Cicippio v. Islamic Republic of Iran

Decision Date29 July 1994
Docket NumberNo. 93-7047,93-7047
Citation30 F.3d 164
PartiesJoseph J. CICIPPIO, Elham Cicippio, David Jacobson, Appellants, v. ISLAMIC REPUBLIC OF IRAN, Appellee.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeal from the United States District Court for the District of Columbia (92cv2300).

James Godin, Norristown, PA, of the Bar of the Supreme Court of Pennsylvania, pro hac vice, by special leave of the Court, argued the cause for appellants. On the briefs for appellants was Barbara A. Barnes.

Bruno A. Ristau, Washington, DC, argued the cause and filed the brief for appellee.

Before: WALD, SILBERMAN, and RANDOLPH, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

SILBERMAN, Circuit Judge:

Appellants appeal from the district court's order dismissing their action against the Islamic Republic of Iran for lack of subject matter jurisdiction. Concluding that kidnapping is not, by its nature, a commercial act, that dealings directly between two sovereign states do not constitute "commercial activity" within the meaning of the Foreign Sovereign Immunities Act, and that the "noncommercial tort" exception does not apply, we affirm.

I.

This case arises out of the well-publicized abductions of appellants Joseph Cicippio and David Jacobson in Lebanon. 1 Appellants' complaint alleges that while working in Lebanon, Cicippio and Jacobson were abducted by Islamic fundamentalists hired by the State of Iran and held by those agents for an extended period of time, during which they were tortured. 2 Iran conditioned the release of Cicippio and Jacobson on the return of Iranian assets frozen in this country by the United States government. That abduction, it is also alleged, caused direct effects in the United States through the emotional harm suffered by the victims' families, the payment of monies to the captors by Mrs. Cicippio, and the unfreezing of Iranian assets. Jacobson and Cicippio, on the basis of these factual allegations, sought damages for a number of intentional torts and for violations of international law. They invoked the "commercial activity" and the "noncommercial tort" exceptions to the Foreign Sovereign Immunities Act (FSIA) as bases for federal court jurisdiction.

Appellee, the Islamic Republic of Iran, moved to dismiss the suit on grounds that the court lacked subject matter jurisdiction under the FSIA as well as personal jurisdiction over the defendant. The district court granted the motion to dismiss on lack of subject matter jurisdiction. It concluded that although Iran's alleged actions did appear to constitute "commercial activity" within the meaning of the FSIA--at least under the Supreme Court's analysis--"state-supported kidnapping, hostage-taking, and similar universally criminal ventures were simply not the sorts of proprietary enterprises within the contemplation of Congress when it enacted the 'commercial activity' exception to [the] FSIA." This appeal followed.

II.

The Foreign Sovereign Immunities Act of 1976, 28 U.S.C. Sec. 1602 et seq. (1988), provides that a "foreign state shall be immune from the jurisdiction of the courts of the United States and of the States." 28 U.S.C. Sec. 1604 (1988). The Act does create, however, a number of exceptions to this immunity. Two are invoked here: the "commercial activity" and the "noncommercial tort" exceptions. See 28 U.S.C. Secs. 1605(a)(2), 1605(a)(5) (1988). We consider them in turn.

A.

The Act permits a suit against a foreign government to proceed in any case

in which the action is based upon a commercial activity carried on in the United States by a foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.

28 U.S.C. Sec. 1605(a)(2) (1988) (emphasis added). Appellants rely on the third clause of this subsection; i.e., they claim that the government of Iran committed an act in connection with commercial activity elsewhere. The FSIA defines "commercial activity" as "either a regular course of commercial conduct or a particular commercial transaction or act." 28 U.S.C. Sec. 1603(d) (1988). The subsection further directs that 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." Id. We have not a little difficulty in understanding appellants' precise theory of the case because they do not clearly identify which of the allegations is the "act" and which makes up the "commercial activity". As best we can determine, appellants treat "hostage taking for profit" as both the act and the commercial activity. In other words, appellants do not specifically claim that the freezing or prospective unfreezing of Iranian assets (or the payments made by Cicippio's relatives) to gain his release constitute commercial activity, and that the kidnapping is an act in connection with that transaction. Instead, appellants present the situation as one integrated activity of a commercial nature which suggests that they should be suing under the first clause. We assume, however, that appellants are implicitly claiming that one of the acts relating to the abduction takes place "elsewhere" from the commercial activity. We therefore consider whether a foreign sovereign's alleged use of non-official agents to conduct alleged hostage takings to gain economic advantages can be considered a commercial activity.

The Supreme Court first had occasion to apply the FSIA's phrase "commercial activity" in Republic of Argentina v. Weltover, Inc., --- U.S. ----, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992). There the government of Argentina had issued bonds payable in dollars to support its guarantee of payments of loans its domestic borrowers took from foreign creditors. When the Argentine government unilaterally extended the time of payment it was sued in New York (where payment was to be made) by foreign creditors. Drawing on the legislative history of the FSIA, as well as on the pre-Act practice of the State Department, the Court

conclude[d] that when a foreign government acts, not as regulator of a market, but in the manner of a private player within it, the foreign sovereign's actions are "commercial" within the meaning of the FSIA.... [T]he issue is whether the particular actions that the foreign state performs (whatever the motive behind them) are the type of actions by which a private party engages in "trade and traffic or commerce." Thus, a foreign government's issuance of regulations limiting foreign currency exchange is a sovereign activity, because such authoritative control of commerce cannot be exercised by a private party; whereas a contract to buy army boots or even bullets is a "commercial" activity, because private parties can similarly use sales contracts to acquire goods.

Weltover, --- U.S. at ----, 112 S.Ct. at 2166 (citations omitted) (emphasis added). The government of Argentina, recognizing that the statute made its purpose irrelevant, nevertheless argued that one could not ignore the context in which it issued the bonds--which was in order to enhance the ability of its citizens to borrow foreign capital, not like the ordinary commercial issuance of debt to raise capital or refinance debt. The court assumed arguendo that the notions of context and purpose might be different but rejected Argentina's argument because the bonds had been issued, just as might be done by a private actor, to restructure the government's existing obligations. Putting aside for now the relationship between purpose and context, we take from Weltover the key proposition that in determining whether a given government activity is commercial under the act, we must ask whether the activity is one in which commercial actors typically engage.

Appellants insist that this formulation does not mean that when a sovereign is alleged to have engaged in illegal activities such activities should be thought not commercial per se. The Second Circuit had earlier determined that kidnapping (and assassination) could not be considered commercial activities under FSIA because a private person could not engage in such activity lawfully. See Letelier v. Republic of Chile, 748 F.2d 790, 797 (2d Cir.1984). Appellants point out, however, that all causes of action can be thought, in some sense, to accuse a defendant of acting unlawfully, and the distinction between tortious and criminal acts is not always clear.

The most recent FSIA Supreme Court decision, Saudi Arabia v. Nelson, --- U.S. ----, 113 S.Ct. 1471, 123 L.Ed.2d 47 (1993), may well undermine the Second Circuit's categorical approach. There an American plaintiff hired in the United States to work in a Saudi hospital claimed that he had been wrongly imprisoned and tortured by Saudi police in retaliation "for his whistle blowing" directed at certain hospital practices. Although the Second Circuit's approach offered the most obvious line of analysis, the Court did not take it. Instead, the Court concluded that since the basis of the claim was the alleged tortious--perhaps criminal--actions of the Saudi police (not the arguably commercial activity in recruiting Nelson), and private parties cannot exercise that "sort " of power while engaging in commerce, the activity could not be thought "commercial." 3

The Court dismissed the contention that the Saudi government typically uses such techniques to resolve commercial disputes by emphasizing that the "powers allegedly abused were those of police and penal officers" and noting that "[i]n any event the argument is off the point, for it goes to purpose." --- U.S. at ----, 113 S.Ct. at 1480. The last observation, it seems to us, makes abundantly...

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