United States Court of Appeals
for the district of columbia circuit
No. 00-7157 September Term, 2001
Filed On: January 11, 2002 [650226]
McKesson HBOC, Inc., et al.,
Appellees/Cross-Appellants
v.
Islamic Republic of Iran,
Appellant/Cross-Appellee
Consolidated with 00-7263
Appeals from the United States District Court
for the District of Columbia
(No. 82cv00220)
Before: Edwards, Rogers and Tatel, Circuit Judges.
O R D E R
Upon consideration of the appellants' petition for rehearing, filed December 31, 2001, it
is
ORDERED that the opinion in McKesson HBOC, Inc. v. Islamic Republic of Iran, 271
F.3d 1101 (D.C. Cir. 2001), be amended as follows:
(1) The paragraph beginning "Iran argues that even if some elements of its
expropriation . . . ." be deleted in its entirety.
(2) The following paragraph be inserted in its place:
"Iran argues that even if some elements of its expropriation
had direct effects in the United States, federal courts may not
exercise jurisdiction over one particular aspect of that claim: Pak
Dairy's withholding of McKesson's dividends. In support of this
proposition, Iran argues first that in Kingdom of Saudi Arabia v.
Nelson, 507 U.S. 349 (1993), the Supreme Court established an
exclusionary principle under which no fact that could not have
independently served as grounds for jurisdiction may serve as a
basis for a foreign state's liability, and second, that the "direct
effects" exception to claims based on commercial transactions does
not apply where, as here, the place of payment lies outside the
United States. In our view, the first argument has no merit, thus
rendering the second irrelevant. Nelson held that commercial-
activity jurisdiction cannot exist unless the commercial activity that
forms the basis for jurisdiction also serves as the predicate for the
plaintiff's substantive cause of action. See 507 U.S. at 357-58.
Here, McKesson's extensive showing of direct effects flowing from
the commercial activity on which its cause of action rests
establishes the nexus found lacking in Nelson. Regardless of
whether denial of dividends alone would give rise to federal court
jurisdiction under the FSIA's commercial-activity exception,
because the net effect of Pak Dairy's cut-off of commercial ties
included not just nonpayment, but also the cessation of "the flow of
capital, management personnel, engineering data, machinery,
equipment, materials, and packaging," McKesson I, 905 F.2d at
451, the district court rightly considered the dividends issue in both
in determining that Iran had expropriated McKesson's equity
interest and in awarding damages for that expropriation."
Per Curiam
FOR THE COURT:
Mark J. Langer, Clerk
BY:
Deputy Clerk