POWEREX CORP. v. RELIANT ENERGY SERVICES, INC.

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Case Basics
Docket No. 
05-85
Petitioner 
Powerex Corp.
Respondent 
Reliant Energy Services, Inc., et al.
Advocates
(for the petitioner)
(for the United States, as amicus curiae, by special leave of the Court)
(for the respondents)
Term:
Facts of the Case 

The state of California suffered an energy crisis in 2001. Citizens filed suit against energy company Reliant Energy Services et al (Reliant) for conspiring to fix energy price levels. Reliant filed cross-claims against multiple energy companies and regulatory agencies involved in the price fixing, including the Canadian company Powerex Corporation. PowerEx exported surplus Canadian hydropower on behalf of its owner, the British Columbia Hydro and Power Authority (BC Hydro). Since BC Hydro was a governmental corporation and Powerex was its subsidiary, both argued that they were entitled to sovereign immunity under the Foreign Sovereign Immunity Act of 1976 (FSIA). FSIA defines a foreign sovereign as an "organ of a foreign state" (28 U.S.C. Section 1603(b)). Reliant claimed that the two companies were exempt from FSIA sovereign immunity because their commercial activity had a "direct effect" on California energy markets.

A District Court ruled that BC Hydro was a foreign sovereign, but PowerEx was not. The District Court issued a remand order sending the case back to state court. Powerex appealed to the U.S. Court of Appeals for the Ninth Circuit, claiming that it operated for the "public interest" as an instrumentality of the government. The Ninth Circuit held that PowerEx was not a "foreign sovereign" because BC Hydro, not the Canadian government, owned PowerEx's shares.

Question 

1) Does an entity whose shares are wholly owned by a governmental corporation that acts on behalf of a foreign state qualify as an "organ of a foreign state" for purposes of the Foreign Sovereign Immunities Act of 1976 and therefore have sovereign immunity?

2) Did the Court of Appeals have jurisdiction to review the District Court's order sending the case back to state court?

Conclusion 
Decision: 7 votes for PowerEx Corp., 2 vote(s) against
Legal provision: 28 U.S.C. 1447

Unanswered and no. In an opinion by Justice Antonin Scalia, the Court ruled 7-2 that the Ninth Circuit lacked jurisdiction to review the District Court's remand order. The Court relied on 28 U.S.C. 1447(d), which precludes appellate review of remands based on lack of subject-matter jurisdiction. The District Court remanded the case because it found itself lacking the power to adjudicate the dispute after it determined that Powerex was not a foreign sovereign and thus could not remove the case to federal court. Since "the District Court relied upon a ground that is colorably characterized as subject-matter jurisdiction," the remand could not be reviewed on appeal. The Court ruled that Section 1447(d) clearly applied to FSIA sovereign immunity cases, and rejected the argument that Congress could not have intended to deny review of remand orders in such cases. The Court acknowledged that Section 1447(d) had "undesirable consequences in the FSIA context," but it said a change of the law in the internationally sensitive area of sovereign immunity would have to be left to Congress. Justice Stephen G. Breyer's dissent argued that there is an implicit exception for FSIA in Section 1447(d).

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POWEREX CORP. v. RELIANT ENERGY SERVICES, INC.. The Oyez Project at IIT Chicago-Kent College of Law. 19 June 2014. <http://www.oyez.org/cases/2000-2009/2006/2006_05_85>.
POWEREX CORP. v. RELIANT ENERGY SERVICES, INC., The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/2000-2009/2006/2006_05_85 (last visited June 19, 2014).
"POWEREX CORP. v. RELIANT ENERGY SERVICES, INC.," The Oyez Project at IIT Chicago-Kent College of Law, accessed June 19, 2014, http://www.oyez.org/cases/2000-2009/2006/2006_05_85.