Rush-Presbyterian-St. Luke's v. Hellenic Republic
| Citation | 690 F. Supp. 682 |
| Decision Date | 11 July 1988 |
| Docket Number | No. 86 C 2021.,86 C 2021. |
| Parties | RUSH-PRESBYTERIAN-ST. LUKE'S MEDICAL CENTER, et al., Plaintiffs, v. The HELLENIC REPUBLIC, a foreign country, et al., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Catalina J. Sugayan, Floyd A. Wisner, William C. Anderson, Lord Bissell & Brook, Chicago, Ill., for Rush-Presbyterian-St. Luke's Medical Center.
Peter Petrakis, Andrew T. Berlin, Katten Muchin Zavis Pearl Greenberger & Galler, Chicago, Ill., for South Chicago Community Hosp Theodore Rodes, Jr., Porikos & Rodes, Martha A. Mills, Foss Schuman Drake & Barnard, Chicago, Ill., for defendants.
Rush-Presbyterian-St. Luke's Medical Center (Rush) and South Chicago Community Hospital (South Chicago) brought suit seeking the payment of medical bills for kidney transplants provided in their facilities to Greek nationals by Chicago Regional Organ and Tissue Bank (CROTB). CROTB and two staff members were joined as involuntary plaintiffs.
Defendants move to quash summons and dismiss the case on the ground that they are immune from suit under the Foreign Sovereign Immunities Act (FSIA), 28 U.S. C. §§ 1330, 1602-1611. Rush and South Chicago assert that because defendants, in contracting for the transplants, engaged in commercial activity carried on in and having a direct effect on the United States, they are amenable to suit under the FSIA. We agree and deny the motion.
In December 1983 CROTB, through its president, Dr. Merkel, and June Bator, its director of development, contracted with defendants to perform operations on Greek nationals in Chicago under an "International Kidney Transplant Programme" . The contract included estimated costs of the transplant procedures . Defendants agreed to "assume responsibility of all the expenses of" surgery for certain patients once CROTB sent them the relevant itemized bills . CROTB subsequently entered into agreements with Rush and South Chicago, whereby the hospitals would admit Greek transplant patients and CROTB would obtain from defendants and disburse to plaintiffs payment for the medical services (Rush cplt. ¶ 7). The parties do not dispute that the contract was negotiated in Greece and executed and performed in the United States. They further agree that the paper work for the transplants, including bills, statements and payments, was "funneled through" the Greek consulate in Chicago. Finally, it is not contested that defendants made payments to plaintiffs for the transplants through the American National Bank in Chicago.
CROTB performed transplants on those Greek nationals who had obtained defendants' approval at Rush and South Chicago in 1983 and 1984. CROTB submitted bills to defendants for plaintiffs' treatment of the patients . Defendants, claiming that the costs estimated by CROTB in its agreement were binding and that CROTB had not adequately documented the bills, made partial payments for the services rendered but refused to pay the full amounts plaintiffs claimed were due. Rush claims defendants owe it $346,915.81 under the contract (cplt. ¶ 10); South Chicago asserts that it is owed approximately $203,219.48 (South Chicago resp. at 3); and CROTB seeks a balance of $5,995 (cplt. ¶ 9). All three complaints include a count in quantum meruit for the benefits conferred upon defendants.
Defendants now maintain that this court lacks jurisdiction to entertain this suit under the FSIA since in contracting with CROTB they were performing a governmental function. In an unsigned affidavit defendants assert that the Greek government provides health care for its citizens (Mousouri aff. exh. D at 2-3). They further assert that the medical benefit system in Greece is funded by the State in accordance with State guidelines and specific payments sought for services rendered must meet the approval of the Greek government (Mousouri aff. at 5). From the Greek government's regulation of health care, defendants conclude that they acted as a sovereign, and not in a commercial capacity, when they contracted with CROTB to provide the transplants for Greek citizens.2
Before 1952 this nation traditionally granted foreign countries complete immunity from suit in American courts. See The Schooner Exchange v. McFaddon, 11 U.S. (7 Cranch) 116, 136, 3 L.Ed. 287 (1812) (). The State Department announced the replacement of this absolute theory of sovereign immunity with the restrictive theory in 1952. Tate Letter, 26 Dept. of State Bull. 984 (1952) reprinted in Alfred Dunhill of London v. Republic of Cuba, 425 U.S. 682, 711-15 app., 96 S.Ct. 1854, 1869-71 app., 48 L.Ed.2d 301 (1976). Under the restrictive theory public acts of foreign sovereigns are shielded from judicial scrutiny, but private acts receive no similar protection. Segni v. Commercial Office of Spain, 835 F.2d 160, 162 (7th Cir.1987). The application of the new doctrine was left generally within the discretion of the State Department until Congress enacted the FSIA in 1976. See generally Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 486-89, 103 S.Ct. 1962, 1967-69, 76 L.Ed.2d 81 (1983).
The FSIA essentially codifies the restrictive theory of sovereign immunity, id. at 488, 103 S.Ct. at 1968, and gives the federal judiciary the responsibility of determining the extent to which particular actions of foreign states are immune from its power. The FSIA provides that, with certain enumerated exceptions, foreign states shall be immune from suit in federal and state courts. 28 U.S.C. § 1604.3 If one of the exceptions to the general grant of sovereign immunity applies, the FSIA confers subject matter jurisdiction on the district courts. 28 U.S.C. § 1330(a).
The requirement set forth in the three clauses of § 1605(a)(2) ensure that a sufficient connection exists between the commercial activity in question and the United States. Practical Concepts, Inc. v. Republic of Bolivia, 811 F.2d 1543, 1549 n. 12 (D.C.Cir.1987); Callejo v. Bancomer, S.A., 764 F.2d 1101, 1110 (5th Cir.1985).
To determine whether defendants are immune from suit under the FSIA we must answer the critical question: is the activity upon which the action is based properly described as "commercial" rather than "governmental." Congress, in the Act itself, has defined commercial activity as follows:
A "commercial activity" means either a regular course of commercial conduct or a particular commercial transaction or act. The 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.
28 U.S.C. § 1603(d). Numerous courts have observed that the statutory definition, read in isolation, provides little guidance, e.g., Segni, 835 F.2d at 163, and is indeed "somewhat circular" since it defines "commercial activity" in terms of "commercial conduct" and "commercial transaction." Callejo, 764 F.2d at 1108 n. 6. While the definition is broad, the Act does instruct us to consider the nature of the activity rather than its purpose. Congress did not further specify in the Act what it meant by the word "commercial." Rather, it "deliberately left the meaning open and ... `put its faith in the U.S. courts to work out progressively, on a case-by-case basis ... the distinction between commercial and governmental.'" Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300, 308-09 (2d Cir.1981) (), cert. denied, 454 U.S. 1148, 102 S.Ct. 1012, 71 L.Ed.2d 301 (1982).
The legislative history of the Act narrows our focus somewhat. The FSIA House Report emphasizes "that an underlying public purpose will not provide a foreign state protection for an act which is private by nature." Segni, 835 F.2d at 163. Specifically, the Report, H.Rep.No. 84-1487, 94 Cong.2d Sess. at 16, reprinted at 1976 U.S.Code Cong. & Admin.News 6604, 6615 (hereafter "Report"), states:
As the definition indicates, the fact that goods or services to be procured through a contract are to be used for a public purpose is irrelevant; it is the essentially commercial nature of an activity or transaction that is critical. Thus, a contract by a foreign government to provide provisions or equipment for its own forces or to construct a government building constitutes a commercial activity. The same would be true of a contract to make repairs on an embassy building. Such contracts should be considered to be commercial contracts, even if their ultimate object is to further a public function.
Contracts for the purchase of goods or services are described in several portions of the Report as activities that are generally considered commercial. The Seventh Circuit, and other circuits, have noted that the...
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Rush-Presbyterian-St. Luke's Medical Center v. Hellenic Republic
...were not immune from suit under the exceptions to sovereign immunity contained in the Act. Rush-Presbyterian-St. Luke's Medical Center v. The Hellenic Republic, 690 F.Supp. 682 (N.D.Ill.1988). The defendants appeal; we Under the Greek constitution, the government has a broad obligation to p......