United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 7, 1999 Decided April 2, 1999
No. 98-7055
International Bank for Reconstruction and Development,
Appellee
v.
District of Columbia,
Appellant
Appeal from the United States District Court
for the District of Columbia
(97cv01158)
Donna M. Murasky, Assistant Corporation Counsel, ar-
gued the cause for appellant. With her on the briefs were
John M. Ferren, Corporation Counsel, Charles L. Reischel,
Deputy Corporation Counsel, and Lutz Alexander Prager,
Assistant Deputy Corporation Counsel.
Albert G. Lauber, Jr. argued the cause for appellee. With
him on the brief was Lloyd H. Mayer.
Lester Nurick, F. David Lake, Jr., and Erik H. Corwin
were on the brief for amici curiae The Inter-American Devel-
opment Bank, et al.
Before: Silberman, Sentelle, and Randolph, Circuit
Judges.
Opinion for the Court filed by Circuit Judge Randolph.
Randolph, Circuit Judge: The property, income, operations
and transactions of the International Bank for Reconstruction
and Development, commonly known as the World Bank, are
immune from federal, state and local taxation. The question
in this appeal is whether a private contractor, retained by the
Bank to provide food services to individuals on the Bank's
premises, has derivative immunity from District of Columbia
taxes on the contractor's sales of food and beverages.
I
The World Bank is an international, inter-governmental
organization, with headquarters in Washington, D.C. Creat-
ed by Articles of Agreement drawn up at a conference held in
Bretton Woods, New Hampshire in 1944, the Bank is corpo-
rate in form, with all of its capital stock owned by its member
governments. See Herbert Harvey, Inc. v. NLRB, 424 F.2d
770, 773 n.20 (D.C. Cir. 1969). The United States accepted
the Articles in the Bretton Woods Agreements Act of 1945, 22
U.S.C. ss 286-286m. The Bank is empowered to provide
financial assistance for the development of member countries,
to promote private foreign investment, to stimulate the bal-
anced growth of international trade, and "[t]o conduct its
operations with due regard to the effect of international
investment on business conditions in the territories of mem-
bers." Articles of Agreement (as amended Feb. 16, 1989),
Art. I. One of the treaty's provisions (Article VII, s 9(a)),
which has "full force and effect" throughout the United
States, see 22 U.S.C. s 286h, confers tax immunity on the
Bank in the following terms:
The Bank, its assets, property, income and its operations
and transactions authorized by this Agreement, shall be
immune from all taxation and from all customs duties.
The Bank shall also be immune from liability for the
collection or payment of any tax or duty.
Nearly forty years ago the Bank began providing food
services for its employees and guests in its D.C. headquar-
ters. Since 1970 it has engaged an outside contractor for this
purpose. Initially, the contractor received a fixed percentage
of food-service revenues and the Bank provided a substantial
subsidy--which by the mid-1980s amounted to $1.3 million
per year. In 1989, the Bank phased out the subsidy, renego-
tiated the agreement with its contractor--then the Marriott
Corporation--and replaced the old management-fee contract
with a "modified profit and loss" contract. Under the new
arrangement, the contractor continued to receive a percent-
age of revenues and the Bank continued to provide equip-
ment, space, and utilities, but the burden of any financial loss
now fell on the contractor.
The District of Columbia imposes a tax on the retail sale of
food and beverages. The vendor is responsible for paying the
tax to the District, but "reimbursement for the tax imposed
upon the vendor shall be collected by the vendor" from the
purchasers of the food and drink. D.C. Code ss 47-
2002(3)(A), 47-2003(a). (The District's compensating-use tax
on retail sales of food and beverages is inapplicable when the
sales tax is "properly collected." s 47-2202(3)(A).) Until the
1990's, the District had not sought to collect sales or use taxes
on food-service transactions at the Bank. Matters changed
when, in 1991--shortly after the Bank's contract renegotia-
tion--Marriott twice requested letter rulings from the Dis-
trict's Department of Finance and Revenue regarding the tax
status of its food-service operations at the Bank and at the
International Monetary Fund. The District responded that
cafeteria and vending sales by outside contractors on the
premises of international organizations were subject to local
sales taxes when the sales were made to employees of the
organizations rather than to the organizations themselves.
Marriott's contract lapsed in 1992 and the Bank entered
into a new arrangement with Gardner Merchant Food Ser-
vices, Inc. This contract slightly modified the profit-and-loss
arrangement the Bank had with Marriott: Gardner Merchant
was to "be allowed profits not to exceed 2% of revenue";
anything in excess of 2% went to the Bank1; Gardner Mer-
chant was entitled to general and administrative costs not to
exceed 3% of revenue, but it was to be responsible for
"pay[ing] out all expenses" and it assumed the risk of "any
resultant losses." The contract set forth Gardner Merchant's
independent status: "Contractor will, in all its dealings, make
it clear that it is an independent contractor to the Bank, and
the Contractor and its employees are neither agents, repre-
sentatives, nor employees of the Bank." Gardner Merchant
was to maintain its own records and hold the Bank harmless
for any losses arising out of its services.
A provision in the contract purported to extend to Gardner
Merchant the Bank's immunity from the collection and pay-
ment of taxes:
The Bank is exempt from payment of sales, use and
excise taxes and shall provide Contractor with tax ex-
emption certification as may be required from time to
time. The Bank, and the Contractor acting on the
Bank's behalf, are also exempt from collecting such taxes
from staff and other user's [sic] of the Bank's food
services.
Relying on this provision, Gardner Merchant neither collected
nor paid any District of Columbia sales or use taxes in
performing its food-service contract.
In March 1996, the District's Department of Finance and
Revenue conducted a general audit of Gardner Merchant's
records and discovered a tax deficiency. For the tax years
1994 and 1995, the District sought to recover from Gardner
Merchant back taxes of $351,396.73, penalties of $158,128.55
__________
1 The record does not disclose whether the Bank actually received
any profits for the years covered by the Gardner Merchant con-
tract.
and interest of $179,212.33, for a total of $688,737.61. On
May 22, 1997, the Bank paid to the District approximately
$680,000.00 to satisfy Gardner Merchant's deficiency and, on
the same day, filed suit to recover that amount from the
District.2 On cross-motions for summary judgment, the dis-
trict court ruled in the Bank's favor.
The district court held that Gardner Merchant's operation
of the food-service program fell within the scope of the
"operations and transactions" for which the Bank enjoys tax
immunity. See International Bank for Reconstruction &
Dev. v. District of Columbia, 996 F.Supp. 31, 35 (D.D.C.
1998). The Bank's president is empowered to conduct "the
ordinary business of the Bank." Id. at 34 (citing Article V,
s 5(b) of the Bank's Articles of Agreement). Although the
Articles do not expressly state that providing on-site food
services is part of the Bank's "ordinary business," the district
court thought it must be: because the Bank's president has
responsibility over the "organization, appointment and dis-
missal of the [Bank's] officers and staff," Article V, s 5(b),
"[i]t would make no sense to give the President responsibility
for the 'organization ... of the officers and staff,' but deny
him the authority to provide for the daily food needs of that
staff." 996 F.Supp. at 35.
The court observed that the food program would enjoy tax
immunity if the Bank itself had operated it. Id. The Dis-
trict, while not disputing this, takes issue with the conclusion
the court then drew: if the District imposed a tax on the
Bank's food program simply because the Bank chose to
engage an outside contractor rather than run the program
itself, this would constitute an impermissible intrusion into
the Bank's decision-making processes. Id. In the court's
view, such interference would contravene the statutory inde-
pendence of the World Bank and other international organiza-
tions, see Articles of Agreement, Article V, s 5(c); 22 U.S.C.
s 288, an independence this court recognized in Atkinson v.
__________
2 The District makes nothing of the point that although the Bank
paid the taxes and is suing to recoup its payment, the Bank itself
incurred no liability under District law.
Inter-American Dev. Bank, 156 F.3d 1335, 1337 (D.C. Cir.
1998), holding that an international organization was not
subject to a garnishment proceeding. See also Mendaro v.
World Bank, 717 F.2d 610, 615 (D.C. Cir. 1983); Broadbent v.
OAS, 628 F.2d 27, 34 (D.C. Cir. 1980).
The district court seemed to believe, perhaps as an alterna-
tive ground of decision, that it would be inequitable for D.C.
to collect taxes from Gardner Merchant retroactively for the
years 1994 and 1995. See International Bank, 996 F.Supp. at
38-39. According to the court, "[t]he District has by its
inaction over the last thirty years led the Bank to reasonably
believe that its tax immunity would preclude the imposition of
tax liability on third party operators of the Bank cafeteria."
Id. at 38. In the court's view, the District produced no
credible evidence that either Gardner Merchant or the Bank
itself had been on notice of the District's intention to impose
such taxes for the years 1994 and 1995.
II
Like the Constitution and federal statutes, treaties made
under the authority of the United States are the "supreme
Law of the Land." U.S. Const. art. VI. Whether the World
Bank's tax immunity extends to Gardner Merchant's retail
sales operations therefore depends on the terms of the trea-
ty--on the terms, that is, of the Articles of Agreement.
As to Article VII, s 9(a), quoted earlier, we can put to one
side the Bank's tax immunity regarding its "assets, property
and income." The District is not seeking to impose taxes on
those items. We also can disregard the Bank's immunity
from liability "for the collection or payment of any tax or
duty." The liability for the collection and payment of the
District's taxes, to the extent any exists, is Gardner Mer-
chant's alone. Thus, if Gardner Merchant shares the Bank's
tax immunity, this can only be on the basis that the District
has imposed its sales and use taxes on the Bank's "operations
and transactions authorized by" the Agreement.
The District and the Bank quarrel about whether a cafete-
ria in the Bank's D.C. office building constitutes an "opera-
tion" of the Bank. For its part, the District points to Article
IV entitled "Operations." This provision lays out in consider-
able detail the Bank's authority to make loans and borrow
funds, to set terms and conditions on its loans, to relax the
schedule of payments, to guarantee loans, to set aside a
special reserve and so forth. Nothing in Article IV appears
to contemplate treating a cafeteria as an "operation." On the
other hand, the Bank and the district court stress the authori-
ty given the Bank's president to "conduct, under the direction
of the Executive Directors, the ordinary business of the
Bank." Art. V, s 5(b). The Bank's president decided to
provide in-house food and beverage service at the Bank's
headquarters. Food service therefore must be considered
part of the Bank's "ordinary business." If "ordinary busi-
ness" constitutes an "operation" for which the Bank is im-
mune from taxation, then the District cannot impose its taxes.
We think framing the dispute this way misses an essential
question. The treaty provides that the "Bank, ... and its
operations and transactions authorized by this Agreement,
shall be immune from all taxation and from all customs
duties. The Bank shall also be immune from liability for the
collection or payment of any tax or duty." Art. VII, s 9(a)
(emphasis added). We may assume that having a cafeteria on
its premises is within the Bank's authority under the Articles.
We may also assume that the Bank, through its officers, may
decide to provide this service in any way it sees fit. But the
question remains--is the provision of food services an "opera-
tion" of the Bank? The answer depends not so much on how
essential the Bank believes the activity to be, but on the
arrangements the Bank has made to carry it out. Take for
instance janitorial services. The Bank needs to have its
offices cleaned and maintained. Every business does. Sup-
pose the Bank hires an outside contractor to perform these
services. Although the Bank itself is immune from the
National Labor Relations Act, its cleaning contractor may not
be, and we so held in Herbert Harvey, Inc. v. NLRB, 424
F.2d at 779. To take an example closer to home, the opera-
tions of the federal courts cannot be taxed by a state. But if
an outside contractor runs a cafeteria in the courthouse, state
sales taxes may be imposed, and are.
Here, the district court found, and the Bank concedes, that
Gardner Merchant is "a separate and independent entity."
International Bank, 996 F.Supp. at 34. It is responsible in
every respect for food preparation and sales, and it bears any
losses that arise from those sales.3 It hires its own employ-
ees and maintains its own records. It has its own commercial
objectives, including making a profit from its contract with
the Bank. If the sales tax applied, the Bank would neither
collect nor incur liability for paying any District of Columbia
tax when a Bank employee or guest purchased food from
Gardner Merchant. The Bank stands wholly outside these
transactions. The legal incidence of the tax would not fall on
the Bank. Gardner Merchant would be responsible for remit-
ting the tax to the District and Gardner Merchant would
collect the sales tax from its customers. Whether the custom-
ers would entirely bear the corresponding reduction in wealth
is a question of economics, depending on another law--that of
supply and demand. See Armen A. Alchian & William R.
Allen, Exchange & Production: Competition, Coordination &
Control 67-68 (3d ed. 1983).
As against this, the Bank stresses the general rule that
agreements among nations should be construed more liberally
than private agreements. See Brief for Appellee at 24 (citing
Eastern Airlines, Inc. v. Floyd, 499 U.S. 530, 535 (1991);
United States v. Stuart, 489 U.S. 353, 368 (1989)). From this
it concludes that the tax immunity provision should be under-
stood to include third-party transactions such as those in-
volved here. We do not think the conclusion follows. We
may not read international treaties so broadly as to create
unintended benefits or to reach parties not within the scope
of a treaty's language. See Maximov v. United States, 373
U.S. 49, 55-56 (1963). "Operations" and "transactions" may
have a broad sweep, but the terms are qualified by the
__________
3 Although the Gardner Merchant contract contains much detail
about the nature of the food program and allows the Bank to
monitor closely for compliance, these contractual provisions do not
affect our view that the contractor is independent of the Bank.
pronoun "its," which refers to the Bank. The immunity
provision cannot be read to include within its scope activities
conducted by any other entity. Transactions conducted by
independent contractors are not mentioned in Article VII,
s 9, and we have seen no evidence that the Articles of
Agreement were meant to shield private entities from tax
liability arising from their contracts with the World Bank. In
this regard we view it as significant that the United States, as
a signatory to the Articles of Agreement, has not seen fit to
support the Bank's claim that Article VII would immunize its
private contractors from the District's sales tax.4 We view as
not significant the statements offered by the Bank--one from
an official at the European Bank for Reconstruction and
Development and another from an administrative services
manager at the Asian Development Bank--attesting that the
governments of the United Kingdom and the Philippines do
not tax cafeteria sales at those two banks. The statements
contain no detail, and so we do not know whether, for
instance, the Asian Development Bank uses an outside con-
tractor, whether there is a tax on food purchases in the
Philippines, whether the authorities in London or Manila are
refraining on the basis of a legal conclusion regarding the
applicable treaties, or whether the treaties are comparable to
the Articles of Agreement.5
__________
4 In May 1997, the U.S. State Department informed the District
by letter of the government's view that imposing the disputed taxes
retroactively would be "inequitable and inconsistent with" Article
VII, s 9. The idea appeared to be that the Bank had been lulled
into believing that its contractor had tax immunity and so had
agreed to hold Gardner Merchant harmless from tax liability. The
letter concluded that it was "without prejudice to the views of the
United States Government with respect to the question of whether
the prospective collection of sales tax by a World Bank contractor
from Bank staff and guests who do not enjoy personal sales-tax
privileges is permissible under the Articles of Agreement." Al-
though the United States filed an amicus brief in the district court
taking the same position, it has not presented its views to this court.
5 We also place no weight on the statement of the New York
Department of Taxation and Finance that if the World Bank had an
The Bank also invokes Carson v. Roane-Anderson Co., 342
U.S. 232 (1952). The state of Tennessee had collected sales
and use taxes from independent contractors performing ser-
vices for the Atomic Energy Commission at Oak Ridge. The
Court allowed the contractors to recover the amounts paid,
holding that their contracts entitled them to enjoy the bene-
fits of the Commission's tax immunity under the Atomic
Energy Act of 1946.6 (Congress "overruled" the decision one
year later, eliminating the tax immunity. See United States
v. Boyd, 378 U.S. 39, 40 (1964).) The Bank argues that since
the services of the independent contractors in Carson fell
within the statutory term "activities," Gardner Merchant's
operation of the food service program falls within the treaty's
phrase "operations and transactions."
We do not find Carson dispositive. For one thing, Carson
involved different language: "activities" are not "operations
and transactions authorized by [the World Bank's] Agree-
ment." To the Supreme Court, the "meaning of 'activities' as
applied either to an individual or to a government agency may
be broad enough to include what is done through independent
contractors as well as through agents." Id. at 236. The case
thus turned on whether Congress meant the term to have
that broader meaning. On this score, the Court relied on
other provisions of the statute using "activities" in its broader
sense and on the fact that Congress expressly authorized the
Commission to use private contractors in managing its affairs:
"Certainly where the pattern of conduct visualized by the Act
is the use of independent contractors or agents from the field
of private enterprise, the inference is strong that 'activities'
means all authorized methods of performing the governmen-
tal function." Id. No such "strong" inference is present
__________
independent contractor operate a cafeteria for it within the head-
quarters of the United Nations, food sales would be subject to New
York state and local sales tax.
6 Section 9(b) of the Act then provided that "[t]he Commission,
and the property, activities, and income of the Commission, are
hereby expressly exempted from taxation in any manner or form by
any State.... " Carson, 342 U.S. at 233.
here. Indeed we see no basis for any inference, strong or
weak, that the Bank's operations include the activities of
private contractors. Nothing in the Articles of Agreement
indicates that the signatories contemplated having the Bank
retain independent contractors to perform its lending opera-
tions.7
As against this, the Bank maintains that because it would
be immune from the District's sales tax if it had run the food
program itself, the same immunity attaches when it engages
an independent contractor to perform the service. See Brief
for Appellee at 26. Otherwise, the argument continues, local
taxes would interfere with the Bank's "internal functions" and
affect its decisions about how best to serve its workforce. Id.
The argument has a familiar ring, and there was a time when
it might have carried the day. Chief Justice Marshall said in
McCulloch v. Maryland, that "the power to tax involves the
power to destroy." 17 U.S. (4 Wheat.) 316, 431 (1819).
Taking this "seductive clich"8 to heart, the Supreme Court
early in this century began conferring immunity from state
taxes on so-called "instrumentalities" of the federal govern-
ment, that is, on private contractors performing work for the
government. This derivative tax immunity rested partly on
the notion that if the federal government had undertaken the
activity itself, the state could not have taxed it, and partly on
the basis that tax immunity for private entities was needed to
protect the United States from state interference. Many of
the cases handed down in this era are discussed in James v.
Dravo Contracting Co., 302 U.S. 134 (1937), and in Thomas
Reed Powell, The Waning of Intergovernmental Tax Immu-
__________
7 The Bank attempts to broaden the reach of Carson by arguing
that its outcome did not depend upon the Atomic Energy Act's
express provision for the use of independent contractors. We
disagree with such a reading. The Carson Court rested its decision
precisely on that ground. As the Court interpreted the Act,
Congress anticipated that the Commission would perform its func-
tions through independent contractors. See id. at 236.
8 Graves v. New York ex rel. O'Keefe, 306 U.S. 466, 489 (1939)
(Frankfurter, J., concurring).
nities, 58 Harv. L. Rev. 633 (1945). In upholding a state tax
on the gross receipts of a federal contractor, James v. Dravo
Contracting Co. marked a turning point in the Court's ap-
proach: henceforth, application of non-discriminatory state
taxes on government instrumentalities, with only a remote
influence on governmental functions, would be sustained. 302
U.S. at 150.
The Supreme Court's modern jurisprudence on the tax
immunities of government "instrumentalities" is instructive
for several reasons. It seems to us doubtful that the Articles
of Agreement were intended to confer on the World Bank a
wider immunity from state and local taxes than that enjoyed
by the federal government.9 Under the terms of the Bretton
Woods agreement, all concerned knew that the World Bank's
headquarters would be located in the United States. Article
V, s 9, provided that the "principal office of the Bank shall be
located in the territory of the member holding the greatest
number of shares," and that member was the United States.
See Articles of Agreement, Schedule A. In the mid-1940's,
when Article VII, s 9, was drafted and accepted, those natu-
rally interested in the analogous subject of federal immunity
from state taxation would have discovered the line of Su-
preme Court decisions, such as James and Helvering v.
Mountain Producers Corp., 303 U.S. 376 (1938), refusing to
maintain the tax immunity of private contractors performing
work for the United States. They would have known as well
that the United States had taken the position that any
"attempt to distinguish between the varying types of taxes
imposed on private persons, according as they interfere with
the sovereign, is to perpetuate a rule which has proved to be
unsatisfactory and inconsistent." Brief for the United States
as Amicus Curiae, at p. 44, in James v. Dravo Contracting
Co.
__________
9 The tax immunity of international organizations is based on a
principle analogous to the one upon which Chief Justice Marshall
relied in McCulloch--to protect against the destructive power of
state interference. See, e.g., Broadbent, 628 F.2d at 34 ("[I]nterna-
tional organizations must be free to perform their functions and ...
no member state may take action to hinder the organization.")
With all of this in mind, we return to the Bank's argument
that Gardner Merchant should be free of the District's sales
tax because the Bank would not have been subject to the tax
if it had operated the cafeteria itself. If, instead of the World
Bank, the United States had made this argument on behalf of
one of its contractors, the Supreme Court would have reject-
ed it--"tax immunity is appropriate in only one circumstance:
when the levy falls on the United States itself, or on an
agency or instrumentality so closely connected to the Govern-
ment that the two cannot realistically be viewed as separate
entities, at least insofar as the activity being taxed is con-
cerned." United States v. New Mexico, 455 U.S. 720, 735
(1982); see also Arizona Dep't of Revenue v. Blaze Constr.
Co., No. 97-1536, 1999 WL 100899 (U.S. Mar. 2, 1999). We
can think of no reason--certainly none stemming from the
principles governing the construction of international trea-
ties--why similar logic should not apply to the interpretation
of the Bank's Articles of Agreement. The District of Colum-
bia's sales and use taxes are not imposed upon the Bank, but
upon Gardner Merchant and its customers. Gardner Mer-
chant is by no stretch an instrumentality of the Bank. Nor is
Gardner Merchant "so closely connected to the [Bank] that
the two cannot realistically be viewed as separate entities."10
Although the Bank exercises close control over the terms of
the contract and Gardner Merchant's performance under it,
that does not transform Gardner Merchant into an instrumen-
tality of the Bank. As we mentioned, Gardner Merchant is
pursuing private ends for its own benefit. See New Mexico,
455 U.S. at 739-40; Boyd, 378 U.S. at 48. Imposing the tax
on Gardner Merchant will not impermissibly intrude on the
Bank's freedom from local government control. On the con-
trary, imposing the tax will merely require the Bank to take
an additional factor into account when it negotiates its food-
service contract. Cf. Boyd, 378 U.S. at 48. It will exert "a
remote, if any, influence upon the exercise of the functions of
[the Bank]." James v. Dravo Contracting Co., 302 U.S. at
150 (internal quotation omitted). On the other hand, to hold
__________
10. The Bank does not contend that the District's sales and use
taxes are discriminatory.
that the Bank's tax immunity extends to Gardner Merchant's
food-service transactions would create an ever-expanding tax
immunity without any limiting principle. Must Gardner Mer-
chant pay sales and use taxes on purchases it makes pursuant
to its contract with the World Bank? Should the company be
free from District income taxes? Should the company's em-
ployees? These and many other similar questions continually
perplexed the Supreme Court after it ventured onto the
slippery slope of derivative tax immunity. See, e.g., Cotton
Petroleum Corp. v. New Mexico, 490 U.S. 163, 173-75, 187
(1989); South Carolina v. Baker, 485 U.S. 505, 520 (1988).
We decline the Bank's invitation to set out on the same
precipitous course.
III
The Bank has an alternative position: even if the District
of Columbia has the power to impose the disputed taxes on
Gardner Merchant, it would be inequitable under the Articles
of Agreement for the District to impose them retroactively.
The Bank does not contend that the District is equitably
estopped from collecting the taxes because of its prior policy
of refraining from collecting them. See Brief for Appellee at
36 n.9; see also Automobile Club v. Commissioner, 353 U.S.
180, 183 (1957). Rather, the Bank adopts the position of the
United States in the district court that the retroactive imposi-
tion of the District sales tax would be inequitable under the
terms of the Bank's treaty. The idea is that in relying in
good faith on its interpretation of the Articles, and the
District's prior practice, the Bank entered into the food-
service contract promising tax immunity to its contractor;
hence, retroactive taxation constitutes taxation of the Bank
itself, in violation of Article VII, s 9. The district court
seemed to agree, but it also appeared to base its holding at
least in part on principles of equitable estoppel: the court
noted that D.C. had refrained from imposing the tax on Bank
food-service operators for thirty years, and that the Bank had
no notice when the District changed course in the early 1990s.
See 996 F.Supp. at 38-39.
We neither endorse nor reject the view of the United
States, as set forth by the Bank. The district court rendered
its decision on summary judgment. It is not clear whether
the factual predicate for the Bank's argument exists. Given
the procedural posture of the case, the District was entitled to
all justifiable inferences. See Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248-50 (1986). The district court observed
that the District had cited "only two instances in thirty years
where it claims to have informed an international organization
that it would collect sales and use taxes for cafeteria sales
recorded by a contractor." 996 F.Supp. at 39. Although the
District may not have produced any evidence that the Bank
was aware of the two letters it sent to Marriott, there is a
genuine issue of material fact whether the Bank knew of the
District's policy with regard to imposing the tax in such cases.
A February 1994 letter to the State Department from an
attorney in the Bank's legal department stated that the
attorney was aware as early as December 1993 of the Dis-
trict's "new position that the World Bank, and the catering
firms that act on its behalf, should begin collecting sales tax
from staff who purchase meals in the Bank's employee cafete-
rias." From this letter, one might reasonably infer that the
Bank knew of the District's decision to impose the taxes
before 1994. This tends to undercut the Bank's equitable
claim. The Bank complains that the letter should not have
been included in the record; the District counters that the
Bank cited the letter in its brief and therefore should be
deemed to have waived any procedural objection to it. This
is but one of several issues we must leave to the district court.
* * *
We therefore hold that Gardner Merchant, in performing
its food service contract at the World Bank's headquarters,
did not share the Bank's immunity from the District's sales
and use taxes. The order granting summary judgment is
reversed and the case is remanded for further proceedings on
the Bank's equitable argument.
So ordered.