Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-02-07006/USCOURTS-caDC-02-07006-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

---

Notice: This opinion is subject to formal revision before publication in the

Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify

the Clerk of any formal errors in order that corrections may be made

before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 7, 2003 Decided May 16, 2003

No. 02-7006

MEL J. HILL, ET AL.,

APPELLANTS

v.

REPUBLIC OF IRAQ AND SADDAM HUSSEIN,

IN HIS OFFICIAL CAPACITY AS PRESIDENT OF THE REPUBLIC OF IRAQ,

C/O MINISTRY OF FOREIGN AFFAIRS, BAGHDAD,

REPUBLIC OF IRAQ,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 99cv03346)

Daniel Wolf argued the cause for appellant. With him on

the brief was Steven M. Sprenger.

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

USCA Case #02-7006 Document #749719 Filed: 05/16/2003 Page 1 of 9
2

Before: RANDOLPH and ROGERS, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge: The issue on appeal is whether the

district court erred in denying appellants damages for economic loss in a suit brought under the Foreign Sovereign

Immunities Act (‘‘FSIA’’), 28 U.S.C. §§ 1330, 1602–11 (2000).

This court has not previously addressed the quantum of

evidence that a plaintiff must present to obtain damages

against a non-immune foreign state. Today we hold that

under FSIA a plaintiff must prove that the projected consequences are ‘‘reasonably certain’’ (i.e., more likely than not) to

occur, and must prove the amount of damages by a ‘‘reasonable estimate’’ consistent with this court’s application of the

American rule on damages. Accordingly, we remand the case

to the district court.

I.

Appellants are six former hostages who were denied permission to leave Kuwait and Iraq by the armed forces and

civilian police of the Republic of Iraq after Iraq invaded

Kuwait on August 2, 1990, prior to the start of the Gulf War

in 1990–91. They filed suit against Iraq and its leader

pursuant to the FSIA for hostage taking and sought damages

for the associated pain and suffering, mental anguish, and

physical injuries resulting from their detention and for their

loss of income and other economic injuries. After the appellants-plaintiffs properly served the appellees-defendants, see

28 U.S.C. § 1608(a)(4), and they failed to plead or otherwise

defend, see 28 U.S.C. § 1608(d), the Clerk of the Court

entered a default and the district court thereafter held an

evidentiary hearing. See Hill v. Republic of Iraq, 175

F. Supp. 2d 36, 38 (D.D.C. 2001).

As relevant to this appeal, appellants presented evidence to

establish that at the time of the invasion they were United

States citizens living and working in Iraq and Kuwait, four

for private corporations, one for the United States government, and one as a minister. Each appellant offered evidence

USCA Case #02-7006 Document #749719 Filed: 05/16/2003 Page 2 of 9
3

to establish that he had suffered and continues to suffer

physical and mental injuries as a result of his experiences as

a hostage in Iraq or Kuwait. In addition, appellants offered

expert evidence from a psychiatrist specializing in posttraumatic stress syndrome frequently experienced by former

hostages on the varying degrees each appellant has suffered

and continues to suffer psychological trauma.

On August 2, 1990, David Morris was 49 years old and

working for the Bechtel Corporation on an Iraqi oil project

near Baghdad. He testified that he continued to experience

symptoms of post-traumatic stress and that the psychological

trauma of his hostage experience has made it impossible for

him to resume a career; he submitted documentation from

several therapists who have diagnosed Morris with depression

and/or post-traumatic stress syndrome and from the Social

Security Administration declaring Morris permanently disabled. Jack Frazier, age 53 at the time, was a manager with

the Bechtel Corporation for an oil refinery outside of Baghdad. He testified that because he was denied his diabetes

medication, he had developed progressive diabetic neuropathy

which has resulted in the substantial deterioration of his

health to the point where simple activities such as walking

and using his hands for mundane tasks are extremely difficult

and thus he cannot sustain a career; he offered supportive

evidence from his treating physicians. The other four appellants testified regarding their psychological inability to travel

overseas or at least to the Middle East and thus consequent

loss of career opportunities that each pursued prior to August

2, 1990. Bill Rodebush was 52 years old in 1990 and working

as a field supervisor for Dresser Industries working on a

Kuwaiti oil rig; working for Dresser in China for two years

after his hostage experience, he found that he was unable to

handle the psychological strain of being in a foreign country

and thus was unable to continue his employment with Dresser

and had to accept a lower paying job at Wal–Mart. Paul

Eliopoulos, then 38 years old, managed Arthur Andersen’s

local consulting practice in Kuwait City, and claimed that his

inability to return to Kuwait cost him a promised partnership

and resulted in his dismissal from the company. Charles

USCA Case #02-7006 Document #749719 Filed: 05/16/2003 Page 3 of 9
4

Kolb was a 21–year-old language instructor for the United

States Information Agency in Baghdad and claimed that

because he was psychologically unable to return to the Middle

East, he has been unsuccessful in pursuing a career using his

foreign language skills in Arabic and Farsi and has been

forced to take a lower paying job in the United States.

Reverend Virgil Graham was 51 years old at the time and

doing missionary work for the National Evangelical Church in

Kuwait City, but he similarly found it impossible to work

abroad and was forced to accept a lower paying position as a

minister in the United States, losing other benefits from

missionary work overseas.

The district court construed § 1608(e) to require a FSIA

plaintiff to prove his claims ‘‘by evidence of a nature and

quality sufficient to support summary judgment under Fed.

R. Civ. P. 56, namely, oral or written testimony under oath,

made upon personal knowledge by witnesses competent to

testify to the matters stated therein. See Fed. R. Civ. P.

56(e).’’ Hill, 175 F. Supp. 2d at 38 & n.4. So construed, the

district court found that appellants had suffered and continue

to suffer psychological and physical injuries as a result of

their experiences as hostages, and awarded damages based

on their pain and suffering both ‘‘during their ordeals’’ and

‘‘after captivity TTT ceased.’’ Id. at 46–47. The court awarded appellants damages for hostage taking (false imprisonment) and the associated pain and suffering and mental

anguish, for post-traumatic stress disorders, and for physical

injuries and loss of consortium. The court also awarded

Frazier damages for exacerbation of his diabetic condition.

Notwithstanding the evidence of ‘‘residual psychic effects’’ on

their livelihoods and ‘‘plausible’’ explanations for their ‘‘workrelated problems,’’ however, the district court concluded that

the evidence of economic loss was ‘‘too speculative, and

without a basis to exclude unrelated factors as causative of

adverse fortunes in their working lives, to ascribe any quantity of monetary damages to their economic claims.’’ Id. at 47.

The court also ruled that the cost of any therapy they have

had or might have was ‘‘too imprecise to quantify into damage

awards.’’ Id.

USCA Case #02-7006 Document #749719 Filed: 05/16/2003 Page 4 of 9
5

II.

The issue before this court is confined to review of the

district court’s decision on damages for economic loss. We

are assuming the defendants’ liability and do not address the

question of the FSIA’s plaintiff’s burden on proof on liability.1

This court has not addressed the quantum of evidence

regarding damages and to date other circuits have not provided guidance on this issue. Our review is for abuse of

discretion. See Gulf Arab Media–Arab Am. Film Co. v.

Faisal Found., 811 F.2d 1260, 1262 (9th Cir. 1987); cf. Keegel

v. Key West & Caribbean Trading Co., 627 F.2d 372, 373–74

(D.C. Cir. 1980). Because it is an abuse of discretion to apply

the wrong standard or to consider an improper factor, we

hold that the district court erred by failing to apply the

normal standard for damages for economic loss.

No section of the FSIA directly addresses the quantum of

proof for damages. Section 1608(e) provides that a default

judgment shall not be entered against a foreign state ‘‘unless

the claimant establishes his [or her] claim or right to relief by

evidence satisfactory to the court.’’ 28 U.S.C. § 1608(e).

The Report of the House Judiciary Committee, noting that

§ 1608(e) establishes ‘‘the same requirement applicable to

default judgments against the U.S. Government under rule

55(e), F.R. Civ. P.,’’ observed that ‘‘[i]n determining whether

the claimant has established his claim or right to relief, it is

expected that courts will take into account the extent to which

the plaintiff’s case depends on appropriate discovery against

the foreign state.’’ H.R. REP. NO. 94–1487, at 26 (footnote

omitted) (1976); see also S. REP. NO. 94–1310, at 25 (1976)

(‘‘Legislative History’’).

1 Because no issue is raised we will assume that appellants (1)

have a cause of action against Iraq; see Price v. Socialist People’s

Libyan Arab Jamahiriya, 294 F.3d 82, 87 (D.C. Cir. 2002); and (2)

adequately alleged hostage taking, bringing their claims within

FSIA §§ 1605(a)(7) & 1605(e)(2). See Simpson v. Socialist People’s

Libyan Arab Jamahiriya, ––– F.3d ––––, 2003 WL 1906337, at *2–3

(D.C. Cir. Apr. 22, 2003).

USCA Case #02-7006 Document #749719 Filed: 05/16/2003 Page 5 of 9
6

Section 1606 of the FSIA provides, however, that ‘‘as to any

claim for relief with respect to which a foreign state is not

entitled to immunity TTT, the foreign state shall be liable in

the same manner and to the same extent as a private

individual under like circumstances,’’ subject to exceptions

inapplicable here. 28 U.S.C. § 1606. Therefore, a FSIA

default winner must prove damages ‘‘in the same manner and

to the same extent’’ any as other default winner. Cf. Alameda v. Sec’y of Health, Educ. & Welfare, 622 F.2d 1044, 1048

(1st Cir. 1980) (dictum). Other than protection against procedural default, with the possibility of a relaxed evidentiary

burden on the FSIA plaintiff, see supra Legislative History, a

non-immune foreign state is subject under the FSIA to

federal common law for determining the amount of damages a

plaintiff can recover, with qualifications not relevant here.

See 28 U.S.C. § 1606; Bettis v. Islamic Republic of Iran, 315

F.3d 325, 333 (D.C. Cir. 2003).

The seminal case of Story Parchment Co. v. Paterson

Parchment Paper Co., 282 U.S. 555 (1931), states the American rule on damages:

Where the tort itself is of such a nature as to

preclude the ascertainment of the amount of damages with certainty, it would be a perversion of

fundamental principles of justice to deny all relief to

the injured person, and thereby relieve the wrongdoer from making any amend for his acts. In such

case, while the damages may not be determined by

mere speculation or guess, it will be enough if the

evidence show the extent of damages as a matter of

just and reasonable inference, although the result be

only approximate.

Id. at 563. This approach continues to be reflected in the

literature. See RESTATEMENT (SECOND) OF TORTS § 912 cmts. d

& e; id. § 924 & cmts. d & e; 1 ROBERT DUNN, RECOVERY OF

DAMAGES FOR LOST PROFITS § 1.4, at 9–10 (5th ed. 1998). As

expressed by one commentator, a plaintiff may recover damages for past economic losses if such losses are ‘‘reasonably

proved,’’ while a plaintiff may recover for future harm only by

USCA Case #02-7006 Document #749719 Filed: 05/16/2003 Page 6 of 9
7

a reasonable certainty or preponderance of the evidence.

DAN B. DOBBS, DOBBS LAW OF REMEDIES § 8.1(2), at 361–62,

§ 8.1(7) at 407 (2d ed. 1993). This approach has been

adopted by this circuit in construing District of Columbia law.

See Samaritan Inns, Inc. v. District of Columbia, 114 F.3d

1227, 1235 (D.C. Cir. 1997); Wood v. Day, 859 F.2d 1490, 1493

(D.C. Cir. 1988); 28 U.S.C. § 1391(f)(4). In Samaritan Inns,

a lost profits case, the court applied Story, stating that a

plaintiff must ‘‘prove the fact of injury with reasonable certainty, [and prove] the amount of damages TTT based on a

reasonable estimate,’’ Samaritan Inns, 114 F.3d at 1235; the

plaintiff failed to meet its burden because its measure of

damages rested on a faulty premise. Id. at 1235–37. In

Wood, the court explained that ‘‘damages for future consequences are recoverable only if plaintiff establishes that it is

‘more likely than not (a greater than 50% chance) that the

projected consequence will occur,’ ’’ essentially a preponderance standard. Wood, 859 F.2d at 1493 (quoting Wilson v.

Johns–Manville Sales Corp., 684 F.2d 111, 119 (D.C. Cir.

1982)). Regarding the amount of damages, the court instructed that while damages cannot be awarded on the basis

of ‘‘mere speculation or guesswork,’’ Wood, 859 F.2d at 1493,

the plaintiff need only provide ‘‘some reasonable basis on

which to estimate damages.’’ Id. (quoting Romer v. District

of Columbia, 449 A.2d 1097, 1100 (D.C. 1982)).

Consequently, we hold that to recover damages a FSIA

plaintiff must prove that the projected consequences are

‘‘reasonably certain’’ (i.e., more likely than not) to occur, and

must prove the amount of damages by a ‘‘reasonable estimate’’ under this circuit’s application of Story. This is consistent with § 1606 and not inconsistent with § 1608(e), which is

silent on damages, and assures that a FSIA plaintiff’s recovery of damages has some proportionality to the harm proved.

It is fair to hold FSIA default-judgment winners to the same

preponderance standard of damages as other defaultjudgment winners with regard to future damages, as at the

damages stage the FSIA plaintiff is no longer handicapped by

the defendant’s absence and proof of future damages is likely

in the plaintiff’s control. As to past damages, the district

USCA Case #02-7006 Document #749719 Filed: 05/16/2003 Page 7 of 9
8

court properly could take into account any special problems of

proof arising from the defendant’s absence, consistent with

Congress’ statement of its intent in establishing a liability

threshold. See supra Legislative History.

Because the district court’s failure to apply the proper

standard was not harmless, we must remand. Appellants’

claims for economic loss include lost wages and economic

damages incurred prior to commencement of the instant

lawsuit and future lost wages and economic damages incurred

thereafter. See Complaint ¶ ¶ 35, 39. So far as the record

reveals, the district court failed to use the correct standard

(‘‘reasonable certainty’’ and ‘‘reasonable estimate’’) and

abused its discretion by going beyond the evidence presented

into its own unsupported speculation about other unidentified

unrelated factors. In considering whether to award damages

for economic loss, the district court must confine itself to the

evidence actually presented and not speculate about what

other evidence might have been brought to the court’s attention in a two-sided proceeding. Moreover, in rejecting all of

the economic loss claims as speculative, the district court did

not differentiate among each appellant’s evidence in support

of his economic loss. Yet, the district court found that

appellants’ claims for economic losses based on their experiences as hostages were plausible. See Hill, 175 F. Supp. 2d

at 47. Further, as to the four appellants (Eliopoulos, Kolb,

Graham and Rodebush) who based their claim of economic

loss on their inability to travel overseas because of posttraumatic stress syndrome, the district court credited the

testimony of appellants’ expert and found that these appellants would ‘‘avoid any situation or experience, physical or

mental, which is likely to revive recollections of their ordeals.’’

Id. With respect to Frazier, the district court awarded

additional damages for the exacerbation of his diabetic complications. Id. at 48. Absent explanation, these findings

appear inconsistent with rejection of all of appellants’ economic loss claims. See Fed. R. Civ. P. 52(a); Cicippio v.

Islamic Republic of Iran, 18 F. Supp. 2d 62, 69–70 (D.D.C.

1998).

USCA Case #02-7006 Document #749719 Filed: 05/16/2003 Page 8 of 9
9

Accordingly, we reverse the judgment denying appellants’

claims for economic loss and remand the case to the district

court to apply the proper standard.

USCA Case #02-7006 Document #749719 Filed: 05/16/2003 Page 9 of 9