Court Opinion

ID: 803536
Source: CourtListenerOpinion
Date Created: 2012-07-02 20:29:15+00
Date Added: 2024-06-11T18:00:08.591475
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              JUL 02 2012

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

MOHAMED E. LASHEEN,                              No. 10-17034

              Plaintiff - Appellee,              D.C. No. 2:01-cv-00227-LKK-
                                                 EFB
EMBASSY OF THE ARAB REPUBLIC
OF EGYPT; et al.,
                                                 MEMORANDUM *
              Defendants - Appellants,

  and

THE LOOMIS COMPANY,

              Defendant.

                 Appeal from the United States District Court
                     for the Eastern District of California
              Lawrence K. Karlton, Senior District Judge, Presiding

                     Argued and Submitted December 1, 2011
                            San Francisco, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: THOMAS and CLIFTON, Circuit Judges, and CARR, Senior District
Judge.**

      The Arab Republic of Egypt, the Embassy of the Arab Republic of Egypt,

and the Embassy of Egypt Cultural and Educational Bureau (collectively, the

“Egyptian defendants”) appeal the district court’s determination that they are not

immune from suit by Mohamed E. Lasheen (“Lasheen”).1 Lasheen sued the

Egyptian defendants for violations of the Employees Retirement Income Security

Act of 1974 (“ERISA”) and breach of contract. The Egyptian defendants asserted

sovereign immunity. Because Lasheen’s claims are based upon the Egyptian

defendants’ commercial activity, we affirm. As the parties are familiar with the

factual and legal history of the case, we need not recount it here.

                                        I

      Under the Foreign Sovereign Immunities Act (“FSIA”), “a foreign state shall

be immune from the jurisdiction of the courts of the United States and of the States

except as provided in” the Act. 28 U.S.C. § 1604. Thus, “a foreign state is

presumptively immune from the jurisdiction of United States courts[,] unless a

           **
             The Honorable James G. Carr, Senior District Judge for the U.S.
District Court for the Northern District of Ohio, sitting by designation.
       1
       As in the previous Ninth Circuit opinion on this matter, “Lasheen” refers to
both Mohamed Lasheen and his estate. See Embassy of the Arab Republic of Egypt
v. Lasheen (Lasheen I), 603 F.3d 1166, 1168 n.1 (9th Cir. 2010).

                                            2
specified exception applies.” Lasheen I, 603 F.3d at 1169-70 (quoting Saudi

Arabia v. Nelson, 507 U.S. 349, 355 (1993)). “Once the plaintiff offers evidence

that a[] FSIA exception to immunity applies, the party claiming immunity bears the

burden of proving by a preponderance of the evidence that the exception does not

apply.” Joseph v. Office of the Consulate Gen. of Nigeria, 830 F.2d 1018, 1021

(9th Cir. 1987), cert. denied, 485 U.S. 905 (1988).

      Here, Lasheen argues that two statutory exceptions apply to the Egyptian

defendants: (1) waiver and (2) commercial activity. See 28 U.S.C. § 1605(a)(1)-(2).

Because we affirm on the basis of the commercial activity exception, we need not

reach the waiver exception.

      Under the commercial activity exception, “[a] foreign state shall not be

immune from the jurisdiction of courts of the United States or of the States in any

case . . . in which the action is based upon a commercial activity carried on in the

United States by the foreign state . . . .” 28 U.S.C. § 1605(a)(2). The FSIA defines

“commercial activity” as “either a regular course of commercial conduct or a

particular commercial transaction or act.” 28 U.S.C. § 1603(d). It also explains

that “[t]he commercial character of an activity shall be determined by reference to

the nature of the course of conduct or particular transaction or act, rather than by

reference to its purpose.” Id. The Supreme Court has elaborated upon these

                                           3
requirements. A foreign state engages in commercial activity when it exercises

“only those powers that can also be exercised by private citizens,” and not those

“powers peculiar to sovereigns.” Nelson, 507 U.S. at 360 (quotations omitted); see

also Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 614 (1992).

      The key inquiry “is whether the [government’s] particular actions . . .

(whatever the motive behind them) are the type of actions by which a private party

engages in . . . commerce.” Id. (quotations omitted). Thus, this Court considers

whether “the category of conduct is commercial in nature.” Lasheen I, 603 F.3d at

1170 (quoting Sun v. Taiwan, 201 F.3d 1105, 1109 (9th Cir. 2000) (internal

quotation marks omitted)). Finally, there must be “a sufficient nexus between the

plaintiff’s asserted cause of action and the foreign state’s commercial activity.” Id.

This requires that the foreign state’s activities form the basis of an element of the

plaintiff’s claim. Nelson, 507 U.S. at 357; see also Holden v. Canadian Consulate,

92 F.3d 918, 920 (9th Cir. 1996); Gates v. Victor Fine Foods, 54 F.3d 1457, 1463

(9th Cir. 1995).

      In this case, Lasheen pled two causes of action that potentially form the basis

of the commercial activity exception: ERISA violations, including breach of

fiduciary duty, and breach of contract. As this Court explained in Lasheen I, “[b]y

contracting with a company to manage a health benefits plan . . . the Egyptian

                                            4
Defendants did not act with the powers peculiar to a sovereign, but instead acted as

private players in the market.” 603 F.3d at 1171. Similarly, by providing a health

benefits plan to participants, the Egyptian defendants “did not act with the powers

peculiar to a sovereign, but instead acted as private players in the market.” Id.

Regardless of their purpose, the nature of their activity was commercial. See 28

U.S.C. § 1603(d); Sun, 201 F.3d at 1108.

      Moreover, this activity forms the basis of Lasheen’s claims. In Gates v.

Victor Fine Foods, a governmental Canadian pork processing company owned,

through subsidiaries, a California plant. 54 F.3d at 1459. When the Canadian

company withdrew financial support, the plant closed, and workers at the plant sued

the Canadian company under various employment-related theories. Id. We

observed that “[t]he record contain[ed] no evidence to suggest that [the Canadian

company] was involved in [the California plant’s] decision to cancel its Plan and to

close its plant.” Id. at 1465. Additionally, there was no “evidence that [the

Canadian company] participated in any decisions concerning [the California plant]

operations.” Id. Because the commercial activities were unrelated to the claims at

issue, we concluded that the commercial activity exception did not apply. Id.

      In this case, by contrast, the record suggests that the Egyptian defendants

were closely involved in the decision to deny Lasheen coverage. Lasheen

                                           5
produced: the Agreement between Loomis and the Egyptian defendants, which

specifies that the Egyptian defendants were the final decision-maker in coverage

decisions; a letter from the Egyptian defendants to Loomis explaining the coverage

decision on Lasheen’s transplant; and internal Loomis correspondence showing the

company’s implementation of the Egyptian defendants’ decision. Thus, there is

substantial evidence that the Egyptian defendants were “involved in”–indeed, that

they made–the decision regarding Lasheen’s coverage, upon which his claims are

based.

                                            II

         The Egyptian defendants argue that, even if they were involved in

commercial activity, the exception does not apply because Lasheen was a civil

servant. See Holden, 92 F.3d at 921.

         The civil-servant inquiry stems from the FSIA’s legislative history, to which

we turn for a framework by which to analyze commercial activity. Holden, 92 F.3d

at 921. The House Report on the FSIA states: “Also public or governmental and

not commercial in nature, would be the employment of diplomatic, civil service, or

military personnel, but not the employment of American citizens or third country

nationals by the Foreign state in the United States.” H.R. Rep. No. 94-1487, at 11

(1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6615. Thus, the report continues,

                                            6
“[a]ctivities such as a foreign government’s sale of a service or a product, . . . its

employment or engagement of laborers, clerical staff or public relations or

marketing agents . . . would be among those included within the definition [of

commercial activity].” Id. Moreover, “courts . . . have a great deal of latitude in

determining what is ‘commercial activity’ for purposes of th[e Act].” Id. True to

the legislative history, we have employed a flexible approach in determining

whether a person is a civil servant. Holden, 92 F.3d at 921.

      Here, Lasheen was a professor at a public university in Egypt. He came to

the United States on a student scholarship to study horticulture, in connection with

his teaching in Egypt. Even assuming that Egypt’s laws define university

professors as civil servants, he was effectively on sabbatical while studying in the

United States. As in Holden, he was not provided the same benefits or protections

as a civil servant. See Holden, 92 F.3d at 921. The Egyptian defendants argue that

he was entitled to student benefits, but this is not persuasive evidence of civil

service. The type of activity in which Lasheen was involved–study at a

university–was a type “of action[] by which a private party engages in trade and

traffic or commerce.” Kato, 360 F.3d at 114 (quotation marks omitted). Thus,

Lasheen was not a civil servant.

                                             7
                                          III

      Because Lasheen’s claims arise out of the Egyptian defendants’ commercial

activity, the Egyptian defendants fall under a statutory exception of the FSIA and

are not entitled to sovereign immunity.

      AFFIRMED.

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