Venezuela’s Attempt to Purchase Bolívar Artifacts from Florida Resident Was “Commercial Activity” Not Subject to Sovereign Immunity

In Devengoechea v. Bolivarian Republic of Venezuela, No. 16-16816 (11th Cir. May 10, 2018), the Eleventh Circuit held that the Foreign Sovereign Immunities Act’s “commercial activity” exception to sovereign immunity applied to Venezuela’s alleged failure to return or pay for a collection of artifacts owned by a Florida resident.

Plaintiff Ricardo Devengoechea, a citizen of the United States and Florida resident, inherited a collection of documents and artifacts which had belonged to Simón Bolívar. According to the plaintiff’s complaint against Venezuela, Venezuelan officials, including the Coordinator General of the Office of the Vice President of Venezuela, contacted him in 2007 about a potential purchase of the collection, which was at the plaintiff’s Florida home. The officials visited Florida, examined the collection there, and assisted the plaintiff in renewing his passport so that he could bring the collection to Venezuela for further inspection. At the officials’ invitation, the plaintiff and the collection traveled to Venezuela on a private jet; the officials also paid for the plaintiff to return to Florida, and then fly back to Venezuela, with some additional items. Throughout these meetings, the plaintiff claimed, he and the Venezuelan officials were negotiating a potential sale of the collection to Venezuela.

In late 2007 the plaintiff returned to Florida but left the collection in Venezuela for further examination. According to his complaint, Venezuela officials told him that they would contact him about the purchase after the collection had been examined by experts, and he left the country on that understanding. But by 2010 Venezuela had neither purchased nor returned the collection to the plaintiff. At that point, the plaintiff filed a complaint against Venezuela in the United States District Court for the Southern District of Florida, alleging breach of agreement and unjust enrichment and invoking the court’s jurisdiction under all three clauses of the FSIA’s commercial-activity exception. Venezuela moved to dismiss, claiming lack of subject-matter jurisdiction and failure to state a claim. The district court denied the motion, finding that the FSIA’s “commercial activity” exception to sovereign immunity applied to confer jurisdiction and that the complaint sufficiently stated claims against Venezuela.

The Eleventh Circuit, in an opinion written by Judge Rosenbaum and joined by Judges Martin and William Pryor, affirmed. The court began its analysis by noting that the FSIA “renders foreign states immune from the jurisdiction of United States Courts unless one of its statutory exceptions applies to the plaintiff’s claim.” One of those, the “commercial-activity exception,” provides jurisdiction over a foreign state when:

the action is based [1] upon a commercial activity carried on in the United States by the foreign state; or [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). “Commercial activity,” in turn, is “either a regular course of commercial conduct or a particular commercial transaction or act.” Id. § 1603(d). And “commercial” has the same meaning under the FSIA as it did before the FSIA was enacted, when the State Department generally applied a “restrictive” theory of sovereign immunity, according to which “the sovereign immunity of foreign states should be ‘restricted’ to cases involving acts of a foreign state which are sovereign or governmental in nature, as opposed to acts which are either commercial in nature or those which private persons normally perform.” (Slip Op. at 12 (quoting H.R. Rep. No. 94-1487).)

Venezuela, the court held, did not seize the Bolívar collection through its sovereign powers; it negotiated a potential sale “like a private buyer could do.” Devengoechea’s claims were “based upon” that commercial activity, as required by the FSIA, because “[t]he conduct that actually injured Devengoechea—and therefore that makes up the gravamen of Devengoechea’s lawsuit—is Venezuela’s failure to return the Bolívar Collection to Devengoechea or to pay him for it.” And the acts complained of had a “direct effect in the United States” because the complaint alleged an agreement requiring payment or return of the collection, either of which would have occurred in the United States. So the FSIA’s commercial-activity exception to sovereign immunity applied, conferring subject-matter jurisdiction over Devengoechea’s claims.

The court also affirmed the denial of Venezuela’s Rule 12(b)(6) motion to dismiss, rejecting the argument that the complaint failed sufficiently to allege action by Venezuela itself. The court found the complaint’s allegations about Venezuela’s “representatives” and “officials,” including the assistance given for the plaintiff’s passport renewal and transportation to and from Venezuela, were sufficient to allege apparent or actual authority to act for Venezuela.

Posted by Valerie Sanders.

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