Broidy Capital Mgmt. LLC v. Muzin

• Decision Date: 03 September 2021
• Docket Number: No. 20-7040,20-7040
• Citation: 12 F.4th 789
• Parties: BROIDY CAPITAL MANAGEMENT LLC and Elliott Broidy, Appellees v. Nicolas D. MUZIN, et al., Appellants
• Court: U.S. Court of Appeals — District of Columbia Circuit

12 F.4th 789

BROIDY CAPITAL MANAGEMENT LLC and Elliott Broidy, Appellees

v.Nicolas D. MUZIN, et al., Appellants

No. 20-7040

United States Court of Appeals, District of Columbia Circuit.

Argued February 26, 2021

Decided September 3, 2021

Stephen J. Obermeier argued the cause for appellants. With him on the joint briefs were Jeremy J. Broggi, Krystal B. Swendsboe, Jeffrey A. Udell, Alison L. Andersen, Laura E. Zell, and Charles S. Fax.

Shannen W. Coffin argued the cause for appellees. With him on the brief were Filiberto Agusti and Linda C. Bailey. Michael J. Baratz entered an appearance.

Before: Pillard and Walker, Circuit Judges, and Randolph, Senior Circuit Judge.

Pillard, Circuit Judge:

Defendants-Appellants, public relations contractors who are citizens and residents of the United States, appeal the district court's order denying their claim of immunity from suit for alleged violations of U.S. law in the course of their work here on behalf of the State of Qatar. Business executive and activist Elliott Broidy and his company (collectively, Broidy) sued the defendants, claiming that, in their efforts to discredit Broidy for speaking out against Qatar, they distributed emails illegally hacked from Broidy's private servers. Without acknowledging any involvement in such a scheme, the defendants argue that Broidy's allegations that they had acted on Qatar's behalf mean they are shielded by Qatar's foreign sovereign immunity. All agree that the Foreign Sovereign Immunities Act (FSIA) by its terms does not apply, but the defendants say residual common-law immunity protects them as agents of Qatar acting at its behest. Broidy argues that the district court's nonfinal judgment is not immediately appealable and that, in any event, the defendants lack immunity.

The jurisdictional question is close, but we believe we have jurisdiction over the appeal based on the defendants’ colorable claim of immunity. On the merits, we affirm the district court's order denying immunity. The State of Qatar has not said that the conduct challenged as unlawful was at its behest nor has it urged the United States to recognize the defendants’ immunity. The United States Department of State, for its part, has never suggested that the defendants are immune as agents of Qatar. In the absence of any such acknowledgement or suggestion, a private party claiming foreign sovereign immunity bears a heavy burden. The defendants here are U.S. citizens and a U.S. firm sued in their private capacities by U.S. plaintiffs for violations of U.S. and California law within the United States. We hold they have failed to establish that any foreign official immunity shields them from further proceedings and ultimate liability.

BACKGROUND

Because we review the district court's decision on a motion to dismiss, we draw much of the background from Broidy's amended complaint. See Kareem v. Haspel , 986 F.3d 859, 865-66 & n.7 (D.C. Cir. 2021). But where, as here, "the motion is based on a claim of foreign sovereign immunity," which, if meritorious, "provides protection from suit and not merely a defense to liability," the court "must engage in sufficient pretrial factual and legal determinations to satisfy itself of" jurisdiction. Belhas v. Ya'alon , 515 F.3d 1279, 1281 (D.C. Cir. 2008) (citation omitted). We rely for the most part on the complaint, on which the defendants have chosen to rest, and make limited reference to a consulting agreement of record in a California case arising from the same events.

Broidy describes himself as "a prominent business and civic leader who has actively served in leadership roles in U.S. government advisory groups, Jewish organizations, and the Republican Party for decades." Amended Compl. ¶ 45, J.A. 23. In recent years, Broidy has urged the United States to oppose the State of Qatar's alleged funding and harboring of terrorists and to support the efforts of Qatar's neighbors to isolate it economically. "Beginning in early 2017," he explains, he "became a vocal critic of Qatar's support for terrorists and friendly relationship with Iran, which he sees as a major threat to the security of the United States and its allies." Id. ¶ 46, J.A. 24. And Broidy has had powerful audiences for his advocacy, including "directly interact[ing] with" then-President Donald Trump. Id. ¶ 45, J.A. 23.

Broidy alleges that Qatar sought to counter his advocacy. It engaged in "a multi-million dollar dark money effort to recruit lobbyists and influencers to polish Qatar's public image within the United States." Id. ¶ 50, J.A. 24. Broidy dubs that effort the "Qatari Enterprise." Id. ; see also id. ¶ 2, J.A. 13. That is where the defendants enter the picture: Nicholas D. Muzin is a former Republican legislative aide and Trump campaign staffer; Joseph Allaham is a former restauranteur; Stonington Strategies, LLC, is a public relations consulting firm those two men co-founded; and Gregory Howard is a media placement expert at another public strategy firm. Qatar allegedly paid them millions in hopes of rehabilitating its image with "the Republican, American Jewish community and other conservative supporters of Israel." Id. ¶ 51, J.A. 25.

Broidy acknowledges the lawfulness of the defendants’ initial efforts, including their outreach to relevant stakeholders. But, Broidy alleges, "Muzin's and Allaham's efforts ... were largely ineffective, in part because of Mr. Broidy's actions to undercut any efforts by Qatar ... to change the minds of other Republican Jewish community leaders." Id. ¶ 71, J.A. 29. That failure allegedly drove the Qatari Enterprise to turn to lawless actions to silence Broidy. The Enterprise retained a cybersecurity firm, Global Risk Advisors LLC, "to coordinate an offensive cyber and information operation against" Broidy and his company, "including by infiltrating [their] computer networks and obtaining unauthorized access to Google email accounts of United States persons associated with [Broidy]" such as his spouse and executive assistant. Id. ¶ 79, J.A. 30-31.

Muzin and Allaham's alleged role was to distribute hacked information. They collaborated with Howard "to place information illegally obtained from the hacking in the hands of journalists, media organizations, and public relations professionals." Id. ¶ 116, J.A. 39. Broidy alleges that their purpose in "disseminating emails and documents hacked and stolen from Broidy to the U.S. media" was "to destroy Broidy's public standing," and with it his ability to influence public and presidential opinion on Qatar. Id. ¶ 52, J.A. 25.

In January 2019, Broidy and his company, Broidy Capital Management, LLC, sued Muzin, Allaham, Howard, and Stonington Strategies in the District of Columbia under U.S. and California law. As amended, his thirteen-count complaint asserts violations of the Racketeer Influenced and Corrupt Organizations Act, Stored Communications Act, Computer Fraud and Abuse Act, Defend Trade Secrets Act, and California law.

This is not Broidy's first lawsuit over this general course of events. First, in early 2018 in the Central District of California, Broidy sued each of the defendants named here except Howard, along with Global Risk Advisors, the State of Qatar, and Qatari officials. See Broidy Cap. Mgmt., LLC v. State of Qatar , 982 F.3d 582, 586 (9th Cir. 2020). That court dismissed Broidy's claims against Qatar for lack of subject-matter jurisdiction under the FSIA and nixed the remaining claims against the other defendants for lack of sufficient contacts with California to support personal jurisdiction. Id. at 586, 596. The Ninth Circuit affirmed. Id.

Broidy also sued two of the defendants’ alleged coconspirators in separate lawsuits in the Southern District of New York. One of those defendants, a former U.N. official not named in the California case, obtained a dismissal based on diplomatic immunity, which the Second Circuit affirmed. See Broidy Cap. Mgmt. LLC v. Benomar , 944 F.3d 436, 439-40 (2d Cir. 2019). In the other New York lawsuit, Global Risk Advisors successfully argued that Broidy's complaint lacked sufficient allegations linking the cybersecurity firm to the hack. See Broidy v. Glob. Risk Advisors LLC , No. 1:19-cv-11861, 2021 WL 1225949, at *8-10 (S.D.N.Y. Mar. 31, 2021). In dismissing the suit, however, the court held that Global Risk Advisors was not entitled to any form of immunity from suit. Id. at *5-7.

Shortly after Broidy filed his amended complaint in federal district court here, the defendants moved to dismiss. They claimed immunity based on Broidy's allegations regarding their relationship to Qatar, a foreign sovereign, and, alternatively, that the complaint failed to state a legally adequate claim on its merits. The court granted the motions in part, dismissing certain claims as legally inadequate, but rejecting the immunity defense. In this interlocutory appeal, the defendants challenge only the district court's denial of immunity.

The defendants asserted that Broidy's own allegations that they acted on behalf of Qatar must be taken as true at the motion-to-dismiss stage. They emphasized that Qatar's foreign sovereign immunity in relation to the same events had been recently affirmed by the Ninth Circuit, see State of Qatar , 982 F.3d at 586, 596, and contended that if they acted for Qatar as Broidy alleges they are entitled to conduct-based foreign official immunity.

The district court rejected the immunity defense. It noted at the outset that because the defendants are private individuals and not a foreign state the FSIA does not apply, so any immunity must arise from the common law. Broidy Cap. Mgmt. LLC v. Muzin , No. 19-cv-0150, 2020 WL 1536350, at *5 (D.D.C. Mar. 31, 2020) (citing Samantar v. Yousuf (Samantar I ), 560 U.S. 305, 325, 130 S.Ct. 2278, 176 L.Ed.2d 1047 (2010) ); see also Lewis v. Mutond , 918 F.3d 142, 145 (D.C. Cir. 2019). The court evaluated the defendants’ assertions of immunity under two distinct analyses without "resolv[ing] which ......