Overview
In a notable decision addressing the degree to which US citizens acting on behalf of foreign sovereigns can claim immunity from civil lawsuits under US law, the US Court of Appeals for the DC Circuit affirmed the district court's denial of common law foreign immunity in Broidy Capital Management LLC v. Muzin, No. 20-7040 (Sept. 3, 2021). The decision rejected immunity claims by US lobbyists and public relations agents alleged to have participated in a foreign-government-sponsored hacking and media smear campaign aimed at a US citizen on US soil.
The decision sets strict limits on the ability of private contractors to claim immunity derived from a foreign state under federal common law. Especially where the foreign government has not requested immunity from the State Department or otherwise sought legal protection for its alleged agents, private US contractors of a foreign government bear an especially heavy burden in establishing immunity at common law. And the complete absence of any established US practice of recognizing immunity for such private contractors, coupled with the lack of any allegations that the foreign government specifically directed the tortious conduct at issue, supported the denial of immunity.
The plaintiffs in the case are Elliott Broidy, an American businessman who once served as the Deputy Finance Chair of the Republican National Committee, and his company. The complaint alleged that, in response to plaintiffs' vocal criticism of the State of Qatar’s support for terrorist organizations, Qatar retaliated in an effort to harm Broidy's reputation. The complaint alleged a scheme in which Qatari-sponsored hackers infiltrated Broidy's computer networks and stole confidential information. Assisted by the defendants—American lobbyists and public relations professionals—the conspirators then distributed hacked materials to the media in an attempt to destroy Broidy’s reputation and his ability to influence US policy toward Qatar.
In one of a series of cases aimed at the conspiracy, Broidy sued several US citizens (and a US public relations consulting firm) who allegedly participated in the Qatari enterprise in federal district court in the District of Columbia. The complaint alleged violations of California state law as well as federal laws including the Racketeer Influenced and Corrupt Organizations Act (RICO), the Stored Communications Act, the Computer Fraud and Abuse Act, and the Defend Trade Secrets Act. Defendants claimed that they were immune from suit for their alleged role in the Qatari enterprise and moved to dismiss, arguing both "derivative" foreign sovereign immunity and common-law "foreign official" immunity. The district court rejected both forms of immunity and concluded that several of plaintiffs' claims were adequately pled and thus could continue to discovery.
The DC Circuit affirmed the district court's denial of immunity in a unanimous opinion by Judge Pillard, which was joined by Judge Randolph and Judge Walker.
In rejecting defendants' claims of immunity, the Court began by acknowledging that the immunity is not available under the Foreign Sovereign Immunity Act (FSIA). Citing Samantar v. Yousuf, 560 U.S. 305, 325 (2010), the court noted that the FSIA addresses immunity only for foreign states and their political subdivisions and agencies or instrumentalities, not for individuals. As Samantar also held, however, individuals may claim immunity under the common law.
Under Samantar, those claims are governed by a two-step analysis. At the first step, the court asks whether the US State Department has made a "suggestion of immunity" on behalf of the defendants. If so, the court would usually respect that suggestion and dismiss the suit. But there was no suggestion of immunity here. Indeed, the Court found it "notable" that Qatar, "on whose behalf the defendants purportedly acted, has not indicated any interest in this case, whether by requesting a formal suggestion of immunity or otherwise."
The DC Circuit therefore proceeded to Samantar's second step, at which a court must decide for itself whether immunity is appropriate. Courts applying the second step generally seek to determine whether the asserted claim of immunity is one which it is the established policy of the State Department to recognize, including by looking to the State Department's prior decisions regarding immunity. Here, the DC Circuit concluded that the State Department's past practice does not support immunity for private individuals where, as here, the foreign state did not seek immunity on their behalf and they acted merely as arm's-length contractors for that foreign state. Notably, the Court held that foreign official immunity could not be based on the mere fact that certain defendants were registered for agents of Qatar under the Foreign Agent Registration Act: "[N]ever has the State Department suggested, nor has this court held, that registered foreign agents are entitled to their principals sovereign immunity as a matter of law."
Finally, the "close connections of the parties and the claims to the United States" counts against immunity. Defendant were all US citizens, and the court cited prior State Department statements that those who enjoy the protections of US law ordinarily should be subject to the jurisdiction of the US courts when they violate US law, particularly when sued by other US citizens for conduct within the United States. None of those factors may themselves be dispositive, but taken together, they weigh heavily against common law immunity.
The DC Circuit also rejected the defendants' alternative argument, which invoked a supposed doctrine of "derivative" foreign sovereign immunity. The court raised significant doubts about whether such a doctrine, derived from cases dealing with US contractors claiming immunity derived from the federal government, existed at all: "This court has never suggested a derivative immunity doctrine might apply in the foreign sovereign immunity context." But even if it did, the domestic contractor cases from which it allegedly derives permit such derivative immunity only where the challenged actions were "specifically ordered" or "directed" by the foreign sovereign. That was not the case here, where (according to the complaint) the defendants’ agreement with Qatar left them substantial discretion in how to achieve their goals.
Broidy strongly suggests that US citizens and residents who violate US law as agents of foreign sovereigns will not be able to claim common law conduct-based foreign immunity absent a suggestion of immunity from the State Department. And the decision leaves claims of "derivative" foreign sovereign immunity on uncertain grounds in the DC Circuit, but plainly denying such immunity in the absence of clear allegations that the foreign government directed the conduct at issue.
Shannen W. Coffin is a partner and co-chair of the Appeals and Advocacy Practice at Steptoe & Johnson LLP. Mark C. Savignac is a senior associate in that practice. Broidy and Broidy Capital Management LLC were represented in Broidy Capital Management LLC v. Muzin by Filiberto Agusti, Shannen W. Coffin, Michael J. Baratz, Linda C. Bailey, and Mark C. Savignac of Steptoe & Johnson LLP. Mr. Coffin argued the case in the DC Circuit.
