Merlini v. Canada

United States Court of Appeals
For the First Circuit
No. 17-2211
CYNTHIA L. MERLINI,
Plaintiff, Appellant,
v.
CANADA,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
Before
Lynch, Kayatta, and Barron,
Circuit Judges.
Theodore J. Folkman, with whom Murphy & King, P.C. was on
brief, for appellant.
John F. Cooney, with whom Benjamin E. Horowitz, Venable LLP,
D.E. Wilson, Jr., Andrew E. Bigart, and Liz C. Rinehart were on
brief, for appellee.
June 10, 2019
BARRON, Circuit Judge. Cynthia Merlini ("Merlini") is
a United States citizen who was injured in the course of her
employment as an administrative assistant at the Canadian
consulate in Boston, Massachusetts. The injury occurred in 2009
when she tripped over a cord in the consulate that had not been
secured to the floor. In 2017, as a result of that injury, Merlini
sued Canada for damages in the United States District Court for
the District of Massachusetts pursuant to the Massachusetts
Workers' Compensation Act (the "MWCA"), which is codified at
Massachusetts General Laws chapter 152.
The District Court dismissed Merlini's complaint for
lack of jurisdiction after concluding that Canada was immune from
the suit under the Foreign Sovereign Immunities Act ("FSIA"), 28
U.S.C. § 1602 et. seq. We now reverse.
I.
In 2003, the government of Canada hired Merlini -- who
is a resident of Massachusetts, a citizen of the United States,
and not a citizen of Canada -- to be an administrative assistant
to the Consul General of Canada in Boston. Merlini asserts, and
Canada does not contest, that her "duties" in this position "were
purely clerical, and comparable to the duties of an assistant or
secretary to an executive in any private firm," as "[s]he answered
the phones, maintained files, typed letters, and did other
secretarial work" in the Canadian consulate in Boston. She further
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asserts, again without dispute, that "[s]he was not a consular
officer," "[s]he had no governmental, consular, diplomatic, or
official duties," "[s]he took no competitive examination before
hiring," and "she was not entitled to tenure protections, or to
the employment benefits Canadian foreign service officers
received."
Merlini alleges that, while setting up coffee and tea
service on January 22, 2009 for a meeting at the consulate, she
tripped over an unsecured speakerphone cord, fell, struck a
credenza, and thereby sustained "a serious injury" that left her
unable to work. Canada does not challenge that allegation for the
purpose of the present appeal. Additionally, it is undisputed
that, per Canada's own national workers' compensation system,
Canada paid Merlini what amounted to her full salary from shortly
after the accident until October 2009.
Sometime thereafter, however, Canada determined that
Merlini was able to return to work and ceased paying her pursuant
to its national workers' compensation system. That determination
appears to have set matters on the course that has resulted in the
suit that is now before us on appeal.
The initial step on that course was Merlini's request
that Canada reconsider its determination to stop paying her under
Canada's workers' compensation system. Following Canada's denial
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of that request for reconsideration, Merlini shifted course and
sought relief under Massachusetts law.
Merlini did so first, in 2011, by bringing an
administrative claim against the Massachusetts Workers'
Compensation Trust Fund ("WCTF"). That fund provides, among other
things, for the payment of benefits to employees who are unable to
work in consequence of workplace injuries that they have suffered
while working for an employer who is subject to personal
jurisdiction within the Commonwealth and who is "uninsured" for
purposes of the MWCA. See Mass. Gen. Laws ch. 152 § 65(2)(e).
Chapter 152 provides that, to qualify as "insured," an employer
must (1) have insurance with an insurer, (2) hold membership in a
workers' compensation self-insurance group certified by the state,
or (3) be licensed as self-insured annually by the state, which
requires the employer, among other things, to complete a detailed
application, provide certain financial information, post a surety
bond to or deposit negotiable securities with the state to cover
any losses that may occur, and purchase catastrophe reinsurance of
at least $500,000. See id. at §§ 1(6), 25A; 452 Mass. Code Regs.
5.00; see also LaClair v. Silberline Mfg. Co., 393 N.E.2d 867, 871
(Mass. 1979).
In 2013, the Massachusetts Department of Industrial
Accidents ("DIA") held an evidentiary hearing, in which Canada
participated as amicus curiae for the WCTF, on Merlini's claim
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against the fund. An administrative judge found that Merlini was
entitled to ongoing incapacity benefits from the fund under chapter
152 § 34 (temporary total incapacity benefits) and chapter 152
§ 34A (permanent total incapacity benefits).
The WCTF then appealed this ruling to the DIA's Reviewing
Board ("DIA Board"). In 2015, the DIA Board reversed the
administrative judge's ruling and denied Merlini the benefits from
the fund. The DIA Board determined that (1) Canada was not
"subject to the personal jurisdiction of the Commonwealth"; (2)
Canada was not "uninsured" for purposes of the statute because it
had sovereign immunity; and (3) the WCTF was not liable if an
employee was entitled to workers' compensation benefits in any
other jurisdiction, Mass. Gen. Laws ch. 152 § 65(2)(e)(i), and
Merlini was in fact entitled under Canadian law to such benefits
under Canada's national workers' compensation system.
In 2016, Merlini sought review of the DIA Board's ruling
from the Massachusetts Appeals Court ("MAC"). The MAC upheld the
Board's ruling. The MAC did so, however, only on the ground that,
in consequence of the injury that Merlini suffered at the
consulate, she had been entitled to benefits in another
jurisdiction -- namely, Canada. Thus, the MAC did not "address
whether the Canadian government is subject to the jurisdiction of
the Commonwealth or whether the Consulate was an 'uninsured
employer' in violation of chapter 152."
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Merlini did not appeal the MAC's ruling. Instead, in
2017, Merlini sued Canada for damages in federal district court in
the District of Massachusetts pursuant to chapter 152. It is that
suit that is the subject of this appeal.
Canada moved to dismiss Merlini's suit on jurisdictional
grounds under Federal Rule of Civil Procedure 12(b)(1). Canada
contended in its motion that it was entitled to foreign sovereign
immunity under the FSIA and thus that the District Court lacked
jurisdiction. Canada also separately moved to dismiss Merlini's
suit under Federal Rule of Civil Procedure 12(b)(6) for failure to
state a claim. Canada did so on the ground that the DIA Board's
ruling that Canada was not "uninsured" was preclusive of Merlini's
claim because the DIA Board had ruled on that basis that Canada
"was not required to obtain local workers' compensation insurance
or register with the state as a self-insurer and therefore could
not be considered an uninsured employer" under the MWCA.
In opposing Canada's motion to dismiss, Merlini first
asserted that two exceptions to the FSIA's presumption of foreign
sovereign immunity applied: the "commercial activity" exception,
28 U.S.C. § 1605(a)(2),1 and the "noncommercial tort" exception,
1 This provision states that:
A foreign state shall not be immune from the
jurisdiction of courts of the United States or of
the States in any case in which the action is based
upon a commercial activity carried on in the United
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id. at § 1605(a)(5).2 Merlini thus contended that the District
Court had jurisdiction over Canada. Merlini also argued that she
had stated a claim against Canada because the DIA Board ruling did
not preclude her claim.
In December 2017, the District Court dismissed Merlini's
complaint for lack of jurisdiction on the grounds that, pursuant
to the FSIA, Canada is "'presumptively immune' from liability in
federal courts of the United States" and that Merlini had failed
to demonstrate that either of the two FSIA exceptions on which she
States by the 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 territory of
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.
2 This provision states that:
A foreign state shall not be immune from the
jurisdiction of courts of the United States or of
the States in any case not otherwise encompassed in
paragraph (2) [the "commercial activity" exception]
above, in which money damages are sought 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 or of any official
or employee of that foreign state while acting
within the scope of his office or employment;
except this paragraph shall not apply to -- (A) any
claim based upon the exercise or performance or the
failure to exercise or perform a discretionary
function regardless of whether the discretion be
abused, or (B) any claim arising out of malicious
prosecution, abuse of process, libel, slander,
misrepresentation, deceit, or interference with
contract rights.
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relied in contesting Canada's sovereign immunity applied. Merlini
v. Canada, 280 F. Supp. 3d 254, 256, 258 (D. Mass. 2017) (quoting
Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993)). The District
Court "decline[d] to address" Canada's separate contention that
Merlini had failed to state a claim for which relief could be
granted. Id. at 259. Merlini now appeals the District Court's
dismissal of her claim for lack of jurisdiction and also contends
that the dismissal of her claim may not be affirmed on issue
preclusion grounds.
II.
We start by describing certain aspects of the
Massachusetts workers' compensation scheme, as codified by chapter
152 of the MWCA. Those provisions figure prominently in the
parties' dispute over whether Canada is entitled to foreign
sovereign immunity in this case.
As a general matter, the MWCA bars an employee from suing
her employer for a work-related injury -- including one resulting
from a fellow employee's conduct -- when the employer is "insured"
within the meaning of the MWCA. See Mass. Gen. Laws ch. 152 § 24.
The MWCA imposes this bar by providing that an employee waives the
"right of an action at common law . . . [with] respect to an injury
that is compensable under [the MWCA]" if the employer was insured
within the meaning of the MWCA at the time of the employee's hiring
or became insured prior to the employee's injury, unless the
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employee preserves such a right by providing proper notice of the
employee's intent to preserve it. Id.
Chapter 152, however, sets forth a corollary to this
bar. It provides that, if an employer is not insured within the
meaning of the MWCA, then an employee, generally, may bring a suit
against the employer to recover for a workplace injury -- even if
the conduct is caused by a fellow employee. See Hanover Ins. Co.
v. Ramsey, 539 N.E.2d 537, 538 n.3 (Mass. 1989) ("An employer who
has failed to obtain workers' compensation insurance can be held
liable essentially in all cases in which the employee can prove
that he was injured in the course of his work.").
Moreover, chapter 152 makes clear that, in such a suit
by the employee, the employer is deprived of asserting a host of
important defenses that would ordinarily be available at common
law, which effectively renders the employee's claim against the
employer a "strict liability" claim. See Doe v. Access Indus.,
Inc., 137 F. Supp. 3d 14, 16 (D. Mass. 2015); Coppola v. City of
Beverly, 576 N.E.2d 686, 687 (Mass. App. Ct. 1991). Section 66 of
chapter 152 specifies the limitations on the defenses that are
available as follows:
Actions brought against employers to recover
damages for personal injuries or consequential
damages sustained within or without the
commonwealth by an employee in the course of
his employment . . . shall be commenced within
twenty years from the date the employee first
became aware of the causal relationship
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between the disability and his employment. In
such actions brought by said
employees . . . it shall not be a defense: 1.
That the employee was negligent; 2. That the
injury was caused by the negligence of a
fellow employee; 3. That the employee had
assumed voluntarily or contractually the risk
of the injury; 4. That the employee's injury
did not result from negligence or other fault
of the employer, if such injury arose out of
and in the course of employment.
Merlini contends that, because Canada is not insured
(even as a self-insurer) within the meaning of chapter 152, she is
entitled under chapter 152 to bring her suit against Canada for
the workplace injury that she suffered. And, she further contends,
for that same reason, Canada is subject in her suit to the
limitations on the defenses that are set forth in § 66. Canada
argues in response that, precisely because Merlini relies on § 66,
it is entitled to immunity under the FSIA, even assuming that
Canada does not qualify as being "insured" within the meaning of
chapter 152. Thus, Canada contends, Merlini's claim must be
dismissed for lack of jurisdiction.
We must now decide whether Canada is right. To do so,
we must address Merlini's contention that Canada lacks foreign
sovereign immunity in consequence of either of two exceptions to
such immunity that the FSIA recognizes.
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III.
The FSIA "provides the sole basis for obtaining
jurisdiction over a foreign state in federal court." Universal
Trading & Inv. Co. v. Bureau for Representing Ukrainian Interest
in Int'l & Foreign Courts, 727 F.3d 10, 16 (1st Cir. 2013) (quoting
Argentine Republic v. Amerada Hess Shipping Co., 488 U.S. 428, 439
(1989)). The FSIA establishes "a presumption of foreign sovereign
immunity from the jurisdiction of the courts of the United States"
that typically controls the jurisdictional question. Id. (citing
28 U.S.C. § 1330; Verlinden B.V. v. Cent. Bank of Nigeria, 461
U.S. 480, 485 n.5 (1983)). Thus, as a general matter, "courts in
the Unites States lack both subject matter and personal
jurisdiction over a suit against a foreign sovereign." Id.The FSIA does, however, set forth a list of express
exceptions to the foreign sovereign immunity that it generally
recognizes, such that foreign states are not immune from suit in
federal court if one of those "enumerated exceptions to immunity
applies." Id. (citing 28 U.S.C. §§ 1604, 1605, 1605A; Verlinden,
461 U.S. at 488). Merlini invokes two of those exceptions -- the
"commercial activity" exception and the "noncommercial tort"
exception -- in contending that Canada is not entitled to sovereign
immunity from her suit.
We focus here on one of them, the "commercial activity"
exception, 28 U.S.C. § 1605(a)(2), as we conclude that, contrary
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to the District Court's ruling, this exception does apply. This
conclusion, moreover, precludes the "noncommercial tort" exception
from applying. See 28 U.S.C. § 1605(a)(5) (providing that "[a]
foreign state shall not be immune from the jurisdiction of courts
of the United States or of the States in any case not otherwise
encompassed in paragraph (2) [the "commercial activity"
exception]"). Our review of the District Court's ruling on this
score is de novo. Universal Trading, 727 F.3d at 15.
A.
The "commercial activity" exception provides in relevant
part that "a foreign state is subject to jurisdiction in any case
'in which the action is based upon a commercial activity carried
on in the United States by the foreign state.'" Fagot Rodriguez
v. Republic of Costa Rica, 297 F.3d 1, 5 (1st Cir. 2002) (emphasis
added) (quoting 28 U.S.C. § 1605(a)(2)). The inquiry into whether
the exception applies -- at least in a case like this, in which
the parties agree that the foreign state "carried on" the relevant
action "in the United States" -- involves two steps.
The first step "requires a court to 'identify[] the
particular conduct on which the [plaintiff's] action is based.'"
OBB Personenverkehr AG v. Sachs, 136 S. Ct. 390, 395 (2015)
(alteration in original) (quoting Saudi Arabia v. Nelson, 507 U.S.
349, 356 (1993)). In performing that threshold inquiry, "a court
should identify that 'particular conduct' by looking to the 'basis'
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or 'foundation' for a claim," which the court has variously
described as "'those elements . . . that, if proven, would entitle
a plaintiff to relief'" and as "the gravamen of the complaint."
Id. (omission in original) (internal citations omitted) (quoting
Nelson, 507 U.S. at 357).
This inquiry requires more than a myopic focus on whether
"one element" of the claim is based upon a "commercial activity"
of the foreign state. See id. at 394-96. The right approach looks
beyond the fact that a single element of the claim might be "based
on" such conduct and instead "zeroe[s] in on the core of" the
plaintiff's claim. Id. at 396.
After a court identifies the particular conduct by the
foreign state on which the plaintiff's claim is "based," the next
step in the inquiry requires a court to determine whether that
conduct qualifies as "commercial activity." Fagot Rodriguez, 297
F.3d at 5. If the conduct does so qualify, then the "commercial
activity" exception to foreign state sovereign immunity applies,
at least when, as in this case, the parties do not dispute that
the conduct was "carried on" by the foreign state "in the United
States."
"The term 'commercial activity' encompasses both 'a
regular course of commercial conduct' and 'a particular commercial
transaction or act.'" Id. (quoting 28 U.S.C. § 1603(d)). As we
have explained, however, "the question is not whether the foreign
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government [was] acting with a profit motive or instead with the
aim of fulfilling uniquely sovereign objectives," but "[r]ather,
the issue is whether the particular actions that the foreign state
perform[ed] (whatever the motive behind them) [were] the type of
actions by which a private party engages in 'trade and traffic or
commerce.'" Id. at 6 (alterations in original) (quoting Republic
of Argentina v. Weltover, Inc., 504 U.S. 607, 614 (1992)). Thus,
"[i]n assessing whether a certain transaction or course of conduct
is commercial in character, courts must look to the 'nature' of
the activity rather than its 'purpose.'" Id. at 5-6; see also 28
U.S.C. § 1603(d) ("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.").
Against this legal background, the key questions
concerning the "commercial activity" exception that we must
address in this appeal are the following: what conduct is Merlini's
claim against Canada "based on," and is that conduct "commercial
activity"? We turn, then, to those two questions, starting with
the first.
B.
In taking up the first question, we begin by observing
that Canada does not dispute that it employed Merlini at its
consulate in Boston, that she is an American citizen and not a
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Canadian citizen, that her employment involved only duties that
"were purely clerical," and that her employment lacked indicia of
diplomatic or civil service.3 Nor does Canada contest, for
purposes of this appeal, that Merlini was injured while performing
her ordinary clerical duties as Canada's employee in the consulate
in Boston.
Thus, if Merlini's complaint is "based on" Canada's
employment of her as a clerical worker doing routine clerical work
at the consulate in Boston, then the "commercial activity"
exception would appear to apply. See H. Rep. No. 94-1487, at 16
(1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6615 (describing
"[a]ctivities such as a government's . . . employment or engagement
of laborers, clerical staff or public relations or marketing agents
. . . [as] those included within the definition [of commercial
activity]" (emphasis added)). In fact, Canada does not appear to
argue otherwise.
The State Department, in its amicus brief, however,
contends that Merlini's complaint is solely "based on" the
negligent conduct by her fellow employee that caused the injury
that she suffered during the course of her employment -- namely,
3As already mentioned, Canada does not contend that Merlini
had governmental, consular, diplomatic, or official duties; took
a competitive examination before hiring; or was entitled to tenure
protections or the employment benefits Canadian foreign service
officers receive.
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what she alleges in her complaint to have been the negligent laying
of the cord by that employee. The Department then contends that
this conduct does not qualify as "commercial activity" and thus
that the "commercial activity" exception does not apply. Rather,
the Department contends, the "noncommercial tort" exception is the
only exception that might apply in Merlini's case, insofar as her
action under § 66 can be characterized -- notwithstanding the fact
that it strips the employer of asserting an absence of negligence
as a defense -- as one that seeks recovery "against a foreign state
for personal injury . . . caused by [a] tortious act or omission."
28 U.S.C. § 1605(a)(5) (emphasis added). The Department thus
argues that we should vacate and remand to permit Merlini to
develop her claim of negligence under the "noncommercial tort"
exception.
To establish the premise on which this contention
rests -- namely, that the suit is based solely on the conduct of
Merlini's fellow employee with respect to the speakerphone
cord -- the Department invokes the Supreme Court's opinion in Saudi
Arabia v. Nelson. There, the plaintiff argued that his claims of
torture and false imprisonment at the hands of the Saudi Arabian
government were "commercial" in nature because it was his
employment with the Saudi Arabian government that "led to" those
injuries. Nelson, 507 U.S. at 358. The Supreme Court, however,
disagreed. In so deciding, the Court held that it was wrong to
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characterize the plaintiff's claims as being "based on"
"commercial activity" simply because "commercial activity"
"preceded" the conduct from which those claims arose. Id.Instead, the Court stressed that while the plaintiff's employment
may have "led to" his injuries at the hands of the Saudi Arabian
government in a temporal sense, the actions that effectuated those
injuries were in no way tied to that employment and were,
therefore, not "commercial" in nature. Id. The Department argues
that the same conclusion is required here.
We disagree. The MWCA requires that Merlini prove only
that she was injured in the workplace in the course of her
employment with Canada. Consequently, Merlini is not required to
prove -- as the plaintiff in Nelson was required to prove as to
his claims for battery, unlawful detainment, wrongful arrest and
imprisonment, false imprisonment, inhuman torture, disruption of
normal family life, and infliction of mental anguish -- any action
by any person that caused the underlying injury. She has to prove,
instead, that she suffered a workplace injury in the course of her
employment and that the defendant, Canada, was her employer. Given
that courts have held that an employer's maintenance of a hostile
or discriminatory work environment constitutes "commercial
activity" for the purposes of a Title VII suit against an employer,
42 U.S.C. § 2000e–2(a), -- see, e.g., Holden v. Canadian Consulate,
92 F.3d 918, 922 (9th Cir. 1996); Ashraf-Hassan v. Embassy of
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France in United States, 40 F. Supp. 3d 94, 102-03 (D.D.C.
2014) -- we fail to see why that same logic does not apply to
Merlini’s § 66 claim against her employer for workplace injuries
suffered by employees during the course of their employment. Hers
is no more an ordinary slip and fall case than those cases are
ordinary harassment cases. Each rests on a claim that makes the
employer directly liable for what happens in the workplace to the
employee who brings the suit.
To be sure, the Supreme Court has stressed that to find
the gravamen of any personal injury suit, one must look to "the
point of contact -- the place where the boy got his fingers
pinched." Sachs, 136 S. Ct. at 397 (internal quotations omitted).
However, nothing in that precedent requires that we assess that
conduct independent of the plaintiff's actual claim, which, in
this case, is a claim against the employer -- not a fellow employee
-- and requires no proof that any fellow employee engaged in any
particular conduct.
We find the D.C. Circuit's analysis in El-Hadad v. United
Arab Emirates instructive in this regard. 496 F.3d 658 (D.C. Cir.
2007). There, the Court held that that the gravamen of the
plaintiff's complaint, which alleged breach of contract for
wrongful termination, involved "commercial activity," in part,
because it occurred in the "employment context." Id. at 663. In
choosing to focus on the "employment relationship . . . as a
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whole," the Court noted that a "narrow[er]" framing of the gravamen
of the complaint -- focusing myopically on the plaintiff's
defamation or breach of contract claims divorced from the
employment context -- would "defy analysis" under the "commercial
activity" inquiry. Id. at 663 n.1 (highlighting the difficulty of
characterizing a "breach of contract," without more, as
"commercial" or "non-commercial").
Simply put, Merlini's employment did not simply "le[ad]
to" the injury that she received; it provides the legal basis for
the only cause of action that she has against her employer for the
injury for which she seeks to recover. See In re Opinion of the
Justices, 34 N.E.2d 527, 544 (Mass. 1941) (establishing that
chapter 152 §66 "must be interpreted as creating a cause of action
in an employee sustaining an injury 'in the course of his
employment' that is a 'direct result' of such employment though
not a 'direct result of any negligence on the part of the
employer'").
We recognize that, as the Department notes, the Supreme
Court did not reject all of Nelson's claims on the ground that his
allegations of "commercial activity" (his employment) preceded the
actual conduct causing his injuries. Instead, in both Nelson and
the Court's subsequent decision in Sachs, the Supreme Court noted
that, with respect to the plaintiffs' failure to warn claims, the
exception triggering activities (Nelson's employment and Sachs's
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ticket purchase) were necessary elements of those claims.
Nonetheless, the Court concluded in both cases that the failure to
warn claims were impermissible because they were
"merely . . . semantic ploy[s]," Nelson, 507 U.S. 9 at 363,
"artful[ly] pled[]," Sachs, 136 S. Ct. at 396, to avoid the foreign
states' sovereign immunity.
Insofar as the Department means to argue that Merlini's
claims are, in some way, a similar "semantic ploy" to avoid
Canada's sovereign immunity, no such concerns exist here.
Merlini's chapter 152 claim was not part of some shrewd litigation
strategy aimed at navigating around Canada's sovereign immunity.
It was, instead, the only claim that Merlini could bring against
her employer for the workplace injury that she suffered under the
statutory framework established by the Massachusetts legislature
for permitting employees to seek redress for such injuries from
their employers. That framework has, as one of its express aims,
the goal of incentivizing employers to comply with the law's
worker's compensation requirement so that employees are ensured
adequate coverage in situations where they are injured during the
course of their employment. See In re Opinion of the Justices, 34
N.E.2d at 543-44 (describing the "manifest[] . . . purpose" of
chapter 152 as "leav[ing] non-subscribing employers in such a
disadvantageous position that hardly any employer could afford not
to accept the insurance provisions of the act").
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Thus, even if we were to accept that the gravamen of
Merlini's complaint does not encompass Canada's choice to forgo
obtaining the requisite insurance, we still would find that the
"commercial activity" exception applies. And that is because the
conduct on which her claim is based cannot be divorced from her
"employment relationship" with Canada.
In so deciding, though, we emphasize that we reach this
conclusion because Merlini is a United States citizen -- and not
a citizen of Canada -- whom Canada employed to work for it as
clerical staff in the United States. Accordingly, Merlini is just
the type of employee whose employment by a foreign state Congress
identified as an example of "commercial activity" by a foreign
state. See H. Rep. No. 94-1487, at 16 (1976), reprinted in 1976
U.S.C.C.A.N. 6604, 6615. Nor does Canada argue that there is
anything about Merlini's duties that supports a different
conclusion. We thus do not mean to suggest that the outcome would
be the same if Merlini's position were not purely "clerical." See
Kato v. Ishihara, 360 F.3d 106, 110-14 (2nd Cir. 2004)
(characterizing "product promotion for Japanese companies" as
"governmental" and, therefore, noncommercial); Butters v. Vance
Intern., Inc., 225 F.3d 462, 465 (4th Cir. 2004) (characterizing
"[p]roviding security for the royal family" of Saudi Arabia as
"sovereign" and, therefore, noncommercial).
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C.
We turn, then, to Canada's contention, which it also
made to the District Court, that "[t]he circumstances of
[Merlini's] employment, and whether Canada could or should have
prevented the alleged accident," are "incidental and immaterial
under [Merlini's] theory of the claim." Canada points to the fact
that Merlini is relying in bringing her claim on chapter 152 § 66,
which provides that "[a]n employer is liable in tort to an employee
without proof of negligence if the employer is required to maintain
workers' compensation insurance and fails to do so (or fails to
become a licensed self-insurer) . . . ." Thorson v. Mandell, 525
N.E.2d 375, 377 (Mass. 1988).
Canada argues that Merlini's reliance on § 66 is of
critical importance in determining the gravamen of her complaint.
Canada contends that, due to her reliance on that provision of
chapter 152, Merlini is necessarily bringing a claim that is "based
on" "how Canada provides workers' compensation benefits," given
that her claim necessarily depends on the fact that Canada chose
to compensate her through a means that does not qualify an employer
as "insured" under chapter 152.4 (Emphasis added).
4
Notably, Canada does not dispute the fact that this activity
was conducted by the Canadian government, nor does it dispute that
it was performed in the United States.
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The District Court appeared, at least at points, to agree
with Canada that the conduct that we must assess to determine
whether it is "commercial" in nature is Canada's "decision to
provide benefits directly under its own [national workers'
compensation insurance] system." In particular, the District
Court, after describing "[t]he determinative question" at the
first step of the inquiry as being "whether [Canada's] decision
not to purchase workers' compensation insurance is commercial in
nature," ultimately concluded that Canada's "decision to provide
its own benefits does not fall under the commercial activit[y]
exception because the decision to create and organize a workers'
compensation program is sovereign in nature." Merlini, 280 F.
Supp. 3d at 257 (emphasis added).
The State Department, in its amicus brief, also endorsed
this position as an alternative to its argument that the gravamen
of Merlini's claim is more appropriately characterized as a
"noncommercial tort." The Department contends that "Canada opted
out of the Massachusetts workers' compensation system in a manner
available exclusively to sovereigns -- by enacting a statute
creating an alternate and uniform compensation regime for all
Canadian employees, wherever in the world they might be."
But, while Canada and the District Court are right that
Merlini's claim does rely on § 66, nothing in § 66, or, for that
matter, the whole of chapter 152, makes how an "uninsured" employer
- 23 -
chooses to compensate an injured employee of any relevance to a
chapter 152 claim for damages against that employer. Chapter 152
requires, in relevant part, only that an employee must show "that
[the employer] had to carry worker's [sic] compensation insurance"
for an employee and "that [the employer] did not carry it." Beath
v. Nee, 74 Mass. App. Ct. 1119, 1119 (2009) (unpublished). The
statute does not require any showing regarding what alternative
means, if any, the employer may have used to compensate the
employee once the employee has shown that the employer was not
insured within the meaning of chapter 152. Thus, while we must
"zero[] in on the core" of her claim, Sachs, 136 S. Ct. at 396,
and while we may not unduly seize upon merely one element of her
claim, see id. at 394-96, Merlini's claim is in no sense "based
on" Canada's decision to compensate her through its own national
workers' compensation system. See Sachs, 136 S. Ct. at 395(explaining that "a court should identify . . . those elements
. . . that, if proven, would entitle a plaintiff to relief, . . .
and the gravamen of the complaint" (internal citations omitted)).
That is not to say, though, that we reject Canada's
contention that its decision to forgo insurance forms part of what
may be understood to be the gravamen of Merlini's claim. We may
assume that it does. Cf. Nelson, 507 U.S. at 358 n.4. But, even
if we do, we cannot ignore that Canada failed to obtain what
Massachusetts courts describe as "workers' compensation
- 24 -
insurance," see LaClair v. Silberline Mfg. Co., Inc., 393 N.E.2d
867, 869 (Mass. 1979), and that Merlini's claim is based on the
fact that she is an employee who was injured during the course of
her employment while her employer failed to possess that type of
insurance. See El-Hadad, 496 F.3d at 663 (declining to divorce
the conduct on which a breach of contract claim was based -- the
breach -- from the "employment context" in which it occurred).
Thus, even accepting that the gravamen of Merlini's claim relates
to Canada's failure to obtain the requisite insurance, our inquiry
into whether it is based on "commercial activity" would require us
to examine whether that failure -- given the employment context in
which it occurred -- constitutes "commercial activity."
In so doing, we must keep in mind that the
characterization of conduct as "commercial activity" turns on its
"nature" rather than its "purpose." 28 U.S.C. § 1603(d). Thus,
a sovereign's conduct constitutes "commercial activity" if "the
particular actions that the foreign state perform[ed] (whatever
the motive behind them) [were] the type of actions by which a
private party engages in 'trade and traffic or commerce,'" Fagot
Rodriguez, 297 F.3d at 6 (alterations in original) (quoting
Weltover, 504 U.S. at 614). Applying that test, we conclude that
Canada's employment of Merlini without obtaining the requisite
insurance is properly deemed to be "commercial activity," at least
given that Merlini is a United States citizen whom Canada employed
- 25 -
in Boston as clerical staff and that she seeks recovery for the
injury she suffered while performing her clerical duties.5
1.
We start by considering whether, in general, an
employer's failure, in employing its workers, to be insured within
the meaning of chapter 152 is the type of conduct "by which a
private party engages in 'trade and traffic or commerce.'" Fagot
Rodriguez, 297 F.3d at 6 (quoting Weltover, 504 U.S. at 614). We
have little doubt that it is.
Private employers in Massachusetts must regularly decide
whether, in employing their workers, they should obtain the kind
of insurance that chapter 152 contemplates or whether they instead
should take the risk of going bare. See, e.g., Brown v. Leighton,
434 N.E.2d 176 (Mass. 1982) (uninsured taxicab driver employer);
Barrett v. Transformer Serv., Inc., 374 N.E.2d 1325 (Mass 1978)
(uninsured transformer service company employer); Truong v. Wong,
775 N.E.2d 405 (Mass. App. Ct. 2002) (uninsured tofu manufacturing
5 Although we recognize that courts are instructed to give
"special attention" to the State Department's views on matters of
foreign immunity, see Jam v. Int'l Finance Corp., 139 S. Ct. 759,
770-71 (2019) (quoting Bolivarian Republic of Venezuela v.
Helmerich & Payne Int'l. Drilling Co., 137 S. Ct. 1312, 1320
(2017)), we are aware of no authority that would instruct us to
adopt the Department's views if we conclude -- as we do
here -- that they would have us run afoul of the statutory
instruction that we not permit the purposes behind foreign state
actions to serve as proxies for the nature of those actions. 28
U.S.C. § 1603(d); Weltover, 504 U.S. at 614.
- 26 -
plant employer). That decision by employers about their approach
to insuring themselves against their employees' workplace injuries
impacts the overall financial wellbeing of the employers'
businesses and generally concerns parties (namely, their
businesses' employees) who have commercial expectations about the
recourse that they will have against their employers in the event
that they suffer a workplace injury. See, e.g., Truong, 775 N.E.2d
at 408 (establishing that the corporation president did not
purchase workers' compensation insurance because it was "too
expensive"); see also Rush-Presbyterian-St. Luke’s Med. Ctr. v.
Hellenic Republic, 877 F.2d 574, 580-81 (7th Cir. 1989) (describing
the commercial obligations that arise out of traditionally
private, third-party transactions).6
In recognizing the commercial nature of this choice by
a business to go bare in employing someone, we do not mean to
question whether Canada was in so "choosing" -- while nonetheless
employing Merlini, a United States citizen, as a clerical worker
6
Of course, it may be that, in some instances, a private
business's failure to become insured within the meaning of chapter
152 is less the product of a commercial choice than a commercial
oversight, see, e.g., O'Dea v. J.A.L., Inc., 569 N.E.2d 841 (Mass.
App. Ct. 1991) (employer alleged to be uninsured due to a policy
lapse), especially given how disadvantageous such a decision would
appear to be for the employer. But, such an oversight still takes
place in the course of the business's employment of its workers
and in parallel with its business judgments about how to protect
against the commercial losses that might be incurred in consequence
of those workers suffering a workplace injury.
- 27 -
in its consulate in Boston -- motivated by what it characterizes
as its sovereign obligation to provide its employees protection
through its own national workers' compensation system. In fact,
Canada asserts that it has no legal authority -- given the
limitations that it contends that Canadian law imposes -- to act
otherwise. But, in light of the Supreme Court's decision in
Weltover, it is clear that the "motive behind" Canada's conduct in
employing Merlini without obtaining the requisite insurance is not
germane to the question of whether the activity of doing just that
is "commercial" for purposes of the FSIA's "commercial activity"
exception. Fagot Rodriguez, 297 F.3d at 6 (quoting Weltover, 504
U.S. at 614); see also 28 U.S.C. § 1603(d).
In Weltover, the plaintiffs brought a breach of contract
claim against Argentina after it defaulted on its bonds. Weltover,
504 U.S. at 610. Argentina argued in response that foreign
sovereign immunity protected it from the suit, pointing to the
fact that the bonds were not issued for the ordinary commercial
purpose of "raising capital or financing acquisitions" but instead
as instruments for refinancing sovereign debt. Id. at 616.
According to Argentina, these refinancing measures were required
as part of the government's program for addressing its domestic
debt crisis. Id. Argentina thus argued that its decision not to
repay the bonds was part of a governmental policy undertaken for
sovereign rather than commercial reasons and therefore that the
- 28 -
claim was based on activity that could not qualify as commercial
for FSIA purposes. Id. at 616-17.
The Supreme Court rejected Argentina's contention. Id.
at 617. According to the Court, Argentina had defaulted on what
it termed "garden-variety debt." Id. at 615. Argentina's bonds,
like private bonds, were negotiable, were traded on international
markets, and came with the promise of future repayment. Id. Thus,
for purposes of determining whether Argentina's default on those
bonds was "commercial activity," the Court explained that
Argentina's participation in the bond market was of a type that
was commercial in nature and thus that it was "irrelevant why
Argentina participated in the bond market." Id. (emphasis in
original).
Canada, of course, did not issue bonds. But, it did
employ a United States citizen as clerical staff in its Boston
consulate, thereby engaging in conduct that it does not dispute
qualifies as being "commercial" in nature. Nor does Canada dispute
that private businesses, when employing such clerical workers, are
subject to the very same obligation to obtain insurance in
compliance with chapter 152 -- insofar as they wish to avoid being
subjected to personal injury suits such as Merlini brings -- or
that their employment of such workers without having such
insurance, as applied to those businesses, constitutes an activity
that is commercial in nature.
- 29 -
We thus do not see how Canada's maintenance of a
"garden-variety" employment relationship with Merlini while not
maintaining such insurance is an activity that is any less
"commercial" in nature than was Argentina's default on
"garden-variety" debt in Weltover. In each case, the foreign state
can point to a sovereign "purpose" in acting as it did. But in
neither case does that reason speak to the "nature" of the foreign
sovereign's conduct.7 As a result, Canada provides no more reason
7 The dissent argues that, in attempting to identify the
"nature" of Merlini's claim, we ignore the "outward form of
[Canada's] conduct," which the dissent characterizes as "informing
Merlini that she was subject to the GECA . . . , compensating her
pursuant to the GECA's benefits scheme after she made a claim of
injury, and not continuing her benefits when Canada's Workplace
Safety and Insurance Board (WSIB) determined after a full process
that Merlini was ready to return to work." However, none of these
actions constitutes the "outward conduct" that forms the basis of
Merlini's claim against the Canadian government. The only "outward
conduct" on Canada's part that Merlini needs to prove to succeed
in her claim is defined by the elements of the claim that § 66
permits her to bring. Those elements make clear that she must
prove that Canada was her employer in Massachusetts when she
suffered the workplace injury for which she seeks recompense and
that Canada did not comply with the state's workers' compensation
requirements while having her in its employ. In fact, had Canada
registered as a self-insurer in compliance with chapter 152, it
could have performed each of the "outward" actions that the dissent
outlines and Merlini would not have had a claim that she could
bring under Massachusetts law. This point shows that the "outward
conduct" described by the dissent is simply immaterial to the claim
that Merlini brings here, such that her claim can in no sense be
understood to be "based on" it. She has a cause of action under
Massachusetts law against Canada for the workplace injury that she
suffered only because Canada employed her and, as her employer,
did not comply with the state's workers' compensation
requirements. Because that kind of conduct is the kind of conduct
that private employers engage in regularly it is conduct that is
- 30 -
for us to conclude that its conduct is "sovereign" rather than
"commercial" than Argentina provided for the Court in Weltover.
Moreover, we note that, in deciding Weltover, the
Supreme Court relied in part on the Seventh Circuit's reasoning in
Rush-Presbyterian. Weltover, 504 U.S. at 614. There, Greece had
entered into contracts with American doctors but then only
partially paid them for their services. Rush-Presbyterian, 877
F.2d at 575-76. The Greek government pointed out that it had
assumed these obligations as part of its comprehensive scheme to
provide healthcare to all of its citizens. Id. at 580. According
to Greece, the fact that its healthcare system was not
profit-seeking, was funded by taxpayers, and operated through its
own set of administrative proceedings, placed Greece's activity in
retaining the doctors' services -- and thus its alleged failure to
pay them fully for those services -- squarely in the realm of
sovereign rather than "commercial activity." Id. at 580-81.
The Seventh Circuit disagreed. The court made clear
that "private parties in the United States enter such agreements
routinely" and that "the 'basic exchange' of money for health care
services is the same" whether the payer is a government or a
private employer. Id. at 581. The court thus ruled that Greece's
properly characterized as "commercial activity," at least given
Merlini's particular attributes as a United States citizen working
in the Boston consulate as clerical staff.
- 31 -
reasons for characterizing its conduct as noncommercial related
only to the purpose underlying Greece's decision to enter into the
contracts with the doctors and then not to pay them fully, rather
than to the nature of the decision to enter into those contracts
or to breach them. Id. at 580. And, for that reason, the Seventh
Circuit rejected Greece's contention that the "commercial
activity" exception did not apply.
Here, Canada, like Greece, entered into a contract for
commercial services -- in this case, in the form of its employment
contract with Merlini, given that Canada does not dispute the
"commercial" nature of Canada's employment of her as clerical staff
at the consulate. And, then, after having done so, Canada, like
Greece, failed to do what state law required of employers engaged
in such typical commercial employment relationships -- namely, in
this case, to be "insured" within the meaning of chapter 152 in
employing Merlini.
To be sure, the existence of Canada's own national
workers' compensation system may explain Canada's motive for
making a type of decision regularly made by private commercial
actors. But, the existence of the foreign sovereign's system of
social insurance in Rush-Presbyterian helped to explain the
purpose behind that sovereign's failure to undertake a duty
commonly required of employers engaged in commercial employment
- 32 -
relationships. Yet, Rush-Presbyterian makes clear that such a
fact does not thereby alter the commercial nature of that failure.
2.
Notwithstanding Weltover and Rush-Presbyterian, Canada
contends that this case is actually more closely analogous to both
Jungquist v. Sheikh Sultan Bin Khalifa Al Nahyan, 115 F.3d 1020(D.C. Cir. 1997) and Anglo-Iberia Underwriting Mgmt. v. P.T.
Jamsostek, 600 F.3d 171 (2d Cir. 2010), in which the "commercial
activity" exception was held not to apply. See Jungquist, 115
F.3d at 1024; Anglo-Iberia, 600 F.3d at 176. Neither case,
however, supports Canada's position.
In Jungquist, the D.C. Circuit held that the "commercial
activity" exception was inapplicable to claims brought against
officials of the government of the United Arab Emirates for actions
that those officials took in administering the Abu Dhabi medical
program in compliance with the Crown Prince Court's orders. 115
F.3d at 1020. Specifically, the court determined that the
officials engaged in no "commercial activity" with the plaintiffs,
but instead "fulfilled [the government's] obligations to the
[plaintiffs] by performing their official tasks as
administrators." Id. at 1030.
In Anglo-Iberia, the Second Circuit held that the
"commercial activity" exception did not apply to claims against
the Indonesian government for a fraud perpetrated by its employees
- 33 -
in their capacities as administrators of the state-owned social
security insurer, Jamsostek. 600 F.3d at 174. The court noted
that providing insurance is an activity that both the government
and private markets perform. But, the court explained, Jamsostek
did not operate like a private insurer and therefore its wrongful
administration of that government-run insurance program did not
qualify as "commercial activity." Id. at 176.
The reason that neither Jungquist nor Anglo-Iberia aids
Canada's cause is simple. In each of those cases, the claims at
issue were based on the defendants' administration of the
government programs at issue independent of any conduct by the
foreign state as the employer of the plaintiffs, such that it was
the manner of the administration of those programs -- and not the
manner of the foreign state's employment of the plaintiffs -- that
was alleged to be wrongful.
Merlini's claim is quite distinct. Even on Canada's
account, insofar as Merlini's claim is based on more than Canada's
employment of her at the consulate or the conduct that caused the
injury that she suffered there, her claim is still based on the
Canadian government's decision to employ her for clerical work at
the Boston consulate while not having the insurance contemplated
by chapter 152. Thus, her claim is not based -- as the claims at
issue in Jungquist and Anglo-Iberia were -- on any allegation that
foreign state officials acted wrongfully in administering a
- 34 -
governmental program independent of the foreign state's employment
of the plaintiff in circumstances in which such employment
concededly constitutes "commercial activity."
In that respect, Merlini's claim is no different from
the claims that other employees have brought against private
business employers that, like Canada, have not insured themselves
in the manner chapter 152 specifies for the injuries that their
workers may suffer in the workplace. The existence of Canada's
own nationally administered program for compensating workers like
Merlini, in other words, only provides the justification for the
conduct by Canada on which Merlini's claim is based. But that
justification speaks to Canada's "purpose" in engaging in that
conduct and not to the "nature" of the conduct itself.
In fact, if Canada and the dissent's views prevailed, we
struggle to understand what recovery for workplace harm -- whether
concerning wages, benefits, or discriminatory treatment -- an
employee of a foreign government, who, like Merlini, is a United
States citizen employed as a clerical worker, could seek from the
employer under the "commercial activity" exception recognized in
the FSIA. Yet, it is quite clear that Congress, in enacting the
"commercial activity" exception to foreign state immunity in the
FSIA, contemplated that some employees of foreign governments
would be entitled to recover for workplace harm against their
foreign state employer -- namely, those employees that, like
- 35 -
Merlini, are United States citizens employed in clerical
positions. See H. Rep. No. 94-1487, at 16 (1976), reprinted in
1976 U.S.C.C.A.N. 6604, 6615 (describing "[a]ctivities such as a
government's . . . employment or engagement of laborers, clerical
staff or public relations or marketing agents . . . [as] those
included within the definition [of commercial activity]"). Nor
are we aware of any precedent supporting the notion that employees
like Merlini lose their right to recover against their foreign
state employer whenever that foreign employer establishes rules
different from ours for protecting them.8
3.
Finally, Canada contends that a ruling that it must
comply with the MWCA's insurance requirements or be stripped of
many common law defenses in any suit claiming damages for a
8 The dissent relatedly argues that the "commercial activity"
exception should not apply to Canada in this context because, due
to Canada's own workers' compensation law, the government was not
allowed to comply with Massachusetts' insurance requirements under
chapter 152. We fail to see how Canada's legislative prohibition
against obtaining the type of insurance that would qualify Canada
as being "insured" for purposes of chapter 152 renders the act of
not acquiring compliant insurance any less "commercial" in nature.
As we have already argued, while Canada's sovereign workers'
compensation regime clearly provides the motivation for its
decision not to acquire compliant insurance under chapter 152,
that motivation does not strip Canada's decision not to provide
the requisite insurance of its "commercial" character, any more
than the presidential decree directing Argentina to default on its
bonds stripped that act of its "commercial" character in Weltover
by way of constituting executive action. See Weltover, 504 U.S.
at 610.
- 36 -
workplace injury brought by an employee against the employer would
"produce an absurd result." Such a conclusion, Canada contends,
would essentially force Canada to subject itself to having
Massachusetts assess its solvency through semi-annual audits and
various deposit requirements. According to Canada, that kind of
intrusion into its finances "would violate basic principles of
comity" that foreign sovereign immunity exists to protect. Thus,
for this reason, too, Canada contends, the "commercial activity"
exception cannot be construed to apply here.
We may, for present purposes, set aside the fact, which
Canada does not contest, that some foreign consulates as well as
the Quebec Government Office in Boston, which is a political
subdivision of Canada for the purposes of FSIA applicability,
apparently have obtained the insurance required by chapter 152.
The more fundamental point is that Canada's concerns about "comity"
do not provide a basis for concluding that it is immune from suit
in this case.
As Canada rightly points out, the "FSIA's objective is
to give protection from the inconvenience of suit as a gesture of
comity." Bolivarian Republic of Venezuela v. Helmerich & Payne
Int’l Drilling Co., 137 S. Ct. 1312, 1322 (2017) (internal
quotations omitted) (noting that the FSIA was drafted with comity
concerns in mind). But, by including the "commercial activity"
exception in the FSIA, Congress made clear that those concerns do
- 37 -
not provide a reason to extend that protection to foreign states
with respect to a suit that the "commercial activity" exception
encompasses. Thus, an appeal to comity cannot in and of itself
explain why a foreign state's conduct that is encompassed by that
exception should be treated as if it is not.
Perhaps there is a case to be made that such comity
concerns are relevant to a merits determination -- as a matter of
Massachusetts or federal law -- that chapter 152's "insurance"
requirement does not apply to a foreign sovereign in the same way
that it applies to private employers. But, FSIA immunity applies
only if, under the analysis that we must apply, see Weltover, 504
U.S. at 614; Fagot, 297 F.3d at 5–6, the conduct on which Merlini's
claim is based is not "commercial" in nature. And, for the reasons
that we have explained, the conduct here is commercial in nature,
even though it may have been undertaken for sovereign reasons.
Canada's appeal to comity, therefore, adds nothing to its argument,
which we otherwise reject, that the "commercial activity"
exception does not apply here. And thus, Canada's comity concerns
provide no basis for concluding that Canada enjoys an immunity
from this suit pursuant to the FSIA such that no federal court
even has jurisdiction to make a merits judgment.
In its amicus brief, the State Department advances many
similar "comity" concerns to those presented by Canada. But,
although we give "special attention" to the State Department's
- 38 -
views on matters of foreign policy, see Jam, 139 S. Ct. at 770-71,
we decline to place much weight on those views here. The
Department itself does not view recovery by an employee like
Merlini under § 66 against a foreign state employer to be
necessarily adverse to United States foreign policy interests,
given that it argues to us that Canada might lack immunity from
Merlini's claim under the FSIA's "noncommercial tort" exception,
28 U.S.C. § 1605(a)(5). And, as we have explained, the Department
sets forth no basis in the legislative history or text of the
FSIA -- or in any precedent construing it -- for finding that
Canada is immune from a suit under § 66 that is brought by a
clerical worker like Merlini.
IV.
Having determined that the FSIA does not prohibit
Merlini's suit, Canada argues that we should nevertheless affirm
the District Court's dismissal on a ground not reached by the
District Court. Specifically, Canada argues that Merlini has
failed to state a claim upon which relief can be granted, see Fed.
R. Civ. P. 12(b)(6), because the DIA Board's ruling operates to
preclude Merlini's suit.
The parties agree that we apply Massachusetts issue
preclusion law. In re Baylis, 217 F.3d 66, 70-71 (1st Cir. 2000).
Canada contends that the DIA Board's conclusion that "Canada is
not uninsured in violation of [the MWCA]" should be entitled to
- 39 -
preclusive effect and thus bars Merlini's "relitigation" of that
issue in federal court.
In order for an issue to have preclusive effect in a
later proceeding under Massachusetts law, the following elements
must be present: (1) there was a final judgment on the merits in
the prior adjudication; (2) the party against whom preclusion is
asserted was a party to the prior adjudication; and (3) the issue
in the prior adjudication was identical to the issue in the current
adjudication and essential to the earlier judgment. See Kobrin v.
Bd. of Registration in Med., 832 N.E.2d 628, 634 (Mass. 2005); see
also In re Baylis, 217 F.3d at 71. An order from a state agency
is considered to be a final judgment for issue preclusion purposes,
however, only if it is unappealed. See, e.g., Almeida v. Travelers
Ins. Co., 418 N.E.2d 602, 605 (Mass. 1981) (noting that the
determination of an agency is not binding for preclusion purposes
after it has been appealed). And here, Merlini appealed the DIA
Board's ruling to the MAC. Thus, it is to the MAC's ruling that
we must look.
The MAC's ruling, however, is of no help to Canada's
contention that Merlini's claim must be dismissed on issue
preclusion grounds. In affirming the DIA Board's order, the MAC
did so only on one ground -- namely, that Merlini was not entitled
to recover from the WCTF because she was eligible for benefits in
another jurisdiction. The MAC expressly stated that it was not
- 40 -
ruling on whether Canada was subject to the jurisdiction of
Massachusetts or whether the consulate was an "uninsured" employer
in violation of chapter 152. For that reason, the MAC's "judgment
is conclusive [only] as to the first determination." In re Baylis,
217 F.3d at 71. And, given that Canada makes no argument, just as
it made none to the District Court, that the judgment as to the
issue that the MAC did decide is preclusive of Merlini's claim,
Canada's argument for dismissal pursuant to Federal Rule of Civil
Procedure 12(b)(6) on the grounds of issue preclusion fails. See
P.R. Tel. Co., Inc. v. San Juan Cable LLC, 874 F.3d 767, 770 (1st
Cir. 2017), cert. denied, 138 S. Ct. 1597 (2018) (holding that any
argument not raised in the party's brief is deemed waived).
V.
For the foregoing reasons we reverse the District
Court's grant of Canada's motion to dismiss and remand the case
for further proceedings. The parties shall bear their own costs.
-Dissenting Opinion Follows-
- 41 -
LYNCH, Circuit Judge, dissenting. In this important
case affecting this country's foreign relations, I respectfully
disagree with my colleagues. The majority holds that Canada is
stripped of its sovereign immunity under the commercial activity
exception to the Foreign Sovereign Immunities Act ("FSIA"), 28
U.S.C. § 1602 et seq. I disagree.
This suit is based on Merlini's disagreement with the
decision of her employer, the Canadian consulate in Boston, not to
provide her with extended workers' compensation benefits, having
provided her with basic benefits. That decision by Canada is
required by a Canadian legislative act, under which Canada has
chosen to provide its own workers' compensation system to all
consulate employees, regardless of nationality. I believe
Canada's actions are protected from suit by the FSIA. Even if the
suit could be viewed as based not on a legislative act, but only
on an administrative act by Canada in its decision not to give
Merlini an extension on her benefits, Canada is still protected by
sovereign immunity.
Further, I think the policy implications of the
majority's view are grave. What is sauce for the Canadian goose
under the majority's holding will prove to be a bitter sauce for
the American gander. The majority view will, I believe, operate
to the detriment of the United States. Compelling Canada to abide
by Massachusetts state law, at the expense of maintaining its own
- 42 -
workers' compensation scheme, will redound to the harm of the U.S.
government's functions abroad, as I discuss later.
Because a sovereign state is "presumptively immune from
the jurisdiction of United States courts" under the FSIA, Saudi
Arabia v. Nelson, 507 U.S. 349, 355 (1993), the burden falls upon
Merlini to demonstrate that an exception applies, see Universal
Trading & Inv. Co. v. Bureau for Representing Ukrainian Interest
in Int'l & Foreign Courts, 727 F.3d 10, 17 (1st Cir. 2013) (citing
Virtual Countries, Inc. v. Republic of S. Afr., 300 F.3d 230, 241
(2d Cir. 2002)). I agree with the district court that this burden
has not been met. See Merlini v. Canada, 280 F. Supp. 3d 254, 258
(D. Mass. 2017). I set out my reasons below.9
I.
I first consider the text and meaning of the FSIA. The
FSIA, enacted in 1976, "provides the sole basis for obtaining
jurisdiction over a foreign state in the courts of this country."
Sullivan v. Republic of Cuba, 891 F.3d 6, 9 (1st Cir. 2018)
(quoting Argentine Republic v. Amerada Hess Shipping Corp., 488
9 I do agree with, and join, the majority in rejecting the
State Department's arguments in its amicus brief that (1) Merlini's
complaint is based only on the negligent conduct of her fellow
employee in laying the phone cord that Merlini tripped over and so
(2) we should vacate and remand for Merlini to make a negligence
claim under the noncommercial tort exception. But, as discussed
later, I agree with aspects of the State Department's brief,
particularly concerning this country's activities abroad.
- 43 -
U.S. 428, 443 (1989)). According to the Supreme Court, "the
[FSIA's] manifest purpose [is] to codify the restrictive theory of
foreign sovereign immunity." Nelson, 507 U.S. at 363.10 In a case
cited approvingly by the Nelson Court, the Second Circuit carefully
laid out the scope of the restrictive theory, which safeguards
immunity for "traditionally . . . quite sensitive" actions
including "internal administrative acts" and "legislative acts."
Victory Transp. Inc. v. Comisaria Gen. de Abastecimientos y
Transportes, 336 F.2d 354, 360 (2d Cir. 1964). And the Nelson
Court quoted from a much-cited law review article by a leading
commentator, stating, "[S]uch acts as legislation . . . cannot be
performed by an individual acting in his own name. They can be
performed only by the state acting as such." Nelson, 507 U.S. at
362 (quoting Hersch Lauterpacht, The Problem of Jurisdictional
Immunities of Foreign States, 28 Brit. Y.B. of Int'l L. 220, 225
(1952)).
Under the FSIA's commercial activity exception, a
foreign state is not immune from suit in a case
in which the action is based upon a commercial
activity carried on in the United States by
the foreign state; or upon an act performed in
the United States in connection with a
commercial activity of the foreign state
10 Indeed, just months before the passage of the FSIA, the
Supreme Court noted that "it is fair to say that the 'restrictive
theory' of sovereign immunity appears to be generally accepted as
the prevailing law in this country." Alfred Dunhill of London,
Inc. v. Republic of Cuba, 425 U.S. 682, 703 (1976).
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elsewhere; or upon an act outside the
territory of 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. § 1605(a)(2).11
As the first step in considering this exception, we must
"identify[] the particular conduct on which [Merlini's] action is
'based' for purposes of the [FSIA]." Nelson, 507 U.S. at 356.
This requires "zero[ing] in on the core of the[] suit," OBB
Personenverkehr AG v. Sachs, 136 S. Ct. 390, 396 (2015), without
focusing merely on "a single element of a claim," id. at 395.12
11 The majority states correctly that its holding on the
commercial activity exception, see 28 U.S.C. § 1605(a)(2),
"precludes the noncommercial tort exception from applying." See
id. § 1605(a)(5).
I consider the noncommercial tort exception briefly on
the merits here. As the district court pointed out, the
noncommercial tort exception expressly does not apply to "any claim
based upon the exercise or performance or the failure to exercise
or perform a discretionary function regardless of whether the
discretion be abused." 28 U.S.C. § 1605(a)(5)(A); see Fagot
Rodriguez v. Republic of Costa Rica, 297 F.3d 1, 8 (1st Cir. 2002);
Merlini, 280 F. Supp. 3d at 258. Canada's decision to enact a
particular workers' compensation scheme clearly is a discretionary
legislative decision and is a decision "based on considerations of
public policy." Berkovitz v. United States, 486 U.S. 531, 537
(1988). Following the Supreme Court, we must avoid "judicial
'second guessing' of legislative and administrative decisions
grounded in social, economic and political policy through the
medium of an action in tort." United States v. S.A. Empresa de
Viacao Aerea Rio Grandense (Varig Airlines), 467 U.S. 797, 814
(1984). Thus, Merlini's argument that Canada's conduct falls
within the exception for noncommercial torts is unavailing.
12 In Sachs, the Court unanimously held that the commercial
exception did not apply to a claim concerning a grievous injury
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That is, a court must identify the "gravamen of the complaint."
Id.Here, when we properly "zero[] in on the core of
[Merlini's] suit," id. at 396, we see that it was the sovereign
decision by Canada to enact and administer its own compensation
scheme, including for all workers at consulates,13 that is the
basis for plaintiff's claim of injury. Merlini seeks more in the
way of workers' compensation than Canada has provided. I disagree
with the majority's characterization of Canada's conduct as being
"an employer's failure . . . to be insured" under state law, as
from a rail accident in Austria, and did not permit jurisdiction
over the foreign state-owned railway. 136 S. Ct. at 393. The
Court rejected the Ninth Circuit's reading of Nelson -- that the
commercial activity exception was properly met so long as a single
element of the claim met the exception -- and said again that
courts must focus on the acts of the sovereign alleged to have
injured the plaintiff. "[T]he mere fact that the sale of the
Eurail pass would establish a single element of a claim is
insufficient to demonstrate that the claim is 'based upon' that
sale for purposes of § 1605(a)(2)." Id. at 395.
13 Consulates, like embassies, by their operation are not
usual places. They embody actions by a sovereign exercising its
sovereign powers; the consulate here is an extension of Canada.
As Canada says, the "[c]onsulate's mission is to monitor and
interpret political and economic issues in the New England area;
represent Canadian sovereign interests on issues such as borders,
security, and trade; and provide consular services to Canadian
citizens in New England, among other functions." I certainly do
not say that the FSIA question is resolved by the fact that the
accident happened in a consulate and to a person employed by a
consulate. But I think the majority gives insufficient attention
to these facts.
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though Canada were a private employer making a discretionary,
market-based choice.14 The majority concludes that this is an
ordinary commercial omission made by an employer who "take[s] the
risk of going bare." Thus, the majority asserts that Merlini's
claim is "in no sense 'based on' Canada's decision to compensate
her through its own national workers' compensation scheme." In my
view, the premise is wrong, and the conclusion is wrong.
To see why, one need only look to Canada's Government
Compensation Act ("GECA"), R.S.C. 1985, c. G-5. That Canadian
statute not only establishes the exclusive framework for how local
consulate staff, like Merlini, receive benefits, but it also sets
forth the sole mechanism for appealing the denial of such benefits.
Accordingly, the GECA sets forth what the government of Canada has
determined, in its sovereign discretion, to be the appropriate
comprehensive workers' compensation scheme for all of its federal
employees, at home and abroad. It does not matter, as the majority
posits, that Merlini held only an administrative position: The
GECA clearly applies to all "locally engaged" employees. See id.
§ 7(1).
14 Canada argues that it does provide workers' compensation
and that the chapter 152 definition of "uninsured" or
"self-insured" employer is irrelevant to its immunity, contrary to
what the majority suggests. And Merlini's complaint argues not
that the consulate was uninsured as a factual matter, but that it
"was acting as a self-insurer without obtaining a [Massachusetts]
license."
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Important here, the GECA authorizes the government of
Canada to compensate workplace injuries only through the Canadian
Consolidated Revenue Fund (if a local fund exists in the
jurisdiction where the injury occurred), see id., or directly
through the government of Canada, see id. § 7(2). The Act does
not authorize any other means of compensation. As such, Canada,
as Merlini's employer, was prohibited by law from purchasing local
Massachusetts insurance. Nothing under the FSIA required the
Canadian consulate to flout its own Canadian laws. Contrary to
the majority, this issue is not, then, one of "motivation," but of
a sovereign choice by Canada's legislature untethered from
commercial activity (unlike, for example, the issuance and
repayment of bonds).
To enforce Canada's uniform compensation scheme, the
consulate had to forgo Massachusetts workers' compensation
insurance. These "acts" -- of enforcing the Canadian uniform
compensation scheme and of foregoing Massachusetts workers'
compensation insurance -- are the same. It is mere semantics to
disaggregate the two. Following the Supreme Court's
interpretations in Nelson15 and Sachs, then, Merlini's suit is
"based upon" Canada's enforcement and administration of a uniform
15 In Nelson, discussed further in the following section,
the Supreme Court held that the suit was "based upon a sovereign
activity immune from the subject-matter jurisdiction of United
States courts under the [FSIA]." 507 U.S. at 363.
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compensation scheme, and not merely one aspect of Canada's conduct
in enforcing and administering this scheme.
II.
The second step of the commercial activity inquiry
requires determining whether the conduct that the complaint is
"based upon" is commercial rather than sovereign. The FSIA defines
commercial activity as "either a regular course of commercial
conduct or a particular commercial transaction or act. 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." 28
U.S.C. § 1603(d). Thus, courts must assess "whether the particular
actions that the foreign state performs . . . are the type of
actions by which a private party engages in 'trade and traffic or
commerce.'" Republic of Argentina v. Weltover Inc., 504 U.S. 607,
614 (1992) (quoting Black's Law Dictionary (6th ed. 1990)).
Weltover requires that the "full context" be considered. Id. at
615.
The majority asserts that Canada's conduct cannot be
framed as a Canadian legislative directive to have and enforce its
own workers' compensation scheme because that goes to the "purpose"
of Canada's conduct, and not its "nature." See 28 U.S.C.
§ 1603(d). I disagree. Although it can be "difficult . . . in
some cases to separate 'purpose' (i.e., the reason why the foreign
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state engages in the activity) from 'nature' (i.e., the outward
form of the conduct that the foreign state performs or agrees to
perform)," Weltover, 504 U.S. at 617 (emphasis omitted), that
distinction here supports my view.
The "outward form of [Canada's] conduct" includes, among
other things, informing Merlini that she was subject to the GECA
(this was done before her accident and injury),16 compensating her
pursuant to the GECA's benefits scheme after she made a claim of
injury, and not continuing her benefits when Canada's Workplace
Safety and Insurance Board (WSIB) determined after a full process
that Merlini was ready to return to work. Each of these actions
was authorized, and, indeed, compelled by the GECA. I cannot see
how a country enacting its own law as to its employees and then
administering its own national compensation scheme under that law
as to those employed at its embassies and consulates is not, by
its "nature," a sovereign act. Put another way, the full
administration of this scheme is not the "justification for the
conduct by Canada on which Merlini's claim is based," it is the
relevant conduct by Canada. The majority asserts that this conduct
is "simply immaterial," and we should treat Canada, a sovereign
16 Merlini's complaint acknowledges that "the Consulate
instructed all its American employees, including Merlini, to apply
to the Government of Canada for benefits in the event of a
workplace accident."
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state, simply as an "employer" who just "did not comply with the
state's workers' compensation requirements." I disagree, and view
this conduct as clearly material to Merlini's claim.17 The
majority, then, narrowly focuses on Merlini's employment and
Canada's failure to have workers' compensation insurance under
Massachusetts state law, which I do not see as the relevant "course
of conduct": Canada's sovereign, full administration of its
workers' compensation scheme.
The majority thrice cites to a single sentence in the
House Report about "employment or engagement" of clerical staff,
as though it provides support for its conclusion. See H. Rep. No.
94-1487, at 16 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6615.
It does not.
The full text of that paragraph of the report states:
The courts would have a great deal of latitude
in determining what is a '[commercial]
activity' for purposes of this bill. It has
seemed unwise to attempt an excessively
precise definition of this term, even if that
17 The majority also says that, "had Canada registered as
a self-insurer in compliance with chapter 152, it could have
performed each of the 'outward' actions" that I list and "Merlini
would not have had a claim that she could bring under Massachusetts
law." That counterfactual is not relevant to the majority's
assertion that "none of these actions constitutes the 'outward
conduct' that forms the basis of Merlini's claim against the
Canadian government." The existence of an alternative form of
compliance with a Massachusetts statute (or, put another way, a
method for a sovereign state to stave off lawsuits) does not change
the character of Canada's acts from sovereign to commercial, nor
does it mean that these acts are not the relevant conduct by Canada
underlying Merlini's claim.
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were practicable. Activities such as a
foreign government's sale of a service or a
product, its leasing of property, its
borrowing of money, its employment or
engagement of laborers, clerical staff or
public relations or marketing agents, or its
investment in a security of an American
corporation, would be among those included
within the definition.
Id. This history does not support the majority's use of it. This
case is not about whether Canada complied with local law when it
hired Merlini. No such dispute is before us. Merlini was hired;
this dispute is about workers' compensation and Canada's choice of
the workers' compensation it provides for its employees. Nothing
in the legislative history says that any dispute about
post-employment compensation for workplace injuries is within the
exception for commercial activity. This case is about Canada's
sovereign choice of a comprehensive workers' compensation scheme
(a scheme which did compensate Merlini). Canada chose to cover
all people employed at its consulates, whether U.S. citizens or
nationals of other countries, under its own scheme.
Further, Canada's action is not the "type of
action[] . . . which a private party [would] engage[] in," id. at
614. That is so because no private party can administer such a
national statutory scheme.
My understanding comports with the Supreme Court's
holding and reasoning in a series of cases. In Weltover, the Court
held that Argentina's issuance of bonds known as "Bonods" was a
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commercial act, even though its purpose was to restructure the
country's debt, 504 U.S. at 609-10, because the government was
acting "not as regulator of [the] market, but in the manner of a
private player within it." Id. at 614. The Court looked at the
"full context," id. at 615, and pointed to the fact that private
parties regularly held and traded such "garden-variety debt
instruments." Id.In this case, the very opposite is true: The Canadian
consulate's decision to comply with and enforce the workers'
compensation scheme established by the GECA is precisely "the type
of action[]" that a "regulator," not a private employer, engages
in. Id. at 614. To be sure, a private employer can forgo
purchasing workers' compensation insurance, but unlike Canada, it
does not and cannot do so as part and parcel of enforcing a broader
statutory scheme.
Next, in Nelson, the Court firmly rejected the argument
that the recruitment and employment by Saudi Arabia of foreign
nationals -- which was arguably a commercial activity, and may
have led to the commission of intentional torts which injured the
plaintiffs -- satisfied the commercial activity exception. 507
U.S. at 351. That is, the Court explicitly rejected the argument
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that no more was required than "a mere connection with, or relation
to, commercial activity." Id. at 358.
The Nelson court emphasized that "a foreign state
engages in commercial activity for purposes of the restrictive
theory only where it acts 'in the manner of a private player
within' the market." Id. at 360 (quoting Weltover, 504 U.S. at
614). The Court cited several federal cases, some pre-FSIA, for
the proposition that immunity extends "to a foreign state's
'internal administrative acts.'" Id. at 361 (quoting Victory
Transport, 336 F.2d at 360); see Herbage v. Meese, 747 F. Supp.
60, 67 (D.D.C. 1990), aff'd, 946 F.2d 1564 (D.C. Cir. 1991); see
also Heaney v. Gov't of Spain, 445 F.2d 501, 503 (2d Cir. 1971)
(reiterating immunity for legislative acts and administrative
acts); Isbrandtsen Tankers, Inc. v. President of India, 446 F.2d
1198, 1200 (2d Cir. 1971) (same). Whether viewed as primarily
legislative or administrative, Canada's conduct here remains
sovereign.
The majority opinion, in my view, is also inconsistent
with the Court's prior precedent and other circuit precedent. This
circuit and others have rejected the majority's implicit premise
that the nature of an action can be determined by an abstract
consideration of whether some aspects of the broader governmental
conduct are like those "which a private party engages in [during]
'trade and traffic or commerce.'" Weltover, 504 U.S. at 614. In
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my view, private parties cannot create governmental workers'
compensation schemes and so Canada's actions are not like those of
private employers. But even if there were some likenesses to a
private employer's decision to self-insure, that would not be
enough to strip Canada of its immunity under fairly settled FSIA
law.
Several circuits have correctly found that even where
government conduct is determined to be like that in which private
parties can and do engage, the government conduct remains sovereign
when performed as part of a broader governmental program.
I think the majority's view is in conflict with the
Second Circuit decision in Anglo-Iberia Underwriting Mgmt. v. P.T.
Jamsostek, 600 F.3d 171 (2d Cir. 2010). There, the Second Circuit
held that an Indonesian state-owned insurer was entitled to
sovereign immunity against a negligent supervision claim because
neither Indonesia nor its state-owned insurer was engaged in a
commercial activity. Id. at 176. Even if the insurer were
arguably involved in a commercial activity overall, the challenged
activity (negligent supervision) was not sufficiently connected to
commerce. Id. at 179. That is, the state-owned insurer's "hiring,
supervision, and employment of" individuals as part of a
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comprehensive national health insurance program was not a
commercial act. Id. at 178.
The Second Circuit's first holding was that the
sovereign there, Indonesia, "does not sell insurance to workers or
to employers in any traditional sense and does not otherwise
compete in the marketplace like a private insurer." Id. at 177(internal quotation marks omitted). Thus, it held that Indonesia's
insurance scheme does not equate to that of an independent actor
in the private marketplace of potential health insurers. Instead,
it determined that "the administration of Indonesia's national
health insurance program" was "sovereign in nature." Id. at 178.
Here, Canada also does not compete in the marketplace as either
seller or buyer, nor does it offer its workers' compensation
program to private employees.
The Second Circuit's second holding was that "even if
. . . administration of Indonesia's national health insurance
program and [the state-owned insurer's] employment . . . were
commercial in nature," the FSIA would not allow "abrogat[ing] a
foreign sovereign's immunity solely on the basis of an employment
relationship." Id. at 179. The majority attempts to distinguish
Anglo-Iberia on this second holding, saying "the claims [there]
were based on the defendants' administration of the government
programs at issue," as it was "the manner of the
administration . . . that was alleged to be wrongful." It is, at
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minimum, the administration by Canada of its own workers'
compensation scheme that is at issue here, too.
And my view is that Jungquist v. Sheikh Sultan Bin
Khalifa Al Nahyan further supports my point: The fact that actions
can be done by private actors does not mean the actions fall within
the commercial activity exception where such actions were
nevertheless "uniquely sovereign in nature." 115 F.3d 1020, 1030
(D.C. Cir. 1997). There, the two officials who saw to the
provision of the plaintiff's healthcare were "performing their
official tasks as administrators of a government [health and
welfare] program." Id. As here, then, the sovereign actions
involved the "administrat[ion] of a government program [for health
and welfare]." Id.I also view the majority's conclusion as being at odds
with rulings by the Ninth Circuit and D.C. Circuit. In Gregorian
v. Izvestia, the Ninth Circuit held that the Soviet Union was
entitled to sovereign immunity against a libel claim regarding a
state-controlled newspaper. 871 F.2d 1515, 1522 (9th Cir. 1989).
That the newspaper was sold and distributed in the United States
did not render commercial the nature of its publication and
distribution, as the "writing and publishing of articles reporting
or commenting on events" remained governmental because the paper
was state-owned and operated. Id. The D.C. Circuit held similarly
that Peru was entitled to sovereign immunity for remodeling and
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operating a building as a chancery allegedly in violation of local
District of Columbia zoning laws, because the operation of a
chancery was "by its nature governmental." MacArthur Area Citizens
Ass'n v. Republic of Peru, 809 F.2d 918, 920 (D.C. Cir. 1987)
(citation omitted).
In my view, it is incorrect to say that Merlini's claim
is "no different from the claims that other employees have brought
against private businesses that . . . have not insured themselves"
under Massachusetts law. It is analytically incorrect, partly
because the broader context must matter as to statutory
interpretation and application of the FSIA. If that broader
context did not matter, almost any governmental act could be
disaggregated and framed as commercial conduct that a private party
can perform.
Since what Canada has done here is a governmental act by
its very nature, the majority cannot rely on Rush-Presbyterian-
St. Luke's Med. Ctr. v. Hellenic Republic, 877 F.2d 574 (7th Cir.
1989), even if the case (whether rightly or wrongly decided) bears
some initial resemblance. There, the Greek government was alleged
to be in breach of a contract to reimburse physicians and an organ
bank in Chicago for performing kidney transplants on Greek
nationals. Id. at 575. The Seventh Circuit held that Greece's
execution of the contract constituted "commercial activity," even
though it was done to fulfill the government's constitutional goal
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of caring for the health of Greek citizens, because "nothing about
the provision of and payment for health services . . . is uniquely
governmental." Id. at 581.
Not so here. Canada's conduct, its enactment of a
comprehensive workers' compensation scheme and decision not to
award extended benefits, is the conduct at issue, and it is
"uniquely governmental." Id. It is one thing for a government to
engage in a private, commercial act (such as executing a contract)
in order to fulfill a general governmental purpose (such as
providing healthcare to its citizens).18 It is quite another for
a government to act in a manner strictly and precisely compelled
by its own law to maintain the uniformity of its own federal
workers' compensation program. This distinction is important.
18 The Seventh Circuit in Rush-Presbyterian stated that
"[u]nder the Greek constitution, the government has a broad
obligation to provide health care services to Greek citizens."
877 F.2d at 575. The Greek constitution does establish that "the
State shall care for the health of citizens and shall adopt special
measures for the protection of youth, old age, disability and for
the relief of the needy." 2001 Syntagma [Syn.][Constitution] 21
(Greece) (trans). This language seems closer to stating a general
sovereign purpose -- caring for health of citizens -- than a direct
and precise mandate such as at issue in the GECA.
In furthering this general constitutional goal, the
Greek government maintains a wide range of possible options. And
indeed, the Greek government has changed the precise cost and
provision of healthcare numerous times since Rush-Presbyterian was
decided, including, for example, eliminating health insurance for
those who had been unemployed for more than two years as part of
austerity measures. See Lucy Rodgers & Nassos Stylianou, How bad
are things for the people of Greece, BBC News (July 16, 2015),
http://www.bbc.com/news/world-europe-33507802.
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I return to my sense of the foreign policy repercussions
of the majority's view. The U.S. has undertaken the same sovereign
exercise abroad as to providing workers' compensation for U.S.
embassy and consulate employees as has Canada. For over a century,
the U.S. has had a workers' compensation scheme for federal workers
under the Federal Employees' Compensation Act ("FECA"), 5 U.S.C.
§ 8101 et seq. FECA expressly covers "noncitizens and
nonresidents" who are employees of the United States, such as
employees at U.S. embassies and consulates abroad. See id. § 8137.
The State Department tells us that "many foreign nationals employed
by U.S. embassies and consulates — including Canadian citizens
employed by the United States in Canada — are currently entitled
to workers' compensation benefits in virtue of United States law,
not local law." Like the GECA, U.S. law mandates that noncitizen,
nonresident federal workers employed abroad are subject to federal
U.S. workers' compensation law and procedures. See id. In
addition to this statutory command, State Department regulations
establish a "special schedule" for the compensation of such embassy
and consulate workers, except in narrow circumstances. 20 C.F.R.
§ 25.2(b).
To say, then, that Canada is acting in a "commercial"
manner when it imposes its own workers' compensation scheme would
lead to the conclusion that our government's like actions as to
employees of embassies and consulates abroad are similarly
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commercial, not sovereign. That, in my view, cannot be right. A
decision that Canada's actions are merely commercial risks
providing cover for other countries to ignore sovereign actions
taken by the U.S. and allow liability against the U.S. government
concerning workers' compensation under local laws. Indeed, the
State Department's filing expresses concern with the U.S.
"fac[ing] increased exposure in similar claims abroad." I think
it highly unlikely that Congress intended such a result in drafting
the FSIA. The effect of the majority's holding is to abrogate
Canada's immunity from suit and force it to face a claim that
Massachusetts can require Canada to get local insurance when Canada
has made a sovereign decision to provide insurance itself through
a comprehensive scheme.
Further, Merlini cannot escape from the fact that she is
challenging Canada's imposition of its own compensation scheme in
lieu of purchasing Massachusetts workers' compensation insurance.
The majority finds little significance in the fact that Canada
provided Merlini with compensation through Canada's own workers'
compensation system. Pursuant to the GECA, Merlini received
compensation, in the form of full payment of her salary, from March
until October 2009. At that point, the WSIB determined that
Merlini was able to return to work and terminated her benefits.
Merlini chose not to appeal, which was open to her, and instead
- 61 -
began a decade-long legal battle in the U.S. to obtain additional
benefits from Massachusetts and from Canada.
Finally, the majority also "emphasize[s]" throughout
that Merlini is an American citizen, and states that it reaches
its conclusion because of that fact. But that cannot limit the
reach of its opinion in any way. The Massachusetts insurance
statute, by its terms, applies to workers of all nationalities
employed locally, not just U.S. citizens. So, by that logic, even
the consulate's Canadian employees are subject to the state
statute. The majority's attempt to cabin its opinion by stressing
that Merlini is an American citizen does not work for yet another
reason. The majority's attempted distinction based on citizenship
of Canada's consular employees creates incentives to discourage
Canada from employing Americans in its consulate, and imposes on
Canada the costs and paperwork of administering different workers'
compensation systems. In turn, the majority's attempted
distinction would discourage American embassies abroad from
employing local foreign citizens due to post-employment
application of local workers' compensation law. But the choice to
employ such citizens and the mix of the nationalities of employees
at such consulates and embassies are sovereign choices.
If the majority thinks, as it says it does, that its
result here, a denial of sovereign immunity, can be limited to
low-level, "purely clerical" workers, I think that is mistaken.
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The logic of its analysis leaves no room for that. Further, there
is no support in the text of the statute or the Supreme Court
caselaw for such a distinction. The same is true for any attempted
limitation based on Merlini's American citizenship.
The purpose of sovereign immunity is to leave sovereign
issues to the sovereigns, not to the courts. I respectfully
dissent.
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