Court Opinion

ID: 6800758
Source: CourtListenerOpinion
Date Created: 2022-07-22 15:01:36.940283+00
Date Added: 2024-06-11T16:03:13.304865
License: Public Domain

United States Court of Appeals
                              FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 21-7070                                                       September Term, 2021
                                                                   FILED ON: JULY 22, 2022

CAPITALKEYS, LLC,
                        APPELLANT

v.

DEMOCRATIC REPUBLIC OF CONGO AND CENTRAL BANK OF THE DEMOCRATIC REPUBLIC OF THE
CONGO,
                  APPELLEES

                             Appeal from the United States District Court
                                     for the District of Columbia
                                         (No. 1:15-cv-02079)

        Before: TATEL *, WILKINS and RAO, Circuit Judges.

                                           JUDGMENT

       This appeal was considered on the record, briefs, and oral arguments of the parties. The
Court has accorded the issues full consideration and determined that they do not warrant a
published opinion. See FED R. APP. P. 36; D.C. CIR. R. 36(d). For the reasons set out below, it is

        ORDERED AND ADJUDGED that the judgment of the District Court be AFFIRMED.

     CapitalKeys, LLC (“CapitalKeys”), a public affairs firm based in Washington, D.C., sued the
Democratic Republic of the Congo (“the DRC”) and the Central Bank of the Democratic Republic
of Congo (“the Central Bank,” and collectively, “Appellees”) for breach of contract and other
related claims. According to CapitalKeys, its President, Adam Falkoff, executed an agreement
with then-outgoing Governor of the Central Bank, Jean-Claude Masangu Mulongo. The
Agreement stipulated that Appellees would pay Appellant $16.6 million in exchange for services
including “government relations and strategic communications,” to be completed over the course
of five years. Appellant Opening Br. 10; CapitalKeys, LLC v. Democratic Republic of Congo, No.
15-CV-2079, 2021 WL 2255362, at *1 (D.D.C. June 3, 2021). In addition, the Agreement
provided that it would be governed by “the laws of the District of Columbia . . . and a court in said

*
 Judge Tatel assumed senior status after this case was argued and before the date of this judgment.
place shall be the exclusive location for any suit or proceeding relating to this Agreement.” J.A.
35. Just such a suit arose two years into the contract when neither the DRC nor the Central Bank
had paid, prompting CapitalKeys to attempt to retrieve what it believed it was owed via the District
Court. Part of its attempt, however, required CapitalKeys to prove that Appellees, two foreign
entities “presumptively immune from the jurisdiction of United States courts,” had waived their
sovereign immunity. Fed. Republic of Germany v. Philipp, 141 S. Ct. 703, 707 (2021).

     The District Court concluded that CapitalKeys failed to do so and granted the Central Bank’s
motion to dismiss the complaint for lack of subject matter jurisdiction over either the Central Bank
or the DRC, see FED. R. CIV. P. 12(b)(1), despite the DRC’s failure to appear at any stage of this
litigation. CapitalKeys, LLC, 2021 WL 2255362, at *20–21; see Verlinden B.V. v. Cent. Bank of
Nigeria, 461 U.S. 480, 493 n.20 (1983) (“[E]ven if the foreign state does not enter
an appearance to assert an immunity defense, a District Court still must determine
that immunity is unavailable under the [Foreign Sovereign Immunities Act].”). We affirm its
decision.

     The Foreign Sovereign Immunities Act (“FSIA”) provides “the sole basis for obtaining
jurisdiction over a foreign state in the courts of this country.” Argentine Republic v. Amerada
Hess Shipping Corp., 488 U.S. 428, 443 (1989). Under FSIA, foreign states or “a political
subdivision . . . or an agency or instrumentality of a foreign state,” 28 U.S.C. § 1603(a), are
jurisdictionally immune unless “the plaintiff’s claim[s] fall[] within a statutorily enumerated
exception” upon which a district court has subject matter jurisdiction. Odhiambo v. Republic of
Kenya, 764 F.3d 31, 34 (D.C. Cir. 2014). CapitalKeys bears the burden of producing evidence
that an exception applies, see Bell Helicopter Textron, Inc. v. Islamic Republic of Iran, 734 F.3d
1175, 1183 (D.C. Cir. 2013), and must do so for both the DRC and the Central Bank. To that end,
CapitalKeys invoked the waiver exception, 28 U.S.C. § 1605(a)(1), arguing that Appellees
“waived sovereign immunity by implication,” and the commercial activity exception, 28 U.S.C. §
1605(a)(2), arguing that Appellees were not immune because “this action is based on commercial
activities” sufficient to strip jurisdictional immunity. J.A. 19; see also Appellant Opening Br. 33–
46, 46–51. We consider each exception in turn.

     The waiver exception applies when “the foreign state has waived its immunity either explicitly
or by implication[.]” 28 U.S.C. § 1605(a)(1). The statute fails to identify what constitutes an
implicit waiver; nevertheless, we have construed the provision narrowly and emphasized that a
finding of implicit waiver turns on evidence of a foreign state’s intent to waive its immunity. See
Creighton Ltd. v. Gov’t of State of Qatar, 181 F.3d 118, 122 (D.C. Cir. 1999) (“[I]mplicit in
§ 1605(a)(1) is the requirement that the foreign state have intended to waive its sovereign
immunity.”).

    CapitalKeys argues that Governor Masangu implicitly waived the Central Bank’s sovereign
immunity because the Agreement contained a choice-of-law provision that designated the laws of
the District of Columbia as the “exclusive location for any suit or proceeding” related to the
Agreement. Appellant Opening Br. 33–34; J.A. 35. Under certain circumstances, courts have

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found implied waiver in a foreign state’s assent to handle any dispute that arises in the courts of
the United States. See World Wide Mins., Ltd. v. Republic of Kazakhstan, 296 F.3d 1154, 1161
n.11 (D.C. Cir. 2002). But even if, as the District Court found, the Agreement’s choice-of-law
provision could effectuate an implicit waiver of the Central Bank’s sovereign immunity, see
CapitalKeys, LLC, 2021 WL 2255362 at *9, Governor Masangu did not have the authority—actual
or apparent—to enter into a binding Agreement on behalf of the Central Bank. That authority
rested with the Board of the Central Bank rather than its Governor.

    “An agent acts with actual authority when, at the time of taking action that has legal
consequences for the principal, the agent reasonably believes, in accordance with the principal’s
manifestations to the agent, that the principal wishes the agent so to act.” Restatement (Third) Of
Agency § 2.01 (2006). CapitalKeys points to DRC law Act No. 005/2002; J.A. 402–16, the Central
Bank’s governing statute, to demonstrate that Governor Masangu had actual authority to enter the
Agreement on behalf of the Central Bank. Appellant Opening Br. 43; see Restatement (Third) Of
Agency § 1.03 cmt. c. (2006) (“Within public-sector organizations, the authority associated with
a position is often defined by legislation or by administrative regulation.”). A common-sense
reading of the law proves opposite.

     The law in question provides that that the Board “is the highest body with the most extensive
powers to conceive and direct the Bank’s policy and supervise the management thereof.” Act No.
005/2002 art. 18; J.A. 404. The Governor sits on the Board of seven as chair, id. at art. 21; J.A.
404, but must “regularly keep the Board informed” via quarterly updates and submit “draft[] acts
that he deems necessary to accomplish the Banks’ mission and policy to the Board for their
approval.” Id. at art. 31; J.A. 405. In addition, the governing statute empowers the Governor to
“solely or jointly sign contracts concluded by the Bank,” as well as “the Banks’ correspondence
and other documents.” Id. (emphasis added).

     Nothing in the pertinent law indicates that Governor Masangu enjoyed actual authority to
enter agreements like the one at issue in this case without Board authorization, let alone to waive
the Central Bank’s sovereign immunity. What is more, there is no record evidence that Governor
Masangu could have reasonably thought otherwise. CapitalKeys argues that the Governor had the
necessary authority because the statute entrusts him with management of the Central Bank and
provides that he has “all the powers necessary to perform the day-to-day management of the Bank.”
Id. at art. 30; J.A. 405; Appellant Opening Br. 44. We are not convinced. Appellant’s view of the
statute does not account for the Governor’s inability to act without Board approval on any matter
not related to operational and administrative oversight of the Central Bank, nor does it address the
limitations on the types of contracts the Governor has power to “solely or jointly” sign: he can sign
contracts already concluded by the Bank exclusively. See Act No. 005/2002 art. 31; J.A. 405.
Taken together, a more coherent reading of the law is that the Board must agree to a contract before
its Governor can sign it. Thus, Governor Masangu did not have actual authority under Act No.
005/2002 to bind the Central Bank to the Agreement with CapitalKeys thereby waiving its
sovereign immunity.

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     Despite this lack of actual authority, CapitalKeys asserts that Governor Masangu had apparent
authority to enter the Agreement for not only the Central Bank, but also the DRC. Appellant
Opening Br. 34–41. “Unlike actual [authority] . . . apparent [authority] depends in large part upon
the representations made to the third party and upon the third party’s perception of those
representations.” Williams v. Washington Metro. Area Transit Auth., 721 F.2d 1412, 1416 (D.C.
Cir. 1983). Accordingly, “an agent’s apparent authority originates with expressive conduct by the
principal toward a third party” and “is present only when a third party’s belief is traceable to
manifestations of the principal.” Restatement (Third) of Agency § 3.03 cmt. b.

    At present, our Court has not determined whether apparent authority is sufficient to waive
sovereign immunity. Some members of our District Court have held it insufficient, reasoning that
the waiver exception “encompasses only agents of the foreign state who are actually authorized to
waive sovereign immunity.” SACE S.p.A. v. Republic of Paraguay, 243 F. Supp. 3d 21, 38–39
(D.D.C. 2017) (emphasis in the original); see CapitalKeys, LLC, 2021 WL 2255362, at *10 (“[F]or
FSIA purposes, actual authority to waive sovereign immunity is required.”) (emphasis in original).

     Other Circuits have held otherwise. See First Fid. Bank, N.A. v. Gov’t of Antigua & Barbuda-
Permanent Mission, 877 F.2d 189, 194 (2d Cir. 1989) (identifying “[t]he question . . . whether [an
agent] . . . possessed the apparent authority . . . to waive . . . sovereign immunity” as a “factual
inquiry into the principal’s manifestations to third persons”); Aquamar, S.A. v. Del Monte Fresh
Produce N.A., Inc., 179 F.3d 1279, 1299 (11th Cir. 1999) (“under the FSIA, courts should assume
that an ambassador possesses the authority to appear before them and waive sovereign immunity
absent compelling evidence making it ‘obvious’ that he or she does not.”); but cf. Phaneuf v.
Republic of Indonesia, 106 F.3d 302, 308 (9th Cir. 1997) (concluding that Congress intended for
the commercial activity exception to apply “only in cases of actual authority”). We need not weigh
in on whether actual or apparent authority is required to waive sovereign immunity, however,
because the District Court’s finding that Governor Masangu lacked apparent authority easily
survives clear-error review. Price v. Socialist People’s Libyan Arab Jamahiriya, 389 F.3d 192,
197 (D.C. Cir. 2004) (Though we review the District Court’s dismissal of a case for lack of subject
matter jurisdiction de novo, “we review the district court’s findings of fact — including facts that
bear upon immunity and therefore upon jurisdiction — for clear error.”). A brief discussion of the
facts at issue demonstrates why.

      In response to the Central Bank’s motion to dismiss, CapitalKeys argued that apparent
authority of the Governor to enter the contract was established because “the Governor represented
that he had the authority to sign a contract on behalf of the Central Bank,” a representation upon
which CapitalKeys reasonably relied. J.A. 364. The District Court found this assertion “legally
insufficient” because “apparent authority requires a manifestation of authorization by the principal
(the Central Bank) rather than the agent (Governor Masangu).” CapitalKeys, LLC, 2021 WL
2255362, at *10 n.14 (emphasis in the original). The Court also found nothing in the complaint
or evidentiary submissions to prove that such manifestations ever occurred, leading it to conclude
that CapitalKeys’s view was “wholly implausible.” Id. On appeal, CapitalKeys points to several

                                                 4
factual assertions to prove otherwise but fails to demonstrate any error in the District Court’s
findings.

     Appellant reiterates its reliance on oral representations by Governor Masangu and high-
ranking DRC officials that the “President of the [DRC] had authorized their entering into the
[A]greement . . . on behalf of both the Central Bank and the [DRC].” Appellant Opening Br. 39.
It claims that the parties engaged in six months of negotiations prior to entering into the
Agreement, received a good-faith payment of $600,000 as consideration for the Agreement one-
month prior to its execution from the DRC, and that various representatives of the DRC’s
President, including the Chief of Staff and Counsel, accompanied Governor Masangu to
Washington, D.C. when it came time to execute the Agreement. Id. Over the course of the next
two years, CapitalKeys reports that it hosted “several further delegations of DRC representatives”
each of which confirmed the binding nature of the Agreement and made promises that full payment
would be forthcoming. Id. at 40–41. Finally, CapitalKeys points to a letter it received from the
President’s office sent by the Chief of Staff that thanked CapitalKeys for its services and again,
promised payment. Id.

     The problem for CapitalKeys, however, is that even if it accurately captured what transpired
between the parties, an assertion that the Central Bank contests, see Appellee Br. 40 n.9, it has
not demonstrated that Governor Masangu’s apparent authority is traceable to the conduct of his
principal, the Central Bank. Moreover, CapitalKeys cannot explain how the President of the DRC,
the head of a distinct legal entity, could have authorized the Governor to waive the Central Bank’s
jurisdictional immunity. See Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438,
440 (D.C. Cir. 1990) (“Under FSIA, agencies and instrumentalities of a foreign nation are
presumed to be separate from each other and from the foreign state.”). The DRC could not have
directed an agent of the Central Bank to enter into a binding agreement in contravention of the
Bank’s governing statute, and CapitalKeys has not traced its belief in Governor Masangu’s
authority to do so to any action taken by the Central Bank. Finally, it is worth reiterating that
Governor Masangu and CapitalKeys’s President were the only signatories to the Agreement. As
such, it is not at all clear what role, if any, the DRC played in retaining services from CapitalKeys,
let alone in waiving its sovereign immunity via a document to which it is not a signatory.

     Because there is no evidence of apparent authority, there is no need to wade into the circuit
split concerning whether apparent authority is sufficient to waive a sovereign’s immunity.

   Appellant’s arguments in support of the commercial activity exception fare no better.

    Section 1605(a)(2) permits the Court to exercise subject matter jurisdiction over a
presumptively immune foreign state when 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). FSIA defines this provision
to mean “commercial activity carried on by such state and having substantial contact with the
United States.” Id. at § 1603(e); Zedan v. Kingdom of Saudi Arabia, 849 F.2d 1511, 1513 (D.C.
Cir. 1988). Because Governor Masangu acted outside his authority in signing the contract, neither

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the contract nor the alleged default amount to commercial activity “carried on by” the DRC or the
Central Bank. 28 U.S.C. § 1603(e).

     In sum, CapitalKeys has failed to prove that its claims against the Central Bank and the DRC
fall into an exception under FSIA. Accordingly, we affirm the District Court’s dismissal of this
matter for lack of subject matter jurisdiction.

    Pursuant to D.C. Circuit Rule 36, this disposition will not be published. The Clerk is directed
to withhold issuance of the mandate herein until seven days after resolution of any timely petition
for rehearing or petition for rehearing en banc. See FED. R. APP. P. 41(b); D.C. CIR. R. 41(a)(1).

                                              Per Curiam

                                                            FOR THE COURT:
                                                            Mark J. Langer, Clerk

                                                     BY:    /s/
                                                            Daniel J. Reidy
                                                            Deputy Clerk

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