Broidy Capital Management, LLC v. State of Qatar

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BROIDY CAPITAL MANAGEMENT, No. 18-56256

LLC; and ELLIOTT BROIDY,

Plaintiffs-Appellants, D.C. No.

2:18-cv-02421-

v. JFW-E

STATE OF QATAR,

Defendant-Appellee. OPINION

Appeal from the United States District Court for the

Central District of California

John F. Walter, District Judge, Presiding

Argued and Submitted February 11, 2020

Pasadena, California

Filed December 2, 2020

Before: Jay S. Bybee, Daniel P. Collins, and

Daniel A. Bress, Circuit Judges.

Opinion by Judge Collins

2 BROIDY CAPITAL MGMT. V. STATE OF QATAR

SUMMARY *

Foreign Sovereign Immunities Act

The panel affirmed the district court’s dismissal, for lack

of subject matter jurisdiction under the Foreign Sovereign

Immunities Act, of an action brought against the State of

Qatar, alleging violation of the Computer Fraud and Abuse

Act and other causes of action.

The panel held that neither the FSIA’s exception to

immunity for tortious activity nor its exception for

commercial activity applied, and the State of Qatar therefore

was immune from jurisdiction.

The panel concluded that all of plaintiffs’ tort claims

were barred under the discretionary function exclusion from

the tortious activity exception because the challenged

conduct met two criteria: (1) it was discretionary in nature

or involved an element of judgment or choice; and (2) the

judgment was of the kind that the exception was designed to

shield. The first criterion was met because there was no

showing that Qatari or international law proscribed Qatar’s

actions. The second criterion was met because Qatar’s

alleged actions involved considerations of public policy.

Plaintiffs argued that the commercial activity exception

applied because their action was based upon a commercial

activity carried on in the United States by Qatar. The panel

concluded that plaintiffs’ claims were based on the alleged

*

This summary constitutes no part of the opinion of the court.

It has been prepared by court staff for the convenience of the reader.

BROIDY CAPITAL MGMT. V. STATE OF QATAR 3

surreptitious intrusion into their servers and email accounts

in order to obtain information and the dissemination of such

information to others, including persons in the media, and

this conduct did not qualify as commercial activity within

the meaning of the FSIA.

COUNSEL

Shannen Wayne Coffin (argued), Filiberto Agusti,

Christopher M. Re, Linda C. Bailey, and Mark C. Savignac,

Steptoe & Johnson LLP, Washington, D.C., for Plaintiffs-

Appellants.

David Meir Zionts (argued), Robert A. Long Jr., Jonathan

Gimblett, Lauren K. Moxley, and Megan M. O’Neill,

Covington & Burling LLP, Washington, D.C.; Mitchell A.

Kamin, Neema T. Sahni, and Rebecca G. Van Tassell,

Covington & Burling LLP, Los Angeles, California; for

Defendant-Appellee.

OPINION

COLLINS, Circuit Judge:

Plaintiffs-Appellants Elliott Broidy and his investment

firm, Broidy Capital Management, LLC, sued the State of

Qatar and various other defendants after Qatari agents

allegedly hacked into Plaintiffs’ computer servers, stole their

confidential information, and leaked it to the media in a

retaliatory effort to embarrass Broidy and thereby to

neutralize his ability to continue to effectively criticize the

Qatari regime and its alleged support of terrorism. The

district court dismissed the claims against Qatar for lack of

4 BROIDY CAPITAL MGMT. V. STATE OF QATAR

subject matter jurisdiction, concluding that Qatar was

immune under the Foreign Sovereign Immunities Act

(“FSIA”), 28 U.S.C. § 1602 et seq. Although for somewhat

different reasons, we agree with the district court that subject

matter jurisdiction is lacking under the FSIA, and we

therefore affirm its judgment dismissing this action.

I

A

Qatar’s motion to dismiss relied on a “facial attack on

the subject matter jurisdiction of the district court” under the

FSIA, and therefore, in reviewing de novo the district court’s

order granting that motion, we take as true the well-pleaded

allegations of Plaintiffs’ operative First Amended

Complaint. Doe v. Holy See, 557 F.3d 1066, 1073 (9th Cir.

2009); see also Holden v. Canadian Consulate, 92 F.3d 918,

920 (9th Cir. 1996) (de novo review applies to dismissal for

lack of jurisdiction under the FSIA). In addition, we note

that Plaintiffs’ opposition to Qatar’s motion to dismiss

requested leave to amend “in order to incorporate additional

allegations based on Plaintiffs’ discovery efforts,” and the

then-current status of those discovery efforts were set forth

in a contemporaneously filed declaration from Plaintiffs’

counsel. The district court, however, denied leave to amend

based on its conclusion that “discovery had failed to provide

any evidence that might cure or change the Court’s analysis

that it lacks subject matter jurisdiction over Qatar” and that

further amendment would be futile. Because we review that

determination de novo, see Thinket Ink Info. Res., Inc. v. Sun

Microsystems, Inc., 368 F.3d 1053, 1061 (9th Cir. 2004), and

because we apply the same standards in evaluating the

sufficiency of a proposed amendment as we do to the

underlying complaint, see Miller v. Rykoff-Sexton, Inc.,

845 F.2d 209, 214 (9th Cir. 1988), we likewise take as true

BROIDY CAPITAL MGMT. V. STATE OF QATAR 5

for purposes of this appeal the additional well-pleaded

contentions that are contained in that declaration of counsel.

Considering these allegations together, we take the

following factual assertions as true for purposes of this

appeal.

In response to being sanctioned diplomatically and

commercially by several of its neighbors in June 2017 for its

alleged “support for terrorism and its close ties to Iran,”

Qatar launched “a wide-ranging and extremely well-

resourced effort to influence public opinion in the United

States.” In addition to attempting to burnish Qatar’s image

with the U.S. Government, Qatar’s “public relations

campaign” sought to “curtail[] the influence of individuals

that could undermine the standing of the State of Qatar in the

United States.” One of the persons whose influence Qatar

sought to blunt was Elliott Broidy (“Broidy”), the CEO of an

investment firm in Los Angeles called Broidy Capital

Management, LLC (“BCM”). In addition to his business

ventures, Broidy has been active in public affairs, serving on

the Homeland Security Advisory Council for several years

and also taking leadership roles in various political and civic

organizations. Starting in March 2017, Broidy became an

outspoken critic of Qatar, condemning it for its alleged

support for terrorism. His activities were perceived by Qatar

as thwarting its public relations efforts, such as when Broidy

and others persuaded many “American Jewish leaders to

refuse to meet with the Emir” of Qatar when the Emir

traveled to New York in the fall of 2017 for the General

Assembly of the United Nations. Qatar also perceived that

Broidy “‘had been influential’ in shaping the White House’s

views on Qatar.” As a result, one registered agent for Qatar

noted that “Broidy’s name [came] up in Embassy meetings

often,” and Qatar decided to target him in order to limit his

future influence.

6 BROIDY CAPITAL MGMT. V. STATE OF QATAR

The centerpiece of Qatar’s purported targeting of Broidy

was a concerted series of cyberattacks aimed at BCM’s

California-based computer servers. In the latter half of 2017,

Qatar retained the New York-based firm of Global Risk

Advisors LLC (“GRA”) to coordinate that effort, and GRA

thereafter introduced Qatar “to cyber mercenaries in various

countries to coordinate technical aspects of the illegal

intrusion.” Thereafter, through a series of “spearphishing”

attacks aimed at several persons connected to Broidy,

including his executive assistant, the hackers obtained access

to BCM’s Los Angeles-based servers. Beginning on January

16, 2018, and continuing through at least February 25, 2018,

the hackers engaged in “thousands” of instances of

unauthorized access into BCM’s servers and obtained

“Plaintiffs’ private communications, emails, documents and

intellectual property.”

Subsequent forensic investigation revealed that the

hackers were largely able to hide the origins of the attacks

on BCM’s servers by routing their communications through

Virtual Private Networks (“VPNs”). However, two brief

glitches in the VPN system revealed that at least two attacks

in February 2018 originated from an IP address in Doha,

Qatar, that belongs to an internet service provider that is

majority-owned by Qatar. Additional forensic analysis also

established that persons using IP addresses from Vermont

“directly accessed Plaintiffs’ servers 178 times from

February 12, 2018 to February 25, 2018.” Plaintiffs contend

that these Vermont-based attacks were direct, i.e., that they

were not “associated with VPNs or similar anonymization

tools.”

After the hackers obtained Plaintiffs’ private documents,

the stolen materials were converted into PDF format and

distributed to several U.S. media outlets via email and hand-

BROIDY CAPITAL MGMT. V. STATE OF QATAR 7

delivery. A New York-based public relations firm that Qatar

had previously hired in connection with its efforts to

influence U.S. public opinion, Stonington Strategies LLC

(“Stonington”), participated in this plan to “organize and

disseminate Plaintiffs’ stolen emails to media

organizations.” The metadata from some of these leaked

PDFs revealed timestamps from the Central and Eastern

Time Zones, suggesting that the conversion of these files

into PDF format took place in the United States. Plaintiffs

also allege that “many of the instances of unlawful

distribution of illegally obtained [documents] took place

within the United States.”

The result of the dissemination of the stolen materials

was an unflattering series of articles in March 2018 in the

Wall Street Journal, the New York Times, and the

Huffington Post alleging that, in exchange for tens of

millions of dollars, Broidy and his wife had sought to scuttle

a criminal investigation connected to a Malaysian state

investment fund. As a consequence, Plaintiffs suffered

reputational harm and other injuries.

B

Based on these allegations, Plaintiffs filed this action

against Qatar and various other defendants in the district

court. In the operative First Amended Complaint, Plaintiffs

asserted 10 causes of action against Qatar, GRA, Stonington,

and numerous individuals arising from the alleged

unauthorized access into Plaintiffs’ servers and the

subsequent distribution of stolen materials. Specifically,

Plaintiffs alleged that the unlawful intrusion into the servers

to obtain information was actionable under the common law

tort of intrusion upon seclusion, as well as under the civil

suit provisions of the Computer Fraud and Abuse Act,

18 U.S.C. § 1030(g); the Stored Communications Act,

8 BROIDY CAPITAL MGMT. V. STATE OF QATAR

18 U.S.C. § 2707(a); the Digital Millennium Copyright Act,

17 U.S.C. § 1203(a); and the California Comprehensive

Computer Data Access and Fraud Act, see Cal. Penal Code

§ 502(e). Plaintiffs also alleged that the unlawful acquisition

and dissemination of the stolen materials were actionable

under common-law theories of conversion and intrusion

upon seclusion, as well as under the civil actions authorized

by California Penal Code § 496(c) (relating to receipt of

stolen property); the California Uniform Trade Secrets Act,

see Cal. Civ. Code §§ 3426.2, 3426.3; and the Defend Trade

Secrets Act, 18 U.S.C. § 1836(b). The complaint also

alleged a cause of action for “civil conspiracy,” but as the

district court correctly noted, there is no such cause of action

under California law. See, e.g., Kenne v. Stennis, 179 Cal.

Rptr. 3d 198, 210 (Ct. App. 2014) (“Conspiracy is not a

cause of action. It is a theory of liability under which persons

who, although they do not actually commit a tort themselves,

share with the tortfeasor or tortfeasors a common plan or

design in its perpetration.”). Based on these claims,

Plaintiffs sought declaratory, monetary, and injunctive

relief, as well as attorneys’ fees. 1

Qatar filed a motion to dismiss under Federal Rules of

Civil Procedure 12(b)(1) and 12(b)(2) for lack of subject

matter and personal jurisdiction, asserting that it was

immune under the FSIA. In opposing Qatar’s motion,

Plaintiffs argued that two of the FSIA’s exceptions—the

tortious activity exception and the commercial activity

exception—defeated Qatar’s claimed immunity. On August

8, 2018, the district court granted Qatar’s motion, finding

both exceptions inapplicable. The tortious activity exception

did not apply, according to the district court, because

Plaintiffs had failed to “allege at least ‘one entire tort’

1

Plaintiffs also sought punitive damages, but such damages are not

available against Qatar. See 28 U.S.C. § 1606.

BROIDY CAPITAL MGMT. V. STATE OF QATAR 9

occurring in the United States” as required by our decision

in Olsen by Sheldon v. Government of Mexico, 729 F.2d 641,

646 (9th Cir. 1984), abrogated in part on other grounds as

recognized in Joseph v. Office of Consulate Gen. of Nigeria,

830 F.2d 1018, 1026 (9th Cir. 1987). The district court

concluded that all of the torts alleged by Plaintiffs were

“premised on allegedly wrongful conduct by Qatar, its

agents, or co-conspirators in gaining access to Plaintiffs’

data servers from outside the United States, making each tort

transnational.” The alleged attacks from Vermont, the court

held, “were merely the continuation of purported conduct

allegedly originating in Qatar and ‘do not demonstrate an

independent tort occurring entirely within the United

States’” (citation omitted). The district court held that the

commercial activity exception was inapplicable because

Qatar’s alleged conduct—hacking and cyberespionage—did

not qualify as “commercial activity” within the meaning of

the FSIA. The district court therefore dismissed the action

against Qatar without leave to amend.

Shortly thereafter, the district court dismissed GRA,

Stonington, and various individual defendants affiliated with

those entities for lack of personal jurisdiction. With the

approval of the district court, Plaintiffs’ claims against three

remaining individual defendants, who had not been served,

were voluntarily dismissed without prejudice and a formal

“final, appealable judgment” was entered by the district

court. See Galaza v. Wolf, 954 F.3d 1267, 1272 (9th Cir.

2020) (where dismissal of remaining claims without

prejudice is done with “the approval and meaningful

participation of the district court,” the resulting judgment is

final and appealable). Plaintiffs timely appealed the

judgment, challenging only the dismissal of the claims

against Qatar.

10 BROIDY CAPITAL MGMT. V. STATE OF QATAR

II

The FSIA is the “‘sole basis’” for obtaining jurisdiction

over a foreign state in a civil action. Republic of Argentina

v. Weltover, Inc., 504 U.S. 607, 611 (1992) (citation

omitted). Under the FSIA, a foreign state “shall be immune

from the jurisdiction of the courts of the United States”

unless one of the Act’s enumerated exceptions applies.

28 U.S.C. § 1604. This default rule of immunity reflects

“the absolute independence of every sovereign authority”

and also “helps to induce each nation state, as a matter of

international comity, to respect the independence and dignity

of every other, including our own.” Bolivarian Republic of

Venezuela v. Helmerich & Payne Int’l Drilling Co.,

137 S. Ct. 1312, 1319 (2017) (simplified).

The Act, however, contains a number of explicit

exceptions to this default rule of foreign sovereign

immunity, thereby acknowledging that there are some

limited situations in which a foreign state entity should be

subject to suit. In establishing such exceptions, the FSIA

generally codifies the so-called “restrictive theory” of

sovereign immunity, under which immunity “is recognized

with regard to sovereign or public acts (jure imperii) of a

state, but not with respect to private acts (jure gestionis).”

Siderman de Blake v. Republic of Argentina, 965 F.2d 699,

705–06 (9th Cir. 1992) (citation and internal quotation

marks omitted). Although this “restrictive theory of

sovereign immunity was developed in the context of

commercial activities of states, . . . it is not limited to claims

arising out of contractual relationships,” and in appropriate

circumstances it also imposes liability upon a foreign state

for torts, such as traffic accidents, committed by that state’s

agents. See Restatement (Third) of the Foreign Relations

Law of the United States § 454 cmt. a (Am. L. Inst. 1987).

BROIDY CAPITAL MGMT. V. STATE OF QATAR 11

The FSIA thus contains separate exceptions that permit

certain actions against foreign states based on their

commercial activities, 28 U.S.C. § 1605(a)(2), as well as

certain actions based on the tortious acts of their agents, id.

§ 1605(a)(5). If either of these exceptions is applicable, then

the district court may assert jurisdiction over a “nonjury civil

action against [the] foreign state,” but only “as to any claim

for relief in personam with respect to which the foreign state

is not entitled to immunity.” 28 U.S.C. § 1330(a); see also

Argentine Republic v. Amerada Hess Shipping Corp.,

488 U.S. 428, 434 (1989) (“Sections 1604 and 1330(a) work

in tandem: § 1604 bars . . . jurisdiction when a foreign state

is entitled to immunity, and § 1330(a) confers jurisdiction

. . . when a foreign state is not entitled to immunity.”). 2

There is, of course, no dispute that the State of Qatar

qualifies as a “foreign state” for purposes of the FSIA, and it

is therefore immune from jurisdiction here unless Plaintiffs’

claims fit within one of the FSIA’s enumerated exceptions.

Plaintiffs invoke both the tortious activity exception and the

commercial activity exception, and it is their burden to make

an initial showing as to the applicability of one or both of

them. Packsys, S.A. v. Exportadora de Sal, S.A., 899 F.3d

1081, 1088 (9th Cir. 2018). We agree with the district court

that as a matter of law neither exception is applicable here,

although our reasoning differs in some respects from the

district court’s. We discuss each exception in turn.

2

Plaintiffs are therefore wrong in suggesting that the district court

can assert jurisdiction over this entire action against Qatar so long as any

one of their claims fits within an exception in the FSIA. This “foot-in-

the-door” approach cannot be reconciled with the limited grant of

jurisdiction in § 1330(a). See Simon v. Republic of Hungary, 812 F.3d

127, 141 (D.C. Cir. 2016) (courts must “make FSIA immunity

determinations on a claim-by-claim basis”).

12 BROIDY CAPITAL MGMT. V. STATE OF QATAR

A

Subject to two enumerated exclusions, the FSIA’s

tortious activity exception allows a foreign sovereign to be

sued in any case:

in which money damages are sought against

a foreign state for personal injury or death, or

damage to or loss of property, occurring in

the United States and caused by the tortious

act or omission of that foreign state or of any

official or employee of that foreign state

while acting within the scope of his office or

employment.

28 U.S.C. § 1605(a)(5); see also Liu v. Republic of China,

892 F.2d 1419, 1425 (9th Cir. 1989). Although the actual

words of the statute require only that a claimant’s injury

occur in the United States, see 28 U.S.C. § 1605(a)(5), the

Supreme Court has stated that this exception “covers only

torts occurring within the territorial jurisdiction of the United

States,” Amerada Hess, 488 U.S. at 441. See also

Asociación de Reclamantes v. United Mexican States,

735 F.2d 1517, 1524 (D.C. Cir. 1984) (Scalia, J.) (“Although

the statutory provision is susceptible of the interpretation

that only the effect of the tortious action need occur here,

where Congress intended such a result elsewhere in the FSIA

it said so more explicitly.”). Accordingly, we have held that,

while not “every aspect of the tortious conduct” must “occur

in the United States,” the exception in § 1605(a)(5) applies

only where the plaintiff alleges “at least one entire tort

occurring in the United States.” Olsen, 729 F.2d at 646.

The parties vigorously dispute how Olsen’s “entire tort”

rule applies to Plaintiffs’ allegations in this case, but we find

it unnecessary to address this issue because Plaintiffs’ claims

BROIDY CAPITAL MGMT. V. STATE OF QATAR 13

fall within one of § 1605(a)(5)’s express exclusions from the

tortious activity exception. Johnson v. Riverside Healthcare

Sys., LP, 534 F.3d 1116, 1121 (9th Cir. 2008) (“[W]e may

affirm based on any ground supported by the record.”). In

addition to preserving a foreign sovereign’s immunity over

a specified list of torts, § 1605(a)(5) also expressly precludes

any tort claim against a foreign state “based upon the

exercise or performance or the failure to exercise or perform

a discretionary function regardless of whether the discretion

be abused.” 28 U.S.C. § 1605(a)(5)(A). We conclude that

all of Plaintiffs’ tort claims are barred under this

“discretionary function” exclusion from the FSIA’s tortious

activity exception.

As we have previously observed, “[t]he language of the

discretionary function exclusion closely parallels the

language of a similar exclusion in the Federal Tort Claims

Act (‘FTCA’), so we look to case law on the FTCA when

interpreting the FSIA’s discretionary function exclusion.”

Holy See, 557 F.3d at 1083. Accordingly, the FSIA’s

discretionary function exclusion applies if the challenged

conduct “meets two criteria: (1) it is ‘discretionary in nature’

or ‘involve[s] an element of judgment or choice’ and (2) ‘the

judgment is of the kind that the discretionary function

exception was designed to shield.’” Id. at 1083–84 (quoting

United States v. Gaubert, 499 U.S. 315, 322–23 (1991)).

Although Qatar ultimately has the burden to establish that

the exclusion applies, that burden arises only if Plaintiffs

have “‘advance[d] a claim that is facially outside the

discretionary function exception.’” Id. at 1084 (citation

omitted). We conclude that the particular tortious conduct

that Plaintiffs allege in this case facially satisfies both of

Gaubert’s criteria, and that the discretionary function

exclusion therefore applies.

14 BROIDY CAPITAL MGMT. V. STATE OF QATAR

1

As the Supreme Court has recognized, “conduct cannot

be discretionary unless it involves an element of judgment

or choice.” Berkovitz v. United States, 486 U.S. 531, 536

(1988). Accordingly, the discretionary function exclusion

cannot apply when an applicable “statute, regulation, or

policy specifically prescribes a course of action.” Id.

(emphasis added). Put another way, a defendant is not

exercising discretion if it is “bound to act in a particular

way.” Gaubert, 499 U.S. at 329. Applying similar

reasoning, we have also held that the FTCA’s comparable

discretionary function exception does not apply when the

defendants’ assertedly discretionary actions are specifically

proscribed by applicable law. Fazaga v. FBI, 965 F.3d

1015, 1065 (9th Cir. 2020) (conduct that violates “federal

constitutional or statutory directives” is not within the

FTCA’s discretionary function exception); Tobar v. United

States, 731 F.3d 938, 946 (9th Cir. 2013) (same where

conduct violated agency’s “own regulations and policies”

(emphasis omitted)); Galvin v. Hay, 374 F.3d 739, 758 (9th

Cir. 2004) (“‘[F]ederal officials do not possess discretion to

violate constitutional rights.’” (citation omitted)). Plaintiffs

contend that “[t]his principle is dispositive here,” because

their operative complaint alleges multiple violations of

specific federal and state statutory prohibitions. We

disagree.

In drawing upon the relevant caselaw applicable to the

U.S. Government under the FTCA’s discretionary function

exception, we must apply those principles mutatis mutandis

in construing the scope of the similar language used in the

FSIA with respect to a foreign state. The discretion of the

U.S. Government is, of course, cabined by the applicable

limitations in the U.S. Constitution, federal statutes and

BROIDY CAPITAL MGMT. V. STATE OF QATAR 15

regulations, and any other relevant binding source of law.

But the policy discretion of a foreign sovereign is not

evaluated by those same constraints, but rather by the

corresponding limitations that bind that sovereign, whether

contained in its own domestic law or (we will assume) in

applicable and established principles of international law.

We drew precisely this distinction in Risk v. Halvorsen,

936 F.2d 393 (9th Cir. 1991), in which we upheld Norway’s

immunity under the FSIA on the ground that the

discretionary function exclusion applied to the challenged

actions of Norwegian officials, despite the fact that those

actions “may constitute a violation of California criminal

law.” Id. at 396–97. We noted that we had previously held

that the FSIA’s discretionary function exclusion “‘is

inapplicable when an employee of a foreign government

violates its own internal law,’” but we concluded that this

principle did not apply in Risk, because there was “no

assertion that the Norwegian officials violated any

Norwegian law.” Id. at 396 (quoting Liu, 892 F.2d at 1431)

(emphasis added); see also Liu, 892 F.2d at 1431

(discretionary function exclusion did not apply where, in

ordering assassination, Taiwanese official had violated

Taiwanese law). And Risk similarly distinguished Letelier

v. Republic of Chile, 488 F. Supp. 665 (D.D.C. 1980), on the

ground that it involved an alleged assassination in violation

of international law. Risk, 936 F.2d at 396 (noting that

Letelier addressed “‘action that is clearly contrary to the

precepts of humanity’”); cf. MacArthur Area Citizens Ass’n

v. Republic of Peru, 809 F.2d 918, 922 n.4 (D.C. Cir. 1987)

(similarly distinguishing Letelier in a case involving Peru’s

alleged criminal violation of D.C. zoning laws in

establishing a chancery, noting that “it is hardly clear that,

even if a criminal act were shown, it would automatically

prevent designation of Peru’s acts as discretionary”).

16 BROIDY CAPITAL MGMT. V. STATE OF QATAR

The alleged actions that Qatar took here have not been

shown to violate either Qatari law or applicable international

law. The parties do not dispute that, under Qatari law, the

various criminal prohibitions against hacking, theft, or

disclosure of trade secrets do not bind government agents

acting in accordance with official orders. Indeed, it would

perhaps be surprising if the domestic law of any country

prohibited its own government agents from engaging in

covert cyberespionage and public relations activities aimed

at foreign nationals in other countries. Nor have the specific

forms of cyberespionage alleged here been shown to violate

judicially enforceable principles of international law. Cf.

Letelier, 488 F. Supp. at 673. The status of peacetime

espionage under international law is a subject of vigorous

debate, see, e.g., Patrick C.R. Terry, “The Riddle of the

Sands”—Peacetime Espionage and Public International

Law, 51 Geo. J. Int’l L. 377, 380–85 (2020); A. John Radsan,

The Unresolved Equation of Espionage and International

Law, 28 Mich. J. Int’l L. 595, 601–07 (2007), and the parties

have not pointed us to any sufficiently clear rule of

international law that would impose a mandatory and

judicially enforceable duty on Qatar not to do what it

allegedly did here. Cf. Sosa v. Alvarez-Machain, 542 U.S.

692, 724–31 (2004) (explaining why courts should exercise

great caution before purporting to identify and enforce

norms of international law).

In the absence of a showing that Qatari or international

law proscribes Qatar’s actions here, that alleged conduct

involves an exercise of discretion by Qatar that satisfies the

first Gaubert criterion. Cf. Fazaga, 965 F.3d at 1024, 1065

(to the extent that “Defendants did not violate any federal

constitutional or statutory directives, the discretionary

function exception will bar Plaintiffs’ FTCA claims”

BROIDY CAPITAL MGMT. V. STATE OF QATAR 17

concerning alleged “covert surveillance program” aimed at

mosque (emphasis added)).

2

There is, however, a further element that must be

satisfied before the FSIA’s discretionary function exclusion

may be applied, viz., the “judgment” involved must be “‘of

the kind that the discretionary function exception was

designed to shield.’” Holy See, 557 F.3d at 1083–84

(citation omitted). This criterion is satisfied if the challenged

“‘governmental actions and decisions’” are “‘based on

considerations of public policy.’” Id. at 1084 (citation

omitted); see also Risk, 936 F.2d at 395 (challenged acts

must be “‘grounded in social, economic, and political

policy’” (citation omitted)). Thus, “[a]lthough driving

requires the constant exercise of discretion, the official’s

decisions in exercising that discretion can hardly be said to

be grounded in regulatory policy.” Gaubert, 499 U.S. at 325

n.7. Here, there can be little doubt that Qatar’s alleged

actions involved considerations of public policy that are

sufficient to satisfy Gaubert’s second criterion.

Plaintiffs’ complaint alleges that, in response to a

diplomatic and economic boycott, Qatar undertook the

challenged actions as one component of a public-relations

strategy “to influence public opinion in the United States”

by “curtailing the influence of individuals,” such as Broidy,

who “could undermine the standing of the State of Qatar in

the United States.” Indeed, although the Letelier court found

that the discretionary function exclusion did not apply to the

challenged assassination in that case because it “clearly”

violated international law—i.e., because it failed what we

have described as Gaubert’s first criterion—that court also

expressly acknowledged that Chile’s act, however

reprehensible it might have been, was “one most assuredly

18 BROIDY CAPITAL MGMT. V. STATE OF QATAR

involving policy judgment.” 488 F. Supp. at 673; see also

Macharia v. United States, 334 F.3d 61, 67 (D.C. Cir. 2003)

(because matters of embassy location and security involved

considerations that “‘affect foreign relations,’” they satisfied

Gaubert’s “second step” (citation omitted)). We therefore

conclude that Qatar’s alleged conduct here involved “the

type of discretionary judgments that the exclusion was

designed to protect.” Holy See, 557 F.3d at 1084.

Because Plaintiffs have failed to “‘advance a claim that

is facially outside the discretionary function’” exclusion, the

tortious activity exception to foreign sovereign immunity in

§ 1605(a)(5) is inapplicable here as a matter of law. Id.

(citation omitted).

B

Plaintiffs also contend that the FSIA’s commercial

activity exception allows the U.S. courts to assert

jurisdiction over Plaintiffs’ claims against Qatar, but we

again disagree.

Section 1605(a)(2) contains three separate clauses that

set forth three alternative variations for asserting jurisdiction

over a foreign state based on its commercial activities. In

this court, Plaintiffs rely only on one of the formulations,

namely, the one that allows jurisdiction over a foreign state

in a “case . . . in which the action is based upon a commercial

activity carried on in the United States by the foreign state.”

28 U.S.C. § 1605(a)(2). In applying this clause, we must

first identify what are the activities on which “the action is

based” and then determine whether those activities are

“commercial” within the meaning of the FSIA. Id.

Applying this two-step analysis, we conclude that the

challenged actions of Qatar here do not constitute

“commercial activity.”

BROIDY CAPITAL MGMT. V. STATE OF QATAR 19

As noted, the “crucial” first step “in determining whether

the basis of this suit was a commercial activity is defining

the ‘act complained of here.’” MOL, Inc. v. People’s

Republic of Bangladesh, 736 F.2d 1326, 1328 (9th Cir.

1984) (citation omitted); see also Saudi Arabia v. Nelson,

507 U.S. 349, 356 (1993). “Although the Act contains no

definition of the phrase ‘based upon,’” the Supreme Court

has held that the “phrase is read most naturally to mean those

elements of a claim that, if proven, would entitle a plaintiff

to relief under his [or her] theory of the case.” Nelson,

507 U.S. at 357. As explained earlier, all of Plaintiffs’

claims are based upon either or both of two types of

activities: (1) the surreptitious intrusion into Plaintiffs’

servers and email accounts in order to obtain information;

and (2) the dissemination of such information to others,

including persons in the media. See supra at 7–8. Plaintiffs

point out that these alleged activities are connected to other

allegedly commercial conduct (such as the hiring of a public

relations firm), but that other conduct is not what the suit “is

based” on. 28 U.S.C. § 1605(a)(2). Even taking as true

Plaintiffs’ allegations that Qatar entered into various

contracts in the United States to carry out its operations,

“those facts alone entitle [Plaintiffs] to nothing under their

theory of the case,” and these activities therefore “are not the

basis for [Plaintiffs’] suit.” Nelson, 507 U.S. at 358. It is the

“torts, and not the arguably commercial activities that

preceded [or followed] their commission,” that “form the

basis for [Plaintiffs’] suit.” Id.

The next question, then, is whether Qatar’s “tortious

conduct itself . . . qualif[ies] as ‘commercial activity’ within

the meaning of the Act.” Nelson, 507 U.S. at 358. The FSIA

defines “commercial activity” as “either a regular course of

commercial conduct or a particular commercial transaction

or act.” 28 U.S.C. § 1603(d). The statute further explains

20 BROIDY CAPITAL MGMT. V. STATE OF QATAR

that the “commercial character of an activity shall be

determined by reference to the nature” of the activity, “rather

than by reference to its purpose.” Id. In assessing whether

the “nature” of particular state actions is commercial, courts

look to whether they “are the type of actions by which a

private party engages in trade and traffic or commerce.”

Weltover, 504 U.S. at 614 (simplified); see also Adler v.

Federal Republic of Nigeria, 219 F.3d 869, 875–76 (9th Cir.

2000) (considering whether the defendants’ challenged

conduct was “what every private party does in the open

market (notwithstanding the fact that their precise

undertakings were illegal)”); Cicippio v. Islamic Republic of

Iran, 30 F.3d 164, 167 (D.C. Cir. 1994) (“[W]e take from

Weltover the key proposition that in determining whether a

given government activity is commercial under the [FSIA],

we must ask whether the activity is one in which commercial

actors typically engage.”). “[W]hether a state acts ‘in the

manner of’ a private party is a question of behavior, not

motivation.” Nelson, 507 U.S. at 360 (citation omitted).

We have little difficulty in concluding that, without

more, a foreign government’s conduct of clandestine

surveillance and espionage against a national of another

nation in that other nation is not “one in which commercial

actors typically engage.” Cicippio, 30 F.3d at 167; see also,

e.g., Democratic Nat’l Comm. v. Russian Fed’n, 392 F.

Supp. 3d 410, 429 (S.D.N.Y. 2019) (“Transnational

cyberattacks are not the ‘type of actions by which a private

party engages in trade and traffic or commerce.’” (citation

omitted)). A foreign government engaged in such conduct

is not exercising “powers that can also be exercised by

private citizens,” but rather is employing powers that—

however controversial their status may be in international

law—are “peculiar to sovereigns.” Nelson, 507 U.S. at 360

(citations and internal quotation marks omitted).

BROIDY CAPITAL MGMT. V. STATE OF QATAR 21

Plaintiffs point out that there are bad actors in the

commercial sphere who employ similar tactics, but any

application of this argument to the particular facts of this

case seems difficult to reconcile with Nelson. In that case,

plaintiff Scott Nelson was allegedly arrested, imprisoned,

and beaten by police officials in Saudi Arabia, assertedly in

retaliation for his reporting of safety defects in the state-

owned hospital at which he worked. 507 U.S. at 352–53.

Nelson and his wife sued both the Saudi government and the

hospital (among others), claiming that the commercial

activity exception applied in light of the employment-related

context in which the conduct occurred. Id. at 358. After

identifying the tortious conduct—e.g., the arrest,

imprisonment, and beatings—as “the basis for the Nelsons’

suit,” the Court held that this conduct “fail[ed] to qualify as

‘commercial activity.’” Id. Emphasizing that the actual

tortious conduct was an exercise of the police power, rather

than an act that can be “‘performed by an individual acting

in his own name,’” the Court held that, “however monstrous

such abuse undoubtedly may be, a foreign state’s exercise of

the power of its police has long been understood for purposes

of the restrictive theory as peculiarly sovereign in nature.”

Id. at 361–62 (citation omitted). Just as exercising police

and penal powers “is not the sort of action by which private

parties can engage in commerce,” id. at 362, a foreign

government’s deployment of clandestine agents to collect

foreign intelligence on its behalf, without more, is the sort of

peculiarly sovereign conduct that all national governments

(including our own) assert the distinctive power to perform.

Because the conduct Qatar allegedly engaged in here “‘can

be performed only by the state acting as such,’” id.

(emphasis added) (citation omitted), it is not “commercial”

for purposes of the commercial activity exception. And we

agree with the D.C. Circuit to the extent that it concluded

that a foreign government’s use of “irregular operatives” to

22 BROIDY CAPITAL MGMT. V. STATE OF QATAR

perform uniquely sovereign actions, such as occurred in this

case, is not sufficient to distinguish Nelson. Cicippio,

30 F.3d at 168.

Having determined that Qatar’s conduct of the espionage

action against Plaintiffs was not a commercial activity, we

also reject Plaintiffs’ argument that Qatar’s subsequent use

of the materials it obtained constituted a “commercial”

activity within the meaning of the FSIA. Although Plaintiffs

contend that the materials that were accessed and

disseminated included commercially sensitive materials,

including trade secrets, there is no allegation that Qatar made

commercial use of the materials. Plaintiffs contend that any

consideration of Qatar’s subsequent uses is an improper

consideration of purpose, but we disagree. The Supreme

Court confirmed in Weltover that it was not precluding

consideration of the “context” of a sovereign’s actions, and

what a foreign sovereign does with covertly obtained

intelligence is certainly an aspect of the “outward form of

the conduct that the foreign state performs.” 504 U.S. at 615,

617. To paraphrase the D.C. Circuit, when the outward

actions are judged in context, there is an objective difference

between (1) stealing the trade secrets of a “commercial

rival” and deploying them against that rival and (2) stealing

confidential materials from a policy critic and publishing

embarrassing excerpts from them. Cf. Cicippio, 30 F.3d

at 168 (“Perhaps a kidnapping of a commercial rival could

be thought to be a commercial activity.”). Here, the context

confirms that Qatar was not acting “in the manner of a

private player” in the marketplace. Weltover, 504 U.S.

at 614. Although the materials were of commercial value to

Plaintiffs, the statute’s focus is on whether the particular

actions that the foreign sovereign took amounted to the

conduct of “‘trade and traffic or commerce,’” id. (citation

BROIDY CAPITAL MGMT. V. STATE OF QATAR 23

omitted), and we agree with the district court that they were

not.

III

Our ruling in this case is neither an affirmation that the

alleged conduct actually occurred nor an endorsement of any

such conduct. Our task is to assume the allegations to be true

and then to apply the limitations of the FSIA according to

the statute’s plain terms. Having done so, we conclude that

the FSIA bars Plaintiffs’ claims against Qatar here.

The judgment of the district court is AFFIRMED.