Wood Ex Rel. United States v. American Institute in Taiwan

                  United States Court of Appeals

               FOR THE DISTRICT OF COLUMBIA CIRCUIT

       Argued February 12, 2002    Decided April 16, 2002 

                           No. 01-5092

                   James C. Wood, Jr., ex rel. 
                    United States of America, 
                            Appellant

                                v.

            The American Institute in Taiwan, et al., 
                            Appellees

          Appeal from the United States District Court 
                  for the District of Columbia 
                         (No. 98cv01952)

     Wm. Paul Lawrence, II argued the cause for appellant.  
With him on the briefs was Bradley S. Weiss.

     Douglas N. Letter, Litigation Counsel, U.S. Department of 
Justice, argued the cause for appellee.  With him on the brief 
were Roscoe C. Howard, Jr., U.S. Attorney, R. Craig Law-
rence and Lydia Kay Griggsby, Assistant U.S. Attorneys.

     Before:  Tatel and Garland, Circuit Judges, and Williams, 
Senior Circuit Judge.

     Opinion for the Court filed by Circuit Judge Tatel.

     Tatel, Circuit Judge:  In this case, we must determine 
whether the American Institute in Taiwan, a unique entity 
through which the United States performs consular services 
on Taiwan and conducts commercial, cultural, and other rela-
tions with the people on Taiwan, enjoys sovereign immunity 
from a qui tam suit brought by the Institute's former Manag-
ing Director.  Agreeing with the district court that the Insti-
tute is immune, we affirm the dismissal of the complaint.

                                I.

     Following the triumph of Mao Zedong's 1949 communist 
revolution, Chiang Kai-Shek, leader of China's defeated Na-
tionalist party, fled to Taiwan with two million loyalists.  The 
United States declined to recognize the new People's Repub-
lic of China, continuing instead to recognize the Nationalists 
as the official leaders of the Chinese government.  This 
arrangement lasted until several years after President Rich-
ard Nixon's historic visit to China when, in 1978, the United 
States established diplomatic relations with the People's Re-
public.

     As a condition of normalizing relations with the United 
States, the People's Republic insisted on recognition as "the 
sole legal government of China," stating its "firm[ ] op-
pos[ition] [to] any activities which aim at ... an[ ] 'indepen-
dent Taiwan.' "  Dep't St. Bull., Mar. 20, 1972, at 435, 437 
(setting forth text of Shanghai Communique).  Because the 
United States wished to maintain relations with Taiwan that 
would not be unacceptable to the People's Republic, Congress 
passed the Taiwan Relations Act of 1979, which replaced 
official recognition of Taiwan with "relations between the 
people of the United States and the people on Taiwan."  22 
U.S.C. s 3301(b)(1).  In addition to "preserv[ing] and pro-
mot[ing] commercial, cultural, and other relations" with the 
people on Taiwan, id., Congress sought to protect the United 
States' ongoing interest in "peace and stability in the area," 

id. s 3301(b)(2), and in the determination of Taiwan's future 
by "peaceful means," id. s 3301(b)(3), (4);  "to provide Taiwan 
with arms of a defensive character," id. s 3301(b)(5);  and to 
prevent threats to "the security, or the social or economic 
system, of the people on Taiwan," id. s 3301(b)(6).  As Sena-
tor Church, the sponsor of the bill that became the Taiwan 
Relations Act explained, Congress wanted to "make[ ] clear to 
the people on Taiwan that we are not abandoning them" while 
"simultaneously developing a mutually beneficial relationship 
with the People's Republic of China."  125 Cong. Rec. 6709 
(1979).

     To facilitate this new and sensitive set of relations, the 
Taiwan Relations Act created appellee, the American Insti-
tute in Taiwan.  Given that the United States no longer had 
an embassy on or ambassador to Taiwan, the Institute be-
came the entity through which "the people of the United 
States" and "the people on Taiwan" maintain "extensive, 
close, and friendly commercial, cultural, and other relations."  
22 U.S.C. s 3301(a)(2), (b).  The Act establishes the Institute 
as "a nonprofit corporation incorporated under the laws of the 
District of Columbia or ... such comparable successor non-
governmental entity as the President may designate."  Id. 
s 3305(a)(1)-(2).  The Act "preempt[s]" any "law, rule, regu-
lation, or ordinance of the District of Columbia" "[t]o the 
extent" it "impedes or otherwise interferes with the perfor-
mance of the functions of the Institute pursuant to [the Act]."  
Id. s 3305(c).

     The Taiwan Relations Act gives the Institute two primary 
functions, both of which are to be carried out "in the manner 
and to the extent directed by the President."  22 U.S.C. 
s 3305(a), (b).  First, the Institute "conduct[s] [and] carrie[s] 
out" "[p]rograms, transactions, and other relations conducted 
or carried out by the President or any agency of the United 
States Government with respect to Taiwan."  Id. s 3305(a).  
Second, the Institute "enter[s] into, perform[s], [and] en-
force[s]" any "agreement or transaction" of the President or 
any federal agency "relative to Taiwan."  Id. s 3305(b).  The 
Institute also provides services to federal agencies, id. 
s 3308, and performs "acts such as are authorized to be 

performed outside the United States for consular purposes," 
id. s 3306(a)(3);  acts performed in this latter connection 
"shall be valid, and of like force and effect within the United 
States, as if performed by any other person authorized under 
the laws of the United States to perform such acts," id. 
s 3306(b).  The United States Comptroller General may audit 
the Institute's books with respect to any funds made available 
to the Institute by federal agencies.  Id. s 3308(c).

     The President delegated the lion's share of his authority 
over the Institute to the Secretary of State.  See Exec. Order 
No. 12,143, 44 Fed. Reg. 37,191 (June 22, 1979), superseded 
by Exec. Order No. 13,014, 61 Fed. Reg. 42,963 (Aug. 15, 
1996).  Under the Institute's bylaws, the Secretary appoints 
and "may ... remove[ ] [the Trustees] at any time, with or 
without cause."  James Wood ex rel. United States of Amer-
ica v. Am. Inst. in Taiwan, No. 98-1952, slip op. at 13 
(D.D.C. Feb. 28, 2001) (quoting United States' Mem. Supp. 
Mot. to Dismiss at 6 n.3 (quoting Institute bylaws)) (internal 
quotation marks omitted).  The Board of Trustees appoints 
both a Chairperson and a Managing Director, see id., and 
" 'manage[s] and conduct[s]' " the Institute's " 'business and 
affairs ... in accordance with the bylaws,' " Appellant's Br. at 
8 (quoting Institute Articles of Incorporation).

     The Institute carries out its statutory responsibilities pur-
suant to a contract with the State Department.  Under that 
contract, the Institute performs "consular and other functions 
in Taiwan .... normally performed by the ... [State Depart-
ment] and other U.S. agencies at United States foreign 
diplomatic posts."  Compl. p 14.  Among other things, the 
Institute processes visa applications from foreign nationals 
and provides travel-related services for Americans.  The In-
stitute contracts with other government agencies to provide 
"services ... similar to those ... provided by federal [embas-
sy] employees prior to the time the United States terminated 
diplomatic relations with Taiwan."  Id. p 13.  For example, 
the Institute conducts trade shows on behalf of the Depart-
ment of Commerce.  The Institute has also entered into a 
number of agreements with the Taipei Economic and Cultural 
Representative Office in the United States, "the instrumental-

ity established by the people on Taiwan having the necessary 
authority ... to ... take ... actions on behalf of Taiwan in 
accordance with the [Taiwan Relations] Act," Exec. Order No. 
13,014, 61 Fed. Reg. at 42,964, concerning such matters as 
customs, energy, intellectual property rights, taxation, and 
trade, see Agreements in Force as of December 31, 1997 
Between the American Institute in Taiwan and the Taipei 
Economic and Cultural Representative Office in the United 
States, 63 Fed. Reg. 71,507 (Dec. 28, 1998).

     Over half of the Institute's approximately $36 million in 
annual revenue derives from the State Department contract.  
Most of the remainder comes from either visa processing fees 
or contracts with other federal agencies.  Between $1.4 and 
$1.5 million comes from trade shows.

     Appellant James Wood served as the Institute's Managing 
Director and chaired its Board of Trustees from 1995 to 1997.  
Wood alleges that during his tenure, he discovered that the 
Institute had defrauded the United States by making false 
claims for payment under the State Department contract to 
the tune of some $5.3 million.  According to Wood, Institute 
personnel accomplished this fraud by embezzling visa pro-
cessing fees and submitting false reports to the State Depart-
ment.  In order to cover operating expenses, he alleges, the 
Institute offset the embezzled amount by drawing additional 
funds from the State Department contract.  Wood claims that 
when he reported the alleged fraud to the State Department, 
the Trustees and State Department officials embarked on a 
"campaign of retaliation, discrimination and intimidation" 
against him, ultimately forcing him to resign.  Compl. p 87.

     Wood then filed a qui tam suit under the False Claims Act, 
31 U.S.C. s 3730, in the United States District Court for the 
District of Columbia.  The False Claims Act permits a pri-
vate person, known as the "relator," to bring "a civil action 
... for the person and for the United States Government ... 
in the name of the Government," id. s 3730(b), against any 
"person who ... knowingly presents, or causes to be present-
ed, to [the federal government] ... a false or fraudulent claim 
for payment or approval," id. s 3729(a)(1).  The relator 

shares in any financial recovery.  Id. s 3730(d).  In addition 
to the qui tam claim, Wood's complaint asserts retaliatory 
discharge "because of lawful acts done ... in furtherance of 
... [the qui tam] action."  Id. s 3730(h).

     Declining to intervene in Wood's suit, the United States, on 
behalf of the Institute, moved to dismiss on the grounds of 
sovereign immunity.  The district court denied Wood's mo-
tion for discovery and an evidentiary hearing on the issue, 
concluded that the Institute "is an arm of the sovereign ... 
for purposes of [the Institute's] claim of sovereign immunity 
under the [False Claims Act]," Wood, No. 98-1952, slip op. at 
17, and dismissed the complaint.  Wood now appeals, chal-
lenging the district court's sovereign immunity determination 
as well as its denial of discovery.

                               II.

     The Institute describes itself as an "agency or instrumen-
tality" of the United States not subject to suit under the 
False Claims Act.  Disagreeing, Wood argues that Congress's 
decision to create the Institute as a "nonprofit corporation 
incorporated under the laws of the District of Columbia, or 
... comparable successor nongovernmental entity," 22 U.S.C. 
s 3305(a)(1)-(2), demonstrates that the Institute is not a 
governmental entity enjoying sovereign immunity, but rather 
a private corporation providing services to the government.  
Wood likens the Institute to Radio Free Europe/Radio Liber-
ty, the American National Red Cross, and Amtrak, three 
corporations created by the federal government and char-
tered under state or District of Columbia law that courts have 
held (or observed in dicta) are not part of the government for 
some purposes.  See Ralis v. RFE/RL, Inc., 770 F.2d 1121, 
1124-25 (D.C. Cir. 1985) (holding that Radio Free Europe/Ra-
dio Liberty is not a "government controlled corporation" 
within the meaning of the Age Discrimination Employment 
Act);  Marcella v. Brandywine Hosp., 47 F.3d 618, 622-24 (3d 
Cir. 1995) (holding that Red Cross is not part of government 
for purpose of immunity from jury trials in personal injury 
suits, although Red Cross is "virtually ... an arm of the 

[federal] government" entitled to immunity for some pur-
poses, including state taxation (internal quotation marks and 
citation omitted));  Lebron v. Nat'l R.R. Passenger Corp., 513 
U.S. 374, 391-92, 400 (1995) (noting in dictum that the 
statutory provision that Amtrak "will not be an agency or 
establishment of the United States government" "no doubt 
... deprives Amtrak of sovereign immunity from suit," but 
holding that Amtrak is "part of the Government" for First 
Amendment purposes (internal quotation marks and citation 
omitted)).

     Although certainly relevant to the issue of sovereign immu-
nity, the Institute's nonprofit corporate status is hardly dis-
positive.  Relying on the Institute's status alone would ignore 
the governmental nature of its responsibilities and the exten-
sive control the government exerts over Institute operations.  
Cf. Lebron, 513 U.S. at 400 (holding that Amtrak is "part of 
the Government for purposes of the First Amendment" be-
cause the government created Amtrak "by special law" to 
further "governmental objectives" and retained authority to 
appoint a majority of Amtrak's corporate directors).  Indeed, 
the Institute has no role other than promoting and conducting 
relations "between the people of the United States and the 
people on Taiwan," a role it performs through governmental-
type activities such as processing visa applications, providing 
consular services, and entering into agreements regarding 
customs and trade.  Wood himself describes the Institute as 
performing activities that are not only "normally performed" 
by the State Department "at ... foreign diplomatic posts," 
Compl. p 14, but are also similar to those "provided by federal 
[embassy] employees prior to the time the United States 
terminated diplomatic relations with Taiwan," id. p 13.

     Under the Taiwan Relations Act, moreover, the Institute 
carries out its core statutory functions--"programs," "trans-
actions," and "agreements"--as well as "services" to federal 
agencies, "in the manner and to the extent directed by the 
President," 22 U.S.C. s 3305(a), (b), or "upon such terms and 
conditions as the President may direct," id. s 3308(b).  Al-
though the Trustees " 'manage[ ] and conduct[ ]' " the Insti-
tute's " 'business and affairs,' " Appellant's Br. at 8 (quoting 

Institute Articles of Incorporation), the Secretary of State 
retains ultimate control over the Trustees through the power 
of appointment and removal at will.  As Wood conceded at 
oral argument, the Institute may undertake no "activities ... 
inconsistent with U.S. government policy."  Tr. of Oral Arg. 
at 13.  Were this not the case, we cannot imagine how acts of 
Institute employees could ever have the same "force and 
effect" as "acts ... for consular purposes.... performed by 
any other [authorized] person."  22 U.S.C. s 3306(a)(3), (b).

     Put simply, though not an embassy, the Institute functions 
like one.  In Wood's words, the Institute "carr[ies] out U.S. 
foreign policy."  Appellant's Br. at 9.  The Institute thus 
differs quite significantly from Radio Free Europe/Radio 
Liberty and the Red Cross.  Finding Radio Free Europe/Ra-
dio Liberty not a governmental entity for ADEA purposes, 
we emphasized that the corporation, though required to carry 
programming "consistent with" U.S. foreign policy, operates 
under an express statutory mandate to remain "an indepen-
dent broadcast media";  it thus retains "independence in 
programming and broadcasting decisions" and "day-to-day 
... operational control."  RFE/RL, 770 F.2d at 1125-26 
(internal quotation marks and citation omitted).  Likewise, in 
concluding that the Red Cross is not the government for 
purposes of immunity from jury trials, the Third Circuit 
thought it important that the Red Cross, in order "to proper-
ly fulfill its role ... in international ... activities[,] ... must 
be independent of the United States government," and that 
the government "does not manage the [Red Cross's] day-to-
day activities."  Marcella, 47 F.3d at 624.  "Independence" is 
not a word one associates with the Institute.  Indeed, the 
Institute's foreign policy mission requires a fundamental lack 
of independence from U.S. government control.

     Lebron also differs from this case.  There, the Supreme 
Court held that Amtrak is "part of the Government" for First 
Amendment purposes.  513 U.S. at 400.  To be sure, the 
court stated that Amtrak enjoys no sovereign immunity, id. at 
392, but that observation, in addition to being dictum, rested 
on a provision in the "authorizing statute ... that ... [Am-
trak] 'will not be an agency or establishment of the United 

States Government,' " id. at 391 (quoting the Rail Passenger 
Service Act of 1970, 84 Stat. 1330).  In contrast, when Con-
gress used the words "nongovernmental entity" in the Taiwan 
Relations Act, it did not create an independent corporation 
like Amtrak.  Instead, Congress established a vehicle 
through which the United States could accomplish two seem-
ingly inconsistent objectives:  fulfill its commitment to the 
People's Republic to end official ties with Taiwan, yet main-
tain relations with the "people on Taiwan" through consular, 
commercial, and cultural activities--even arms sales.  To 
hold, as Wood urges, that the Institute is not part of the 
government would ignore this central foreign policy mission.

     Galvan v. Federal Prison Industries reinforces our belief 
that the Institute, notwithstanding its nonprofit corporate 
status, remains very much part of the federal government.  
199 F.3d 461 (D.C. Cir. 1999).  Galvan involved a qui tam 
suit against the Federal Prison Industries, an entity created 
by Congress to provide work opportunities for federal in-
mates.  Id. at 462.  Pointing out that FPI is a "wholly owned 
government corporation," and that its revenues are deposited 
in the United States Treasury, we held that the suit was 
"against the sovereign" because "any judgment in [the qui 
tam relator's] favor would require FPI to pay damages 
directly from the public treasury."  Id.  Although Institute 
funds are not held in the United States Treasury, "[d]iversion 
of resources from a private entity created to advance federal 
interests has effects similar to those of diversion of resources 
directly from the Treasury."  Id. (internal quotation marks 
and citation omitted).  A False Claims Act judgment against 
the Institute would have one of two consequences for the 
government:  either the government would have to make up 
the loss (as Wood says it did with respect to the $5.3 million 
in allegedly embezzled funds), or it would have to adjust its 
relations with the "people on Taiwan," as the Act makes the 
Institute the sole entity through which the United States 
conducts such relations.  Wood's suit is "against the sover-
eign," in other words, because the " 'judgment sought would 
expend itself on the public treasury or domain, or interfere 
with the public administration.' "  Dugan v. Rank, 372 U.S. 

609, 620 (1963) (quoting Land v. Dollar, 330 U.S. 731, 738 
(1947)).

     Insisting that a False Claims Act judgment against the 
Institute would have no effect on the Treasury, Wood claims 
that some Institute revenues--visa fees and funds generated 
from trade shows, for example--come from what he calls 
"independent sources" and could be used to pay the judg-
ment.  Appellant's Br. at 29.  We disagree.  The Institute 
issues visas and conducts trade shows pursuant to State and 
Commerce Department contracts through which it fulfills its 
statutory responsibility to "promote ... commercial, cultural, 
and other relations between the people of the United States 
and the people on Taiwan."  22 U.S.C. s 3301(b)(1).  Reve-
nues generated by these activities, moreover, offset funds the 
federal government would otherwise have to provide for the 
Institute to fulfill its statutory and contractual obligations.  
And at oral argument, Wood conceded that, were the Insti-
tute to close its doors and liquidate its assets, any remaining 
funds would go to the federal government.  Put another way, 
it makes little difference from the government's perspective 
whether a False Claims Act damages award is paid out of visa 
and trade show revenues or from funds received from the 
State Department or other federal agency--the effect on the 
Treasury is essentially the same.

     Wood next argues that even if the Institute is part of the 
government, Congress waived sovereign immunity because 
under D.C. law a nonprofit corporation "shall have power ... 
to sue and be sued, complain, and defend, in its corporate 
name."  D.C. Code s 29-301.05 (West 2001).  "A waiver of 
the federal government's sovereign immunity must be un-
equivocally expressed in statutory text, and will not be im-
plied."  Lane v. PeNa, 518 U.S. 187, 192 (1996) (internal 
citations omitted).  We construe statutory ambiguity in favor 
of immunity:  "So long as a statute supposedly waiving immu-
nity has a 'plausible' non-waiver reading, a finding of waiver 
must be rejected."  Galvan, 199 F.3d at 464 (quoting United 
States v. Nordic Village, Inc., 503 U.S. 30, 37 (1992)).

     Although FDIC v. Meyer holds that a sue-and-be-sued 
clause represents a "broad waiver" of sovereign immunity, 
510 U.S. 471, 475 (1994) (internal quotation marks and cita-
tion omitted), this case differs from Meyer in a significant 
respect:  In Meyer, the federal statute creating the FDIC 
contained the sue-and-be-sued clause, while the clause in this 
case appears not in the Taiwan Relations Act, but in the D.C. 
Code.  Given the presumption against waiver, we must there-
fore determine whether the Taiwan Relations Act has a 
"plausible non-waiver reading"--that is, can we plausibly read 
the Act to exempt the Institute from the sue-and-be-sued 
clause?  See Galvan, 199 F.3d at 464-66 (analyzing organic 
statute to determine whether it could plausibly be read as 
rendering D.C. Code's "sue and be sued" clause inapplicable).

     Arguing that Congress intended the clause to apply to the 
Institute, Wood points to Sloan Shipyards v. United States 
Shipping Board Emergency Fleet Corp., 258 U.S. 549 (1922).  
There, the Supreme Court found that a corporation formed 
by the United States Shipping Board enjoyed no sovereign 
immunity, id. at 566-68, because, as a D.C. corporation, it had 
"the capacity to sue and be sued," id. at 565.  Although like 
the corporation in Sloan Shipyards, the Institute is incorpo-
rated under D.C. law, the Taiwan Relations Act adds an 
additional wrinkle by way of the preemption clause, which 
bars application of any provision of D.C. law that "impedes or 
otherwise interferes with the [Institute's] performance."  22 
U.S.C. s 3305(c).  "Impede" the Institute's performance or 
"otherwise interfere" with it is exactly what a False Claims 
Act judgment would do.  As we explained, the United States 
would either have to make up any losses resulting from such 
an award or live with any negative foreign policy conse-
quences that might flow from having to modify or reduce the 
Institute's exclusive role.  Because we can thus plausibly read 
the Act to preempt the D.C. Code's sue-and-be-sued clause, 
Congress has not waived the Institute's sovereign immunity.

     Contrary to Wood's claim, our conclusion does not leave the 
Institute free to operate in a "basically unregulated" "no-
man's land."  Tr. of Oral Arg. at 14.  The Comptroller 

General may audit the Institute's books.  22 U.S.C. s 3308(c).  
The State Department's Inspector General has jurisdiction to 
investigate the Institute's operations and finances, as does the 
Inspector General of every federal agency with which it 
contracts.  See 5 U.S.C. App. 3 ss 1-12 (Inspector General 
Act).  Even with sovereign immunity, therefore, the Institute 
is hardly free from government oversight.  That oversight 
may not be what Wood prefers, but the fact remains that 
some of the government's most powerful watchdog agencies 
may investigate the Institute and its affairs.

                               III.

     Wood contends that the district court erred in denying his 
motion for discovery and an evidentiary hearing with respect 
to two issues relating to the Institute's claim of sovereign 
immunity:  the sources of Institute funding and the precise 
extent of government control over Institute operations.  De-
nying Wood's motion, the district court explained that sover-
eign immunity turns "primarily" on legal rather than factual 
conclusions.  Wood, No. 98-1952, slip op. at 22.  In the 
context of foreign sovereign immunity claims, we have recog-
nized that district courts must afford plaintiffs " 'ample op-
portunity to secure and present evidence relevant to the 
existence of jurisdiction.' "  Phoenix Consulting, Inc. v. Re-
public of Angola, 216 F.3d 36, 40 (D.C. Cir. 2000) (quoting 
Prakash v. Am. Univ., 727 F.2d 1174, 1179-80 (D.C. Cir. 
1984)).  "In order to avoid burdening a sovereign that proves 
to be immune from suit, however, ... [such] discovery should 
be carefully controlled and limited."  Id.  The same princi-
ples apply here.

     Reviewing for abuse of discretion, see Goodman Holdings 
v. Rafidain Bank, 26 F.3d 1143, 1147 (D.C. Cir. 1994), we find 
no fault with the denial of discovery on the issue of control.  
The district court had no need to resolve disputed factual 
issues, relying (as have we) on the Act, bylaws, and Articles 
of Incorporation, which themselves ensure virtually total ex-
ecutive branch control.  Thus, even if, as Wood sought to 
demonstrate through discovery, the Institute exercises "day-

to-day control over [its own] business and financial affairs," 
Appellant's Br. at 29, the Institute would remain part of the 
United States government.

     The district court did make several factual findings regard-
ing Institute funding, including some findings based on asser-
tions in the Government's brief.  Statements by counsel, of 
course, are not evidence.  See, e.g., Brown v. INS, 775 F.2d 
383, 388 (D.C. Cir. 1985).  As Wood conceded at oral argu-
ment, however, in order to resolve this appeal we need not 
rely on district court findings concerning disputed details of 
the Institute's finances.  As we have explained, undisputed 
evidence regarding the nature of Institute funding, together 
with the Institute's exclusive foreign relations role and the 
government's extensive control over it, leave no doubt that 
the Institute enjoys sovereign immunity.

     The decision of the district court is affirmed.

                                                                 So ordered.