Opinion ID: 778751
Heading Depth: 3
Heading Rank: 1

Heading: The Press Release's Effect

Text: 24 Virtual Countries argues that the preparation and initial dissemination of the press release cause[d] a direct effect in the United States, 28 U.S.C. § 1605(a)(2), by having a devastating and direct effect ... on [its] business operations, Paley Decl. ¶ 10. Paley explains that the press release's message damaged the plaintiff's ability to raise capital, threaten[ed] Virtual Countries' continued corporate existence, and forced it to divest one of its assets, switzerland.com, to obtain funds to cover operating expenses. Id. ¶¶ 10-12. Paley further explains that the principal injury, a diminishment in Virtual Countries' ability to raise capital, is particularly acute because the plaintiff's continued growth and ultimately its corporate survival [as an internet-based start-up company] depends entirely upon its ability to raise funds in the capital markets. Id. ¶ 11 (emphasis added). 25 But even accepting the plaintiff's account for purposes of the motion to dismiss, the press release's effect falls at the end of a long chain of causation and is mediated by numerous actions by third parties. First, the Republic issued the press release. Then wire services and newspapers in South Africa and elsewhere obtained the release and wrote articles about it. Current or potential investors — perhaps in the United States, perhaps in other countries, and perhaps in both — and a potential strategic business partner in South Africa, allegedly then learned of the release's contents. Drawing on news reports, they then formed their own independent assessments of the Republic's intentions and the possible effect of those intentions on Virtual Countries and people who would do business with it. Among these independent assessments was speculation about possible reprisals by the Republic. Paley Decl. ¶ 13. Only then could investors and the prospective business partner have decided to give effect to their doubts as to the validity of the plaintiff's current registration of southafrica.com and their fears of reprisal by the Republic, by declining to invest in or do business with Virtual Countries. 26 At a minimum, two independent kinds of actors — first the press and then investors, potential investors, and potential business partners — intervened between issuance of the press release and any alleged injurious effect on the plaintiff. Cf. United World Trade, 33 F.3d at 1238 (concluding that there was no jurisdiction where the direct effect was dependent on an intervening factor). Any ultimate effect on Virtual Countries depended principally on a shift in investors' sentiments regarding the plaintiff's prospects. 5 The press release's effect thus depended crucially on variables independent of the Republic. This tangled causal web does not provide the requisite immediacy to establish jurisdiction. See Weltover, 504 U.S. at 618, 112 S.Ct. 2160; cf. United World Trade, 33 F.3d at 1238 (finding no direct effect under any common sense reading of that phrase following a series of banking transactions ... from Sicily to London to New York to Paris). 27 Nor, in our view, would extending the commercial acts exception to the type of remote harm alleged here further the Act's purposes. The legislative history of the FSIA suggests that Congress adopted it to mitigate the considerable uncertainty that arises when a private party ... deals with a foreign government and immunity is decided on the basis of nonlegal considerations. H.R.Rep. No. 94-1487, at 9 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6607. Defining direct effect to permit jurisdiction when a foreign state's actions precipitate reactions by third parties, which reactions then have an impact on a plaintiff, would foster uncertainty in both foreign states and private counter-parties. Neither could predict when an action would create jurisdiction, which would hinge on third parties' independent reactions and conduct, even if in individual cases, such as the one at bar, a particular effect might be foreseeable. To permit jurisdiction in such cases would thus be contrary to the predictability interest fostered by the statute. 28 Finally, to conclude that the press release had an impact on Virtual Countries, we must speculate that investors or potential investors were prepared initially to extend further capital to the plaintiff. We must then surmise that the release had an outcome-determinative impact on such decisions. Yet the press release mentioned only the Republic's intention to initiate an arbitral dispute in WIPO and to lodge proposals with ICANN. Especially in light of the tentative and indefinite nature of the release, it is speculative to conclude that it, rather than other events, triggered the plaintiff's alleged injury. A speculative injury of this kind does not suffice to satisfy § 1605(a)(2)'s third clause. See Gen. Elec. Capital Corp. v. Grossman, 991 F.2d 1376, 1386 (8th Cir.1993) (holding that an American corporation's loss of an opportunity to acquire a foreign entity was too speculative to establish jurisdiction). 6 29