Opinion ID: 6327683
Heading Depth: 2
Heading Rank: 1

Heading: IOIA Immunity

Text: The IOIA grants an international organization “the same immunity from suit . . . as is enjoyed by foreign governments.” 22 U.S.C. § 288a(b). The IOIA provisions link the immunity of international organizations and foreign governments. Jam, 139 S. Ct. at 768. In 1960, President Eisenhower designated PAHO an international organization for IOIA purposes. Tuck v. PAHO, 668 F.2d 547, 550 n.5 (D.C. Cir. 1981). The IOIA, through the FSIA provisions, grants PAHO immunity from suit brought in American courts. 28 U.S.C. § 1604. Under the FSIA’s commercial activity exception, however, PAHO loses its immunity if “the action is based upon a commercial activity carried on in the United States by the [international organization].” Id. § 1605(a)(2). The Supreme Court has said that courts should look to “the gravamen” of the action when determining whether an action is “based upon” a commercial activity in the United States. OBB Personenverkehr AG v. Sachs, 577 U.S. 27, 35 (2015). “The gravamen” simply means “the crux” of the action. Fry v. Napoleon Cmty. Schs., 137 S. Ct. 743, 755 (2017). Unsurprisingly, the parties describe neither the gravamen nor its application under the commercial activity exception in the same way. Their dispute includes whether to identify the 10 gravamen on a claim-by-claim basis and, further, whether the gravamen took place in the United States. 1. Whether to determine the gravamen on a claim-by-claim basis PAHO contends that we should look to the entire complaint in determining the gravamen of the action. It notes that the commercial activity exception applies if “the action is based upon a commercial activity,” 28 U.S.C. § 1605(a)(2) (emphasis added), and argues that “the action” refers to the entire lawsuit. If PAHO is correct, we must consider the entire complaint to determine the “gravamen.” See Sachs, 577 U.S. at 35 (court looks to “gravamen” in considering whether “an action is based upon a commercial activity carried on in the United States” (emphasis added)). In Sachs, the Supreme Court interpreted its earlier FSIA holding in Saudi Arabia v. Nelson, 507 U.S. 349 (1993). It observed that Nelson “did not undertake . . . an exhaustive claim-by-claim, element-byelement analysis of the Nelsons’ 16 causes of action” in analyzing the “gravamen.” Sachs, 577 U.S. at 34. “Rather than individually analyzing each of the Nelsons’ causes of action, [the Court] zeroed in on the core of their suit: the Saudi sovereign acts that actually injured them.” Id. at 35. We read Sachs—and 28 U.S.C. § 1605(a)(2)—differently from PAHO. First, the FSIA text does not require courts to look to the entire lawsuit to determine the gravamen thereof. PAHO relies significantly on the assumption that “action” in 28 U.S.C. § 1605(a)(2) refers to the entire suit. But “action” can refer both to “a . . . judicial proceeding,” Action, Black’s Law Dictionary (11th ed. 2019), and serve as shorthand for a “cause of action,” id. (referring to “cause of action” entry); see also Cause of Action, Black’s Law Dictionary (11th ed. 2019) (“group of operative facts giving rise to one or more bases for suing”). 11 And the Supreme Court has stated that “statutory references to an ‘action’ have not typically been read to mean that every claim included in the action must meet the pertinent [jurisdictional] requirement before the ‘action’ may proceed.” Jones v. Bock, 549 U.S. 199, 221 (2007). Second, Sachs instructs courts to define the “gravamen” on a claim-by-claim basis. Earlier, in Nelson, the plaintiff had claimed that the commercial activity exception lifted Saudi Arabia’s sovereign immunity. 507 U.S. at 355–56. In that case, the Supreme Court read the commercial activity exception to require a court to look to the “elements of a claim that, if proven, would entitle a plaintiff to relief under his theory of the case” in determining whether an action is “based upon” commercial activity in the United States. Id. at 357. After Nelson, the Ninth Circuit Sachs opinion adopted an “elementby-element” approach under which the commercial activity exception applies if any element of a claim involves a “commercial activity . . . in the United States.” Sachs v. Republic of Austria, 737 F.3d 584, 599 (9th Cir. 2013) (en banc).3 3 Before Sachs, circuit courts had interpreted Nelson in various ways. Like the Ninth Circuit, the Eighth Circuit read Nelson to say that “only one element of a plaintiff’s claim must concern commercial activity carried on in the United States.” BP Chems. Ltd. v. Jiangsu Sopo Corp., 285 F.3d 677, 682 (8th Cir. 2002). It therefore found that a wrongful disclosure case was “based upon” commercial activity in the United States because the plaintiffs alleged that the defendants disclosed “trade secrets to American vendors in the United States.” Id. at 684. Indeed, rejecting the “gravamen” theory, the Eighth Circuit held that courts should look beyond the elements only if guarding against a “semantic ploy” like recasting an intentional tort claim as a “facially invalid” failure-to-warn claim. Id. at 685–86. 12 In Sachs, the Supreme Court rejected that approach. Sachs, 507 U.S. at 34. Sachs had purchased a Eurail train pass in the United States and was later injured at a government-owned train station in Austria. Id. at 30. She sued Austria’s railway operator, relying on the commercial activity exception because an element of her claim—her Eurail purchase—involved “commercial activity . . . in the United States.” Id. at 30. The Supreme Court clarified that earlier, in Nelson, it did not “individually analyz[e] each of the [plaintiffs’] causes of action” because the “Saudi sovereign acts that actually injured them . . . form[ed] the basis for the [plaintiffs’] suit.” Id. at 35 (quoting Nelson, 507 U.S. at 358) (internal quotation marks In our circuit, we read Nelson to say that the commercial activity must constitute an essential element of the claim. Kirkham v. Société Air France, 429 F.3d 288, 292 (D.C. Cir. 2005) (“so long as the alleged commercial activity establishes a fact without which the plaintiff will lose, the commercial activity exception applies”). In Kirkham, we explained that the plaintiff “must show she purchased a plane ticket in order to establish a passenger-carrier relationship with the airline” and proceed with her negligence claim against Air France. Id. The Fourth and Fifth Circuits interpreted Nelson similarly. See Globe Nuclear Servs. & Supply (GNSS), Ltd. v. AO Techsnabexport, 376 F.3d 282, 287 (4th Cir. 2004) (what plaintiff “will need to prove” constitutes what action is “based upon”); Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841, 853 (5th Cir. 2000) (inquiry is whether alleged commercial activity is “an essential element of the claims”). The Third Circuit read Nelson to “require the actual legal claims being pursued to have arisen materially from the commercial activity undertaken by the foreign state.” Fed. Ins. Co. v. Richard I. Rubin & Co., 12 F.3d 1270, 1288 (3d Cir. 1993). It therefore held that tort claims arising from deficient electrical and fire detection systems were not “based upon” a Dutch-controlled entity that invested in American property. Id. at 1289. The investments were not “directly connected to the cause of action” or the “‘basis’ or ‘foundation’ of the claims.” Id. 13 omitted). PAHO argues that the Sachs Court, in saying that Nelson “did not undertake . . . an exhaustive claim-by-claim, element-by-element analysis of the Nelsons’ 16 causes of action,” id. at 34, instructs us to look to the entire lawsuit to determine whether an action is “based upon” commercial activity in the U.S. But Sachs rejected the Ninth Circuit’s “oneelement” approach and instead reaffirmed its direction to look to the “gravamen” of the suit. Indeed, Sachs itself considered individual claims, declaring that “the gravamen of Sachs’s suit plainly occurred abroad. All of her claims turn on the same tragic episode in Austria.” Id. (emphasis added). The Court explicitly rejected Sachs’s assertion that some of her claims were based upon American activity. Id. at 35–36 (“Sachs maintains that some of those claims are not limited to negligent conduct or unsafe conditions in Austria, but rather involve at least some wrongful action in the United States. . . . However Sachs frames her suit, the incident in Innsbruck remains at its foundation.”). The Court in fact emphasized its opinion’s limited reach, noting it “consider[ed] here only a case in which the gravamen of each claim is found in the same place.” Id. at 36 n.2 (emphasis added). Sachs, then, approves considering the “gravamen” on a claim-by-claim basis. Since Sachs, we have considered “FSIA immunity determinations on a claim-by-claim basis.” Simon v. Republic of Hungary, 812 F.3d 127, 141 (D.C. Cir. 2016) (citing precedent from other circuits), vacated on other grounds by Federal Republic of Germany v. Philipp, 141 S. Ct. 703 (2021); see also Action All. of Senior Citizens of Greater Philadelphia v. Sullivan, 930 F.2d 77, 83 (D.C. Cir. 1991) (vacated opinions “continue to have precedential weight, and in the absence of contrary authority, we do not disturb them”). In Simon, we reviewed claims made by fourteen Holocaust survivors against the Republic of Hungary and its state-owned railway. Id. at 132. The survivors “assert[ed] causes of action ranging from 14 the common law torts of conversion and unjust enrichment for the plaintiffs’ property loss, to false imprisonment, torture, and assault for their personal injuries, to international law violations.” Id. at 134. They argued that FSIA’s expropriation exception applied, id. at 140, which requires, inter alia, “that the claims are ones in which ‘rights in property’ are ‘in issue,’” id. at 141 (quoting 28 U.S.C. § 1605(a)(3)). We reviewed the causes of action separately, noting that property rights were at issue in the plaintiffs’ conversion claims but not in their personal injury claims. Id. Although PAHO emphasizes that the commercial activity exception uses “action” (and the expropriation exception does not), we think it unlikely that this implicit word choice differentiates commercial activity exception analysis from that of other FSIA exceptions. The parties also contest PAHO’s alleged delict—whether PAHO “moved money for a fee” (i.e., acting as a financial intermediary) or, instead, arranged medical services for a fee (i.e., acting as an international public health organization). As described supra, the complaint alleges that PAHO “moved money for a fee” under the “pretext” of arranging medical services. PAHO, of course, maintains that it in fact organized a public health program. At this stage of the litigation, however, we accept all well-pleaded allegations as true. Valambhia, 964 F.3d at 1137. The complaint plainly asserts that, with respect to the funds that constituted its financial benefit in violation of 1589(b), PAHO had the role of financial “intermediary,” transferring money among Mais Médicos participants. 2. Whether the gravamen occurred in the United States The parties also dispute how to define the gravamen under the claim-by-claim approach and whether the gravamen constitutes “commercial activity carried on in the United States.” PAHO maintains that the “gravamen” is the activity 15 that in fact injured the physicians, the alleged human trafficking and forced labor. In Sachs, the Supreme Court rejected Sachs’s argument that, for her failure-to-warn claim, the gravamen occurred in the United States. 577 U.S. at 35–36. “Under any theory of the case that Sachs presents . . . there is nothing wrongful about the sale of the [train] pass standing alone. Without the existence of the unsafe boarding conditions in [Austria], there would have been nothing to warn Sachs about when she bought the [train] pass. However Sachs frames her suit, the incident in [Austria] remains at its foundation.” Id. Moreover, in Jam v. International Finance Corporation, 3 F.4th 405 (D.C. Cir. 2021), we recently applied a similar rationale. The plaintiff alleged that the International Finance Corporation (IFC) negligently lent money to an Indian powergeneration project that allegedly caused significant environmental damage. Id. at 407. Relying in part on the Supreme Court’s earlier decision in the case, see Jam, 139 S. Ct. at 779 (“[I]f the ‘gravamen’ of a lawsuit is tortious activity abroad, the suit is not ‘based upon’ commercial activity within the meaning of the FSIA’s commercial activity exception.”), we held that, notwithstanding the IFC loan transaction took place in the United States, the “gravamen” occurred in India because all the allegedly wrongful conduct occurred there. Jam, 3 F. 4th at 409. PAHO asserts that “moving money for a fee” likewise becomes “wrongful” only due to activity that occurred elsewhere—in this instance, alleged human trafficking and forced labor in Cuba and/or Brazil. Absent the alleged trafficking and forced labor, PAHO would have merely acted as a typical financial intermediary. As in Sachs and in Jam, PAHO argues that we should look to what “actually injured” the physicians in identifying the “gravamen.” See Sachs, 577 U.S. at 35–36. If PAHO is right, the “gravamen” occurred abroad and the commercial activity exception would not apply. 16 We think that Sachs does not require defining the “gravamen” by looking to the acts that “actually injured” the physicians. In defining the “gravamen” according to the activity that injured the plaintiffs, the Sachs Court clarified that “[d]omestic conduct with respect to different types of commercial activity may play a more significant role in other suits.” 577 U.S. at 36 n.2; see also id. (“Justice Holmes wrote that the ‘essentials’ of a personal injury narrative will be found at the ‘point of contact’—‘the place where the boy got his fingers pinched.’ At least in this case, that insight holds true.” (citation omitted) (emphasis added)). Nelson, Sachs and Jam all considered commercial activity connected with tortious activity that occurred abroad. See Jam, 139 S. Ct. at 779 (“[I]f the ‘gravamen’ of a lawsuit is tortious activity abroad, the suit is not ‘based upon’ commercial activity within the meaning of the FSIA’s commercial activity exception.” (emphasis added)). The Court expressed concern that artful pleading would allow litigants to “recast virtually any claim of intentional tort” as a failure to warn and thus create an exception to sovereign immunity. Sachs, 577 U.S. at 36 (quoting Nelson, 507 U.S. at 363).4 4 Indeed, in Nelson and Sachs, the Court explained that it looked to the “gravamen” as plaintiffs could otherwise recast nearly any tortious activity that occurred abroad as a tort that occurred in the United States. See Nelson, 507 U.S. at 363 (“[A] plaintiff could recast virtually any claim of intentional tort committed by sovereign act as a claim of failure to warn, simply by charging the defendant with an obligation to announce its own tortious propensity before indulging it. To give jurisdictional significance to this feint of language would effectively thwart the [FSIA’s] manifest purpose to codify the restrictive theory of foreign sovereign immunity.”); id. at 358 (“Those torts, and not the arguably commercial activities that preceded their commission, form the basis for the Nelsons’ suit.”); Sachs, 577 U.S. at 36 (iterating Nelson’s concern about artful 17 Here, however, the alleged financial activity itself gives rise to a cause of action. See 18 U.S.C. § 1589(b) (prohibition on financially benefitting from participation in human trafficking). At least with regard to alleged illegal financial activity, we consider the “gravamen” of that alleged wrongful conduct rather than any harm that may result elsewhere. The “gravamen” of a suit consists of “those elements of a claim that, if proven, would entitle a plaintiff to relief under his theory of the case,” Nelson, 507 U.S. at 357, or, phrased differently, “the core” of a claim, see Sachs, 577 U.S. at 35. If the conduct is itself wrongful—as opposed to wrongful based only on other conduct—it constitutes the “core” of the claim. The physicians allege that PAHO committed a financial crime in the U.S., see 18 U.S.C. § 1589(b), and press the corresponding civil claim, see 18 U.S.C. § 1595(a) (“individual who is a victim of a violation of this chapter may bring a civil action against the perpetrator . . . and may recover damages”). The “financial benefit” that violates § 1589(b) is itself “wrongful conduct” and occurred in the United States, to wit: PAHO received, forwarded and retained the Mais Médicos money through its Washington, D.C. bank account. Apart from the wrongful conduct PAHO allegedly participated in abroad, the physicians also allege wrongful conduct that occurred entirely within the U.S.5 pleading of tort claims); id. (gravamen occurs abroad if plaintiff suffers “personal injury” abroad and “seeks relief under claims for negligence, strict liability for failure to warn, or breach of implied warranty”); see also Fry v. Napoleon Cmty. Schs., 137 S. Ct. 743, 755 (2017) (concern about artful pleading motivated holding in Sachs). 5 Because we define the “gravamen” as it relates to the injurycausing conduct, and not to the resulting injury, we need not address who suffered from the § 1589(b) violation. Even if we did, however, we would reach the same conclusion. Section 1589(a) criminalizes 18 Accordingly, we believe that the physicians have sufficiently alleged that PAHO’s conduct of “moving money for a fee” constituted “commercial activity carried on in the United States.” We emphasize, however, that we hold only that the physicians have made sufficient allegations to survive dismissal; the district court retains the authority to reassess its jurisdiction as the litigation progresses. Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006) (“subject-matter jurisdiction . . . may be raised by a party, or by a court on its own initiative, at any stage in the litigation”); Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992) (burden of establishing jurisdiction varies “with the manner and degree of evidence required at the successive stages of the litigation”).