Jacubovich v. State of Israel

• Court: Court of Appeals for the Second Circuit
• Decided: May 28, 2020
• Docket: 19-2970
• Status: Unpublished

Opinion

19-2970 Jacubovich v. State of Israel UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 28th day of May, two thousand twenty.

PRESENT: GUIDO CALABRESI, RICHARD C. WESLEY, RICHARD J. SULLIVAN, Circuit Judges. ------------------------------------------------------------------ NICOLE SOFIA JACUBOVICH, CALANIT DIVA JACUBOVICH,

Plaintiffs-Appellants,

v. No. 19-2970-cv

STATE OF ISRAEL, COMPUTERSHARE INC., COMPUTERSHARE TRUST COMPANY, N.A.,

Defendants-Appellees. ------------------------------------------------------------------ FOR PLAINTIFFS-APPELLANTS: KATHLEEN M. KUNDAR (Jami L. Mevorah, on the brief), Fox Horan & Camerini LLP, New York, NY.

FOR DEFENDANTS-APPELLEES: SAMUEL N. LONERGAN, Arnold & Porter Kaye Scholer LLP, New York, NY (Robert Reeves Anderson, Arnold & Porter Kaye Scholer LLP, Denver, CO, Stephanna F. Szotkowski, Arnold & Porter Kaye Scholer LLP, Chicago, IL, Stephen K. Wirth, Arnold & Porter Kaye Scholer LLP, Washington, DC, on the brief), for Defendant-Appellee State of Israel.

SANDRA D. HAUSER, Dentons US LLP, New York, NY, for Defendants- Appellees Computershare Inc., Computershare Trust Company, N.A.

Appeal from a judgment of the United States District Court for the Southern

District of New York (Naomi Reice Buchwald, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the judgment of the district court is

AFFIRMED.

Plaintiffs-Appellants Nicole Sofia Jacubovich and Calanit Diva Jacubovich

(together, “Appellants”) appeal from a judgment of the district court (Buchwald,

J.) dismissing their claims against Defendants-Appellees Computershare Inc.,

2 Computershare Trust Co., N.A. (together, “Computershare”), and the State of

Israel (collectively, “Appellees”) arising from Appellees’ alleged failure to transfer

to the Appellants the proceeds of bonds issued by the Israeli government (the

“Bonds”). The district court determined that Israel was immune from suit under

the Foreign Sovereign Immunities Act (“FSIA”) and that Computershare was not

a proper defendant because it did not serve as Israel’s fiscal agent for the Bonds.

Appellants contend that the district court erred in granting Appellees’ motions to

dismiss because Israel waived its foreign sovereign immunity or is barred from

asserting it under the FSIA and Computershare is a proper defendant; Appellants

further assert that the district court erred in denying their request for leave to

amend their complaint. Because Israel is immune from this suit, Computershare

is not a proper defendant, and leave to amend would be futile, we affirm. We

assume the parties’ familiarity with the underlying facts, procedural history, and

issues on appeal, to which we refer only as necessary to explain our decision.

I. Israel Is Immune from This Suit Under the FSIA

We review a district court’s decision regarding subject matter jurisdiction

under the FSIA de novo for legal conclusions and its factual findings for clear error.

U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 241 F.3d 135, 150–51 (2d Cir.

3 2001). The FSIA is “the sole basis for obtaining jurisdiction over a foreign state in

our courts.” Arch Trading Corp. v. Republic of Ecuador, 839 F.3d 193, 200 (2d Cir.

2016) (quoting Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434

(1989)). “Under the FSIA, a foreign sovereign and its instrumentalities are immune

from suit in the United States courts unless a specific statutorily defined exception

applies.” Id. (internal quotation marks omitted). “Absent such an exception, the

immunity conferred by the FSIA strips courts of both subject matter and personal

jurisdiction over the foreign state.” Id. Nevertheless, the FSIA permits courts to

exercise jurisdiction over foreign sovereigns in any case “in which the foreign state

has waived its immunity either explicitly or by implication.” 28 U.S.C.

§ 1605(a)(1). “The waiver exception is narrowly construed,” Joseph v. Office of the

Consulate Gen. of Nigeria, 830 F.2d 1018, 1022 (9th Cir. 1987), such that waiver under

the FSIA must be unambiguous and unmistakable in order to be effective, see, e.g.,

Shapiro v. Republic of Bolivia, 930 F.2d 1013, 1017–18 (2d Cir. 1991).

A. Israel Did Not Explicitly Waive Its Sovereign Immunity

Appellants maintain that Israel explicitly waived its foreign sovereign

immunity in this case through the waiver provision of the U.S. prospectus that

accompanied the bond offering. But the U.S. prospectus clearly applies only to

4 U.S. bond purchases, not to international bond purchases like those at issue in this

case. For starters, the U.S. prospectus expressly provides that it covers bond sales

only by the Development Corporation for Israel (“DCI”). It then defines DCI as

the “sole and exclusive underwriter of the bonds in the United States.” J. App’x at

174 (emphasis added). It next cautions that “Israel is not offering to sell or

soliciting offers to buy any securities other than the bonds offered under this

prospectus supplement.” Id. at 156.

If that were not enough, the U.S. prospectus expressly states that sales to

international purchasers are subject to different terms and conditions. With

respect to international sales, it provides that “Israel may sell the bonds outside of

the United States through additional underwriters or dealers, as will be described

in the applicable prospectus supplement.” Id. at 166; see also id. at 175 (explaining

that prospectuses and other investment documentation “are available outside of

the United States from the appropriate local underwriter”). It then explicitly

warns that “[a]ny use of this prospectus supplement and the accompanying

prospectus . . . other than in connection with the offering of the bonds

[underwritten by DCI], is unauthorized.” Id. at 156–57.

5 Consequently, we agree with the district court that the U.S. prospectus and

its applicable supplement, when read as a whole, do not extend to the Bonds at

issue here. See Nyambal v. Int’l Monetary Fund, 772 F.3d 277, 282 (D.C. Cir. 2014)

(reading waiver provision in context of entire contract to determine whether

defendant had expressly waived immunity).

Appellants alternatively argue that, even if the U.S. prospectus does not

apply to internationally purchased bonds, their bonds were actually purchased in

the United States. But the record amply supports the district court’s conclusion

that the Bonds were purchased internationally, and Appellants offer no evidence

to suggest that the district court’s factual finding was clearly erroneous.

B. Israel Did Not Implicitly Waive Its Sovereign Immunity

Appellants next contend that Israel implicitly waived its foreign sovereign

immunity in this action because it submitted to a separate 28 U.S.C. § 1782

proceeding before Judge Failla in connection with Appellants’ Argentine criminal

action against their grandfather. We are unpersuaded.

“[D]istrict courts have discretion to determine that the conduct of a party in

litigation does [not] constitute a waiver of foreign sovereign immunity in light of

the circumstances of a particular case.” Canadian Overseas Ores Ltd. v. Compania de

6 Acero del Pacifico S.A., 727 F.2d 274, 278 (2d Cir. 1984). The district court properly

exercised its discretion to hold that Israel did not implicitly waive its sovereign

immunity by voluntarily complying with Appellants’ subpoena in the § 1782

proceeding.

In determining whether a foreign sovereign has implicitly waived its

immunity, we have drawn on the three examples of implied waiver described in

the FSIA’s legislative history: (1) “where a foreign state has agreed to arbitration

in another country;” (2) “where a foreign state has agreed that the law of a

particular country should govern a contract;” and (3) “where a foreign state has

filed a responsive pleading in an action without raising the defense of sovereign

immunity.” Shapiro, 930 F.2d at 1017 (internal quotation marks omitted). “These

examples involve circumstances in which the waiver was unmistakable, and

courts have been reluctant to find an implied waiver where the circumstances

were not similarly unambiguous.” Id. Both this Court and other Circuits have

held that conduct short of a responsive pleading, such as engaging in discovery, is

insufficient to meet this stringent waiver standard. See, e.g., Canadian Overseas, 727

F.2d at 277–78; Rodriguez v. Transnave Inc., 8 F.3d 284, 287–90 (5th Cir. 1993);

7 Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438, 443–45 (D.C. Cir.

1990).

Appellants nevertheless maintain that Israel implicitly waived sovereign

immunity by voluntarily complying with their discovery requests in the § 1782

proceeding. But Israel has maintained since the beginning of this lawsuit that it is

immune under the FSIA. It has not taken any actions in this litigation that suggest

a contrary intent, and Appellants do not identify a case in which a foreign

sovereign’s conduct in one proceeding has been held to impliedly waive sovereign

immunity in a different proceeding. Moreover, as the district court noted,

Appellants’ implicit waiver contention would undermine § 1782’s “twin aims”: to

“provid[e] efficient means of assistance to participants in international litigation

in our federal courts” and to “encourag[e] foreign countries by example to provide

similar means of assistance to our courts.” Malev Hungarian Airlines v. United Techs.

Int’l Inc. (In re Malev Hungarian Airlines), 964 F.2d 97, 100 (2d Cir. 1992).

C. Israel Cannot Be Estopped from Asserting Sovereign Immunity

Appellants next assert that Israel is equitably estopped from asserting

sovereign immunity because it engaged in “bad faith efforts to deceive and

mislead” them as to where it was amenable to suit. Appellants’ Br. at 45. But

8 leaving aside the accuracy of Appellants’ characterizations, this argument fails for

the simple reason that equitable estoppel is not a cognizable exception to the FSIA.

“[T]he Supreme Court [has] emphasized that the FSIA is

‘comprehensive[,]’ . . . meaning that ‘after the enactment of the FSIA, the Act – and

not the preexisting common law – indisputably governs the determination of

whether a foreign state is entitled to sovereign immunity.’” Mobil Cerro Negro, Ltd.

v. Bolivarian Republic of Venezuela, 863 F.3d 96, 113 (2d Cir. 2017) (quoting Republic

of Argentina v. NML Capital, Ltd., 573 U.S. 134, 141 (2014)). The FSIA enumerates

seven exceptions to sovereign immunity: (1) waiver, (2) commercial activities,

(3) takings contrary to international law, (4) succession, gifts, and rights in real

property, (5) noncommercial torts, (6) arbitral awards, and (7) terrorism. See 28

U.S.C. §§ 1605(a), 1605A, 1605B. Courts are “prohibit[ed] [from] creating new

exceptions to the FSIA.” Belhas v. Ya’alon, 515 F.3d 1279, 1287 (D.C. Cir. 2008). We

therefore cannot estop Israel from asserting sovereign immunity. 1

1Appellants also maintain that the first and second clauses of 28 U.S.C. § 1605(a)(2) apply to strip Israel of its sovereign immunity. In oral argument before the district court, Appellants’ counsel referred vaguely to “the possibility of the exception under sovereign [immunity] for commercial activity,” acknowledging that this possibility “ha[d] not been explored” and had “not been argued on this motion.” J. App’x at 503. Because Appellants’ § 1605(a)(2) arguments were not properly briefed below, we decline to consider them for the first time on appeal. See Otal Invs. Ltd. v. M/V Clary, 673 F.3d 108, 120 (2d Cir. 2012); Halpert Enters., Inc. v. Harrison, No. 07-1144, 2008 WL 4585466, at *3 & n.1 (2d Cir. Oct. 15, 2008).

9 II. The District Court Did Not Abuse Its Discretion When It Declined to Order Additional Jurisdictional Discovery

Appellants maintain that the district court should have permitted them to

conduct additional jurisdictional discovery to determine where the Bonds were

actually purchased. But a district court has “wide latitude to determine the scope

of discovery,” and we will not overturn “a district court’s denial of jurisdictional

discovery” unless it amounts to an “abuse of discretion.” Arch Trading, 839 F.3d

at 206 (internal quotation marks omitted).

Appellants’ claim fails because Appellants never moved for jurisdictional

discovery in the district court and did not request it in opposition to the motions

to dismiss. To be sure, Appellants’ counsel, during oral argument on the motions

to dismiss, obliquely stated that while she didn’t “have facts” to establish that

Appellants’ Bonds were purchased in the United States, she “believe[d] that, with

further work, we could find the facts.” J. App’x at 509. She also stated that she

“continue[d] to believe that if we were given the opportunity to proceed in this

case with all the evidence, [the] question [of where the Bonds were purchased]

may be answered differently.” Id. at 528. But at no point did Appellants’ counsel

specifically request jurisdictional discovery or identify what additional facts could

establish that the Bonds were sold in the United States to a U.S. purchaser.

10 Accordingly, Appellants have forfeited their contention that the district court

abused its discretion by failing to grant jurisdictional discovery. See, e.g., Otal Invs.,

673 F.3d at 120.

III. The District Court Properly Dismissed All Claims Against Computershare

We review de novo a district court’s dismissal of a claim for lack of subject-

matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). See Broidy

Capital Mgmt. LLC v. Benomar, 944 F.3d 436, 441 (2d Cir. 2019). Computershare –

which did not serve as Israel’s fiscal agent for the Bonds – played no role in the

events underlying the Appellants’ claimed injury. As the district court explained,

Computershare Trust Co. of Canada (“CTCC”) was the entity that served as

Israel’s fiscal agent for the Bonds, and therefore, any potential claims Appellants

have against a fiscal agent arise only against CTCC. The district court thus

committed no error in dismissing all claims against Computershare because

Computershare is not a proper defendant.

IV. The District Court Properly Denied Appellants Leave to Amend Their Complaint

Finally, Appellants contend that the district court erred in denying them

leave to amend their complaint. Where, as here, the district court denied the

plaintiffs leave to amend their complaint on the grounds of futility, we review the

11 denial de novo. See Hutchison v. Deutsche Bank Sec. Inc., 647 F.3d 479, 490 (2d Cir.

2011).

On appeal, Appellants’ only contention for permitting amendment of their

claims against Israel is that the district court erred in dismissing the suit on

sovereign immunity grounds. But since we agree with the district court that Israel

is immune from suit, and since Appellants proffer no facts that would alter that

conclusion if included in an amended pleading, any amendment with respect to

Israel would clearly be futile. The same can be said with respect to Appellants’

request to add new claims against Computershare. As explained above,

Computershare was not the fiscal agent for the Bonds, so there is no appropriate

claim against it. Adding new causes of action against Computershare would not

alter the plain terms of the U.S. prospectus, which made clear that Computershare

was not the fiscal agent for the Bonds.

Finally, the district court properly determined that any amendment to

substitute CTCC as a defendant would be futile because CTCC would not be

subject to personal jurisdiction in the district court. As a general matter, plaintiffs

bear the burden of establishing personal jurisdiction and “must make a prima facie

showing that jurisdiction exists.” Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d

12 30, 34–35 (2d Cir. 2010) (internal quotation marks omitted). That prima facie

showing must include “an averment of facts that, if credited[,] would suffice to

establish jurisdiction over the defendant.” Id. at 35 (internal quotation marks

omitted).

Here, there is no allegation that CTCC, a Canadian-incorporated and

domiciled entity that has no United States place of business and does not operate

in the United States, would be subject to general jurisdiction in the district court.

See Daimler AG v. Bauman, 571 U.S. 117, 137–39 (2014). Furthermore, Appellants

offer no facts to demonstrate that CTCC’s contacts with New York are sufficient to

establish specific jurisdiction. See N.Y. C.P.L.R. § 302(a). Although representatives

of CTCC attended meetings in New York City along with representatives of

Appellees, DCI, and Israel Bonds International, Appellants do not allege that any

conduct relevant to this case occurred at those meetings. While the fiscal agency

agreement between CTCC and Israel does state that it was “executed and

delivered in New York, New York,” any cause of action that Appellants might

bring against CTCC plainly could not arise out of that expressly bilateral

agreement, which grants “[n]o rights . . . to any other person” and disclaims the

existence of any “third party beneficiaries.” Special App’x at 16. Finally, the mere

13 fact that Appellants received two checks from CTCC that reflect a New York bank

account is insufficient to establish specific jurisdiction over CTCC, since the record

indicates that all the other relevant conduct occurred outside of the United States.

See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (explaining that

defendant must not be “haled into a jurisdiction solely as a result

of . . . ‘attenuated’ contacts” (internal quotation marks omitted)); see also Soma Med.

Int’l v. Standard Chartered Bank, 196 F.3d 1292, 1299 (10th Cir. 1999) (rejecting

attempt to assert jurisdiction over a foreign entity through, among other contacts,

a “few wire transfers of funds”). Accordingly, the district court properly denied

Appellants’ request to add CTCC as a defendant.

* * *

We have considered Appellants’ remaining contentions and conclude that

they are without merit. For the foregoing reasons, the judgment of the district

court is AFFIRMED.

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court