Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil No. 76-742) District Judge: Honorable Louis H. Pollak.
MEMORANDUM OPINION OF THE COURT
Before: ALDISERT, Chief Judge, and SLOVITER, Circuit Judge, and MANSMANN, District Judge.*fn*
This is an appeal by the defendant from an adverse judgment in a diversity case which the district court, sitting without a jury, entered judgment against Makina ve Kimya Endustrisi Kurmumu ("Makina") for injuries sustained by Robert Ohntrup when a gun he was using malfunctioned. Firearms Center, Inc., was also a defendant, but the court concluded as a matter of law that Makina is liable over to Firearms for indemnification. Makina is a Turkish corporation whose stock is wholly owned by the Turkish government. The judgment, including delay damages, amounted to $847,173.97.
From 1972 to 1975, Makina sold 2,850 pistols to Firearms, located in Victoria, Texas. Plaintiff purchased a Makina model pistol and was injured when struck in the left hand by one of the bullets fired by the pistol when, without the trigger being pulled, it discharged three times while he was attempting to load it and the safety was in the "on" position. The basis of the claim and theory of recovery was that the pistol malfunctioned because Makina defectively designed and manufactured it. On appeal, appellant argues that the court erred in denying Makina's motion to dismiss for lack of subject matter jurisdiction because it is a Turkish company whose stock is wholly owned by the Turkish government, that the court erred in finding Makina liable under § 402(a) of the Restatement 2d of Torts, and that the damages were excessive and ascertained in an arbitrary fashion.
We are satisfied that the district court properly ruled that subject matter jurisdiction exists because this case falls within the stated exception contained in 28 U.S.C. § 1605(a)(2). Our review is plenary. Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 103 (3d Cir. 1981). The foreign state immunity statute provides, in relevant part:
(a) A foreign state shall not be immune from the jurisdiction of courts of the United States . . . in any case --
(2) in which the action is based upon a commercial activity carried on in the United States by the foreign state . . . or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.
28 U.S.C. § 1605(a). The statute defines "commercial activity carried on in the United States by a foreign state" as "commercial activity carried on by such state and having substantial contact with the United States." 28 U.S.C. § 1603(e).
We are satisfied with the district court's determination that Makina's pistol sales to Firearms constituted a commercial activity and that this activity had a substantial contact with the United States. The sales agreement between Makina and Firearms provided for a minimum order of 1,000 pistols to sell in the United States during the first year of the contract and for renewal of the contract with an increase in the minimum order by 20% per year. We also agree with the district court that the injury in the United States of a purchaser of a pistol was both a substantial and foreseeable consequence of Makina's actions and came within the exception for commercial acts which cause a "direct effect" in the United States. Accordingly, we reject the first contention of the appellant for the reasons generally set forth in the June 30, 1981, opinion of the district court. App. at 11a-23a.
We also conclude that the district court did not err in finding that Makina could be held liable under § 402(a) of the Restatement 2d Torts. To the extent that the court made findings of basic facts, we hold that the findings were not clearly erroneous. Appellant argues that the court erred in finding that there was no substantial alteration of the pistol after it left Makina's control and possession, that "a substantial change in the pistol should have been anticipated by Makina," and that the plaintiff was not contributorily negligent. The district court concluded that the design of the firing pin and safety crossbolt coupled with the lack of any instructions or warning rendered the pistol owned by the plaintiff unsafe for normal use, that there was no unexpected substantial change after it left the hands of both defendants and this defective condition was the proximate cause of plaintiff's injury. We are satisfied that the district court's position is adequately justified by the court's discussion in its bench opinion of July 12, 1982. App. 32a-43a. Since we uphold the district court's finding against Makina on the basis of strict liability, the contributory negligence, if any, of the plaintiff is irrelevant.
Appellant argues that the award of $483,646.22 for lost earnings and impairment of earning capacity is contrary to the record and excessive, that the awards for pain and suffering and loss of consortium are unsupported in the record, and that the court erroneously found that the plaintiff's hand presently has a functional disability. Here we apply the clearly erroneous rule. Tyminsky v. United States, 481 F.2d 257, 271 (3d Cir. 1973). It also argues that the court erroneously denied Makina's request that the court exclude from its consideration all portions of Dr. Chodoff's testimony concerning his examination of plaintiff. Here we review for abuse of discretion. Joy Mfg. Co. v. Sola Basic Industries, Inc., 697 F.2d 104, 111 (3d Cir. 1982). The district court had referred the question of damages to a United States Magistrate for a report and ...