “In contrast to general, all-purpose

jurisdiction, specific jurisdiction is confined to adjudication of issues deriving from, or connected

with, the very controversy that establishes jurisdiction.” Goodyear Dunlop Tires, 564 U.S. at

919 (citation omitted). In other words, specific jurisdiction exists where a claim arises out of the

non-resident defendant’s contacts with the forum. See Helicopteros, 466 U.S. at 414 n.8; United

States v. Ferrara, 54 F.3d 825, 828 (D.C. Cir. 1995). “A plaintiff seeking to establish specific

jurisdiction over a non-resident defendant must establish that specific jurisdiction comports with

the forum’s long-arm statute and does not violate due process.” FC Inv. Grp., 529 F.3d at 1094-

95 (internal citation omitted). In relevant part, the District of Columbia’s long-arm statute reads,

“A District of Columbia court may exercise personal jurisdiction over a person, who acts directly

or by an agent, as to a claim for relief arising from the person’s . . . transacting any business in

the District of Columbia.” D.C. Code § 13–423(a)(1). The question, therefore, is whether

Sharp’s claims “arise out of or relate to” Hisense’s conduct in this city. See Bristol-Myers

13 Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1786 (2017) (quoting Helicopteros, 466 U.S. at

414).

2. Sufficient Contacts

In denying such connections, Defendants assert that “the alleged sale of televisions [in

the District] is not sufficiently related to Plaintiffs’ attempt to challenge a foreign arbitration

award as violating their rights to free speech.” Reply at 9. Rather, Hisense’s perspective is that

“[t]he entire controversy” giving rise to Sharp’s Complaint “focuses solely on the validity of the

arbitration proceeding, the Emergency Order, and Plaintiff’s free-speech rights,” none of which

has any “causal nexus” with the District. See MTD at 15. Plaintiffs retort that “[t]his action

directly arises from Hisense’s activities directed at and occurring in the District.” Sharp Resp. at

16. Sharp asserts that “Hisense sells the [Sharp-branded] televisions at issue in physical retail

stores throughout the District of Columbia,” and that this commercial activity is sufficiently

related to the Licensing Agreement so as to give rise to personal jurisdiction. Id. at 17-18.

Because the televisions “are on retail shelves in the District of Columbia and expressly assert

compliance with FCC standards,” Plaintiffs contend that these “contacts form one of the core

bases for [their] attempt to declare the Gag Order unenforceable.” Id. at 19.

Although it is a close call, the Court finds that Sharp is unable to show that Hisense’s

contacts with the District have the requisite nexus to the instant suit. This inquiry is fact

intensive, focusing on “the relationship among the defendant, the forum, and the litigation.”

Shaffer v. Heitner, 433 U.S. 186, 204 (1977). This litigation arises out of Plaintiffs’ claim that

they want to speak, but that they are prevented from doing so by virtue of the interim gag order.

In particular, Sharp asserts that, but for the order, it would communicate with consumers

14 regarding the quality (or alleged lack thereof) of Hisense-made televisions and with the FCC

regarding emissions testing of such products.

There is some surface appeal to Sharp’s assertion that the relatedness inquiry is satisfied

because it seeks relief, in part, to communicate with regulators and consumers about the

television sets being sold in the District. Yet Sharp’s Complaint is not really about Hisense’s

sale of televisions here; rather, Plaintiffs’ grievances are grounded in the emergency order itself,

which has no connection to the forum. FC Inv. Grp. LC v. IFX Mkts., Ltd., 479 F. Supp. 2d 30,

39 (D.D.C. 2007), aff'd, 529 F.3d 1087 (D.C. Cir. 2008) (“plaintiff's jurisdictional allegations

must arise from the same conduct of which it complains”); Novak–Canzeri v. Saud, 864 F. Supp.

203, 206–207 (D.D.C. 1994) (explaining that “[t]he claim itself must have arisen from the

business transacted in the District or there is no jurisdiction” and finding no jurisdictional nexus

between the plaintiff's underlying breach-of-contract claim where “there is no statement that the

jurisdictional allegations set forth there necessarily relate to the same activity as the breach of

contract allegations”). At bottom, this dispute is principally about an order entered in Singapore,

by a foreign arbitrator, regarding a contract signed between two foreign parties. The Court

therefore concludes that the nexus between Sharp’s claims and Defendants’ contacts with the

District is too attenuated to support personal jurisdiction.

3. Government-Contacts Doctrine

Sharp is not yet ready to cede the field, and it offers two other theories to support

personal jurisdiction. It first argues that Hisense is subject to specific personal jurisdiction in the

District because the company has made repeated filings with the FCC, which is headquartered

here. Yet such interactions with the Commission do not, by themselves, confer personal

jurisdiction. Under the “government contacts” doctrine, a nonresident who files with a

15 government agency in the District does not thereby subject itself to personal jurisdiction here.

See Envl. Research Int’l, Inc. v. Lockwood Greene, Inc., 355 A.2d 808, 813 (D.C. 1976).

Plaintiffs nonetheless invoke a narrow exception to this doctrine, which instructs that

personal-jurisdiction requirements may be satisfied when a defendant’s contacts with a

government agency “fraudulently induced unwarranted government action against the plaintiff.”

Companhia Brasileira Carbureto De Calcio v. Applied Indus. Materials Corp., 35 A.3d 1127,

1133 (D.C. 2012). Attempting to frame the facts of this case as falling within this exception,

Plaintiffs assert that they are seeking to correct potentially inaccurate filings made by Hisense to

the FCC. See ECF No. 33-6 (Declaration of Ian Volner), ¶ 8 (stating that “Sharp wishes to

submit to FCC emission test results about Hisense-made Sharp TVs that contradict test results

Hisense has already submitted to FCC”).

Such positon notwithstanding, Sharp cannot satisfy two crucial components of the

Companhia exception: it failed to allege “fraud” on the part of Defendants, and it did not

plausibly allege that Hisense’s filings induced adverse government action. See Companhia, 35

A.3d at 1134. As to the former, Companhia is clear that the fraud exception to the government-

contacts doctrine should be narrowly applied. This restriction is “addressed in part by strict

adherence to the standards of pleading.” Id. To that end, Companhia states that, in order for the

exception to apply, “[i]t will not be sufficient to allege that the [defendant] presented an

unbalanced view of the issue or even that he made a false statement,” but instead that “[t]he

plaintiff seeking to overcome the government contracts doctrine must allege ‘fraud.’” Id. Here,

Sharp’s Complaint contains no such allegations that Hisense filed fraudulent government

petitions, much less any actual counts of fraud. See Compl. at 11-13. As Sharp’s claims do not

“meet the requirements for pleading fraud under Super. Ct. Civ. R. 9(b) or its federal

16 counterpart,” they are not “sufficient to confer personal jurisdiction in the District.” Companhia,

35 A.3d at 1135.

Even if Sharp’s allegations did rise to such a level, the Complaint nonetheless does not

satisfy the second condition under Companhia, which requires that “[t]he plaintiff must also

allege that the agency actually relied on the fraudulent information in making its decision,” and

that the fraudulent information thus “induced unwarranted government action against the

plaintiff.” Id. at 1134-35; see Morgan v. Richmond Sch. of Health and Tech., Inc., 857 F. Supp.

2d 104, 109 (D.D.C. 2012) (holding fraud exception to government-contacts doctrine

inapplicable where no allegations that government agency took any actions against

plaintiff); Shaheen v. Smith, 994 F. Supp. 2d 77, 86 (D.D.C. 2013) (holding narrow fraud

exception inapplicable because government agency – the SEC – did not take any action against

plaintiff as result of defendants’ actions). Here, Sharp’s assertion of government action is based

on the indirect effects of Hisense’s allegedly deficient agency filings. More specifically,

Plaintiffs’ theory of adverse government action is that, by making false representations to the

FCC, Hisense induced the agency to continue to allow Hinsese-made, Sharp-branded televisions

to be sold with FCC-compliance labels. The ongoing sale of these televisions, Plaintiffs argue,

has in turn resulted in economic and reputational harm to Sharp and its brand.

This construction of adverse government action stretches the requirement that “the

[fraudulent] petition must provoke government action against the plaintiff” beyond its reasonable

bounds. See Globe Metallurgical, Inc. v. Rima Indus. S.A., 177 F. Supp. 3d 317, 326 (D.D.C.

2016) (emphasis added); App Dynamic ehf v. Vignisson, 87 F. Supp. 3d 322, 328 (D.D.C. 2015)

(noting that in defining the fraud exception, “the D.C.C.A. emphasized the provoking of

government action against another; it did not premise jurisdiction on the mere filing of a

17 fraudulent petition”). Under Sharp’s reading, any government action that affects a plaintiff’s

business would suffice as “unwarranted government action against the plaintiff.” Given the

command that the fraud exception be narrowly applied, the Court finds that such a reading would

impermissibly extend the holding of Companhia. See Globe Metallurgical, 117 F. Supp 3d at

327-28 (finding that government decision that favors one competitor “cannot be fairly

characterized as an action ‘against’ another, despite the fact that the indirect effect will be to

benefit one competitor at the theoretical expense of others” and rejecting reliance on the “indirect

impact of an agency decision”). The Court therefore concludes that Hisense’s communications

with the FCC do not fall within the fraud exception to the general government-contacts doctrine

and thus cannot confer personal jurisdiction.

4. State-Owned Entities

In a final attempt to persuade the Court of its jurisdiction over Defendants, Sharp asserts

that Hisense Intl. and Hisense USA, as Chinese state-owned entities, are not persons capable of

asserting personal-jurisdiction defenses under the Fifth Amendment. See Omnibus Response at

20-21. As Defendants correctly rejoin, this argument is contrary to both governing precedent

and the facts of this case.

Under this Circuit’s law, “foreign states are not ‘persons’ protected by the Fifth

Amendment,” and they are thus not afforded the jurisdictional protections of that provision. See

Price v. Socialist People’s Libyan Arab Jamahiriya, 294 F.3d 82, 96 (D.C. Cir. 2002). Yet the

same conclusion does not automatically apply to foreign corporations. As this Circuit explicitly

held in GSS Group Ltd v. National Port Authority, 680 F.3d 805 (D.C. Cir. 2012), the “same

logic” that results in “put[ting] foreign sovereigns in a separate constitutional category from

‘private entities’” does not “appl[y] to foreign state-owned corporations.” Id. at 813. Rather,

18 this Circuit has held that “government instrumentalities established as juridical entities distinct

and independent from their sovereign should normally be treated as such.” Id. (internal

quotation mark omitted). That presumption is overcome only when “a foreign sovereign controls

an instrumentality to such a degree that a principal-agent relationship arises between them.” Id.

at 815 “On the other hand, if an instrumentality does not act as an agent of the state, and

separate treatment would not result in manifest injustice, the instrumentality will enjoy all the

due process protections available to private corporations.” Id. (citation omitted). Put another

way, “the extent of a state-owned corporation’s juridical independence plays a dispositive role in

the constitutional analysis.” Id.

Here, Plaintiffs have not met their burden of showing that the Chinese government

exercises such extensive control over Defendants as to form a principal-agent relationship.

Indeed, Sharp ignores a simple, insurmountable stumbling block to its foreign-state theory – viz.,

Hisense Co., Ltd., the Chinese-owned company, is not a named party in this suit. The two

named Defendants, Hisense Intl. and Hisense USA, are both subsidiaries of Hisense Co., Ltd.,

and Sharp does not allege that these subsidiaries act as “agents” of the Chinese state. Indeed,

precedent shows that the foreign-government status of a parent company is not automatically

imputed to its subsidiaries. See Dole Food Co. v. Patrickson, 538 U.S. 468, 473 (2003) (holding

that “a subsidiary of an instrumentality is not itself entitled to instrumentality status”).

Sharp has nonetheless just submitted a recent district court order from the Central District

of California, which concluded that Hisense Co., Ltd. is an “instrumentality of a foreign state”

for the purposes of the Foreign Sovereign Immunities Act. See ECF No. 42 (October 18, 2017,

Order from Case No. 17-3341 (C.D. Cal.)). Yet that determination has little relevance to this

case.

19 First, as discussed above, Hisense Co., Ltd. is not a party to this suit. The California

court order in fact supports Defendants’ argument that, regardless of the status of Hisense Co.,

Ltd., the two subsidiaries in this case are not agents of a foreign state. In the California case,

Sharp initially filed an action in state court, and Hisense Co., Ltd. removed the entire action to

federal district court under the FSIA. In order to show federal jurisdiction under the FSIA,

Hisense Co., Ltd. asserted that it was an “agency or instrumentality of a foreign state,” as it is

directly and wholly owned by a political subdivision of the Chinese government. See C.D. Cal.

Order at 3. Yet, although Hisense USA and Hisense Intl. were named defendants in the

California state action, they did not join the notice of removal, and Hisense Co., Ltd. did not

assert that its subsidiaries were also agencies or instrumentalities of the Chinese state. Indeed, as

the California order noted, “[O]nly direct ownership of a majority of shares by the foreign state

satisfies the statutory requirement under the FSIA.” Id. (internal quotation marks omitted)

Second, the California order addressed the standard governing whether an entity is an

“instrumentality” of a foreign government under the FSIA, which is distinct from the

determination of that entity’s due-process protections under the Fifth Amendment. See GSS

Grp. Ltd 680 F.3d at 811, 814 (discussing distinctions between FSIA jurisdiction and Fifth

Amendment protections). The conclusion that Hisense Co., Ltd. is an “instrumentality” of the

Chinese government for the purposes of the FSIA, therefore, does not compel the conclusion that

the corporation is unable to assert a personal-jurisdiction defense, much less that its subsidiaries

have no such protections. Id. Because Sharp cannot show that the Defendants in this case –

Hisense Intl. and Hisense USA – are under the “plenary control” of the Chinese government, see

TMR Energy, 411 F.3d at 301, the Court finds that these corporations are able to contest

personal jurisdiction.

20 * * *

In sum, the Court rejects all of Sharp’s theories of personal jurisdiction here. While their

arguments are creative, Plaintiffs can show neither adequate government contacts by Defendants,

nor a bar as foreign entities. As the question of whether Hisense’s contacts with the District give

rise to specific personal jurisdiction is sufficiently close, however, the Court will, out of an

abundance of caution, proceed to address the merits of the case.

C. Merits

In a nutshell, Sharp contends that the emergency order issued by the SIAC arbitrator is

unenforceable because it violates a fundamental U.S. public policy: freedom of speech and the

right to petition the government as enshrined in the First Amendment. Hisense responds that

such an argument omits a critical component of a viable First Amendment claim – namely, the

existence of state action. The question before the Court is thus whether this case does, in fact,

involve state action, and, if not, whether Sharp nonetheless may assert a claim that the

emergency order offends U.S. public policy.

1. Legal Background

“[A] secondary jurisdiction court must enforce an arbitration award unless it finds one of

the grounds for refusal or deferral of recognition or enforcement specified in the Convention.”

Karaha Bodas, 364 F.3d at 288 (citing 9 U.S.C. § 207). Article V provides the enumerated,

exclusive grounds upon which a secondary jurisdiction may decline to enforce or recognize an

arbitral award. In relevant part, the Article provides for seven defenses that a party may raise

against enforcement. See Convention, Art. V (enumerating seven circumstances where

“[r]ecognition and enforcement of the award may be refused” by “the competent authority where

the recognition or enforcement is sought”). The party opposing confirmation has the burden of

21 establishing one of these defenses, as there is a strong presumption in favor of enforcing

arbitration awards. See Polimaster Ltd. v. RAE Sys., Inc., 623 F.3d 832, 836 (9th Cir. 2010)

(“[Respondent] has the burden of showing the existence of a New York Convention defense.

[Respondent’s] burden is substantial because the public policy in favor of international

arbitration is strong.”) (citation omitted). In this case, Sharp relies on the provision of Article V

providing that a court may decline to enforce an award when it would be contrary to the public

policy of the signatory state. See Convention, Art. V(2)(b).

“Although this defense is frequently raised, it has rarely been successful.” Ministry of

Def. & Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Def. Systems,

Inc., 665 F.3d 1091, 1097 (9th Cir. 2011) (quotation omitted). Courts have cautioned that the

public-policy defense “is to be construed narrowly to be applied only where enforcement would

violate the forum state’s most basic notions of morality and justice.” TermoRio, 487 F.3d at 938

(quoting Karaha Bodas, 364 F.3d 274 at 305-306). Overcoming the presumption in favor of

enforcement requires the moving party to “demonstrate a countervailing public policy sufficient

to overcome [the] strong policy favoring confirmation.” Armed Forces of the Islamic Republic of

Iran, 665 F.3d at 1098. This public policy “must be well defined and dominant, and is to be

ascertained by reference to the laws and legal precedents and not from general considerations of

supposed public interests.” United Bhd. Of Carpenters and Joiners of America, AFL–CIO v.

Operative Plasterers’ & Cement Masons’ Int’l Ass’n of U.S. & Can., AFL–CIO, 721 F.3d 678,

697 (D.C. Cir. 2013) (quotation omitted). Because this standard is so high, this Circuit has noted

that “[o]nly in clear-cut cases ought it to avail defendant.” TermRio, 487 F.3d at 938.

22 2. State-Action Doctrine

Sharp believes it can meet this high bar by relying on the public policy of free speech

enshrined in the First Amendment. More specifically, Plaintiffs assert that the emergency order

violates the First Amendment’s “well defined and dominant” public policy against “one-sided

gag orders” and restrictions on a party’s ability to petition the government. In relying on the

First Amendment, however, Sharp runs into a significant obstacle – the principle that without

governmental action, there can be no First Amendment violation. According to Hisense, as this

suit presents no such state action, Sharp is out of luck. In response, Sharp first argues that there

is in fact governmental action in this case – in the form of the Court’s enforcement or

nonenforcement of the arbitration award. Unfortunately for Plaintiffs, that theory holds no

water.

It is axiomatic that to elicit First Amendment protection, the infringement upon speech or

petition rights must have “arisen from state action of some kind.” Banner v. Duggan 249 F.

Supp. 3d 27, 41 (D.D.C. 2017). As another district court noted last year, there is simply “no

authority holding that judicial enforcement . . . of an arbitration award[] constitutes state action.”

Roberts v. AT&T Mobility LLC, 2016 WL 1660049, at *34 (N.D. Cal. Apr. 27, 2016). The

caselaw, in fact, shows ample support for the contrary proposition.

In Davis v. Prudential Securities, Inc., 59 F.3d 1186 (11th Cir. 1995), for example, the

Eleventh Circuit considered the argument that a district court’s confirmation of an arbitration

award provided the requisite state action for a constitutional claim. The defendant in Davis

argued that a punitive-damages award violated its due-process rights, and that the court’s

participation in enforcing the award was tantamount to governmental action. Id. at 1191. The

Eleventh Circuit squarely rejected that reasoning, stating that “the mere confirmation of a private

23 arbitration award by a district court is insufficient state action to trigger the application of the due

process clause.” Id. at 1192. This reasoning has been echoed by multiple other courts. See

Desiderio v. Nat’l Ass’n of Sec. Dealers, Inc., 191 F.3d 198, 207 (2d Cir. 1999) (holding “no

state action in the application or enforcement of [an] arbitration clause”); Federal Deposit Ins.

Corp. v. Air Florida Sys., Inc., 822 F.2d 833, 842 n.9 (9th Cir. 1987) (“The arbitration involved

here was private, not state, action; it was conducted pursuant to contract by a private arbitrator.

Although Congress, in the exercise of its commerce power, has provided for some governmental

regulation of private arbitration agreements, we do not find in private arbitration proceedings the

state action requisite for a constitutional due process claim.”); United Egg Producers v. Standard

Brands, Inc., 44 F.3d 940, 943 (11th Cir. 1995) (holding that there is no state action for

constitutional purposes where “a court acts to enforce the right of a private party which is

permitted but not compelled by law”).

Plaintiffs are correct that, in one limited instance, the Supreme Court has found that court

enforcement of an agreement between private parties can be considered governmental action. In

Shelley v. Kraemer, 334 U.S. 1 (1948), it held that the state court’s enforcement of racially

restrictive covenants was sufficient state action to invoke the Fourteenth Amendment. Id. at 19.

Yet Sharp ignores the fact that the holding in Shelley has been confined to the race-

discrimination context. Although many courts have been presented with the argument that

Shelley should be construed more broadly, they have not signed on, including in the context of

courts’ enforcing arbitration awards and private contracts. See Davis, 59 F.3d 1186 at 1191

(stating that defendant was asserting a “Shelley v. Kramer theory that a court’s enforcement of a

private contract constitutes state action,” but finding that “[t]he holding of Shelley . . . has not

been extended beyond the context of race discrimination”); Ohno v. Yasuma, 723 F.3d 984, 998

24 (9th Cir. 2013) (rejecting argument that recognizing a foreign judgment constitutes state action

and holding that “Shelley’s attribution of state action to judicial enforcement has generally been

confined to the context of discrimination claims under the Equal Protection Clause”); United

Egg, 44 F.3d at 943 (noting that judicial enforcement of private agreements does not constitute

state action unless there is “finding that constitutionally impermissible discrimination is

involved”). This Court agrees and thus declines to extend Shelley to the facts of this case.

As this Circuit has underscored, “If, for constitutional purposes, every private right were

transformed into governmental action by the mere fact of court enforcement of it, the distinction

between private and governmental action would be obliterated.” Edwards v. Habib, 397 F.2d

687, 691 (D.C. Cir. 1968). Plaintiffs here ask the Court to engage in precisely such elision

between the state-action requirement and court enforcement of an arbitral award. Rejecting such

an outcome, the Court finds instead that in the arbitration context, “[government] permission of a

private choice cannot support a finding of state action.” Am. Mfrs. Mut. Ins. Co. v. Sullivan,

526 U.S. 40, 54 (1999).

3. Public Policy and the First Amendment

Finding no state action, the Court next considers Plaintiffs’ argument that the emergency

order is, nonetheless, contrary to public policy. On this point, the Court concludes that the First

Amendment provides no “well defined and dominant” public policy in favor of permitting

private parties to speak absent state action. Instead, the precedent is abundantly clear that the

rights enshrined in the First Amendment cannot, and should not, be uncoupled from the state-

action requirement.

At bottom, the First Amendment “is a restraint on government action, not that of private

persons.” Columbia Broad. Sys., Inc. v. Democratic Nat’l Comm., 412 U.S. 94, 114 (1973).

25 This maxim is clear from the numerous cases upholding restrictions on speech in private

contracts and arbitration agreements. Time and time again, courts have held that because there is

no state-action present in the court’s enforcement of such provisions, plaintiffs have no First

Amendment claim. See Bronner, 249 F. Supp. 3d at 42 (stating that enforcement of plaintiffs’

rights derived from contract limiting defendants’ speech “would not constitute state action[,] . . .

meaning that there would be no First Amendment issue with a judgment for plaintiffs in this

case”) (emphasis added); Dominion Video Satellite, Inc. v. Echostar Satellite L.L.C., 430 F.3d

1269, 1276 (10th Cir. 2005) (rejecting argument that district court order confirming arbitration

award was content-based restriction and unlawful prior restraint on speech because party “failed

to provide relevant authority to satisfy its burden of demonstrating state action[,] a finding

required to trigger application of the First Amendment”) (emphasis added); Roberts, 2016 WL

1660049, at *2 (rejecting claim that arbitration would violate First Amendment petition clause

and holding that “in order for Plaintiffs to have a First Amendment claim, they must first show

state action”) (emphasis added).

Plaintiffs are unable to demonstrate why this case is at all distinguishable from such

precedent. Instead, this action boils down to a dispute over a private agreement – precisely the

type of controversy that courts have held is not subject to the First Amendment. “Arbitration is a

private self-help remedy,” and “[w]hen arbitrators issue awards, they do so pursuant to the

disputants’ contract – in fact the award is a supplemental contract.” Smith v. American

Arbitration Ass’n, 233 F.3d 502, 507 (7th Cir. 2000). The emergency award in this case is the

result of a private agreement between two willing, sophisticated parties. In entering into the

arbitration agreement, Sharp subjected itself to the full range of restrictions articulated under the

26 SIAC rules, which were expressly incorporated into the licensing agreement. See Licensing

Agreement.

The SIAC rules, for instance, provide that an emergency arbitrator “shall have the power

to order or award any interim relief that he deems necessary,” SIAC Rules, Schedule 1, ¶ 8. The

Rules also contain a broad confidentiality provision, which states that “all matters relating to the

proceedings and the Award” are confidential. Id. at Rule 39.1. In entering into the arbitration

provision of the TLA, which expressly incorporated the SIAC rules, Sharp willingly subjected

itself to precisely the type of interim award issued in this case. As discussed above, such a

contract between private parties does not implicate the First Amendment.

a. Analogous Caselaw

Despite such precedent, Sharp asks this Court to find that there is nonetheless a First

Amendment concern in this case. Specifically, Plaintiffs argue that the public-policy defense

under the New York Convention expands the scope of the Amendment to include a general

policy in favor of free speech, even where there is no state action. This is a matter of first

impression in this Circuit, and there is no precedent directly on point. There are, however,

certain bodies of caselaw that are helpful in guiding the Court’s determination as to the

parameters of constitutionally derived public-policy claims.

First, although both sides agree that there is no case addressing whether enforcing an

arbitration agreement can violate the public policy of the First Amendment in the absence of

state action, see Response at 27, neither party addresses the fact that there are cases addressing

an analogous argument with respect to the Due Process Clause. In MedValUSA Health

Programs, Inc. v. MemberWorks, Inc., 872 A.2d 423 (Conn. 2005), for example, the Supreme

Court of Connecticut considered the argument that an arbitration award violated the public

27 policy against excessive punitive damages, a limitation based in the Due Process Clause.

Recognizing that there was no state action at issue, the defendant nonetheless asserted that the

award was unenforceable due to a broader public policy against such punitive damages. The

court squarely rejected this claim. It first explained that the Due Process Clause “barred a state

from imposing grossly excessive punitive damages,” a principle that was “premised on the

presence of state action.” Id. at 663. The court thus found that although there was certainly a

“public policy against the imposition of [such damages] by the state,” the Due Process Clause

could not provide a basis for finding a “public policy against the imposition of excessive punitive

damages by a private actor, such as an arbitration panel.” Id. To draw the contrary inference,

the court held, would be to “render meaningless” the limitation of the Due Process Clause to

state actors by “circumventing the state action requirement.” Id. at 663 n.16 Such an outcome

would “pave[] the way for constitutionalizing a wide variety of private conduct through public

policy analysis.” Id.; see also Shahinian v. Cedars-Sinai Medical Center, 194 Cal. App. 4th 987

(2011) (rejecting argument that arbitration award violated public policy against excessive

punitive damages because “arbitration in this case . . . was not state action [but] was a private

proceeding, arranged by contract, without legal compulsion . . . and [c]onsequently, the

arbitration and award themselves were not governed or constrained by due process”) (internal

citations omitted).

Here, validating Plaintiffs’ claims would achieve the same result. By finding that the

First Amendment establishes a general public policy in favor of speech, the Court would be

permitting private parties to make an end-run around the state-action doctrine. The holdings of

MedValUSA and Shahinian thus support Defendants’ assertion that the public-policy exception

28 to the New York Convention cannot be so broadly construed so as to swallow the state-action

requirements of a First Amendment claim.

The second set of cases that is helpful in guiding the Court’s decision today addresses

circumstances in which private employees have asserted that the First Amendment supports a

public policy against their termination for the exercise of free speech. Like Sharp, these

employees were unable to demonstrate state action with respect to the alleged constitutional

infringement. Yet, those plaintiffs nonetheless asserted that their discharge violated public

policy – an argument that was repeatedly rebuffed by the courts. In Grinzi v. San Diego Hospice

Corp., 120 Cal. App. 4th 72 (2004), for instance, the plaintiff asserted that the First Amendment

provided a public policy sufficient to sustain her tortious-discharge claim against a private

employer. The court concluded otherwise, holding that the public policy of the First Amendment

was circumscribed by “substantive limitations in [the] constitutional provision[],” including the

state-action requirement. Id. at 81. The court in Grinzi therefore concluded that the “First

Amendment prohibition against government intrusions into free speech fails to establish public

policy forbidding free-speech-based terminations by private employers.” Id. at 81.

Similarly, in Barr v. Kelso-Burnett Co., 106 Ill. 2d 520 (1985), the Supreme Court of

Illinois considered whether private employees could assert a First Amendment public-policy

violation giving rise to a retaliatory-discharge cause of action. The plaintiffs “concede[d] that

the constitutional and statutory provisions . . . are limitations only on the power of government,”

but contended “that these provisions are indicators of public policy and thus a violation of these

provisions by anyone is a violation of public policy.” Id. at 527. The court disagreed, holding

that “the public policy clearly mandated by the provisions cited in plaintiffs’ complaint,”

including the First Amendment, “is that the power of government should be limited in those

29 areas.” Id. The “public policy that is mandated by [those] provisions,” the Court concluded, “is

that the power of government, not private individuals, be restricted.” Id. at 528; see also

Newman v. Legal Servs. Corp., 628 F. Supp. 535, 540 (D.D.C. 1986), disapproved of on other

grounds by Hall v. Ford, 856 F.2d 255 (D.C. Cir. 1988) (finding employee’s alleged violation of

public policy on First Amendment grounds “not actionable,” and holding: “There is one

overriding problem with plaintiff’s identification of the First Amendment as a clear mandate of

public policy in this case: By its own terms, the First Amendment applies only to federal or state

governmental actors. If [Defendant] is held not to be a state actor [,] . . . the First Amendment

could not serve as a clear source of public policy.”); Edmondson v. Shearer Lumber Prod., 139

Idaho 172, 177 (2003) (“The prevailing view among those courts addressing the issue in the

private sector is that state or federal constitutional free speech cannot, in the absence of state

action, be the basis of a public policy exception in wrongful discharge claims.”).

These decisions stand for the proposition that, even when a plaintiff asserts a general

public-policy argument, the First Amendment does not apply outside of state action. As is clear

from these decisions, the government-action requirement is not some technicality with which

plaintiffs can dispense by cloaking their claims in the guise of “public policy.” It is, instead, a

necessary and fundamental underpinning of the First Amendment.

b. Foreign Judgments

Finally, the Court turns briefly to Plaintiffs’ reliance upon a limited number of cases in

which U.S. courts have refused to enforce foreign judgments because they were contrary to the

public policy of the First Amendment. This line of decisions appears to be confined largely to a

narrow area of law – libel judgments issued by foreign courts. As Sharp correctly notes, federal

courts have found certain foreign judgments unenforceable in the United States, concluding that

30 such judgments are “repugnant” to the public policy of the First Amendment. See Matusevitch

v. Telnikoff, 877 F. Supp. 1, 4 (D.D.C. 1995) (finding foreign judgment unenforceable on

public-policy grounds because it would be contrary to First and Fourteenth Amendments);

Bachchan v. India Abroad Publ. Inc., 585 N.Y.S. 2d 661, 662 (N.Y. Sup. Ct. 1992) (refusing to

recognize foreign judgment when “the public policy to which the foreign judgment is repugnant

is embodied in the First Amendment to the United States Constitution”). While having some

superficial allure, these cases offer no succor here.

As an initial matter, all of Sharp’s cited cases involve judgments rendered by foreign

courts – not arbitration awards issued by private arbitrators. This distinction matters. First, as

Defendants point out, the enforcement of foreign judgments is governed not by the New York

Convention, but instead by general notions of comity, see Yahoo!, Inc. v. La Ligue Contre Le

Racisme et L’Antisemitisme, 169 F. Supp. 2d 1181, 1192 (N.D. Cal. 2001), rev’d on other

grounds, 433 F.3d 1199 (9th Cir. 2006), and state statutes governing the uniform enforcement of

money judgments. See, e.g., Naoko Ohno v. Yuko Yasuma, 723 F.3d 984, 987 (9th Cir. 2013)

(analyzing whether Japanese judgment was against public policy under California’s Uniform

Foreign-Country Money Judgments Recognition Act).

Second, the foreign-judgment cases make clear that the courts’ concern is whether the

underlying cause of action on which the judgment is based – typically a claim for libel – would

be consonant with the First Amendment if asserted in the United States. See, e.g., Bachchan,

585 N.Y.S. 2d at 662. Here, the “cause of action” that led to the judgment against Sharp is an

action pursuant to an arbitration award entered under a private agreement between private

parties. The fact that the emergency order was, in this case, issued by a foreign arbitrator makes

no difference. The First Amendment would be no more offended by the parties’ arbitration

31 agreement and the resulting award if such proceedings occurred across the street. The foreign-

judgment cases cited by Plaintiffs are thus distinguishable from the facts of this case, as they are

concerned with whether a foreign court has entertained a cause of action that would not be

cognizable if brought in this country. Cf. Yahoo! Inc., 169 F. Supp 2d at 1192 (finding that

foreign judgment “clearly would be inconsistent with the First Amendment if mandated by a

court in the United States”). The SIAC arbitrator, by contrast, issued an order that the precedent

shows would be permissible and enforceable, even if made by a U.S. arbitral body.

Finally, it is reasonable that U.S. courts may be more concerned with the First

Amendment implications of foreign judgments than foreign arbitral awards. The former come

far closer to the state-action concerns of the First Amendment than do the latter, as they involve

the coercive power of a state over potentially non-consenting parties. Arbitration, by contrast,

simply involves the bargained-for results of the parties’ mutual agreement to forgo the judicial

system. Although it is not explicit in the reasoning of the foreign libel decisions, the Court finds

persuasive this distinction between the level of state action involved in foreign judgments versus

foreign arbitration. See Montré D. Carodine, Political Judging: When Due Process Goes

International, 48 Wm. & Mary L. Rev. 1159, 1242 (2007) (“Foreign judgments are readily

distinguishable from private contractual rights. . . . [P]arties freely and voluntarily enter into

private contracts. A foreign judgment is usually obtained after litigation . . . [and] under most

circumstances, the [defendant] can hardly be said to have voluntarily agreed to the terms of the

foreign judgment.”).

Indeed, unlike foreign judgments, arbitration proceedings and awards are “simply a

matter of contract between the parties.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938,

943 (1995). The determinations of an arbitral body are a reflection of that bargained-for

32 arrangement and involve no independent governmental acts. Here, no law compelled Sharp and

Hisense to submit to arbitration. The two parties entered into the arbitration provision of the

TLA willingly, and no state action was involved in the proceedings or entry of the interim award.

The Court therefore finds the foreign-judgment decisions inapposite, in part because they reflect

a degree of governmental involvement not present in this case.

Put simply, there is no free-floating, penumbral public policy protecting free speech. The

principle underlying the First Amendment – that citizens shall be free from government acts

infringing upon their rights of expression and petition – is inherently tied to the state-action

requirement. Because Sharp can make no showing of such government involvement, and

because all of its counts rely upon the alleged violations of First Amendment policies, the Court

will grant Defendants’ Motion to Dismiss.

D. Discretion Under Declaratory Judgment Act

In addition to the lack of personal jurisdiction and Plaintiffs’ failure to state a claim, there

is yet another reason why Sharp comes up empty. Given the ongoing arbitration proceedings in

this case, the Court is unconvinced that a declaratory judgment is the appropriate relief at this

time. As has long been held, the Declaratory Judgment Act gives courts discretion to determine

“whether and when to entertain an action.” Wilton v. Seven Falls, 515 U.S. 277, 282 (1995); see

MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 136 (2007) (Declaratory Judgment Act “has

long been understood to confer on federal courts unique and substantial discretion in deciding

whether to declare the rights of litigants”) (internal quotation marks omitted); Pub. Affairs

Assocs. v. Rickover, 369 U.S. 111, 112, (1962) (“The Declaratory Judgment Act was an

authorization, not a command.”). This determination is guided by the court’s sense of

“practicality and wise judicial administration,” Wilton, 515 U.S. at 287-88, as well as numerous

33 other factors. See Hanes Corp. v. Millard, 531 F.2d 585, 591 n.4 (D.C. Cir. 1976), overruled on

other grounds by Nat’l R.R. Passenger Corp. v. Consol. Rail Corp., 892 F.2d 1066, 1072 (D.C.

Cir. 1990) (listing as among factors whether it would finally settle controversy between parties,

whether other remedies are available or other proceedings pending, convenience of parties,

equity of conduct of declaratory-judgment plaintiff, prevention of procedural fencing, state of

record, degree of adverseness between parties, and public importance of question to be decided).

As Defendants note and Plaintiffs concede, there is currently a motion to vacate the

emergency order pending before a full arbitral panel of the SIAC. See Exh. E. There will be a

hearing on this motion next month, with a decision expected two months later. See Omnibus

Response at 40; ECF No. 35-3 (Declaration of Woo Shu Yan), ¶¶ 9-10. This pending motion

weighs in favor of declining to issue a declaratory judgment and, at the very least, staying the

The New York Convention expressly provides that a court may impose a stay when a

petition to vacate is pending before a court in the country of primary jurisdiction. See

Convention, art. VI. This discretion, coupled with the Court’s inherent leeway in deciding

whether to exercise its jurisdiction under the Declaratory Judgement Act, counsel against

interference in an ongoing international-arbitration dispute. See Telcordia Techs., Inc. v.

Telkom SA, Ltd., 95 F. App’x. 361, 362–63 (D.C. Cir. 2004) (affirming district court decision to

adjourn case pursuant to New York Convention, where foreign set-aside proceeding was

underway); In Re Arb. of Certain Controversies Between Getma Int’l & Republic of Guinea, 142

F. Supp. 3d 110, 116–17 (D.D.C. 2015) (granting stay of arbitration-award action pending

resolution of foreign proceeding seeking annulment of award and noting possibility that award

will be set aside favors granting stay). As was articulated in this Circuit’s decision in Hanes, the

34 “propriety of granting a declaratory judgment” is informed, in part, by the question of whether

“other remedies are available or other proceedings pending.” 531 F.2d at 591 n.4. Here, such

proceedings are already well underway. Foreign proceedings to vacate the emergency award

were initiated prior to the instant suit, see Exh. E, and the SIAC is only months away from taking

action on the merits of Plaintiffs’ claims.

The Court therefore finds that practical considerations counsel it to refrain from

exercising its authority to issue a declaratory judgment. Even in a world in which the merits of

this case were not so readily resolved in Defendants’ favor, Plaintiffs would nonetheless not

prevail.

IV. Conclusion

Although Plaintiffs certainly feel aggrieved by the emergency order imposed upon them

by the SIAC, they have no legal recourse in this Court. There is no personal jurisdiction over

Defendants in the District, and, even if there were, the emergency order does not violate a

fundamental public policy. And, assuming arguendo that the Court reached neither of those

conclusions, it would nonetheless decline to exercise its authority under the Declaratory

Judgment Act in light of the pending motion to vacate before the SIAC. For all of these reasons,

the Court will grant Defendants’ Motion to Dismiss. A separate Order consistent with this

Memorandum Opinion shall issue on this date.

Date: November 13, 2017

/s/ James E. Boasberg JAMES E. BOASBERG United States District Judge