Court Opinion

ID: 4701448
Source: CourtListenerOpinion
Date Created: 2021-07-06 16:03:25.984815+00
Date Added: 2024-06-11T08:06:17.722119
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 26, 2021                   Decided July 6, 2021

                        No. 20-7092

                 BUDHA ISMAIL JAM, ET AL.,
                      APPELLANTS

                              v.

          INTERNATIONAL FINANCE CORPORATION,
                      APPELLEE

                 Consolidated with 20-7097

        Appeals from the United States District Court
                for the District of Columbia
                    (No. 1:15-cv-00612)

     Richard L. Herz argued the cause for appellants. With him
on the briefs were Marco Simons and Michelle Harrison.

     Henry C. Su was on the brief for amici curiae Center for
International Environmental Law, et al. in support of
appellants.

    Jeffrey T. Green argued the cause for appellee. With him
on the brief were Dana Foster and Maxwell J. Kalmann.
Marisa S. West entered an appearance.
                                2

   Before: ROGERS and TATEL, Circuit Judges, and
RANDOLPH, Senior Circuit Judge.

    Opinion for the Court by Circuit Judge ROGERS.

    Concurring opinion by Senior Circuit Judge RANDOLPH.

     ROGERS, Circuit Judge: Appellants allege that the
International Finance Corporation negligently lent funds to a
power-generation project in India, which damaged their
environment, health, and livelihoods. Because the gravamen
of appellants’ complaint is injurious activity that occurred in
India, the United States’ courts lack subject-matter jurisdiction,
see OBB Personenverkehr AG v. Sachs, 577 U.S. 27, 35–36
(2015), and the district court’s dismissal on that ground is
affirmed.

                                I.

     Appellants are residents of Gujarat, India, a government
entity from the same region, and a nonprofit focused on
fishworkers’ rights. The International Finance Corporation
(“IFC”) is an international organization, established by Articles
of Agreement among its 185 member countries. 1 Appellants’
allegations have been fully described in prior opinions. See
Jam v. Int’l Fin. Corp. (Jam II), 139 S. Ct. 759, 765–67 (2019);
Jam v. Int’l Fin. Corp. (Jam I), 860 F.3d 703, 704 (D.C. Cir.
2017); Jam v. Int’l Fin. Corp. (Jam III), 442 F. Supp. 3d 162,

1
 IFC Articles of Agreement arts. I–II, as amended through Apr. 16,
2020, https://www.ifc.org/wps/wcm/connect/d057dbd5-4b02-40f8-
8065-9e6315c5a9aa/2020-IFC-AoA-English.pdf?MOD=
AJPERES&CVID=n7H2n-h; World Bank, IFC Member Countries
(Apr. 16, 2019), https://www.worldbank.org/en/about/leadership/
members#3.
                               3
166–69 (D.D.C. 2020). For present purposes, a summary will
suffice: Appellants allege that they have been injured by
operations of the coal-fired Tata Mundra Power Plant (the
“Plant”), which is located in India and owned and operated by
Coastal Gujarat Power Limited (“CGPL”). IFC loaned funds
for the project and conditioned disbursement of those funds on
CGPL’s compliance with certain environmental standards.
Appellants allege that IFC negligently failed to ensure that the
Plant’s design and operation complied with these
environmental standards but nonetheless disbursed funds to
CGPL. These supervisory omissions and disbursement
decisions allegedly took place at IFC’s headquarters in the
United States, specifically in Washington, D.C.

     The district court initially dismissed the case for lack of
subject-matter jurisdiction, based on then-binding circuit
precedent that international organizations like IFC enjoyed
virtually absolute immunity from suit. Jam v. Int’l Fin. Corp.,
172 F. Supp. 3d 104, 108–09, 112 (D.D.C. 2016). This court
affirmed in Jam I, 860 F.3d at 708, but the Supreme Court
reversed, holding that such organizations possess more limited
immunity equivalent to that enjoyed by foreign governments,
Jam II, 139 S. Ct. at 765. Applying the new standard on
remand, the district court in February 2020 again ruled that IFC
was immune from appellants’ claims. Jam III, 442 F. Supp. 3d
at 179. The district court in August 2020 denied as futile
appellants’ motion for leave to amend their complaint,
reasoning that IFC would remain entitled to immunity, even
crediting the allegations of the proposed amended complaint.
Jam v. Int’l Fin. Corp., 481 F. Supp. 3d 1, 4, 13–14 (D.D.C.
2020).
                                4
                               II.

     The parties dispute whether the district court’s February
2020 order granting IFC’s renewed motion to dismiss the
complaint was final and appealable. The court need not resolve
that issue. Appellants timely filed a motion to amend their
complaint pursuant to Federal Rule of Civil Procedure 15 or, in
the alternative, Rule 59(e). The pendency of such a motion
tolls the time to appeal. FED. R. APP. P. 4(a)(4)(A)(iv);
Obaydullah v. Obama, 688 F.3d 784, 788 (D.C. Cir. 2012).
After the district court’s August 2020 denial of the motion for
leave to amend the complaint, appellants timely filed a notice
of appeal. The August 2020 decision was a final, appealable
order. Therefore, no matter whether the February decision was
final, the appeal is timely, and this court has jurisdiction under
28 U.S.C. § 1291. We turn to the merits.

     Under the International Organizations Immunities Act
(“IOIA”), international organizations “enjoy the same
immunity from suit and every form of judicial process as is
enjoyed by foreign governments, except to the extent that such
organizations may expressly waive their immunity for the
purpose of any proceedings or by the terms of any contract.”
22 U.S.C. § 288a(b). In Jam II, the Supreme Court held that
the IOIA confers on international organizations the same
immunity available to foreign governments under the Foreign
Sovereign Immunities Act (“FSIA”). 139 S. Ct. at 764–66,
772.

     The FSIA, in turn, provides that foreign states are immune
from the jurisdiction of United States’ courts, 28 U.S.C.
§ 1604, subject to a handful of exceptions, id. §§ 1605–07. At
issue in this appeal is the commercial activity exception, which
provides that a foreign state shall not be immune from
jurisdiction
                                5
         in any case . . . in which the action is based [1] upon a
         commercial activity carried on in the United States by
         the foreign state; or [2] upon an act performed in the
         United States in connection with a commercial
         activity of the foreign state elsewhere; or [3] upon an
         act outside the territory of the United States in
         connection with a commercial activity of the foreign
         state elsewhere and that act causes a direct effect in
         the United States[.]

Id. § 1605(a)(2). The third clause, concerning foreign activity
with a direct effect in the United States, is not at issue here.

     The “based upon” phrase in the commercial activity
exception requires courts to identify the “gravamen” of the
lawsuit: “[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.”
Jam II, 139 S. Ct. at 772. In Saudi Arabia v. Nelson, 507 U.S.
349 (1993), the Supreme Court explained that in identifying
what an action is “based upon” — its “gravamen” — courts
should examine “those elements of a claim that, if proven,
would entitle a plaintiff to relief under his theory of the case.”
Id. at 357. There, the plaintiff had been hired to work in a
government-owned Saudi Arabian hospital. Id. at 351–52. The
plaintiff alleged that after he reported safety defects at the
hospital, Saudi authorities detained and tortured him. Id. at
352–53. The Court held that the lawsuit was not based upon
domestic commercial activity, despite allegations that Saudi
Arabia had tortiously failed to warn the plaintiff of the risks
when it recruited him in the United States. Id. at 358, 363.

    More recently, in OBB Personenverkehr AG v. Sachs, 577
U.S. 27 (2015), the Supreme Court clarified that the gravamen
analysis does not require courts to undertake a “claim-by-
                               6
claim, element-by-element analysis,” but rather to “zero[] in on
the core of [the] suit.” Id. at 34–35. “What matters is the crux
— or, in legal-speak, the gravamen — of the plaintiff’s
complaint, setting aside any attempts at artful pleading.” Fry
v. Napoleon Cmty. Schs., 137 S. Ct. 743, 755 (2017). In Sachs,
the plaintiff had purchased a Eurail pass from a travel agent in
the United States and was later injured by a government-owned
railway car in Austria. 577 U.S. at 30. The plaintiff sued for,
among other things, failure to warn that the train and boarding
platform were defectively designed. Id. The Court concluded
that the gravamen of the suit was tortious activity abroad,
because the plaintiff’s claims all “turn[ed] on the same tragic
episode in Austria, allegedly caused by wrongful conduct and
dangerous conditions in Austria, which led to injuries suffered
in Austria.” Id. at 35. The domestic sale of the railway pass
did not change the result because there was “nothing wrongful
about the sale of the Eurail 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 Eurail pass.” Id. at 35–36. However the suit was
“fram[ed],” “the incident in [Austria] remain[ed] at its
foundation.” Id. at 36. Any other approach, the Court
observed, “would allow plaintiffs to evade the [FSIA’s]
restrictions through artful pleading.” Id.

     In the instant case, paralleling Sachs, all of appellants’
claims turn on allegedly wrongful conduct in India, which has
led to injuries suffered in India. The Washington, D.C.
decisionmaking that appellants criticize consists of providing
funding that facilitated conduct in India. Absent the operation
of the Plant in India, or appellants’ injuries in India, there
would have been nothing wrongful about IFC’s disbursement
of funds. Even crediting the allegation that the Plant would not
have been built without IFC’s funding, see Prop. Am. Compl.
¶ 57, the operation of the Plant is what actually injured
                               7
appellants, cf. Sachs, 577 U.S. at 34, and the manner of its
construction and operation is the crux of their complaint. The
gravamen of appellants’ lawsuit is therefore conduct that
occurred in India, not in the United States, and IFC
consequently cannot be subjected to the jurisdiction of United
States’ courts under the commercial activity exception. That
conclusion holds for each of the various theories that appellants
have pleaded: negligent supervision, public nuisance, trespass,
breach of contract to third party beneficiaries, and others.

     Appellants’ contrary arguments are unpersuasive. At the
outset, appellants make the bold suggestion that Jam I
“previously held” that IFC would not be immune under the
FSIA, that such a result survived Jam II, and that it remains
binding circuit precedent. Appellants’ Br. 19. This is a
transparent misreading of Jam I, which in fact held that IFC
had “virtually absolute” immunity under the IOIA. 860 F.3d at
705–06. Insofar as Jam I suggested a potential outcome of the
FSIA analysis it rejected, see id. at 707, that dictum is not
binding circuit precedent, see Doe v. Fed. Democratic Republic
of Ethiopia, 851 F.3d 7, 10 (D.C. Cir. 2017).

     Appellants’ principal contention is that the gravamen
analysis must be categorically limited to the sovereign
defendant’s conduct, and correspondingly that the conduct of
any non-sovereign entity must be ignored. See Appellants’ Br.
15–17, 21–30. (Although IFC is not a “sovereign,” the parties
— and this opinion — use the term as a shorthand to include
international organizations that enjoy sovereign-like immunity.
See generally Jam II, 139 S. Ct. at 768.) Applying their
proposed rule, appellants maintain that their lawsuit is “based
upon” only IFC’s decisionmaking in Washington, D.C., and
that CGPL’s operation of the Plant in India is irrelevant.
Appellants’ Br. 44–45. This view cannot be squared with
Sachs and Nelson, which instruct courts to examine “the ‘basis’
                                8
or ‘foundation’ for a claim, ‘those elements that, if proven
would entitle a plaintiff to relief,’ and ‘the “gravamen of the
complaint.”’” Sachs, 577 U.S. at 33–34 (alteration omitted)
(citations omitted) (quoting Nelson, 507 U.S. at 357); cf. also
Nestle USA, Inc. v. Doe, 593 U.S. ___ (2021) (slip op., at 3–5).
There is no suggestion that the examination is restricted to the
sovereign’s conduct, especially where, as here, the core of
appellants’ complaint is that IFC enabled or failed to
adequately supervise the conduct of a non-sovereign third
party. Insofar as appellants purport to identify authority to the
contrary, those cases are either distinguishable on their facts,
pre-date Sachs, or both. See, e.g., Transamerican S.S. Corp. v.
Somali Democratic Republic, 767 F.2d 998, 1002–04 (D.C.
Cir. 1985); Gilson v. Republic of Ireland, 682 F.2d 1022, 1027
& n.22 (D.C. Cir. 1982); Glob. Tech., Inc. v. Yubei (XinXiang)
Power Steering Sys. Co., 807 F.3d 806, 814 (6th Cir. 2015);
Callejo v. Bancomer, S.A., 764 F.2d 1101, 1108–09 (5th Cir.
1985).

     IFC’s textual arguments on this point are similarly
unavailing.      The commercial activity exception denies
immunity in “any case . . . based upon a commercial activity
carried on in the United States by the foreign state; or upon an
act performed in the United States in connection with a
commercial activity of the foreign state elsewhere[.]” 28
U.S.C. § 1605(a)(2) (emphasis added). Appellants interpret
the italicized text to “bar courts from basing immunity on a
third party’s acts.” Appellants’ Br. 29. This argument
essentially reads “based upon” out of the statute. Appellants’
position is that a court must look only to the alleged acts of the
sovereign and then determine whether those acts are
commercial and have a geographical nexus to the United
States. Id. at 15–16, 29–30. This approach skips a step
required by the statute: determining what the case is “based
upon.” The text of the commercial activity exception does not
                               9
constrain the gravamen inquiry to only the sovereign acts
alleged in the complaint or require courts to ignore the
importance of third parties’ conduct. Appellants’ other textual
arguments are no more persuasive. The congressional findings
in 28 U.S.C. § 1602 concerning international law cannot
overcome the operative language in § 1605. Cf. Rothe Dev.,
Inc. v. U.S. Dep’t of Def., 836 F.3d 57, 66 (D.C. Cir. 2016).
And the statement in § 1606 — that “the foreign state shall be
liable in the same manner and to the same extent as a private
individual under like circumstances” — applies only “[a]s to
any claim for relief with respect to which a foreign state is not
entitled to immunity under section 1605 or 1607.” Since IFC
is entitled to immunity under § 1605, the scope of liability
specified by § 1606 is of no importance.

     Appellants suggest that the “based upon” inquiry should
function like a personal jurisdiction requirement, asking simply
whether “there is a geographical nexus between [the]
defendant’s commercial activity and the United States.”
Appellants’ Br. 30. Rather than determining the gravamen of
the lawsuit, appellants therefore contend that courts should
engage in a “defendant-focused ‘minimum contacts
inquiry[.]’” Id. at 32 (internal quotation marks omitted)
(quoting Walden v. Fiore, 571 U.S. 277, 284 (2014)). This is
markedly not the approach that the Supreme Court has taken to
the FSIA. In Sachs, for example, the Court found it
unnecessary to determine whether the seller of the railway pass
had acted as the agent of the sovereign entity, 577 U.S. at 31,
35–36, which would have been critical to a minimum contacts
analysis, see Int’l Shoe Co. v. Washington, 326 U.S. 310, 320–
21 (1945). Rather, the Court “zeroed in on the core of [the
plaintiffs’] suit,” the “wrongful conduct and dangerous
conditions” abroad, which led to injuries suffered abroad.
Sachs, 577 U.S. at 35. It was of no consequence whether the
defendant had purposefully availed itself of the U.S. market
                               10
through ticket sales. Cf. J. McIntyre Mach., Ltd. v. Nicastro,
564 U.S. 873, 880–81 (2011).

     Appellants warn against adopting a “last harmful act”
requirement under the FSIA, in which “the sovereign must
commit the last act preceding the injury, even though ordinary
liability rules have no such limitation.” Appellants’ Br. 16.
Like the Supreme Court’s decision in Sachs, 577 U.S. at 36 &
n.2, today’s decision does not impose such a requirement.
Rather, “the reach of our decision [is] limited,” id. at 36 n.2,
holding only that the gravamen of appellants’ particular
complaint is conduct occurring abroad.

     Nor has IFC waived its immunity to appellants’ lawsuit.
This issue was actually decided by Jam I. 860 F.3d at 706–08.
Appellants’ petition for certiorari to the Supreme Court on that
issue was not granted. See Petition for a Writ of Certiorari at i,
21, 24–27, Jam v. Int’l Fin. Corp., No. 17-1011 (Jan. 19, 2018),
granted in part by 138 S. Ct. 2026, 2026 (2018). Nor did the
reasoning of Jam II undermine this court’s conclusion on the
waiver issue. Jam I thus remains law of the circuit as to IFC’s
purported waiver, and the present panel is bound thereby.
LaShawn A. v. Barry, 87 F.3d 1389, 1395 (D.C. Cir. 1996).

     Accordingly, United States’ courts lack subject-matter
jurisdiction over appellants’ complaint because their claims are
not based upon activity carried on in the United States, and IFC
has not waived its immunity to the claims. We therefore affirm
the judgment of the district court dismissing the complaint.
RANDOLPH, Senior Circuit Judge, concurring,

     A few days ago, before we issued this opinion, the Supreme
Court decided Nestle USA, Inc. v. Doe, 593 U.S. ___ (2021).
Justice Thomas’s opinion for the Court in Nestle reinforces
Judge Rogers’ opinion for our court in this case.

     Nestle answered this question — did plaintiffs “establish
that ‘the conduct relevant to the [Alien Tort Statute’s] focus
occurred in the United States.’” Id. at ___ (slip op., at 3–4)
(quoting RJR Nabisco, Inc. v. Eur. Cmty., 136 S. Ct. 2090, 2101
(2016)) (emphasis added). Our decision answered the question
whether the “gravamen” of Jam’s suit was the defendant’s
activity in the United States. See 28 U.S.C. § 1605(a)(2); OBB
Personenverkehr AG v. Sachs, 577 U.S. 27, 33–34 (2015). The
two statutes are different but the analysis is the same. It is the
same because in this context there is no meaningful distinction
between “focus” and “gravamen.”

      The Nestle plaintiffs alleged that the company aided and
abetted forced labor in Ivory Coast by providing farms with
resources “in exchange for the exclusive right to purchase
cocoa.” Nestle, 593 U.S. at ___ (slip op., at 2). Knowing that
the Alien Tort Statute lacks extraterritorial reach, the plaintiffs
claimed that Nestlé “made all major operational decisions from
within the United States.” Id. As the Ninth Circuit put it, “the
[plaintiffs] had pleaded a domestic application of the [statute]
. . . because the ‘financing decisions originated’ in the United
States.” Id. at ___ (slip op., at 3) (internal alterations omitted).

     The Supreme Court disagreed. The Court stressed that
“[n]early all the conduct that [the plaintiffs] say aided and
abetted forced labor — providing training, fertilizer, tools, and
cash to overseas farms — occurred in Ivory Coast.” Id. at ___
(slip op., at 4–5). While the plaintiffs “pleaded as a general
matter that ‘every major operational decision by [Nestlé] is
made or approved in the U.S.[,] . . . allegations of general
                                2

corporate activity — like decisionmaking — cannot alone
establish domestic application of the [statute].” Id. at ___ (slip
op., at 5). And the Court continued: “Because making
‘operational decisions’ is an activity common to most
corporations, generic allegations of this sort do not draw
sufficient connection between the cause of action [plaintiffs]
seek . . . and domestic conduct.” Id.

     The same is true here. Jam failed to show how anything
actionable was based upon something that occurred in the
United States. See 28 U.S.C. § 1605(a)(2); Sachs, 577 U.S. at
33–34. Like the Nestle plaintiffs, Jam alleged that general
corporate activity (loan decision-making and oversight) occurred
at the defendant’s headquarters, so the suit is “based upon”
conduct in the United States. That is not enough. Although the
International Finance Corporation’s financing decisions
originated in D.C., nearly all of the conduct that allegedly
harmed Jam occurred in India. General allegations of decision-
making in D.C. cannot alone transform this suit from one based
upon conduct in India to one based upon conduct in the United
States.