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In re Subpoena

United States Court of Appeals, District of Columbia Circuit

January 8, 2019

In re: Grand Jury Subpoena

          Argued December 14, 2018

          Appeal from the United States District Court for the District of Columbia (No. 1:18-gj-00041)

          Before: Tatel and Griffith, Circuit Judges, and Williams, Senior Circuit Judge.

          OPINION

          PER CURIAM [*]

         With the Foreign Sovereign Immunities Act (the "Act"), Congress unquestionably set out a comprehensive framework for resolving whether foreign states are entitled to immunity in civil actions. But did Congress, through the same Act, tell us how to handle claims for immunity in criminal cases as well? That question looms large over this litigation concerning a subpoena issued by a grand jury, but we find it unnecessary to supply a definitive answer. Assuming the Act's immunity applies, we hold that it leaves intact the district courts' subject-matter jurisdiction over federal criminal cases involving foreign sovereigns, and that there is a reasonable probability the information sought through the subpoena here concerns a commercial activity that caused a direct effect in the United States. Because the Act-even where it applies-allows courts to exercise jurisdiction over such activities, and because the ancillary challenges in this appeal lack merit, we affirm the district court's order holding the subpoena's target, a corporation owned by a foreign sovereign, in contempt for failure to comply.

         I.

         The grand jury seeks information from a corporation ("the Corporation") owned by Country A and issued a subpoena directing the Corporation to produce that information. XXXXX The Corporation moved to quash the subpoena, arguing that it is immune under the Act, or, alternatively, that the subpoena is unreasonable or oppressive (and therefore unenforceable under Federal Rule of Criminal Procedure 17(c)(2)) because it would require the Corporation to violate Country A's domestic law.

         The district court denied the motion to quash. The Corporation took an immediate appeal, which an earlier panel of this court dismissed for lack of appellate jurisdiction. Per Curiam Order, In re Grand Jury Subpoena, No. 18-3068 (October 3, 2018). The district court then held the Corporation in contempt, imposing a fine of $50, 000 per day until the Corporation complies with the subpoena, but stayed accrual and execution of the penalty pending appeal. The Corporation then filed this appeal of the contempt order. Because this appeal involves exclusively legal questions, our review is de novo. In re Sealed Case, 146 F.3d 881, 883 (D.C. Cir. 1998) (reviewing contempt order de novo where the district court allegedly "applied the wrong legal standard"). In a judgment dated December 18, 2018, we affirmed the district court and explained that a full opinion would follow. This is that opinion.

         II.

         Before 1952, foreign sovereigns enjoyed "complete immunity" in United States courts as "a matter of grace and comity." Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 486 (1983). First articulated in The Schooner Exchange v. McFaddon, 11 U.S. (7 Cranch) 116 (1812), that rule was in harmony with the then-existing "general concepts of international practice." Michael Wallace Gordon, Foreign State Immunity in Commercial Transactions § 3.01 (1991). Over the next century and a half, change slowly crept over the horizon. "[A]s foreign states became more involved in commercial activity," by taking over businesses and other historically private functions, many grew concerned that states could manipulate their immunity to obtain market advantages by evading accountability mechanisms that would hinder purely private corporations. Rubin v. Islamic Republic of Iran, 138 S.Ct. 816, 821-22 (2018) (noting that the State Department had expressed such a concern). As a result, several countries began stripping foreign sovereigns of their former immunity for "private," usually commercial, acts. Letter from Jack B. Tate, Acting Legal Adviser, Department of State, to Acting Attorney General Philip B. Perlman (May 19, 1952), reprinted in 26 Department of State Bulletin 984-85 (June 23, 1952) ("Tate Letter").

         The United States joined this club in 1952, when the Acting Legal Adviser to the State Department issued a letter (known as the "Tate Letter") adopting this so-called "'restrictive theory of sovereign immunity.'" Rubin, 138 S.Ct. at 822 (quoting Verlinden, 461 U.S. at 488). The result "proved troublesome." Verlinden, 461 U.S. at 487. Because courts relied "primarily" on the State Department to guide them regarding which activities remained immune, many disputes that were essentially private had the potential to become spiraling diplomatic imbroglios for the administration of the day. Id. Nobody was especially happy with the outcomes: "inconsistent" immunity determinations heavily informed by "'political'" and diplomatic considerations. Samantar v. Yousuf, 560 U.S. 305, 312-13 (2010) (quoting Republic of Austria v. Altmann, 541 U.S. 677, 690 (2004)).

         Seeking to extract the State Department from this stew and "endorse and codify the restrictive theory of sovereign immunity," Congress passed the Foreign Sovereign Immunities Act in 1976. Id. at 313. Where the Act applies, it does three things relevant to this case: (1) as a general matter, it extends foreign sovereigns "immun[ity] from the jurisdiction of the courts of the United States," 28 U.S.C. § 1604; (2) it creates exceptions to the rule of immunity under various circumstances, including cases based on certain "commercial activit[ies]" of the sovereign, id. § 1605(a)(2); and (3) it grants federal district courts subject-matter jurisdiction over certain "nonjury civil action[s]" against foreign states where they lack immunity, id. § 1330(a).

         The key question here is whether the Act-including section 1604's grant of immunity-applies to civil and criminal proceedings alike. The Corporation tells us the Act does apply here, and thereby immunizes the Corporation from this subpoena. The government responds that no part of the Act applies to criminal proceedings. "Immunity in criminal matters," the government assures us, "'simply was not the particular problem to which Congress was responding.'" Appellee's Br. 18 (quoting Samantar, 560 U.S. at 323).

         The few circuits to consider this issue have reached differing conclusions, albeit in circumstances distinct from those here. Compare Southway v. Central Bank of Nigeria, 198 F.3d 1210, 1214 (10th Cir. 1999) (stating in context of a civil Racketeer Influenced and Corrupt Organizations Act ("RICO") claim that the Act does not apply in criminal proceedings), and United States v. Noriega, 117 F.3d 1206, 1212 (11th Cir. 1997) (same, in case involving head-of-state immunity claim), with Keller v. Central Bank of Nigeria, 277 F.3d 811, 820 (6th Cir. 2002) (stating in context of civil RICO claim that the Act does apply in criminal proceedings), partially abrogated by Samantar, 560 U.S. 305. Mindful of our obligation to avoid sweeping more broadly than we must to decide the case in front of us, we need not weigh in on this dispute. As we explain below, even assuming section 1604's grant of immunity applies to criminal proceedings, the Corporation still lacks immunity from this particular subpoena.

         III.

         Taking section 1604's grant of immunity as a given, the government must check three boxes for the contempt order to stand. First, there must be a valid grant of subject-matter jurisdiction. Second, one of the Act's exceptions to immunity must apply. And third, the contempt sanctions must be a permissible remedy. According to the district court, the government satisfies all three. We agree.

         A.

         We start, as we must, with subject-matter jurisdiction. The district court purported to exercise its inherent contempt power in aid of its criminal jurisdiction. See FG Hemisphere Associates, LLC v. Democratic Republic of Congo, 637 F.3d 373, 377 (D.C. Cir. 2011) (explaining that "federal courts enjoy inherent contempt power" that "runs with a court's jurisdiction"). The problem, according to the Corporation, is that the Act eliminated all criminal subject-matter jurisdiction over foreign sovereigns, taking the contempt power with it. The text of the relevant statutes, however, cuts against the Corporation's position. Section 3231 of title 18 gives federal courts original jurisdiction over "all offenses against the laws of the United States." It is hard to imagine a clearer textual grant of subject-matter jurisdiction. "All" means "all"; the provision contains no carve-out for criminal process served on foreign defendants. And nothing in the Act's text expressly displaces section 3231's jurisdictional grant. True, section 1604 grants immunity "from the jurisdiction of the courts," but that is no help to the Corporation. Linguistically, granting a particular class of defendants "immunity" from jurisdiction has no effect on the scope of the underlying jurisdiction, any more than a vaccine conferring immunity from a virus affects the biological properties of the virus itself.

         To be sure, we have often referred to the Act's immunity provisions as affecting "subject matter jurisdiction." See, e.g., Odhiambo v. Republic of Kenya, 764 F.3d 31, 34 (D.C. Cir. 2014). But in offering that characterization, we are not referring to section 1604. The provision that usually gives the exceptions to immunity their jurisdictional status is the Act's provision conferring subject-matter jurisdiction over foreign states in civil actions, codified at 28 U.S.C. § 1330(a). That section authorizes jurisdiction over certain nonjury civil actions "with respect to which the foreign state is not entitled to immunity." Thus, establishing that an exception to immunity applies is one element of invoking subject-matter jurisdiction under section 1330(a). See Verlinden, 461 U.S. at 489 (using section 1330(a) to link the immunity exceptions to subject-matter jurisdiction). This feature of section 1330(a) does not transmute the entirely separate section 1604 into a provision about subject-matter jurisdiction.

         With no textual provision purporting to eliminate section 3231's grant of subject-matter jurisdiction, the Corporation instead focuses on section 1330(a). Although that provision by its terms merely confers jurisdiction over an unrelated set of civil cases, the Corporation assures us that, as with an iceberg, much hides beneath the surface. Specifically, the Corporation reads the provision to silently and simultaneously revoke jurisdiction over any case not falling within its terms, including any criminal proceeding.

         Ordinarily, that argument would be a tough sell. We are usually reluctant to view one statute as implying a limited repeal of another where the two are capable of coexisting. See Morton v. Mancari, 417 U.S. 535, 550 (1974) ("In the absence of some affirmative showing of an intention to repeal, the only permissible justification for a repeal by implication is when the earlier and later statutes are irreconcilable."). But the Corporation argues this usual rule has no force in the context of foreign sovereign immunities, citing the Supreme Court's statement, first appearing in Argentine Republic v. Amerada Hess Shipping Corp., that the Act is "the sole basis for obtaining jurisdiction over a foreign state in our courts." 488 U.S. 428, 434 (1989).

         Amerada Hess was a civil action. Id. at 431. The plaintiffs sought relief in tort from Argentina for having bombed their neutral ship in the course of Argentina's war with the United Kingdom over the Falkland, or Malvinas, Islands. Id. at 431- 32. Because the Act pretty plainly granted Argentina immunity for this essentially sovereign act, see id. at 439-43, the plaintiffs sought to circumvent that immunity by invoking subject-matter jurisdiction under the Alien Tort Statute, 28 U.S.C. § 1350, which unlike section 1330(a) makes no mention of the immunity exceptions. Rebuffing that effort, the Supreme Court concluded that founding jurisdiction on the Alien Tort Statute-or, for that matter, any "other grant[] of subject-matter jurisdiction in Title 28," id. at 437 (emphasis added)- would conflict with Congress's choice "to deal comprehensively with the subject of foreign sovereign immunity in the" Act, id. at 438. To avoid that outcome, when it comes to foreign sovereigns, the Court held that section 1330(a) precludes subject-matter jurisdiction under other, more general grants, listing the Alien Tort Statute and a bevy of other examples from the civil code in title 28. Id. at 437-39. Subsequent decisions from the Supreme Court and this court echoing that conclusion can all be traced back to Amerada Hess. See, e.g., Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993) (quoting Amerada Hess); Schermerhorn v. State of Israel, 876 F.3d 351, 353 (D.C. Cir 2017) (same). Neither the Supreme Court nor this court has ever extended Amerada Hess's holding to a criminal proceeding.

         Uncritically applying the exclusivity rule from Amerada Hess in the criminal context would yield the conclusion the Corporation prefers: no jurisdiction, as this grand jury proceeding is plainly not a "nonjury civil action" covered by section 1330(a). But even the briefest peek under the hood of Amerada Hess shows that the Supreme Court's reasons for finding section 1330(a) to ...


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