McKeel v. Islamic Republic of Iran, s. 82-5111

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Citation: 722 F.2d 582
• Docket Number: 82-5114,Nos. 82-5111,s. 82-5111
• Parties: John D. McKEEL, Jr., et al., Plaintiffs-Appellants, v. The ISLAMIC REPUBLIC OF IRAN and the United States of America, Defendants-Appellees. to 82-5117 and 82-5417.
• Decision Date: 30 December 1983

Page 582

722 F.2d 582

John D. McKEEL, Jr., et al., Plaintiffs-Appellants, v. The ISLAMIC REPUBLIC OF IRAN and the United States of

America, Defendants-Appellees.

Nos. 82-5111, 82-5114 to 82-5117 and 82-5417.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted Dec. 7, 1982.

Submission Withdrawn Jan. 31, 1983.

Resubmitted Dec. 28, 1983.

Decided Dec. 30, 1983.

James H. Davis, Los Angeles, Cal., for plaintiffs-appellants.

Michael F. Hertz, Washington, D.C., for defendants-appellees.

Appeal from the United States District Court for the Central District of California.

Before SNEED and SKOPIL, Circuit Judges, and INGRAM ^*, District Judge.

SNEED, Circuit Judge:

On November 4, 1979, Iranian militants seized the diplomatic and military personnel attached to the United States Embassy in Tehran. The Americans were held hostage in violation of international law for over fourteen months. See Case Concerning United States Diplomatic and Consular Staff in Tehran (U.S. v. Iran), 1980 I.C.J. 3; see also Dames & Moore v. Regan, 453 U.S. 654, 662-66, 101 S.Ct. 2972, 2977-79, 69 L.Ed.2d 918 (1981) (discussing agreement between United States and Iran that led to release of the hostages).

This action was brought by twelve former hostages and by wives of two ex-hostages. Plaintiffs seek redress in tort against Iran for damages suffered during and as a result of their Iranian captivity, as well as declaratory relief against the United States. Plaintiffs base their allegation of subject matter jurisdiction over Iran on 28 U.S.C. Secs. 1331 and 1332, and on the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. Sec. 1330(a), and over the United States on 28 U.S.C. Secs. 1331 and 1361.

The claims of thirteen of the plaintiffs were consolidated before Judge Gray of the District Court for the Central District of California, and Judge Hall of that district heard the fourteenth case. Both judges granted the motion of the United States, appellee here, to dismiss for lack of subject matter jurisdiction, and for failure to state a claim on which relief could be granted. ¹

We affirm the district court's dismissal of the actions for lack of subject matter jurisdiction. ² In addition, we reject appellants' suggestion that we remand this case to determine whether the executive agreements negotiated by the President to obtain the hostages' release constitute a valid claim against the United States for a "taking" of property without just compensation, because the proper forum to adjudicate that issue is the United States Claims Court. Finally, we deny appellants' motion to transfer this case to that court.

I. JURISDICTION OVER IRAN

Appellants assert federal question and diversity jurisdiction over the Islamic Republic of Iran, 28 U.S.C. Secs. 1331 and 1332, as well as jurisdiction derived from the Foreign Sovereign Immunities Act, id. Sec. 1330(a). We hold that there is no basis under sections 1331 and 1332 or the FSIA for jurisdiction over Iran.

A. Federal Question and Diversity Jurisdiction

Congress has the power through the Arising Under and Diversity Clauses of Article III of the Constitution to confer jurisdiction on the federal courts to hear suits such as the present one, where United States citizens seek redress against a foreign state defendant. Verlinden B.V. v. Central Bank of Nigeria, --- U.S. ----, 103 S.Ct. 1962, 1970 n. 18, 1973, 76 L.Ed.2d 81 (1983). However, it has not done so by enacting 28 U.S.C. Secs. 1331 and 1332. These sections do not provide a basis for jurisdiction over Iran. Congress has vested

exclusive jurisdiction over suits against foreign state defendants in the FSIA.

1. Section 1331

Although section 1331 grants district courts federal question jurisdiction over all cases "arising under" federal law, cf. Osborn v. Bank of the United States, 22 U.S. (9 Wheat.) 738, 739, 6 L.Ed. 204 (1824), the scope of this statutory "arising under" jurisdiction is limited by the well-pleaded complaint rule. This rule provides that a case arises under federal law for the purposes of section 1331 if the federal law issue must be presented as a matter of sound pleading in the complaint. See Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 43, 53 L.Ed. 126 (1908). It is not satisfied when the federal question is merely an assertion "that federal law deprives the defendant of a defense he may raise ..., or that a federal defense the defendant may raise is not sufficient to defeat the claim." Franchise Tax Board v. Construction Laborers Vacation Trust for Southern California, --- U.S. ----, 103 S.Ct. 2841, 2846-47, 77 L.Ed.2d 420 (1983).

The federal question presented by appellants here is such an assertion. Appellants assert that the FSIA waives Iran's immunity from suit. The FSIA, however, does not affect the substantive law of liability. See First National City Bank v. Banco Para el Comercio Exterior de Cuba, --- U.S. ----, 103 S.Ct. 2591, 2597, 77 L.Ed.2d 46 (1983). That liability--were a court to reach the merits of appellants' claims--would be determined by state or Iranian law. It follows that the appellants' allegation that the FSIA deprives Iran of a sovereign immunity defense to this action does not constitute a well-pleaded complaint under section 1331, Franchise Tax Board, 103 S.Ct. at 2846-47, and therefore does not provide a basis for statutory "arising under" jurisdiction. ³ Cf. Ruggiero v. Compania Peruana de Vapores, 639 F.2d 872, 876 (2d Cir.1981); Hanoch Tel-Oren v. Libyan Arab Republic, 517 F.Supp. 542, 545-48 (D.D.C.1981).

2. Section 1332

Section 1332(a)(2) presently gives the district courts jurisdiction over civil actions between "citizens of a State and citizens or subjects of a foreign state." Before the adoption of the FSIA, section 1332(a)(2) also extended district court jurisdiction to suits between "citizens of a State and foreign states." 62 Stat. 869, 930 (1948). However, Congress, as part of the FSIA, removed this jurisdiction from section 1332, and placed it in a new section, 1330. ⁴ H.R.Rep. No. 1487, 94th Cong., 2d Sess. 14, reprinted in 1976 U.S.Code Cong. & Ad.News 6604, 6613. Moreover, the legislative history of the FSIA notes that section 1330 was enacted to promote "uniformity in decision," id. at 13, 1976 U.S.Code Cong. & Ad.News at 6611, and implies that jurisdiction over foreign states and their instrumentalities as defendants can only be obtained under the FSIA. Indeed, every appellate court to address the issue has so

                held.   See Goar v. Compania Peruana de Vapores, 688 F.2d 417, 420-22 (5th Cir.1982);  Rex v. Compania Pervana de Vapores, 660 F.2d 61, 65 (3d Cir.1981), cert. denied, 456 U.S. 926, 102 S.Ct. 1971, 72 L.Ed.2d 441 (1982);  Williams v. Shipping Corp. of India, 653 F.2d 875, 880-81 (4th Cir.1981), cert. denied, 445 U.S. 982, 102 S.Ct. 1490, 71 L.Ed.2d 691 (1982);  Ruggiero, 639 F.2d at 875-76;  see also Verlinden B.V. v. Central Bank of Nigeria, 103 S.Ct. at 1971, 1973 (dictum).  We agree, and hold that section 1332 no longer provides for district court jurisdiction over a foreign state defendant, and that if appellants are to obtain jurisdiction in this case over Iran, it must be through the FSIA.   See Goar, 688 F.2d at 420-22
                

B. Foreign Sovereign Immunities Act Jurisdiction

28 U.S.C. Sec. 1330(a) states that district court jurisdiction over claims against foreign state defendants is limited to cases in "which the foreign state is not entitled to immunity either under sections 1605-1607 of ... title or under any applicable international agreement." The district court examined the relevant passages of the FSIA, and found that sovereign immunity barred suit against Iran. We affirm.

Under the FSIA, sovereign immunity is waived in suits "for money damages ... against a foreign state for personal injury or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of that foreign state ...." 28 U.S.C. Sec. 1605(a)(5) (emphasis added). 28 U.S.C. Sec. 1603(c) defines "the United States" for purposes of the FSIA to include "all territory and waters, continental or insular, subject to the jurisdiction of the United States."

This brings us to the heart of this case. Appellants argue that section 1603(c) should be interpreted to embrace "all territory and waters" with respect to which the United States exercises any form of jurisdiction. Inasmuch as United States embassies are subject to the jurisdiction of the United States for certain purposes, appellants argue that events occurring at the embassies fall within the waiver of immunity contained in section 1605(a)(5). Although a literal reading of the statute supports this argument, we decline to accept it because we believe the intent of Congress was to the contrary. Cf. United States v. American Trucking Ass'ns, 310 U.S. 534, 543-44, 60 S.Ct. 1059, 1063-64, 84 L.Ed. 1345 (1940); Trailer Train Co. v. State Board of Equalization, 697 F.2d 860, 866 (9th Cir.), cert. denied, --- U.S. ----, 104 S.Ct. 149, 78 L.Ed.2d ---- (1983).

Our view rests on the proposition that Congress intended that the FSIA would make United States law on sovereign immunity consistent with international law. See Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300, 310 (2d Cir.1981), cert. denied, 454 U.S. 1148, 102 S.Ct. 1012, 71 L.Ed.2d 301 (1982); H.R.Rep. No. 1487, supra, at 7, 1976 U.S.Code Cong. & Ad.News at 6605-06. ⁵ Consistent with that intent section 1604 provides a general jurisdictional immunity for foreign states which is made subject to the exceptions specified in section 1605. ⁶ Section 1605(a)(5), the exception for noncommercial torts on which appellants rely, is directed primarily at the problem of traffic accidents in the United States caused by automobiles operated by a foreign embassy. The legislative history makes this clear.

See H.R.Rep. No. 1487, supra, at 7, 20-21, 1976 U.S.Code Cong. & Ad.News at...