Opinion ID: 3040536
Heading Depth: 3
Heading Rank: 4

Heading: The “Used For a Commercial Activity” Immunity

Text: Standard Applies to Property of SNPC as the Congo’s Stipulated Alter Ego. Af-Cap asserts that as an instrumentality of the Congo, SNPC’s immunity from execution is governed by the standard prescribed in 28 U.S.C. § 1610(b), providing an exception from immunity for the property of an “instrumentality of a foreign state engaged in a commercial activity in the United States,” rather than the more restrictive standard of § 1610(a), excepting from immunity only property of a sovereign “used for a commercial activity in the United States.” Af-Cap’s contention is unavailing because, as part of the dispositive motion procedure, the parties stipulated that SNPC was an alter ego of the Congo, and an alter ego is not a “separate legal entity.” See First Nat’l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 618, 632-33 (1983) (holding that the instrumentality was the alter ego of the sovereign, and refusing to give effect to the instrumentality’s separate juridical status).9 9 The § 1610(b) standard would be inapplicable even if SNPC had separate legal status because § 1610(b)(1) requires that the instrumentality AF-CAP v. CHEVRONTEXACO 1005 E. The District Court Did Not Abuse Its Discretion in Limiting Discovery. Af-Cap asserts that immunity from discovery is more limited in an execution action than in a liability action, and suggests that the district court misinterpreted the law on this point, abusing its discretion when it “den[ied] ‘full discovery’ once it ha[d] determined that a sovereign has no immunity from suit.” See First City, Texas-Houston, N.A. v. Rafidain Bank, 150 F.3d 172, 177 (2d Cir. 1998). Af-Cap contends specifically that the district court abused its discretion when it accepted the Congo’s declarations in lieu of “meaningful discovery” into how the Congo used the ChevronTexaco payment obligations. Af-Cap also argues that de novo review, rather than the abuse of discretion standard, applies to the limitation on discovery, because the district court misinterpreted the FSIA preemption of California’s general debtor statute, California Civil Procedure Code § 708.110. Af-Cap points to no evidence in the record that any misapprehension of the appropriate scope of discovery impacted the district court’s discovery orders. Rather, the district court acted consistently with CBC’s admonition that discovery against a foreign sovereign should be ordered “circumspectly and only to verify allegations of specific facts crucial to the immunity determination.” CBC, 309 F.3d at 260 n.10 (citation and alteration omitted) (emphasis added). Af-Cap also fails to acknowledge that the district court permitted Af-Cap more than fifteen months of discovery from both the Congo and ChevronTexaco, and that the district court did not restrict discovery because of the Congo’s sovereign immunity, but because Af-Cap’s discovery requests had “gone too far.” The district court “has extensive control over the discovery process.” Flatow v. Islamic Republic of Iran, waive its immunity. As SNPC was not a party to the original 1984 Loan Agreement, there is no evidence in the record that SNPC waived immunity. 1006 AF-CAP v. CHEVRONTEXACO 308 F.3d 1065, 1074 (9th Cir. 2002) (citation and internal quotation marks omitted). The district court did not abuse this broad discretion when it limited discovery related to whether there was personal jurisdiction over the foreign subsidiaries, whether SNPC’s assets belonged to the Congo, or whether the obligations were located in the United States, because the court and the parties stipulated, for purposes of the dispositive motion, that Af-Cap had proven all of these allegations. Terminating discovery related to how the Congo “used” the obligations was likewise not an abuse of discretion because AfCap has not specified what additional discovery was warranted. See Theis Research, Inc. v. Brown & Bain, 400 F.3d 659, 666 (9th Cir. 2005) (concluding that the district court did not abuse its discretion when it refused to permit additional discovery because “the movant failed to show how allowing additional discovery would have precluded summary judgment”) (emphasis omitted). None of the court’s discovery rulings was based on an interpretation of FSIA preemption; thus, de novo review is not required. Nevertheless, de novo review of the district court’s interpretation of the interaction between the FSIA discovery procedures and California’s general creditor discovery rules reveals that FSIA, a federal law, preempts state law provisions. See Fed. R. Civ. P. 69(a).