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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 7, 2003 Decided May 16, 2003
No. 02-7006
MEL J. HILL, ET AL.,
APPELLANTS
v.
REPUBLIC IRAQ AND SADDAM HUSSEIN,
OF
IN HIS OFFICIAL CAPACITY AS PRESIDENT OF THE REPUBLIC OF IRAQ,
C/O MINISTRY OF FOREIGN AFFAIRS, BAGHDAD,
REPUBLIC OF IRAQ,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 99cv03346)
Daniel Wolf argued the cause for appellant. With him on
the brief was Steven M. Sprenger.
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
Before: RANDOLPH and ROGERS, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge ROGERS.
ROGERS, Circuit Judge: The issue on appeal is whether the
district court erred in denying appellants damages for eco-
nomic loss in a suit brought under the Foreign Sovereign
Immunities Act (‘‘FSIA’’), 28 U.S.C. §§ 1330, 1602–11 (2000).
This court has not previously addressed the quantum of
evidence that a plaintiff must present to obtain damages
against a non-immune foreign state. Today we hold that
under FSIA a plaintiff must prove that the projected conse-
quences are ‘‘reasonably certain’’ (i.e., more likely than not) to
occur, and must prove the amount of damages by a ‘‘reason-
able estimate’’ consistent with this court’s application of the
American rule on damages. Accordingly, we remand the case
to the district court.
I.
Appellants are six former hostages who were denied per-
mission to leave Kuwait and Iraq by the armed forces and
civilian police of the Republic of Iraq after Iraq invaded
Kuwait on August 2, 1990, prior to the start of the Gulf War
in 1990–91. They filed suit against Iraq and its leader
pursuant to the FSIA for hostage taking and sought damages
for the associated pain and suffering, mental anguish, and
physical injuries resulting from their detention and for their
loss of income and other economic injuries. After the appel-
lants-plaintiffs properly served the appellees-defendants, see
28 U.S.C. § 1608(a)(4), and they failed to plead or otherwise
defend, see 28 U.S.C. § 1608(d), the Clerk of the Court
entered a default and the district court thereafter held an
evidentiary hearing. See Hill v. Republic of Iraq, 175
F. Supp. 2d 36, 38 (D.D.C. 2001).
As relevant to this appeal, appellants presented evidence to
establish that at the time of the invasion they were United
States citizens living and working in Iraq and Kuwait, four
for private corporations, one for the United States govern-
ment, and one as a minister. Each appellant offered evidence
3
to establish that he had suffered and continues to suffer
physical and mental injuries as a result of his experiences as
a hostage in Iraq or Kuwait. In addition, appellants offered
expert evidence from a psychiatrist specializing in post-
traumatic stress syndrome frequently experienced by former
hostages on the varying degrees each appellant has suffered
and continues to suffer psychological trauma.
On August 2, 1990, David Morris was 49 years old and
working for the Bechtel Corporation on an Iraqi oil project
near Baghdad. He testified that he continued to experience
symptoms of post-traumatic stress and that the psychological
trauma of his hostage experience has made it impossible for
him to resume a career; he submitted documentation from
several therapists who have diagnosed Morris with depression
and/or post-traumatic stress syndrome and from the Social
Security Administration declaring Morris permanently dis-
abled. Jack Frazier, age 53 at the time, was a manager with
the Bechtel Corporation for an oil refinery outside of Bagh-
dad. He testified that because he was denied his diabetes
medication, he had developed progressive diabetic neuropathy
which has resulted in the substantial deterioration of his
health to the point where simple activities such as walking
and using his hands for mundane tasks are extremely difficult
and thus he cannot sustain a career; he offered supportive
evidence from his treating physicians. The other four appel-
lants testified regarding their psychological inability to travel
overseas or at least to the Middle East and thus consequent
loss of career opportunities that each pursued prior to August
2, 1990. Bill Rodebush was 52 years old in 1990 and working
as a field supervisor for Dresser Industries working on a
Kuwaiti oil rig; working for Dresser in China for two years
after his hostage experience, he found that he was unable to
handle the psychological strain of being in a foreign country
and thus was unable to continue his employment with Dresser
and had to accept a lower paying job at Wal–Mart. Paul
Eliopoulos, then 38 years old, managed Arthur Andersen’s
local consulting practice in Kuwait City, and claimed that his
inability to return to Kuwait cost him a promised partnership
and resulted in his dismissal from the company. Charles
4
Kolb was a 21–year-old language instructor for the United
States Information Agency in Baghdad and claimed that
because he was psychologically unable to return to the Middle
East, he has been unsuccessful in pursuing a career using his
foreign language skills in Arabic and Farsi and has been
forced to take a lower paying job in the United States.
Reverend Virgil Graham was 51 years old at the time and
doing missionary work for the National Evangelical Church in
Kuwait City, but he similarly found it impossible to work
abroad and was forced to accept a lower paying position as a
minister in the United States, losing other benefits from
missionary work overseas.
The district court construed § 1608(e) to require a FSIA
plaintiff to prove his claims ‘‘by evidence of a nature and
quality sufficient to support summary judgment under Fed.
R. Civ. P. 56, namely, oral or written testimony under oath,
made upon personal knowledge by witnesses competent to
testify to the matters stated therein. See Fed. R. Civ. P.
56(e).’’ Hill, 175 F. Supp. 2d at 38 & n.4. So construed, the
district court found that appellants had suffered and continue
to suffer psychological and physical injuries as a result of
their experiences as hostages, and awarded damages based
on their pain and suffering both ‘‘during their ordeals’’ and
‘‘after captivity TTT ceased.’’ Id. at 46–47. The court award-
ed appellants damages for hostage taking (false imprison-
ment) and the associated pain and suffering and mental
anguish, for post-traumatic stress disorders, and for physical
injuries and loss of consortium. The court also awarded
Frazier damages for exacerbation of his diabetic condition.
Notwithstanding the evidence of ‘‘residual psychic effects’’ on
their livelihoods and ‘‘plausible’’ explanations for their ‘‘work-
related problems,’’ however, the district court concluded that
the evidence of economic loss was ‘‘too speculative, and
without a basis to exclude unrelated factors as causative of
adverse fortunes in their working lives, to ascribe any quanti-
ty of monetary damages to their economic claims.’’ Id. at 47.
The court also ruled that the cost of any therapy they have
had or might have was ‘‘too imprecise to quantify into damage
awards.’’ Id.
5
II.
The issue before this court is confined to review of the
district court’s decision on damages for economic loss. We
are assuming the defendants’ liability and do not address the
question of the FSIA’s plaintiff’s burden on proof on liability.1
This court has not addressed the quantum of evidence
regarding damages and to date other circuits have not provid-
ed guidance on this issue. Our review is for abuse of
discretion. See Gulf Arab Media–Arab Am. Film Co. v.
Faisal Found., 811 F.2d 1260, 1262 (9th Cir. 1987); cf. Keegel
v. Key West & Caribbean Trading Co., 627 F.2d 372, 373–74
(D.C. Cir. 1980). Because it is an abuse of discretion to apply
the wrong standard or to consider an improper factor, we
hold that the district court erred by failing to apply the
normal standard for damages for economic loss.
No section of the FSIA directly addresses the quantum of
proof for damages. Section 1608(e) provides that a default
judgment shall not be entered against a foreign state ‘‘unless
the claimant establishes his [or her] claim or right to relief by
evidence satisfactory to the court.’’ 28 U.S.C. § 1608(e).
The Report of the House Judiciary Committee, noting that
§ 1608(e) establishes ‘‘the same requirement applicable to
default judgments against the U.S. Government under rule
55(e), F.R. Civ. P.,’’ observed that ‘‘[i]n determining whether
the claimant has established his claim or right to relief, it is
expected that courts will take into account the extent to which
the plaintiff’s case depends on appropriate discovery against
the foreign state.’’ H.R. REP. NO. 94–1487, at 26 (footnote
omitted) (1976); see also S. REP. NO. 94–1310, at 25 (1976)
(‘‘Legislative History’’).
1 Because no issue is raised we will assume that appellants (1)
have a cause of action against Iraq; see Price v. Socialist People’s
Libyan Arab Jamahiriya, 294 F.3d 82, 87 (D.C. Cir. 2002); and (2)
adequately alleged hostage taking, bringing their claims within
FSIA §§ 1605(a)(7) & 1605(e)(2). See Simpson v. Socialist People’s
Libyan Arab Jamahiriya, ––– F.3d ––––, 2003 WL 1906337, at *2–3
(D.C. Cir. Apr. 22, 2003).
6
Section 1606 of the FSIA provides, however, that ‘‘as to any
claim for relief with respect to which a foreign state is not
entitled to immunity TTT, the foreign state shall be liable in
the same manner and to the same extent as a private
individual under like circumstances,’’ subject to exceptions
inapplicable here. 28 U.S.C. § 1606. Therefore, a FSIA
default winner must prove damages ‘‘in the same manner and
to the same extent’’ any as other default winner. Cf. Alame-
da v. Sec’y of Health, Educ. & Welfare, 622 F.2d 1044, 1048
(1st Cir. 1980) (dictum). Other than protection against proce-
dural default, with the possibility of a relaxed evidentiary
burden on the FSIA plaintiff, see supra Legislative History, a
non-immune foreign state is subject under the FSIA to
federal common law for determining the amount of damages a
plaintiff can recover, with qualifications not relevant here.
See 28 U.S.C. § 1606; Bettis v. Islamic Republic of Iran, 315
F.3d 325, 333 (D.C. Cir. 2003).
The seminal case of Story Parchment Co. v. Paterson
Parchment Paper Co., 282 U.S. 555 (1931), states the Ameri-
can rule on damages:
Where the tort itself is of such a nature as to
preclude the ascertainment of the amount of dam-
ages with certainty, it would be a perversion of
fundamental principles of justice to deny all relief to
the injured person, and thereby relieve the wrong-
doer from making any amend for his acts. In such
case, while the damages may not be determined by
mere speculation or guess, it will be enough if the
evidence show the extent of damages as a matter of
just and reasonable inference, although the result be
only approximate.
Id. at 563. This approach continues to be reflected in the
literature. See RESTATEMENT (SECOND) OF TORTS § 912 cmts. d
& e; id. § 924 & cmts. d & e; 1 ROBERT DUNN, RECOVERY OF
DAMAGES FOR LOST PROFITS § 1.4, at 9–10 (5th ed. 1998). As
expressed by one commentator, a plaintiff may recover dam-
ages for past economic losses if such losses are ‘‘reasonably
proved,’’ while a plaintiff may recover for future harm only by
7
a reasonable certainty or preponderance of the evidence.
DAN B. DOBBS, DOBBS LAW OF REMEDIES § 8.1(2), at 361–62,
§ 8.1(7) at 407 (2d ed. 1993). This approach has been
adopted by this circuit in construing District of Columbia law.
See Samaritan Inns, Inc. v. District of Columbia, 114 F.3d
1227, 1235 (D.C. Cir. 1997); Wood v. Day, 859 F.2d 1490, 1493
(D.C. Cir. 1988); 28 U.S.C. § 1391(f)(4). In Samaritan Inns,
a lost profits case, the court applied Story, stating that a
plaintiff must ‘‘prove the fact of injury with reasonable cer-
tainty, [and prove] the amount of damages TTT based on a
reasonable estimate,’’ Samaritan Inns, 114 F.3d at 1235; the
plaintiff failed to meet its burden because its measure of
damages rested on a faulty premise. Id. at 1235–37. In
Wood, the court explained that ‘‘damages for future conse-
quences are recoverable only if plaintiff establishes that it is
‘more likely than not (a greater than 50% chance) that the
projected consequence will occur,’ ’’ essentially a preponder-
ance standard. Wood, 859 F.2d at 1493 (quoting Wilson v.
Johns–Manville Sales Corp., 684 F.2d 111, 119 (D.C. Cir.
1982)). Regarding the amount of damages, the court in-
structed that while damages cannot be awarded on the basis
of ‘‘mere speculation or guesswork,’’ Wood, 859 F.2d at 1493,
the plaintiff need only provide ‘‘some reasonable basis on
which to estimate damages.’’ Id. (quoting Romer v. District
of Columbia, 449 A.2d 1097, 1100 (D.C. 1982)).
Consequently, we hold that to recover damages a FSIA
plaintiff must prove that the projected consequences are
‘‘reasonably certain’’ (i.e., more likely than not) to occur, and
must prove the amount of damages by a ‘‘reasonable esti-
mate’’ under this circuit’s application of Story. This is consis-
tent with § 1606 and not inconsistent with § 1608(e), which is
silent on damages, and assures that a FSIA plaintiff’s recov-
ery of damages has some proportionality to the harm proved.
It is fair to hold FSIA default-judgment winners to the same
preponderance standard of damages as other default-
judgment winners with regard to future damages, as at the
damages stage the FSIA plaintiff is no longer handicapped by
the defendant’s absence and proof of future damages is likely
in the plaintiff’s control. As to past damages, the district
8
court properly could take into account any special problems of
proof arising from the defendant’s absence, consistent with
Congress’ statement of its intent in establishing a liability
threshold. See supra Legislative History.
Because the district court’s failure to apply the proper
standard was not harmless, we must remand. Appellants’
claims for economic loss include lost wages and economic
damages incurred prior to commencement of the instant
lawsuit and future lost wages and economic damages incurred
thereafter. See Complaint ¶ ¶ 35, 39. So far as the record
reveals, the district court failed to use the correct standard
(‘‘reasonable certainty’’ and ‘‘reasonable estimate’’) and
abused its discretion by going beyond the evidence presented
into its own unsupported speculation about other unidentified
unrelated factors. In considering whether to award damages
for economic loss, the district court must confine itself to the
evidence actually presented and not speculate about what
other evidence might have been brought to the court’s atten-
tion in a two-sided proceeding. Moreover, in rejecting all of
the economic loss claims as speculative, the district court did
not differentiate among each appellant’s evidence in support
of his economic loss. Yet, the district court found that
appellants’ claims for economic losses based on their experi-
ences as hostages were plausible. See Hill, 175 F. Supp. 2d
at 47. Further, as to the four appellants (Eliopoulos, Kolb,
Graham and Rodebush) who based their claim of economic
loss on their inability to travel overseas because of post-
traumatic stress syndrome, the district court credited the
testimony of appellants’ expert and found that these appel-
lants would ‘‘avoid any situation or experience, physical or
mental, which is likely to revive recollections of their ordeals.’’
Id. With respect to Frazier, the district court awarded
additional damages for the exacerbation of his diabetic com-
plications. Id. at 48. Absent explanation, these findings
appear inconsistent with rejection of all of appellants’ eco-
nomic loss claims. See Fed. R. Civ. P. 52(a); Cicippio v.
Islamic Republic of Iran, 18 F. Supp. 2d 62, 69–70 (D.D.C.
1998).
9
Accordingly, we reverse the judgment denying appellants’
claims for economic loss and remand the case to the district
court to apply the proper standard.