Broidy Capital Management, LLC v. State of Qatar

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BROIDY CAPITAL MANAGEMENT, No. 18-56256
LLC; and ELLIOTT BROIDY,
Plaintiffs-Appellants, D.C. No.
2:18-cv-02421-
v. JFW-E
STATE OF QATAR,
Defendant-Appellee. OPINION
Appeal from the United States District Court for the
Central District of California
John F. Walter, District Judge, Presiding
Argued and Submitted February 11, 2020
Pasadena, California
Filed December 2, 2020
Before: Jay S. Bybee, Daniel P. Collins, and
Daniel A. Bress, Circuit Judges.
Opinion by Judge Collins
2 BROIDY CAPITAL MGMT. V. STATE OF QATAR
SUMMARY *
Foreign Sovereign Immunities Act
The panel affirmed the district court’s dismissal, for lack
of subject matter jurisdiction under the Foreign Sovereign
Immunities Act, of an action brought against the State of
Qatar, alleging violation of the Computer Fraud and Abuse
Act and other causes of action.
The panel held that neither the FSIA’s exception to
immunity for tortious activity nor its exception for
commercial activity applied, and the State of Qatar therefore
was immune from jurisdiction.
The panel concluded that all of plaintiffs’ tort claims
were barred under the discretionary function exclusion from
the tortious activity exception because the challenged
conduct met two criteria: (1) it was discretionary in nature
or involved an element of judgment or choice; and (2) the
judgment was of the kind that the exception was designed to
shield. The first criterion was met because there was no
showing that Qatari or international law proscribed Qatar’s
actions. The second criterion was met because Qatar’s
alleged actions involved considerations of public policy.
Plaintiffs argued that the commercial activity exception
applied because their action was based upon a commercial
activity carried on in the United States by Qatar. The panel
concluded that plaintiffs’ claims were based on the alleged
*
This summary constitutes no part of the opinion of the court.
It has been prepared by court staff for the convenience of the reader.
BROIDY CAPITAL MGMT. V. STATE OF QATAR 3
surreptitious intrusion into their servers and email accounts
in order to obtain information and the dissemination of such
information to others, including persons in the media, and
this conduct did not qualify as commercial activity within
the meaning of the FSIA.
COUNSEL
Shannen Wayne Coffin (argued), Filiberto Agusti,
Christopher M. Re, Linda C. Bailey, and Mark C. Savignac,
Steptoe & Johnson LLP, Washington, D.C., for Plaintiffs-
Appellants.
David Meir Zionts (argued), Robert A. Long Jr., Jonathan
Gimblett, Lauren K. Moxley, and Megan M. O’Neill,
Covington & Burling LLP, Washington, D.C.; Mitchell A.
Kamin, Neema T. Sahni, and Rebecca G. Van Tassell,
Covington & Burling LLP, Los Angeles, California; for
Defendant-Appellee.
OPINION
COLLINS, Circuit Judge:
Plaintiffs-Appellants Elliott Broidy and his investment
firm, Broidy Capital Management, LLC, sued the State of
Qatar and various other defendants after Qatari agents
allegedly hacked into Plaintiffs’ computer servers, stole their
confidential information, and leaked it to the media in a
retaliatory effort to embarrass Broidy and thereby to
neutralize his ability to continue to effectively criticize the
Qatari regime and its alleged support of terrorism. The
district court dismissed the claims against Qatar for lack of
4 BROIDY CAPITAL MGMT. V. STATE OF QATAR
subject matter jurisdiction, concluding that Qatar was
immune under the Foreign Sovereign Immunities Act
(“FSIA”), 28 U.S.C. § 1602 et seq. Although for somewhat
different reasons, we agree with the district court that subject
matter jurisdiction is lacking under the FSIA, and we
therefore affirm its judgment dismissing this action.
I
A
Qatar’s motion to dismiss relied on a “facial attack on
the subject matter jurisdiction of the district court” under the
FSIA, and therefore, in reviewing de novo the district court’s
order granting that motion, we take as true the well-pleaded
allegations of Plaintiffs’ operative First Amended
Complaint. Doe v. Holy See, 557 F.3d 1066, 1073 (9th Cir.
2009); see also Holden v. Canadian Consulate, 92 F.3d 918,
920 (9th Cir. 1996) (de novo review applies to dismissal for
lack of jurisdiction under the FSIA). In addition, we note
that Plaintiffs’ opposition to Qatar’s motion to dismiss
requested leave to amend “in order to incorporate additional
allegations based on Plaintiffs’ discovery efforts,” and the
then-current status of those discovery efforts were set forth
in a contemporaneously filed declaration from Plaintiffs’
counsel. The district court, however, denied leave to amend
based on its conclusion that “discovery had failed to provide
any evidence that might cure or change the Court’s analysis
that it lacks subject matter jurisdiction over Qatar” and that
further amendment would be futile. Because we review that
determination de novo, see Thinket Ink Info. Res., Inc. v. Sun
Microsystems, Inc., 368 F.3d 1053, 1061 (9th Cir. 2004), and
because we apply the same standards in evaluating the
sufficiency of a proposed amendment as we do to the
underlying complaint, see Miller v. Rykoff-Sexton, Inc.,
845 F.2d 209, 214 (9th Cir. 1988), we likewise take as true
BROIDY CAPITAL MGMT. V. STATE OF QATAR 5
for purposes of this appeal the additional well-pleaded
contentions that are contained in that declaration of counsel.
Considering these allegations together, we take the
following factual assertions as true for purposes of this
appeal.
In response to being sanctioned diplomatically and
commercially by several of its neighbors in June 2017 for its
alleged “support for terrorism and its close ties to Iran,”
Qatar launched “a wide-ranging and extremely well-
resourced effort to influence public opinion in the United
States.” In addition to attempting to burnish Qatar’s image
with the U.S. Government, Qatar’s “public relations
campaign” sought to “curtail[] the influence of individuals
that could undermine the standing of the State of Qatar in the
United States.” One of the persons whose influence Qatar
sought to blunt was Elliott Broidy (“Broidy”), the CEO of an
investment firm in Los Angeles called Broidy Capital
Management, LLC (“BCM”). In addition to his business
ventures, Broidy has been active in public affairs, serving on
the Homeland Security Advisory Council for several years
and also taking leadership roles in various political and civic
organizations. Starting in March 2017, Broidy became an
outspoken critic of Qatar, condemning it for its alleged
support for terrorism. His activities were perceived by Qatar
as thwarting its public relations efforts, such as when Broidy
and others persuaded many “American Jewish leaders to
refuse to meet with the Emir” of Qatar when the Emir
traveled to New York in the fall of 2017 for the General
Assembly of the United Nations. Qatar also perceived that
Broidy “‘had been influential’ in shaping the White House’s
views on Qatar.” As a result, one registered agent for Qatar
noted that “Broidy’s name [came] up in Embassy meetings
often,” and Qatar decided to target him in order to limit his
future influence.
6 BROIDY CAPITAL MGMT. V. STATE OF QATAR
The centerpiece of Qatar’s purported targeting of Broidy
was a concerted series of cyberattacks aimed at BCM’s
California-based computer servers. In the latter half of 2017,
Qatar retained the New York-based firm of Global Risk
Advisors LLC (“GRA”) to coordinate that effort, and GRA
thereafter introduced Qatar “to cyber mercenaries in various
countries to coordinate technical aspects of the illegal
intrusion.” Thereafter, through a series of “spearphishing”
attacks aimed at several persons connected to Broidy,
including his executive assistant, the hackers obtained access
to BCM’s Los Angeles-based servers. Beginning on January
16, 2018, and continuing through at least February 25, 2018,
the hackers engaged in “thousands” of instances of
unauthorized access into BCM’s servers and obtained
“Plaintiffs’ private communications, emails, documents and
intellectual property.”
Subsequent forensic investigation revealed that the
hackers were largely able to hide the origins of the attacks
on BCM’s servers by routing their communications through
Virtual Private Networks (“VPNs”). However, two brief
glitches in the VPN system revealed that at least two attacks
in February 2018 originated from an IP address in Doha,
Qatar, that belongs to an internet service provider that is
majority-owned by Qatar. Additional forensic analysis also
established that persons using IP addresses from Vermont
“directly accessed Plaintiffs’ servers 178 times from
February 12, 2018 to February 25, 2018.” Plaintiffs contend
that these Vermont-based attacks were direct, i.e., that they
were not “associated with VPNs or similar anonymization
tools.”
After the hackers obtained Plaintiffs’ private documents,
the stolen materials were converted into PDF format and
distributed to several U.S. media outlets via email and hand-
BROIDY CAPITAL MGMT. V. STATE OF QATAR 7
delivery. A New York-based public relations firm that Qatar
had previously hired in connection with its efforts to
influence U.S. public opinion, Stonington Strategies LLC
(“Stonington”), participated in this plan to “organize and
disseminate Plaintiffs’ stolen emails to media
organizations.” The metadata from some of these leaked
PDFs revealed timestamps from the Central and Eastern
Time Zones, suggesting that the conversion of these files
into PDF format took place in the United States. Plaintiffs
also allege that “many of the instances of unlawful
distribution of illegally obtained [documents] took place
within the United States.”
The result of the dissemination of the stolen materials
was an unflattering series of articles in March 2018 in the
Wall Street Journal, the New York Times, and the
Huffington Post alleging that, in exchange for tens of
millions of dollars, Broidy and his wife had sought to scuttle
a criminal investigation connected to a Malaysian state
investment fund. As a consequence, Plaintiffs suffered
reputational harm and other injuries.
B
Based on these allegations, Plaintiffs filed this action
against Qatar and various other defendants in the district
court. In the operative First Amended Complaint, Plaintiffs
asserted 10 causes of action against Qatar, GRA, Stonington,
and numerous individuals arising from the alleged
unauthorized access into Plaintiffs’ servers and the
subsequent distribution of stolen materials. Specifically,
Plaintiffs alleged that the unlawful intrusion into the servers
to obtain information was actionable under the common law
tort of intrusion upon seclusion, as well as under the civil
suit provisions of the Computer Fraud and Abuse Act,
18 U.S.C. § 1030(g); the Stored Communications Act,
8 BROIDY CAPITAL MGMT. V. STATE OF QATAR
18 U.S.C. § 2707(a); the Digital Millennium Copyright Act,
17 U.S.C. § 1203(a); and the California Comprehensive
Computer Data Access and Fraud Act, see Cal. Penal Code
§ 502(e). Plaintiffs also alleged that the unlawful acquisition
and dissemination of the stolen materials were actionable
under common-law theories of conversion and intrusion
upon seclusion, as well as under the civil actions authorized
by California Penal Code § 496(c) (relating to receipt of
stolen property); the California Uniform Trade Secrets Act,
see Cal. Civ. Code §§ 3426.2, 3426.3; and the Defend Trade
Secrets Act, 18 U.S.C. § 1836(b). The complaint also
alleged a cause of action for “civil conspiracy,” but as the
district court correctly noted, there is no such cause of action
under California law. See, e.g., Kenne v. Stennis, 179 Cal.
Rptr. 3d 198, 210 (Ct. App. 2014) (“Conspiracy is not a
cause of action. It is a theory of liability under which persons
who, although they do not actually commit a tort themselves,
share with the tortfeasor or tortfeasors a common plan or
design in its perpetration.”). Based on these claims,
Plaintiffs sought declaratory, monetary, and injunctive
relief, as well as attorneys’ fees. 1
Qatar filed a motion to dismiss under Federal Rules of
Civil Procedure 12(b)(1) and 12(b)(2) for lack of subject
matter and personal jurisdiction, asserting that it was
immune under the FSIA. In opposing Qatar’s motion,
Plaintiffs argued that two of the FSIA’s exceptions—the
tortious activity exception and the commercial activity
exception—defeated Qatar’s claimed immunity. On August
8, 2018, the district court granted Qatar’s motion, finding
both exceptions inapplicable. The tortious activity exception
did not apply, according to the district court, because
Plaintiffs had failed to “allege at least ‘one entire tort’
1
Plaintiffs also sought punitive damages, but such damages are not
available against Qatar. See 28 U.S.C. § 1606.
BROIDY CAPITAL MGMT. V. STATE OF QATAR 9
occurring in the United States” as required by our decision
in Olsen by Sheldon v. Government of Mexico, 729 F.2d 641,
646 (9th Cir. 1984), abrogated in part on other grounds as
recognized in Joseph v. Office of Consulate Gen. of Nigeria,
830 F.2d 1018, 1026 (9th Cir. 1987). The district court
concluded that all of the torts alleged by Plaintiffs were
“premised on allegedly wrongful conduct by Qatar, its
agents, or co-conspirators in gaining access to Plaintiffs’
data servers from outside the United States, making each tort
transnational.” The alleged attacks from Vermont, the court
held, “were merely the continuation of purported conduct
allegedly originating in Qatar and ‘do not demonstrate an
independent tort occurring entirely within the United
States’” (citation omitted). The district court held that the
commercial activity exception was inapplicable because
Qatar’s alleged conduct—hacking and cyberespionage—did
not qualify as “commercial activity” within the meaning of
the FSIA. The district court therefore dismissed the action
against Qatar without leave to amend.
Shortly thereafter, the district court dismissed GRA,
Stonington, and various individual defendants affiliated with
those entities for lack of personal jurisdiction. With the
approval of the district court, Plaintiffs’ claims against three
remaining individual defendants, who had not been served,
were voluntarily dismissed without prejudice and a formal
“final, appealable judgment” was entered by the district
court. See Galaza v. Wolf, 954 F.3d 1267, 1272 (9th Cir.
2020) (where dismissal of remaining claims without
prejudice is done with “the approval and meaningful
participation of the district court,” the resulting judgment is
final and appealable). Plaintiffs timely appealed the
judgment, challenging only the dismissal of the claims
against Qatar.
10 BROIDY CAPITAL MGMT. V. STATE OF QATAR
II
The FSIA is the “‘sole basis’” for obtaining jurisdiction
over a foreign state in a civil action. Republic of Argentina
v. Weltover, Inc., 504 U.S. 607, 611 (1992) (citation
omitted). Under the FSIA, a foreign state “shall be immune
from the jurisdiction of the courts of the United States”
unless one of the Act’s enumerated exceptions applies.
28 U.S.C. § 1604. This default rule of immunity reflects
“the absolute independence of every sovereign authority”
and also “helps to induce each nation state, as a matter of
international comity, to respect the independence and dignity
of every other, including our own.” Bolivarian Republic of
Venezuela v. Helmerich & Payne Int’l Drilling Co.,
137 S. Ct. 1312, 1319 (2017) (simplified).
The Act, however, contains a number of explicit
exceptions to this default rule of foreign sovereign
immunity, thereby acknowledging that there are some
limited situations in which a foreign state entity should be
subject to suit. In establishing such exceptions, the FSIA
generally codifies the so-called “restrictive theory” of
sovereign immunity, under which immunity “is recognized
with regard to sovereign or public acts (jure imperii) of a
state, but not with respect to private acts (jure gestionis).”
Siderman de Blake v. Republic of Argentina, 965 F.2d 699,
705–06 (9th Cir. 1992) (citation and internal quotation
marks omitted). Although this “restrictive theory of
sovereign immunity was developed in the context of
commercial activities of states, . . . it is not limited to claims
arising out of contractual relationships,” and in appropriate
circumstances it also imposes liability upon a foreign state
for torts, such as traffic accidents, committed by that state’s
agents. See Restatement (Third) of the Foreign Relations
Law of the United States § 454 cmt. a (Am. L. Inst. 1987).
BROIDY CAPITAL MGMT. V. STATE OF QATAR 11
The FSIA thus contains separate exceptions that permit
certain actions against foreign states based on their
commercial activities, 28 U.S.C. § 1605(a)(2), as well as
certain actions based on the tortious acts of their agents, id.§ 1605(a)(5). If either of these exceptions is applicable, then
the district court may assert jurisdiction over a “nonjury civil
action against [the] foreign state,” but only “as to any claim
for relief in personam with respect to which the foreign state
is not entitled to immunity.” 28 U.S.C. § 1330(a); see also
Argentine Republic v. Amerada Hess Shipping Corp.,
488 U.S. 428, 434 (1989) (“Sections 1604 and 1330(a) work
in tandem: § 1604 bars . . . jurisdiction when a foreign state
is entitled to immunity, and § 1330(a) confers jurisdiction
. . . when a foreign state is not entitled to immunity.”). 2
There is, of course, no dispute that the State of Qatar
qualifies as a “foreign state” for purposes of the FSIA, and it
is therefore immune from jurisdiction here unless Plaintiffs’
claims fit within one of the FSIA’s enumerated exceptions.
Plaintiffs invoke both the tortious activity exception and the
commercial activity exception, and it is their burden to make
an initial showing as to the applicability of one or both of
them. Packsys, S.A. v. Exportadora de Sal, S.A., 899 F.3d
1081, 1088 (9th Cir. 2018). We agree with the district court
that as a matter of law neither exception is applicable here,
although our reasoning differs in some respects from the
district court’s. We discuss each exception in turn.
2
Plaintiffs are therefore wrong in suggesting that the district court
can assert jurisdiction over this entire action against Qatar so long as any
one of their claims fits within an exception in the FSIA. This “foot-in-
the-door” approach cannot be reconciled with the limited grant of
jurisdiction in § 1330(a). See Simon v. Republic of Hungary, 812 F.3d
127, 141 (D.C. Cir. 2016) (courts must “make FSIA immunity
determinations on a claim-by-claim basis”).
12 BROIDY CAPITAL MGMT. V. STATE OF QATAR
A
Subject to two enumerated exclusions, the FSIA’s
tortious activity exception allows a foreign sovereign to be
sued in any case:
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.
28 U.S.C. § 1605(a)(5); see also Liu v. Republic of China,
892 F.2d 1419, 1425 (9th Cir. 1989). Although the actual
words of the statute require only that a claimant’s injury
occur in the United States, see 28 U.S.C. § 1605(a)(5), the
Supreme Court has stated that this exception “covers only
torts occurring within the territorial jurisdiction of the United
States,” Amerada Hess, 488 U.S. at 441. See also
Asociación de Reclamantes v. United Mexican States,
735 F.2d 1517, 1524 (D.C. Cir. 1984) (Scalia, J.) (“Although
the statutory provision is susceptible of the interpretation
that only the effect of the tortious action need occur here,
where Congress intended such a result elsewhere in the FSIA
it said so more explicitly.”). Accordingly, we have held that,
while not “every aspect of the tortious conduct” must “occur
in the United States,” the exception in § 1605(a)(5) applies
only where the plaintiff alleges “at least one entire tort
occurring in the United States.” Olsen, 729 F.2d at 646.
The parties vigorously dispute how Olsen’s “entire tort”
rule applies to Plaintiffs’ allegations in this case, but we find
it unnecessary to address this issue because Plaintiffs’ claims
BROIDY CAPITAL MGMT. V. STATE OF QATAR 13
fall within one of § 1605(a)(5)’s express exclusions from the
tortious activity exception. Johnson v. Riverside Healthcare
Sys., LP, 534 F.3d 1116, 1121 (9th Cir. 2008) (“[W]e may
affirm based on any ground supported by the record.”). In
addition to preserving a foreign sovereign’s immunity over
a specified list of torts, § 1605(a)(5) also expressly precludes
any tort claim against a foreign state “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). We conclude that
all of Plaintiffs’ tort claims are barred under this
“discretionary function” exclusion from the FSIA’s tortious
activity exception.
As we have previously observed, “[t]he language of the
discretionary function exclusion closely parallels the
language of a similar exclusion in the Federal Tort Claims
Act (‘FTCA’), so we look to case law on the FTCA when
interpreting the FSIA’s discretionary function exclusion.”
Holy See, 557 F.3d at 1083. Accordingly, the FSIA’s
discretionary function exclusion applies if the challenged
conduct “meets two criteria: (1) it is ‘discretionary in nature’
or ‘involve[s] an element of judgment or choice’ and (2) ‘the
judgment is of the kind that the discretionary function
exception was designed to shield.’” Id. at 1083–84 (quoting
United States v. Gaubert, 499 U.S. 315, 322–23 (1991)).
Although Qatar ultimately has the burden to establish that
the exclusion applies, that burden arises only if Plaintiffs
have “‘advance[d] a claim that is facially outside the
discretionary function exception.’” Id. at 1084 (citation
omitted). We conclude that the particular tortious conduct
that Plaintiffs allege in this case facially satisfies both of
Gaubert’s criteria, and that the discretionary function
exclusion therefore applies.
14 BROIDY CAPITAL MGMT. V. STATE OF QATAR
1
As the Supreme Court has recognized, “conduct cannot
be discretionary unless it involves an element of judgment
or choice.” Berkovitz v. United States, 486 U.S. 531, 536
(1988). Accordingly, the discretionary function exclusion
cannot apply when an applicable “statute, regulation, or
policy specifically prescribes a course of action.” Id.(emphasis added). Put another way, a defendant is not
exercising discretion if it is “bound to act in a particular
way.” Gaubert, 499 U.S. at 329. Applying similar
reasoning, we have also held that the FTCA’s comparable
discretionary function exception does not apply when the
defendants’ assertedly discretionary actions are specifically
proscribed by applicable law. Fazaga v. FBI, 965 F.3d
1015, 1065 (9th Cir. 2020) (conduct that violates “federal
constitutional or statutory directives” is not within the
FTCA’s discretionary function exception); Tobar v. United
States, 731 F.3d 938, 946 (9th Cir. 2013) (same where
conduct violated agency’s “own regulations and policies”
(emphasis omitted)); Galvin v. Hay, 374 F.3d 739, 758 (9th
Cir. 2004) (“‘[F]ederal officials do not possess discretion to
violate constitutional rights.’” (citation omitted)). Plaintiffs
contend that “[t]his principle is dispositive here,” because
their operative complaint alleges multiple violations of
specific federal and state statutory prohibitions. We
disagree.
In drawing upon the relevant caselaw applicable to the
U.S. Government under the FTCA’s discretionary function
exception, we must apply those principles mutatis mutandis
in construing the scope of the similar language used in the
FSIA with respect to a foreign state. The discretion of the
U.S. Government is, of course, cabined by the applicable
limitations in the U.S. Constitution, federal statutes and
BROIDY CAPITAL MGMT. V. STATE OF QATAR 15
regulations, and any other relevant binding source of law.
But the policy discretion of a foreign sovereign is not
evaluated by those same constraints, but rather by the
corresponding limitations that bind that sovereign, whether
contained in its own domestic law or (we will assume) in
applicable and established principles of international law.
We drew precisely this distinction in Risk v. Halvorsen,
936 F.2d 393 (9th Cir. 1991), in which we upheld Norway’s
immunity under the FSIA on the ground that the
discretionary function exclusion applied to the challenged
actions of Norwegian officials, despite the fact that those
actions “may constitute a violation of California criminal
law.” Id. at 396–97. We noted that we had previously held
that the FSIA’s discretionary function exclusion “‘is
inapplicable when an employee of a foreign government
violates its own internal law,’” but we concluded that this
principle did not apply in Risk, because there was “no
assertion that the Norwegian officials violated any
Norwegian law.” Id. at 396 (quoting Liu, 892 F.2d at 1431)
(emphasis added); see also Liu, 892 F.2d at 1431(discretionary function exclusion did not apply where, in
ordering assassination, Taiwanese official had violated
Taiwanese law). And Risk similarly distinguished Letelier
v. Republic of Chile, 488 F. Supp. 665 (D.D.C. 1980), on the
ground that it involved an alleged assassination in violation
of international law. Risk, 936 F.2d at 396 (noting that
Letelier addressed “‘action that is clearly contrary to the
precepts of humanity’”); cf. MacArthur Area Citizens Ass’n
v. Republic of Peru, 809 F.2d 918, 922 n.4 (D.C. Cir. 1987)
(similarly distinguishing Letelier in a case involving Peru’s
alleged criminal violation of D.C. zoning laws in
establishing a chancery, noting that “it is hardly clear that,
even if a criminal act were shown, it would automatically
prevent designation of Peru’s acts as discretionary”).
16 BROIDY CAPITAL MGMT. V. STATE OF QATAR
The alleged actions that Qatar took here have not been
shown to violate either Qatari law or applicable international
law. The parties do not dispute that, under Qatari law, the
various criminal prohibitions against hacking, theft, or
disclosure of trade secrets do not bind government agents
acting in accordance with official orders. Indeed, it would
perhaps be surprising if the domestic law of any country
prohibited its own government agents from engaging in
covert cyberespionage and public relations activities aimed
at foreign nationals in other countries. Nor have the specific
forms of cyberespionage alleged here been shown to violate
judicially enforceable principles of international law. Cf.
Letelier, 488 F. Supp. at 673. The status of peacetime
espionage under international law is a subject of vigorous
debate, see, e.g., Patrick C.R. Terry, “The Riddle of the
Sands”—Peacetime Espionage and Public International
Law, 51 Geo. J. Int’l L. 377, 380–85 (2020); A. John Radsan,
The Unresolved Equation of Espionage and International
Law, 28 Mich. J. Int’l L. 595, 601–07 (2007), and the parties
have not pointed us to any sufficiently clear rule of
international law that would impose a mandatory and
judicially enforceable duty on Qatar not to do what it
allegedly did here. Cf. Sosa v. Alvarez-Machain, 542 U.S.
692, 724–31 (2004) (explaining why courts should exercise
great caution before purporting to identify and enforce
norms of international law).
In the absence of a showing that Qatari or international
law proscribes Qatar’s actions here, that alleged conduct
involves an exercise of discretion by Qatar that satisfies the
first Gaubert criterion. Cf. Fazaga, 965 F.3d at 1024, 1065
(to the extent that “Defendants did not violate any federal
constitutional or statutory directives, the discretionary
function exception will bar Plaintiffs’ FTCA claims”
BROIDY CAPITAL MGMT. V. STATE OF QATAR 17
concerning alleged “covert surveillance program” aimed at
mosque (emphasis added)).
2
There is, however, a further element that must be
satisfied before the FSIA’s discretionary function exclusion
may be applied, viz., the “judgment” involved must be “‘of
the kind that the discretionary function exception was
designed to shield.’” Holy See, 557 F.3d at 1083–84
(citation omitted). This criterion is satisfied if the challenged
“‘governmental actions and decisions’” are “‘based on
considerations of public policy.’” Id. at 1084 (citation
omitted); see also Risk, 936 F.2d at 395 (challenged acts
must be “‘grounded in social, economic, and political
policy’” (citation omitted)). Thus, “[a]lthough driving
requires the constant exercise of discretion, the official’s
decisions in exercising that discretion can hardly be said to
be grounded in regulatory policy.” Gaubert, 499 U.S. at 325
n.7. Here, there can be little doubt that Qatar’s alleged
actions involved considerations of public policy that are
sufficient to satisfy Gaubert’s second criterion.
Plaintiffs’ complaint alleges that, in response to a
diplomatic and economic boycott, Qatar undertook the
challenged actions as one component of a public-relations
strategy “to influence public opinion in the United States”
by “curtailing the influence of individuals,” such as Broidy,
who “could undermine the standing of the State of Qatar in
the United States.” Indeed, although the Letelier court found
that the discretionary function exclusion did not apply to the
challenged assassination in that case because it “clearly”
violated international law—i.e., because it failed what we
have described as Gaubert’s first criterion—that court also
expressly acknowledged that Chile’s act, however
reprehensible it might have been, was “one most assuredly
18 BROIDY CAPITAL MGMT. V. STATE OF QATAR
involving policy judgment.” 488 F. Supp. at 673; see also
Macharia v. United States, 334 F.3d 61, 67 (D.C. Cir. 2003)
(because matters of embassy location and security involved
considerations that “‘affect foreign relations,’” they satisfied
Gaubert’s “second step” (citation omitted)). We therefore
conclude that Qatar’s alleged conduct here involved “the
type of discretionary judgments that the exclusion was
designed to protect.” Holy See, 557 F.3d at 1084.
Because Plaintiffs have failed to “‘advance a claim that
is facially outside the discretionary function’” exclusion, the
tortious activity exception to foreign sovereign immunity in
§ 1605(a)(5) is inapplicable here as a matter of law. Id.
(citation omitted).
B
Plaintiffs also contend that the FSIA’s commercial
activity exception allows the U.S. courts to assert
jurisdiction over Plaintiffs’ claims against Qatar, but we
again disagree.
Section 1605(a)(2) contains three separate clauses that
set forth three alternative variations for asserting jurisdiction
over a foreign state based on its commercial activities. In
this court, Plaintiffs rely only on one of the formulations,
namely, the one that allows jurisdiction over a foreign state
in a “case . . . in which the action is based upon a commercial
activity carried on in the United States by the foreign state.”
28 U.S.C. § 1605(a)(2). In applying this clause, we must
first identify what are the activities on which “the action is
based” and then determine whether those activities are
“commercial” within the meaning of the FSIA. Id.Applying this two-step analysis, we conclude that the
challenged actions of Qatar here do not constitute
“commercial activity.”
BROIDY CAPITAL MGMT. V. STATE OF QATAR 19
As noted, the “crucial” first step “in determining whether
the basis of this suit was a commercial activity is defining
the ‘act complained of here.’” MOL, Inc. v. People’s
Republic of Bangladesh, 736 F.2d 1326, 1328 (9th Cir.
1984) (citation omitted); see also Saudi Arabia v. Nelson,
507 U.S. 349, 356 (1993). “Although the Act contains no
definition of the phrase ‘based upon,’” the Supreme Court
has held that the “phrase is read most naturally to mean those
elements of a claim that, if proven, would entitle a plaintiff
to relief under his [or her] theory of the case.” Nelson,
507 U.S. at 357. As explained earlier, all of Plaintiffs’
claims are based upon either or both of two types of
activities: (1) the surreptitious intrusion into Plaintiffs’
servers and email accounts in order to obtain information;
and (2) the dissemination of such information to others,
including persons in the media. See supra at 7–8. Plaintiffs
point out that these alleged activities are connected to other
allegedly commercial conduct (such as the hiring of a public
relations firm), but that other conduct is not what the suit “is
based” on. 28 U.S.C. § 1605(a)(2). Even taking as true
Plaintiffs’ allegations that Qatar entered into various
contracts in the United States to carry out its operations,
“those facts alone entitle [Plaintiffs] to nothing under their
theory of the case,” and these activities therefore “are not the
basis for [Plaintiffs’] suit.” Nelson, 507 U.S. at 358. It is the
“torts, and not the arguably commercial activities that
preceded [or followed] their commission,” that “form the
basis for [Plaintiffs’] suit.” Id.The next question, then, is whether Qatar’s “tortious
conduct itself . . . qualif[ies] as ‘commercial activity’ within
the meaning of the Act.” Nelson, 507 U.S. at 358. The FSIA
defines “commercial activity” as “either a regular course of
commercial conduct or a particular commercial transaction
or act.” 28 U.S.C. § 1603(d). The statute further explains
20 BROIDY CAPITAL MGMT. V. STATE OF QATAR
that the “commercial character of an activity shall be
determined by reference to the nature” of the activity, “rather
than by reference to its purpose.” Id. In assessing whether
the “nature” of particular state actions is commercial, courts
look to whether they “are the type of actions by which a
private party engages in trade and traffic or commerce.”
Weltover, 504 U.S. at 614 (simplified); see also Adler v.
Federal Republic of Nigeria, 219 F.3d 869, 875–76 (9th Cir.
2000) (considering whether the defendants’ challenged
conduct was “what every private party does in the open
market (notwithstanding the fact that their precise
undertakings were illegal)”); Cicippio v. Islamic Republic of
Iran, 30 F.3d 164, 167 (D.C. Cir. 1994) (“[W]e take from
Weltover the key proposition that in determining whether a
given government activity is commercial under the [FSIA],
we must ask whether the activity is one in which commercial
actors typically engage.”). “[W]hether a state acts ‘in the
manner of’ a private party is a question of behavior, not
motivation.” Nelson, 507 U.S. at 360 (citation omitted).
We have little difficulty in concluding that, without
more, a foreign government’s conduct of clandestine
surveillance and espionage against a national of another
nation in that other nation is not “one in which commercial
actors typically engage.” Cicippio, 30 F.3d at 167; see also,
e.g., Democratic Nat’l Comm. v. Russian Fed’n, 392 F.
Supp. 3d 410, 429 (S.D.N.Y. 2019) (“Transnational
cyberattacks are not the ‘type of actions by which a private
party engages in trade and traffic or commerce.’” (citation
omitted)). A foreign government engaged in such conduct
is not exercising “powers that can also be exercised by
private citizens,” but rather is employing powers that—
however controversial their status may be in international
law—are “peculiar to sovereigns.” Nelson, 507 U.S. at 360(citations and internal quotation marks omitted).
BROIDY CAPITAL MGMT. V. STATE OF QATAR 21
Plaintiffs point out that there are bad actors in the
commercial sphere who employ similar tactics, but any
application of this argument to the particular facts of this
case seems difficult to reconcile with Nelson. In that case,
plaintiff Scott Nelson was allegedly arrested, imprisoned,
and beaten by police officials in Saudi Arabia, assertedly in
retaliation for his reporting of safety defects in the state-
owned hospital at which he worked. 507 U.S. at 352–53.
Nelson and his wife sued both the Saudi government and the
hospital (among others), claiming that the commercial
activity exception applied in light of the employment-related
context in which the conduct occurred. Id. at 358. After
identifying the tortious conduct—e.g., the arrest,
imprisonment, and beatings—as “the basis for the Nelsons’
suit,” the Court held that this conduct “fail[ed] to qualify as
‘commercial activity.’” Id. Emphasizing that the actual
tortious conduct was an exercise of the police power, rather
than an act that can be “‘performed by an individual acting
in his own name,’” the Court held that, “however monstrous
such abuse undoubtedly may be, a foreign state’s exercise of
the power of its police has long been understood for purposes
of the restrictive theory as peculiarly sovereign in nature.”
Id. at 361–62 (citation omitted). Just as exercising police
and penal powers “is not the sort of action by which private
parties can engage in commerce,” id. at 362, a foreign
government’s deployment of clandestine agents to collect
foreign intelligence on its behalf, without more, is the sort of
peculiarly sovereign conduct that all national governments
(including our own) assert the distinctive power to perform.
Because the conduct Qatar allegedly engaged in here “‘can
be performed only by the state acting as such,’” id.(emphasis added) (citation omitted), it is not “commercial”
for purposes of the commercial activity exception. And we
agree with the D.C. Circuit to the extent that it concluded
that a foreign government’s use of “irregular operatives” to
22 BROIDY CAPITAL MGMT. V. STATE OF QATAR
perform uniquely sovereign actions, such as occurred in this
case, is not sufficient to distinguish Nelson. Cicippio,
30 F.3d at 168.
Having determined that Qatar’s conduct of the espionage
action against Plaintiffs was not a commercial activity, we
also reject Plaintiffs’ argument that Qatar’s subsequent use
of the materials it obtained constituted a “commercial”
activity within the meaning of the FSIA. Although Plaintiffs
contend that the materials that were accessed and
disseminated included commercially sensitive materials,
including trade secrets, there is no allegation that Qatar made
commercial use of the materials. Plaintiffs contend that any
consideration of Qatar’s subsequent uses is an improper
consideration of purpose, but we disagree. The Supreme
Court confirmed in Weltover that it was not precluding
consideration of the “context” of a sovereign’s actions, and
what a foreign sovereign does with covertly obtained
intelligence is certainly an aspect of the “outward form of
the conduct that the foreign state performs.” 504 U.S. at 615,
617. To paraphrase the D.C. Circuit, when the outward
actions are judged in context, there is an objective difference
between (1) stealing the trade secrets of a “commercial
rival” and deploying them against that rival and (2) stealing
confidential materials from a policy critic and publishing
embarrassing excerpts from them. Cf. Cicippio, 30 F.3d
at 168 (“Perhaps a kidnapping of a commercial rival could
be thought to be a commercial activity.”). Here, the context
confirms that Qatar was not acting “in the manner of a
private player” in the marketplace. Weltover, 504 U.S.
at 614. Although the materials were of commercial value to
Plaintiffs, the statute’s focus is on whether the particular
actions that the foreign sovereign took amounted to the
conduct of “‘trade and traffic or commerce,’” id. (citation
BROIDY CAPITAL MGMT. V. STATE OF QATAR 23
omitted), and we agree with the district court that they were
not.
III
Our ruling in this case is neither an affirmation that the
alleged conduct actually occurred nor an endorsement of any
such conduct. Our task is to assume the allegations to be true
and then to apply the limitations of the FSIA according to
the statute’s plain terms. Having done so, we conclude that
the FSIA bars Plaintiffs’ claims against Qatar here.
The judgment of the district court is AFFIRMED.