Case of the Day: Bell Helicopter v. Iran
Posted on November 7, 2013
The case of the day is Bell Helicopter Textron, Inc. v. Islamic Republic of Iran (D.C. Cir. 2013). Bell operated a helicopter factory in Iran in the 1970s. It abandoned the plant after the Iranian Revolution. In 2002, Bell learned that the Iran Aircraft Manufacturing Industrial Co., a state-owned firm, was using the plant to manufacture the Shaheed helicopter, which closely resembled Bell’s Jet Ranger helicopter. In 2006 Bell sued Iran in Washington, alleging violations of the Lanham Act. After Bell effected service of process, Iran defaulted, and the court entered Iran’s default in 2009. Following a hearing on damages, the court entered a default judgment for more than $22 million in damages. In 2012, after Iran was served with the default judgment pursuant to the FSIA, Iran moved for relief from the judgment under FRCP 60(b)(4) on the grounds that the judgment was void. The district court granted the motion on the grounds that under the FSIA, Iran was immune from suit because Bell had not shown that Iran’s actions caused a “direct effect” in the United States. Bell appealed.
On appeal, the court affirmed after a de novo review. First, it rejected the argument that the Rule 60 motion was untimely; under DC Circuit precedent, there is no time limit on a FRCP 60(b)(4) motion where the defendant did not appear in the action. Second, the court rejected Bell’s argument that FRCP 60(b)(4) had a limited scope: when the defendant has not appeared, the judgment is void under the rule if the court lacked subject matter jurisdiction, full stop. The court went on to affirm the lower court’s finding that, on the facts of the case, Bell could not show an exception to sovereign immunity under the FSIA.
The case is interesting because it emphasizes the continuing vitality of the traditional understanding of void judgments. IF a defendant actually litigates a jurisdictional motion and loses, or if it actively litigates a case and fails to raise a jurisdictional point before judgment, then of course there are limits to its ability to seek relief from the judgment on grounds that the judgment is void. But if the defendant is willing to take the risk of forfeiting its right to litigate the merits if it’s wrong about jurisdiction, then it is free to sit back, allow a judgment to enter, and then raise its jurisdictional defense later.
I agree with this analysis, and I have presented it as essentially unproblematic. But stay tuned for tomorrow’s discussion of Box v. Dallas Mexican Consulate General, a case that takes the wrong view of this.