Mohamed Lasheen v. Embassy of the Arab Republic of Egypt , 485 F. App'x 203 ( 2012 )

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NOT FOR PUBLICATION JUL 02 2012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).
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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
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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
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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
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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,
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“[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.
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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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