Harassment Action Dismissed on Foreign Sovereign Immunity Grounds

A recent Second Circuit decision clarifies the application of the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. 1602 et seq., in a discrimination case filed against foreign governments and their agencies and instrumentalities.

In Kato v. Ishihara, 2004 WL 301002 (2/18/04), the plaintiff was a Japanese citizen employed by the Tokyo Metropolitan Government (TMG). She alleged that she was sexually harassed while working for the TMG in New York in 1998-2000, and subjected to retaliation upon her return to Tokyo in March 2000. The defendants were the governor and municipal government of the city of Tokyo.

The FSIA

The FSIA provides that, with some important exceptions, “a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States.” 28 U.S.C. 1604. The immunity exception implicated in Kato is the “commercial activity” exception, which provides that sovereign immunity is not available where the case is “based upon a commercial activity carried on in the United States by the foreign state.” 28 U.S.C. 1605(a)(2) (emphasis added). While the FSIA does not define “commercial activity,” it does state that “[t]he commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose.” Courts have broad discretion in determining what constitutes commercial activity.

On its motion to dismiss based on sovereign immunity defense, TMG argued that plaintiff was a “local public servant” and hence a civil service employee, and that its conduct in employing plaintiff was governmental, not commercial, activity. Plaintiff argued that her employment constituted a commercial activity, even if she had status under Japanese law as a civil servant.

Is 'Civil Service' Defined?

The FSIA does not define “civil service.” The House Report on the FSIA, however, provides that “the employment of diplomatic, civil service, or military personnel” constitutes non-commercial governmental activity. “[E]mployment or engagement of laborers, clerical staff or public relations or marketing agents,” by contrast, constitutes commercial activity under the FSIA.

The plaintiff's job duties in Kato included what appeared, on its face, to be commercial activities: namely, promotional activities on behalf of Japanese corporations (such as manning booths at trade shows) and creation of marketing reports of interest to Japanese companies. Plaintiff contended that these activities disqualified the TMG from sovereign immunity.

The Second Circuit Rules …

The Second Circuit affirmed the district court's granting of TMG's motion to dismiss. However, the appeals court's ruling went beyond that of the district court, which principally considered the plaintiff's “civil service” status in upholding immunity. The Second Circuit held that TMG's conduct did not constitute commercial activity. The court explained: “[I]n order to determine whether plaintiff's employment was by nature 'commercial' for the purposes of the 'commercial activity' exception to sovereign immunity under the FSIA, we consider whether TMG's activities in New York were typical of a private party engaged in commerce.”

Here, TMG's conduct was not typical of a private party engaged in commerce, for while “a private Japanese business might engage in these activities in its own behalf — for example, by sending its representatives to trade shows in the United States and to promote its products — such a business would not typically undertake the promotion of other Japanese businesses, or … of Japanese business interests in general” (emphasis added).

Thus, “the fact that a government instrumentality may be engaged in the promotion of commerce does not mean that it is necessarily engaged in commerce.” (Emphasis in original.)

The Second Circuit also cautions that courts need not look for the hallmarks of American civil service employment in determining whether a foreign sovereign employs an individual in a civil service capacity. “Other countries are free to structure employment relationships in ways that do not mimic civil service protections now common to the United States and many foreign states, without thereby sacrificing the immunity conferred to the FSIA.”

A recent Second Circuit decision clarifies the application of the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. 1602 et seq. , in a discrimination case filed against foreign governments and their agencies and instrumentalities.

In Kato v. Ishihara, 2004 WL 301002 (2/18/04), the plaintiff was a Japanese citizen employed by the Tokyo Metropolitan Government (TMG). She alleged that she was sexually harassed while working for the TMG in New York in 1998-2000, and subjected to retaliation upon her return to Tokyo in March 2000. The defendants were the governor and municipal government of the city of Tokyo.

The FSIA

The FSIA provides that, with some important exceptions, “a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States.” 28 U.S.C. 1604. The immunity exception implicated in Kato is the “commercial activity” exception, which provides that sovereign immunity is not available where the case is “based upon a commercial activity carried on in the United States by the foreign state.” 28 U.S.C. 1605(a)(2) (emphasis added). While the FSIA does not define “commercial activity,” it does state that “[t]he commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose.” Courts have broad discretion in determining what constitutes commercial activity.

On its motion to dismiss based on sovereign immunity defense, TMG argued that plaintiff was a “local public servant” and hence a civil service employee, and that its conduct in employing plaintiff was governmental, not commercial, activity. Plaintiff argued that her employment constituted a commercial activity, even if she had status under Japanese law as a civil servant.

Is 'Civil Service' Defined?

The FSIA does not define “civil service.” The House Report on the FSIA, however, provides that “the employment of diplomatic, civil service, or military personnel” constitutes non-commercial governmental activity. “[E]mployment or engagement of laborers, clerical staff or public relations or marketing agents,” by contrast, constitutes commercial activity under the FSIA.

The plaintiff's job duties in Kato included what appeared, on its face, to be commercial activities: namely, promotional activities on behalf of Japanese corporations (such as manning booths at trade shows) and creation of marketing reports of interest to Japanese companies. Plaintiff contended that these activities disqualified the TMG from sovereign immunity.

The Second Circuit Rules …

The Second Circuit affirmed the district court's granting of TMG's motion to dismiss. However, the appeals court's ruling went beyond that of the district court, which principally considered the plaintiff's “civil service” status in upholding immunity. The Second Circuit held that TMG's conduct did not constitute commercial activity. The court explained: “[I]n order to determine whether plaintiff's employment was by nature 'commercial' for the purposes of the 'commercial activity' exception to sovereign immunity under the FSIA, we consider whether TMG's activities in New York were typical of a private party engaged in commerce.”

Here, TMG's conduct was not typical of a private party engaged in commerce, for while “a private Japanese business might engage in these activities in its own behalf — for example, by sending its representatives to trade shows in the United States and to promote its products — such a business would not typically undertake the promotion of other Japanese businesses, or … of Japanese business interests in general” (emphasis added).

Thus, “the fact that a government instrumentality may be engaged in the promotion of commerce does not mean that it is necessarily engaged in commerce.” (Emphasis in original.)

The Second Circuit also cautions that courts need not look for the hallmarks of American civil service employment in determining whether a foreign sovereign employs an individual in a civil service capacity. “Other countries are free to structure employment relationships in ways that do not mimic civil service protections now common to the United States and many foreign states, without thereby sacrificing the immunity conferred to the FSIA.”