Saudi Arabia v. Nelson – Oral Argument – November 30, 1992

Media for Saudi Arabia v. Nelson

Audio Transcription for Opinion Announcement – March 23, 1993 in Saudi Arabia v. Nelson

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William H. Rehnquist:

We’ll hear argument first this morning in number 91-522, Saudi Arabia, King Faisal Specialist Hospital and Royspec v. Scott Nelson.

Mr. Johnson.

Everett C. Johnson, Jr.:

Mr. Chief Justice, and may it please the Court:

The question before the Court in this case is whether United States courts have jurisdiction to review respondent’s allegations that while working for a government-owned hospital in Saudi Arabia, he was wrongfully arrested, imprisoned and tortured by agents of the Government of Saudi Arabia.

The answer to this question must be no.

Nevertheless, the United States Court of Appeals for the Eleventh Circuit in this case held that clause 1 in the commercial activity exception in the Foreign Sovereign Immunities Act conferred jurisdiction over respondent’s claims.

In so holding, the court of appeals made two distinct findings: first, that each and every cause of action in the complaint was based upon commercial activity; and second, that that commercial activity had substantial contact with the United States.

We submit that the court of appeals should be reversed on both grounds.

Nevertheless, reversal of the court of appeals on either ground requires dismissal of the complaint in this case.

The court of appeals held that a cause of action is based upon commercial activity when the acts complained of bear a jurisdictional nexus to that activity.

That is to say, the acts complained of themselves need not be commercial.

They must simply exist in some poorly defined proximity to some other activity of the foreign sovereign state which is commercial.

In so–

Byron R. White:

Do you deny that there was any commercial activity in this country by your client?

Everett C. Johnson, Jr.:

–Your Honor, the recruitment activity in this country by the client, if the acts of its agent, HCA, are to be attributed to it, would be commercial activity.

We think it lacks–

Byron R. White:

Just recruiting, hiring is a commercial activity.

Everett C. Johnson, Jr.:

–Recruiting and hiring in this case is a commercial activity I believe, Your Honor.

The legislative history of the act suggests that certain kinds of hiring may not be commercial activity.

However, in this case, we believe… and I believe the district court found–

Byron R. White:

So, it’s just as though the… Saudi Arabia sent its own employees over here to recruit?

Everett C. Johnson, Jr.:

–No, I think it’s not that, Justice White.

There is a question, which the Court would need to reach if it were to find that, in the abstract, the activity in the United States could reach the legal standard of substantial contact, whether or not the acts of HCA, which was the Cayman corporation which actually did the recruiting in the United States, could be automatically attributed to Saudi Arabia.

The district court expressly reserved that question because it found that the contacts, even if attributed to Saudi Arabia–

Byron R. White:

So, what’s your view on that, whether or not the acts of the… of your agent can be attributed to the government?

Everett C. Johnson, Jr.:

–I believe they should not be automatically attributed, Your Honor.

Byron R. White:

Well, how about in this case?

Everett C. Johnson, Jr.:

I believe they should not be attributed in this case, and let me elaborate on that if I may.

HCA, to be sure, entered into a contract with the Government of Saudi Arabia to recruit expatriate personnel from the United States and around the world.

However, the decisions with respect to the recruiting and the obligations to comply with U.S. law and all other laws were expressly reserved to HCA.

Everett C. Johnson, Jr.:

We think this is the kind of circumstance where not only as a matter of substantive law should the acts of the agent not–

Byron R. White:

Well, was the contract signed in Miami?

Everett C. Johnson, Jr.:

–Your Honor, I believe the–

Byron R. White:

The contract of employment?

Everett C. Johnson, Jr.:

–The contract of employment Mr. Nelson alleges was signed in Florida, yes, sir.

Byron R. White:

Well, and who signed it for… there just wasn’t one signature, was there?

Everett C. Johnson, Jr.:

That’s correct.

It was signed–

Byron R. White:

Who signed it?

Everett C. Johnson, Jr.:

–It was signed on behalf of the hospital by a gentleman by the name of Donald LaFeu who was an employee of HCA.

Byron R. White:

So, did he… and HCA had authority to sign that contract?

Everett C. Johnson, Jr.:

They did, Your Honor.

The Eleventh Circuit’s construction of the based upon language is critical to this Court’s determination.

We think the Eleventh Circuit’s construction is wrong for two reasons.

First, it ignores the plain language of the statute, and second, it obliterates the restrictive theory of foreign sovereign immunity which the statute was intended to codify.

In its common sense and most straightforward meaning, based upon refers to the gravamen or the foundation of the complaint.

Thus, in the most common sense interpretation, the bases of a complaint are the acts complained of.

It does not naturally or inherently inquire of a nexus or connection to other activity.

The Eleventh Circuit’s construction in this case, nevertheless, imports the nexus or connection inquiry into the based upon language.

We think this is plainly inconsistent with the most common sense and straightforward, in fact, simple meaning of the phrase based upon.

To illustrate–

John Paul Stevens:

May I just ask this clarifying question?

If there were a breach of contract, the contract having been entered into in the United States and the breach occurring in Saudi Arabia, would that… an action based on that breach be based upon the contract or be based upon commercial activity in the United States within your view?

Everett C. Johnson, Jr.:

–Justice Stevens, if I may break that into two parts.

Assuming, of course, that the breach of contact… contract was not based upon the same conduct in question here, it could be.

Nevertheless, Saudi Arabia would still–

John Paul Stevens:

Well, say they didn’t pay his salary.

Everett C. Johnson, Jr.:

–That could be based upon commercial activity, yes, Justice Stevens.

In this case, there still wouldn’t be sufficient contact with the United States, the second part of the inquiry, to justify the exercise of jurisdiction over that breach.

We would not–

John Paul Stevens:

Let me be sure I understand your answer.

You’re saying it would be based upon action, but there would be no jurisdiction because it was not… it had no impact on the United States.

Everett C. Johnson, Jr.:

–Yes.

Not so much impact, because everyone concedes in this case it’s a clause 1 case, which refers to substantial contact with the United States.

John Paul Stevens:

Is your position on that particular question the same as the United States’, do you know?

Everett C. Johnson, Jr.:

I’m not sure the United States has taken a formal position on the substantial contact inquiry in this case because it is, properly understood, a much more fact-specific inquiry.

I don’t think they disagree with us, but I’m not sure they have taken a formal position.

John Paul Stevens:

I read one footnote in their brief as suggesting there would be jurisdiction in the case I posed.

Everett C. Johnson, Jr.:

I’m sorry, Justice.

John Paul Stevens:

I say I read one footnote in their brief as seeming to me to suggest there would be jurisdiction in their view in the case I suggest.

Everett C. Johnson, Jr.:

Well, I think–

John Paul Stevens:

Do you disagree with that?

Everett C. Johnson, Jr.:

–I… well, it depends on the underlying facts.

If we import the facts of this case, and that is, take the same level of activity in the United States which respondent refers to as his recruitment in the United States and the signing of the employment contract in the United States, yes, sir, that would not be enough contact with the United States in this case to justify jurisdiction.

Antonin Scalia:

Do you–

–Even though it’s based upon a commercial activity in the United States.

Everett C. Johnson, Jr.:

Well, of course, the in the United States is the question.

The statute itself defines carried on in the United States to mean having contact with the… having substantial contact with the United States.

And if substantial contact is to be given its plain meaning, that must mean more than trivial or minimum contact.

So, in our view the contact in the United States has to be more than transitory or a precursor contact to the commercial activity.

Antonin Scalia:

Do you think commercial activity… a commercial activity, such as a contract, the signing and performance of a contract, is divisible so that the signing of the contract is one commercial activity, the performance of the contract in Saudi Arabia is a separate commercial activity so that if you don’t pay for the service in Saudi Arabia, that is, indeed, a commercial activity, but it’s not a commercial activity in the United States within the meaning of the act?

Is that the position you take?

Everett C. Johnson, Jr.:

That may be cutting too fine a point, Justice Scalia.

I think our position is that the recruitment in the United States and the performance of the contract in Saudi Arabia are divisible.

I’m not sure I would draw the line, as you’ve suggested, between the signing of the contract and the performance of the contract.

Antonin Scalia:

I think that’s even a finer line.

You’re drawing the line between the recruitment and the signing.

Everett C. Johnson, Jr.:

Well, I… and I think these questions come together somewhat in this inquiry because the question is what is the cause of action based upon, and to be sure, the cause of action does not refer back to the recruitment activity.

It refers about… to alleged injuries… pardon me… occurring entirely in Saudi Arabia.

So, I think the recruitment activity in the United States is insufficient.

Antonin Scalia:

Even with respect to recruitment, why isn’t the… why isn’t… at least as to the negligence cause of action here, why isn’t that gravamen based upon the activity in the United States?

The claim made is that your client failed to warn… failed to warn… that there was a danger in working in Saudi Arabia.

Everett C. Johnson, Jr.:

That’s correct.

The question, of course, has the same two components.

And assuming for a moment out of the question whether or not that cause of action is based upon commercial activity, obviously, we contend that it is not.

Even if the Court were to–

Antonin Scalia:

Wait.

Why isn’t it?

Everett C. Johnson, Jr.:

–Well, because, Justice Scalia, it’s just a different theory of recovery for the same conduct, and the statute is explicit in at least this one thing.

It directs the court to inquire of the nature of the conduct in question.

The duty to warn cause of action, to be sure, adds another legal element and spins the theory of recovery somewhat differently.

The conduct that he complains about is, nevertheless, exactly the same, and that’s his allegations regarding the arrest and imprisonment in Saudi Arabia.

And we think the dispositive question for the based upon inquiry is not what is the plaintiff’s theory of recovery or how clever has the drafter of the complaint been, but rather, what is the core conduct in question, in this case it being inherently sovereign conduct, arrest, and imprisonment, and allegations regarding torture.

That… there’s no construction of commercial activity that reaches that–

Antonin Scalia:

Suppose Saudi Arabia were engaged in the business of recruiting workers for Qatar, and the same thing happened here, only it happened in Qatar, and a suit is brought in Florida claiming negligence in failing to warn the recruitee about Qatar sometimes engaging in this kind of a governmental activity.

You still say there’s no cause of action?

Everett C. Johnson, Jr.:

–And Saudi Arabia, not Qatar, is the defendant in the lawsuit.

Antonin Scalia:

Yes, Saudi Arabia is the defendant.

Everett C. Johnson, Jr.:

Yes, that would not be commercial activity, as we understand it, Your Honor, because the underlying conduct about which they complain, albeit couched as a negligence cause of action… every injury has attendant to it a theoretical failure of a duty to warn if you can find a legal relationship with someone.

We think, therefore, the Court ought to look to the underlying core conduct, in your hypothetical injury in Qatar.

It’s not different than the injury in Saudi Arabia and not commercial.

William H. Rehnquist:

But the duty to warn arises out of different circumstances, doesn’t it?

I mean, it’s much more logical to say that there’s a duty to warn at the time of recruitment activity, which is in Florida, and tie that to the commercial activity of recruiting.

It seems to me that comes over more plausibly than to say the activities… or the injuries that the fellow suffered in Saudi Arabia arose out of commercial activity in the United States.

Everett C. Johnson, Jr.:

Your Honor, if I may just disagree with you slightly about where the recruiting activity occurred in this case.

Respondents contend that it occurs in Saudi Arabia, but if we strip that allegation from its legal conclusion recruitment, we see that it, in fact, occurred almost entire… rather, they contend it occurred in Florida, and it in fact occurred on the undisputed facts of this case almost entirely in Saudi Arabia.

In fact, it’s undisputed here that he interviewed for the job in Saudi Arabia, that he was offered the job in Saudi Arabia, implicitly he accepted the job in Saudi Arabia.

William H. Rehnquist:

But there was… don’t you admit there was any commercial activity amounting to recruitment in the United States?

Everett C. Johnson, Jr.:

We do not contest, for purposes of this appeal, his allegation that he saw a newspaper advertisement while in the United States.

That’s the entirety of the recruitment in the United States that he bases his allegation upon.

William H. Rehnquist:

Well, do you also concede that that is commercial activity carried on in the United States, the placing of that newspaper advertisement?

Everett C. Johnson, Jr.:

Yes.

Coming back to Justice White’s earlier question, I don’t concede that that conduct is attributable to Saudi Arabia for purposes of the substantial contact question, but yes, the recruitment itself in the United States is most likely commercial activity.

David H. Souter:

Going back to Justice Scalia’s question, why don’t you draw a distinction between a duty to warn about what a third party might do, on the one hand, and a duty to warn about what the person giving the warning might do?

I thought you were basing your argument in this case on the fact that we simply do not… tort law generally does not recognize a duty to warn of one’s own malevolence, but tort law does recognize a duty to warn of risks that are beyond the control of the person giving the warning.

And yet, you don’t seem to accept that distinction.

Everett C. Johnson, Jr.:

Well, I think it’s unnecessary for the Court to go that far in this case, Your Honor.

As you say and as the United States aptly pointed out in this brief, the allegation of respondent here is nothing more than the allegation that an assailant has a duty to warn before he attacks.

In that sense, the duty to warn and the assailant in that hypothetical are the same.

In this case–

David H. Souter:

That’s all you want us to recognize.

Everett C. Johnson, Jr.:

–The Court doesn’t need to go farther than that in this case.

That’s right.

Perhaps as illuminating as the plain language of the statute with respect to the Eleventh Circuit’s construction is the restrictive theory of foreign sovereign immunity, which the statute was intended to codify, as this Court held most recently in its decision in Weltover last year.

The restrictive… the primary characteristic, indeed, the only distinguishing characteristic, of the restrictive theory of foreign sovereign immunity is that it purports to distinguish between the kind of conduct which U.S. courts may adjudicate, commercial conduct or the public… or private or commercial acts of a foreign sovereign, and that conduct which U.S. courts can never review, the inherently sovereign or public acts of a foreign sovereign.

And the trouble we have with the Eleventh Circuit’s jurisdictional nexus test in this case is that it not only steps over that line, it erases that line because under the Eleventh Circuit’s construction, there is no activity of any type which a U.S. court could not adjudicate so long as the plaintiff were willing to allege a sufficient connection with commercial activity.

It is, therefore, a completely limitless construction of the based upon language which erases Congress’ primary purpose in codifying the restrictive theory of foreign sovereign immunity, to distinguish between the types of conduct which can be adjudicated and the types of conduct which cannot.

I’ve struggled to find a hypothetical that was more indicative of the danger of that construction than the facts of this case.

Candidly, there’s hard to find… it’s hard to find one.

In this case, the allegations go to the very core, the very quintessential activity of a government, the right to exercise its police power, the right to arrest and to imprison, to decide when and under what circumstances a defendant shall be informed of the charges against him, to decide when and under what circumstances he shall be provided with a translator, to conduct the trial, and to generally govern the police power within its own territory.

Nevertheless, if the Eleventh Circuit–

John Paul Stevens:

May I ask on that point?

Would the case be different if instead of the allegation being that law enforcement authorities had been used, they had alleged that the hospital had its own private police force in effect that could discipline people for whistle blowing?

Would that be a different case?

Everett C. Johnson, Jr.:

–It would not be a different case.

John Paul Stevens:

So, then the fact that you have law enforcement personnel involved really isn’t a critical part of your–

Everett C. Johnson, Jr.:

Makes it an easier case I believe, but in your hypothetical, it would not be a different case.

The agency or instrumentality, in this case the hospital, is defined as a foreign sovereign state in the Foreign Sovereign Immunities Act.

Congress passed–

John Paul Stevens:

–So, you don’t draw a distinction between government-owned hospitals and government police forces.

Everett C. Johnson, Jr.:

–I do not.

Antonin Scalia:

And you’d say, I assume, that if a private employer did the same thing and took one of its employees into the back room and had him beat up by some of the private employer’s officers, that would not be a commercial activity.

Everett C. Johnson, Jr.:

It might be a commercially motivated activity, Justice Scalia.

Antonin Scalia:

But the nature of it is not commercial.

Everett C. Johnson, Jr.:

The nature of it is not commercial.

Antonin Scalia:

It has nothing to do with governmental.

It doesn’t matter whether you’re a police force or not.

Everett C. Johnson, Jr.:

It has to be commercial to be jurisdictional in this case.

I’d like to–

Anthony M. Kennedy:

Under that analysis, it seems to me you make irrelevant the injunction of the statute that purpose shall not be considered.

Everett C. Johnson, Jr.:

–Justice Kennedy, I think just the opposite.

I think that in my response to Justice Scalia I was suggesting that the only difference that he’s… the only relationship to commercial activity that the question suggests when the hypothetical deals with a private actor, as opposed to a governmental actor, is that it implies a commercial purpose.

And we agree fully that the purpose of the activity, whether sovereign or commercial, is utterly irrelevant.

We looked at the nature of the activity itself.

Even if the sovereign state acted with a commercial purpose, which of course Saudi Arabia denies in this case, but even if that were to be true, the activity would become no more inherently commercial in its nature.

Anthony M. Kennedy:

Well, suppose in Justice Stevens’ hypothetical of the security guards beating up the employee, they did it in order to punish the employee for transgressions on the job and to teach other employees not to do that in the future.

Is that not a commercial activity?

Everett C. Johnson, Jr.:

Your Honor, I think your hypothetical aptly defines their motivation, their purpose, but I think what the Court said in Weltover is that that’s irrelevant, and we look at the nature of the conduct itself, not what motivates the conduct to determine whether the activity is commercial.

To be sure, that’s a difficult inquiry.

I think the Court recognized that in Weltover.

David H. Souter:

I take it your criterion in answering Justice Kennedy’s question is that what’s commercial or not depends on what is commercial in the United States.

Everett C. Johnson, Jr.:

That’s correct, Justice Souter.

That is our view.

Mr. Chief Justice, I’d like to reserve my remaining time.

William H. Rehnquist:

Very well, Mr. Johnson.

Mr. Minear.

Jeffrey P. Minear:

Mr. Chief Justice, and may it please the Court:

The court of appeals has interpreted the commercial activity exception in a way that would dramatically curtail the sovereign immunity of not just Saudi Arabia, but the entire community of nations.

We urge this Court to correct that error, an error that could prompt other nations to limit the United States’ sovereign immunity in their courts.

Under the Foreign Sovereign Immunities Act, Saudi Arabia is immune from the respondents’ claims unless those claims are based upon a commercial activity carried on in the United States by the foreign state.

Jeffrey P. Minear:

The court of appeals mistakenly concluded that the based upon requirement was satisfied here because according to the complaint, Saudi Arabia recruited Mr. Nelson in the United States.

He was mistreated abroad, and his mistreatment was causally related to his employment.

The problem with the court’s reasoning is that Congress did not use that court’s so-called nexus test in formulating the commercial activity exception.

Congress said the suit must be based upon a commercial activity.

In other words, the commercial activity must be the basis of foundation for the legal claim.

In common law parlance, the complaint… or the commercial activity must provide the gist or gravamen of the complaint.

Although recruitment activities can, in theory, qualify as a commercial activity, the Saudi recruitment activities alleged here do not provide a basis for the respondents’ claims of intentional injury.

The respondents do not contend that Scott Nelson was injured during the recruitment process in this country.

Rather, they contend that the harm alleged here occurred 10 months later during his employment in Saudi Arabia.

The respondents’ intentional injury claims are explicitly based on the Saudis’ noncommercial acts of arresting and jailing Mr. Nelson in that country.

John Paul Stevens:

Mr. Minear, would you just clear up one thing to be sure I understand your position?

Supposing they hadn’t paid him 10 months later, could he sue the government for that in the United States?

Jeffrey P. Minear:

Well, that claim would be based on the contract.

John Paul Stevens:

Right.

Jeffrey P. Minear:

And the contract here had a forum selection clause that provided that any dispute arising from this contract shall be subject to the jurisdiction of the Saudi courts only.

John Paul Stevens:

Well, assume you don’t have a forum… just assume you have a naked contract without a forum selection clause in it, and a breach 10 months after was signed in the United States by failing to pay in Saudi Arabia.

In your view would the plaintiff be able to have jurisdiction over the–

Jeffrey P. Minear:

In that case, the question becomes one of substantial contacts.

John Paul Stevens:

–Well, I understand.

What’s your answer to the question?

Jeffrey P. Minear:

And our answer would be that the contract alone would not be substantial contacts.

Under this Court’s reasoning in Burger King, the mere entry into a contract in the United States is insufficient to establish minimum contacts.

We believe substantial contacts must be at least that amount, and for that reason, we don’t believe that simply the execution of the contract would allow the assertion of jurisdiction.

John Paul Stevens:

Even following extensive recruitment activity, you’d still say the same thing?

Jeffrey P. Minear:

At some point, this becomes a question of the extent of the contacts that the Saudi Government might have–

John Paul Stevens:

Well, say you’ve got enough contact to say that the commercial activity was in the United States, but then the breach is in Saudi Arabia by failing to pay.

Jeffrey P. Minear:

–In that case, I think that it probably would qualify.

We are not far removed from the Weltover situation in that case.

As you recall, in Weltover, the contract was… in that case, it was a bond agreement.

The bond agreements were actually issued in Argentina, but the breach occurred in the United States, and the Court concluded that the breach of performance had direct effect in the United States.

John Paul Stevens:

Well, if you admit that the failure to pay would be sufficient for jurisdiction, then what if by tortious means they took the money back from him in some way?

They beat him up to get… to extort money from him while he’s employed.

That… there would not be jurisdiction then I take, because that would be a tort.

Jeffrey P. Minear:

Again, the question would be substantial contacts.

If that occurred in the United States, this would be covered, of course, by the tort exception.

John Paul Stevens:

No, no.

That’s not my hypothetical.

Jeffrey P. Minear:

But if it occurred abroad, the question here would be substantial contacts.

Also, commercial… if I could step back–

John Paul Stevens:

My assumption is you have the same substantial contacts, and they’re enough to support a suit for failure to pay the salary 10 months after the man goes to work in Saudi Arabia.

My question then is, is it a different rule if a tort is committed in the course of the employment relationship that has exactly the same financial impact on him and on the United States.

Jeffrey P. Minear:

–Yes.

I misunderstood your question, and my answer there is that would not be a commercial activity in that situation, that is a tort that occurs overseas.

Now, in this case the alleged recruitment activities in this country simply have no legal or factual bearing on respondents’ right to relief and we think that’s critical to the inquiry in this situation.

Now, the court of appeals decision is clearly contrary to the specific language of the commercial activity exception, and perhaps for that reason, respondents have changed their legal theory.

The centerpiece of respondents’ argument in the court of appeals was, quote, the detention and torture of Mr. Nelson were based upon his recruitment in the United States.

This is the heading on page 11 of their brief in the court of appeals.

They now purport to base their claims on the Saudis’ operation of the entire hospital enterprise.

The respondents’ new theory, which we do not believe was argued below, also fails to satisfy the based upon requirement.

As this Court indicated in Weltover, the focus must be on the particular commercial conduct, transaction, or act that provides the basis for the claim.

The respondents’ complaint does not seek damages because the Saudis operate a hospital, nor does it seek to enjoin any hospital policy with respect to employees or employee discipline.

The request for relief here is explicitly based on allegations that Saudi officials committed certain specific acts of battery, wrongful arrest, and imprisonment.

Sandra Day O’Connor:

–Well, Mr. Minear, they also claim a breach of a duty to warn at the time of recruitment.

Jeffrey P. Minear:

Well, as we explain in our brief, the negligence claims may stand on a somewhat different footing.

The negligence claims here are rather opaque, but they might be read to allege the Saudi Arabian Government, when recruiting in the United States, violated some recognized duty that is generally applicable to all recruiters in the United States.

And we would agree that if Saudi Arabia conducts recruitment activities in the United States, it is subject to the same rules, the same Federal and State law based obligations, that govern the nonsovereign recruiters.

Antonin Scalia:

Although the Government argues differently under the Federal Tort Claims Act.

I mean, if there’s a suit saying the Government is immune for the tort committed by a coworker in the Federal Government, you couldn’t sue the Government for failing to warn that your coworker may be dangerous.

Jeffrey P. Minear:

I’m sure you’d not be able to, and I think the–

Antonin Scalia:

Why is this any different?

Jeffrey P. Minear:

–It might not be different.

I think much depends on what specifically is alleged in the complaint.

This complaint… it appears that all the respondents are saying is that the assailant here had a duty to warn before they struck us.

In that case, if that is what the complaint says, then that puts this case on all fours with Shearer.

David H. Souter:

But do you think the duty to warn referred to a duty to warn of anything but the activities, i.e., the potentially tortious activities of the Arabian Government itself?

Jeffrey P. Minear:

Well, the duty to warn… it’s not clear, first of all, whether there is any such duty to warn.

David H. Souter:

Well, let’s assume just for the sake of argument there is.

Isn’t the complaint simply that there was a failure to warn of what you, the Arabian Government, might do if you got mad?

Jeffrey P. Minear:

That’s right.

That’s what the complaint seems to say in this case now, but–

David H. Souter:

Well, does that fall within any recognized category of tort?

Jeffrey P. Minear:

–I would think not, but again–

David H. Souter:

So, why–

Jeffrey P. Minear:

–the respondents should have an opportunity to make that argument, we believe.

David H. Souter:

–It seems to me you’re bending over backwards to give them an opportunity to make an argument that doesn’t seem to be very plausible.

Jeffrey P. Minear:

Well, ultimately our position here is based not on the merits of this individual claim, but rather, we’re concerned with the broader principle, and that is the question of what we mean by based upon a commercial activity in the United States.

The difficulty here is the result might seem harsh in this individual case, but it accords with the reasonable and reciprocal expectations of sovereign nations with respect to the exercise of their police powers within their own borders.

For example, the United States would vigorously object to being sued in a Saudi court by a Saudi citizen seeking damages based on his arrest in this country regardless of the reason for his arrest or his treatment while in jail.

Sovereign nations have always been immune from these types of lawsuits, and nothing in the commercial activity exception alters that rule.

Our view is, in this case, that even if you could characterize the arresting and jailing of Mr. Nelson as commercial practices, those practices do not have substantial contact with the United States in any event.

Not only do the alleged Saudi practices regulate employee conduct taking place wholly in a Saudi-owned work place in Saudi Arabia, but Mr. Nelson’s employment contract specifically stated… and as I alluded to before, and I quote now… in the case of any dispute arising from this contract, the Saudi courts, authorities, or commissions only will have jurisdiction.

Thus, the contract that Mr. Nelson signed clearly envisioned that any… that U.S. courts would not have jurisdiction to hear any dispute arising from his employment relationship.

And this dispute here, even if couched in tort terms, is really no different.

Unless there are further questions–

John Paul Stevens:

Mr. Minear, when we judge whether or not an activity is commercial in nature, do we look to the standards and practices of the international business community, or is it to what is a commercial activity here in the United States?

Jeffrey P. Minear:

–I think Weltover indicates that we should look to the commercial activities as Congress understood them at the time it enacted the FSIA.

There is a statement in Weltover that suggests that that is… that Congress relied heavily on the meaning of commercial activity when it adopted the restrictive theory of sovereign immunity in 1976.

John Paul Stevens:

You mean we look to what is commercial activity in 1976?

Jeffrey P. Minear:

Well, what Congress would have envisioned at that time.

Thank you, Mr. Chief Justice.

William H. Rehnquist:

Thank you, Mr. Minear.

Mr. Stevens, we’ll hear from you.

Paul S. Stevens:

Mr. Chief Justice, and may it please the Court:

This is a case about jurisdiction over a hospital, not a police department.

The question presented is this.

May a hospital owned by a foreign government come to the United States for its work force, recruit and hire a United States citizen to perform a specific job overseas, beat and torture him for the proper performance of his responsibilities, and then claim immunity for its actions in the U.S. courts?

We say it cannot.

Our argument deals with the hospital.

It consists of two main points.

First, there are, as the Court knows, three separate defendants in this case, and there are, in effect, three separate complaints.

Where this hospital is concerned, petitioner’s motion to dismiss the facial challenge that they have mounted to subject matter jurisdiction requires that a court focus on the factual allegations in the complaint concerning the conduct of the hospital.

William H. Rehnquist:

Mr. Stevens, you say there are three defendants.

Saudi Arabia, the government, was named also as a defendant by you, was it not?

Paul S. Stevens:

Yes, it was.

William H. Rehnquist:

And you want it retained in the case?

Paul S. Stevens:

Chief Justice Rehnquist, there are eight causes of action stated against Saudi Arabia.

The United States, as amicus, has said that at least one of those, the negligence count, should survive the jurisdictional test.

We believe that Saudi Arabia can be answerable as an alter ego of the hospital, as its principal, as the person exercising control over all aspects of its operations.

But there are, in the complaint in counts III through VII, alternative theories of liability that are stated against the Kingdom of Saudi Arabia, international law theories that, frankly in our view, cannot withstand analysis following the Court’s decision in the Amerada Hess case.

This complaint was filed prior to that decision.

What we are advancing in this argument today is the core proposition of jurisdiction over the hospital and the subsidiary proposition that there is jurisdiction over Saudi Arabia as its owner and Royspec as its agent in the United States.

William H. Rehnquist:

So, you do want Saudi Arabia, the state, retained as a defendant because you contend it’s the alter ego of the hospital.

Paul S. Stevens:

That is correct, Mr. Chief Justice.

William H. Rehnquist:

So, when you say you’re just talking about a hospital, you’re actually talking about something more.

You are talking about a sovereign government, the Government of Saudi Arabia.

Paul S. Stevens:

In its capacity as the owner and operator of a hospital enterprise, that is correct.

But the core proposition, the core issue–

Byron R. White:

Suppose the recruiter for Saudi Arabia in this country affirmatively misrepresented certain critical facts that would obtain during his work in Saudi Arabia.

Would you say that Saudi Arabia would… would there be jurisdiction over Saudi Arabia on a misrepresentation claim?

Paul S. Stevens:

–First, Your Honor, we do believe it’s unquestionable that the principal will be answerable for the acts of its agent and that there will be jurisdiction extended for those acts even if they’re not performed directly in the United States.

Paul S. Stevens:

On this basis, the hospital and Saudi Arabia as its owner are answerable for jurisdictional purposes at least for the actions of the Hospital Corporation of America, and if HCA had done something beyond the scope of its authority as an agent that was wrongful, you would apply simple agency analysis for purposes of liability, but the jurisdictional question would remain to be applied and addressed under the statute.

Antonin Scalia:

Mr. Stevens, suppose the hospital supervisors had someone that they had hired beat up because he was dating the hospital president’s daughter.

Would that be a commercial activity?

Paul S. Stevens:

Justice Scalia, our view is that there is a very short menu that the Foreign Sovereign Immunities Act provides.

Things are either commercial or they are sovereign.

There is not a third, private type of action which falls somewhere between the two.

Insofar as the hospital is concerned, the activity that you described would be commercial for jurisdictional purposes under the statute.

Now–

Antonin Scalia:

It would?

Paul S. Stevens:

–It may be an odd sense of the term commercial.

Antonin Scalia:

It certainly is.

Paul S. Stevens:

But it certainly could not be considered governmental or sovereign or uniquely public in nature.

Antonin Scalia:

So, any tort committed against him by his employer is commercial.

Paul S. Stevens:

Well, the torts that we have alleged in the complaint against the hospital… and this is the key point–

Antonin Scalia:

No.

I’m still within my hypothetical.

The way you answered that hypothetical, a tort is committed against him unrelated to his employment except that it is by his employer; you say that’s a commercial activity.

Paul S. Stevens:

–For purposes of a jurisdictional analysis under the statute, it cannot be uniquely governmental.

Therefore, it would be commercial.

Antonin Scalia:

I don’t see the world as being divided into commerce and government.

It’s divided into commerce and noncommerce.

That’s what the act says.

The act doesn’t create a dichotomy between commercial and governmental.

It creates a dichotomy between commercial and noncommercial.

Paul S. Stevens:

The question under the act in our view is the outward form of the conduct.

Would the hospital in that instance be operating in some uniquely governmental capacity as the regulator of–

Antonin Scalia:

That isn’t the question.

The question is whether it is acting in a commercial capacity, not whether it is acting in a governmental or nongovernmental, whether it’s acting in a commercial capacity.

And you say so long as you’re doing something to your employer… employee, you are always acting in a commercial capacity.

That’s your position.

Paul S. Stevens:

–That is our position.

The statute in our view subjects the hospital to the jurisdiction of the United States based upon its conduct, commercial conduct, whether performed here or abroad so long as that conduct has substantial contact with the United States.

Sandra Day O’Connor:

What is that substantial conduct that you rely on here?

The advertisement in the newspaper and the signing of the contract?

Paul S. Stevens:

The complaint alleges, in a portion titled, Factual Allegations Against King Faisal Specialist Hospital, a course of dealing in the United States that goes well beyond the specific advertisement that was issued in the U.S. media or the specific recruitment of Scott Nelson.

But the most fundamental conduct here, Justice O’Connor, is that the petitioners came to the United States to ask Mr. Nelson to do a specific job for them, induced him through a rather extensive course of dealing to come to Saudi Arabia to do that job, and once he was there, beat and tortured him precisely for doing that job that they had recruited and hired him to do.

Now, when Mr. Nelson and the hospital entered into an agreement here in the United States, there were some specific aspects of that agreement that bear upon the substantial contact requirement.

First of all, the agreement identified Mr. Nelson as an expatriate employee of the hospital.

It identified Fort Lauderdale, Florida as his U.S. point of origin and the point to which he would be returned.

It required him to surrender his United States passport to the hospital, but it also obligated the hospital to return him to the United States following the termination of his services.

In other words, this hospital said, Mr. Nelson, if you quit, if you perform poorly, or if you break the rules of the hospital, we will send you home.

Now, our view is that when the hospital entered into that agreement and mutual understanding with Mr. Nelson, it assumed an obligation to exercise care and diligence as an employer for Mr. Nelson’s safe passage during his–

Byron R. White:

You wouldn’t be making any different argument, would you, if Mr. Nelson didn’t perform his job over there?

And let’s assume… let’s just concede that he didn’t perform well, but… and rather than just send him home, they put him in the jug and beat him.

You would still be making the same argument, wouldn’t you?

Paul S. Stevens:

–Precisely, we would.

Byron R. White:

Yes.

So, it’s just sort of beside the point that he really did his job well.

Paul S. Stevens:

Well, but the point, Justice White, is the United States contacts bracket this entire employment relationship.

It’s not simply that they came here.

It’s that they said he would be sent back, and they assumed a duty during the time that he was gone to exercise due care and diligence.

Now if–

Antonin Scalia:

But the statute doesn’t say bracketed by commercial activity in the United States.

It says based on.

Isn’t there a difference between bracketing and basing?

Paul S. Stevens:

–I was addressing my remarks, Justice Scalia, to the substantial contact requirement.

The statute does not say–

Antonin Scalia:

The two are the same.

I mean, the commercial activity has to be a commercial activity carried on in the United… it means commercial activity carried on by such state and having substantial contact with the United States.

Paul S. Stevens:

–That is correct, Your Honor.

Paul S. Stevens:

Our point is that the duty that the hospital assumed was one that extended from the time it was… first employed Mr. Nelson here in the United States, through his tour of duty there, until he was returned to this country, and that this, as an obligation reflected directly in their employment contract, gives the Court a sense of the substantial contacts that the duty and the activities of the hospital vis-a-vis Mr. Nelson had with this country.

William H. Rehnquist:

Well, I don’t–

–But you seem to be making up for what may be a shortcoming in the jurisdictional aspects by spinning a very elaborate tort theory that kind of subsumes everything.

I mean, that would be an easy way to get around the limitations contained in the Foreign Sovereign Immunities Act, to develop a very elaborate tort theory that perhaps would turn out to be not supported by the cases at all.

You say the Government of Saudi Arabia assumed a duty to kind of look after him from the time he left this country until the time he was returned.

Well, I really think you have to stretch quite a bit to get that out of these facts.

Paul S. Stevens:

Mr. Chief Justice, this was Mr. Nelson’s employer.

It is commonplace in our law that an employer assumes a duty to prevent injury to his employee, a duty of diligence and care, ordinary care at least, for the well-being of the employee.

Now, if there is such a duty in our law–

William H. Rehnquist:

But not to prevent injury at the hands of the employer.

Paul S. Stevens:

–I would say, Mr. Chief Justice, to prevent foreseeable injury at the hands of anyone, to the extent that the employer can exercise ordinary care for that purpose.

William H. Rehnquist:

Well, you mean, when I leave the premises of, say, the store that I work at and walk home at night, my employer has a duty to see that nobody mugs me on the way home?

Paul S. Stevens:

Well, if your employer knows that there is a dangerous criminal lurking outside the entranceway, it may issue some kind of warning that you should take care.

But more fundamentally, we’re not talking about the negligence question, because if there is such a duty, however it may be defined, then certainly there’s an obligation on an employer not to cause injury.

But the allegations of the complaint say that’s precisely what this hospital did.

It intentionally caused Mr. Nelson grievous injury, false imprisonment, and battery.

William H. Rehnquist:

But that doesn’t depend on any duty of care.

That’s a tort by virtue of an intentional assault.

It doesn’t depend on any rather elaborate duty.

But that took place in Saudi Arabia.

Paul S. Stevens:

You’re correct that it does not depend, in the way that we think about these things, on the articulation of a duty, but in our view, both in terms of the nature of the commercial activity and its substantial contact with the United States, you cannot look at these torts, these intentional torts, in isolation and rip them out of this commercial context.

These were, after all, actions taken by the hospital as alleged in the complaint, the truth of the allegations which petitioners admit, by the hospital as an employer against its employee precisely for the performance of his job responsibilities.

David H. Souter:

In other words, you want us to look at the purpose of the act.

Paul S. Stevens:

Justice Souter, I think that the purpose of the act here, why it may be that this employer beat Mr. Nelson, that purpose is reflected in the complaint, but that an employer intentionally injures an employee in whatever association it may be, on the work place, in connection with the performance of his jobs, however that happens, is an action that any private hospital employer could have done.

And it’s not made less commercial just because it is so horrendous.

David H. Souter:

What’s that got to do with the answer to my question?

The answer to my question is yes.

You want us to look at the purpose of the act.

Paul S. Stevens:

It is a commercial activity.

David H. Souter:

And that gives you a problem under the statute, doesn’t it?

Paul S. Stevens:

Your Honor, I don’t believe so.

The statute talks about commercial activities.

It talks about a course of conduct–

David H. Souter:

And it makes a distinction between–

Paul S. Stevens:

–or a particular transaction or an act.

David H. Souter:

–Excuse me.

Doesn’t it make a distinction between the activity and the motivation for the activity?

Paul S. Stevens:

It does, Your Honor.

David H. Souter:

Okay, and you want us basically to disregard that distinction.

Paul S. Stevens:

No, I’m not arguing that.

David H. Souter:

Would your claim… would you have a cause of action, even on your own theory, if they beat him up because he had fraudulently misrepresented his credentials?

No.

Paul S. Stevens:

Justice Souter, it’s not a question about whether there is a cause of action.

David H. Souter:

No, but isn’t the answer to my question no?

You wouldn’t have a cause of action in that case.

Paul S. Stevens:

You would not have a cause of action, but you might have jurisdiction.

David H. Souter:

But the fact is you wouldn’t have a cause of action, and the only distinction between that case and this one and the only reason that there might be on your theory jurisdiction in one case and not in the other is by looking to the motivation for the act, and that is exactly what the statute tells us we can’t do.

Paul S. Stevens:

The proposition is narrow and simple, and it is that torts committed by an employer in the context of an employment relationship are commercial, just as they would be if the employer breached a contract.

David H. Souter:

In other words, you don’t have to look to the motivation to the act.

You’re now saying if the tort feasor is an employer and the victim is an employee, that’s all you need to know.

Paul S. Stevens:

That… we know more in this case, but that is all that you would need to know for our jurisdiction analysis.

David H. Souter:

On the theory that you’re now espousing, that’s all you need to know.

Paul S. Stevens:

Correct.

Antonin Scalia:

Good.

Well, you have to change your answer to him.

I mean, you answered me before that if they beat him up because he was dating the president’s daughter, that was still a commercial act, and I assume if they beat him up because he made a misrepresentation in his employment application, that’s an easier question even.

You’d say you’d still have a cause of action under this act.

You’d say that’s a commercial activity, no?

Paul S. Stevens:

Justice Scalia, there may not be a cause of action.

It may be that the complaint could be dismissed.

Antonin Scalia:

I’m not talking about cause of action.

Is it… as far as jurisdiction under this act is concerned, is that a commercial activity, beating him up because he made a misstatement on his application form?

Is that a commercial act?

Paul S. Stevens:

We would say that it provides the jurisdictional basis under the statute, yes, that it’s a commercial activity.

Antonin Scalia:

It is a commercial activity.

And so… and if somebody just walked… his employer came in and shot him in the head, that’s a commercial activity.

Isn’t that your theory?

Paul S. Stevens:

Torts… as the employer against the employee, it would be a commercial activity in our view.

Byron R. White:

That isn’t a commercial activity in the United States, is it?

Paul S. Stevens:

Well, the issue of substantial contact is one, Justice White, that is not subject to the limitations as to nature and purpose that the analysis of whether an act is commercial in nature is subject to.

Byron R. White:

Well, do you… I thought the statute said… I thought you… I thought your theory was that your suit was based on a commercial activity that occurred in the United States.

Paul S. Stevens:

Our theory is that the action is based upon commercial conduct, transactions or acts that have substantial contact with the United States, and nothing more is required in the statute by the express terms of the statute.

Byron R. White:

And… but… and you say the… running a hospital is a commercial activity, and it has substantial contacts with the United States.

Is that your theory?

Paul S. Stevens:

The conduct upon which this case is based performed by this hospital–

Byron R. White:

Yes.

Paul S. Stevens:

–is commercial and has such substantial contact.

Byron R. White:

And what are the substantial contacts with the United States?

Paul S. Stevens:

There was an unbroken course of dealing with respect to Mr. Nelson.

Byron R. White:

So, rather than start with a commercial activity and going up the line, you start with the commercial activity of running a hospital and coming back down to… you have to trace it.

Your substantial contact has to be traced to the recruitment.

Is that it?

Paul S. Stevens:

Well, to the activity.

Byron R. White:

And the signing of the contract?

Paul S. Stevens:

The recruitment, the signing of the contract, the definition of the job responsibilities, and all of those activities that occurred here in the United States that led to Mr. Nelson’s accepting his employment and performing those responsibilities in Saudi Arabia.

Byron R. White:

Well, of course, he… part of his recruitment went on in Saudi Arabia.

Paul S. Stevens:

He was interviewed in Saudi Arabia, Justice White.

Petitioners have given the Court three different versions of this.

Byron R. White:

I suppose he didn’t ask any question at all about what his duties would be?

Paul S. Stevens:

I’m certain that he did, but they were finely defined in the employment agreement, in the job description, and in the advertisement that was… that he first responded to.

Paul S. Stevens:

On the specific point of what happened in Saudi Arabia, petitioners have given in three different submissions three different versions.

On page 3 of their petition for the writ of certiorari, they say that Mr. Nelson was interviewed in Saudi Arabia, and then he was offered and accepted the job in the United States.

In their brief on the merits at page 3, they say he was interviewed for and offered the job in Saudi Arabia, and then came back to the United States and accepted.

Finally, on page 18 of their reply brief, they say he was interviewed for, offered the job, and accepted it in Saudi Arabia.

The fact is the Court must accept the allegations of the complaint against the hospital as true.

Antonin Scalia:

They’re just getting more and more complete as they went on.

[Laughter]

Paul S. Stevens:

The allegations in the complaint as true, and what does the complaint say.

That’s the key issue here, taking them as true.

First, it says that the hospital conducted a regular part of its business activities in the United States, and this consisted of advertising for, recruiting, employing, orienting, and training its employees.

Secondly, that in November 1983, the hospital published an ad for a specific hospital job.

Thereafter it recruited Mr. Nelson to take the job.

It entered into an employment agreement with him concerning the job, and it arranged for his transportation to Saudi Arabia to begin work, all here in the United States.

It further alleges that Mr. Nelson was required by that job to monitor the physical plant of the hospital to ensure the safety of patients and staff.

It further states that in March of 1984, Mr. Nelson discovered safety problems at the hospital.

He reported them to hospital officials, as his job required him to do.

He subsequently reported them to a Saudi Arabian investigating commission that was investigating the hospital.

And finally, that the hospital, as a direct result of his reporting these safety problems, had him beaten and tortured by persons acting at its direction and subject to its control.

As a result, Mr. Nelson is permanently disabled.

These are the allegations in the complaint that are to be accepted as true.

These are the allegations that define the jurisdictional issue with respect to both the commercial nature of the activities and the substantial contact with the United States.

Now, in our view it doesn’t make any difference that this particular employer chose to retaliate against its employee by detention and torture rather than by firing him and sending him home.

Certainly if the hospital had breached the employment contract with Mr. Nelson, that act would be commercial, and beating and torture can’t be less commercial just because they’re so much more extreme.

William H. Rehnquist:

Mr. Stevens, you said earlier I think in response to a question from Justice Scalia that you thought the act divided conduct into governmental and commercial.

Is that correct?

Paul S. Stevens:

Yes, sir.

William H. Rehnquist:

Do you rely on any of our decisions for that proposition or on some specific part of the statutory language?

Paul S. Stevens:

Well, I believe that the Court’s decision in the Dunhill case, which recently in the Weltover opinion this Court has said has authoritative explanation of the restrictive theory of sovereign immunity, can be looked to to establish what is essentially the dichotomy here.

William H. Rehnquist:

Well, Dunhill was not an interpretation of the FSIA, was it?

Paul S. Stevens:

It was not, Mr. Chief Justice.

Paul S. Stevens:

It was handed down shortly before the act went into law and has been said by this Court to be an authoritative gloss at least on the purposes the act was intended to serve and the nature of the restrictive theory of sovereign immunity.

Byron R. White:

You mean a gloss in advance.

[Laughter]

Paul S. Stevens:

An advanced gloss.

That is correct, Justice White.

Antonin Scalia:

I suppose it’s doubtless true that when you have a Foreign Sovereign Immunities Act case in front of you, if you say… if you come to the conclusion that the act was not a commercial act, then for purposes of that statute, the act must be treated as an act of government.

Paul S. Stevens:

Precisely.

Antonin Scalia:

But in making the inquiry of whether it’s a commercial act or not, I don’t think you approach it with the mental attitude that everything in the world has to be either a commercial act or a governmental act.

I think everything in the world is either a commercial act or not a commercial act, like shooting somebody in the head, for instance.

I don’t care if that’s done in the course of a contract or not.

That seems to me not a commercial act.

It may not be a governmental act either, but it’s a commercial act… it’s not a commercial act.

And if it’s not a commercial act and the suit at hand is a Foreign Sovereign Immunities Act suit, having determined it’s not a commercial act, it’s an act of government.

Paul S. Stevens:

Well, we approach it in much the same way, and it is a conundrum that this dichotomy places one in, a dilemma, so to speak, and I would acknowledge that.

But our consideration is very straightforward.

John Paul Stevens:

I suppose perhaps the question is whether piracy is commerce.

Paul S. Stevens:

Well, the law has resolved that question, Justice Stevens.

It could be a form of commerce by those people who are engaging in it, I suppose.

The point is that this was an action taken by a hospital, an employer, in the context of an employment relationship, and it really doesn’t matter why the act was taken.

If you look to the experience of the U.S. marketplace, you certainly can see all sorts of cases that go off on the issue of the wrongful discharge of an employee, retaliatory actions taken against an employee by an employer, whistle blower statutes that are now the modern craze, I suppose, to address these kinds of wrongs.

Nowhere is it suggested to me in our jurisprudence that just because these acts were terrible, wrongful, injurious, tortious, that they are less commercial for that reason.

And consider the signal that such a conclusion would send.

If a foreign sovereign running a commercial enterprise wishes to breach a contract, well, it shouldn’t fire the employee and stand ready to answer in damages.

It should have the employee done away with, because then it has removed any possibility that it will have to answer for its actions in the U.S. courts since doing away with an employee can’t be a commercial act.

Anthony M. Kennedy:

It’s not clear to me the extent to which you base your complaint on a breach of the contract itself.

We’ve been talking about tort.

The contract provides certain remedies, certain provisions for discipline of the employee, one of which is not beating.

It’s just warning, suspension without pay, et cetera.

Did you frame a cause of action based around a breach of that provision of the contract?

Or do you have any contract breaches in your complaint here?

Paul S. Stevens:

We have no causes of action in contract.

I suppose you could say–

Anthony M. Kennedy:

Why is that?

Paul S. Stevens:

–It is because of the way that counsel in the original proceeding wrote the complaint, Justice Kennedy.

I would be happy to–

Anthony M. Kennedy:

Do you at least use the contract or may you use the contract as setting forth the duties of the employer, which then gives rise to a tort cause of action?

Is that your theory?

Paul S. Stevens:

–Well, our theory with respect to the contract is that it is impossible to understand either the commercial nature of the activity or the substantiality of the contact with the United States without looking to the agreement.

Implied by the agreement are duties that were undertaken by the employer that underscore both the liability on the negligence claim, but the nature of the commercial contact… commercial activity and the contact.

You could, I suppose, make a quasi-contractual argument that an employer is obligated by a contract not to torture its employee, but you can also, under our jurisprudence, make an independent and perhaps more compelling tort claim, and that’s what we have done.

Anthony M. Kennedy:

So, your theory is that by setting forth terms of discipline in the contract, that at least establishes that discipline was within the realm of commercial activity and that the employer exceeded permissible discipline and committed a tort in this instance.

Is that–

Paul S. Stevens:

That is precisely what we are arguing with respect to that portion of the contract.

Sandra Day O’Connor:

–As to your claim of failure to warn at the time of recruitment that a foreign government might take the action that it took here, what do you… what law do you base that on?

Can you give us any citations for the substantive law creating such a duty to warn?

Paul S. Stevens:

The–

Sandra Day O’Connor:

I didn’t find any in your brief.

Paul S. Stevens:

–It would be the common law of Florida with respect to the obligations of an employer or recruiter active in Florida.

Sandra Day O’Connor:

Can you give us a citation?

Paul S. Stevens:

Justice O’Connor, I cannot, and the theory of liability may be one that would break some ground in the Florida courts.

Sandra Day O’Connor:

A new theory.

Paul S. Stevens:

Well, I think the obligations of a recruiter or employer to warn of job-related dangers is not a new theory.

I mean, there are risks inherent in employment which may not be foreseeable to the employee, but which, if reasonably foreseen by the employer, have to be pointed out, and there are certainly many cases that hold that.

With respect to the application of this principle in the context of recruitment and the activities of a foreign government-owned hospital and its employment practices or a foreign police operation and its peculiar practices, it would break new ground insofar as that is concerned.

If the Court has no further questions, I’ll conclude my argument.

William H. Rehnquist:

Thank you, Mr. Stevens.

Mr. Johnson, you have 2 minutes remaining.

Mr. Johnson, while you’re getting ready, it seems to me shooting somebody in the head, I suggested to your opponent, is not a commercial activity.

What about fixing prices, violating the Sherman Act?

That’s a violation of law too.

William H. Rehnquist:

Is that a commercial activity?

Everett C. Johnson, Jr.:

The lower courts who have addressed that in the OPEC cases, Your Honor, have tended to treat that either alternatively as an act of state in advance of the jurisdictional grounds or to treat it as international agreements regarding the exploitation of natural resources.

Antonin Scalia:

That’s not what I asked.

Is that a commercial activity in your–

Everett C. Johnson, Jr.:

In my view, if it’s a conspiracy between nations, it is not a commercial activity, Justice Scalia.

Antonin Scalia:

–Never mind whether it’s between nations or not.

By a private party, by anybody else, is price fixing in violation of the Sherman Act a commercial activity?

Everett C. Johnson, Jr.:

Well, by a private party, it would be in violation of… a commercial activity and the character of the conduct–

Antonin Scalia:

It would be a commercial activity.

Everett C. Johnson, Jr.:

–Yes, sir.

Antonin Scalia:

What about burning down your competitor’s store?

Everett C. Johnson, Jr.:

In my view that would not be a commercial activity.

Antonin Scalia:

So, it lies… the line between commercial and noncommercial lies somewhere between the Sherman Act and arson.

Everett C. Johnson, Jr.:

It lies entirely in the nature of the conduct, yes, Justice Scalia.

Two very brief points, Your Honor.

First, Mr. Stevens says that this is an action against the hospital.

If it is, it doesn’t help them.

The Foreign Sovereign Immunities Act has expressly made this hospital and all other agencies and instrumentalities of foreign sovereigns… foreign sovereign states for purposes of the act.

They are presumptively immune.

They are only amenable to jurisdiction of U.S. courts when they engage in commercial activity.

Their conduct, which is not commercial, is nevertheless immune.

Respondent seeks somewhat to have this both ways by alleging that this is an action against the hospital, which they allege is an inherently commercial enterprise, but that the hospital is the alter ego of Saudi Arabia and therefore is, in essence, the Government of Saudi Arabia.

Why it’s irrelevant to our purpose is because the hospital enjoys its own immunity.

There is an inconsistency in this position.

Byron R. White:

I suppose the hospital is a commercial activity.

You deny that there’s substantial contacts with the United States.

Everett C. Johnson, Jr.:

I think it is not a commercial activity qua the operation of the hospital, Justice White.

It has to do with the nature of what this hospital does in Saudi Arabia, and it’s our view that the hospital had no contact at all with the United States.

The only contact is through its American agent.

Thank you, Mr. Chief Justice.

William H. Rehnquist:

Thank you, Mr. Stevens.

The case is submitted.