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Case number 20-7114.

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Ramona Matos Rodriguez et al.

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versus Pan American Health Organization at balance.

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Joaquin Molina et al.

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Mr. Bowker for the at balance.

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Mr. Dubin for the appellee.

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Mr. Yelling.

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Amicus curia.

[00:00:16] Speaker 03:
All right, Mr. Bowker, good morning.

[00:00:17] Speaker 04:
Please proceed.

[00:00:19] Speaker 04:
Good morning, your honor.

[00:00:19] Speaker 04:
May it please the court, David Bowker, especially appearing for PAHO to assert its immunity.

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The Supreme Court's decisions in Sachs and Nelson and this court's decision on remand in Jam v. IFC all require reversal here under the IOIA.

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Those cases demonstrate that the district court misidentified the gravamen of the 1589B claim and thus wrongly concluded that the gravamen of that claim constitutes commercial activity.

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Sachs, Nelson, and this court's decision in Jam all instruct that the gravamen of the claim or the gravamen of the action is the conduct that it is based upon, the core or foundation that it is based upon.

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Here, that core, that foundation is forced labor and trafficking.

[00:01:19] Speaker 01:
And I take it, Mr. Becker, that your position on that would be the same if Matos had only brought the one TVPA claim under 1589B, just benefiting from trafficking or forced labor, that even that claim, which is about economic benefit, and which I don't think you dispute, that benefit is taking place for PAHO in the United States, that nonetheless the gravamen of that claim would also be in Brazil.

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It is correct that the grovement of that claim alone standing alone would be forced labor and trafficking.

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And the reason is the language of the statute refers to knowingly benefiting from participation in a venture that's engaged in providing or obtaining forced labor.

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And the title of that

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section for both 1589A and 1589B is forced labor.

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And if we look at the complaint, the count that makes the 1589B claim says, quote, that Pajo knowingly benefited financially from trafficking of plaintiffs in violation of 1589B.

[00:02:35] Speaker 01:
The, and it says that- So what you're saying is that there has to be proof of the trafficking of the plaintiffs and that's why the government is trafficking?

[00:02:45] Speaker 04:
I think it may even, I don't think it turns on a single element that way that you need to establish each element and that we're focused only on one element.

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Rather, we're following the direction of Sachs, Nelson, and this Gordon, Jam the IFC, which directs us to look at the foundation of the suit.

[00:03:06] Speaker 01:
What's- Just putting aside the,

[00:03:11] Speaker 01:
Foreign Sovereignty Act issue for a moment.

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If medical suppliers are us, a US firm, sold bandages, thermometers, stethoscopes, stretchers in the US for a profit, and it was proved that those goods were manufactured abroad by forced labor, it seems like there's little question that American business would be liable under 1589B, right?

[00:03:37] Speaker 04:
I think that's right, Your Honor.

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But there, obviously, you're not dealing with the FSIAA or the IOIA.

[00:03:45] Speaker 01:
So if PAHO were doing the same thing, were selling those same goods that were produced overseas with traffic to force labor, and PAHO were aware of that, in your view, that is not enough for that exact same claim to be brought against PAHO?

[00:04:04] Speaker 04:
I don't think that's our position, Your Honor.

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The position would be instead that what's alleged here is Paho's participation for purposes of 1589B, Paho's participation is much broader than moving money.

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And in fact, there is no allegation that Paho was moving money for a fee.

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The allegation here- I feel like that's a proof.

[00:04:30] Speaker 01:
That's a merits issue or a proof issue, a summary judgment question.

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It's not a question for us at the threshold.

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I think it's a pleading issue, and the pleading issue is as follows.

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The what what matters for the foundational purposes of 1589 be.

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is what is the foundation of the claim?

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We submit that the foundation is forced labor and trafficking because that's what the provision is all about.

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Even if plaintiffs and the district court are right that the foundation is PAHO's participation, in that case the participation is much broader than moving money and in fact

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The fee here that was charged, the pleading, the complaint says the fee was charged for medical services, for brokering medical services, triangulating health care services.

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In paragraph 38, paying PAHO fees for the doctor's labor.

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That's obviously a very different kind of claim.

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than acting like a bank and moving money for a fee.

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As the US brief explains, the payments that were made here were not payments for moving money.

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These were program support costs for PAHO that related to its administration of a public health program.

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But again, even if you accept- Well, that's not, excuse me, but that's not what the plaintiffs alleged in their brief.

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I'm sorry, in their complaint.

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That's not their allegation.

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Well, Your Honor, their allegation.

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And besides, don't we look at this from the point of view of the character of the commercial transaction as opposed to its purpose?

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And in that sense, the question is, is this the kind of transaction that an actor in the commercial market would participate in, right?

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Regardless of what its motive was.

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Your honor is correct that what matters is the commercial nature of the conduct not the purpose and we don't fight that rule that's exactly right.

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That's what what the Congress tells us is.

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activity that's commercial in nature is the type of activity, and this is from the legislative history, where a state-owned enterprise is, quote, carrying on a commercial enterprise such as a mineral extraction company, an airline, or a state trading corporation.

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The Supreme Court's decision in Weltover

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expands on that congressional guidance and says that really we're talking about commercial activity, quote, in the manner of a private player within the market.

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Here, here, it is not even alleged that Paho was acting as a private player in the market.

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What is alleged?

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I don't think they have to.

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Why do they have to allege that?

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All they have to allege is a commercial, what they think is a commercial transaction.

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Then the question we ask, is it the type of transaction that a player in the commercial market would undertake?

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I don't think they have to allege the legal conclusion.

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That's correct, Your Honor.

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And here the allegation is that PAHO's administration of this program and the money that it received for, and I'm quoting,

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brokering medical services, triangulating health care services for compensation, and charging fees for the doctor's labor.

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that that is the allegation.

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And what we submit is even if you focus, and again, we think you should not be focused on how PAHO allegedly benefited, but rather on the fact of forced labor and trafficking and the allegation that PAHO did benefit.

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But even if you focus on the how, it is not commercial for two reasons.

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So wait, can I just ask you, so is it your position then that

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Set aside the, well, don't set aside anything.

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Is it your position that based on the allegations in the complaint, that what is alleged is not in fact a violation of 1589B or RICO?

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Is that your point?

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That is our belief, is what is alleged is absolutely not a violation of 1589B.

[00:09:09] Speaker 07:
Suppose, just humor me for a minute, suppose it was, then would you agree that this case is very different from Nelson, Sachs, and James III?

[00:09:22] Speaker 04:
No.

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And the reason is because even if there is moving money for a fee happening in the United States, it is not the gravamen or foundation of the 1589B claim.

[00:09:39] Speaker 07:
And the reason- Well, but let me just pursue that.

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In Nelson and Sachs and Jams 3, there was no allegation at all that the

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that the commercial transaction, the payments in Nelson, the ticket in Sachs, and the loans in James, there was no argument that those were in any way inappropriate or illegal.

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Whereas here, you may be right that their allegations don't make it out to be illegal, but if it is illegal,

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then it's different from Nelson Sachs and James Three.

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It's different because they're alleging not just a financial transaction that's independent of what happened in the foreign country, but a illegal financial transaction, a financial transaction that violates federal law.

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That's completely different, isn't it, than Nelson Sachs and James Three?

[00:10:50] Speaker 04:
That is a distinguishing feature.

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However, you are still back, Your Honor, to the parameters of the commercial activity exception.

[00:11:04] Speaker 07:
And Sachs itself pointed out, emphasized that, look, we're dealing with a situation where

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all of the cause of actions relate back to one event, whereas we don't have that here, assuming again that the allegations are sufficient to make out a violation of 1589D.

[00:11:23] Speaker 04:
Your Honor, I don't think that's right.

[00:11:25] Speaker 04:
I think all of the claims and all of the allegations relate back to the same foundation.

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the foundation of the entire case, the foundation of every claim as pleaded, is that Mais Medicos involved forced labor and trafficking.

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The only question here is whether that PAHOs connection to that forced labor and trafficking amounted to commercial activity for purposes of the FSIA and the IOIA.

[00:11:56] Speaker 01:
I just want to get clear.

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I understand your instinct to sort of roll the two issues together, whether there's a separate financial brokering here and the statutory question.

[00:12:09] Speaker 01:
But I really would like to have a clearer sense of your position on the statutory question.

[00:12:13] Speaker 01:
So the statute says it has a separate provision that forbids knowingly benefiting from participation in an adventure which has engaged

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in the providing or obtaining of labor services by coercive means, knowing and reckless disregard that it has done so so.

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I understand Congress to be looking at a distinct harm there that that it's saying

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Knowing that something has taken place in the past, you harm the US market if you participate in commercial activity relating to that.

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And the question is, why isn't that different?

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from Nelson and Sachs, and Congress has effectively defined a distinct gravamen of the domestic conduct there that just is a missing piece in Nelson, Sachs, and Gen 3.

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A financial benefit as the standalone violation, the financial benefit in the US.

[00:13:19] Speaker 04:
Your Honor, under both 1589A and 1589B, the harm to the plaintiffs is exactly the same.

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What actually injured the plaintiffs is the forced labor and trafficking.

[00:13:33] Speaker 01:
One thing that strikes me as curious about this, that is clearly an injury under the statute.

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It's clearly an aim of every provision of it.

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But one thing that's strikingly different here from in the other three cases is that this is also a criminal provision, meaning that there is a harm to the public and the harm to the public from the benefiting from from

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from an enterprise that has used forced labor is also a harm to the market.

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It's unfair competition, it's undercutting, it's really distorting the US market.

[00:14:10] Speaker 01:
And why isn't that also a harm and also a gravamen in a way that the buying of the train ticket or the negotiating the employment contract or the giving of the loan in our other three cases wasn't?

[00:14:22] Speaker 04:
Well, three answers to that first sacks Nelson and this court's decision and jam the IFC all direct the court to focus on the actual injury to the plaintiff, not to society.

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there's a harm to society from forced labor and trafficking.

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And of course, there would be if it were occurring.

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That harm in this case would be happening in Cuba and Brazil.

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And I guess I'm not sure that the right way... Sorry, Your Honor.

[00:14:58] Speaker 07:
I'm sorry to interrupt, but it's critical to me to understand your point here.

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Could you just...

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Your point is that 1589B does not add any additional, what should I say, harm.

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Congress added 1589B for a reason, right?

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To provide a remedy for people who were injured by an entity who knowingly

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financially or otherwise participates in one of these ventures.

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That's why they added it.

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So it's different from A. And I guess what Judge Pillard and I are both getting at, maybe using different languages,

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The presence of 1589B and Rico in this case seems to distinguish this case quite clearly from Nelson's stacks and jams three, where you didn't have a claim about an independent behavior that itself violated federal law.

[00:15:55] Speaker 07:
And I still haven't heard.

[00:15:56] Speaker 04:
I see.

[00:15:58] Speaker 04:
That's helpful, Your Honor.

[00:15:59] Speaker 04:
Sorry to interrupt.

[00:16:01] Speaker 04:
No, please.

[00:16:03] Speaker 04:
On 1589 A and B, the court is absolutely right that those were designed by Congress to reach both the entity that provides or obtains forced labor and trafficking and the entity that benefits from that providing and obtaining.

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And so they do reach potentially different entities.

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here, PAHU is alleged to have done both.

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It's alleged to have provided and obtained to enforce the terms to engage in trafficking and to be benefiting from that by charging a fee for its administration of mais medicos.

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What matters under Nelson Sachs and Jam is that the gravamen of those two for purposes of the IOIA is the same.

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It's the foundation of those two things is the same in the sense that they're both ultimately about the forced labor and trafficking.

[00:17:04] Speaker 07:
And if I could back up- But it says knowingly benefits.

[00:17:08] Speaker 07:
In other words,

[00:17:12] Speaker 07:
So let me, I just, I really want to understand your point.

[00:17:14] Speaker 07:
Is your point that your client here is really charged?

[00:17:19] Speaker 07:
The one thing it's charged with is traffic.

[00:17:23] Speaker 07:
That's it, right?

[00:17:25] Speaker 04:
Is that your point?

[00:17:27] Speaker 04:
No.

[00:17:28] Speaker 04:
No, there are two claims here.

[00:17:29] Speaker 04:
There's a 1589A claim and a 1589B claim.

[00:17:33] Speaker 04:
But the 1589B claim is the only one here before this court.

[00:17:36] Speaker 04:
Correct.

[00:17:37] Speaker 04:
Because the district court concluded that forced labor and trafficking are not commercial activity.

[00:17:42] Speaker 04:
Okay.

[00:17:42] Speaker 04:
Now, where does that get you?

[00:17:43] Speaker 01:
Provisionally.

[00:17:44] Speaker 01:
Provisionally, as your opponents are very eager to point out.

[00:17:47] Speaker 01:
Sorry.

[00:17:48] Speaker 04:
I apologize, Your Honor.

[00:17:49] Speaker 04:
Provisionally.

[00:17:50] Speaker 04:
Where does that get you?

[00:17:51] Speaker 04:
Just keep going.

[00:17:53] Speaker 04:
So your honor, our point is that for purposes of the ILIA, the gravamen of these two claims is the same.

[00:18:01] Speaker 04:
The analysis of the gravamen is the same.

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And the reason is simple.

[00:18:05] Speaker 07:
So is your point then that once the district court concluded that the 1589A cause that I couldn't go forward, automatically the B couldn't either?

[00:18:15] Speaker 07:
Is that your point?

[00:18:19] Speaker 07:
B couldn't be a separate, an independent,

[00:18:24] Speaker 04:
grovelment in this case, because- The elements of the two claims are different, but the grovelment is the same.

[00:18:31] Speaker 04:
And so, yes, Your Honor.

[00:18:32] Speaker 07:
Isn't that what's critical?

[00:18:34] Speaker 07:
Yes.

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The critical difference is the elements.

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This is knowing participation, knowingly benefits financially.

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That's a separate claim.

[00:18:47] Speaker 07:
That's not the same as A.

[00:18:49] Speaker 04:
And your honor, in Sachs and Nelson and Jambi IFC, as you know, the courts were facing many different kinds of claims, all of which had different elements.

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And in those cases, there was, quote, separately wrongful conduct in connection with some claims that was US-based and arguably commercial.

[00:19:09] Speaker 04:
And the courts properly said that doesn't matter because the foundation is the same.

[00:19:15] Speaker 04:
Ultimately, it's all about

[00:19:17] Speaker 07:
Are you talking about the breach of contract and failure to warn?

[00:19:22] Speaker 07:
Yes, or.

[00:19:23] Speaker 07:
But as the court said in theirs, that's just an example of artful pleading.

[00:19:28] Speaker 07:
I think that's the phrase it used.

[00:19:29] Speaker 07:
Whereas here,

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It's not artful pleading.

[00:19:35] Speaker 07:
They're alleging a violation of two federal statutes.

[00:19:39] Speaker 04:
That was also true in Jam the IFC, Your Honor, where the IFC was accused of negligently financing, negligently overseeing and supervising.

[00:19:51] Speaker 04:
Those were considered completely different claims separate from the independent actor in India that was doing the pleading.

[00:19:59] Speaker 07:
Were they violative of federal law?

[00:20:03] Speaker 04:
I don't know if a failure to supervise an environmental leader.

[00:20:09] Speaker 04:
Was it alleged they were?

[00:20:12] Speaker 04:
I don't think it was, Your Honor.

[00:20:14] Speaker 07:
Isn't that the distinction here?

[00:20:15] Speaker 07:
To me, that seems to be a major distinction between the two cases.

[00:20:21] Speaker 07:
And I still haven't heard

[00:20:23] Speaker 07:
from you why that isn't.

[00:20:26] Speaker 07:
I mean you keep citing Sachs and you keep saying there's just one gravamen, but it just seems to me that this case is different because here, I'll just say it once more, that the financial transactions involved in those three cases were not themselves independently wrong or independently unlawful.

[00:20:48] Speaker 07:
And this one is, and that is not the situation.

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Sachs, Nelson and Jams did not face the situation we face today.

[00:20:55] Speaker 07:
So the cases are different.

[00:20:58] Speaker 07:
And it seems to me the challenge you have is to tell us why that is not a material or legally significant difference.

[00:21:07] Speaker 04:
Your honor, I think one of the main reasons that it's not significant here is that if you back up and look at the big picture of what's being alleged here, it is that the Cuban government's conscription of civil service employees and the terms of their employment

[00:21:28] Speaker 04:
amounted to forced labor and trafficking.

[00:21:32] Speaker 04:
This case is so much less commercial activity than those other cases in the sense that the entire picture of this case rests on

[00:21:44] Speaker 04:
a government's employment of its own civil service employees, its deployment of those civil service employees on a patriotic medical mission to a foreign country to serve in a public health program.

[00:21:58] Speaker 07:
The allegation is that PAHO financed it.

[00:22:03] Speaker 01:
And profited from financing.

[00:22:06] Speaker 01:
And maybe you went on the merits on the theory you're talking about, but the question is really this threshold question where we read the pleading in the light most favorable to the claims, and they've plausibly pleaded.

[00:22:20] Speaker 01:
that one of the benefits to PAHO was just pocketing a big chunk of change for doing something that these parties were aware they actually couldn't really directly do with a commercial bank, but it was the kind of activity objectively that commercial banks do.

[00:22:37] Speaker 04:
So two things, Your Honor.

[00:22:40] Speaker 04:
There's no allegation, and in fact, PAHO did not finance this project.

[00:22:44] Speaker 04:
There's no allegation of that.

[00:22:46] Speaker 04:
The only allegation

[00:22:48] Speaker 04:
Sorry if I said finance, but work the transaction.

[00:22:52] Speaker 04:
Well, and that's not what's alleged either.

[00:22:55] Speaker 04:
What's alleged is that PAHO

[00:22:59] Speaker 04:
created, managed, organized, and administered MICE Medicos, that it engaged in technical cooperation, that it engaged in everything an international organization does in connection with a public health program, and that one of the things it did was receive money from a sovereign government and transmit it to another sovereign government.

[00:23:21] Speaker 04:
which by the way is what international organizations do in the context of almost every public program they help facilitate.

[00:23:29] Speaker 07:
Banks do that too.

[00:23:30] Speaker 07:
Commercial banks do just the same thing.

[00:23:33] Speaker 04:
Well, I don't think that there's any allegation that PAHO behaved as a commercial bank in the following sense.

[00:23:40] Speaker 07:
Yeah, but we don't have to, that's the legal conclusion.

[00:23:44] Speaker 07:
The fact is that they complain that the PAHO moved money for a fee.

[00:23:53] Speaker 04:
No, they did not.

[00:23:55] Speaker 04:
I'm sorry, that does not appear in the complaint.

[00:23:58] Speaker 04:
What they say is that PAHO was paid a fee for the doctor's labor, for providing medical services, and for administering this program.

[00:24:06] Speaker 04:
The district court interpreted those allegations to mean moving money for a fee.

[00:24:12] Speaker 04:
That appears zero times in the complaint.

[00:24:16] Speaker 04:
The other thing that is important here

[00:24:19] Speaker 04:
is that Citibank is alleged to have done the transferring of the money, not Pahoe.

[00:24:26] Speaker 04:
What they say is that Pahoe was an intermediary between two sovereigns.

[00:24:31] Speaker 04:
Citibank is where the accounts were.

[00:24:34] Speaker 04:
If there were fees charged, that would have been Citibank.

[00:24:36] Speaker 04:
That wouldn't have been Pahoe, and Pahoe had nothing to do with that.

[00:24:40] Speaker 04:
So just as a factual matter, I think it's important both to focus on what's been alleged

[00:24:45] Speaker 04:
and to recognize that there was a commercial bank here and it wasn't PAHO.

[00:24:50] Speaker 04:
But let me put that aside.

[00:24:51] Speaker 04:
In both Youngquist, this court's decision in Youngquist and the Second Circuit's decision in Yam-Sostak,

[00:25:00] Speaker 04:
there were public health programs or public health insurance programs at issue.

[00:25:06] Speaker 04:
In both of those cases, the allegations were that the officials had been involved in the transferring of money, wire transfers, receipt of money, payment of money.

[00:25:19] Speaker 04:
And this court and the Second Circuit both very appropriately held that that was number one, not commercial activity because it was in the context of a public health program.

[00:25:30] Speaker 04:
And two, that the public nature of the entire program could not be changed by the fact that some of the elements of the program

[00:25:45] Speaker 04:
have some similarity with what happens in the market with commercial actors.

[00:25:50] Speaker 04:
The point was they were not engaged in commerce.

[00:25:54] Speaker 04:
That is so true here.

[00:25:56] Speaker 04:
PAHO was never engaged and is not alleged to have been engaged in commerce.

[00:26:01] Speaker 04:
It was sitting between two sovereigns in a public health program located overseas.

[00:26:08] Speaker 04:
And it was doing what it always does, which is to facilitate the public health program to serve the sovereign member states by doing, as is alleged, managing, administering, organizing, and running this public health program.

[00:26:28] Speaker 04:
I should note also

[00:26:30] Speaker 04:
that plaintiffs have accused Pajo of enforcing the terms of employment of these Cuban civil service employees.

[00:26:41] Speaker 04:
This court said in El Haddad, and I think there's no dispute that the administration of civil service employment terms is not itself commercial activity.

[00:26:54] Speaker 04:
I also want to highlight that the same exact kinds of claims were brought in the Lubian case.

[00:27:01] Speaker 04:
and were rejected as non-commercial activities by both the Southern District of Florida and the 11th Circuit in a case that was precisely the same in the sense that it was about Cuban medical missions sent abroad.

[00:27:18] Speaker 04:
I recognize Judge Pillard's concern that

[00:27:24] Speaker 04:
The way the Cuban government runs its civil service is not how the United States runs its civil service today and I recognize the concerns regarding that civil service.

[00:27:37] Speaker 04:
I don't think those concerns, even if they are grave human rights concerns, are the types of concerns that bring this case within the commercial activities exception.

[00:27:47] Speaker 04:
And in our research getting ready for the argument, we noted that the United States in the 1960s and 70s had its own doctor's draft.

[00:27:58] Speaker 04:
in which doctors couldn't choose their terms of employment, couldn't leave the service if they wanted to, and some of the other things that have been complained about here.

[00:28:09] Speaker 04:
It's not to equate the two, but rather to say that these are non-commercial activities in the core of what sovereigns do.

[00:28:18] Speaker 03:
All right.

[00:28:18] Speaker 03:
Are there any more questions?

[00:28:21] Speaker 03:
No.

[00:28:21] Speaker 03:
All right.

[00:28:21] Speaker 03:
Thank you.

[00:28:22] Speaker 03:
Mr. Dubbin.

[00:28:25] Speaker 02:
Thank you very much.

[00:28:26] Speaker 02:
May it please the court.

[00:28:28] Speaker 02:
Paho fundamentally refuses to accept that Congress affirmatively enacted.

[00:28:33] Speaker 07:
Could I ask you to just start in a different place?

[00:28:35] Speaker 07:
Could you just start with Mr. Bowker's point?

[00:28:39] Speaker 07:
I read him this quote from your brief, which is, the gravamen is moving money for a fee.

[00:28:46] Speaker 07:
That's what you say the gravamen is.

[00:28:48] Speaker 07:
And he points out that's from your brief.

[00:28:50] Speaker 07:
And actually, I remember looking at the site

[00:28:53] Speaker 07:
And I didn't think the site to the complaint supported it.

[00:28:56] Speaker 07:
So where in the complaint.

[00:28:58] Speaker 07:
Do you allege that the grabbing is moving money for a fee and not other activities, namely, you know, supporting the program substantively.

[00:29:08] Speaker 02:
Your honor, the complaint doesn't use the words moving money for a fee, but it doesn't have to judge both for

[00:29:14] Speaker 02:
who thoroughly examined the allegations of the complaint and the provisions of both statutes, took the entire purpose of what was there, including the allegations that PAHO was brought into this transaction fundamentally for the purpose of enabling it to happen, because Brazil couldn't give it directly.

[00:29:32] Speaker 07:
Could you set aside Judge Boasberg's opinion for just a minute?

[00:29:37] Speaker 07:
We look at the complaint to see whether the allegations are sufficient.

[00:29:42] Speaker 07:
So what would you point us to in the complaint to say that this is a commercial transaction, i.e.

[00:29:49] Speaker 07:
moving money for a fee?

[00:29:52] Speaker 07:
Where do you?

[00:29:54] Speaker 02:
Paragraphs 45 through 51.

[00:29:56] Speaker 02:
Well, paragraph one says that PAHO collected $75 million for taking in money from Brazil and sending it to Cuba.

[00:30:05] Speaker 07:
Yeah, but for what?

[00:30:05] Speaker 02:
Paragraph 18.

[00:30:07] Speaker 02:
That's a commercial activity, Your Honor.

[00:30:10] Speaker 02:
If you want to know about the purpose, we can address that as well.

[00:30:13] Speaker 02:
And paragraphs 45 through 51 make it clear that the reason PAHO was involved in the case was that in order for Brazil to get those Cuban doctors there, their Congress wouldn't authorize the payments.

[00:30:26] Speaker 02:
They literally says, and it's quoted from a Brazilian embassy quote,

[00:30:31] Speaker 02:
They suggested ringing in the Pan American Health Organization as an intermediary to enable the payments to be transferred to Cuba.

[00:30:39] Speaker 02:
And that's throughout the complaint.

[00:30:41] Speaker 02:
That's moving money for a fee.

[00:30:44] Speaker 02:
Now, when, when Mr. Bapper talks about Pato.

[00:30:49] Speaker 02:
receiving money from sovereign members as a normal activity, I don't think it's normal for an international organization to take $1.3 billion of trafficked laborers' wages and then send it to the entity who trafficked them.

[00:31:06] Speaker 02:
That's what Paula did with $1.3 billion, and it put $75 million in its own pocket.

[00:31:11] Speaker 02:
And as far as the argument that that went to program costs,

[00:31:14] Speaker 02:
we do allege that it did not.

[00:31:16] Speaker 02:
That's in paragraphs 87, 103, and 143.

[00:31:20] Speaker 01:
And assuming all of those, taking those allegations as true at the current procedural stage, back to the important questions about whether Sachs, Nelson, and Jam 3 foreclosed the claim on the ground that the Grav amendment, that we would not be here if there were not also allegations of forced labor in violation of the other provisions of

[00:31:48] Speaker 01:
against trafficking in persons.

[00:31:51] Speaker 01:
In Sachs, the court rejected the notion that there was a failure-to-warn claim occurring in the US that could be treated as commercial activity under the Foreign Sovereignty Act exception, because it said that the failure to warn was not wrongful commercial action within the United States.

[00:32:12] Speaker 01:
Now, you can agree or disagree.

[00:32:14] Speaker 01:
I mean, it seems, in fact, like

[00:32:17] Speaker 01:
a failure to warn for a known risk in the sale of a ticket for an activity that allegedly exposes the ticket holder to that risk.

[00:32:28] Speaker 01:
One could say, well, that's a wrong in the United States, but the court in Nelson said, no.

[00:32:35] Speaker 01:
The court in Nelson said the gravamen was the harm to the plaintiff overseas.

[00:32:39] Speaker 01:
Why are we not in the same situation here?

[00:32:42] Speaker 02:
As Judge Boesper pointed out, a case can have two gravamens.

[00:32:45] Speaker 02:
He determined that the 1589A claim was not a commercial craftman, but he clearly said that the 1589B claim is commercial and is a self-contained wrong.

[00:32:57] Speaker 02:
As Your Honor pointed out in your questions to the appellant, 1589B makes it a crime to knowingly benefit from participation in a forced labor venture, and that's what we have had alleged positive dip.

[00:33:10] Speaker 02:
And Judge Boasberg cited footnote two in sacks, which makes it clear that in another case, based upon a two, where the grabberments might've occurred in two places, we would be in a different place.

[00:33:22] Speaker 02:
That basically anticipated our case.

[00:33:25] Speaker 02:
Our case is a self-contained wrong by Pado violating 1589B as Judge Boasberg meticulously documented in his analysis, which is entitled to deference.

[00:33:35] Speaker 02:
We're here on a 12B6 standard.

[00:33:38] Speaker 02:
And, uh, he, his, yes, we weren't titled to the benefit of De Novo review, De Novo review, but

[00:33:47] Speaker 02:
we're entitled to the benefit of every inference in the complaint.

[00:33:51] Speaker 01:
And Judge, was that's we also apply that standard and make those inferences.

[00:33:55] Speaker 01:
But so I'm just help me out because it just seems that it has to be true here, as in Nelson, that the allegations about the commercial part in the United States would alone, as in Nelson, entitle Nelson to nothing.

[00:34:10] Speaker 01:
Without the allegations of in Nelson the personal injury abroad and here the forced labor abroad.

[00:34:21] Speaker 02:
This is a separate wrong okay taking my clients money and putting it in your pocket, taking my clients money and sending $1.3 billion to Cuba.

[00:34:31] Speaker 02:
That all happened here in the United States.

[00:34:33] Speaker 02:
And that's what PAHO did.

[00:34:34] Speaker 02:
And Congress specifically added 1589B in 2008 as the congressional amicus brief shows, as the trafficking victims legal centers brief shows, specifically because just going after the trafficking itself was not doing the job of eliminating the problem.

[00:34:52] Speaker 02:
So we have a separate ravenment here that PAHO

[00:34:56] Speaker 02:
profited from its knowing participation.

[00:34:59] Speaker 02:
Now, Secretary of State Blinken has stated for the last 10 years that Cuba's medical missions are trafficking and are for Cuba's profit.

[00:35:10] Speaker 02:
And knowing that, PAHO knowingly got involved in this transaction

[00:35:15] Speaker 02:
and profited from it.

[00:35:16] Speaker 02:
That's a separate violation of 1589B.

[00:35:18] Speaker 01:
This is where I'm struggling because there was a separate violation of law alleged in Nelson.

[00:35:27] Speaker 01:
The recruiting of Mr. Nelson in the United States, the defendants omitted important information

[00:35:37] Speaker 01:
about his prospective employment and the allegations were that that newer should have known that as somebody who's being hired to do quality control for a Saudi Arabian hospital when they try to actually criticize the safety and quality in that hospital is going to be severely punished and so the allegations are

[00:35:57] Speaker 01:
that omitting that important information during the recruiting was itself a separate harm under US law.

[00:36:02] Speaker 01:
And the court said, no, Gravaman in Saudi Arabia.

[00:36:05] Speaker 01:
And I'm just looking for distinctions between that and this case.

[00:36:12] Speaker 02:
The Gravaman of a violation of a statute that makes it a crime to knowingly benefit from participation in forced labor

[00:36:21] Speaker 02:
is knowingly participation in a venture that's forced labor.

[00:36:25] Speaker 02:
And that's what we've alleged who did.

[00:36:26] Speaker 02:
That's a self-contained bravamen.

[00:36:28] Speaker 02:
Whatever your honor thinks about the result in Nelson, we have a self-contained bravamen here under a statute that Congress specifically enacted to capture this very activity.

[00:36:38] Speaker 02:
That's the reason we have 1589B.

[00:36:49] Speaker 02:
And the complaint clearly alleges that Pablo knowingly pocketed $75 million.

[00:36:56] Speaker 02:
It knew it was money from the wages that were owed to my client.

[00:37:00] Speaker 02:
That's a crime.

[00:37:01] Speaker 02:
And that's something where there's a civil right of action.

[00:37:06] Speaker 02:
I'd like to make a, and I would analogize the Judge Bosworth's conclusion about the Graven to this court's decision in De Shepple when the government of Hungary argued

[00:37:19] Speaker 02:
that the plaintiffs had not alleged that Hungary promised to return that property to the United States.

[00:37:25] Speaker 02:
And this court said that it was a fair inference from the facts alleged in the complaint, which were that Hungary promised to return the property to the plaintiffs and knew the plaintiffs lived in the United States, that that was going to have a direct effect in the United States.

[00:37:37] Speaker 02:
We're entitled to the same benefit of the inference here that Judge Bosberg drew from the allegations in the complaint.

[00:37:44] Speaker 02:
I'd like to briefly comment on the government's brief

[00:37:48] Speaker 02:
because they agree with the plaintiffs that the World Health Organization Constitution does not provide immunity to PAHO.

[00:37:59] Speaker 02:
They acknowledge that they don't have a position on whether or not the money PAHO received was used for programming expenses.

[00:38:11] Speaker 06:
I'm sorry, would you just repeat what you just said?

[00:38:14] Speaker 06:
I'm sorry, you looked out for a second.

[00:38:17] Speaker 06:
What did you just say?

[00:38:18] Speaker 02:
that we agree with the government that Paul was not entitled to absolute immunity under the World Health Organization chart.

[00:38:27] Speaker 02:
And that position of the government is entitled to deference.

[00:38:30] Speaker 07:
No, I heard that, but what was that about money you just said?

[00:38:33] Speaker 02:
That they don't take a position on whether or not the plaintiffs have adequately alleged

[00:38:42] Speaker 02:
the nature of the money that was received by our position is that this is not before the court.

[00:38:53] Speaker 02:
The complaint does allege as I stated before in paragraph 87103 and 143, that none of the money that I received was used for program expenses.

[00:39:02] Speaker 02:
And there's no reason for the court to venture into that here.

[00:39:10] Speaker 02:
If

[00:39:11] Speaker 02:
But if the court were so inclined to ask the government what there's no application of that argument, you know, they don't talk about how that would affect this case.

[00:39:23] Speaker 02:
And so if the issue is that PAHO's receipt of a billion five from Brazil.

[00:39:30] Speaker 02:
and sending 1.3 billion back to the trafficker is a program expense, that's not tenable.

[00:39:36] Speaker 02:
If their argument is that some of the $75 million that PAHO received and put in its pocket was used for, quote, program expenses, that would be an argument about purpose and would not be relevant to the jurisdictional determination.

[00:39:53] Speaker 03:
Mr. Dubbin, you're over your time.

[00:39:55] Speaker 03:
Thank you very much.

[00:39:57] Speaker 03:
And we'll hear from Mr. Yellen.

[00:40:03] Speaker 05:
Thank you, Your Honor.

[00:40:04] Speaker 05:
Good morning, Your Honors, and may it please the Court, Luis Yellen from the Department of Justice here today on behalf of the United States.

[00:40:12] Speaker 05:
As the Court knows, the United States is here for a very limited purpose to address one issue that the Court may have to consider, that is the non-commercial nature of an international organization's receipt of program support costs from a member state.

[00:40:28] Speaker 05:
The basic principle that we urge is that if the program itself is public,

[00:40:33] Speaker 05:
then the money paid by a member state for program support costs is also public.

[00:40:42] Speaker 05:
Now, the parties have taken different views about what the government's brief has said, and they're not exactly right.

[00:40:50] Speaker 05:
And I'd like to clarify this because I think it goes to an important part of the court's colloquy earlier in the argument

[00:40:58] Speaker 05:
It's not the case that the government has endorsed the idea that the payments here were part of program support costs, but it's also not the case that the United States has not taken a position on whether the plaintiffs adequately alleged that the payments were not program support costs.

[00:41:18] Speaker 01:
The point I think that are... In other words, you have not taken a position on whether they've adequately alleged?

[00:41:25] Speaker 05:
The question isn't one about allegations.

[00:41:28] Speaker 05:
And this is the critical point that I'm hoping to be able to explain to the court.

[00:41:34] Speaker 05:
The question about whether or not payments are part of program support costs is part of the immunity question.

[00:41:44] Speaker 05:
It goes to the commercial nature of the transaction.

[00:41:48] Speaker 05:
Let me give you an analogy.

[00:41:50] Speaker 05:
Recall that the IOIA tracks

[00:41:53] Speaker 05:
the FSIA's commercial activity exception.

[00:41:56] Speaker 05:
Now imagine a foreign sovereign paying one of its agencies, providing in its budget funds for the payment of contractors to provide medical services.

[00:42:07] Speaker 05:
If a plaintiff sued the foreign sovereign on the theory that the foreign sovereign's payment to the agency was commercial in character, the court would have to consider the nature of the program, that is the nature of the enterprise

[00:42:21] Speaker 05:
that the foreign sovereign and its agency were undertaking.

[00:42:25] Speaker 05:
Just so in the ILIA context, the question is if a international organization receives from a member state payments of program support costs in connection with a public program, those payments are also public.

[00:42:42] Speaker 05:
That is, they're part of the public that is non-commercial enterprise in which the international organization is engaging

[00:42:50] Speaker 05:
on behalf of the member state.

[00:42:53] Speaker 07:
Okay, so from the U.S.'

[00:42:54] Speaker 07:
's point of view, what's the question we should ask here?

[00:42:58] Speaker 05:
The question that we should ask about this case.

[00:43:03] Speaker 05:
The question that this court needs to consider is whether the district court properly determined that there was a commercial activity at issue here.

[00:43:15] Speaker 05:
Yeah, I know that.

[00:43:17] Speaker 05:
Well, I'm sorry.

[00:43:18] Speaker 05:
I'm sorry.

[00:43:19] Speaker 05:
I had a comment there, Your Honor, and I didn't quite finish the thought.

[00:43:23] Speaker 05:
And part of that inquiry involves, in the context here, determining whether the payment was part of program support costs on behalf of a public program that PAHO had undertaken on behalf of member states.

[00:43:39] Speaker 05:
The court, it's not sufficient to release.

[00:43:42] Speaker 07:
At this stage, isn't that just a question of looking at the complaint and seeing what is alleged?

[00:43:48] Speaker 05:
No, Your Honor.

[00:43:49] Speaker 05:
A court in an immunity matter, a court cannot turn to the merits until it has determined conclusively.

[00:43:55] Speaker 05:
that the international organization.

[00:43:57] Speaker 07:
I wasn't talking about, no, no, no, I'm sorry.

[00:43:59] Speaker 07:
I didn't mean to say, look at the merits.

[00:44:02] Speaker 07:
Just look at the allegations of the complaint to see what the allegations are with respect to whether the money is part of a program or whether it's a fee of some kind.

[00:44:15] Speaker 07:
That's right, Your Honor.

[00:44:17] Speaker 05:
The question would be, well, what's next, Your Honor?

[00:44:20] Speaker 05:
Let's assume that as a pleading matter,

[00:44:23] Speaker 05:
the court determines, okay, there's an allegation that this payment was commercial.

[00:44:29] Speaker 05:
Well, the international organization or a foreign state disputes that, right?

[00:44:34] Speaker 05:
The question is, you don't get to then go on to a merits determination because the court has not yet adjudicated fully the immunity or jurisdictional question.

[00:44:45] Speaker 05:
So it is incumbent on it.

[00:44:47] Speaker 01:
I'm sorry to interrupt.

[00:44:48] Speaker 01:
I just want to, is what you're saying that the next thing, assuming, let's say we're not involved in this and Mr. Bowker didn't appeal, the next question in the district court would be, before you get into trial on the merits, we want to do a trial on those facts that go to whether the allegations about pocketing a fee

[00:45:10] Speaker 01:
Are supported so let's let's focus at the front end and actually have a factual final factual determination subject to clearly erroneous review, whether there was some kind of sweetheart deal where a power is is, you know, profiting off of forced labor.

[00:45:29] Speaker 01:
or whether when PAHO opens its books, we see it's running a program, it's doing support costs, it's paying its people for overseeing all of this stuff.

[00:45:39] Speaker 01:
And if the latter, then immunity actually, at that later point, kicks in.

[00:45:46] Speaker 05:
Is that your position?

[00:45:48] Speaker 05:
Maybe, Your Honor.

[00:45:50] Speaker 05:
Let me clarify what I mean by maybe.

[00:45:52] Speaker 05:
The further inquiry may not require a trial on the facts of jurisdiction.

[00:45:58] Speaker 01:
It could be a summary judgment posture.

[00:46:00] Speaker 01:
Exactly.

[00:46:00] Speaker 05:
The only point is the court would be looking outside of the pleadings.

[00:46:05] Speaker 05:
And just as in the Supreme Court's recent decision in the Helmer and Payne case, a district court has to decide at the outset whether the requirements for immunity have been

[00:46:19] Speaker 05:
Satisfied or not.

[00:46:21] Speaker 05:
And that is something that has to be done before the court gets to the merits.

[00:46:26] Speaker 05:
There is a dispute in this case, the dispute is something that we, the United States has not taken a position on.

[00:46:31] Speaker 05:
There's a dispute about the nature of the particular

[00:46:35] Speaker 05:
transactions and their connection or not to a public program.

[00:46:41] Speaker 05:
That makes sense.

[00:46:42] Speaker 01:
So what you're saying is that even if pleadings are adequate, there continues throughout a case a kind of priority on the factual assertions, then turning into evidence, then turning into findings of facts should, you know,

[00:46:59] Speaker 01:
God forbid from Paho's perspective that have to go that far, but that there should be a priority at each stage in verifying whether the key facts that support the commercial activities exception are materializing or not.

[00:47:15] Speaker 05:
I think that's right.

[00:47:16] Speaker 05:
The only qualification I would make, Your Honor, is that it may not be purely factual.

[00:47:20] Speaker 05:
There could be legal components to the inquiry as well, depending on the nature and the structure of the international organization.

[00:47:27] Speaker 05:
It's set up pursuant to its organic documents with the member states all of these things may be relevant to the nature of the setup, but the bottom line that I would wholly endorse your honor is that before a court were to reach the merits of a claim against an international organization, it would have to.

[00:47:49] Speaker 05:
be sure that the claims actually satisfy the requirements of the commercial activity exception that requires not only that the claim be based upon certain action, that is that the gravamen of the claim be based upon actionable claims, but that those things, actions on which it's based upon are commercial in nature and not public.

[00:48:11] Speaker 07:
Mr. Yellen, can I just add a simple question?

[00:48:12] Speaker 07:
I just want to make totally sure I understand the United States position.

[00:48:16] Speaker 07:
This is, we have this on a motion to dismiss, right?

[00:48:18] Speaker 07:
That's okay.

[00:48:20] Speaker 07:
So we look at the complaint, right?

[00:48:24] Speaker 07:
And we ask whether the allegations are sufficient, giving the benefit of all inferences to the plaintiff, correct?

[00:48:31] Speaker 07:
And if we decide they are, then your point is Paho could still file a motion for summary judgment.

[00:48:40] Speaker 07:
And that would require that the allegations be proven before we can make the court to make a judgment on immunity, correct?

[00:48:49] Speaker 07:
Do I have it?

[00:48:51] Speaker 05:
Yes, I'm sorry.

[00:48:52] Speaker 05:
I'm thinking through this, Your Honor.

[00:48:53] Speaker 05:
I believe that's correct.

[00:48:54] Speaker 05:
OK, thank you.

[00:48:56] Speaker 01:
And it might present, as you're pointing out, whatever the legal issue is that we decide is decided on the basis of whatever the facts are at the relevant stage.

[00:49:05] Speaker 01:
And so here, the plaintiffs have alleged something, and we could decide a legal question.

[00:49:11] Speaker 01:
The legal question we might be deciding at summary judgment might shift because the facts that are evidenced

[00:49:19] Speaker 01:
to a level sufficient to create a tribal issue might be different.

[00:49:23] Speaker 01:
So they might have a more challenging legal argument at the summary judgment stage, a distinct and more challenging argument.

[00:49:30] Speaker 01:
So it might not be law of the case, and it might require some different legal analysis.

[00:49:35] Speaker 01:
Is that what you're saying?

[00:49:36] Speaker 05:
That might be right, Your Honor.

[00:49:39] Speaker 05:
I guess the only qualification I want to give is international organizations are not like commercial enterprises set up by states.

[00:49:48] Speaker 05:
international organizations by their very nature deal with public programs on behalf of their sovereigns.

[00:49:56] Speaker 05:
And so it would be the extraordinary case that would get very far.

[00:50:00] Speaker 05:
And the court needs to be, I think, cautious about the potential for artful pleading to string out litigation against a international organization, given this background, given that the typical conduct in which international organizations engage is public and not commercial,

[00:50:18] Speaker 05:
This is something the court needs to be cautious about.

[00:50:21] Speaker 05:
And I want to be very clear that we are not signaling anything about the underlying case here.

[00:50:27] Speaker 05:
It's just a general concern that the United States have about the nature of international organizations and the public programs and the payments that sovereign states make to those organizations that are roughly analogous to payments that sovereign states make to their non-commercial agencies.

[00:50:48] Speaker 05:
rule that the court lays down here will have implications, not only for international organizations and conceivably have an impact on the United States funding of international organizations, but also conceivably could have an impact on the commercial activity exception under the FSIA.

[00:51:06] Speaker 03:
All right, if there are no more questions, Mr. Bowker, why don't you take two minutes?

[00:51:13] Speaker 04:
Thank you, Your Honor.

[00:51:14] Speaker 04:
I'll make just a few quick points.

[00:51:16] Speaker 04:
First, PAHO's position is that this is resolvable on the face of the complaint, that PAHO's immunity is immunity not only from liability but from the burdens of litigation.

[00:51:29] Speaker 04:
The reason it's resolvable on the face of the complaint is

[00:51:35] Speaker 04:
The complaint alleges that PAHO was paid in connection with its administration of an enforcement of the terms of employment of this Cuban medical mission and MICE Medicos.

[00:51:49] Speaker 04:
I'll point the court to paragraphs one, six, 19, and 38, all of which explain that PAHO was being allegedly paid

[00:52:01] Speaker 04:
For labor for medical services and for its quote enabling managing and enforcing of this trafficking What were those paragraphs again?

[00:52:11] Speaker 04:
It's one read them in one one six six 19 and 38 And I'll repeat what I said earlier, which is that moving money for a fee does not appear in the complaint the second point

[00:52:29] Speaker 04:
is in response to my colleague's point about expenses versus program support costs.

[00:52:38] Speaker 04:
We're not fighting with the allegation that PAHO didn't

[00:52:44] Speaker 04:
pay for out-of-pocket expenses, things like travel, food, lodging.

[00:52:49] Speaker 04:
We're not fighting with those allegations.

[00:52:51] Speaker 04:
The point here is the point that the United States government brief explains in great detail, which is that program support costs are different.

[00:53:01] Speaker 04:
Those are for indirect or overhead costs.

[00:53:04] Speaker 04:
They're standard for all public programs for IOs.

[00:53:08] Speaker 04:
And those are different from the out-of-pocket expenses that my colleague, Mr. Dubbin, was referring to.

[00:53:15] Speaker 04:
And so we don't fight with those allegations.

[00:53:18] Speaker 04:
The third point, and this to Judge Tatel, I know that you were focused on the difference between

[00:53:27] Speaker 04:
the type of claim in Nelson and Sachs and the one here.

[00:53:31] Speaker 04:
And I just wanted to direct your honor's attention to 136 Supreme Court at 396 in Sachs.

[00:53:42] Speaker 04:
And I'm going to quote here where it says, under any theory of the case that sacks presents, however, there is nothing wrongful about the sale of the URL pass standing alone.

[00:53:56] Speaker 04:
And then there's an ellipsis here.

[00:54:01] Speaker 04:
However, Sachs frames her suit, the incident in Innsbruck, that's the platform in Austria, remains at its foundation.

[00:54:10] Speaker 04:
And that is true here.

[00:54:13] Speaker 04:
Standing alone, the moving, the alleged moving of money that occurred in the United States is not wrongful.

[00:54:22] Speaker 04:
The only thing that makes it- And that's because it's program support under your theory, right?

[00:54:27] Speaker 04:
No, whether it's moving money for a fee or whether it's program support costs for a fee or whatever, however it is framed, it is not independently wrongful without a connection to forced labor and trafficking overseas.

[00:54:42] Speaker 04:
That aspect of our case is exactly the same as Sachs and Nelson and Jam.

[00:54:50] Speaker 04:
And I think that's what's critical here for purposes of the commercial activity exception.

[00:54:56] Speaker 03:
All right.

[00:54:56] Speaker 03:
If there are no questions, Madam Clerk, if you'd call the next case.