DeRoburt v. Gannett Co., Inc., Civ. No. 78-0375.

• Decision Date: 13 October 1982
• Docket Number: Civ. No. 78-0375.
• Citation: 548 F. Supp. 1370
• Parties: Hammer DeROBURT, Plaintiff, v. GANNETT CO., INC., a Delaware corporation, and Guam Publications, Inc., a Hawaii corporation, both dba Pacific Daily News, Defendants.
• Court: U.S. District Court — District of Hawaii

548 F. Supp. 1370

Hammer DeROBURT, Plaintiff, v. GANNETT CO., INC., a Delaware corporation, and Guam Publications, Inc., a Hawaii corporation, both dba Pacific Daily News, Defendants.

Civ. No. 78-0375.

United States District Court, D. Hawaii.

October 13, 1982.

Genevieve S. Richardson, A. Bernard Bays, Carlsmith, Carlsmith, Wichman & Case, George M. Allen, Honolulu, Hawaii, Donald C. Williams, Agana, Guam, for plaintiff.

David J. Dezzani, James J. Bickerton, Goodsill, Anderson & Quinn, Honolulu, Hawaii, for defendants.

ORDER GRANTING MOTION TO DISMISS

FACTS

SAMUEL P. KING, District Judge.

Plaintiff Hammer DeRoburt, on October 2, 1978, filed this suit against Gannett Company, Inc., and its subsidiary, Guam Publications, Inc. collectively referred to as "Gannett". Jurisdiction is premised on diversity of citizenship: Gannett Company, Inc. is a Delaware corporation with its principal place of business in New York; Guam Publications, Inc. is a Hawaii corporation with its principal place of business in Guam; DeRoburt is a citizen of Nauru.¹

Plaintiff alleges that defendants have libeled him in two articles published in the Pacific Daily News, a daily newspaper printed in Guam by Guam Publications. A May 30, 1978, Pacific Daily News article (the "May 30 article"), written by Cisco Uludong and headlined "Marshalls Separatist Movement Gets Secret Funds from Nauru," reported that President DeRoburt personally delivered to the Marshall Islands Political Status Commission ("MIPSC")² a loan made by Nauru in support of separation of the Marshall Islands from Micronesia.³

The second story, written by Paul Addison and published on June 29, 1978, ("the June 29 article") in the Pacific Daily News, was headed "Nauru Officials Admit Lending Separatists' Loan." It reported the angry reactions of Nauru officials to the first story, as well as repeating the statements made in that story.⁴

Plaintiff DeRoburt alleges that the stories falsely and maliciously accused him of committing serious crimes under Nauru law and of interfering with the internal political affairs of a foreign nation in violation of accepted standards of international diplomacy. His complaint also includes an allegation that the stories were published by defendants "with actual malice, that is, with actual knowledge of their falsity and/or with reckless disregard for whether they were false or not." Third Amended Complaint ¶ 21, at 16 (filed June 30, 1982).⁵ DeRoburt seeks $20 million compensatory and $20 million punitive damages for allegedly having been exposed to criticism and ridicule both within Nauru and elsewhere in the world.

The present Motion to Dismiss by defendants is the latest in a long line of motions that have raised often intricate and difficult issues of law. See, e.g., DeRoburt v. Gannett Co., Inc., 507 F.Supp. 880 (D.Hawaii 1981); id., 83 F.R.D. 574 (D.Hawaii 1979). For the reasons discussed herein, the court grants the defendants' motion.

DISCUSSION

The defendants' motion to dismiss the suit is founded on the act of state doctrine. Their contention, in brief, is that the doctrine, when applied to this case, requires that the court dismiss for failure to state a claim upon which relief may be granted. Plaintiff, of course, asserts that the doctrine is inapposite to the instant suit.

1. Which law applies?

Initially, the court must decide which law applies to the issues presented by defendants' motion.

Ordinarily, a federal court exercising its diversity jurisdiction must apply the choice of law rules of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Applying what it held would be the rule under Hawaii law, the court previously has ruled that the defamation law of Nauru would apply to this case, subject to the limitations of the First Amendment, specifically the "actual malice" standard of New York Times v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964). The law of Nauru, moreover, has been determined to be essentially the same as the common law applied in England. Therefore, in determining what Nauru law is, the court would look to English common law for guidance.

The issues raised by the instant motion require a contrary result for present purposes, however. The Supreme Court has spoken specifically to this question. In Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 427, 84 S.Ct. 923, 939, 11 L.Ed.2d 804 (1964), a diversity case, the Court held that "the scope of the act of state doctrine must be determined according to federal law." Touching on the fundamental policies underlying the act of state doctrine, the Court stated: "We are constrained to make it clear that an issue concerned with a basic choice regarding the competence and function of the Judiciary and the National Executive in ordering our relationships with other members of the international community must be treated exclusively as an aspect of federal law." Id. at 425, 84 S.Ct. at 938.

Sabbatino, then, requires the court to apply federal law to the present motion, notwithstanding any prior ruling.

In any case, the parties agree that, with respect to the act of state doctrine, federal and Nauru/English law are very nearly identical. In fact, many of the cases applying the doctrine rely on cases decided on both sides of the Atlantic. As a result, the court may cite English law for persuasive, if not binding, authority.⁶

2. The Act of State Doctrine

The classic statement of the act of state doctrine in the United States was rendered by the Supreme Court in Underhill v. Hernandez, 168 U.S. 250, 252, 18 S.Ct. 83, 84, 42 L.Ed. 456 (1897):

Every sovereign State is bound to respect the independence of every other sovereign State, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves.

The Supreme Court has consistently reaffirmed the general principle in every case in which it has been at issue, see Alfred Dunhill of London v. Cuba, 425 U.S. 682, 96 S.Ct. 1854, 48 L.Ed.2d 301 (1976); First Nat'l City Bank v. Banco Nacional de Cuba, 406 U.S. 759, 92 S.Ct. 1808, 32 L.Ed.2d 466 (1972); Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964); United States v. Pink, 315 U.S. 203, 62 S.Ct. 552, 86 L.Ed. 796 (1942); United States v. Belmont, 301 U.S. 324, 57 S.Ct. 758, 81 L.Ed. 1134 (1937); Shapleigh v. Mier, 299 U.S. 468, 57 S.Ct. 261, 81 L.Ed. 355 (1937); Ricaud v. American Metal Co., 246 U.S. 304, 38 S.Ct. 312, 62 L.Ed. 733 (1918); Oetjen v. Central Leather Co., 246 U.S. 297, 38 S.Ct. 309, 62 L.Ed. 726 (1918); American Banana Co. v. United Fruit Co., 213 U.S. 347, 29 S.Ct. 511, 53 L.Ed. 826 (1909), although it has not always been clear whether the doctrine was based on the Constitution, principles of international law, or choice of law principles.⁷

More recently, the doctrine has been stated as barring any examination by the courts into the validity, legality or motivation of the sovereign acts of a foreign state. See Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S.Ct. 923, 11 L.Ed.2d 804; International Ass'n of Machinists & Aerospace Workers v. OPEC, 649 F.2d 1354, 1359 (9th Cir. 1981); Timberlane Lumber Co. v. Bank of Am. Nat'l Trust & Sav. Ass'n, 549 F.2d 597, 607 (9th Cir. 1976).

In Banco Nacional de Cuba v. Sabbatino, the Court spelled out in explicit terms the underlying rationale and policies of the act of state doctrine. Sabbatino involved the expropriation by instrumentalities of the Cuban government of American-owned sugar located in Cuba. Cuba then sold the sugar to another American company for resale. When the purchaser of the sugar, acting under an agreement with the original expropriated owner, refused to make payment on the goods, the national bank of Cuba brought suit in federal district court seeking payment.

The district court, affirmed by the court of appeals, found that the original expropriation by the Cuban government was illegal under international law and refused to enforce the plaintiff's claim. The Supreme Court reversed, agreeing with the plaintiff that the federal courts could not inquire into the legality of a sovereign act of the government of Cuba. The limited holding of the case was that the courts will not examine the validity of a taking of property within its own territory by a foreign sovereign, recognized by this country at the time of suit, even if the taking allegedly violates international law. 376 U.S. at 428, 84 S.Ct. at 940.

More illuminating for present purposes than the holding is the route by which the Court arrived at its conclusion. First, it established that the act of state doctrine was compelled neither by principles of sovereign immunity, which go to the courts' jurisdiction, nor by international law. Id. at 421-22, 84 S.Ct. at 936. Although the act of state doctrine is not required by the "text of the Constitution," it does have "constitutional underpinnings." Id. at 423, 84 S.Ct. at 937. Specifically, the act of state doctrine

arises out of the basic relationships between branches of government in a system of separation of powers. It concerns the competency of dissimilar institutions to make and implement particular kinds of decisions in the area of international relations. The doctrine as formulated in past decisions expresses the strong sense of the Judicial Branch that its engagement in the task of passing on the validity of foreign acts of state may hinder rather than further this country's pursuit of goals both for itself and for the community of nations as a whole in the international sphere.

Id.

Within the Court's analysis can be discerned at least two amplectant strands of policy. One acknowledges that judicial declarations regarding the invalidity of the...