[00:00:00] Speaker 00: Case number 19, Dutch 7162 et al. [00:00:03] Speaker 00: Wyo Technology Inc. [00:00:05] Speaker 00: versus Republic of Iraq and Ministry of Defense for the Republic of Iraq, a balance. [00:00:10] Speaker 00: Mr. Morag for the balance, Mr. Katyal for the appellee. [00:00:14] Speaker 05: All right, Mr. Morag, good morning. [00:00:16] Speaker 05: Good morning and apologies for the delay. [00:00:18] Speaker 05: May it please the court? [00:00:20] Speaker 05: I'd like to start with the subject matter jurisdiction issues, if I may. [00:00:24] Speaker 05: Good. [00:00:27] Speaker 05: This is a single, this case is a single cause of action for breach of contract. [00:00:32] Speaker 05: That contract is the Broker Services Agreement, which called for WIOC to refurbish military equipment, construct repair facilities, and decommission equipment for scrap sales, all in Iraq, all of Iraqi military equipment. [00:00:51] Speaker 05: It was negotiated in Iraq, signed in Iraq, and is governed by Iraqi law, and critically, [00:00:57] Speaker 05: why Oak was to invoice Iraq in Iraq and sought to be paid in Iraq. [00:01:04] Speaker 05: And it is that breach, the breach of contract alleged in the complaint and found by the district court was the non-payment of invoices in Iraq. [00:01:13] Speaker 05: In light of that, the Fourth Circuit's ruling sustaining an immunity exception under clause two of the commercial activities exception, [00:01:21] Speaker 05: cannot stand as law of the case after the Supreme Court's decision in OBB versus Sachs. [00:01:28] Speaker 05: And it was clearly wrong at the time it was issued in 2011 as well. [00:01:33] Speaker 03: Mr. Morrig, can I ask you a question? [00:01:36] Speaker 03: Yes. [00:01:38] Speaker 03: Are you suggesting that it would be law of the case if you agreed with the substance of the ruling? [00:01:46] Speaker 03: Do you concede that it's law of the case, but that you're saying [00:01:50] Speaker 03: it, these exceptions apply that we shouldn't do law of the case because it isn't correct or because there's an intervening decision, but absent those, you would believe this to be law of the case. [00:02:06] Speaker 05: Yes, Your Honor. [00:02:07] Speaker 05: As we lay out in our brief, and it's undisputed, I believe, the law of the case doctrine applies initially. [00:02:17] Speaker 05: The issue of intervening change in the law and a determination by this court that the Fourth Circuit's decision was clearly erroneous and created a manifest injustice are described in your case law as exceptions to the doctrine. [00:02:35] Speaker 05: We think both apply. [00:02:36] Speaker 05: And what that does is that permits you to reconsider the Fourth Circuit's decision. [00:02:42] Speaker 05: And when you do that, you would be applying the de novo standard of review. [00:02:46] Speaker 02: Almost nothing else appearing, though. [00:02:48] Speaker 02: The Sachs decision from the Supreme Court clearly must be the controlling. [00:02:54] Speaker 02: The Supreme Court president would control over the law of the case, would it not? [00:02:58] Speaker 05: Yes, it is. [00:02:59] Speaker 05: Yes, it would. [00:02:59] Speaker 05: And that's why the Supreme Court's decision is intervening. [00:03:03] Speaker 05: Yes, exactly. [00:03:06] Speaker 05: What you've said in McKesson, too, was the standard to determine whether it affects your [00:03:15] Speaker 05: reliance on the Fourth Circuit's decision is whether it's material to the outcome. [00:03:19] Speaker 05: You would just look at the Fourth Circuit's decision today after Sachs and decide if it's still good law. [00:03:25] Speaker 05: And we submit that you can only come to one conclusion on that question, and the answer is no. [00:03:31] Speaker 05: And this court is very familiar with Sachs. [00:03:35] Speaker 05: You applied it only two months ago in the jam. [00:03:37] Speaker 05: versus IFC case to make this exact same determination on what conduct is a claim based upon. [00:03:47] Speaker 05: And here, the Fourth Circuit's decision cannot stand because the Fourth Circuit decided that this claim [00:03:59] Speaker 05: this breach of contract claim was based upon administrative tasks that why oak performed in the united states in connection with the broker services agreement but that cannot be the gravamen the foundation the core of the claim because of two things that the supreme court reiterated in sax which other circuits and including this one had [00:04:23] Speaker 05: misunderstood before sex. [00:04:26] Speaker 05: And those are that you need to, the gravamen is the conduct that actually injured the plaintiff. [00:04:32] Speaker 05: And it's the conduct which, and therefore you have to look at what the plaintiff needs to show in order to prevail. [00:04:41] Speaker 05: Proving that Y.O.C. [00:04:43] Speaker 05: conducted administrative tasks in the United States, entitles it to no recovery from Iraq, [00:04:49] Speaker 05: Indeed, as Judge Lambert's lengthy opinion shows, the basis for Y. Oak's recovery in this case was proof that Iraq breached a contract to pay the pro forma invoices in Iraq, and then the attendant damages that Y. Oak suffered in Iraq. [00:05:09] Speaker 03: Mr. Moore, I'm more concerned, I think, about sort of other issues related to law of the case, one of which is the peculiar circumstance of the Fourth Circuit having decided this to begin with. [00:05:23] Speaker 03: And what I'm trying to understand is why shouldn't your client be made to live with the consequence of its decision to appeal the Fourth Circuit's decision notwithstanding the fact that the case had been transferred? [00:05:37] Speaker 03: It seems to me you bore the risk [00:05:39] Speaker 03: that the Fourth Circuit would rule against you because you sought to appeal rather than just go with the fact that the case had been transferred and work through the system at the DVC and now this court. [00:05:55] Speaker 03: So we're in a sort of peculiar situation in which you're suggesting that a Fourth Circuit opinion on a legal issue somehow binds us in this context. [00:06:06] Speaker 05: Well, Your Honor, [00:06:09] Speaker 05: The case law is clear and the Christiansen case in the Supreme Court was a situation where you had one, the Federal Circuit decision being considered law of the case relative to the Seventh Circuit. [00:06:26] Speaker 05: We would be in the exact same position if Y.O. [00:06:30] Speaker 05: could file this case in the District Court in Washington [00:06:33] Speaker 05: the district judge had rendered the same decision as the Virginia judge, we would have taken interlocutory appeal, and you would have rendered the same decision as the Fourth Circuit. [00:06:43] Speaker 03: Well, let me ask, can I test that hypothetical because that's another sort of odd aspect in terms of your initial concession that law of the case applies. [00:06:55] Speaker 03: My understanding is that the Fourth Circuit ruled on a motion to dismiss, that they were determining whether the complaint [00:07:03] Speaker 03: contained sufficient allegations, if true, to sustain a claim against the defense of immunity. [00:07:13] Speaker 03: And they said, affirmed the district court judge that you did not have immunity, but on the complaint at the motion to dismiss stage. [00:07:23] Speaker 03: Suppose there was no transfer. [00:07:26] Speaker 03: The Fourth Circuit's decision stands. [00:07:29] Speaker 03: Is it your position that the district judge in the Eastern District of Virginia [00:07:33] Speaker 03: would not have been able to revisit the immunity decision during or after trial? [00:07:42] Speaker 05: Your Honor, the answer is that the reason we said what we said in our appeal brief is because there's a decision by Judge Roberts in this court that explains that [00:07:59] Speaker 05: What happens when you make a motion to dismiss on sovereign immunity grounds at the outset is the court looks at the complaint allegations and makes an initial determination whether they state a immunity exception. [00:08:12] Speaker 05: The Fourth Circuit said they did. [00:08:15] Speaker 05: At trial, we were not able to, because they're not really disputed, to contradict the factual allegation that WYOG did perform some administrative tasks in the United States. [00:08:28] Speaker 05: That was not a factual dispute. [00:08:31] Speaker 03: Right, but I'm asking you a different question. [00:08:32] Speaker 03: I'm asking you whether the law of the case doctrine would prevent the district court from revisiting that determination at a later stage in the litigation, regardless of whether or not they would have agreed with you on if you'd re-raised the immunity question. [00:08:51] Speaker 03: I want to know whether the Fourth Circuit's decision would be law of the case [00:08:55] Speaker 03: on the district of on the Eastern District of Virginia on that issue. [00:09:00] Speaker 05: Yes, it would, and as well as the as the mandate rule and the mandate rule applied to Judge Lamberth as well, because the Fourth Circuit is a is an appellate court. [00:09:14] Speaker 05: In the federal system, the transfer did not change the relationship between the appellate court and the district court in terms of the Fourth Circuit's decision. [00:09:24] Speaker 03: But isn't the Fourth Circuit's decision only about the motion to dismiss? [00:09:28] Speaker 03: I would understand if Judge Lamberth were asked as soon as it came to him. [00:09:35] Speaker 03: you've refiled a motion to dismiss and made the same arguments. [00:09:38] Speaker 03: Then I see law of the case. [00:09:40] Speaker 03: What I don't understand is why if a district judge is asked at a later stage of the case about immunity again, the Fourth Circuit's opinion on immunity precludes that. [00:09:54] Speaker 05: The Fourth Circuit's opinion itself discusses that it would be law of the case, not withstanding the transfer. [00:10:00] Speaker 05: The majority decided it would be. [00:10:04] Speaker 05: The point is that the Fourth Circuit decided based on a factual assumption it accepted as true one fact that Y.O. [00:10:11] Speaker 05: performed administrative tasks in the United States. [00:10:14] Speaker 05: The only way the district court within the rubric of your question about the motion to dismiss could have come out differently is if it found those facts not met. [00:10:32] Speaker 05: What we are saying is that the facts were established, but they still do not, they do not, as a matter of law, satisfy Wyo's burden of pleading an exception to the immunity of Iraq, which Iraq invoked and reinvoked after the Fourth Circuit's decision came down in its answer. [00:10:56] Speaker 05: It has preserved the issue [00:10:59] Speaker 05: and you are the right court to decide whether either because of intervening Supreme Court authority or the Fourth Circuit's decision itself at the time was clearly in error. [00:11:18] Speaker 02: Well, we don't need to do anything about the Fourth Circuit's error or non-error if we agree with you that sex [00:11:27] Speaker 02: states the law governing this case and facts intervened since the original Fourth Circuit decision, then the Fourth Circuit decision is no longer. [00:11:36] Speaker 02: binding as law of the case, even to the extent the law of the case is usually binding. [00:11:40] Speaker 05: Absolutely, Your Honor, that's correct. [00:11:42] Speaker 05: And that is why it appears that WIOC is looking for alternative grounds to substantiate the court's jurisdiction and has not identified those either that comply with the FSIA. [00:11:59] Speaker 05: The waiver argument that they raise is without basis because there was no [00:12:05] Speaker 05: because Iraq preserved the issue of its sovereign immunity. [00:12:10] Speaker 05: It certainly did not unambiguously, unmistakably, through any conduct post the appeal, [00:12:20] Speaker 05: affirmatively waive and indicate to the Court and to WIOC that it was no longer contesting immunity and was conceding the Court's jurisdiction, as your precedence would require finding under the implied waiver exception. [00:12:35] Speaker 03: What about direct effects, Mr. Morick? [00:12:37] Speaker 03: What about direct effects? [00:12:38] Speaker 03: We have this other clause, even if we agree with you, that based upon means based upon [00:12:44] Speaker 03: The gravamen of the suit. [00:12:45] Speaker 03: The gravamen of the suit is the breach. [00:12:48] Speaker 03: They also argue that the breach has caused direct effects in the United States. [00:12:52] Speaker 03: Why is that wrong? [00:12:53] Speaker 05: Okay. [00:12:53] Speaker 05: Well, first of all, on that, there is no law of the case issue. [00:12:56] Speaker 05: It's a de novo. [00:12:57] Speaker 05: It would be de novo consideration of an issue the district court never even decided. [00:13:02] Speaker 05: So there, the direct effects fail for the same reasons that they failed in any number of cases. [00:13:10] Speaker 05: The direct effects are not direct and were not felt in the United States. [00:13:16] Speaker 03: But if the district court didn't decide it, why wouldn't we just send it back for district court consideration in the first instance? [00:13:22] Speaker 05: Well, it was fully briefed before the district court, and it chose not to. [00:13:26] Speaker 05: For the same reason the Fourth Circuit chose not to. [00:13:28] Speaker 05: These are issues that this court can resolve on its own. [00:13:33] Speaker 05: It does that in Bell Helicopter versus Textron. [00:13:36] Speaker 05: You just look at the allegation, and it's a legal question whether that... Directed facts is a legal question, not a question of fact as to what happened in terms of what's going on in the United States. [00:13:52] Speaker 05: When the facts are not disputed, it's a legal question of whether the facts alleged established satisfy the test of being a direct consequence of the sovereign's breach. [00:14:06] Speaker 03: But we're beyond allegation. [00:14:08] Speaker 03: We had a trial. [00:14:09] Speaker 03: And my question is, why wouldn't we let the district court look at the record and determine, based on his understanding of what happened at trial, whether there were direct effects in the United States? [00:14:24] Speaker 05: Your honor, that is an option you have. [00:14:27] Speaker 05: But I think when you look at what is alleged as a direct effect, you essentially have considered these types of arguments in other cases and have affirmed that they are not direct effects. [00:14:38] Speaker 01: How about McKesson? [00:14:39] Speaker 01: Why is this case not closer to McKesson than it is to Zidane? [00:14:45] Speaker 01: It isn't just the payment of money. [00:14:47] Speaker 01: You had [00:14:48] Speaker 01: the operation running from somewhere in Pennsylvania. [00:14:52] Speaker 01: You had the folks who were doing all this scrap stuff over there of necessity, but it was being run from Pennsylvania. [00:15:02] Speaker 05: Because, Your Honor, McKesson involves a situation where the plaintiff was a [00:15:09] Speaker 05: investor owned part of the plant that was expropriated. [00:15:15] Speaker 05: This is simply a US contractor who had some of its employees in the United States and was performing administrative functions here. [00:15:26] Speaker 05: It is not there was no intended performance from the United States. [00:15:32] Speaker 05: This wasn't a contract to supply US goods or anything like that. [00:15:36] Speaker 05: It was a contract with that. [00:15:37] Speaker 05: The only connection is a US contractor who by necessity had employees and operations in the United States. [00:15:46] Speaker 01: Well, you know, but these people who were doing all this scrap work over in Iraq, they had to get [00:15:53] Speaker 01: their directions from the people in Pennsylvania. [00:15:57] Speaker 01: That is what to scrap, what not to scrap, and so forth. [00:16:02] Speaker 01: They were basically, if you had the contractor analogy, the people in Pennsylvania were the contractor and the folks in Iraq were the subs or the carpenters and so forth. [00:16:21] Speaker 01: I don't see why [00:16:23] Speaker 01: This doesn't have a direct effect in why we shouldn't send it back. [00:16:28] Speaker 01: I think Judge Lamberth was wrong on the commercial activity, but this is a vast record. [00:16:37] Speaker 01: He can take another look at it under the third clause and reach his decision. [00:16:44] Speaker 05: Well, Your Honor, if I'm permitted to respond, I think that what you describe is true of every US contractor case and not distinguishable. [00:16:54] Speaker 05: The decisions about what to scrap, what to refurbish were all to be made in Iraq between Y.Oaks personnel there and the Iraqi Ministry of Defense and the US authorities. [00:17:06] Speaker 05: This is not a situation any different [00:17:13] Speaker 05: from the many cases which involved no obligation of payment in the United States and no anticipated performance in the United States. [00:17:21] Speaker 05: This is really Helmrich and Payne, which you more recently ruled on. [00:17:27] Speaker 05: And there is no McKesson connection because of the absence of any interest in any business in Iraq, which is what- What about the potential interference with [00:17:42] Speaker 03: the other contracts that they were trying to make in the United States. [00:17:47] Speaker 03: I thought there was some allegation or evidence of a relationship with other businesses that was interfered with precisely because why Oak said we haven't been paid yet for these invoices and the like. [00:18:04] Speaker 05: Yes, Your Honor. [00:18:04] Speaker 05: And Judge Lamberth made an explicit finding that the subcontract with CLI, which was the company that was supposed to do the construction work, had not been signed, had not been entered into. [00:18:15] Speaker 05: And that was a factor that this court in Helmrich and Payne specifically relied upon as to why, therefore, any effect on subcontractors [00:18:26] Speaker 03: was not a direct effect because they were not an effect on subcontractors, right? [00:18:31] Speaker 03: They didn't have the contract yet. [00:18:33] Speaker 03: I'm talking about an effect on why oak. [00:18:35] Speaker 03: We have a tort that is interference with business relationship, right? [00:18:40] Speaker 03: That's a well established thing that if someone, if you're developing a business relationship with someone and another person comes along and interferes with that, that's a harm. [00:18:51] Speaker 03: So what I'm asking is why isn't it the case [00:18:55] Speaker 03: that why oak was affected in the United States by the alleged interference with its relationship with CLI because of the breach. [00:19:08] Speaker 05: Your honor, that is a theory that why oak has never pleaded not before the district court not before this court. [00:19:14] Speaker 05: There is no torsion interference. [00:19:19] Speaker 05: Iraq, first of all, Iraq breached a contract. [00:19:21] Speaker 05: There is no tort claim against Iraq in this case. [00:19:24] Speaker 03: I'm not saying they have to make the elements of a claim because all we're doing is looking for direct effects. [00:19:29] Speaker 03: And I'm just suggesting that it's no answer to say, but they didn't have a contract with these other people. [00:19:37] Speaker 03: Exactly. [00:19:38] Speaker 03: They didn't have a contract, they say, because Iraq breached [00:19:43] Speaker 03: the agreement. [00:19:44] Speaker 03: And so why isn't that a direct effect? [00:19:47] Speaker 03: We were on the verge of making a contract, and we weren't able to do it because of the breach. [00:19:54] Speaker 03: And the contract we would have had was in the United States. [00:19:58] Speaker 03: Why does that not count as direct effect? [00:20:02] Speaker 05: because that was the precise argument raised in Helmrich and Payne that the Helmrich and Payne would have entered into the subcontract but for Venezuela's breach and that didn't work there. [00:20:15] Speaker 05: What worked in Carnival Cruise Line was a situation where the subcontracts were an integral part of and Canada was the contract [00:20:24] Speaker 05: clearly contemplated these US subcontracts. [00:20:27] Speaker 05: And so that was considered a direct effect. [00:20:31] Speaker 05: But absent the actual contract, there is no direct effect because it just doesn't count. [00:20:40] Speaker 05: It's not direct. [00:20:41] Speaker 05: And there's an attenuation that this court has said breaks the causal chain. [00:20:51] Speaker ?: All right. [00:20:51] Speaker 01: All right, if there are no more questions, then we'll hear from you, Mr. Katyal. [00:20:56] Speaker 04: Thank you, Judge Henderson, and may it please the court, Neil Katyal for WIOC. [00:21:00] Speaker 04: As General Petraeus testified, WIOC and Iraq entered into a commercial contract with massive military and diplomatic importance, but Iraq refused to pay what it owed, and WIOC's CEO was brutally murdered while he was trying to collect that payment. [00:21:16] Speaker 04: Now, before this court, Iraq doesn't dispute it breached the contract, nor does it dispute that WIOC suffered damages, yet Iraq is saying it should pay [00:21:25] Speaker 04: nothing. [00:21:25] Speaker 04: And that's wrong. [00:21:27] Speaker 04: On jurisdiction, they must overcome four independent bases, waiver, law of the case, the merits of the second clause, and the merits of the third clause. [00:21:36] Speaker 04: So Judge Henderson, even if you think the merits of the second clause cut against us, there's still three independent things they'd have to run the table on. [00:21:44] Speaker 01: Why don't you concentrate on the third clause? [00:21:47] Speaker 04: Sure. [00:21:47] Speaker 04: So I think what you just heard my friend say on the other side about the third clause is that we never argued anything about CLI and the withdrawal. [00:21:56] Speaker 04: No, absolutely. [00:21:57] Speaker 04: We isolated four different direct effects in our briefing below. [00:22:02] Speaker 02: By the way. [00:22:03] Speaker 02: I know it's Judge Unison's question. [00:22:05] Speaker 02: I'm going to enumerate those four direct effects, please. [00:22:08] Speaker 04: Absolutely. [00:22:09] Speaker 04: The first was payment to United States Bank, which we designated. [00:22:13] Speaker 02: The second- Isn't that something that would be normally appearing in contracts between the United States entity and a foreign sovereign so that you're writing the direct out of the statutory exception, aren't you, if you say that's enough? [00:22:29] Speaker 04: No, Your Honor, I think direct just refers to is there any sort of intervening cause here the contract itself with the sovereign gave why oak, the ability to pick the place of payment, just as actually the contract and weltover [00:22:42] Speaker 04: And there's no intervening cause why Oak under the agreement that Iraq signed agreed to use the Pennsylvania bank. [00:22:50] Speaker 04: And so that is a direct effect. [00:22:52] Speaker 04: Now, I know you might not feel it's substantial, but the Supreme court in Weltover said that's not the test anymore. [00:22:59] Speaker 04: So that's the first direct effect. [00:23:01] Speaker 04: The second is the one I was referring to with Judge Henderson, the cutoff of capital and personnel, and we litigated this [00:23:10] Speaker 04: which is why we think they've waived all of these sovereign immunity arguments, not just on Clause 2, but on Clause 3 as well. [00:23:17] Speaker 04: We argued, and this is at Joint Appendix page 573, [00:23:24] Speaker 04: breached the contract, that cratered the agreement with CLI. [00:23:28] Speaker 04: We had a verbal agreement. [00:23:29] Speaker 04: They were performing under the agreement, but they needed a guarantee of financing. [00:23:34] Speaker 04: And that's certainly enough, as Judge Henderson, you were talking about with McKesson, enough to qualify as a direct effect. [00:23:42] Speaker 04: The third direct effect, and this is one I understand some members of the panel have disagreed on at various points, is the targeting of a US corporation. [00:23:51] Speaker 04: Our argument here below was that Iraq specifically targeted a US company it knew would feel the loss of the United States. [00:23:58] Speaker 04: WIOC isn't some random company. [00:24:00] Speaker 04: They were handpicked by the US military and the intelligence community to do this kind of work, this very specialized work. [00:24:09] Speaker 03: Targeting by whom, though, Mr. Katyal? [00:24:11] Speaker 03: Targeting by whom? [00:24:12] Speaker 04: Targeted by Iraq for breaching this agreement. [00:24:16] Speaker 04: So Iraq knew that by breaching the agreement, it would cause [00:24:23] Speaker 04: itself recites that WIOC is a United States company. [00:24:28] Speaker 04: And the disagreement that two members of this panel had in EIG was about whether or not there are intervening causes at issue in that case. [00:24:36] Speaker 04: Here there are no intervening causes. [00:24:38] Speaker 04: Iraq breaches the agreement. [00:24:40] Speaker 04: That directly harms a United States company. [00:24:43] Speaker 02: That's all of our disagreement, but perhaps it's at least part of it. [00:24:48] Speaker 03: What is the evidence that it was Iraq's intention to target [00:24:53] Speaker 03: this company I mean it just seems circumstantial that it happened to be a US company but where's the evidence in the record of actual. [00:25:01] Speaker 03: maliciousness in terms of targeting of a U.S. [00:25:05] Speaker 04: Again, I don't think it needs maliciousness, Judge Jackson. [00:25:07] Speaker 04: I don't think that's a test. [00:25:08] Speaker 04: It just requires targeting. [00:25:09] Speaker 04: And here, Iraq knew that WIOC was a United States company and performing a critical mission. [00:25:15] Speaker 04: The re-agreement itself recites just how critical this mission is to the United States and to Iraq. [00:25:21] Speaker 04: It's critical to, for example, the withdrawal of United States forces [00:25:24] Speaker 04: General Petraeus and the testimony referred to by the district court on this, I think, is very telling. [00:25:33] Speaker 01: I thought your targeting argument was more about this zena or whatever, more of a fraud argument. [00:25:42] Speaker 01: that Zena was a crook all along. [00:25:45] Speaker 04: That's part of it, Your Honor, but it isn't the only part of it. [00:25:48] Speaker 04: It's also just the cutoff of funds with the refusal to pay a huge bill to a United States company. [00:25:55] Speaker 04: And then the fourth point is the diplomatic effects and all of the stuff that we isolate, the immediate consequences of geopolitical effects, [00:26:03] Speaker 04: that by withdrawing from this contract it had massive impact on United States personnel, United States foreign policy, and the like. [00:26:12] Speaker 03: Does the current record really bear that out, and what's your position as to whether or not we should send it back so that Judge Lamberth can take a look at that? [00:26:21] Speaker 04: Absolutely, Judge Jackson. [00:26:22] Speaker 04: They don't get another bite at the apple. [00:26:24] Speaker 04: I mean, we litigated this for pages and pages, even though sovereign immunity is their burden, [00:26:30] Speaker 04: And I think this court, Judge Santel, your opinion in police social development and the court's opinion in Al-Haddad says, they bear the burden of proof. [00:26:39] Speaker 04: And if the evidence is an equipoise at all, you give the doubt against sovereign immunity. [00:26:45] Speaker 04: Here, they made zilch of an argument in the district court. [00:26:49] Speaker 04: And Judge Jackson, this brings me to the law of the case argument or waiver arguments. [00:26:53] Speaker 04: I think however you want to phrase it, as this case came to the district court, they picked the Fourth Circuit. [00:26:59] Speaker 04: They said the four circuit decisions would control. [00:27:02] Speaker 04: You even heard my friend again today say something very similar. [00:27:06] Speaker 04: And now in the district court, what do they say? [00:27:08] Speaker 04: They give the district court a whopping one sentence on sovereign immunity with respect to everything, clause two and three. [00:27:17] Speaker 04: And that is a joint appendix, page 505. [00:27:19] Speaker 04: Quote, the court shall determine its jurisdiction accordingly. [00:27:23] Speaker 03: But Mr. Krippjall, can I just tell you that I sense some tension in your argument on this point. [00:27:30] Speaker 03: To the extent that the Fourth Circuit's argument or decision was law of the case, which I am struggling to see, but assuming that it is, then how is it that Iraq can be faulted for not seeking to revisit that vigorously? [00:27:48] Speaker 03: Once the case was transferred it seems as though everybody agreed that the Fourth Circuit had bound them with respect to this issue so I don't know that we can suddenly say well, because they didn't re raise it and have a whole long brief about it that they now have somehow waved it. [00:28:04] Speaker 04: So Judge Jackson, this is a sovereign immunity, both clause two and three is a fact-specific determination. [00:28:11] Speaker 04: And here we made all of these arguments about the facts and so on. [00:28:16] Speaker 04: All they did, they didn't even make the argument that they were sovereign immune. [00:28:20] Speaker 04: They just said, determine jurisdiction accordingly, and they bear the burden of proof. [00:28:24] Speaker 04: And I heard my friends say on the other side, yeah, we're just contesting the law, not the facts. [00:28:29] Speaker 04: I think that's exactly what the law of the case doctrine forbids. [00:28:32] Speaker 04: And as you said, [00:28:35] Speaker 04: in the Fourth Circuit to one set of rules to not be able to challenge it again. [00:28:39] Speaker 04: And Judge Santel, you said, well, what if the Supreme Court makes a different change in law? [00:28:45] Speaker 04: That's binding. [00:28:46] Speaker 04: We absolutely agree with that. [00:28:48] Speaker 04: The problem for them here is that that change in law has to be material. [00:28:53] Speaker 04: That's what this court's decision in McKesson said to Judge Henderson. [00:28:56] Speaker 04: You were on that panel. [00:28:58] Speaker 04: And our point to you is that the Sachs decision is a [00:29:02] Speaker 04: It's not about contract, reaches a contract, which are very different for the reasons our brief explains. [00:29:07] Speaker 04: It's a Clause 1 case, not a Clause 2 case. [00:29:11] Speaker 04: And at the very least, we think for whether you want to call it waiver or law of the case, they should have made some argument about sacks below. [00:29:18] Speaker 04: Everything you just heard my friend say in his 18, 19 minutes was something that the district court was doing. [00:29:25] Speaker 02: I don't see why the Graveman question would be any difference in Clause 1 and Clause 2. [00:29:31] Speaker 02: failed to see why Sachs isn't a material decision. [00:29:36] Speaker 04: Well, I think the Supreme Court itself, Judge Sentel, went out of its way in Sachs to say, in footnote one, they're only deciding clause one, that there's a lot of unique aspects to each of these clauses. [00:29:47] Speaker 04: And so I at least don't think it's a controlling change. [00:29:50] Speaker 02: I don't see how they could consistently come out differently on clause two. [00:29:55] Speaker 02: If you read the Chief Justice's reasoning on Sachs, [00:29:58] Speaker 04: I very much think just until they could because of the difference in the language because clause one refers to a commercial activity by the foreign state. [00:30:06] Speaker 04: Clause two is a bit looser. [00:30:08] Speaker 04: It's an act performed in the United States in connection with a commercial activity. [00:30:13] Speaker 03: Yes, Mr. Katyal, but the treatise that you all cite in your brief, which I happen to look up, [00:30:20] Speaker 03: makes it very clear, this is the Sanchez treatise, makes it very clear that clause two also applies to the defendant's conduct. [00:30:29] Speaker 03: It's an act of the defendant, that's what the whole thing is about. [00:30:34] Speaker 03: So I don't understand how anybody could think that the Fourth Circuit's interpretation of it, an act of the plaintiff, could be correct. [00:30:42] Speaker 04: Judge Jackson, we're not arguing that that isn't a way to satisfy clause two, but nothing in that treatise says it's the only way. [00:30:49] Speaker 04: And there's a really important textual point that we make in our brief, because clause two refers to a foreign state. [00:30:56] Speaker 04: This is our addendum to the brief at page three, which reproduces it. [00:31:00] Speaker 04: A foreign state shall not be immune from the jurisdiction of courts in any case in which the action is based upon an act performed in the United States in connection with commercial activity elsewhere. [00:31:10] Speaker 04: the clause there doesn't specify who must perform the act in the United States, whereas clauses one and three do exactly that. [00:31:18] Speaker 04: Now, to be short, there just aren't that many clause two cases, but that's because any case in which there is foreign sovereign activity in the United States already meets clause one and sometimes meets clause three. [00:31:30] Speaker 04: So that's why you just don't have precedent on it, but they don't have a case the other way saying that this wouldn't satisfy it. [00:31:39] Speaker 03: Can I just ask you, Mr. Katyal, to entertain my hypothetical with Mr. Morgue, because I fear that I don't understand law of the case. [00:31:49] Speaker 03: It seems to me that the Fourth Circuit, to the extent that law of the case is deciding the same issue in the same way or whatever, that it's a different issue when immunity is raised during or after trial [00:32:03] Speaker 03: than it is when immunity is raised, testing the allegations of the complaint. [00:32:08] Speaker 03: Mr. Morrig says, oh yes, I see that, but we don't have any reason to think that the facts were in fact different after trial with respect to Prong 2, which is why we didn't raise it and why. [00:32:22] Speaker 03: I'm asking whether the district judge was precluded from taking another look at it because of the Fourth Circuit's [00:32:31] Speaker 03: opinion, setting aside, setting aside transfer. [00:32:35] Speaker 03: So my hypothetical assumes we don't have a transfer. [00:32:38] Speaker 03: The Fourth Circuit says what it says, and then we have a trial, and then Iraq hypothetically says [00:32:45] Speaker 03: We are immune district judge is law of the case presenting preventing the district judge from deciding that at that point. [00:32:52] Speaker 04: So setting aside waiver, you know which I think is a separate problem but just if this will raise somehow to the district court. [00:32:59] Speaker 04: I think this court's decision and surely versus civilians back and [00:33:02] Speaker 04: 2012, and Judges Santel and Henderson were on that decision, I think answers that, Judge Jackson, by saying ordinarily law of the case would apply, so long as you had a fulsome legal adjudication and there isn't some massive change in the facts. [00:33:17] Speaker 04: Here, my friend on the other side is conceding, after this long trial, no change in the facts. [00:33:23] Speaker 04: So now the only question is, is this a material [00:33:26] Speaker 04: And look, I can imagine some arguments for why it is I'm not saying it's impossible, but boy is a matter of prudence and fairness to the district court, and us that should have been an argument that was made in the district court, they never breathed the word sacks there. [00:33:43] Speaker 04: Then every breathe the word Nelson the predecessor case in the fourth circuit. [00:33:47] Speaker 04: So they go and they brief all of this sovereign immunity extensively in the fourth circuit. [00:33:53] Speaker 04: And when it comes to DC. [00:33:54] Speaker 04: What do they say that one sentence I gave you nothing more. [00:33:58] Speaker 04: And now here we are all litigating having to try and figure out [00:34:02] Speaker 04: whether or not SACS applied, how it changed the law, and so on. [00:34:06] Speaker 04: There is no precedent for this court going and jumping past waiver and law of the case on something like this. [00:34:13] Speaker 04: And this has real-world consequences. [00:34:16] Speaker 02: You're linking waiver and law of the case. [00:34:18] Speaker 02: They're not in the same posture here, are they, Mr. Ketchel? [00:34:22] Speaker 04: There are two very separate arguments, Your Honor. [00:34:24] Speaker 04: They both paint in the same exact direction, which is law of the case, I think, as Judge Jackson said. [00:34:29] Speaker 04: Look, they agreed to the force. [00:34:31] Speaker 02: Are you still willing to say that they come together if one of us, at least, and maybe more, would be convinced that waiver is not present? [00:34:40] Speaker 04: Oh, the law of case would still absolutely be present. [00:34:43] Speaker 02: I think you want to delink those. [00:34:46] Speaker 04: Excuse me. [00:34:47] Speaker 04: Sorry, I couldn't hear that. [00:34:49] Speaker 04: You wanted to link them. [00:34:51] Speaker 04: It's exactly I want to link separate arguments as I said, Your Honor, at the outset, and we certainly think clause three is a separate argument as well and requires no remand, they had their bite at the apple to argue all of the direct effects in the district court, they said nada about it. [00:35:12] Speaker 04: in a trial to say, oh, we now have some clause three arguments. [00:35:19] Speaker 04: That time to do that was at the trial. [00:35:21] Speaker 04: The district court found these facts. [00:35:23] Speaker 03: Can I just ask you a question? [00:35:25] Speaker 03: You keep saying, we spent all this time, we, Ohio, on this issue before the district court, and they said nothing. [00:35:32] Speaker 03: I'm still wondering why you're spending time on it if that's their burden and if law of the case, the Fourth Circuit has already said there's no immunity. [00:35:42] Speaker 03: Were you trying to prove to the district court something that you didn't have to because law of the case already took care of it? [00:35:49] Speaker 04: 100% your honor it's always their burden, but we as a matter of belt and suspenders wanted to be absolutely prudent as you can imagine this is one of the most important that this is the most important thing why oak has ever faced and so as a matter of careful lawyering we did that, but we certainly don't think the fact that we developed a record made all of these arguments and the district court found them all, including the facts on clause three in our favor should somehow hurt us and penalize us and mean that they [00:36:17] Speaker 04: We've been clear from the very start, from the time this case was in the EDVA, what our arguments have been. [00:36:23] Speaker 04: Their arguments have shifted, morphed, and changed over time to the point where here we are now, almost two decades later, having to litigate some of this stuff that was once upon a time litigated in the Fourth Circuit, but definitely not litigated below in the district court. [00:36:39] Speaker 04: And so they bear the ultimate burden here. [00:36:42] Speaker 04: I think that's what the precedents of the DC Circuit have said time and again. [00:36:47] Speaker 01: If there are no more questions, Mr. Kachal, I know we told you that you would have two minutes on damages, but I'd like to amend that and say if neither of my colleagues has any questions about the damages, we'd like to take that on the briefs. [00:37:05] Speaker 02: No questions. [00:37:07] Speaker 01: Judge Jackson. [00:37:08] Speaker 04: No questions. [00:37:09] Speaker 04: All right. [00:37:09] Speaker 04: And Judge Henderson, on the cross appeal about the two complementary compensation things, is that included in the question? [00:37:16] Speaker 04: Yes. [00:37:17] Speaker 01: Yes. [00:37:18] Speaker 01: All right. [00:37:18] Speaker 01: So Mr. Mark, why don't you take two minutes? [00:37:21] Speaker 05: OK. [00:37:22] Speaker 05: Thank you, Your Honor. [00:37:23] Speaker 05: I just want to make one point on the burden of proof. [00:37:26] Speaker 05: What you said in Bell Helicopter and what WIOC actually acknowledged itself in its proposed findings of fact was that it had the burden [00:37:37] Speaker 05: to articulate an FSIA exception that worked on the facts it alleged. [00:37:43] Speaker 05: And in Bell Helicopter, what you held was the district court did not err in ruling that Bell failed to meet its initial burden. [00:37:52] Speaker 05: And even though it had articulated all of these direct effects that it believed occurred in the United States. [00:37:58] Speaker 05: And you held that because you decided they did not qualify as direct effects. [00:38:03] Speaker 05: That's the argument we're making. [00:38:05] Speaker 05: They haven't come forward. [00:38:07] Speaker 05: with a theory of an exception that is legally plausible and that would survive if we said nothing else after that. [00:38:16] Speaker 03: Mr. Katyal says that not only have they done that but that you all said nothing before the district court as they tried. [00:38:23] Speaker 03: Is that true and why shouldn't we consider your argument with respect to this therefore somehow waived about the argument that they haven't done enough? [00:38:34] Speaker 05: Your honor on the issue is unique to subject matter jurisdiction in the in the Prince versus Germany case in which judge sent tell you sat. [00:38:44] Speaker 05: Germany had raised an argument for the first time on appeal against the district court subject matter jurisdiction and this court held that you would consider that belated argument if it were of any consequence to the jurisdictional determination because of the unique fact that subject matter jurisdiction cannot be created by consent waiver or estoppel. [00:39:07] Speaker 05: That is simply a rule that applies here. [00:39:10] Speaker 05: There is no forfeiture [00:39:11] Speaker 05: of arguments that can be possible as long as you accept that we preserve the issue of sovereign immunity. [00:39:19] Speaker 05: And we did that because there was no unmistakable and unambiguous waiver of that point to satisfy the FSIA. [00:39:29] Speaker 05: Nelson was cited to the Fourth Circuit. [00:39:31] Speaker 05: Nelson was cited by the Fourth Circuit. [00:39:34] Speaker 05: With respect to Sachs not being relevant to clause two, [00:39:39] Speaker 05: This court in Odeambo recognized that structurally the based upon phrase applies to every all three categories of the commercial activities exception. [00:39:51] Speaker 05: You applied it in just in again two months ago in Jam versus IFC you considered the clauses one and two in tandem in doing your based upon analysis. [00:40:00] Speaker 05: So I think that one's clear. [00:40:03] Speaker 05: With respect to this issue about no case establishes that the plaintiff's conduct can't be for purposes of clause two. [00:40:12] Speaker 05: We cited the AAA case. [00:40:14] Speaker 05: It's in the briefs. [00:40:15] Speaker 05: It's out of the Sixth Circuit. [00:40:17] Speaker 05: That's exactly what it holds on this similar record of a U.S. [00:40:20] Speaker 05: contractor seeking to predicate jurisdiction on its U.S. [00:40:26] Speaker 05: activities, administrative activities. [00:40:29] Speaker 05: On the issue of the request for payment, Judge Santel, you were exactly right. [00:40:35] Speaker 05: The demand for the payment to the account in the United States was sent by Wye Oak to Zena. [00:40:42] Speaker 05: There is no evidence whatsoever that that was communicated to Iraq. [00:40:46] Speaker 05: Iraq agreed to make payments in Iraq at the Office of the Ministry of Defense in Baghdad. [00:40:52] Speaker 05: So that doesn't count, because it's not, as you said, something between the sovereign defendant and the plaintiff. [00:41:02] Speaker 05: All right, Mr. Morag, you need to wind it up. [00:41:08] Speaker 05: In that case, those are the points. [00:41:10] Speaker 05: All right. [00:41:13] Speaker 01: Thank you, gentlemen. [00:41:14] Speaker 01: And Madam Clerk, if you'd call the next case.