MATIMAK TRADING CO., Plaintiff-Appellant, v. Albert KHALILY, d/b/a Unitex Mills, Inc., and D.A.Y. Kids Sportswear Inc., Defendants-Appellees.

No. 1251, Docket 96-9117.

Facts: Summarize the facts of the case. List only the essential facts that you need to understand the holding and reasoning of the case. 1. Plaintiff-Appellant: Matimak Trading Co. 2. Defendants-Appellees: Albert Khalily, Unitex Mills Inc. and D.A.Y. Kids Sportswear Inc. 3. Plaintiff sues Defendant for breach of contract 4. Plaintiff is located in Hong Kong and is governed by its Jurisdiction 5. Defendants are United states citizens (subjects) 6. The case is brought to court during a period of time of Hong Kong’s absorption into China from United Kingdom 7. Matimak invoked the court's diversity jurisdiction under 28 U.S.C. § 1332(a)(2), which provides jurisdiction over any civil action arising between “citizens of a State and citizens or subjects of a foreign state.” (Mc Laughlin, 1997)
Procedure: The district court for southern New York has dismissed this case ruling that the plaintiff did not have subject matter jurisdiction and cannot invoke alienage/diversity jurisdiction since Hong Kong is not considered a foreign state. The 2nd circuit court of appeals took the case for review and upheld the lower court’s decision after further consideration.
Issue(s): Three principal questions:
“(1) Whether Hong Kong is a “foreign state,” such that Matimak is a “citizen or subject” of a “foreign state”;
(2) Whether Matimak is a “citizen or subject” of the United Kingdom, by virtue of Hong Kong's relationship with the United Kingdom when it brought suit; and
(3) Whether any and all non-citizens of the United States may ipso facto invoke alienage jurisdiction against a United States citizen.” (Mc Laughlin, 1997)
Holding: NO
Reasoning:
Rule: Foreign States are formally recognized by the United States Executive branch. Stateless citizens (subjects) cannot sue United States subjects.
Application: Hong Kong at the time was not recognized by the United States executive branch as a foreign independent state. At the same time it was not recognized as part of the United Kingdom for the purpose of the case. Hence Matimak Trading Co. cannot invoke the diversity alienage jurisdiction under 28 U.S.C. § 1332(a)(2) in bringing suit to Khalily, Unitex Mills Inc. and D.A.Y. Kids Sportswear Inc.
Concurring/dissenting opinions: The court’s majority reached a decision dismissing the case by ruling that Hong Kong is not considered a foreign state or a part of the United Kingdom. Also any and all non US citizens cannot bring suit or sue US citizens. Hence the majority ruling dismissed the Matimak case.

Reference:
Mc Laughlin, J.M., (1997, June 27th). MATIMAK TRADING CO v. KHALILY. Received from http://caselaw.findlaw.com/us-2nd-circuit/1089803.html