United States of America v. PANGANG GROUP COMPANY,LTD.; PANGANG GROUP STEEL VANADIUM & TITANIUM COMPANY, LTD.; PANGANG GROUP TITANIUM INDUSTRY COMPANY, LTD.; PANGANG GROUP INTERNATIONAL ECONOMIC & TRADING COMPANY

San Francisco, CA - Criminal defense lawyer represented defendants with a Economic Espionage Act charge.

Defendants-Appellants Pangang Group Company, Ltd.

("PGC”); Pangang Group Steel Vanadium & Titanium

Company, Ltd. ("PGSVTC”); Pangang Group Titanium

Industry Company, Ltd. ("PGTIC”); and Pangang Group

International Economic & Trading Company ("PGIETC”)

(collectively, "the Pangang Companies”) are four affiliated

Chinese companies that have been indicted for violating the

criminal provisions of the Economic Espionage Act

("EEA”), 18 U.S.C. § 1831 et seq. The Pangang Companies

moved to dismiss the indictment, arguing that they are

"instrumentalities” of the government of the People's

Republic of China ("PRC”) and are therefore entitled to

sovereign immunity under the Foreign Sovereign

Immunities Act ("FSIA”), 28 U.S.C. § 1602 et seq. The

district court denied the motion on the grounds that, even

assuming that the FSIA's immunity provisions extend to

criminal cases, the Pangang Companies were not immune in

light of the FSIA's commercial activity exception and its

waiver exception.

The Pangang Companies have filed this immediate

appeal from the denial of their motion to dismiss, and the

parties' briefs in this court sharply disagree as to whether and

to what extent the immunity conferred by the FSIA applies

in criminal cases. We need not reach these issues, however,

because we conclude that, in moving to dismiss the

indictment, the Pangang Companies failed to carry their

burden to make a prima facie showing that they are

instrumentalities of a foreign sovereign within the meaning

of the FSIA. We therefore affirm the district court's denial

of the motion.

UNITED STATES V. PANGANG GROUP 5

I

A

Because Appellants' motion to dismiss asserted a facial

challenge to the operative indictment, see infra at 13–14, we

take the following allegations of the indictment as true for

purposes of this appeal. See United States v. Fiander,

547 F.3d 1036, 1041 n.3 (9th Cir. 2008).

Titanium dioxide ("TiO2”) is a white pigment that is used

in products "ranging from paints to plastics to paper.” As

the Chinese economy grew in the 1990s, demand for TiO2

increased, but no company within China had been able to

develop a "clean, efficient” technology for producing it. E.I.

du Pont de Nemours & Company ("DuPont”) had managed

to successfully develop such a process "through intensive

research and development over many years,” but DuPont

was unwilling to sell or license that technology to Chinese

companies. DuPont's "chloride-route” TiO2 production

technology included multiple trade secrets that DuPont took

extensive efforts to keep confidential.

Because of TiO2's importance to manufacturing,

officials of the Chinese government decided to task Walter

Liew, a U.S. businessman, with obtaining and transferring

DuPont's "chloride-route TiO2 technology” to China

through other means. Liew endeavored to do so by

"assembl[ing] a team that included former DuPont

employees,” including one with "detailed knowledge of

DuPont's TiO2 technology” and "expertise in building TiO2

production lines.” As a result of the efforts of Liew and

others, certain DuPont trade secrets were unlawfully

transferred to the Pangang Companies. In "a line of effort

parallel” to Liew's activities, the Pangang Companies also

arranged with unknown "computer hackers” to access

6 UNITED STATES V. PANGANG GROUP

DuPont computers without authorization and to steal "trade

secret information related to the chloride-route production of

TiO2.”

B

Liew was ultimately indicted and convicted on multiple

federal charges arising from his efforts to obtain DuPont's

trade secrets, and he was sentenced to 144 months in prison.

See United States v. Liew, 466 F. Supp. 3d 1062, 1063 (N.D.

Cal. 2020). In 2012, the Pangang Companies were added as

co-defendants in a superseding indictment in Liew's case.

The operative pleading against them is the Third

Superseding Indictment, which the Government sought and

filed in 2016 after Liew had already been tried before a jury

and convicted.

The indictment charges the Pangang Companies with

one count of conspiring to commit economic espionage for

the benefit of a foreign government or instrumentality in

violation of 18 U.S.C. § 1831(a)(5) and one count of

attempting to commit such economic espionage in violation

of § 1831(a)(4). As to the first count, the indictment alleges

that the Pangang Companies conspired with Liew and

others, inter alia, to steal DuPont trade secrets in violation

of § 1831(a)(1); to copy and convey such trade secrets

without authorization in violation of § 1831(a)(2); and to

receive, buy, and possess such trade secrets, knowing they

had been obtained without authorization, in violation of

§ 1831(a)(3). The second count alleges that the Pangang

Companies attempted to commit the same three offenses that

were the objects of the conspiracy. Under the terms of the

statute, the offenses must have been committed with

knowledge that they "will benefit any foreign government,

foreign instrumentality, or foreign agent.” Id. § 1831(a).

The indictment alleges that this requirement is satisfied

UNITED STATES V. PANGANG GROUP 7

because the charged offenses "would benefit a foreign

government, namely the PRC, and foreign instrumentalities,

namely [PGC], PGSVTC, [PGTIC], and P[G]IETC.”

C

After the Pangang Companies were named as codefendants in 2012, they repeatedly and successfully argued

that the Government's efforts to serve summonses on the

indictment were inadequate under Federal Rule of Criminal

Procedure 4. Partly in response to the district court's rulings

in this case, Rule 4 was formally amended, effective

December 1, 2016, so as to clarify the requirements for

serving foreign organizational defendants. See In re

Pangang Grp. Co., 901 F.3d 1046, 1050–53 (9th Cir. 2018).

The Government thereafter again attempted service, and the

district court upheld that service as valid under the amended

rule. Id. at 1054. We denied the Pangang Companies'

ensuing mandamus petition, concluding that, in light of the

amendments to Rule 4, "the district court did not err, let

alone clearly err, in denying the Pangang Companies'

motion to quash service.” Id. at 1060.

The Pangang Companies pleaded not guilty in

September 2018, and the following July they moved to

dismiss the indictment for lack of jurisdiction and for failure

to state an offense. See Fed. R. Crim. P. 12(b)(2), (3)(B)(v).

In contesting the court's subject matter jurisdiction, the

Pangang Companies asserted that (1) under the allegations

of the operative indictment, they were all "instrumentalities”

of the PRC for purposes of the FSIA; (2) the FSIA's general

rule that instrumentalities of a foreign sovereign are

"immune from the jurisdiction of the courts of the United

States and of the States,” 28 U.S.C. § 1604, applies in

criminal cases; and (3) the FSIA's exceptions to that

8 UNITED STATES V. PANGANG GROUP

immunity apply only in civil cases. After briefing and

argument, the district court denied the motion.

For purposes of its ruling, the district court assumed that

the indictment's allegation that the Pangang Companies

were "foreign instrumentalit[ies]” under the EEA, 18 U.S.C.

§ 1839(1), was sufficient to establish that they were also

"agenc[ies] or instrumentalit[ies] of a foreign state” entitled

to immunity under the FSIA, 28 U.S.C. § 1603(a). The court

noted that there were some differences between the FSIA's

definition of that latter phrase and the EEA's definition of a

"foreign instrumentality,” but the court concluded that those

differences were "not material.” The court extensively

surveyed the caselaw addressing whether the FSIA applies

to criminal cases, but it ultimately concluded that it did not

need to definitively resolve this issue. Even "assuming the

FSIA applies in criminal cases,” the court explained, "its

exceptions apply as well.” Turning to the specific

exceptions invoked by the Government in opposing the

motion to dismiss, the court held that the Pangang

Companies' conduct fell within the commercial activity

exception, see 28 U.S.C. § 1605(a)(2), and that their

litigation conduct triggered the waiver exception, id.

§ 1605(a)(1).

The Pangang Companies timely filed a notice of appeal.

II

The Government challenges our appellate jurisdiction

over the district court's order, but we conclude that its

objections lack merit.

"[W]e have long held that 'an order denying immunity

under the FSIA is appealable under the collateral order

doctrine.'” Gupta v. Thai Airways Int'l, Ltd., 487 F.3d 759,

UNITED STATES V. PANGANG GROUP 9

763 (9th Cir. 2007) (quoting Compañía Mexicana de

Aviación, S.A. v. U.S. Dist. Ct., 859 F.2d 1354, 1358 (9th

Cir.1988)); accord Terenkian v. Republic of Iraq, 694 F.3d

1122, 1130 (9th Cir. 2012); cf. Republic of Argentina v.

Weltover, Inc., 504 U.S. 607, 610 (1992) (addressing the

merits of an interlocutory appeal in an FSIA case in which

appellate jurisdiction below rested on the collateral order

doctrine).1 The Government argues that a different rule

should apply in the criminal context, but we disagree. Even

assuming that a criminal defendant invoking the collateral

order doctrine must point to "an explicit statutory or

constitutional guarantee that trial will not occur,” Midland

Asphalt Corp. v. United States, 489 U.S. 794, 801 (1989)

(emphasis added); cf. Digital Equip. Corp. v. Desktop

Direct, Inc., 511 U.S. 863, 875 (1994) (citing Lauro Lines,

490 U.S. at 499), we think that standard is satisfied here. The

Pangang Companies' appeal invokes the explicit statutory

immunity from jurisdiction conferred by the FSIA, which—

if it applies to this criminal case—would bar the prosecution

from going forward at all. We recognize that a "party's

agility” in "characterizing the right asserted” as "an

irreparable 'right not to stand trial'” is not dispositive and

that the right must "rise to the level of importance needed for

recognition under § 1291.” Digital Equip., 511 U.S. at 871–

72, 877–79. But this particular claimed right—an asserted

right of a foreign sovereign entity not to be criminally

prosecuted in the United States—is surely one that (if it

exists) meets that standard. Indeed, the Supreme Court has

1 Under the collateral order doctrine, a "small class” of otherwise

interlocutory rulings are deemed to be "final” and appealable if they

"conclusively determine the disputed question, resolve an important

issue completely separate from the merits of the action, and [are]

effectively unreviewable on appeal from a final judgment.” Lauro Lines

s.r.l. v. Chasser, 490 U.S. 495, 498 (1989) (simplified).

10 UNITED STATES V. PANGANG GROUP

stated that the asserted right of a foreign sovereign "to [be]

free . . . from suit” is so important that a court normally

should "reach a decision about immunity as near to the outset

of the case as is reasonably possible.” Bolivarian Republic

of Venezuela v. Helmerich & Payne Int'l Drilling Co.,

137 S. Ct. 1312, 1317 (2017).

Nevertheless, the Government asserts that, even if a

foreign state instrumentality would ordinarily be able to file

an immediate appeal of a denial of foreign sovereign

immunity, the Pangang Companies cannot do so here in light

of the unique EEA backdrop to this case. According to the

Government, the collateral order doctrine's requirement that

the appeal involve "important questions completely separate

from the merits,” Digital Equip., 511 U.S. at 867 (emphasis

added), is not met here, because the question of whether the

Pangang Companies qualify as "agenc[ies] or

instrumentalit[ies] of a foreign state” under the FSIA

happens to overlap with the merits issue of whether they are

"foreign instrumentalit[ies]” under the EEA who were

benefitted by the theft of trade secrets. This argument fails,

because jurisdiction under the collateral order doctrine

"must be determined at a higher level of generality” and does

not turn on such case-specific fortuities. Id. at 876–77.

Applying that higher level of generality, we perceive no

basis for departing from the well-settled caselaw allowing

immediate appeals, under the collateral order doctrine, from

a denial of foreign sovereign immunity. Cf. Bolivarian

Republic, 137 S. Ct. at 1324 (noting that, outside the context

of expropriation cases, "cases in which the jurisdictional

inquiry does not overlap with the elements of a plaintiff's

claims have been the norm in cases arising under other

exceptions to the FSIA”).

UNITED STATES V. PANGANG GROUP 11

We also reject the Government's suggestion that the

appeal is unripe. While the question of whether the Pangang

Companies are actually foreign instrumentalities under the

FSIA has not been definitively resolved, that does not

preclude us from deciding the claim of immunity that the

district court has rejected—viz., the Pangang Companies'

argument that, taking the allegations of the indictment as

true, they are immune under the FSIA. See Doe v. Holy See,

557 F.3d 1066, 1073–74 (9th Cir. 2009) (asserting appellate

jurisdiction over denial of motion to dismiss in which the

defendant asserted that "on the face of the complaint,” it was

immune under the FSIA); Padilla v. Yoo, 678 F.3d 748, 757

(9th Cir. 2012) (applying similar standard in reviewing

denial of motion to dismiss complaint at the outset based on

qualified immunity). And the fact that this appeal involves

a threshold question of whether the defendants qualify as

instrumentalities of a foreign state does not change the

jurisdictional analysis. See Funk v. Belneftekhim, 861 F.3d

354, 364 (2d Cir. 2017) ("[T]his court has exercised

appellate jurisdiction over interlocutory denials of sovereign

immunity based solely on a finding that a party is not an

agency or instrumentality of a foreign state under the FSIA.”

(citing Filler v. Hanvit Bank, 378 F.3d 213, 216–17 (2d Cir.

2004)); cf. Puerto Rico Aqueduct & Sewer Auth. v. Metcalf

& Eddy, Inc., 506 U.S. 139, 147 (1993) (immediate appellate

jurisdiction extends to denial of Eleventh Amendment

immunity even when claim of immunity "presents difficult

factual questions as to whether an agency is an 'arm of the

State'”).

III

We therefore turn to the merits of the Pangang

Companies' appeal. The companies claim that they are

12 UNITED STATES V. PANGANG GROUP

immune from prosecution in this case by virtue of the terms

of § 1604 of the FSIA, which provides:

Subject to existing international agreements

to which the United States is a party at the

time of the enactment of this Act a foreign

state shall be immune from the jurisdiction of

the courts of the United States and of the

States except as provided in sections 1605 to

1607 of this chapter.

28 U.S.C. § 1604. The parties vigorously dispute whether

this provision confers immunity from all jurisdiction, civil

or criminal, or whether it instead applies only to jurisdiction

over civil cases. If § 1604's immunity does apply to criminal

cases, the parties further dispute whether, and to what extent,

the exceptions to immunity listed elsewhere in the FSIA also

apply in such cases. But we cannot properly reach such

issues unless and until the threshold predicate for application

of the FSIA is first satisfied—namely, that the party seeking

to invoke the FSIA's immunity is a "foreign state” within the

meaning of the FSIA. Accordingly, we begin by considering

that issue. And because we find it dispositive, we do not

reach or decide whether, or to what extent, the FSIA applies

in criminal cases.

A

Because we have never addressed whether the FSIA

applies in criminal cases, we have never considered how the

issue of foreign sovereign immunity would properly be

raised or analyzed in a criminal case. We need not

definitively resolve those questions here. Assuming

arguendo that the FSIA does apply in criminal cases, we see

no reason not to further assume that the same basic

procedural framework that we have applied in the civil

UNITED STATES V. PANGANG GROUP 13

context would also apply, mutatis mutandis, in the criminal

context.

Under that framework, when (as here) it is "not obvious

or uncontested” that the defendant is a "foreign state,”

Peterson v. Islamic Republic of Iran, 627 F.3d 1117, 1128

(9th Cir. 2010), the defendant seeking to assert FSIA

immunity "bears the initial burden to 'make a prima facie

case that it is a foreign state,'” Packsys, S.A. de C.V. v.

Exportadora de Sal, S.A. de C.V., 899 F.3d 1081, 1087 (9th

Cir. 2018) (quoting Peterson, 627 F.3d at 1124). Once this

prima facie case has been established, the burden shifts to

the plaintiff to make a sufficient showing that an exception

to the FSIA applies. See Packsys, 899 F.3d at 1087–88;

Terenkian, 694 F.3d at 1131. "'If the plaintiff satisfies [this]

burden of production, jurisdiction exists unless the

defendant demonstrates by a preponderance of the evidence

that the claimed exception does not apply.'” Packsys,

899 F.3d at 1088 (quoting Peterson, 627 F.3d at 1125).

In seeking to invoke this burden-shifting framework, and

in asserting immunity from jurisdiction, a defendant "may

make either a facial or factual challenge to the district court's

subject matter jurisdiction.” Terenkian, 694 F.3d at 1131. If

the defendant makes a factual challenge, "the defendant may

introduce testimony, affidavits, or other evidence to dispute

the truth of the allegations that, by themselves, would

otherwise invoke federal jurisdiction.” Id. (simplified). In

this posture, "'no presumptive truthfulness attaches to

plaintiff's allegations.'” Id. (quoting Doe v. Holy See,

557 F.3d at 1073). If the defendant makes only a facial

challenge, then "we treat the challenge as 'any other motion

to dismiss on the pleadings for lack of jurisdiction.'” Id.

(quoting Doe v. Holy See, 557 F.3d at 1073).

14 UNITED STATES V. PANGANG GROUP

In moving to dismiss the operative indictment here, the

Pangang Companies raised only a facial challenge. They did

not present any evidence in support of their motion, but

instead relied entirely on the allegations of the indictment,

which they took as true, to carry their threshold burden to

establish that each of them was a "foreign state” within the

meaning of the FSIA. In opposing the Pangang Companies'

motion to dismiss the indictment, the Government likewise

did not present any evidence, but instead relied solely on the

allegations of the indictment in arguing that the immunity

conferred by the FSIA was inapplicable. As framed here,

the question therefore is whether the Pangang Defendants'

reliance on the allegations of the indictment, taken as true, is

sufficient to carry their "initial burden to 'make a prima facie

case'” that they are "'foreign state[s].'” Packsys, 899 F.3d

at 1087 (citation omitted). This raises a "question[] of law

which we review de novo.” Corzo v. Banco Cent. de Reserva

del Peru, 243 F.3d 519, 522 (9th Cir. 2001).

B

Taking the allegations in the indictment as true, we

conclude that the Pangang Companies failed to establish a

prima facie case that they qualify as "foreign states” under

the FSIA.

1

The immunity afforded by the FSIA applies only to a

"foreign state,” a phrase that § 1603 defines to "include[] a

political subdivision of a foreign state or an agency or

instrumentality of a foreign state as defined in subsection

(b).” 28 U.S.C. § 1603(a). There is no contention that the

Pangang Companies are "political subdivision[s]” of the

"foreign state” of the PRC, and so the only question is

whether they qualify as "agenc[ies] or instrumentalit[ies] of

UNITED STATES V. PANGANG GROUP 15

a foreign state as defined in subsection (b).” That

subsection, in turn, defines that phrase to mean:

[A]ny entity—

(1) which is a separate legal person,

corporate or otherwise, and

(2) which is an organ of a foreign state

or political subdivision thereof, or a

majority of whose shares or other

ownership interest is owned by a foreign

state or political subdivision thereof, and

(3) which is neither a citizen of a State

of the United States as defined in section

1332(c) and (e) of this title, nor created

under the laws of any third country.

28 U.S.C. § 1603(b). Because there is no dispute that the

Pangang Companies are separate corporate persons and that

they were organized under the laws of the PRC, the

requirements of § 1603(b)(1) and (b)(3) are not at issue here.

Moreover, the Pangang Companies have not contended that

they are "organ[s] of a foreign state or political subdivision

thereof.” The only question, therefore, is whether "a

majority of [each of the Pangang Companies'] shares or

other ownership interest is owned by a foreign state or

political subdivision thereof.” Id. § 1603(b)(2).

The literal language of this phrase presents a threshold

question whether its use of the phrase "foreign state” is

recursive, such that it might be applied in a chain-like

fashion to reach successive layers of related entities. Thus,

for example, if a "foreign state” owns a majority of the

shares of a separate corporation organized under its laws,

16 UNITED STATES V. PANGANG GROUP

that corporation qualifies as an "agency or instrumentality of

a foreign state” under subsection (b), which means, in turn,

that it is included within the definition of a "foreign state”

under subsection (a). Because that corporation is thus

generally treated as a "foreign state” for purposes of the

FSIA, see id. § 1603(a), can it then be treated as a "foreign

state” in subsection (b)(2) when determining whether

another entity meets subsection (b)'s definition of "agency

or instrumentality”? If so, that would mean that a

corporation that is majority owned by another corporation

that is majority owned by a foreign state would count as a

"foreign state” that is entitled to immunity.

The problem with this reading of § 1603 is that it ignores

a critical difference in language between subsection (a) and

subsection (b)(2). The general definition of "foreign state”

in subsection (a) provides that, as used in the FSIA, that

phrase includes not only what one would ordinarily think of

as the "foreign state”—i.e., the foreign nation itself—but

also both "a political subdivision of a foreign state” and "an

agency or instrumentality of a foreign state.” 28 U.S.C.

§ 1603(a). But when defining which state-owned entities are

foreign "agenc[ies] or instrumentalit[ies],” subsection (b)(2)

requires ownership "by a foreign state or political

subdivision thereof,” thereby conspicuously omitting the

phrase "agency or instrumentality of a foreign state.”

28 U.S.C. § 1603(b)(2) (emphasis added). The difference in

language must be given significance, and it precludes the

above-described recursive reading. See Russello v. United

States, 464 U.S. 16, 23 (1983) ("Where Congress includes

particular language in one section of a statute but omits it in

another section of the same Act, it is generally presumed that

Congress acts intentionally and purposely in the disparate

inclusion or exclusion.” (simplified)).

UNITED STATES V. PANGANG GROUP 17

Moreover, a recursive reading would render subsection

(b)(2)'s explicit reference to a "political subdivision”

surplusage inasmuch as a "political subdivision” would

already be included within the reinserted definition of

"foreign state.” That is a further reason why the recursive

reading cannot be correct. See Reiter v. Sonotone Corp.,

442 U.S. 330, 339 (1979) ("In construing a statute we are

obliged to give effect, if possible, to every word Congress

used.”). Accordingly, the statutory text makes clear that the

reference to "foreign state” in subsection (b)(2) means only

the foreign sovereign itself and not any additional entity

included within the definition of "foreign state” by

subsection (a).

Although its opinion did not explicitly address the

recursive reading, the Supreme Court necessarily rejected

that construction of subsection (b)(2) when it squarely held,

in Dole Food Co. v. Patrickson, 538 U.S. 468 (2003), that a

"corporation is an instrumentality of a foreign state under the

FSIA only if the foreign state itself owns a majority of the

corporation's shares.” Id. at 477 (emphasis added). The

Court thus construed the reference to "foreign state” in

subsection (b)(2) as referring only to the actual "foreign state

itself,” i.e., the foreign sovereign, and not to any "agency or

instrumentality” of that foreign state. Id. Under that

understanding of the statute, the defendant "Dead Sea

Companies” in that case, which were indirectly owned by

the State of Israel through "one or more intermediate

corporate tiers,” were not agencies or instrumentalities of a

foreign state within the meaning of the FSIA. Id. at 473–77.

The Dead Sea Companies in Dole Food instead

attempted to squeeze themselves into subsection (b)'s

definition of "agency or instrumentality” by arguing for an

expansive reading of the phrase "owned by a foreign state.”

18 UNITED STATES V. PANGANG GROUP

According to the companies, the term "owned” includes

indirect ownership, at least as that term is used in "common

parlance” and in its "colloquial sense.” 538 U.S. at 474. The

Court rejected this contention, concluding that it ignores

both the language of the FSIA and the background principles

of corporate law that would necessarily inform the

understanding of the statute's terms. Id. In particular, the

Court noted that subsection (b)(2) "refers to ownership of

'shares,' showing that Congress intended statutory coverage

to turn on formal corporate ownership.” Id. (emphasis

added). And although subsection (b)(2) also refers to a

foreign state's owning a majority of an "ownership interest”

other than "shares,” that phrase was "best understood” as

referring to the possibility of "ownership forms in other

countries, or even in this country, that depart from

conventional corporate structures.” Id. at 476.

Accordingly, what mattered in Dole Food was whether

Israel owned a majority of "the Dead Sea Companies as a

matter of corporate law, irrespective of whether Israel could

be said to have owned the Dead Sea Companies in everyday

parlance.” Id. at 474. Because the Dead Sea Companies had

corporate shares, and not some other form of "ownership

interest,” their status turned on who owned a majority of

those shares. Id. at 473–75 (simplified). Because "Israel did

not own a majority of shares in the Dead Sea Companies,”

but instead "owned a majority of shares, at various times, in

companies one or more corporate tiers above the Dead Sea

Companies,” the latter companies, as subsidiaries, were not

agencies or instrumentalities of Israel. Id. at 475 (emphasis

added). As the Court stated, "only direct ownership of a

majority of shares by the foreign state satisfies the statutory

requirement,” and Israel lacked such direct ownership. Id.

at 474.

UNITED STATES V. PANGANG GROUP 19

Dole Food also addressed the separate question of

whether a defendant's status as an instrumentality should be

judged as of the time of the underlying conduct or as of the

time of the suit. 538 U.S. at 478–80. The Court held that,

because subsection (b)(2) "is expressed in the present tense,”

it "requires that instrumentality status be determined at the

time suit is filed.” Id. at 478 (emphasis added). The Court

noted that this understanding of the statute was also

"consistent with the longstanding principle that the

jurisdiction of the Court depends upon the state of things at

the time of the action brought.” Id. (citations and internal

quotation marks omitted). Assuming that the FSIA applies

in the criminal context, this aspect of Dole Food would

indicate that a defendant's status as an "agency or

instrumentality of a foreign state” must be determined as of

the time it was first indicted.

2

With these standards in mind, we consider whether the

allegations of the indictment here are sufficient to establish

that the Pangang Companies were "agenc[ies] and

instrumentalit[ies] of a foreign state” within the meaning of

the FSIA as of February 7, 2012, the day that they were first

indicted.

a

The indictment includes several allegations about the

ownership structure of the Pangang Companies, which we

take as true for purposes of this appeal. See supra at 13–14.

Like the other allegations of the indictment, these claims

about corporate structure are alleged to be true "at all

relevant times.” Because the dates of the alleged conspiracy

are 1998 through October 2011, at least that timeframe is

included within the indictment's understanding of the

20 UNITED STATES V. PANGANG GROUP

"relevant times.” Although that timeframe does not

expressly include the date of the indictment four months

later, the latter date is close enough in time that we will

assume, for purposes of argument, that the indictment's

allegations concerning the companies' corporate structure

on October 2011 may properly be relied upon to establish a

prima facie case as to the corporate structure as of February

2012.

As to PGC, the indictment alleges that it was a "stateowned enterprise controlled by” the "State-Owned Assets

Supervision and Administration Commission of the State

Council (SASAC),” which is a "special government agency”

of the PRC. The remaining Pangang Companies—

PGSVTC, PGTIC, and PGIETC—are alleged to be direct or

indirect "subsidiaries” of PGC. Specifically, the indictment

states that PGC "controlled” the "subsidiar[y]” PGSVTC,

"which shared senior management” with PGC. PGTIC and

PGIETC were "subsidiaries” that "w[ere] owned and

controlled by [PGC] and PGSVTC.”

In light of these allegations, we can readily dispose of

three of the four entities charged in this case. Taken as true,

the allegations affirmatively negate the premise that

PGSVTC, PGTIC, or PGIETC may be considered agencies

or instrumentalities of the PRC. The indictment describes

all three of these entities as being "subsidiaries” of the fourth

defendant—i.e., PGC. Because the corporate-law concept

of a "subsidiary” refers to a company in which the parent

"has a controlling share,” see Corporation—subsidiary

corporation, Black's Law Dictionary (11th ed. 2019); see

also 1 F. Hodge O'Neal & Robert B. Thompson, Close

Corporations and LLCs: Law and Practice § 1:7 (Rev. 3d ed.

2021) ("Subsidiary corporations” are those "where all or

most of the stock is owned by another corporation.”), the

UNITED STATES V. PANGANG GROUP 21

indictment indicates that PGC is a parent corporation

between the other three companies and SASAC. PGC, of

course, is not the "foreign state itself,” Dole Food, 538 U.S.

at 477, nor is it a "political subdivision thereof,” 28 U.S.C.

§ 1603(b)(2). Because PGSVTC, PGTIC, and PGIETC thus

"were subsidiaries of [an]other corporation[],” 538 U.S. at

475, they were not directly owned by the PRC or SASAC,

and they therefore cannot be deemed to be "agenc[ies] or

instrumentalit[ies] of a foreign state” within the meaning of

§ 1603(b).

The indictment's allegations as to the ownership

structure of PGC require a somewhat different analysis. The

operative indictment alleges that, "at all times relevant,”

PGC was a "state-owned enterprise controlled by SASAC,”

a "special government agency” of the PRC. Even assuming

arguendo that SASAC counts as a "political subdivision” of

the PRC rather than an "agency or instrumentality,” cf.

Ministry of Def. & Support for the Armed Forces of the

Islamic Republic of Iran v. Cubic Def. Sys., Inc., 495 F.3d

1024, 1034–36 (9th Cir. 2007) (Iranian Defense Ministry is

part of the Iranian State rather than an "agency or

instrumentality”), rev'd on other grounds, 556 U.S. 366

(2009), the indictment's allegations are insufficient to

establish a prima facie case that PGC is an agency or

instrumentality of SASAC.

As an initial matter, the allegation that PGC was

"controlled by SASAC” is not enough. Dole Food explicitly

rejected the proposition that, "in determining instrumentality

status under the [FSIA], control may be substituted for an

ownership interest.” 538 U.S. at 477. The crucial question,

instead, is whether a "majority of [PGC's] shares or other

ownership interest is owned” by SASAC or the PRC.

28 U.S.C. § 1603(b)(2). The indictment's unadorned

22 UNITED STATES V. PANGANG GROUP

allegation that PGC is "state-owned” does not resolve that

issue, because it does not indicate whether that term is used

merely in the "colloquial sense of that term”—which would

include indirect ownership—or whether the term is instead

meant to refer to "own[ing] shares . . . as a matter of

corporate law.” Dole Food, 538 U.S. at 474. The former

sense of ownership is not sufficient to satisfy § 1603(b)(2),

and direct ownership of a majority of shares is required. See

supra at 17–18. Because the indictment's ambiguous

allegation that PGC is "state-owned” glosses over this

distinction, alleging nothing about ownership of shares, it is

insufficient to establish the requisite "direct ownership of a

majority of shares by the foreign state.” Dole Food,

538 U.S. at 474.

Two other points underscore the inherent ambiguity in

the indictment's use of the phrased "state-owned.” First, the

indictment refers to PGTIC and PGIETC as being "owned

and controlled by [PGC] and PGSVTC,” but the indictment

also alleges that PGSVTC, PGTIC, and PGIETC are each

"subsidiaries” of PGC (emphasis added). The indictment

thus alleges that PGTIC and PGIETC are owned by two

companies (PGC and PGSVTC) that are at different levels

of the corporate hierarchy (given that PGSVTC is itself a

subsidiary of PGC). Perhaps the indictment means that

ownership of PGTIC and PGIETC is split between the two

other companies (i.e., PGC, and its subsidiary, PGSVTC), or

perhaps it means that PGTIC and PGIETC are subsidiaries

of PGSVTC, which in turn is a subsidiary of PGC. But, in

all events, because two companies cannot both have "direct

ownership of a majority of shares” of another company, Dole

Food, 538 U.S. at 474, it seems clear that the indictment is

not using "owned” in the corporate law sense when it says

that PGTIC and PGIETC are "owned and controlled by

[PGC] and PGSVTC.” Instead, the indictment appears to be

UNITED STATES V. PANGANG GROUP 23

using "owned” only in the "colloquial sense of that term”—

which Dole Food held is insufficient. Id. Consequently,

when the indictment alleges that PGC is "state-owned,” it

likewise presumably uses that term only in its colloquial

sense.

Second, we note that the Government, in opposing the

Pangang Companies' earlier efforts to quash service of

summons, submitted evidence affirmatively asserting that

SASAC's ownership of PGC was indirect. Specifically, the

Government contended that in 2010, after a reorganization,

PGC was "100 percent owned by the Anshan Iron and Steel

Group Corporation, which is 100 percent owned by central

SASAC.” Although we do not take judicial notice of the

truth of this earlier-submitted evidence concerning the

Government's theory of PGC's corporate ownership, we can

take judicial notice of the fact that the Government asserted

such a theory. See Lee v. City of Los Angeles, 250 F.3d 668,

689–90 (9th Cir. 2001). And the fact that the Government

did so further underscores the already amply-supported

conclusion that the indictment's use of the term "stateowned” was not intended to speak to the corporate-structure

issues that are dispositive under Dole Food.

b

In the district court, the Pangang Companies relied

principally on the indictment's additional allegation that

each company was a "foreign instrumentality” under the

EEA, and they contended that this allegation was sufficient

to establish their status as instrumentalities under the FSIA.

When asked at the hearing on the motion to dismiss whether

it disagreed with this representation, the Government said

that it did not. In its subsequent order, the district court noted

that there are "some differences” between the relevant

definitions in the EEA and the FSIA, but it concluded that

24 UNITED STATES V. PANGANG GROUP

they were "not material.” The court therefore proceeded on

the assumption that the indictment's allegation that the

Pangang Companies were "foreign instrumentalities” under

the EEA was sufficient to establish that they were

instrumentalities under the FSIA.

Because the issue goes to subject matter jurisdiction, we

are not bound by the Government's failure to object below

to the Pangang Companies' argument on this score. See

Stock West, Inc. v. Confederated Tribes of the Colville Rsrv.,

873 F.2d 1221, 1228 (9th Cir. 1989) ("[A] party cannot

waive by consent or contract a court's lack of subject matter

jurisdiction.”). Considering the jurisdictional issue

independently, see Herklotz v. Parkinson, 848 F.3d 894, 897

(9th Cir. 2017), we conclude that the allegation that the

Pangang Companies are "foreign instrumentalities” under

the EEA, without more, is insufficient to trigger applicability

of the FSIA.

As noted earlier, one of the elements of the charged

offenses under the EEA is that the defendant must have acted

"intending or knowing that the offense will benefit any

foreign government, foreign instrumentality, or foreign

agent.” 18 U.S.C. § 1831(a). The indictment asserts that

this element was satisfied because the defendants knew that

the charged offenses "would benefit a foreign government,

namely the PRC, and foreign instrumentalities, namely

[PGC], PGSVTC, [PGTIC], and P[G]IETC” (emphasis

added). The EEA expressly defines the term "foreign

instrumentality” to "mean[] any agency, bureau, ministry,

component, institution, association, or any legal,

commercial, or business organization, corporation, firm, or

entity that is substantially owned, controlled, sponsored,

commanded, managed, or dominated by a foreign

government,” 18 U.S.C. § 1839(1), and so the indictment

UNITED STATES V. PANGANG GROUP 25

necessarily alleges that each of the Pangang Companies met

this definition.

On its face, however, the EEA's definition of "foreign

instrumentality” is much broader than the FSIA's definition

of "agency or instrumentality of a foreign state,” as

construed in Dole Food. In particular, the EEA's definition

is satisfied if the "corporation” is "controlled” by the foreign

government, see 18 U.S.C. § 1839(1) (emphasis added), but

Dole Food expressly rejected the view that "control may be

substituted for [the] ownership interest” required by the

FSIA's definition of covered instrumentalities. 538 U.S.

at 477; see id. ("Control and ownership . . . are distinct

concepts.”); see also 28 U.S.C. § 1603(b)(2) (requiring that

a "majority” of "shares or other ownership interest” be

"owned” by the foreign state or its political subdivision).

And unlike the FSIA's definition, the EEA's does not

mention "shares” or other similar corporate formalities. Cf.

Dole Food, 538 U.S. at 474 ("The language of § 1603(b)(2)

refers to ownership of 'shares,' showing that Congress

intended statutory coverage to turn on formal corporate

ownership.”). Instead, a company falls under the EEA's

definition merely by being "substantially owned” by the

foreign government. 18 U.S.C. § 1839(1) (emphasis added).

Because the EEA's definition of "foreign

instrumentality” sweeps so much more broadly than the

FSIA's definition of "agency or instrumentality of a foreign

state,” the indictment's allegation that the Pangang

Companies satisfy the former is insufficient to establish a

prima facie case that they meet the latter

For these reasons, the allegations of the indictment,

standing alone, are insufficient to establish that the Pangang

Companies were instrumentalities of the PRC on the date

they were indicted. Because the Pangang Companies relied

solely upon the indictment’s allegations, and presented no

evidence to support their motion to dismiss, they necessarily

failed to establish a prima facie case that they were “foreign

state[s]” entitled to immunity under § 1604 of the FSIA.

Their motion to dismiss was therefore properly denied.



AFFIRMED