Ricardo Devengoechea v. Bolivarian Republic of Venezuela

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-16816
________________________
D.C. Docket No. 1:12-cv-23743-PCH
RICARDO DEVENGOECHEA,
Plaintiff - Appellee,
versus
BOLIVARIAN REPUBLIC OF VENEZUELA,
a foreign state,
Defendant - Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(May 10, 2018)
Before WILLIAM PRYOR, MARTIN, and ROSENBAUM, Circuit Judges.
ROSENBAUM, Circuit Judge:
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Almost two-hundred years ago, on the island of Santa Marta in the
Caribbean, General Simón Bolívar spent his last days at the home of his friend
Joaquín de Mier. 1 Through his relationship with Bolívar, de Mier obtained a
treasure trove of Bolívar’s possessions (the “Bolívar Collection”).
Because some readers might not be as familiar with Bolívar as with, say
President George Washington, we pause for a moment to briefly note Bolívar’s
enormous historic significance. 2 Bolívar, who was born in 1783, was a
contemporary of George Washington and was a founding father in South America
not long after Washington played that role in North America. 3 In fact, Bolívar was
instrumental in helping six countries obtain independence from their former ruling
sovereign (Spain) and become sovereign nations in their own right: Venezuela,
Bolivia, Colombia, Ecuador, Peru, and Panama. 4
1
Marie Arana, Bolívar: American Liberator 450–54 (2013). Bolívar died of
tuberculosis. Id. at 451.
2
Our task at hand prevents us from doing more than oversimplifying Bolívar’s role in
history. Like most historic figures, Bolívar was a complex man who lived a complicated life.
We do not suggest a value judgment about whether Bolívar’s role in history was either a positive
or negative force. Rather, we invoke the comparison to Washington only to indicate that, like
Washington, Bolívar was extremely important in world history.
3
Indeed, Washington’s family sent Bolívar a letter describing him as “the Washington of
the South.” Id. at 447, 562 (quoting Letter from George Washington Custis to Bolívar (Aug. 26,
1825) (reprinted in The United States of Venezuela in 1893, 144 (Gov’t of Venez., 1893)
(published for the World’s Columbian Exposition at Chicago)). And it is said that in
Washington, D.C., in 1825, at a dinner in honor of Gilbert du Motier, Marquis de Lafayette,
attended by President James Monroe, John Quincy Adams, and Andrew Jackson, Henry Clay
toasted “to General Simón Bolívar, the George Washington of South America!” Id. at 337, 531
(citing Robert V. Remini, Henry Clay: Statesman for the Union 257 (W.W. Norton & Co.
1991)).
4
See generally Arana, supra note 1.
2
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As you might expect, the personal effects and professional mementos that
Bolívar acquired over his life have taken on a remarkable significance. And that is
where history intersects with our story.
It turns out that de Mier’s great, great grandson is Plaintiff-Appellant
Ricardo Devengoechea. In the years after de Mier’s death, Devengoechea’s
ancestors passed down the Bolívar Collection from generation to generation until,
eventually, Devengoechea inherited it. Among the items he received are thousands
of Bolívar’s historic documents, including governmental documents and Bolívar’s
correspondence and other writings; Napoleon Bonaparte’s ornamental epaulets;
Bolívar’s one-of-a-kind Liberation Medal of Peru; and a lock of Bolívar’s hair.
According to Devengoechea, today the Collection is worth millions of dollars
because of its association with Bolívar. This case concerns the journey the Bolívar
Collection took after Devengoechea inherited it.
When our story began in 2007, Devengoechea had the Bolívar Collection in
the United States. That’s when Defendant-Appellant Bolivarian Republic of
Venezuela (“Venezuela”)5 entered the picture. Perhaps not surprisingly, when
5
Venezuela became known as the Bolivarian Republic of Venezuela in 1999, when the
Constituent Assembly held a constitutional convention in which it drafted a new constitution for
the country. Library of Congress, Fed. Research Div., Country Profile: Venezuela, March 2005,
1, 3–4 (2005), https://www.loc.gov/rr/frd/cs/profiles/Venezuela.pdf. At that time, the country,
formerly known as the Republic of Venezuela, was renamed the Bolivarian Republic of
Venezuela. Id. at 1, 22. Although the term “Bolivarianism” once encompassed the political
ideas of Bolívar, commentators describe its current meaning as including different notions.
Joshua Keating, War of Ideas: Was Bolivar a ‘Bolivarian’?, Foreign Policy (Mar. 6, 2013),
3
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Venezuela learned of the Bolívar Collection, Devengoechea asserts, it expressed
interest in purchasing it.
Towards this end, Venezuela sent officials to the United States to meet with
Devengoechea and negotiate. Devengoechea contends that while the Venezuelan
officials were in the United States, he and they reached an understanding and
agreement that Devengoechea would take the Bolívar Collection to Venezuela for
further inspection, and Venezuela would either purchase it or return it to
Devengoechea. Based on this agreement, on October 17, 2007, Devengoechea and
the Venezuelan delegation flew to Venezuela on the Venezuelan delegation’s
private jet. Devengoechea took along the Bolívar Collection.
Five years later, Venezuela still had neither returned nor paid for the Bolívar
Collection, despite Devengoechea’s repeated inquiries about obtaining payment or
return.
So Devengoechea filed this action against Venezuela, seeking payment for
or return of the Bolívar Collection. He asserted jurisdiction under the commercial-
http://foreignpolicy.com/2013/03/06/was-bolivar-a-bolivarian/ (last visited May 9, 2018). In
particular, “Venezuelan president Hugo Chávez, the modern exponent of Bolivarianism, trace[d]
the ideology to the thought of Karl Marx, Antonio Gramsci, Leon Trotsky, and Mao Zedong, to
the Italian philosopher Antonio Negri, and even Jesus Christ.” Id. (quoting Dario Azzellini,
Bolivarianism, Venezuela, in 2 International Encyclopedia of Revolution and Protest, 1500 to
Present 413 (Immanuel Ness ed., 2009)). Nevertheless, commentators suggest that modern
Bolivarianism does take two specific ideas from Bolívar: “his vision of pan-American—or at
least pan-Hispanic American unity—and his support for a strong central state.” Id.
4
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activity exception to the Foreign Sovereign Immunities Act of 1976, 28 U.S.C.
§ 1605(a)(2) (“FSIA” or the “Act”).
Venezuela moved to dismiss, claiming sovereign immunity. The district
court denied Venezuela’s motion, and Venezuela appealed. We now affirm.
I. 6
Devengoechea is a United States citizen living in Orlando, Florida. In 2007,
he received a phone call from Jorge Mier Hoffman, a relative of his, on behalf of
Venezuelan officials, requesting copies of select items in the Bolívar Collection.
Soon afterward, Venezuelan officials contacted Devengoechea directly to arrange a
meeting with him in Orlando so they could inspect the Collection in person.
The first meeting occurred on October 14, 2007, after Venezuelan officials
flew by private jet to the United States. Among the Venezuelan delegation was
Delcy Rodríguez, then the Coordinator General of the Office of the Vice President
of Venezuela. 7 During the three-hour meeting in Orlando, the Venezuelan officials
began negotiations for a potential purchase of it.
6
On a motion to dismiss, we take the factual allegations in the complaint as true, even if
they are subject to dispute. See Saudi Arabia v. Nelson, 507 U.S. 349, 351 (1993). We also
construe the factual allegations in the light most favorable to the plaintiff. Hond. Aircraft
Registry, Ltd. v. Gov’t of Hond., 129 F.3d 543, 545 (11th Cir. 1997).
7
Currently, Rodríguez serves as the President of the Constituent Assembly of Venezuela.
Delcy Rodriguez: Venezuela’s Most Powerful Person?, BBC News (Aug. 8, 2017),
http://www.bbc.com/news/av/world-latin-america-40868427/delcy-rodriguez-venezuela-s-most-
powerful-person (last visited May 9, 2018).
5
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The next day, at the Venezuelan delegation’s request, Devengoechea took
the Bolívar Collection to the Orlando hotel where the Venezuelan officials were
staying. There, the officials examined the Collection, and the parties engaged in
another meeting and set of negotiations for Venezuela’s purchase of the Bolívar
Collection—this time for five hours. During the meeting, the Venezuelan
delegation also asked Devengochea to take the Collection and travel with them to
Venezuela, where Venezuela’s experts could further inspect the Collection and
where negotiations for purchase were to continue.
Though Devengoechea was not opposed to the request, he had a problem:
his passport had expired. When the Venezuelan officials learned of the situation,
they asked Devengoechea to go to the Passport Office in Miami the next day to
obtain a new passport on an expedited basis, so Devengoechea could accompany
them to Venezuela with the Bolívar Collection. Then the Venezuelan officials
arranged for Zueiva Vivas, President of Venezuela’s Foundation of National
Museums, to email Devengoechea a letter on the letterhead of “Fundacion Museos
Nacionales” in the “Ministerio del Poder Popular” of the “Gobierno Bolivariano de
Venezuela,” which translates to the Foundation of National Museums in the
Ministry of Popular Power of the Government of the Bolivarian Republic of
Venezuela (“Venezuelan Ministry of Culture”). The officials explained that the
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letter would allow Devengoechea to receive his passport the following day, so he
could travel with the Venezuelan delegation back to Venezuela.
As Venezuela requested, Devengoechea made an appointment to obtain his
passport on an emergency basis on October 16, 2007. That day, Devengoechea
drove to Miami, with the letter, for a 9 a.m. appointment at the passport office.
After receiving his passport that afternoon, Devengoechea drove back the more
than 200 miles to Orlando, packed up the Collection, and met the Venezuelan
officials at the airport. On October 17, 2007, after continuing negotiations for
about an hour, they boarded the private jet and set course for Caracas, Venezuela.
Devengoechea alleges that he never would have done these things, had he and the
Venezuelan officials not reached the understanding and agreement that Venezuela
would, after further examination of the Collection, either return it to him or pay
him for it.
While en route to and following their arrival in Venezuela, the parties
continued to negotiate about the potential sale of the Collection. During these
discussions, Devengoechea mentioned that he might have more memorabilia back
in Orlando. Venezuelan officials, including Rodríguez, then paid for
Devengoechea to fly back to Orlando to gather additional items concerning
Bolívar. Once Devengoechea had done so, Venezuelan officials paid for
Devengoechea to return to Venezuela with the additional items.
7
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Devengoechea remained in Venezuela until about November 6, 2007. At
that time, Venezuelan officials informed him that they needed more time to
examine the Collection because of its vast size and that they would contact him
about purchasing it once they had completed their examination. Devengoechea
alleges that he left the Bolívar Collection with Venezuela based on the agreement
and understanding that Venezuela either would pay Devengoechea for the
Collection or would return it to him.
Over the next two to three years, Devengoechea contacted the Venezuelan
officials periodically about the Collection. Each time, he was told they needed
more time to inspect it. During this period, Devengoechea took Venezuela at its
word, and based on these representations, took no immediate action to obtain
assistance in procuring the return of the Collection.
But in July 2010, Venezuelan President Hugo Chávez announced that he
would be exhuming Bolívar’s body. Devengoechea surmised that one reason for
the exhumation was to test the DNA in the Bolívar Collection’s lock of hair against
Bolívar’s DNA. After the exhumation, Devengoechea’s calls to Venezuelan
officials went unanswered. Despite Devengoechea’s demands, Venezuela neither
paid for nor returned the Bolívar Collection to Devengoechea. To date, that
remains the case.
II.
8
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In an effort to remedy that situation, Devengoechea filed suit against
Venezuela in the Southern District of Florida. Devengoechea asserts five counts in
his Second Amended Complaint: declaratory relief (Count I); damages for breach
of agreement and unjust enrichment (Counts II and III, respectively) under Clause
1 of the commercial-activity exception of the FSIA; and damages for breach of
agreement and unjust enrichment (Counts IV and V, respectively) under Clause 2
of the commercial-activity exception of the FSIA. For all counts, Devengoechea
invokes the Court’s jurisdiction under all three clauses of the commercial-activity
exception of the FSIA, 28 U.S.C. § 1605(a)(2).
Venezuela filed a motion seeking dismissal of the Second Amended
Complaint for lack of subject-matter and personal jurisdiction and for failure to
state a claim. The district court denied Venezuela’s motion, concluding that
subject-matter jurisdiction exists under the first clause of the FSIA’s commercial-
activity exception. To reach this conclusion, the district court found that the
Second Amended Complaint sufficiently alleged facts establishing a breach in
Florida of a bailment agreement that the parties entered into in Florida.
Alternatively, the district court determined that jurisdiction exists under the third
clause of the FSIA’s commercial-activity exception because Venezuela was
required to pay Devengoechea in the United States, and it failed to do so, causing a
direct effect in the United States. Because the district court otherwise found
9
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jurisdiction, it declined to address the second clause of the FSIA’s commercial-
activity exception.
III.
We review de novo the district court’s determination that it had jurisdiction
under the FSIA. Aquamar S.A. v. Del Monte Fresh Produce N.A., Inc., 179 F.3d
1279, 1289 (11th Cir. 1999). On a motion to dismiss, the factual allegations in the
complaint are taken as true, even if they are subject to dispute. Saudi Arabia v.
Nelson, 507 U.S. 349, 351 (1993). Finally, we can affirm on any basis that the
record supports. Big Top Koolers, Inc. v. Circus-Man Snacks, Inc., 528 F.3d 839,
844 (11th Cir. 2008) (citation omitted).
IV.
The Foreign Sovereign Immunities Act of 1976, 28 U.S.C. § 1602, et seq.,
renders foreign states immune from the jurisdiction of United States Courts unless
one of its statutory exceptions applies to the plaintiff’s claim. See 28 U.S.C.
§§ 1604–1605; see also Republic of Arg. v. Weltover, Inc., 504 U.S. 607, 611
(1992) (citation and internal quotation marks omitted) (“The FSIA . . . provides the
sole basis for obtaining jurisdiction over a foreign sovereign in the United
States.”). This case requires us to consider two of the FSIA’s statutory exceptions:
the commercial-activity exception, 28 U.S.C. § 1605(a)(2), and the expropriation
exception, 28 U.S.C. § 1605(a)(3).
10
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A. The Commercial-activity Exception
We begin with the commercial-activity exception. That exception provides
for jurisdiction over foreign states when at least one of its three clauses applies:
the action is based [1] upon a commercial activity carried
on in the United States by the foreign state; or [2] upon
an act performed in the United States in connection with
a commercial activity of the foreign state elsewhere; or
[3] 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). Devengoechea asserts that jurisdiction exists here under
all three clauses, but as it turns out, we need consider only the third clause.
Before we can do so, though, we must first understand the concept of
“commercial activity” under the FSIA. The Act defines “commercial activity,”
which appears in each of the commercial-activity exceptions three clauses, as
“either a regular course of commercial conduct or a particular commercial
transaction or act.” 28 U.S.C. § 1603(d). Under the definition, “[t]he commercial
character of an activity shall be determined by reference to the nature of the course
of conduct or particular transaction or act, rather than by reference to its purpose.”
Id. As the Supreme Court has observed, “[t]his definition . . . leaves the critical
term ‘commercial’ largely undefined . . . .” Weltover, 504 U.S. at 612. So we turn
to what the Supreme Court has said about the meaning of that word.
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The term “commercial” bears the same meaning under the FSIA as it did in
the pre-FSIA regime, when the State Department generally made determinations of
foreign sovereign immunity. 8 See id. at 612–14. The State Department operated
under the “restrictive” theory of foreign sovereign immunity, which provided that
“the sovereign immunity of foreign states should be ‘restricted’ to cases involving
acts of a foreign state which are sovereign or governmental in nature, as opposed to
acts which are either commercial in nature or those which private persons normally
perform.” H.R. Rep. No. 94-1487, at 14 (1976); see also Weltover, 504 U.S. at
612–14; Guevara v. Republic of Peru, 468 F.3d 1289, 1295 (11th Cir. 2006)
(citation omitted).
The FSIA essentially codified the “restrictive” theory of foreign sovereign
immunity. Weltover, 504 U.S. at 612; see also H.R. Rep. No. 94-1487, at 7.
Under the Act’s provisions, “[a] foreign state engaging in ‘commercial’ activities
does not exercise powers peculiar to sovereigns; rather, it exercises only those
powers that can also be exercised by private citizens.” Weltover, 504 U.S. at 614
(citation, internal quotation marks, and alterations omitted); see also Nelson, 507
U.S. at 359 (“[T]he meaning of ‘commercial’ for purposes of the Act must be the
meaning Congress understood the restrictive theory to require at the time it passed
the statute.”).
8
For a more detailed summary of pre-FSIA foreign-sovereign-immunity law, see
Guevara v. Republic of Peru, 468 F.3d 1289, 1295–97 (11th Cir. 2006).
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But that is not our sole consideration in determining whether activity
qualifies as “commercial.” We must also remember that under the FSIA’s
definition of “commercial activity,” whether a foreign government acts out of a
profit motive or out of a desire to fulfill “uniquely sovereign objectives” is entirely
irrelevant to the analysis of whether an activity qualifies as “commercial.”
Weltover, 504 U.S. at 614. Instead, we must determine “whether the particular
actions that the foreign state performs (whatever the motive behind them) are the
type of actions by which a private party engages in ‘trade and traffic or
commerce.’” Id. (citations omitted) (emphasis in original). As the Supreme Court
has explained, “whether a state acts ‘in the manner of’ a private party is a question
of behavior, not motivation.” Nelson, 507 U.S. at 360. For example, a claim
“based upon a foreign state’s participation in the marketplace in the manner of a
private citizen or corporation” states “commercial activity,” even if the foreign
state engages in this activity to help stabilize its own currency. Weltover, 504 U.S.
at 613–14.
Here, Devengoechea’s claims rely on “commercial activity” by Venezuela.
Venezuela engaged in all challenged actions during the course of negotiations for
the purchase of a private collection of artifacts. It did not seize the items through
its police or other sovereign powers. Rather, like a private buyer could do,
Venezuela flew to the United States to meet with the seller, examined the
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Collection, and negotiated to examine it further and return or purchase it. This is
the type of activity that private persons and corporations regularly engage in.
Nothing about this activity is uniquely or peculiarly sovereign in nature. Even
Venezuela has not characterized itself as having exercised sovereign powers to
obtain or retain the Collection. 9 To the contrary, Venezuela conceded before the
district court that the negotiations for the potential sale of the Collection
constituted “commercial” activity. See App. Vol. II at A380. 10 We find no reason
to disagree.
1. Devengoechea’s claims are “based upon” Venezuela’s failure to pay
Devengoechea for the Bolívar Collection or to return the Collection to him.
9
The burden of production to make an initial showing that jurisdiction exists because a
FSIA exception applies falls on the plaintiff. Universal Trading & Inv. Co., Inc. v. Bureau for
Representing Ukrainian Interests in Int’l & Foreign Courts, 727 F.3d 10, 17 (1st Cir. 2013)
(citing Nelson, 507 U.S. at 356); Cargill Int’l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1016
(2d Cir. 1993); Arriba Ltd. v. Petroleos Mexicanos, 962 F.2d 528, 533 (5th Cir. 1992). But once
the plaintiff has satisfied this burden, the defendant must bear the ultimate burden of persuasion
to show that no FSIA exceptions to immunity apply. Universal Trading, 727 F.3d at 17 (citation
omitted); see also Cargill Int’l, 991 F.2d at 1016; Arriba Ltd., 962 F.2d at 533. Nevertheless, to
the extent that a plaintiff’s invocation of a FSIA exception rests exclusively on a legal argument
(as opposed to a factual one), to establish jurisdiction under the FSIA, the plaintiff bears the
ultimate burden of proving that the FSIA exception he or she seeks to invoke applies as a matter
of law. See Bolivarian Republic of Venez. v. Helmerich & Payne Int’l Drilling Co., 137 S. Ct.
1312 (2017).
10
Before the district court, the following exchange occurred:
THE COURT: . . . I don’t see in your papers where you have actually challenged the
determination that the activity is commercial activity as opposed to noncommercial activity
solely within the realm of a sovereign.
VENEZUELA: That’s correct, Your Honor.
THE COURT: Okay. So that’s not an issue. So we’re dealing with commercial activity.
VENEZUELA: Exactly, exactly. . . .
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With this understanding of “commercial activity,” we begin the first step in
any commercial-activity-exception analysis. All three of the commercial-activity
exception’s clauses apply only when the action is “based upon” the conduct that
the exception describes. Nelson, 507 U.S. at 356. So at the first step in a
commercial-activity-exception case, we must identify the conduct upon which the
suit is based. OBB Personenverkehr AG v. Sachs, 136 S. Ct. 390, 396 (2015)
(citation omitted). That, in turn, requires us to look at “the ‘particular conduct’ that
constitutes the ‘gravamen’ of the suit.” Id. In other words, we focus on the “core”
of the suit—the foreign state’s “acts that actually injured” the plaintiff. Id.; see
also Atlantica Holdings, Inc. v. Sovereign Wealth Fund Samruk-Kazyna JSC, 813
F.3d 98, 107 (2d Cir. 2016) (quoting Black’s Law Dictionary 817 (10th ed. 2014)
(defining “gravamen” as “[t]he substantial point or essence of a claim, grievance,
or complaint”)).
The Supreme Court’s decisions in Nelson and Sachs show how this concept
works in practice.
We begin with Nelson. There, the plaintiff, Nelson, was in the United States
when he was recruited for a position in a Saudi Arabia Government-controlled
hospital. 507 U.S. at 351–52. Ultimately, Nelson signed a contract in the United
States to work at the Saudi hospital. Id. at 352. While working there, Nelson
discovered safety hazards and repeatedly reported them to the hospital, which
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instructed Nelson to ignore the problems. Id. Not long after that, agents of the
Saudi Government arrested, tortured, beat, and imprisoned Nelson in difficult
conditions for over a month. Id. at 352–53.
Nelson sued Saudi Arabia and its hospital, alleging, among other causes of
action, various intentional torts, including battery, unlawful detainment, wrongful
arrest and imprisonment, false imprisonment, inhuman torture, disruption of
normal family life, and infliction of mental anguish. Id. at 353–54. To support the
“based upon” requirement, Nelson relied on the facts that Saudi Arabia had
recruited him to work at the hospital, had signed an employment contract with him,
and had ultimately employed him. Id. at 358.
The Supreme Court held that no jurisdiction existed under the FSIA because
Nelson’s claims were not “based upon” these acts. Id. Rather, Nelson’s tort
claims were, of course, based upon Saudi Arabia’s tortious conduct. Id. But that
tortious conduct did not constitute “commercial activity.” Id. Rather, Saudi
Arabia undertook its tortious conduct by exercising the powers of police and penal
officers—actions that are peculiarly sovereign in nature and therefore necessarily
not “commercial.” Id. at 361–63.
In Sachs, the problem was different than that in Nelson: unlike in Nelson, at
least some of Sachs’s claims, on their faces, involved commercial activity. But
Sachs’s claims did not enjoy jurisdiction under the FSIA because the commercial
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activity on which Sachs relied for FSIA jurisdiction was not the true basis for her
claims, as the Supreme Court construed the phrase “based upon.”
In Sachs, the Supreme Court applied the meaning of “based upon” in the
context of a suit relying on the first clause of the commercial-activity exception, so
the plaintiff had to show that her action was “based upon a commercial activity
carried on in the United States by the foreign state.” 136 S. Ct. at 394 (quoting 28
U.S.C. § 1605(a)(2)). That she could not do.
Sachs, a California resident, bought a ticket in the United States for rail
travel in Europe. Id. at 393. Unfortunately, she fell onto the tracks at a station in
Austria while trying to board a train operated by the Austrian state-owned railroad
company. Id. As a result, Sachs experienced traumatic injuries. Id. She then sued
Austria for negligence, strict liability for design defects, strict liability for failure to
warn of design defects, breach of an implied warrant of merchantability for
providing a train and platform unsafe for their intended uses, and breach of an
implied warranty of fitness for providing a train and platform unfit for their
intended uses. Id. Sachs relied on the sale of the Eurail pass in the United States
to establish that her claims were “based upon” commercial activity in the United
States because the sale of the pass was an element of each of her claims. Id. at
394–95.
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The Supreme Court disagreed that the FSIA provided for jurisdiction. Id. at
395–96. First, the Court concluded that Sachs’s claims were not “based upon” the
sale of the Eurail pass. Id. As the Court explained, there was “nothing wrongful
about the sale of the Eurail pass standing alone.” Id. at 396. And second, the
Court found that the conduct making up the gravamen of Sachs’s suit happened in
Austria because “[a]ll of her claims turn[ed] on the same tragic episode” that
occurred there. Id. Nevertheless, the Court did caution that “[d]omestic conduct
with respect to different types of commercial activity may play a more significant
role in other suits . . . .” Id. at 397 n.2. And significantly, it expressly recognized
that the gravamina of different claims may occur in different locations. Id.
Applying these concepts here, we identify the conduct on which
Devengoechea bases his suit. The conduct that actually injured Devengoechea—
and therefore that makes up the gravamen of Devengoechea’s lawsuit—is
Venezuela’s failure to return the Bolívar Collection to Devengoechea or to pay him
for it. And both of Devengoechea’s causes of action—breach of contract and
unjust enrichment—turn on this circumstance. In the breach-of-contract claim,
Venezuela’s failure to return the Collection constitutes the alleged breach, and in
the unjust-enrichment claim, Venezuela’s failure to pay for or return the Collection
to Devengoechea has allegedly caused Venezuela’s unjust enrichment.
2. The Third Clause of the FSIA’s Commercial-Activity Exception
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Since we have identified the conduct upon which Devengoechea’s claims
are based and have determined that Venezuela engaged in commercial activity in
this case, we evaluate whether the allegations in this case satisfy the circumstances
of the third clause of the commercial-activity exception.
Under the third clause, a plaintiff may establish jurisdiction if his action is
based 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). For jurisdiction to exist
under this clause, “1) the lawsuit must be based upon an act that took place outside
the territory of the United States; 2) the act must have been taken in connection
with a commercial activity[;] and 3) the act must have caused a direct effect in the
United States.” de Csepel v. Republic of Hung., 714 F.3d 591, 598 (D.C. Cir.
2013) (citation and internal quotation marks omitted); see also Weltover, 504 U.S.
at 611.
Here, all three conditions are satisfied.
First, Devengoechea’s lawsuit is based on an act that occurred outside the
United States—namely, Venezuela’s decision not to pay Devengoechea for the
Collection or to return the Collection to him. It was this act that directly caused
Venezuela’s failure to pay for or return the Bolívar Collection to Devengoechea.
Devengoechea alleged that “after the July 2010 exhumation [of Bolívar,
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Venezuela] . . . decided to retain the benefit of the [Bolívar] Collection without
paying for it, thereby breaching the parties’ agreement and understanding and
unjustly enriching [Venezuela].” Second Am. Compl. at ¶ 50. Since Venezuela’s
latest visit to the United States in connection with its attempts to purchase the
Bolívar Collection happened in October 2007, Venezuela’s decision not to pay for
or return the Collection, which Devengoechea asserts occurred sometime in July
2010 or later, must have taken place in Venezuela. As a result, the first condition
of the third clause of the commercial-activity exception is satisfied.
Second, Venezuela undertook its decision to neither pay Devengoechea nor
return the Collection to him, in connection with a commercial activity—
specifically, Venezuela’s negotiations in the private market for the Bolívar
Collection.
And finally, Venezuela’s decision not to pay Devengoechea or to return the
Collection to him had a direct effect in the United States. A “direct effect” is one
that follows “as an immediate consequence of the defendant’s . . . activity.”
Weltover, 504 U.S. at 618 (citation omitted). The effect must be more than “purely
trivial” or “remote and attenuated,” but it need not be a substantial or foreseeable
effect. Id. In evaluating a “direct effect,” we ask, “[W]as the effect sufficiently
‘direct’ and sufficiently ‘in the United States’ that Congress would have wanted an
American court to hear the case?” Guevara v. Republic of Peru, 608 F.3d 1297,
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1309 (11th Cir. 2010) (quoting Harris Corp. v. Nat’l Iranian Radio & Television,
691 F.2d 1344, 1351 (11th Cir. 1982) (internal citation and quotation marks
omitted)).
Weltover demonstrates the meaning of “direct effect.” In that case,
Argentina and its bank sold bonds to raise United States dollars to repay their
foreign debts when they matured. Weltover, 504 U.S. at 609–10. The plaintiffs,
who had bought some of these bonds, designated New York as the place of
payment and sued Argentina when it failed to pay after it unilaterally rescheduled
the time for payment. Id. at 610. Based on the fact that New York was “the place
of performance for Argentina’s ultimate contractual obligations,” the Supreme
Court concluded that Argentina’s rescheduling of its obligations to repay the bonds
“necessarily had a ‘direct effect’ in the United States: Money that was supposed to
have been delivered to a New York bank for deposit was not forthcoming.” Id. at
619.
We have construed Weltover to stand for the proposition that a “direct
effect” occurs in the United States when “monies or goods [are] due in the United
States.” Samco Global Arms, Inc. v. Arita, 395 F.3d 1212, 1217 (11th Cir. 2005).
We therefore consider whether the Second Amended Complaint sufficiently
alleges that monies or goods were due in the United States.
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In a case materially indistinguishable from ours, the District of Columbia
Circuit found that goods were due in the United States, so a “direct effect”
occurred here. De Csepel, 714 F.3d 591, involved the Herzog Collection, “one of
Europe’s largest and finest private art collections.” Id. at 594. During the
Holocaust, the Hungarian government, acting in conjunction with Nazi Germany,
had seized the Collection from the de Csepel plaintiffs’ ancestors. Id. at 594–95.
After World War II ended, the plaintiffs alleged, the Hungarian government
reached bailment agreements with them concerning the Herzog Collection. Id. at
596. Under the alleged agreements, upon demand, the Hungarian government had
“a duty . . . to return” the property to the plaintiffs, whom it knew to reside in the
United States. Id. at 596, 601. When Hungary failed to return the Herzog
Collection, the plaintiffs sued for bailment, conversion, constructive trust,
accounting, declaratory relief, and restitution based on unjust enrichment. Id. at
596.
The District of Columbia Circuit concluded that jurisdiction existed under
the third clause of the commercial-activity exception. Id. at 601. In reaching this
determination, the court explained that Hungary’s refusal to return the property to
the plaintiffs in the United States caused the requisite “direct effect” in the United
States. Id. While the complaint did not expressly allege that the return of the
artwork was to take place in the United States, significantly, the court opined that
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“this is fairly inferred from the complaint’s allegations that the bailment contract
required specific performance—i.e., return of the property itself—and that this
return was to be directed to [the plaintiffs] Hungary knew to be residing in the
United States.” Id.
We agree with the District of Columbia Circuit’s reasoning and see no
meaningful legal difference between the allegations in de Csepel and those at issue
here. Like the de Csepel plaintiffs, Devengoechea alleges the existence of a
bailment arrangement between himself and a foreign state.
Also as in de Csepel, when we read the allegations of Devengoechea’s
complaint in the light most favorable to Devengoechea, we must conclude that
payment for or return of the Collection at issue was necessarily to occur in the
United States. The de Csepel plaintiffs alleged that the bailment contract required
return of the artwork at issue there to the plaintiffs in the United States since the
foreign state knew the de Csepel plaintiffs lived in the United States;
Devengoechea alleged that his agreement with Venezuela required payment for or
return of the Bolívar Collection to him, and Venezuela knew he was living in the
United States.
Indeed, the complaint avers that Devengoechea is a citizen of Florida and the
United States, who maintained the Bolívar Collection at his permanent residence in
Florida. Second Am. Compl. at ¶¶ 5, 12, 18. And it asserts extensive allegations
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setting forth a lengthy description of Venezuela’s interactions with Devengoechea
in Florida, which establish Venezuela’s knowledge of Devengoechea’s residence.
See id. at ¶¶ 5 (“Venezuela initiated commercial dealings with plaintiff through
telephonic and written communications addressed to plaintiff in Florida”)
(emphasis added), 21 (Venezuela “contacted plaintiff to arrange to meet plaintiff in
Orlando, Florida (where plaintiff lives)”), 22 (Venezuela’s officials “flew by
private jet from Venezuela to Orlando, Florida, to meet plaintiff to examine the
complete [Bolívar] Collection”), 23–25, 26 (“[P]laintiff informed these
Venezuelan officials that his [U.S.] Passport had expired, [and] they requested that
plaintiff go to the Passport Office in Miami, Florida”), 27–31, 40 (“At the request
of Venezuela’s officials who were examining the [C]ollection, . . . plaintiff
returned to Orlando, Florida, . . . to search for and bring back to Venezuela . . .
further artifacts and memorabilia concerning Simon Bolivar”), 41 (“Venezuela, at
its own expense and for its own benefit, sent plaintiff back to Florida to search for
more materials”), 42 (Devengoechea’s “round-trip travel, from Caracas, Venezuela
to Orlando, Florida and back, occurred on American Airlines, fully paid by . . .
Venezuela”). Because Devengoechea alleges that payment for or return of the
Bolívar Collection was to occur “to him,” and because he sufficiently asserts that
Venezuela knew that he resided in Florida, in the United States, we understand his
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Second Amended Complaint to allege that Venezuela was required to either make
payment or return the Collection to Devengoechea in Florida.
Nor does the fact that Devengoechea alleges payment to him as an
alternative for the return of the Collection (when the de Csepel plaintiffs did not)
affect the analysis. Nothing in the record alleges, or even suggests, that
Devengoechea maintains a bank account outside of the United States, so on a
motion to dismiss, we reasonably understand the allegations in the light most
favorable to Devengoechea to mean that payment was to occur in the United
States.
Because the Second Amended Complaint satisfies all three requirements to
establish jurisdiction under the third clause of the commercial-activity exception,
we affirm the district court’s ruling as it pertains to that clause. And since
jurisdiction exists under the third clause, we do not consider whether it also may
exist under any other clauses.
3. The Second Amended Complaint sufficiently alleges acts attributable to
Venezuela
Finally, because jurisdiction lies under the third clause of the FSIA’s
commercial-activity exception, we must address Venezuela’s claim that the Second
Amended Complaint fails to adequately allege action by Venezuela. We find no
merit to that argument.
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The commercial-activity exception lifts sovereign immunity based upon
activity “by the foreign state” or “of the foreign state.” See 28 U.S.C.
§ 1605(a)(2). But whether a plaintiff may breach sovereign immunity under the
FSIA when the action is based on the acts of a representative of a foreign state who
acts with apparent authority (as opposed to actual authority) is a question that
remains the subject of some debate. Compare First Fid. Bank, N.A. v. Gov’t of
Ant. & Barb., 877 F.2d 189, 194 (2d Cir. 1989) (holding that a purported foreign-
state actor’s apparent authority may suffice to allow a plaintiff to proceed under the
FSIA), with Dale v. Colagiovanni, 443 F.3d 425, 428–29 (5th Cir. 2006) (holding
that actual authority is required), Velasco v. Gov’t of Indon., 370 F.3d 392, 400
(4th Cir. 2004) (same), and Phaneuf v. Republic of Indon., 106 F.3d 302, 308 n.4
(9th Cir. 1997) (same).
And while we have not directly opined on the precise issue, in a FSIA case,
we have considered whether a foreign state’s ambassador’s express waiver of his
country’s sovereign immunity suffices to, in fact, waive his country’s sovereign
immunity in the absence of evidence of the ambassador’s actual authority to waive
sovereign immunity. We determined that, with respect to ambassadors, under the
FSIA, “courts should assume that an ambassador possesses the authority to appear
before them and waive sovereign immunity absent compelling evidence making it
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‘obvious’ that he or she does not.”11 Aquamar, 179 F.3d at 1299. In reaching this
conclusion, we expressed concern that “[r]equiring the courts to look to a
sovereign’s local law to determine the authority of any agent who purports to
waive sovereign immunity . . . would hinder the goals of the FSIA and its waiver
provision.” Id. at 1298. And we further reasoned that “[s]uch a rule at best would
create a roadblock to all FSIA actions, requiring lengthy, unpredictable, and
frequently inconclusive inquiries into conflicting interpretations of foreign
law . . . . The foreign state would have the opportunity of raising immunity
perhaps even after it has unsuccessfully defended on the merits.” Id. (citation and
internal quotation marks omitted).
Our prior-panel-precedent rule requires subsequent panels of the court to
follow the precedent of the first panel to address the relevant issue, “unless and
until the first panel’s holding is overruled by the Court sitting en banc or by the
Supreme Court.” Smith v. GTE Corp., 236 F.3d 1292, 1300 n.8 (11th Cir. 2001).
Under the prior-panel-precedent rule, we must follow the reasoning behind a prior
holding if we cannot distinguish the facts or law of the case under consideration—
even if the present case does not involve precisely the same issue. See Smith, 236
F.3d at 1301–04.
11
We did not engage in the same analysis as did the Second Circuit in First Fidelity. See
Aquamar, 179 F.3d at 1299 n.42. The First Fidelity Court analyzed the waiver under state
agency law, but we applied federal and international law principles instead. Id. Nevertheless,
we arrived at the same conclusion. Id.
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The Aquamar panel’s reasoning applies with equal force to an inquiry into
whether a purported foreign representative acted with actual or apparent authority
when he engaged in the acts that satisfy the commercial-activity exception. So
Aquamar’s rule compels us to conclude that apparent authority suffices to waive
FSIA immunity.
But even if actual authority were required, at this motion-to-dismiss stage of
the proceedings, we find that Devengoechea alleged sufficient facts to establish
actual authority. As we have noted, resolution of a motion to dismiss requires the
court to accept all factual allegations in the complaint as true and to view them in
the light most favorable to the plaintiff. Dusek v. JPMorgan Chase & Co., 832
F.3d 1243, 1246 (11th Cir. 2016). When we review the complaint in that light
here, Devengoechea has asserted sufficient facts that, if true, allow for the
conclusion that the purported representatives of Venezuela acted with actual
authority.
Among other such allegations, the Second Amended Complaint specifically
avers that “Defendant Venezuela initiated commercial dealings with plaintiff . . .
[and] met with plaintiff.” Second Am. Compl. at ¶ 5. It also asserts a bit more
specifically that “defendant’s officials contacted plaintiff to arrange to meet
plaintiff in Orlando,” “defendant’s representatives persuaded plaintiff to obtain a
Passport[,] . . . and provided to plaintiff a letter of introduction[,]” and traveled
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with Devengoechea and the Bolívar Collection to Venezuela. Id. at ¶¶ 6, 21. In
addition, the complaint contends that the jet that Devengoechea was persuaded to
board with the Bolívar Collection was Venezuela’s jet. Id. at ¶ 7.
And more particularly, the complaint identifies as one of Venezuela’s
representatives who participated in these events “Delcy Rodriguez, Coordinator
General of the Office of Vice President of Venezuela.” Id. at ¶ 22. It further
asserts that she and Alberto Arvelo were among “officials sent by the Venezuelan
government.” Id. The complaint also speaks in terms of negotiating “defendant
Venezuela’s prospective purchase” of the Collection. Id. at ¶ 23.
Sure, the purported Venezuelan officials could have been out on an
unauthorized frolic when they took Venezuela’s jet more than 1,500 miles to the
United States, paid for Devengoechea’s roundtrip ticket from Venezuela to Florida
to pick up additional items from the Collection, arranged for Devengoechea to
receive a Venezuelan letter of introduction to expedite the renewal of his passport,
and engaged in negotiations for the purchase of the Bolívar Collection. But even
assuming actual authority is required under the FSIA, the far more natural reading
of these allegations—particularly when we construe them in the light most
favorable to Devengoechea—requires us to conclude that Devengoechea
sufficiently alleged that the purported Venezuelan officials acted with actual
authority.
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B. The Expropriation Exception
Venezuela argues that FSIA’s commercial-activity exception cannot apply to
Devengoechea’s claims because he has recast what are really expropriation claims
as commercial-activity claims, and FSIA’s expropriation exception does not
provide for jurisdiction over Devengoechea’s claims. We disagree with the first
proposition, so we do not reach the second one.
FSIA’s expropriation exception endows federal courts with jurisdiction in
certain cases involving a foreign state’s expropriation of property in violation of
international law:
(a) A foreign state shall not be immune from the
jurisdiction of courts of the United States or of the States
in any case—(3) in which rights in property taken in
violation of international law are in issue and that
property or any property exchanged for such property is
present in the United States in connection with a
commercial activity carried on in the United States by
the foreign state; or that property or any property
exchanged for such property is owned or operated by an
agency or instrumentality of the foreign state and that
agency or instrumentality is engaged in a commercial
activity in the United States[.]
28 U.S.C. § 1605(a)(3).
Under the expropriation exception, expropriation is a uniquely sovereign act,
as opposed to a private act. Similar to the concept embodied in our Fifth
Amendment to the U.S. Constitution, FSIA expropriation involves sovereign
“takings” of property, without just compensation. See Garb v. Republic of Pol.,
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440 F.3d 579, 584, 586 (2d Cir. 2006) (referring to the FSIA expropriation
exception as the “‘takings’ exception”); see also Ernesto J. Sanchez, The Foreign
Sovereign Immunities Act Deskbook 151 (Am. B. Ass’n 2014); Expropriation,
Black’s Law Dictionary (10th ed. 2014) (“A governmental taking or modification
of an individual’s property rights, esp. by eminent domain; CONDEMNATION”).
So the expropriation exception is essentially an exception to the “restrictive
theory of sovereign immunity” otherwise embodied in the FSIA, as it allows a
plaintiff to obtain jurisdiction over a foreign state that has engaged in a public act.
See Helmerich & Payne, 137 S. Ct. at 1321 (“A sovereign’s taking or regulating of
its own nationals’ property within its own territory is often just the kind of foreign
sovereign’s public act (a ‘jure imperii’) that the restrictive theory of sovereign
immunity ordinarily leaves immune from suit[,] . . . and the expropriation
exception provides that the general principle of immunity for these otherwise
public acts should give way.”).
Indeed, we have previously explained the sovereign nature of the act of
expropriation under the FSIA. In Beg v. Islamic Republic of Pakistan, 353 F.3d
1323, 1326–27 (11th Cir. 2003), we held that Pakistan’s actions in seizing the
plaintiff’s land in that country and using it for military purposes was not
commercial activity but expropriation because it made use of the state’s sovereign
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authority at the time of the taking of the property in order to expropriate the
property.
Other Circuits agree that for purposes of construing the FSIA, expropriation
refers to only the state’s use of its sovereign power to take property. For example,
in de Csepel, 714 F.3d at 600, the District of Columbia Circuit acknowledged that
“expropriation constitutes a quintessentially sovereign act falling outside the scope
of the commercial activity exception.” (citation, internal quotation marks, and
alterations omitted). And the Second Circuit has described FSIA expropriation as
“a decidedly sovereign—rather than commercial—activity.” Garb, 440 F.3d at
586.
But here, Venezuela did not invoke any of its sovereign powers to obtain
possession of the Bolívar Collection or to fail to return or pay for the Collection.
Rather, as we have noted and Venezuela has conceded, Venezuela engaged in only
commercial activity in this case.
Since it cannot argue factually that the expropriation exception applies here,
Venezuela instead insists that the expropriation exception applies because
Devengoechea’s original Complaint alleged a count of expropriation in the
alternative. Based on this fact, Venezuela essentially contends that Devengoechea
is estopped from being able to claim that it did not engage in expropriation. But
the Federal Rules of Civil Procedure allow a plaintiff to plead, without penalty, in
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the alternative. See Fed. R. Civ. P. 8(d)(3) (“A party may state as many separate
claims or defenses as it has, regardless of consistency.”); Allstate Ins. Co. v. James,
779 F.2d 1536, 1540 (11th Cir. 1986) (“Litigants in federal court may pursue
alternative theories of recovery, regardless of their consistency.”).
And “[a]n amended pleading supersedes the former pleading; the original
pleading is abandoned by the amendment, and is no longer a part of the pleader’s
averments against his adversary.” Pintando v. Miami-Dade Hous. Agency, 501
F.3d 1241, 1243 (11th Cir. 2007) (internal citation omitted). Once an amended
pleading is filed, we look to the amended pleading to determine jurisdiction. Id.
Here, as we have explained, the Second Amended Complaint pleads sufficient
allegations to establish that the commercial-activity exception is applicable,
regardless of what other exceptions Devengoechea may have asserted in a prior
pleading.
Nor do any direct factual contradictions or inconsistencies exist between
Devengoechea’s original complaint and the Second Amended Complaint. True,
the original Complaint did describe Venezuela’s failure to return the
Devengoechea Collection as a “clear act of expropriation of DEVENGOECHEA’S
personal property in violation of international law.” But that allegation asserts a
conclusion of law. And calling an action expropriation does not make it
expropriation as a matter of law. Rather, as we have explained, FSIA
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expropriation has a very precise meaning, and on this record, Venezuela’s actions
do not satisfy it. For that reason, this is not a case where a plaintiff recast what is
truly an expropriation claim as a commercial-activity claim.
Finally, contrary to Venezuela’s assertion, Beg does not demand—or even
support—a different outcome. As we have noted, in Beg, Pakistan exercised its
peculiarly sovereign powers to take the plaintiff’s property and use it for military
purposes. See Beg, 353 F.3d at 1325–27. In other words, Pakistan engaged in an
“expropriation” within the meaning of that term under the FSIA. See id. at 1326
(explaining that expropriation “is a public act because private actors are not
allowed to engage in ‘takings’ in the manner that governments are”). So the Beg
plaintiff could establish jurisdiction, if at all, only under the FSIA’s expropriation
exception. Here, however, unlike with Pakistan in Beg, nothing in the record
supports the notion that Venezuela came into possession of or refused to pay for or
return the Bolívar Collection through the exercise of its sovereign “takings” power.
Rather, Venezuela acted in the same way that any private foreign buyer could have
when it committed the acts that harmed Devengoechea.
V.
Jurisdiction for Devengoechea’s suit lies under the third clause of the FSIA’s
commercial-activity exception since his action is based on Venezuela’s act outside
the United States in connection with commercial activity, and that act had a direct
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effect in the United States. For this reason, we affirm the district court’s order
denying dismissal and remand for further proceedings.
AFFIRMED.
35