Noah Rosenkrantz v. Inter-American Development Bank

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 15, 2022 Decided June 3, 2022

No. 21-7047

NOAH J. ROSENKRANTZ, ET AL.,
APPELLANTS

v.

INTER-AMERICAN DEVELOPMENT BANK,
APPELLEE

Appeal from the United States District Court
for the District of Columbia
(No. 1:20-cv-03670)

Gregory J. Wrenn argued the cause and filed the briefs for
appellants.

Griffith L. Green argued the cause for appellee. With him
on the brief was Laura C. Mulherin.

Charlotte H. Taylor and Ariel N. Volpe were on the brief
for amici curiae International Bank for Reconstruction and
Development, et al. in support of appellee.
 2
Before: SRINIVASAN, Chief Judge, HENDERSON and
JACKSON *, Circuit Judges.

Opinion for the Court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: Plaintiffs
Noah J. Rosenkrantz, Christopher Thibedeau and TTEK Inc.
(collectively, the Plaintiffs) sued the Inter-American
Development Bank (the IDB or the Bank), alleging that the
IDB violated its internal investigatory procedures when
investigating allegations that the Plaintiffs had engaged in
“Prohibited Practices”—e.g., corruption, fraud, coercion,
collusion, obstruction and misappropriation—in the
performance of IDB-financed contracts, an investigation that
ultimately led to the imposition of severe sanctions against the
Plaintiffs. The IDB moved to dismiss the suit for lack of subject
matter jurisdiction, asserting immunity under the International
Organizations Immunities Act (IOIA), 22 U.S.C. §§ 288–288l.
The Plaintiffs countered that their case fell within two
exceptions to IOIA immunity: the commercial activity
exception and the waiver exception. Rejecting the Plaintiffs’
arguments, the district court granted the IDB’s motion to
dismiss. As detailed infra, we affirm.

I. Background

On review of a dismissal order, “[w]e assume the truth of
all material factual allegations in the complaint and ‘construe
the complaint liberally, granting plaintiff the benefit of all
inferences that can be derived from the facts alleged.’” Am.
Nat’l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir. 2011)

*
Circuit Judge Jackson was a member of the panel at the time
the case was argued but did not participate in the opinion.
 3
(quoting Thomas v. Principi, 394 F.3d 970, 972 (D.C. Cir.
2005)). We recite the relevant facts accordingly.

A.

The IDB is an international financial institution created by
its member countries for “[t]he purpose of . . . contribut[ing] to
the acceleration of the process of economic and social
development of the regional developing member countries,
individually and collectively.” See Agreement Establishing the
Inter-American Development Bank (IDB Charter) art. I, § 1,
opened for signature Apr. 8, 1959, 10 U.S.T. 3068, reprinted
in Joint Appendix (J.A.) 0216–54. The IDB fulfills its chartered
objective by providing loans and grants to the governments and
government-controlled entities located in its borrowing
member countries—principally in the Latin American and
Caribbean regions—which, in turn, use those resources to fund
development activities. See Rosenkrantz v. Inter-Am. Dev.
Bank, No. CV 20-3670, 2021 WL 1254367, at *1 (D.D.C. Apr.
5, 2021). Forty-eight countries, including the United States, are
currently members of the IDB.

The IDB charter requires the bank to “take all necessary
measures to ensure that the proceeds of any loan made,
guaranteed, or participated in by the Bank are used only for the
purposes for which the loan was granted, with due attention to
considerations of economy and efficiency.” IDB Charter art.
III, § 9(b). Pursuant to this mandate, the IDB has adopted
internal policies prohibiting all parties involved in an IDB-
financed project from engaging in “Prohibited Practices,”
which encompass corruption, fraud, coercion, collusion,
obstruction and misappropriation. See IDB, Sanctions
Procedures (Sanctions Procedures) § 2.2 (2020), reprinted in
J.A. 148–66. This prohibition extends well beyond “parties
who contract with the Bank” to cover “any party involved” in
 4
an IDB-financed project, including, inter alia, borrowers, grant
recipients, bidders, suppliers, contractors and subcontractors,
service providers and financial intermediaries, as well as the
officers, employees and agents of these entities. Id. § 1.2; see
also id. § 2.2.

The IDB enforces its prohibition on Prohibited Practices
through a multi-step internal review process set forth in the
IDB’s Sanctions Procedures that is designed to identify and, if
necessary, penalize violations. See generally Sanctions
Procedures §§ 3–14; see also Rosenkrantz, 2021 WL 1254367,
at *2–3 (describing IDB’s sanctions process). First, allegations
of Prohibited Practices are referred to the IDB’s Office of
Institutional Integrity (OII) for investigation. See Sanctions
Procedures § 3.1. If the OII concludes that “a preponderance of
the evidence supports a finding of Prohibited Practice,” id.
§ 3.3, it issues a Statement of Charges and Evidence and refers
the matter, including all relevant evidence, to an IDB
President-appointed Sanctions Officer, id. §§ 3.2–3.4; see also
id. § 10.2, who, like the OII, determines whether “a
preponderance of the evidence supports a finding that the
Respondent engaged in a Prohibited Practice,” id. § 4.1. If the
Sanctions Officer determines the standard has been met, he
provides the respondent and the OII with a “Notice,” which
consists of, among other things, the Statement of Charges and
Evidence, the Sanctions Officer’s findings, and a description of
possible sanctions; the respondent has sixty days after delivery
of the Notice to respond. Id. §§ 4.5–4.7. A respondent’s failure
to respond is deemed an admission of the allegations set forth
in the Notice and a waiver of the opportunity to appeal. Id.
§ 4.8.

Once the sixty days are up, the Sanctions Officer evaluates
the submissions from the OII and, if any, the respondent. Id.
§ 4.9. If the Sanctions Officer concludes again that a
 5
preponderance of the evidence supports the finding of a
Prohibited Practices violation, he may impose an appropriate
sanction, id. § 4.9.2, which may range from a formal reprimand
to debarment—a determination that the respondent is
“ineligible, either permanently or for a stated period of time, to
be awarded and/or participate in additional contracts for
Projects,” id. § 8.1–8.2. The Plaintiffs characterize debarment
as “career-ending” for them, akin to a “Scarlet A.” Appellants’
Br. 17. Parties subject to sanctions include not only the
respondent but also any entity that a respondent owns or
controls. Sanctions Procedures § 8.3.

If the respondent makes a submission to the Sanctions
Officer during the sixty-day period upon delivery of the Notice,
he has forty-five days to appeal the Sanctions Officer’s
determination to the Sanctions Committee. Id. § 6.1. The
Committee reviews the entire record that was presented to the
Sanctions Officer in order to determine—for, by now, a fourth
time—whether a preponderance of the evidence supports a
finding that the respondent engaged in a Prohibited Practice.
Id. § 7.1. If the Committee determines the standard is met, it
issues a final decision, which summarizes its findings and
sanctions and takes effects immediately. Id. § 7.3. The IDB is
permitted to disclose the identity of any sanctioned party, along
with the imposed sanctions, to borrowers, other international
and multinational organizations, governmental authorities and
the general public. Id. § 14.1.

Importantly, the Sanctions Procedures were “adopted to
guide the exercise of discretion” by the IDB and “do not
themselves confer any rights or privileges to any parties.” Id.
§ 15.1. Moreover, on the issue of immunity, the Sanctions
Procedures state that “[n]othing in these Procedures shall be
considered to alter, abrogate, or waive the immunities and
 6
privileges as set forth in” the IDB Charter or in other
agreements among member countries. Id. § 15.2.

B.

Over the course of 2010, the IDB entered into two
contracts with GreenLine Systems, Inc. (GreenLine)—referred
to as the ACRMS Contract and the KCP Contract—to provide
customs products to the Government of Barbados.
Rosenkrantz, 2021 WL 1254367, at *3. At the time,
Rosenkrantz was the co-founder, CEO and chairman of
GreenLine and Thibedeau was a GreenLine vice president. Id.
Both contracts, to which neither Rosenkrantz nor Thibedeau
was named a contracting party, id.; see Compl. ¶¶ 26, 32,
specified that “no promises, terms, conditions, or obligations
other than those contained herein” existed between the IDB and
GreenLine and made no reference to the Sanctions Procedures.
Rosenkrantz, 2021 WL 1254367, at *3; see J.A. 0036 (ACRMS
Contract); J.A. 0064 (KCP Contract).

In 2013, GreenLine was acquired by A-T Solutions, Inc.
(ATS); after the acquisition, Rosenkrantz left the company and
Thibedeau stayed on as a vice president of ATS. Rosenkrantz,
2021 WL 1254367, at *4. The acquisition was governed by the
“GreenLine Purchase Agreement,” which, according to the
Plaintiffs, obligated ATS and the “GreenLine
Securityholders,” a group that included Rosenkrantz and
Thibedeau, to “cooperate fully with each other in connection
with the defense, negotiation or settlement of any
Indemnifiable Claim.” Id. (quoting Compl. ¶ 62). In their view,
this agreement contractually obligated ATS, and any
successors in interest, to facilitate for the GreenLine
Securityholders “the retention and provision of records and
information reasonably relevant to such Indemnifiable
Claim[s],” as well as access to “employees . . . to provide
 7
additional information and explanation of any material
provided.” Id. (quoting Compl. ¶ 62).

In 2015, the Government of Barbados awarded ATS an
IDB-financed contract—referred to as the ESW Contract—for
another customs product. Id. Again, neither Rosenkrantz, who
had already left ATS, nor Thibedeau was a party to the contract.
Id. Although the IDB was also not a party, the contract required
all participants to comply with the IDB’s “Applicable Policies
in regard to fraud and corruption and prohibited practices.” Id.;
see J.A. 0087 (ESW Contract). During the ESW Contract
negotiations, ATS was acquired by Pacific Architects and
Engineers (PAE). Rosenkrantz, 2021 WL 1254367, at *4. After
the acquisition, Thibedeau became a PAE employee but left the
company in April 2016 and later formed TTEK as a Barbados
corporation under his control. Id.

At this point, the IDB surmised that something was amiss.
In 2015, the OII initiated an investigation of alleged Prohibited
Practices in connection with certain IDB-financed contracts, an
inquiry that eventually implicated the ACRMS, KCP and ESW
Contracts. See id. The OII requested documents and
information from PAE, which cooperated with the OII
investigation. Id. According to the Plaintiffs, the “IDB . . .
instruct[ed] PAE not to cooperate with the GreenLine
Securityholders in relation to the investigation,” Compl. ¶ 64,
thereby causing PAE to “decline[]” to provide Rosenkrantz and
Thibedeau with “records relating to the investigation,” see id.
¶ 69, in violation of the GreenLine Purchase Agreement. See
Rosenkrantz, 2021 WL 1254367, at *4; see generally Compl.
¶¶ 65–72. In April 2018, three years after beginning its
investigation, the OII requested to interview Rosenkrantz and
Thibedeau and soon after provided them with approximately
2,500 pages of potentially relevant records, which the Plaintiffs
contend was a small fraction of the nearly 300,000 pages they
 8
believe the OII collected from PAE. Rosenkrantz, 2021 WL
1254367, at *5; Compl. ¶ 75. The OII then issued to
Rosenkrantz and Thibedeau a show-cause order, alleging that
the pair had engaged in Prohibited Practices and outlining the
supporting evidence. Rosenkrantz, 2021 WL 1254367, at *5.
Shortly before Rosenkrantz and Thibedeau filed their written
responses to the show-cause order, the IDB announced that it
executed a negotiated resolution agreement with GL
Systems—the PAE subsidiary that succeeded GreenLine and
ATS’s business—that resolved allegations of Prohibited
Practices in connection with the three customs contracts and
debarred GL Systems for four years. Id.

In December 2018, the OII concluded that Rosenkrantz
and Thibedeau had engaged in Prohibited Practices and issued
a Statement of Charges and Evidence, naming Rosenkrantz and
Thibedeau as “Respondents” and designating TTEK as an
“[o]ther party subject to sanctions.” Id. The Statement of
Charges included over 6,700 pages of relevant exculpatory or
mitigating evidence. Id. The matter was referred to a Sanctions
Officer, who, in May 2019, issued the Plaintiffs a Notice,
which included the Statement of Charges and all relevant
evidence; the Plaintiffs submitted their responses in August
2019. Id. In May 2020, the Sanctions Officer issued his
determination, concluding that Rosenkrantz and Thibedeau had
engaged in Prohibited Practices and debarring the pair, along
with TTEK, for terms ranging from four to ten years. Id. The
Plaintiffs then appealed to the Sanctions Committee. Id. 1

On December 14, 2020, the Plaintiffs sued the IDB,
alleging that it had violated its Sanctions Procedures by (1)
wrongfully instructing PAE not to cooperate with the Plaintiffs

1
The IDB Sanctions Committee eventually affirmed the
Sanctions Officer’s findings and determinations but reduced
Rosenkrantz’s term of debarment from ten years to eight years.
 9
and declining the Plaintiffs’ requests for all 300,000 pages of
documents they believe PAE produced to the OII, id.; see
Compl. ¶¶ 65–79; (2) unfairly pre-determining the Plaintiffs’
guilt by settling with GL Systems before the Plaintiffs had
submitted their responses to the OII’s show-cause letter, see
Rosenkrantz, 2021 WL 1254367, at *5; see Compl. ¶¶ 78–94;
and (3) “wrongfully charg[ing]” TTEK as a party subject to
sanctions, Rosenkrantz, 2021 WL 1254367, at *5. From these
grievances, the Plaintiffs allege that the IDB breached duties
owed the Plaintiffs via the “contractually-imposed Sanctions
Procedures” (Count I), violated its implied duty of good faith
and fair dealing (Count II) and tortiously interfered with the
GreenLine Purchase Agreement (Count III). See Compl.
¶¶ 104–19. The Plaintiffs sought preliminary injunctive relief
to halt the IDB’s then-pending sanctions proceedings. See
Rosenkrantz, WL 1254367, at *6.

The IDB moved to dismiss the complaint on the ground of
immunity, pursuant to Federal Rule of Civil Procedure
12(b)(1). Id. The Plaintiffs opposed, arguing that their case fell
within two statutory exceptions to the IDB’s immunity—the
commercial activity exception, see 28 U.S.C. § 1605(a)(2), and
the waiver exception, see id. § 1605(a)(1); see also 22 U.S.C.
§ 288(a)(b) (IOIA waiver exception). Rosenkrantz, WL
1254367, at *6. The district court granted the IDB’s motion to
dismiss, finding neither exception applicable to the Plaintiffs’
claims. Id. at *16.

The Plaintiffs filed a timely notice of appeal of the district
court’s dismissal and we have appellate jurisdiction pursuant
to 28 U.S.C. § 1291.

II. Analysis

We review the district court’s organizational immunity
determinations de novo. See Odhiambo v. Republic of Kenya,
 10
764 F.3d 31, 35 (D.C. Cir. 2014). “Where, as here, the
‘defendant contests only the legal sufficiency of plaintiff’s
jurisdictional claims, the standard is similar to that of Rule
12(b)(6), under which dismissal is warranted if no plausible
inferences can be drawn from the facts alleged that, if proven,
would provide grounds for relief.’” Valambhia v. United
Republic of Tanzania, 964 F.3d 1135, 1139 (D.C. Cir. 2020)
(quoting Schubarth v. Fed. Republic of Germany, 891 F.3d
392, 398 (D.C. Cir. 2018)).

The IOIA confers upon international organizations like the
IDB “the same immunity from suit and every form of judicial
process as is enjoyed by foreign governments, except to the
extent that such organizations may expressly waive their
immunity.” 2 22 U.S.C. § 288a(b). Although we deal here with
international organization immunity, the Supreme Court has
recently made clear that such immunity is coextensive with the
immunity afforded to foreign sovereigns pursuant to the
Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. §§ 1330,
1604–1606. See Jam v. Int’l Fin. Corp., 139 S. Ct. 759, 772
(2019) (“[T]he Foreign Sovereign Immunities Act governs the
immunity of international organizations.”); id. at 768 (22
U.S.C. § 288a(b) “is best understood to make international

2
Pursuant to the IOIA, an “international organization” is “a
public international organization in which the United States
participates . . . and which shall have been designated by the
President through appropriate Executive order as being entitled” to
immunity under the IOIA. 22 U.S.C. § 288. The United States
became a member of the IDB pursuant to the Inter-American
Development Bank Act, Pub. L. No. 86-147, 73 Stat. 299 (1959)
(codified at 22 U.S.C. §§ 283–283z-13). President Eisenhower
subsequently designated the IDB as an IOIA international
organization on April 8, 1960. See Exec. Order No. 10,873, 25 Fed.
Reg. 3,097.
 11
organization immunity and foreign sovereign immunity
continuously equivalent”).

The FSIA provides that foreign states (and their
instrumentalities)—and, by extension, international
organizations—are generally “immune from the jurisdiction of
the courts of the United States.” 28 U.S.C. § 1604; see LLC
SPC Stileks v. Republic of Moldova, 985 F.3d 871, 877 (D.C.
Cir. 2021). But the presumption is subject to several statutory
exceptions, see 28 U.S.C. §§ 1605–1605B, 1607, which
constitute the sole basis to obtain subject matter jurisdiction of
a foreign state. See Odhiambo, 764 F.3d at 34. Two exceptions
are relevant here. First, immunity is excepted if the action is
based (1) “upon a commercial activity carried on in the United
States by the foreign state,” (2) “upon an act performed in the
United States in connection with a commercial activity of the
foreign state elsewhere,” or (3) “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).
Second, a foreign state may “waive[] its immunity either
explicitly or by implication.” Id. § 1605(a)(1). The IOIA, like
the FSIA, includes a waiver exception, albeit one that
recognizes express waiver only. See 22 U.S.C. § 228a(b)
(“International organizations . . . shall enjoy the same
immunity from suit . . . , except to the extent that such
organizations may expressly waive their immunity.”).

The Plaintiffs contend that their claims satisfy the
commercial activity and waiver exceptions to the IDB’s
immunity. For the reasons below, we disagree on both counts.

A. Commercial Activity Exception

The FSIA’s commercial activity exception, as relevant
here, permits suit against an international organization if “the
 12
action is based upon a commercial activity carried on in the
United States by the [international organization].” 28 U.S.C.
§ 1605(a)(2) (emphasis added). Here, we ask only whether the
Plaintiffs’ action is “based upon” commercial activity and
conclude that it is not.

To determine whether a plaintiff’s action is based upon
commercial activity, we must first identify “the ‘particular
conduct’ that constitutes the ‘gravamen’ of the suit,” OBB
Personenverkehr AG v. Sachs, 577 U.S. 27, 35 (2015) (quoting
Saudi Arabia v. Nelson, 507 U.S. 349, 356, 357 (1993)),
“zero[ing] in on the core of [the plaintiff’s] suit,” that is, the
“wrongful conduct” that “led to [the] injuries suffered,” id.; see
also Jam v. Int’l Fin. Corp., 3 F.4th 405, 409 (D.C. Cir. 2021).
The mere fact that an activity “led to the conduct that
eventually injured” the plaintiff does not necessarily make that
activity the gravamen of the suit, see Nelson, 507 U.S. at 358,
and neither does the fact that an activity “would establish a
single element of a claim,” Sachs, 577 U.S. at 34. As the
Supreme Court has stressed, “any other approach would allow
plaintiffs to evade the [FSIA]’s restrictions through artful
pleading.” Sachs, 577 U.S. at 36; see also Fry v. Napoleon
Cmty. Schs., 137 S. Ct. 743, 755 (2017) (“What matters is the
crux—or, in legal-speak, the gravamen—of the plaintiff’s
complaint, setting aside any attempts at artful pleading.”).

The Plaintiffs assert that the gravamen of their action is the
IDB’s “violation of the Bank’s contractual duties, while
investigating and administering disciplinary procedures that
apply by commercial contract terms to the conduct of private
commercial suppliers and their personnel in the United States
in relation to the contracts.” Appellants’ Reply Br. 19–20. Yet,
despite framing their claims in contractual terms—relying on
the three IDB-financed contracts and the associated bid
solicitations—the Plaintiffs’ complaint, as the district court
 13
correctly recognized, makes clear that the wrongful conduct
that in fact injured them centers around how the IDB carried
out the Sanctions Procedures. See Rosenkrantz, 2021 WL
1254367, at *10. The injurious conduct recounted in Count I
includes “blocking Plaintiffs’ access to historical records of
GreenLine necessary to prepare a defense,” “failing to provide
Plaintiffs access to records provided to IDB by PAE” and to
“documents that may be exculpatory or mitigating in nature,”
“publicly issuing a press release including information that
would identify Plaintiffs” and “pre-judging the responsibility
of Plaintiffs (by publicly announcing vicarious sanctions
against another entity) without first providing Plaintiffs the
opportunity to be heard on the charges.” Compl. ¶ 107; see also
id. ¶ 112 (recounting largely identical injuries in Count II); id.
¶ 118–19 (characterizing IDB’s instruction to PAE “not to
provide . . . cooperation or records to the [Plaintiffs]” as
“intentional interference” with GreenLine Purchase
Agreement); Rosenkrantz, 2021 WL 1254367, at *5
(acknowledging Plaintiffs’ argument that the IDB “wrongfully
charged” TTEK as party subject to sanctions). These alleged
injuries arose when the IDB “violat[ed] or act[ed] without
authority under the Sanctions Procedures.” Compl. ¶ 107.
Thus, the alleged wrongful conduct has very little, if anything,
to do with the IDB-financed contracts. At bottom, the Plaintiffs
are seeking “greater procedural fairness in IDB’s investigation
and prosecution of the charges against them, not the specific
performance of an enumerated duty under one of the three
challenged contracts.” Rosenkrantz, 2021 WL 1254367, at *10.
The fact that the Plaintiffs nevertheless styled their causes of
action as contract or contract-related claims is of no
consequence in light of the substance of their complaint. See
Sachs, 577 U.S. at 36.

Attempting to re-center the gravamen on the three IDB-
financed contracts, the Plaintiffs contend that the commercial
 14
activity exception’s “based on” requirement is satisfied
whenever a commercial activity—say, a contract—forms “a
necessary element of [a] plaintiff’s claim.” Appellants’ Br. 42–
43 (citing Odhiambo v. Republic of Kenya, 764 F.3d 31 (D.C.
Cir. 2014), and Kirkham v. Société Air France, 429 F.3d 288
(D.C. Cir. 2005)). But the Supreme Court squarely rejected this
“single-element” approach to the gravamen analysis in OBB
Personenverkehr AG v. Sachs, 577 U.S. 27 (2015), a decision
postdating this Court’s decisions in Kirkham and Odhiambo. In
Sachs, the plaintiff had purchased a Eurail train pass in the
United States and was later injured at a government-owned
train station in Austria. 577 U.S. at 30. She attempted to sue
Austria’s railway operator and avail herself of the commercial
activity exception by arguing that her purchase of the Eurail
pass, a single element of her claim, involved commercial
activity. Id. at 35–36. The Ninth Circuit agreed, relying in part
on the same single-element approach this Court adopted in
Kirkham:

Because the sale of the Eurail pass is an
essential fact that Sachs must prove to establish
her passenger-carrier relationship with OBB, a
nexus exists between an element of Sachs’s
negligence claim and the commercial activity in
the United States. See Kirkham, 429 F.3d at 292
(“[S]o long as the alleged commercial activity
establishes a fact without which the plaintiff
will lose, the commercial activity exception
applies . . . .”).

Sachs v. Republic of Austria, 737 F.3d 584, 600 (9th Cir. 2013)
(en banc) (alteration in original).

The Supreme Court rejected the Ninth Circuit’s single-
element test as unnecessarily requiring “an exhaustive claim-
 15
by-claim, element-by-element analysis” of a cause of action.
Sachs, 577 U.S. at 34. It directed courts to instead examine the
plaintiff’s asserted claims and “zero[] in on” the wrongful
conduct on the part of the defendant that “actually injured” the
plaintiff. Id. at 35. This is precisely what we have done here by
identifying the IDB’s alleged non-adherence to the Sanctions
Procedures—not the breach of any provision in the IDB-
financed contracts—as the source of the Plaintiffs’ injuries. To
the extent that either Kirkham or Odhiambo may have left the
door open for a single-element approach to the gravamen
analysis, whereby a plaintiff’s pleading decisions could dictate
a court’s jurisdiction, Sachs has since slammed it shut. 3

Having identified the gravamen of the Plaintiffs’ action—
the IDB’s alleged non-adherence to the procedures set forth in
the Sanctions Procedures—we must next determine whether it
constitutes “commercial activity” under the FSIA. 28 U.S.C.
§ 1605(a)(2). An international organization “engages in
commercial activity . . . where it exercises ‘only those powers
that can also be exercised by private citizens,’ as distinct from
those ‘powers peculiar to sovereigns.’” Nelson, 507 U.S. at 360
(quoting Republic of Argentina v. Weltover, Inc., 504 U.S. 607,
614 (1992)); see also de Csepel v. Republic of Hungary, 714
F.3d 591, 599 (D.C. Cir. 2013) (“[A] foreign state’s repudiation
of a contract is precisely the type of activity in which a ‘private
player within the market’ engages.” (quoting Nelson, 507 U.S.

3
As for Odhiambo, this Court simply confirmed Kirkham’s
adoption of a single-element approach to the gravamen analysis,
iterating that “the alleged commercial activity must establish ‘a fact
without which the plaintiff will lose.’” Odhiambo, 764 F.3d at 36
(quoting Kirkham, 429 F.3d at 292); see id. (“[A] claim is ‘based
upon’ commercial activity if the activity establishes one of the
‘elements of a claim that, if proven, would entitle a plaintiff to relief
under his theory of the case.’” (quoting Nelson, 507 U.S. at 357)).
Thus, Odhiambo, like Kirkham, is of no help in light of Sachs.
 16
at 360)). Simply put, if the alleged conduct is not “typically
performed by participants in the market,” it is not commercial
activity under the FSIA. Mwani v. bin Laden, 417 F.3d 1, 17
(D.C. Cir. 2005) (quoting Cicippio v. Islamic Republic of Iran,
30 F.3d 164, 168 (D.C. Cir. 1994)). The question “whether a
state acts ‘in the manner of’ a private party is a question of
behavior, not motivation.” Nelson, 507 U.S. at 360 (quoting
Weltover, 504 U.S. at 614); see 28 U.S.C. § 1603(d) (“The
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.”).

As we see it, the IDB’s application of its Sanctions
Procedures is not the sort of activity “typically performed by
participants in the market” but rather more akin to those powers
exercised by a sovereign. Mwani, 417 F.3d at 17 (quoting
Cicippio, 30 F.3d at 168). The IDB is mandated by charter—
or, more accurately, a multilateral agreement of forty-eight
member nations—to “take the necessary measures to ensure
that” bank funds “are used only for the purposes for which”
they are allocated, “with due attention to considerations of
economy and efficiency.” IDB Charter art. III, § 9(b). In
accordance with this mandate, the IDB uses its Sanctions
Procedures, and the threat of debarment, to identify, root out
and deter fraud and waste in the use of public funds, in the same
manner as many sovereigns, including the United States, see
generally 48 C.F.R. subpart 9.4 (debarment procedures for
federal contractors and subcontractors), and the European
Union, see Council Directive 2014/24, art. 57, 2014 O.J.
(L 121) 127–29 (EU) (grounds for “exclud[ing] an economic
operator from participation in a procurement procedure”). See
Rosenkrantz, 2021 WL 1254367, at *12.

Granted, the Plaintiffs are correct that private market
actors use similar investigatory and disciplinary tools to root
 17
out internal fraud but their proffered examples involve actions
by private institutions to investigate and discipline parties with
whom they have a direct contractual relationship, often to
simply terminate or limit existing rights under that relationship.
See Appellants’ Br. 38–40 (citing Kumar v. George
Washington Univ., 174 F. Supp. 3d 172, 175 (D.D.C. 2016)
(demotion of professor and closure of his laboratory for
misconduct related to scientific research)). The IDB’s
investigatory and disciplinary power, as encapsulated in the
Sanctions Procedures, is derived from its charter, not a singular
and discrete contractual relationship, see IDB Charter art. III,
§ 9(b), and the Sanctions Procedures permit the IDB to take
disciplinary action against any party involved with an IDB-
financed contract, regardless of the existence of a contractual
relationship with the IDB, see Sanctions Procedures §§ 1.2,
8.3. Further still, debarment effectively removes a private party
from the market for IDB or IDB-financed contracts and could
result in “cross-debarment” with other development banks,
governments and private parties, thereby excluding it from the
entire market. See Appellants’ Br. 17. The IDB’s ability to
exercise such influence over a wide array of parties and
markets—potentially to the point of total exclusion of a
particular party from the market—plainly constitutes the
exercise of a “power[] peculiar to sovereigns.” Weltover, 504
U.S. at 614.

In short, the gravamen of the Plaintiffs’ action—the IDB’s
alleged failure to adhere to the Sanctions Procedures—is not
commercial activity within the scope of the FSIA. The IDB’s
mandate under its charter and the Sanctions Procedures to
protect the integrity of its funds and regulate the market for
international development funds is much more akin to a
sovereign’s effort to do the same than to that of a private party.
The commercial activity exception therefore does not abrogate
the IDB’s immunity from the Plaintiffs’ claims, as the district
 18
court correctly concluded. See Rosenkrantz, 2021 WL
1254367, at *14.

B. Waiver Exception

Failing to find refuge in the commercial activity exception,
the Plaintiffs contend that the IDB nevertheless waived its
immunity by virtue of its charter. The Plaintiffs point to Article
XI, section 3, which provides, in relevant part:

Actions may be brought against the Bank only
in a court of competent jurisdiction in the
territories of a member in which the Bank has
an office, has appointed an agent for the purpose
of accepting service or notice of process, or has
issues or guaranteed securities. No action shall
be brought against the Bank by member or
person acting for or deriving claims from
members.

IDB Charter, art. XI, § 3.

This appeal is not the first time our Court has interpreted
Article XI, section 3 of the IDB Charter. In Atkinson v. Inter-
Am. Dev. Bank, 156 F.3d 1335 (D.C. Cir. 1998), abrogated on
other grounds by Jam, 139 S. Ct. 759, the Court specifically
interpreted Article XI, section 3 of the IDB Charter as a limited
waiver of immunity, “not a blanket waiver of immunity from
every type of suit not expressly prohibited elsewhere in the
articles of agreement.” Id. at 1338. 4 We relied heavily on our

4
Although the Supreme Court abrogated Atkinson’s holding
that international organizations possessed absolute immunity under
the IOIA, see Jam, 139 S. Ct. at 770–71, 772, it denied certiorari on
the waiver issue. See Petition for a Writ of Certiorari, Jam v. Int’l
Fin. Corp., No. 17-1011 (Jan. 19, 2018), granted in part by 138 S.
 19
earlier decision in Mendaro v. World Bank, 717 F.2d 610 (D.C.
Cir. 1983), which declined to read “an identical waiver
provision” as “evincing an intent by the members of the Bank
to establish a blanket waiver of immunity from every type of
suit not expressly prohibited.” Id. at 614–15; see also Vila v.
Inter-Am. Investment Corp., 570 F.3d 274, 278–79 (D.C Cir.
2009) (similarly interpreting “nearly identical” language in
Inter-American Investment Corporation’s charter). Instead, the
Court construed section 3 as waiving immunity only if the IDB
receives a corresponding benefit: “[T]he [organization]’s
immunity should be construed as not waived unless the
particular type of suit would further the [organization]’s
objectives.” Atkinson, 156 F.3d at 1338 (emphases in original);
see also Mendaro, 717 F.2d at 617 (“A nonspecific waiver . . .
should be more broadly construed when the waiver would
arguably enable the organization to pursue more effectively its
institutional goals.”). The corresponding benefit test therefore
asks “whether a waiver of immunity to allow this type of suit,
by this type of plaintiff, would benefit the organization over the
long term.” Osseiran v. Int’l Fin. Corp., 552 F.3d 836, 840
(D.C. Cir. 2009) (emphases in original) (citing Atkinson, 156
F.3d at 1338, and Mendaro, 717 F.2d at 618). But even if the
organization accrues benefits as a result of judicial scrutiny,
immunity is not waived if such benefits “would be substantially

Ct. 2026, 2025 (2018); Jam, 3 F.4th 405, 411 (D.C. Cir. 2021)
(noting partial denial of certiorari). Thus, Atkinson’s waiver holding
still controls. See United States v. Adewani, 467 F.3d 1340, 1342
(D.C. Cir. 2006) (“When the Supreme Court vacates a judgment of
this court without addressing the merits of a particular holding in the
panel opinion, that holding ‘continue[s] to have precedential weight,
and in the absence of contrary authority, we do not disturb’ it.”
(alteration in original) (quoting Action All. of Senior Citizens of
Greater Philadelphia v. Sullivan, 930 F.2d 77, 83 (D.C. Cir. 1991)).
 20
outweighed by the burdens caused by judicial scrutiny” of the
organization’s operations. Mendaro, 717 F.2d at 617.

In the context of a multilateral bank like the IDB, the Court
has generally looked to whether waiver of immunity serves to
“enhance the marketability” of an international organization’s
financial products “and the credibility of its activities in the
lending markets.” Mendaro, 717 F.2d at 618. From this view,
waiver may encourage commercial parties to partner with a
multilateral bank like the IDB by providing “reassurance” that
its partners “would be fairly compensated” if their contracts
with the bank fail. See Vila, 570 F.3d at 282; see also Osseiran,
552 F.3d at 840. For example, allowing unjust enrichment
claims brought by independent consultants “would mitigate
possible hesitancies” by commercial parties “to negotiating and
entering into formal contracts” with the organization. See Vila,
570 F.3d at 282; cf. Osseiran, 552 F.3d at 840 (permitting
claims arising out of “sales agreements” with an organization
to proceed “might help attract prospective investors by
reinforcing expectations of fair play”); Lutcher S.A. Celulose e
Papel v. Inter-Am. Dev. Bank, 382 F.2d 454, 456–57 (D.C. Cir.
1967) (finding waiver of immunity from suit by debtors to
enforce loan agreement with organization). In contrast,
permitting judicial review of an international organization’s
internal affairs—such as the organization’s employment
practices—would yield the organization no conceivable benefit
and would likely hamstring the fulfillment of its chartered
mandates. For example, in Atkinson, this Court concluded that
permitting a wage garnishment action against an IDB employee
to proceed would “provide[] no conceivable benefit in
attracting talented employees” and therefore would not
“further the Bank’s objectives.” 156 F.3d at 1338 (emphasis in
original); see also Mendaro, 717 F.2d at 618–20 (declining to
find waiver of immunity from World Bank employee’s sexual
harassment and discrimination suit as doing so “would lay the
 21
Bank open to disruptive interference with its employment
policies” and “obstruct[] . . . the Bank’s purposes”).

The Plaintiffs seize upon this surface-level dichotomy in
our case law and attempt to fit their claims in the first category,
casting themselves as commercial partners with the IDB by
virtue of the three IDB-financed contracts and proposing that
allowing their suit to proceed would benefit the IDB’s
organizational interests by easing commercial parties’ worry
that the IDB “is beyond judicial process for bad faith handling”
of its Sanctions Procedures. Appellants’ Br. 35. But, as the
district court correctly noted, the Plaintiffs’ “mere identity as
‘commercial partners’ of an international organization” is
largely irrelevant. Rosenkrantz, 2021 WL 1254367, at *16. Our
precedent may “draw[] a distinction between external activities
and the internal management of international organizations”
but it does not “create[] an artificial category of waived claims”
and “[t]he court still is required to engage in a weighing of the
benefits and costs that a waiver may entail.” Vila, 570 F.3d at
281.

Weighing the costs and benefits here, we see no reason to
find a waiver of immunity. It is true that the IDB is obligated
to, among other things, “promote the investment of public and
private capital for development purposes” and “encourage
private investment,” IDB Charter art. I, § 2(a), meaning that the
Plaintiffs’ argument that judicial review would assuage
commercial partners’ “fears that [the Sanctions Procedures]
will be applied in bad faith,” and thereby promote investment,
is, at the very least, colorable, Appellants’ Br. 35–36; see
Osseiran, 552 F.3d at 840 (“The thought was that parties may
hesitate to do business with an entity insulated from judicial
process; promises founded on good faith alone are worth less
than obligations enforceable in court.”). Yet even if this
purported benefit is well-founded, permitting judicial scrutiny
 22
of IDB sanctions proceedings would simultaneously conflict
with the IDB’s mandate to “take all necessary measures to
ensure that the proceeds of any loan made, guaranteed, or
participated in by the Bank are used only for purposes for
which the loan was made, with due attention to considerations
of economy and efficiency.” IDB Charter art. III, § 9(b)
(emphasis added). One can reasonably foresee future subjects
of sanctions proceedings “halt[ing] or delay[ing] those
proceedings by filing suits in the courts of the IDB’s member
countries,” thereby frustrating the IDB’s ability to
“expeditiously root[] out corruption in its projects” and
“safeguard[] its funds” with any sort of economy and
efficiency. Rosenkrantz, 2021 WL 1254367, at *16. This would
be especially true if such suits are, over time, brought in the
courts of different IDB member states, potentially leading to
inconsistent judgments and directives. Cf. Broadbent v. Org. of
Am. States, 628 F.2d 27, 35 (D.C. Cir. 1980) (“Denial of
immunity opens the door to divided decisions of the courts of
different member states passing judgment on the rules,
regulations, and decisions of the international bodies.”). Thus,
the Plaintiffs’ proffered benefit is substantially outweighed by
the burdens caused by judicial scrutiny and we, like the district
court, are compelled to conclude that Article XI, section 3 of
the IDB Charter should not be construed to waive the IDB’s
immunity from the Plaintiffs’ claims. See Rosenkrantz, 2021
WL 1254367, at *16.

The Plaintiffs, for their part, contend that we should look
not to Atkinson and Mendaro but rather to an even earlier
decision of our Court that interpreted Article XI, section 3 of
the IDB Charter: Lutcher S.A. Celulose e Papel v. Inter-Am.
Dev. Bank, 382 F.2d 454 (D.C. Cir. 1967). The Plaintiffs
primarily point to the following language in Lutcher with
reference to Article XI, section 3:
 23
The drafters thus manifested full awareness of
the immunity problem and we conclude they
must have been aware that they were waiving
immunity in broad terms rather than treating
narrowly a venue problem. Thus we cannot read
it in a restrictive sense; we read it as permitting
the assertion of a claim against the Bank by one
having a cause of action for which relief is
available.

382 F.3d at 457. As the Plaintiffs see it, section 3 waives
immunity broadly, meaning that Lutcher is irreconcilable with
the narrower corresponding benefit test outlined in Mendaro
and Atkinson and, being the earlier of the three decisions,
should control. Appellants’ Br. 29–30; see also Vila v. Inter-
Am. Inv. Corp., 583 F.3d 869, 870–71 (D.C. Cir. 2009) (order
denying rehearing en banc) (statement of Williams, J.) (finding
Lutcher and Mendaro “impossible to reconcile”).

It is true that “when a conflict exists within our own
precedent, we are bound by the earlier decision.” United States
v. Old Dominion Bd. Club, 630 F.3d 1039, 1045 (D.C. Cir.
2011). But we should not be hasty to “discard a later precedent
that distinguished—or is distinguishable from—an earlier
decision.” Id. Accordingly, we decline to act with such haste.

First, a brief sketch of Lutcher: An IDB debtor alleged that
the IDB breached a loan agreement and argued that section 3
waived the IDB’s immunity from the suit. 382 F.2d at 455–56.
Noting that section 3 was “hardly a model of clarity,” the Court
nonetheless concluded that it presented either a venue
provision or a waiver provision and adopted the latter
interpretation. Id. at 456–47. Noting further that other sections
of Article XI expressly reserved immunity in certain contexts,
such as by barring suit by the IDB’s members, the Court
 24
concluded that “[t]he drafters . . . must have been aware that
they were waiving immunity in broad terms rather than treating
narrowly a venue problem” and read section 3 “as permitting
the assertion of a claim against the Bank by one having a cause
of action for which relief is available.” Id. at 457. The Court
therefore rejected the IDB’s contention that section 3 limited
any waiver to “suit[s] by bondholders, creditors, and
beneficiaries of its guarantees, on the theory that in such cases
vulnerability to suit contributes to the effectiveness of the
Bank’s operation.” Id. at 456. In doing so, the Court found that
suits brought by debtors were just as necessary as those brought
by creditors, given that “responsible borrowers committing
large sums and plans on the strength of the Bank’s agreement
to lend would be reluctant to enter into borrowing contracts if
thereafter they were at the mercy of the Bank’s good will,
devoid of means of enforcement.” Id. at 459–60.

On the surface, it would appear that Lutcher’s broad
interpretation of section 3 would be fatal to the IDB’s immunity
defense. But if we dig a little deeper—as this Court has done in
the past—we find this superficial reading of Lutcher
unfounded. In Lutcher, the plaintiff was the IDB’s debtor and
the IDB argued that any waiver of immunity under section 3
was limited to bondholders and other creditors, not debtors. Id.
at 455–56. The Court thus treated the issue on those terms—
creditor versus debtor. See id. at 458 (“Provision for suit in any
member country where the Bank has an office must have been
designed to facilitate suit for some class other than creditors
and bondholders, i.e., borrowers[.]”); id. at 459 (citing
congressional testimony from U.S. State Department official
asserting, as “one . . . possibility,” IDB “might have a liability
to private persons in the United States on bonds which it had
issued” and concluding such testimony “does not indicate that
suits by creditors were the only ones permissible” (internal
quotation marks and citation omitted)). In doing so, we
 25
declined to define immunity according to “the identity of the
suitor,” including a creditor or a debtor, or “the type of action
a particular suit represents,” whether it be a bondholder seeking
to enforce bond obligations or a debtor seeking to enjoin the
Bank from acting contrary to the terms of a loan agreement. Id.
at 459. Moreover, the Court acknowledged the same functional
approach taken later in Mendaro and Atkinson: “[T]he
doctrine” of sovereign immunity “has developed around the
nature and function of the defendant.” 5 Id. at 459; see also id.
at 459–60 (“Even if [the Court] accepted . . . the distinction”
between creditor versus debtor, “it may be that responsible
borrowers . . . would be reluctant to enter into borrowing
contracts if thereafter they were at the mercy of the Bank’s
good will, devoid of means of enforcement”). Lutcher therefore
has much in common with cases like Vila and Osseiran, which
applied the corresponding benefit test to find a waiver of
immunity.

Mendaro, for its part, acknowledged Lutcher and
discussed it on its decidedly narrower facts and posture. The

5
At the time of Lutcher, the international legal community
similarly embraced the functional necessity doctrine—i.e., the
principle that international organizations should possess at least the
minimum immunities necessary to perform their chartered
functions—as a theoretical limitation on organizational immunity.
See, e.g., Restatement (Second) of the Foreign Relations Law of the
United State § 83 (Am. Law. Inst. 1965) (“An international
organization has such immunity from the jurisdiction of a member
state to prescribe or enforce rules of law as is necessary for the
fulfillment of its purpose as they are stated in its constitution.”)
(emphasis added); Josef L. Kunz, Privileges and Immunities of
International Organizations, 41 Am. J. Int’l L. 828, 847 (1947)
(“The functional principle as the basis” of international organization
immunity is “almost universally recognized,” the “raison d’être” of
immunity).
 26
Court concluded that “[a]lthough the [Lutcher] court
construed” section 3 “broadly enough to uphold its jurisdiction,
the action clearly arose out of the Bank’s external lending
activities,” namely “suits by the Bank’s borrowers,” when
waiver of immunity “would directly aid the Bank in attracting
responsible borrowers.” Mendaro, 717 F.2d at 620; see also
Vila, 583 F.3d at 869–70 (order denying rehearing en banc)
(statement of Rogers, J.) (Mendaro “did not overlook Lutcher”
but rather clarified its scope). The Court reasoned that
Lutcher’s purportedly broad reading of a waiver provision like
Article XI, section 3 is “logical only if the waiver provisions
are read in a vacuum, without reference to the interrelationship
between the functions of the [international organization] set
forth in [its charter] and the underlying purposes of
international immunities”; it instead elected to construe such a
waiver provision to the extent the international organization
“intended to waive . . . immunity from suits by its debtors,
creditors, bondholders, and those other potential plaintiffs to
whom the [it] would have to subject itself to suit in order to
achieve its chartered objectives.” Mendaro, 717 F.2d at 615.
Atkinson subsequently observed Mendaro’s “reject[ion]” of the
broad reading of Lutcher, see Atkinson, 156 F.3d at 1338, and
our later decisions have similarly acknowledged the narrower
understanding of Lutcher’s holding, see, e.g., Osseiran, 552
F.3d at 840 (citing Lutcher in support of the proposition that
“parties may hesitate to do business with an entity insulated
from judicial process”); Vila, 570 F.3d at 279 (doing same); see
also Sampaio v. Inter-Am. Dev. Bank, 806 F. Supp. 2d 238, 244
(D.D.C. 2011) (characterizing Lutcher as holding Inter-
American Development Bank “may be sued by a debtor to
enforce a loan agreement”), aff’d, 468 F. App’x 10 (D.C. Cir.
2012).

Thus, if we were to give significant weight to Lutcher’s
sweeping conclusion that Article XI, section 3 of the IDB
 27
Charter “permit[s] the assertion of a claim against the Bank by
one having a cause of action for which relief is available,” 382
F.2d at 457, we would run the risk of needlessly and
inadvisably transforming dicta into a holding. See Seminole
Tribe of Fla. v. Florida, 517 U.S. 44, 67 (1996) (“[I]t is not
only the result but also those portions of the opinion necessary
to that result by which we are bound.”) (emphasis added); Doe
v. Fed. Democratic Republic of Ethiopia, 851 F.3d 7, 10 (D.C.
Cir. 2017) (“[B]inding circuit law comes only from the
holdings of a prior panel, not from its dicta.” (quoting Gersman
v. Grp. Health Ass’n, 975 F.2d 886, 897 (D.C. Cir. 1992)).

For the foregoing reasons, the district court’s judgment is
affirmed.

So ordered.