Professional Documents
Culture Documents
FILED
No. 15-10717 November 22, 2016
Lyle W. Cayce
Clerk
JOAN GALE FRANK; JON A. BELL; DOCTOR SAMUEL BUKRINSKY;
JAIME ALEXIS ARROYO BORNSTEIN; PEGGY ROIF ROTSTAIN; JUAN
C. OLANO; JOHN WADE, in his capacity as trustee of the Microchip ID
Systems, Inc. Retirement Plan, on behalf of themselves and all others
similarly situated,
PlaintiffsAppellees,
v.
DefendantAppellant.
__________________________
PlaintiffAppellee,
v.
DefendantAppellant.
1 The Frank suit was filed by several individuals as a class action, but, for clarity, we
will refer solely to the first named individual, Joan Gale Frank, on behalf of the potential
class.
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2 For more information on the Stanford Ponzi scheme, see United States v. Stanford,
805 F.3d 557 (5th Cir. 2015), and Janvey v. Democratic Senatorial Campaign Comm., Inc.,
712 F.3d 185 (5th Cir. 2013).
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crucial to determining whether a foreign state is immune from suit. Arriba Ltd. v. Petroleos
Mexicanos, 962 F.2d 528, 534 (5th Cir. 1992). No such discovery was conducted in this case.
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5 Determining if subject matter jurisdiction exists under the FSIA requires a court to
answer two questionsfirst, whether a party is a foreign state to which the Act applies,
and second, whether any exception to the presumption of foreign sovereign immunity applies
under the circumstances. See Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 48889
(1983). Although these together determine subject matter jurisdiction, it appears that the
second part of the inquiryregarding exceptions to foreign sovereign immunitymay be
waived per the wording of the statute itself. See 28 U.S.C. 1605(a)(1) (providing that a party
can expressly or implicitly waive its immunity from the jurisdiction of the United States
courts). As such, we see no reason why a party should not be permitted to waive the
application of foreign sovereign immunity by failing to dispute the application of a particular
exception under the Act.
6 In full, the commercial activity exception provides that:
(a) A foreign state shall not be immune from the jurisdiction of courts of the
United States or of the States in any case . . .
(2) in which the action is based upon a commercial activity carried on
in the United States by the foreign state; or upon an act performed in
the United States in connection with a commercial activity of the
foreign state elsewhere; or upon an act outside the territory of the
United States in connection with a commercial activity of the foreign
state elsewhere and that act causes a direct effect in the United
States . . .
28 U.S.C. 1605(a)(2).
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7 In its brief, Antigua argues that a specific act causing the direct effect must be
legally significant to the cause of action. While many other circuits have adopted this
requirement, the Fifth Circuit has expressly rejected it. See Voest-Alpine Trading USA Corp.
v. Bank of China, 142 F.3d 887, 894 (5th Cir. 1998).
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8 In its brief, Antigua urges that Voest-Alpine is distinguishable because the alleged
commercial activities of Antigua are quite removed from (and unrelated to) the Appellees
financial losses. This argument rests on a misunderstanding of the third clause of the
commercial activity exception. Antigua appears to believe the direct effect element must
relate to the commercial activity. Rather, the direct effect element requires that the
conduct the suit is based upon have a direct effect in the United States. See 28 U.S.C.
1605(a)(2).
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9 This Court has previously held that the direct effect element was met in a
transaction involving an indirect relationship. See Byrd, 182 F.3d at 391. In Byrd, the
indirect relationship at issue was between an assignee to a lease and one of the original
parties to the contract. Id. at 39091. As this Court noted in Byrd, an assignee to a lease
stands in the place of the original party to the contract. Id. at 391. Therefore, the relationship
between Plaintiffs and Antigua is distinguishable, as Plaintiffs do not have the same rights
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and remedies as Stanford to recover for Antiguas failure to pay back the loans. As such,
because the financial loss resulting from Antiguas failure to repay the loans was not directly
felt by Plaintiffs, the direct effect requirement is not met.
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10In its brief, OSIC also argues that the waiver exception applies to its TUFTA claims.
But, as OSIC makes this argument for the first time on appeal, it is waived. See Barrie v.
Intervoice-Brite, Inc., 397 F.3d 249, 263 (5th Cir. 2005).
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