08-2666-cv (L), 08-2836-cv (XAP)
Anglo-Iberia v. Lodderhose
1 UNITED STATES COURT OF APPEALS
2 FOR THE SECOND CIRCUIT
3
4 August Term 2009
5 (Argued: October 27, 2009 Decided: March 29, 2010)
6 Docket Nos. 08-2666-cv (L), 08-2836-cv (XAP)
7 -----------------------------------------------------x
8 ANGLO-IBERIA UNDERWRITING MANAGEMENT COMPANY,
9
10 Plaintiff-Counter-Defendant-Appellant-
11 Cross-Appellee,
12
13 INDUSTRIAL RE INTERNATIONAL, INC.,
14
15 Plaintiff-Appellant-Cross-Appellee,
16
17 -- v. --
18
19 P.T. JAMSOSTEK (PERSERO) and REPUBLIC OF INDONESIA,
20
21 Defendants-Appellees-Cross-Appellants,
22
23 Daniel J. Lodderhose and Security Resources
24 International, Inc.,
25
26 Defendants-Counter-Claimants-Cross-Defendants,
27
28 Security Resources International, Inc., GC Insurance
29 Brokers, Limited, CG Intermediaries Limited, Peter I.
30 Greengrass, Leslie J. Cooper and A.J. Smith,
31
32 Defendants-Counter-Claimants,
33
34 Prio Adhi Sartano,
35
36 Consolidated Defendant.
37
38 -----------------------------------------------------x
39
40 B e f o r e : WALKER, McLAUGHLIN, and RAGGI, Circuit Judges.
41
42 Anglo-Iberia Underwriting Management Company and Industrial
1
1 Re International, Inc., appeal from an order of the United States
2 District Court for the Southern District of New York (Donald C.
3 Pogue, Judge, of the United States Court of International Trade,
4 sitting by designation) that dismissed their negligent
5 supervision claim against P.T. Jamsostek (Persero) and the
6 Republic of Indonesia for lack of subject matter jurisdiction
7 under the Foreign Sovereign Immunities Act (“FSIA”). Because we
8 conclude that P.T. Jamsostek (Persero) and the Republic of
9 Indonesia were not engaged in “commercial activity” for purposes
10 of the FSIA, and that, even assuming arguendo that they were
11 involved in “commercial activity,” their alleged negligent
12 supervision of Jamsostek employees was not “in connection with”
13 such commercial activity, we AFFIRM the district court’s
14 dismissal of the claim for lack of subject matter jurisdiction.
15 AFFIRMED.
16 JOHN R. KEOUGH, III (Cody D.
17 Constable, Peter C. Dee, on the
18 brief), Waesche, Sheinbaum &
19 O’Regan, P.C., New York, NY, for
20 Plaintiffs-Appellants-Cross-
21 Appellees.
22
23 FRANK PANOPOULOS (Carolyn B. Lamm,
24 Nicole Erb, Claire DeLelle, on the
25 brief), White & Case LLP,
26 Washington, DC, for Defendants-
27 Appellees-Cross-Appellants.
28
29 JOHN M. WALKER, JR., Circuit Judge:
30 Anglo-Iberia Underwriting Management Company and Industrial
31 Re International, Inc. (collectively, “Anglo-Iberia”) appeal from
2
1 an order of the United States District Court for the Southern
2 District of New York (Donald C. Pogue, Judge, of the United
3 States Court of International Trade, sitting by designation) that
4 dismissed Anglo-Iberia’s negligent supervision claim against the
5 Indonesian state-owned social security insurer, P.T. Jamsostek
6 (Persero) (“Jamsostek”), and the Republic of Indonesia
7 (“Indonesia”) for lack of subject matter jurisdiction under the
8 Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§ 1330,
9 1602-1611. Because we conclude that neither Jamsostek nor
10 Indonesia was involved in “commercial activity” for purposes of
11 the FSIA, 28 U.S.C. § 1605(a)(2), and that, even assuming
12 arguendo that they were involved in “commercial activity,”
13 Jamsostek’s alleged failure to supervise its employees was not
14 “in connection with” such commercial activity, id., we AFFIRM the
15 district court’s dismissal of Anglo-Iberia’s claim for lack of
16 subject matter jurisdiction.
17 BACKGROUND
18 This case comes before this court for a second time, see
19 Anglo-Iberia Underwriting Mgmt. Co. v. Lodderhose, 235 F. App’x
20 776 (2d Cir. 2007) (summary order) (“Anglo-Iberia I”), and
21 involves only the negligent supervision claim we remanded in
22 Anglo-Iberia I. Specifically, this appeal concerns the district
23 court’s dismissal on remand of Anglo-Iberia’s claim that
24 Jamsostek negligently supervised its employee, Prio Adhi Sartono,
3
1 as well as other Jamsostek employees who acted together with
2 Sartono to perpetrate an international commercial reinsurance
3 fraud scheme to Anglo-Iberia’s detriment. According to Anglo-
4 Iberia, Jamsostek’s negligent supervision of its employees
5 enabled Sartono to commit commercial reinsurance fraud against
6 Anglo-Iberia while Sartono was in Colorado pursuing a Jamsostek-
7 sponsored MBA.1 On remand, the district court concluded that it
8 lacked subject matter jurisdiction over Anglo-Iberia’s negligent
9 supervision claim against Jamsostek and Indonesia because
10 Jamsostek’s activities were not commercial in nature and did not
11 fall within a FSIA-enumerated exception to sovereign immunity.
12 See Anglo-Iberia Underwriting Mgmt. Co. v. Lodderhose, No. 97-
13 0084 (DCP), 2008 WL 190364, at *1, *4-5 (S.D.N.Y. Jan. 22,
14 2008). We assume familiarity with this court’s May 2007 summary
15 order and the opinions below,2 and set forth the relevant facts
1
1 The district court imposed damages, and reasonable
2 attorney’s fees and costs, against, inter alia, individual
3 defendants Sartono and Daniel J. Lodderhose. See Anglo-Iberia
4 Underwriting Mgmt. Co. v. Lodderhose, 287 F. Supp. 2d 454
5 (S.D.N.Y. 2003); Anglo-Iberia Underwriting Mgmt. Co. v.
6 Lodderhose, 282 F. Supp. 2d 126 (S.D.N.Y. 2003).
2
1 The district court denied Anglo-Iberia’s motion for
2 reconsideration in an unpublished, two-page order dated April 30,
3 2008. See Special App. 18-19. More detailed descriptions of the
4 events giving rise to Sartono’s fraud are available at Anglo-
5 Iberia Underwriting Mgmt. Co. v. Lodderhose, 224 F. Supp. 2d 679,
6 681-84 (S.D.N.Y. 2002); Anglo-Iberia Underwriting Mgmt. Co. v. PT
7 Jamsostek, No. 97 Civ. 5116 HB, 1999 WL 76909, at *2-5 (S.D.N.Y.
8 Feb. 16, 1999); and Anglo-Iberia Underwiting Mgmt. Co. v. PT
9 Jamsostek, No. 97 Civ. 5116(HB), 1998 WL 289711, at *1-2
10 (S.D.N.Y. June 4, 1998).
4
1 in the discussion section only insofar as necessary to resolve
2 the instant appeal.
3 DISCUSSION
4 I. FSIA Generally and Standard of Review
5 “The FSIA ‘provides the sole basis for obtaining
6 jurisdiction over a foreign state in federal court.’” Matar v.
7 Dichter, 563 F.3d 9, 12 (2d Cir. 2009) (quoting Argentine
8 Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 439
9 (1989)). In general, a foreign state or an “agency or
10 instrumentality of a foreign state,” 28 U.S.C. § 1603(b), is
11 immune from federal court jurisdiction unless a specific
12 exception to the FSIA applies, Matar, 563 F.3d at 12. See also
13 28 U.S.C. § 1604; Kato v. Ishihara, 360 F.3d 106, 107-08 (2d Cir.
14 2004) (“The FSIA codifies the restrictive theory of sovereign
15 immunity, under which foreign sovereigns and their agencies or
16 instrumentalities enjoy immunity from suit in United States
17 courts, subject to a few, enumerated statutory exceptions.”
18 (internal quotation marks, citations, and alterations omitted)).
19 The burden is on the defendant seeking sovereign immunity to
20 show it is a foreign sovereign. Matar, 563 F.3d at 12. Once the
21 defendant makes this showing, the burden then shifts to the
22 plaintiff to show that a FSIA-enumerated exception to sovereign
23 immunity applies. Id. “Determining whether this burden is met
24 involves a review of the allegations in the complaint, the
5
1 undisputed facts, if any, placed before the court by the parties,
2 and – if the plaintiff comes forward with sufficient evidence to
3 carry its burden of production on this issue – resolution of
4 disputed issues of facts.” In re Terrorist Attacks on Sept. 11,
5 2001, 538 F.3d 71, 80 (2d Cir. 2008) (internal quotation marks
6 and alterations omitted). The district court may look to
7 evidence outside the pleadings and hold an evidentiary hearing,
8 if it believes one is warranted, in resolving the question of
9 jurisdiction. See Filetech S.A. v. France Telecom S.A., 157 F.3d
10 922, 932 (2d Cir. 1998). The ultimate burden of persuasion
11 remains with the party seeking sovereign immunity. See In re
12 Terrorist Attacks on Sept. 11, 2001, 538 F.3d at 80; see also
13 Robinson v. Gov’t of Malaysia, 269 F.3d 133, 141 n.8 (2d Cir.
14 2001) (noting that “the defendant must show that the alleged
15 exception does not apply by a preponderance of the evidence”).
16 The parties do not dispute that Jamsostek and Indonesia are
17 foreign sovereigns presumptively entitled to sovereign immunity.
18 Rather, the issue in contention is whether an exception to their
19 sovereign immunity applies. We review a district court’s
20 decision concerning subject matter jurisdiction under the FSIA
21 for clear error as to factual findings, and de novo as to legal
22 conclusions. Matar, 563 F.3d at 12 (citing Robinson, 269 F.3d at
23 138).
24 II. FSIA’s “Commercial Activity” Exception
6
1 FSIA’s “commercial activity” exception – the only FSIA
2 exception that Anglo-Iberia invokes – abrogates sovereign
3 immunity in cases in which the action is based upon
4 [1] a commercial activity carried on in the United
5 States by the foreign state; or upon
6
7 [2] an act performed in the United States in connection
8 with a commercial activity of the foreign state
9 elsewhere; or upon
10
11 [3] an act outside the territory of the United States
12 in connection with a commercial activity of the foreign
13 state elsewhere and that act causes a direct effect in
14 the United States.
15
16 28 U.S.C. § 1605(a)(2). A “commercial activity” is defined under
17 the FSIA as “either a regular course of commercial conduct or a
18 particular commercial transaction or act.” 28 U.S.C. § 1603(d).
19 The “commercial character” of a defendant’s conduct, transaction,
20 or act is determined “by reference to the nature of the course of
21 conduct or particular transaction or act, rather than by
22 reference to its purpose.” Id. Because Anglo-Iberia does not
23 argue that the first clause of the “commercial activity”
24 exception applies, cf. Anglo-Iberia, 2008 WL 190364, at *2 n.6
25 (rejecting Anglo-Iberia’s arguments under the first clause of the
26 exception), the issue for this appeal is whether Anglo-Iberia has
27 shown that Jamsostek and Indonesia are subject to federal court
28 jurisdiction under either the second or third clauses of the
29 “commercial activity” exception.
30 As an initial matter, we note that under both the second and
7
1 third clauses of the “commercial activity” exception, Anglo-
2 Iberia must show that its negligent supervision claim is grounded
3 upon an act in connection with the commercial activity of
4 Jamsostek and Indonesia elsewhere. See 28 U.S.C. § 1605(a)(2).3
5 Thus, should Anglo-Iberia fail to establish that its claim is
6 connected to Jamsostek and Indonesia’s commercial activity, if
7 any, in Indonesia, Anglo-Iberia’s claim necessarily fails.
8 Because we conclude that Anglo-Iberia’s negligent supervision
3
1 A primary difference between the second and third clauses of
2 the “commercial activity” exception is the location of the
3 relevant act upon which the plaintiff’s claim is based, although
4 in both clauses that act must be “in connection with a commercial
5 activity of the foreign state elsewhere.” 28 U.S.C.
6 § 1605(a)(2).
7
8 Thus, Anglo-Iberia argues under the second clause of the
9 “commercial activity” exception that its negligent supervision
10 claim is based upon (1) “the acts [Jamsostek] performed in the
11 United States by supervising and administering its job training
12 program with Sartono and other employees . . . , ‘in connection
13 with’ its employment of Sartono and the other wrongdoing
14 employees at its commercial offices in Indonesia conducting
15 insurance business,” and (2) “Anglo-Iberia’s act of depositing
16 [reinsurance] premiums in a New York bank . . . and the
17 commercial activity of [Jamsostek] in supervising its employees
18 in Indonesia.” See Kensington Int’l Ltd. v. Itoua, 505 F.3d 147,
19 157 (2d Cir. 2007) (noting that the second clause of the
20 “commercial activity” exception “is generally understood to apply
21 to non-commercial acts in the United States that relate to
22 commercial acts abroad” (internal quotation marks and emphasis
23 omitted)).
24
25 Meanwhile, Anglo-Iberia claims under the third clause of the
26 “commercial activity” exception that “[Jamsostek]’s negligent
27 supervision of its employees in Indonesia and Monaco in
28 connection with commercial activity of [Jamsostek] in Indonesia
29 caused a direct effect in the United States,” thereby causing
30 Anglo-Iberia “to enter the reinsurance transactions with
31 [Jamsostek]’s employees” and incur “financial losses in the
32 United States.”
8
1 claim is not based upon an act “in connection with a commercial
2 activity of [Jamsostek and Indonesia] elsewhere,” 28 U.S.C.
3 § 1605(a)(2), we reject Anglo-Iberia’s contention that it has
4 sustained its burden under the FSIA of going forward with
5 evidence showing that immunity should not be granted. See
6 Robinson, 269 F.3d at 141.
7 We reach this conclusion because Anglo-Iberia has not
8 demonstrated that Jamsostek and Indonesia were involved in
9 “commercial activity” for purposes of the FSIA. In Republic of
10 Argentina v. Weltover, 504 U.S. 607 (1992), the Supreme Court
11 explained that a foreign state engages in commercial activity
12 “when a foreign government acts, not as a regulator of a market,
13 but in the manner of a private player within it,” and thus, that
14 sovereign immunity does not bar a suit “based upon a foreign
15 state’s participation in the marketplace in the manner of a
16 private citizen or corporation.” 504 U.S. at 614. The Supreme
17 Court reiterated this principle in Saudi Arabia v. Nelson, 507
18 U.S. 349 (1993), wherein it explained that “a state engages in
19 commercial activity [under the FSIA] where it exercises only
20 those powers that can also be exercised by private citizens, as
21 distinct from those powers peculiar to sovereigns. Put
22 differently, a foreign state engages in commercial activity for
23 purposes of [the FSIA] only where it acts in the manner of a
24 private player within the market.” 507 U.S. at 360 (internal
9
1 quotation marks omitted); see also Hanil Bank v. PT. Bank Negara
2 Indonesia (Persero), 148 F.3d 127, 131 (2d Cir. 1998).
3 Thus, to determine the nature of a sovereign’s act, we ask
4 not “whether the foreign government is acting with a profit
5 motive or instead with the aim of fulfilling uniquely sovereign
6 objectives” but rather “whether the particular actions that the
7 foreign state performs (whatever the motive behind them) are the
8 type of actions by which a private party engages in ‘trade and
9 traffic or commerce.’” Weltover, 504 U.S. at 614; see also
10 Nelson, 507 U.S. at 360-61. We begin this inquiry by examining
11 the act of the foreign sovereign that serves as the basis for the
12 plaintiff’s claim. See Garb v. Republic of Poland, 440 F.3d 579,
13 586 (2d Cir. 2006) (identifying this as “a threshold step in
14 assessing [a party’s] reliance on the ‘commercial activity’
15 exception”). Here, the basis of Anglo-Iberia’s claim is
16 Jamostek’s alleged negligent supervision of Sartono and other
17 employees in connection with Jamsostek’s provision of health
18 insurance in Indonesia.4 We thus look to whether the actions
4
1 We conclude that the district court properly rejected Anglo-
2 Iberia’s claim under the second clause of the “commercial
3 activity” exception for the reasons set forth in its opinion.
4 See Anglo-Iberia, 2008 WL 190364, at *2 n.6 (explaining that the
5 proper focus is on Jamsostek’s alleged negligent supervision with
6 respect to its insurance activities in Indonesia because
7 Jamsostek’s support of Sartono in a U.S.-based MBA program was
8 purely incidental to his employment). We similarly reject Anglo-
9 Iberia’s argument that jurisdiction exists under the FSIA on the
10 basis of its act of depositing reinsurance premiums in a New York
11 bank.
10
1 Jamsostek performs with respect to its role as Indonesia’s
2 default health insurer are the type of actions by which a private
3 party engages in trade and traffic or commerce.
4 Anglo-Iberia argues that it properly invoked the “commercial
5 activity” exception because Jamsostek competes with private
6 insurers in providing health insurance to Indonesians and acts
7 akin to a private insurer in its hiring, training, employment,
8 and supervision of employees to perform non-discretionary duties
9 such as locating health care providers, processing and verifying
10 health insurance claims, collecting health insurance premiums,
11 and preparing reports.5 However, in arguing that Jamsostek
12 behaves like a private insurer, Anglo-Iberia mischaracterizes the
13 nature of the acts Jamsostek performs “in its capacity as the
14 default health insurer, under Indonesia’s national social
15 security program, which . . . Jamsostek operates and
16 administers.” Anglo-Iberia, 2008 WL 190364, at *4. As the
17 district court correctly found, Jamsostek “does not sell
18 insurance to workers or to employers in any traditional sense”
19 and does not otherwise compete in the marketplace like a private
20 insurer. Id. at *5. Rather, as the default health insurer under
5
1 While Anglo-Iberia also argues, inter alia, that Jamsostek’s
2 employees’ day-to-day activities of processing health claims and
3 collecting health insurance premiums mirror the activities of a
4 private insurer’s employees, we properly focus our “commercial
5 activity” analysis on “the particular actions that the foreign
6 state performs,” and not on the particular actions of any
7 specific Jamsostek employee. Weltover, 504 U.S. at 614 (emphasis
8 added); see also Kato, 360 F.3d at 111-12.
11
1 Indonesia’s national social security program, Jamsostek “provides
2 a general ‘floor’ for health insurance for all workers in
3 Indonesia” and ensures that “Indonesian employers with at least
4 ten employees” comply with the governmental mandate that they
5 provide, at a minimum, basic health insurance coverage to their
6 workers. Id.6
7 Thus, we agree with the district court that, for purposes of
8 our analysis under Weltover, the nature of Jamsostek’s hiring,
9 supervision, and employment of Sartono and other employees is
10 directly concerned with “employment in the provision of a
11 governmental program of health benefits through collection of
12 employer contributions and payroll deductions” and that “such
13 employment is by nature non-commercial.” Id. at *4. Despite
14 Anglo-Iberia’s argument to the contrary, to hold otherwise and
15 look only to the fact of employment for purposes of our
16 “commercial activity” analysis would allow the exception to
17 swallow the rule of presumptive sovereign immunity codified in
18 the FSIA. See id. at *4 n.10.
19 Based on the record evidence, we easily conclude that
20 Jamsostek’s acts of providing basic health insurance to
21 Indonesia’s workforce and monitoring employers’ compliance with
6
1 Contrary to Anglo-Iberia’s arguments, these qualities define
2 the nature of Indonesia’s national health insurance system, not
3 merely its purpose, because a private insurer could not compel
4 employers to purchase coverage. Cf. Weltover, 504 U.S. at 616-
5 17.
12
1 the governmental mandate under the national social security
2 program are carried out in its capacity as Indonesia’s default
3 health insurer. Jamsostek’s insurance operations do not equate
4 to those of an independent actor in the private marketplace of
5 potential health insurers. Despite Anglo-Iberia’s assertions to
6 the contrary, Jamsostek’s actions in connection with the
7 administration of Indonesia’s national health insurance program
8 are sovereign in nature and do not suffice to bring it within the
9 “commercial activity” exception to the FSIA. Compare Nelson, 507
10 U.S. at 361 (holding that conduct “peculiarly sovereign in
11 nature” does not satisfy the “commercial activity” exception),
12 and Jungquist v. Sheikh Sultan Bin Khalifa Al Nahyan, 115 F.3d
13 1020, 1030 (D.C. Cir. 1997) (holding that officials’ actions in
14 administering a government health program were “uniquely
15 sovereign in nature” despite “relat[ing] in certain respects to
16 commercial activity”), with Weltover, 504 U.S. at 615 (concluding
17 that Argentina’s issuance of government bonds to refinance its
18 debt was commercial in nature because the bonds “in almost all
19 respects [are] garden-variety debt instruments . . . [that] may
20 be held by private parties . . . [and] are negotiable and may be
21 traded on the international market”).
22 Anglo-Iberia’s argument under the “commercial activity”
23 exception also fails for a second reason: Jamsostek’s alleged
24 negligence was not “in connection with” its health insurance
13
1 activities in Indonesia. Even assuming arguendo and contrary to
2 fact that the nature of Jamsostek’s insurance activities were
3 commercial and not sovereign, Anglo-Iberia has not shown a
4 sufficient nexus between Jamsostek’s alleged negligent
5 supervision and its alleged commercial activity for purposes of
6 abrogating Jamsostek’s presumptive sovereign immunity under the
7 FSIA. We have made clear that “[t]he statutory term ‘in
8 connection,’ as used in the FSIA, is a term of art, and we
9 interpret it narrowly.” Garb, 440 F.3d at 587. As such, “acts
10 are ‘in connection’ with . . . commercial activity so long as
11 there is a ‘substantive connection’ or a ‘causal link’ between
12 them and the commercial activity.” Id. (internal quotation marks
13 and alterations omitted); see also Drexel Burnham Lambert Group
14 Inc. v. Comm. of Receivers for A.W. Galadari, 12 F.3d 317, 330
15 (2d Cir. 1993) (declining to read § 1605(a)(2)’s “connection”
16 language “to include tangential commercial activities to which
17 the ‘acts’ forming the basis of the claim have only an attenuated
18 connection”).
19 Here, we cannot conclude that Jamsostek’s alleged negligent
20 supervision of Sartono and his colleagues was “in connection
21 with” its provision of basic health insurance in Indonesia. The
22 commercial reinsurance scheme that is said to have injured Anglo-
23 Iberia was Sartono’s alone and wholly unrelated to any negligent
24 supervision by Jamsostek with respect to its insurance activities
14
1 in Indonesia. Indeed, during the relevant time period, Sartono
2 was relieved of his regular employment responsibilities, was
3 unauthorized to conduct any commercial reinsurance activities,
4 and was prohibited from conducting Jamsostek business in Monaco,
5 the United States, or elsewhere abroad. See Anglo-Iberia, 2008
6 WL 190364, at *1 (adopting earlier district court findings). In
7 addition, whatever assistance Sartono’s Jamsostek-based
8 colleagues rendered to Sartono was provided solely at the
9 direction of Sartono, primarily occurred off-premises, did not
10 involve Jamsostek’s business accounts, and was plainly unrelated
11 to Jamsostek’s administration of Indonesia’s social security
12 program. In essence, Anglo-Iberia faults Jamsostek for failing
13 to stop Sartono from enlisting the help of a few of his Jamsostek
14 colleagues, some of whom claimed to be acting unwittingly, in
15 establishing a fraudulent side business. The record, however,
16 demonstrates nothing more than the barest connection between
17 Anglo-Iberia’s alleged injuries by Sartono and Jamsostek’s
18 alleged negligent supervision of Sartono and others with respect
19 to its social insurance activities in Indonesia. Compare
20 Weltover, 504 U.S. at 614-15 (concluding that Argentina’s act of
21 unilaterally extending its payment obligations was in connection
22 with its commercial activity of issuing bonds), with O’Bryan v.
23 Holy See, 556 F.3d 361, 380 (6th Cir. 2009) (holding “commercial
24 activity” exception inapplicable to plaintiff’s claims of
15
1 negligent supervision because the “gravamen” of plaintiff’s
2 claims did not “truly sound[ ] in commercial activity”), cert.
3 denied, 130 S. Ct. 361 (2009), and Stena Rederi AB v. Comision de
4 Contratos del Comite Ejecutivo General, 923 F.2d 380, 386 (5th
5 Cir. 1991) (“Not only must there be a jurisdictional nexus
6 between the United States and the commercial acts of the foreign
7 sovereign, there must be a connection between the plaintiff’s
8 cause of action and the commercial acts of the foreign
9 sovereign.”).
10 Thus, even if we were to conclude – contrary to fact – that
11 Jamsostek’s administration of Indonesia’s national health
12 insurance program and its employment of Sartono and his
13 colleagues were commercial in nature, Jamsostek’s alleged
14 negligent supervision of these employees is not sufficiently
15 connected to its insurance operations in Indonesia to satisfy the
16 “in connection with” requirement of FSIA’s “commercial activity”
17 exception. To conclude otherwise under the facts of this case
18 would be to abrogate a foreign sovereign’s immunity solely on the
19 basis of an employment relationship and would allow Anglo-Iberia
20 to recast what is effectively a fraud claim, lacking any
21 significant nexus to Jamsostek’s insurance activities in
22 Indonesia, as a negligent supervision claim sufficient to bring
23 Jamsostek within FSIA’s “commercial activity” exception. See
24 Nelson, 507 U.S. at 363.
16
1 We therefore conclude that Anglo-Iberia has failed to
2 demonstrate that Jamsostek is subject to jurisdiction under
3 FSIA’s “commercial activity” exception. We similarly conclude
4 that Anglo-Iberia has failed to demonstrate that Indonesia is
5 subject to jurisdiction under the FSIA because Anglo-Iberia’s
6 claim against Indonesia rests on the success of its allegations
7 against Jamsostek and because Anglo-Iberia has not overcome the
8 presumption that Jamsostek is a “juridical entit[y] distinct and
9 independent from” Indonesia. First Nat’l City Bank v. Banco Para
10 El Comercio Exterior de Cuba, 462 U.S. 611, 627-29, 632 (1983).
11 Having concluded that Anglo-Iberia’s negligent supervision claim
12 fails to satisfy the “commercial activity” exception set forth
13 under 28 U.S.C. § 1605(a)(2), we do not reach Anglo-Iberia’s
14 remaining arguments on appeal or Jamsostek and Indonesia’s
15 arguments on cross-appeal.7
16
17 CONCLUSION
18 For the forgoing reasons, the district court’s dismissal of
19 Anglo-Iberia’s negligent supervision claim for lack of subject
20 matter jurisdiction is AFFIRMED.
7
1 Specifically, we do not reach Jamsostek and Indonesia’s
2 challenge to the district court’s holding that if Jamsostek’s
3 negligent supervision were “in connection with” a “commercial
4 activity,” it had a “direct effect” in the United States within
5 the meaning of 28 U.S.C. § 1605(a)(2). We also decline to reach
6 Jamsostek and Indonesia’s argument that the torts exception, see
7 28 U.S.C. § 1605(a)(5), bars Anglo-Iberia’s negligent supervision
8 claim.
17