Appendix — Weinberger v. Ramirez de Arellano

Office - Supreme Court, US. 3

FILED ,

84- 1398 MAR 4 {985

No.

Iu the Supreme Court of the United States

OCTOBER TERM, 1984

CASPAR W. WEINBERGER,

SECRETARY OF DEFENSE, ET AL.

Vv.

TTEMISTOCLES RAMIREZ DE ARELLANO, ET AL.

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

REX E. LEE

Solicitor General

RICHARD K. WILLARD

Acting Assistant Attorney General

KENNETH S. GELLER

Deputy Solicitor General

EDWIN S. KNEEDLER

‘Assistant to the Solicitor General

ROBERT E. Kopp

JOHN M. ROGERS

Attorneys

Depariment of Justice

Washington, D.C: 20530

(202) 633-2217

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TABLE OF CONTENTS

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APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Civil Action No. 88-02002

No. 88-1950

TEMISTOCLES RAMIREZ DE ARELLANO, ET AL.,

APPELLANTS

v.

CASPAR W. WEINBERGER,

SECRETARY OF DEFENSE, ET AL.

Appeal from the United States District Court

for the District of Columbia

Argued 25 April 1984

Decided 5 October 1984

Before: ROBINSON, Chief Judge, and WRIGHT,

TAMM, WILKEY, MIKVA, EDWARDS, GINS-

BURG, BORK, SCALIA and STARR, Circuit

Judges.

Opinion for the court filed by Circuit Judge WILKEY.

Dissenting opinion filed by Circwit Judge TAMM.

Dissenting opinion filed by Circuit Judge SCALIA,

in which Circuit Judges BoRK and STARR concur.

Dissenting opinion filed by Circuit Judge STARR,

in which Circuit Judge SCALIA concurs.

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2a

OUTLINE

Page

Ba Me ia aceceae dais ale scene Ache concn these scasuakiake 5a

A. The Plaintiffs’ Set of Facts 2.000000... 5a

EE Ca 10a

C. Subsequent Developments ....................00.20000.. 12a

Be ee me I ances 14a

a ae 17a

So a 27a

V. RELIEF FOR THE STATED CLAIMS ........ 0... 39a

A. Equitable Discretion of the District Court... 41a

1. Adequacy of the remedy at law ................. 42a

2. Balancing the equities and prudential

I iii gia ii csc peecckiicaenicnneee 58a

a. Location of the land _.....00002......002000.... 59a

AN I 6la

c. Separation of powers ........................... 62a

d. Compliance and monitoring ................ 65a

Ws - ME a is, an 67a

C. Relief for the Due Process Claims ................ 68a

Sr FERRI: ere ACT ies FS 69a

A. The Factual Basis for Applying the Act of

State Doctrine on This Appeal _................... Tla

B. Legal Obstacles to the Application of the Act

I ie a 82a

, A ea el CAEN Ae RNS ere Lt RGIS 93a

8a

WILKEY, Circuit Judge: This case involves an al-

leged occupation, amounting to an effective seizure

and destruction, of a United States citizen’s pri-

vately owned cattle ranch in Honduras by officials of

the United States government. Temistocles Ramirez

de Arellano (Ramirez), a United States citizen,

claims that the Secretaries of State and Defense are

operating a large military facility for training Sal-

vadoran soldiers on his private ranch without per-

mission or lawful authority, in violation of the Con-

stitution. Ramirez alleges, in essence, that a United

States sponsored and controlled military center is oc-

cupying his land, destroying his life’s work, and ex-

posing his family and employees to life threatening

conditions. The complaint filed in the United States

District Court for the District of Columbia requests

declaratory and injunctive relief for the alleged oc-

cupation and destruction of private property without

constitutional or statutory authority and for a depri-

vation of the use and enjoyment of property without

due process of law. The district court dismissed the

complaint prior to any discovery or findings of fact

on the ground that the dispute was a nonjusticiable

political question.* We reverse.

The plaintiffs’ claims present varied and complex

issues of core constitutional concern. We emphasize,

however, that we are not now being asked to enter

judgment on the merits for one of the parties. Be-

cause the case is before us on an appeal of the dis-

trict court’s dismissal of the complaint at the thresh-

old of litigation, we need only determine whether the

plaintiffs have stated a justiciable claim for relief

which falls within the jurisdiction of the district

1568 F. Supp. 1236 (D.D.C. 1983).

4a

court. In so doing, we address the assortment of in

genious but spurious arguments which the defend-

ants have conceived and advanced in an effort to wipe

out the plaintiffs’ case. We find the dismissal of the

complaint was precipitous.

We proceed under the settled rule for assessing the

propriety of dismissal under Rule 12(b) of the Fed-

eral Rules of Civil Procedure. Many potentially dis-

positive facts are intensely disputed by the parties,

such as the role of the Honduran armed forces and

the United States military in operating the Regional

Military Training Center (RMTC), and the extent

of land occupied and used for the military base. Be-

cause there has been neither fact-finding by the dis-

trict court nor stipulation of undisputed facts by the

parties, we must accept as true all of the material al-

legations in the plaintiffs’ complaint. Dismissal for

failure to state a claim for relief is proper only when

“it appears beyond doubt that the plaintiff can prove

no set of facts in support of his claim which would

entitle him to relief.”* All factual doubts must be

resolved and all inferences made in favor of the plain-

tiffs.* Defendants’ factual allegations, if in agree-

ment with plaintiffs’, only reinforce plaintiffs’ case;

if in disagreement, they must be ignored. Thus, at

this stage of the proceedings, the only relevant fac-

tual allegations are the plaintiffs’.

2 Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir.

1979) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957) )

(emphasis added).

8 Shear v. National Rifle Ass’n, 606 F.2d 1251, 1253 (D.C.

Cir. 1979) ; Schuler v. United States, 617 F.2d at 608 (D.C.

Cir. 1979).

5a

I. BACKGROUND

A. The Plaintiffs’ Set of Facts

The plaintiffs’ set of facts are detailed in the veri-

fied complaint filed by Ramirez and six corporate

plaintiffs, in eleven sworn declarations filed with the

district court, and in numerous newspaper reports

appended to the plaintiffs’ pleadings and memoranda.

Assuming, as we must, the truth of the plaintiffs’

material allegations, the facts are as follows.

Plaintiff Ramirez is a citizen of the United States.

He is the sole beneficial owner, the general manager,

and the chief executive officer of a large agricultural-

industrial complex in the northern region of Hondu-

ras. Plaintiff Ramirez is a businessman and was a

founding member of the Lion’s Club of Trujillo, Hon-

duras, as well as the founder of the Association for

the Defense of the Free Enterprise System in San

Juan, Puerto Rico. Ramirez has engaged in numer-

ous civic and community services in Puerto Rico and

in Central America, including assisting the United

States government in a meat distribution program for

Puerto Rico. Ramirez conducts his business opera-

tions through six corporations which he owns and

controls. Two of these corporate plaintiffs are United

States nationals and four are incorporated in Hon-

duras. Together they form a chain of title through

which plaintiff Ramirez holds his interest in the land

and property at issue.*

* Complaint 7] 4-9, Appendix (“‘A.”) at 5-7; Ramirez Dec-

laration 99 1-5, A. at 19-22. The complaint states that

Ramirez owns two United States corporations which in turn

own four Honduran corporations. “The six corporate plain-

tiffs . . . are and at all material times have been owned and

controlled by Mr. Ramirez.” Complaint 75, A. at 6.

6a

Plaintiff Ramirez acquired his large tract of land

in Honduras more than 20 years ago, when it was

raw, undeveloped jungle. Since then he has trans-

formed the land into a 14,000-acre cattle ranch, meat-

packing operation and shrimp-packing plant. Accord-

ing to Ramirez’s sworn declaration filed with the

court, he “supervised the clearing of this land, plant-

ing feed grass, constructing fences, farmroads, cattle

pens, cattle treatment facilities, warehouses and nu-

merous other buildings, water ponds and reservoirs,

and housing for [his] employees and their families.” °

The business operation employs approximately 500

workers and is the single largest employer in the De-

partment of Colon, Honduras. The plaintiffs’ initial

total investment in the property has increased from

approximately $700,000 to more than $13,000,000.°

Still assuming the truth of the plaintiffs’ factual

allegations, the plaintiffs’ property was occupied by

the defendants without permission in 1983. In March

of that year, the United States Department of De-

fense decided to establish a Regional Military Train-

ing Center for the United States to train soldiers from

the army of El] Salvador. Because of Congress’s un-

willingness to increase the number of military ad-

visers in El] Salvador itself, the Defense Department

decided not to locate the military training center

there.’ Instead, after reportedly considering several

5 Ramirez Declaration {| 4, A. at 22.

* Complaint ff 4-9, A. at 5-7; Ramirez Declaration {[{ 1-5,

A. at 19-22.

7 See Plaintiffs’ Memorandum of Points and Authorities,

filed 13 July 1983, Attachment +1, Boston Globe, 27 Mar.

1983, at 1, A. at 15; id., Attachment #3, Miami Herald, 12

Apr. 1983, at 17-A, A. at 17.

Ta

other countries, the Defense Department chose Hon-

duras as the location for the RMTC. Newspaper

articles in the United States at the time reported that

the Honduran government was resisting the Defense

Department’s placement of the military center in

Honduras and that a United States Army spokesman

said that Honduras did not have anywhere to locate

the training center.*

Nonetheless, officials of the United States Depart-

ment of Defense began a survey of land in the vicinity

of Ramirez’s property, and in April of 1983 they

picked a specific site in Honduras for the Regicnal

Military Training Center. Unknown to Ramirez, the

chosen site was his cattle ranch. Officers of the Army

Corps of Engineers immediately started planning the

construction of a 1,000-man tent camp and training

facility on the plaintiffs’ property, and by May 1983,

they had drawn up blueprints for the military center.®

In this same month, plaintiff Ramirez discovered

the United States plans. The First Secret ry of the

United States Embassy in Honduras was visiting

Ramirez’s home and “casually mentioned that a train-

ing base for Salvadoran soldiers was going to be built

in the area.” *° When Ramirez asked its location, the

official pointed to property across the bay. Ramirez

instantly realized that the official was pointing to his

privately owned cattle ranch and he immediately in-

® See id., Attachment +8, Miami Herald, 12 Apr. 1983,

at 17-A (“Honduras balks at hosting Salvador army train-

ing”), A. at 17; id., Attachment #2, N.Y. Times, 20 Mar.

1983, at A19, A. at 16.

® Ramirez Declaration {| 24, A. at 31; Ramirez Supplemental

Declaration { 3, A. at 66.

10 Ramirez Declaration { 10, A. at 28.

8a

formed his guest and other officials of the United

States Embassy that the intended site for the RMTC

was his land.

Construction of the military camp proceeded apace.

Work crews from Litton Industries, under the super-

vision of the United States Army Corps of Engineers,

began bulldozing the ranch in early June 1983. The

crews constructed a 1,000-man tent camp for housing

Salvadoran soldiers as well as an unspecified number

of buildings on the ranch. The Army Corps of Engi-

neers also built an ammunition storage facility and a

firing range on the private land. In addition, plans

were drawn up for mortar and other long distance

firing ranges on the plaintiffs’ property.”

Next, according to the plaintiffs’ allegations, United

States military training personnel moved in. Over

100 United States Army Special Forces Soldiers be-

gan training over 1,000 soldiers on the plaintiffs’

pastures, conducting training exercises all over the

ranch using live ammunition.

As a result of the construction and the military

operations, plaintifis allege that they have suffered

numerous injuries. Prime grazing land and fences

have been bulldozed. The flow of water to the plain-

tiffs’ meat-packing plant has been interrupted by the

soldiers’ diversion of substantial quantities of water

for their own use. Cattle have been shot by stray

bullets. ‘““arge numbers of armed soldiers and

trainees roaming around [the] ranch and the area of

[the] meat-packing plant” have frightened Ramirez’s

family and his employees.” Ranch employees, fearing

1 Jd. {4{ 19, 31, A. at 28, 32-34; Ramirez Supplemental Dec-

laration Jf 22, 29, A. at 73-74, 76.

12 Ramirez Declaration {| 33, A. at 34.

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9a

for their lives, have refused to tend cattle near the

military operations, causing the livestock to become

undernourished. The foreman of one section of the

ranch declared:

My family, I and the workers are living in con-

stant fear because of so much military activity

carried out in the pastures of Taya Crique to the

south of the highway. At this point, we do not

know what to do in such circumstances since we

are afraid to remain here and also because we

fear to encounter armed soldiers in the pastures

where we must work.”

Over half of the ranch’s 14,000 acres and nearly 90%

of the year-round grazing land has been seized by

soldiers of the Regional Military Training Center.™*

The operations are destroying the plaintiffs’ invest-

ment and Ramirez’s life work.

The plaintiffs claim that the land on which their

operations are based is irreplaceable. Land in other

areas of Honduras is either too arid, too mountainous

or too inaccessible for the integrated agro-industrial

enterprise. The only other land in Honduras suitable

for cattle ranching is neighboring property, which is

privately owned.”

The plaintiffs allege that in May 1983, the Wash-

ington Post reported an announcement by officials of

the Departments of State and Defense pertaining to

the establishment of the RMTC. One month later, the

National Congress of Honduras entered a decree

18 Reyes Declaration {| 4, A. at 94-95.

14 Complaint {j11, A. at 8; Ramirez Third Supplemental

Declaration {] 2, A. at 115.

15 Ramirez Declaration { 6, A. at 22-23.

10a

which authorized “the admission of military instruc-

tors and students, coming from friendly countries”

to the Military Training Center.** According to Ra-

mirez, however, “the site for the RMTC was neither

presented to, nor decided by the Honduran legisla-

ture.” *’ In the summer of 1983, Honduran military

officials discussed expropriation of a small portion of

the ranch with Ramirez, but this discussion, Ramirez

alleges, only pertained to a 1,500-2,000 acre section

of the ranch called the “Designated Area.” These dis-

cussions did not result in any expropriation of the

Designated Area** and the training activities spilled

over onto the majority of the ranch’s acreage.

Meanwhile, according to the complaint, plaintiff

Ramirez made numerous efforts to resolve his dispute

with officials of the United States Embassy in Hon-

duras and the Departments of State and Defense in

Washington, D.C., but these efforts were unproductive

or rebuffed.” The plaintiffs have not received any

compensation for the seizure nor has any hearing on

the dispute been held. The plaintiffs do not know

from day to day what is going to happen on their

ranch.

B. Procedural History

In July 1983 plaintiff Ramirez and the six cor-

porate plaintiffs which he wholly owns and controls

1® Ramirez Supplemental Declaration, Attachment +1;

Brief of Appellees, Addendum A.

17 Ramirez Supplemental Declaration {| 2, A. at 65.

18 Complaint {]/11, A. at 8-10; Ramirez Declaration {1% 13,

16-18, A. at 25-28.

19 Ramirez Declaration { 36, A. at 36-37.

lla

sued Caspar W. Weinberger, Secretary of Defense,

George P. Shultz, Secretary of State, and Lt. Gen.

Joseph K. Bratton, Chief of Engineers for the United

States Army Corps of Engineers, in the United States

District Court for the District of Columbia. The

plaintiffs’ complaint charges the named officials of

the United States with causing the construction and

operation of a large military training camp on the

plaintiffs’ private property in Honduras. It alleges

that the defendants’ occupation and destruction of

the plaintiffs’ property is unconstitutional because it

is not authorized by any federal statute or provision

of the Constitution. It further charges that the de-

fendants deprived the plaintiffs of the use and enjoy-

ment of their property without due process of law.

The complaint seeks declaratory and injunctive relief

and such other relief as the court deems just and

proper.”

Shortly after the complaint was filed, the parties

met in an effort to stipulate material facts. When

they failed to reach an agreement, plaintiffs sought

the permission of the district court to begin discovery

of the facts. The district court denied their request.”

On 20 July 1988, the United States defendants

moved to dismiss the complaint on the grounds that

the action presented a nonjusticiable political question

and that the plaintiffs had failed to state a claim for

relief. No answer to the complaint was filed, but the

defendants’ motion to dismiss was supported by five

declarations disputing the plaintiffs’ factual claims

and contending that the RMTC was actually a project

of the Honduran government. The plaintiffs opposed

20 A. at 5-14.

21 See Transcript of 15 July 1983 at 4-11, 36.

12a

the motion to dismiss and submitted additional decla-

rations of fact and other exhibits. On 24 August

1983, the district court dismissed the complaint, hold-

ing that the case presented a nonjusticiable political

question. The district court indicated that summary

judgment was not appropriate at that time, because

crucial material facts were in dispute. Accordingly

it dismissed the complaint under Rule 12(b) of the

Federal Rules of Civil Procedure.” This appeal

ensued.

C. Subsequent Developments

On appeal before a panel of this court, the defend-

ants informed the court that the President of the

Republic of Honduras had issued an “expropriation

decree” in November 1983 pertaining to the plaintiffs’

land.* The decree identifies certain land in the De-

partment of Colon, Honduras on which the Regional

Military Training Center is located and states that

the described property “shall be expropriated.” It

provides that “established legal procedures shall apply

to the appraisal of the property and to the payment

of compensation.” The decree is signed by the Secre-

tary of State for National Defense and Public Se-

curity of Honduras and is dated 4 November 1983.” ©

22 See Transcript of 26 July 1983 at 9, 11-12 (The Court

said: “Summary judgment is a technique to resolve disputes

as a matter of law when there is no dispute as to a material

fact, and it is quite obvious here, I think both parties would

agree, that there are some essential disputes as to the ma-

terial facts in the case.”) ; 568 F. Supp. at 1237 n.1.

23 See Brief of Appellees, Addendum C.

24 Td. at c-5, c-7, c-8.

13a

In response to this submission to the court by the

defendants, the plaintiffs submitted a letter to the

court stating that the signing of such an expropria-

tion decree merely begins the process of expropriation

in Honduras and is not itself an act of expropriation

or a claim of title. The plaintiffs directed the court’s

attention to the uncontroverted legal opinions they

had already submitted to the district court, which

advise that a Presidential decree of expropriation in

Honduras is only the first step in a process which may

or may not result in expropriation.”

The plaintiffs also submitted to the court a copy of

a letter dated 18 November 1983 from Ramirez to the

United States Ambassador to Honduras. This letter

describes alleged, subsequent developments on the

ranch which are similar to those outlined in the veri-

fied complaint. The letter reads:

Dear Mr. Ambassador:

With the utmost urgency I am informing you by

hand courier that United States Armed Person-

nel with Tanks have invaded our Plant Premises

at Puerto Castilla this afternoon... .

At 15.40 hours CST when I am dictating this

letter we have reports that there are four Tanks

inside with supporting infantrymen. The Tank

Commander came to our Office Gate inside the

yarc and demanded the keys to the gates of all

other areas. He was told to leave and that no

keys were to be given to him. He then gave

order to his company to proceed and go thru our

property. At this time we have no reports from

our ranch.

25 See Reply Brief of Appellants, Appendix A. We note

that foreign law is a question of fact.

14a

Inasmuch as the U.S. Government had been fore-

warned and foretold not to go into my properties

and its Diplomatic and Military Representatives

had assured no U.S. Troops would violate my

rights and property I hereby advise you that we

hold all those responsible Legally and Morally

Liable.

Sincerely

/s/

Temistocles Ramirez de Arellano **

II. THE PLAINTIFFS’ CLAIMS

The plaintiffs’ set of facts gives rise to cognizable

causes of action against the named defendants. Count

I of the plaintiffs’ complaint charges that the de-

fendants’ establishment of the Regional Military

Training Camp on plaintiffs’ land, the occupation and

destruction of the plaintiffs’ property, and the depri-

vation of the plaintiffs’ use and enjoyment of the

property “are beyond defendants’ express or implied

authority under the laws and treaties of the United

States and the United States Constitution.” *’

This count states a claim. It is settled law that the

Executive’s power to take the private property of

United States citizens must stem from an act of Con-

gress or from the Constitution itself.** When there is

26 Td.

27 Complaint f 16, A. at 11.

28 See Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S.

579 (1952); Hooe v. United States, 218 U.S. 322 (1910);

The Paquete Habana, 175 U.S. 677 (1900).

15a

no authorization by an act of Congress or the Consti-

tution for the Executive to take private property, an

effective taking by the Executive is unlawful because

it usurps Congress’s constitutionally granted powers

of lawmaking and appropriation. Youngstown Sheet

& Tube Co. v. Sawyer” is a leading authority for the

29343 U.S. 579 (1952). The purported distinctions of

Youngstown Sheet & Tube offered by the dissenters merely

serve to emphasize the applicability of that case to this. We

suggest that the Supreme Court did not regard the foreign

affairs component of seizing domestic steelmills as “‘nil’’; the

motive and justification for the presidential action was a-

leged to be a major war going on in Korea. In both Youngs-

town and the case today the “primary” effect of the seizure

(Dissenting Opinion of Tamm., J., at 8) is on the property of

United States citizens—foreign affairs powers have only been

cited secondarily as a supposed justification for the domestic

actions.

Further, whether the underlying activity enjoined is in

Youngstown, Ohio and every other distant point in the United

States where a seized mill was located, or at no greater dis-

tance to the South in a neighboring country, the location of

the enjoined activity misses the mark. As the injunction run-

ning to the Secretary of Commerce in Youngstown illustrates,

when the enjoined defendant is a responsible government

officer residing in the nation’s capital, who by virtue of his

oath of office is sworn to uphold the Constitution and laws of

the United States, and who therefore must be presumed to be

ready to comply with this court’s orders (as Government

counsel conceded readily at oral argument before the original

panel that defendants were willing and bound to do), ques-

tions of evaluating and guaranteeing compliance are not in-

surmountable.

Finally, the availability of monetary compensation is al-

ways a factor in considering injunctive relief: not only is its

availability doubtful here, but the plaintiffs’ description of the

situation may suggest that mere monetary relief would be

insufficient under any concept of justice. See infra notes 124

& 134.

16a

cause of action stated in plaintiffs’ first count. There

the Supreme Court adjudicated a challenge to the

Executive’s power to seize privately owned steel mills

during the Korean conflict. The Court held that the

President’s seizure of the steel mills was unconstitu-

tional because no statute authorized the taking and

authority to take the mills was not implicit in the

powers granted to the Executive by the Constitution,

despite the exigent circumstances. It upheld a federal

district court’s injunction prohibiting Executive offi-

cials from seizing the mills.”

In the instant case, plaintiffs claim that no statute

or constitutional provision authorizes the United

States defendants to take the plaintiffs’ private prop-

erty for a military training center. While we express

no view on the merits of the plaintiffs’ first count,

the plaintiffs have succeeded in stating a claim against

the defendants for an unauthorized and unconstitu-

tional deprivation of the use and enjoyment of their

property. This claim is adjudicable in the federal

district court.

Count II contends that the defendants’ deprivation

of the plaintiffs’ use and enjoyment of their property

without notice or a hearing violates the due process

clause of the fifth amendment. Plaintiffs rely on

Mullane v. Central Hanover Bank & Trust Co." as

support for the proposition that the deprivation of a

property interest must be preceded by notice and

80 Jd. Similarly, in The Paquete Habana, 175 U.S. 677, 710-

11 (1900), the Supreme Court held that the wartime capture

of foreign fishing vessels off the coast of Cuba by U.S. officials

was unlawful because such seizures had not been authorized

by Congress.

81 339 U.S. 306, 313 (1950) ; see also Fuentes v. Shevin, 407

U.S. 67 (1972).

17a

must be accompanied by an appropriate hearing, ex-

cept in extraordinary circumstances. Plaintiffs claim

that the defendants have given the plaintiffs no notice

of their intentions with respect to the plaintiffs’

property and that no hearing has been held on the

property dispute. This count also states a claim

within the jurisdiction of the federal district court

sufficient to withstand dismissal for failure to state

a claim.”

III. JUSTICIABILITY

Having found that the plaintiffs’ set of facts gives

rise to the causes of action stated in the complaint, we

examine the applicability of the political question

doctrine to this case. The district court dismissed the

complaint on the ground that the case presented a

nonjusticiable political question. It determined that

the case was a direct challenge to the propriety of the

United States military presence in Central America,

and having so characterized the complaint, it held

that the dispute was nonjusticiable. The district court

found that the case presented all of the three criteria

identified by the Supreme Court in Baker v. Carr*®

for nonjusticiable political questions. The panel opin-

ion by Judge Scalia (later vacated for en banc) found

unanimously that the trial court was in error in rely-

ing on this ground. On this point our en banc disposi-

tion is in accord with the panel opinion.

The factors for identifying political questions were

recently summarized by Justice Powell in his con-

82 The third count charges the defendants with violating

the law of Nations and is brought under the Alien Tort Claims

Act, 28 U.S.C. § 1850 (1982).

88 369 U.S. 186 (1962).

18a

currence in Goldwater v. Carter. The doctrine in-

corporates three inquiries:

(i) Does the issue involve resolution of questions

committed by the text of the Constitution to a

coordinate branch of government? (ii) Would

resolution of the question demand that a court

move beyond areas of judicial expertise? (iii)

Do prudential considerations counsel against ju-

dicial intervention? ™

The first of these formulations requires the court to

determine whether the text of the Constitution im-

plicitly or explicity commits the stated claim to the

political branches. According to the Supreme Court,

this necessitates a close textual analysis of specific

provisions of the Constitution. The Supreme Court

determined, for example, that certain suits brought

pursuant to the Constitution’s guarantee of a republi-

can form of government in article IV are nonjusticia-

ble political questions textually committed for resolu-

tion to Congress, not the Judiciary, because the

Constitution gives Congress the exclusive power to

determine whether a particular state government

should be recognized.* In addition, certain disputes

over internal procedures in Congress may be textually

committed for resolution to Congress by article I,

sec. on 5, clause 2, which provides that “[e]ach House

may determine the Rules of its Proceedings.” **

In the area of foreign affairs, some broad chal-

lenges to the Executive’s conducting of foreign rela-

84 444 U.S. 996, 998 (1979) (Powell, J., concurring).

35 See, e.g., Luther v. Borden, 48 U.S. (7 How.) 1 (1849).

586 See, e.g., Metzenbaum v. FERC, 675 F.2d 1282, 1287

(D.C. Cir. 1982).

19a

tions have been found nonjusticiable because formu-

lation of foreign policy is constitutionally committed

to the political branches. In Johnson v. Eisentrager,

for example, the Supreme Court refused to adjudicate

claims by enemy aliens who were convicted of violat-

ing laws of war in China after Germany had sur-

rendered. The aliens’ claims were found to be com-

mitted to resolution by the political branches because

they fundamentally challenged the propriety of

United States military activities in China. There, the

Court stated: “[I]t is not the function of the Judi-

ciary to entertain private litigation . . . which chal-

lenges the legality, the wisdom, or the propriety of

the Commander-in-Chief in sending our armed forces

abroad or to any particular region.” *

Not every issue related to foreign relations, how-

ever, is constitutionally committed for resolution by

the Executive. Baker v. Carr states that “it is error

to suppose that every case or controversy which

touches foreign relations lies beyond judicial cogniz-

ance.” * Issues which are not at base sweeping chal-

lenges to the Executive’s foreign policy typically are

adjudicated by the courts because they do not involve

judicial usurpation of the Executive’s constitutional

powers to manage foreign affairs.

A careful analysis of the plaintiffs’ case shows that

their claims are not exclusively committed for resolu-

tion to the political branches. Unlike the claim ad-

dressed by the Court in Johnson v. Eisentrager, the

plaintiffs do not seek to adjudicate the lawfulness of

the United States military presence abroad. Instead,

they seek adjudication of the narrow issue whether

37 339 U.S. 763, 789 (1950).

38 369 U.S. at 211.

20a

the United States defendants may run military exer-

cises throughout the plaintiffs’ private pastures when

their land has not been lawfully expropriated. They

do not challenge the United States military presence

in Honduras or in Central America, nor do they ob-

ject to United States sponsorship of a Regional Mili-

tary Training Center in Honduras. Plaintiffs’ claim,

properly understood, is narrowly focused on the law-

fulness of the United States defendants’ occupation

and use of the plaintiffs’ cattle ranch.

This is a paradigmatic issue for resolution by the

Judiciary. The federal courts historically have re-

solved disputes over land, even when the United States

military is occupying the property at issue.** Further-

more, certain disputes over property rights to land

located abroad are appropriately resolved by the fed-

eral courts,” as are property disputes involving the

Executive Branch and foreign affairs. In Younys-

town, for example, the Supreme Court adjudicated

the claim that the President had unlawfully seized

most of the nation’s steel mills, even though the case

arose in the context of the nation’s military involve-

ment in Korea.“ The issues in the instant case are

well within the traditional bounds of justiciability by

the federal Judiciary.

Secondly, it cannot be said on review of this dis-

missal that resolution of the case will require the

court to move outside of its areas of expertise. On

the basis of the complaint and affidavits, it appears

38° See, e.g., Meigs v. McClung’s Lessee, 18 U.S. (9 Cranch)

11 (1815). :

© See, e.g., United States v. Caltex (Philippines), Inc., 344

U.S. 149 (1952).

* 343 U.S. 579 (1952).

2la

that adjudication of the defendants’ constitutional au-

thority to occupy and use the plaintiffs’ property will

necessitate interpretations of the Constitution and of

federal statutes—which are quintessential tasks of

the federal Judiciary.“ The complaint does not reveal

that expertise beyond the capacity of the Judiciary

is essential to a resolution of the claims.

The district court found, however, that adjudica-

tion of the plaintiffs’ claims would be unmanageable

because reaching “the heart of this matter would

necessarily involve sensitive and confidential commu-

nications between the highest members of the Execu-

tive branch and officials of a foreign power that are

not judicially discoverable.” ** We disagree. It is

premature to conclude that essential evidence is un-

discoverable merely on the basis of the complaint and

related declarations in this case. Evidentiary privi-

leges turn on facts, such as the harm that might flow

from disclosure of particular communications,“ which

are not yet part of the record in the instant case. In

Attorney General v. The Irish People, Inc., this court

held that dismissal of a complaint is not proper “when

information which ‘might’ be relevant toa... claim

is unavailable for discovery.” ** That case applies

42 See Powell v. McCormack, 395 U.S. 486, 548-49 (1969)

(requirements of nonjusticiability not met when court is called

upon merely to interpret the Constitution) ; Consumer Energy

Council of America v. FERC, 673 F.2d 425, 452 (D.C. Cir.

1982), affirmed mem. sub nom. Process Gas Consumers Group

v. Consumers Energy Council of America, 103 S. Ct. 3556

(1983).

#8 568 F. Supp. at 1239 (footnote omitted).

44 See Halkins v. Helms, 690 F.2d 977, 990 (D.C. Cir. 1982).

45 684 F.2d 928, 951 (D.C. Cir. 1982), cert. denied, 108 S. Ct.

817 (19838).

22a

squarely to the instant appeal. If it turns out that

essential evidence is undiscoverable due to Executive

privilege, the district court can take appropriate ac-

tion at that time. Speculation about Executive privi-

lege in this case cannot justify squelching the plain-

tiffs’ complaint prior to any factfinding.

Finally, the district court erred by holding that

prudential considerations compel dismissal of the com-

plaint. Baker v. Carr identifies four circumstances in

which prudential considerations may bar adjudica-

tion of a claim. These are:

[T]he impossibility of deciding without an ini-

tial policy determination of a kind clearly for

nonjudicial discretion; or the impossibility of a

court’s undertaking independent resolution with-

out expressing lack of the respect due coordinate

branches of government; or an unusual need for

unquestioning adherence to a political decision

already made; or the potentiality of embarrass-

ment from multifarious pronouncements by vari-

ous departments on one question.**

None of these circumstances is necessarily presented

by the plaintiffs’ complaint and related declarations.

The plaintiffs do not seek judicial monitoring of

foreign policy in Central America nor do they chal-

lenge United States relations with any foreign coun-

try. The case does not raise the specter of judicial

control and management of United States foreign

policy. As such, the issues in the instant case are

qualitatively different from those posed in several

recent cases which were dismissed as nonjusticiable

political questions. In Dickson v. Ford the Fifth Cir-

#6 369 U.S. at 217.

23a

cuit upheld the dismissal of a taxpayer’s challenge to

military and economic assistance to Israel.*’ Like-

wise, in Crocket v. Reagan a panel of this circuit

upheld the dismissal of a suit brought by members of

Congress challenging the legality of United States

military aid to El Salvador.** If adjudicated, those

broadside attacks on fundamental foreign policy de-

cisions might have resulted in conflicting pronounce-

ments from the Judiciary and the political branches

over the basic tenets of United States relations with

foreign states.

By contrast, those factors which have permitted ad-

judication in other cases implicating foreign affairs

are present here. Private United States litigants seek

a determination of the lawfulness of the Executive’s

deprivation of their private property.* The pru-

dential, separation-of-powers concerns presented by

the instant case are certainly not greater than those

underlying the wartime seizure of an entire industry

by the Executive in Youngstown. Ramirez’s dispute

with the United States military over land in Hon-

duras does not require unquestioning adherence to a

political decision by the Executive. The complaint

does not present any of the criteria used by the Su-

47521 F.2d 234 (5th Cir. 1975), cert. denied, 424 U.S. 954

(1976).

48720 F.2d 13855 (D.C. Cir. 1983) (per curiam), cert. de-

nied, (1048S. Ct. 3533 (1984).

49 See Goldwater v. Carter, 444 U.S. 996, 1004 (1979)

(Rehnquist, J., concurring) (Justice Rehnquist noted that

the claim in Youngstown was not a nonjusticiable political

question because “[i]n Youngstown, private litigants brought

a suit contesting the President’s authority under his war

powers to seize the Nation’s steel industry.”’).

24a

preme Court to identify nonjusticiable political ques-

tions.

The political question doctrine is a tempting refuge

from the adjudication of difficult constitutional claims.

Its shifting contours and uncertain underpinnings

make it susceptible to indiscriminate and overbroad

application to claims properly before the federal

courts. Recent cases raise doubts about the contours

and vitality of the political question doctrine, which

continues to be the subject of scathing scholarly at-

tack.” We need not, however, announce the demise of

the political question doctrine by our holding in this

case. Despite confusion over whether a retreat to the

political questions doctrine is proper in particular

cases,” it is clear that the doctrine is, at best, a

narrow one. Baker v. Carr admonishes that “[t]he

doctrine .. . is one of ‘political question,’ not one of

‘political cases.’”** For similar reasons we funda-

mentally disagree with Judge Tamm’s dissenting sug-

50 See Tel-Oren v. Libyan Arab Republic, 726 F.2d 774, 796-

98 (D.C. Cir. 1984) (Edwards, J., concurring) ; id. at 803 n.8

(Bork, J., concurring) (“That the contours of the doctrine

are murky and unsettled is shown by the lack of consensus

about its meaning among the members of the Supreme Court

....”); Vander Jagt v. O’Neill, 699 F.2d 1166, 1173-74 (D.C.

Cir.), cert. denied, 104 S. Ct. 91 (1983) ; McGowan, Congress-

men in Court: The New Plaintiffs, 15 Ga. L. REv. 241, 256-

60 (1981). Professor Louis Henkin suggested in his influ-

ential article debunking the political question doctrine that

the leading cases f wearing judicial review on the ground

that the issue pos as a political question might instead be

understood as determinations that the challenged actions were

in fact constitutional. See Henkin, Js There A “Political

Question” Doctrine ?, 85 YALE L.J.597 (1976).

51 See, e.g., Goldwater v. Carter, 444 U.S. 996 (1979).

52 369 U.S. 186, 217 (1962).

25a

gestion that granting these plaintiffs their day in

court will “intolerably” impinge and intrude upon the

Executive’s conducting of foreign affairs. This dis-

sent relies heavily on United States v. Curtiss-Wright

Export Corp.,® to establish the existence of a “realm”

of Executive power in the foreign relations area

which courts should not curtail. But this same deci-

sion review, on the merits, a constitutional challenge

to certain laws granting foreign affairs power to the

President.“ The possibility that the laws would not

withstand constitutional scrutiny, with the concomi-

tant embarassment to the President who had relied

on those laws in prohibiting arms sales to specific for-

eign countries, did not deter the Court from finding

the controversy to be justiciable.

| The Executive’s power to conduct foreign relations

free from the unwarranted supervision of the Ju-

diciary cannot give the Executive carte blanche to

trample the most fundamental liberty and property

rights of this country’s citizenry. The Executive’s

foreign relations prerogatives are subject to constitu-

tional limitation; no agreement with a foreign

country can confer upon the Executive Branch any

power greater than those bounded by the Constitu-

tion.** We recognize that review by the Judiciary may

53 299 U.S. 304 (1936).

54 After reviewing the series of statutes relevant to the

exercise of Executive power, the Supreme Court concluded

that “this court may not, and should not hesitate to declare

acts of Congress, however many times repeated, to be uncon-

stitutional if beyond all rational doubt it finds them tc te

so.” Id. at 327.

55 Jd. at 319.

56 Reid v. Covert, 354 U.S. 1, 16 (1957).

26a

not always be appropriate. But unlike Curtiss-

Wright,” the government has not relied on a specific

legislative grant of authority to conduct the chal-

lenged activities. Moreover, this is not a case like

Chicago & Southern Airlines, Inc. v. Waterman

Steamship Corp.,** in which the plaintiffs, who were

denied review of an Executive order, were at least

granted some process through which their contention

could be heard prior to the Executive decision. In-

deed, if the dissent’s approach were adopted by all

judicial forums, then no ordinary process at all could

be offered.* We must be most reluctant to withhold

judicial scrutiny in these circumstances.

Every act taken by the Executive having an effect

beyond this country’s borders may be described as

political, with a potential or actual impact on our

foreign relations. Affirmance of this dismissal on the

57 299 U.S. 304 (1936).

58 333 U.S. 103 (1948).

58 The theory proposed by the dissent is equally applicable

to other forums. Thus it is seriously doubtful whether any

judicial remedy for the asserted taking would be available.

See, e.g., Langenegger v. United States, slip op. (Claims Court

14 May 1984) (denying review on alternative theory of im-

permissible inquiry into foreign affairs when plaintiff’s claim

was unavoidably predicated upon a challenge to the intrusive

manner in which the United States conducted its foreign pol-

icy). Judge Tamm’s apparent assumption that a remedy

would exist in the Claims Court under the Tucker Act may be

incorrect. Dissenting Opinion of Tamm, J., at 10-11. Of

course, the possibility of a private bill of relief may theoreti-

cally be available. But see P. BAToR, P. MISHKIN, D. SHAPIRO

& H. WECHSLER, HART & WECHSLER’S FEDERAL COURTS IN THE

FEDERAL SYSTEM 1326-31 (2d ed. 1973) (original purpose

of Tucker Act to end the plague of private relief bills dogging

Congress) .

27a

ground that plaintiffs’ claims are political questions

or an improper chalienge to foreign affairs powers

would mean that virtually anything done by United

States officials to United States citizens on foreign

soil is nonjusticiable. This is not the law. A proper

application of the political question doctrine to the

plaintiffs’ case shows that dismissal on this ground

was erroneous.

IV. STANDING

After prompting by the vacated panel opinion in

this case, the defendants for the first time pressed the

argument that Ramirez, a United States citizen, and

his two wholly owned United States corporations lack

standing to sue the defendants for the constitutional

violations alleged here. The theory is that because

plaintiff Ramirez and his two wholly owned United

States corporations own and control the land in ques-

tion by means of !egal title held by their wholly owned

Honduran corporations, the three United States plain-

tiffs do not have a constitutionally protected property

interest in the land and property for the purposes of

the asserted claims.

This proposition embodies a most extreme form of

fanciful thinking. It is bizarre to posit that the

claimed seizure and destruction of the United States

plaintiffs’ multi-million dollar investment, business,

property, assets, and land is not an injury to a pro-

tected property interest. The suggestion that a

United States citizen who is the sole beneficial owner

of viable business operations does not have constitu-

tional rights against the United States government

officials’ threatened complete destruction of corporate

assets is preposterous. If adopted by this court, the

proposition would obliterate the constitutional prop-

28a

erty rights of many United States citizens abroad and

would make a mockery of decades of United States

policy on transnational investments.

The debate over standing is easily obfuscated by

couching the issue in terms of whether this court

should permit Ramirez to bring a suit “derivatively”

or whether we should “lift the corporate veil.” As

Justice (then Judge) Cardozo admonished, “Meta-

phors in law are to be narrowly watched, for starting

as devices to liberate thought, they end often by

enslaving it.” The ability of the United States

plaintiffs to sue does not turn on whether certain

rights which may belong only to the Honduran corpo-

ration may be asserted “derivatively” by the sole

United States shareholders or on whether we should

“lift the corporate veil.” The “standing” inquiry may

be conducted along two different branches: first,

there is a cognizable property interest under the

United States Constitution directly assertable by a

United States citizen-shareholder; and second, whether

60 Further obfuscation is supplied by Judge Scalia’s dissent,

which concedes in his first paragraph on standing that Ra-

mirez as an individual “has a cognizable property interest in

that land, which interest, since he is an American citizen, is

protected by the Constitution.” Dissenting Opinion of Scalia,

J., at 13. The dissent then spends six more pages trying to

place the interest of the wholly owned corporations exclusively

under Honduran law. If the 100% owner, Ramirez, has an

interest protected by the United States Constitution as Judge

Scalia concedes, that is enough to compel the United States

District Court to go forward, as we make clear in text at notes

55-56. Judge Scalia has conceded the only issue on this point

we reach and decide.

61 Berkey v. Third Ave. Railway Co., 244 N.Y. 84, 155 N.E.

58, 61 (1926).

29a

(a) there is a cognizable property interest directly

belonging to the corporation, and (b) if so, the scope

of a shareholder’s right to assert that interest deriva-

tively. The crucial issue here is whether the United

States plaintiffs have constitutional rights of their

own, which exist by virtue of their exclusive bene-

ficial ownership, control, and possession of the prop-

ties and businesses allegedly seized.” Properly under-

stood, the question is whether the United States

plaintiffs—Ramirez and his two wholly owned United

States corporations—have a judicial cognizable in-

terest in the affected property sufficient to enable

them to sue for an unconstitutional deprivation of the

use and enjoyment of that private property. Because

we hold that the United States plaintiffs have a pro-

tected property interest for the purposes of the claims

asserted here and that they have standing to sue, we

do not reach the question whether the alien Honduran

corporations also have constitutional rights to judicial

relief for the violations alleged here.®

62 As such, cases involving corporate shareholders’ attempts

to sue for a violation of a constitutiona! right which attaches

only to individuals when the challenged action affected only

the corporation are inapposite. See, e.g., Reamer v. Beall, 506

F.2d 1345 (4th Cir. 1974), cert. denied, 420 U.S. 955 (1975) ;

United States v. Richardson, 469 F.2d 349 (10th Cir. 1972).

The approach taken in the instant case is consistent with the

holdings of those cases by its focus on the nature of a United

States shareholder’s personal interests and injuries and his

own constitutional rights in determining whether the share-

holder has a right to sue.

63 Cf. Cardenas v. Smith, slip op. (D.C. Cir. Apr. 17, 1974).

Neither do we find it necessary now to resolve the issue

whether the Honduran corporations may state a valid alter-

nate claim under the Alien Tort Claims Act, 28 U.S.C. § 1350

30a

We analyze this issue, as we must, on the basis of

the facts alleged by the plaintiffs. According to the

plaintiffs’ complaint, the operation is the enterprise

(1982) ; see Verified Complaint for Declaratory and Injunc-

tive Relief, Count III, A. at 5.

Judge Scalia, in dissent, mixes the two branches of standing

together. As an initial matter, on the second branch he would

hold that the foreign corporations have “no rights under the

United States Constitution with regard to activity taking

place in Honduras.” Dissenting Opinion of Scalia, J., at 13.

Logically, therefore, he would also assert that no derivative

corporate rights in the assets based on the United States Con-

stitution may be passed on to United States shareholders. The

remainder of the opinion, however, then attempts to define the

direct constitutional rights of the United States citizen

shareholder by reference to the procedural and substantive

rights of shareholders under Honduran law. In effect, the dis-

sent permits the “efficiencies” and technicalities of Honduran

corporation law (which are policies designed to regulate the

affairs between Honduran corporations, the shareholders and

creditors under Honduran law—not United States law) to de-

fine the substantive scope of United States constitutional safe-

guards running directly to United States citizens (which safe-

guards, in turn, control the lawfulness of coercive power exer-

cised upon the citizenry by the Government).

It seems to us that these two considerations are wholly

unrelated; and that, at least when the issue of asserting a

third party’s rights does not cast doubt on the existence of a

justiciable case-or-controversy—as might occur when a share-

holder is attempting to assert derivative rights which can

undisputably be raised by a corporation—it is improper to

analyze the existence of a cognizable constitutionai right as

the dissent suggests. See infra note 79.

The dissent does not doubt that an individual United States

citizen could assert the constitutional rights the plaintiffs now

press. What the dissent attempts to create is a system in

which a United States citizen loses all United States rights in

wholly owned assets when those assets are held through a for-

eign corporation—perhaps even when the assets are located in

the United States, since it is solely the “law of incorporation”

3la

of one man—a United States citizen. Title to the

property is held by three companies incorporated in

Honduras, which are wholly owned jointly by plaintiff

(Dissenting Opinion of Scalia, J., at 17) which is said to define

the United States constitutional rights. This is unsound and

fundamentally unjust. For instance, many foreign countries

forbid direct ownership of real property by aliens, effectively

forcing a United States national to adopt a foreign business

entity to hold the investment. But the adoption of a foreign

business entity should not be held to strip the United States

citizen of rights he or she would otherwise have vis-a-vis the

United States government in United States courts since strip-

ping those rights would not serve any valid policy underlying

the foreign rules of incorporation. Cf. RESTATEMENT (RE-

VISED) OF THE FOREIGN RELATIONS LAW OF THE UNITED STATES

§ 216, reporters’ note 3: “A state cannot, by requiring a for-

eign enterprise to incorporate locally, compel the corporation

to surrender in advance its right to protection by the state of

the parent corporations or of the parent’s shareholders.”

(Tent. Draft No. 2, 1981).

Moreover, the corollary to Judge Scalia’s position is not

true: a United States citizen cannot escape the prescriptive

reach of United States law solely by choosing to do business

through a foreign corporation. In many contexts the United

States government has asserted control over foreign corpora-

tions owned predominately by United States shareholders. See

RESTATEMENT (SECOND) OF THE FOREIGN RELATIONS LAW OF

THE UNITED STATES § 27, comment d (1965):

When the nationality of a corporation is different from

the nationality of the persons (individual or corporate)

who own or control it, the state of the nationality of such

persons has jurisdiction to prescribe, and to enforce in its

territory, rules of law governing their conduct. It is

thus in a position to control the conduct of the corporation

even though it does not have jurisdiction to prescribe

rules directly applicable to the corporation.

See also id. reporters’ note. Constitutional rights and duties

are closely related in scope; if the Constitution permits such

a broad exercise of prescriptive power, then the protective

reach of the Constitution should extend equally far.

32a

Ramirez and by two United States corporations which

plaintiff Ramirez wholly owns and controls. The sole

and ultimate individual investor, beneficial owner and

shareholder in the chain of companies is plaintiff

Ramirez.“

The essence of standing is whether the asserted

claims—here, of an unconstitutional, unauthorized oc-

cupation and use of private property and of a de-

privation of property without due process of law—

entitle persons in the position of the plaintiffs to

judicial relief.“ The question may be phrased either

in terms of whether the plaintiffs have standing to

sue or in terms of whether the plaintiffs have properly

stated a cause of action for the allegedly unconstitu-

tional acts.“ Either way, the inquiry must focus on

whether the plaintiffs have a cognizable property in-

terest in the assets in Honduras for the purposes of

the constitutional violations claimed here.

We turn first to an assessment of the nature of the

United States citizens’ interests in the property. The

fact that the United States plaintiffs do not directly

hold legal title to the real property does not deprive

them of a property interest in the assets nor does it

defeat their constitutional claims. Ramirez has a pro-

tected property interest in the allegedly occupied

property both by virtue of his status as sole share-

holder of the corporations and by virtue of his posses-

sion of the land for more than twenty years.

%4 See supra note 4.

85 See Warth v. Seldin, 422 U.S. 490, 500 (1975).

86 See Cardenas v. Smith, slip op. at 11 (D.C. Cir. April 17,

1984) ; Currie, Misunderstanding Standing, 1981 S. Ct. Rev.

41, 43.

83a

First, as shareholders, the United States plaintiffs

have a concrete and protected interest in the property

allegedly occupied and used by the United States de-

fendants. The United States plaintiffs’ status as sole

and ultimate shareholders of the corporations which

have title to the land and property gives rise to in-

terests which are protected from unconstitutional ac-

tivity of the type alleged here. It is settled law that

ownership of stock constitutes a specific interest in

the corporation’s property.

Shares of stock do. . . represent an interest in

the corporate property. Thus, it has been said

that stockholders are the equitable owners of the

property and assets of the corporation, and that

they have a proprietary interest in the corpora-

tion, and a qualified beneficial interest which is

an indirect or collateral interest in the corporate

property. It has been held that the stockholder’s

interest is an “ownership interest” within the

meaning of an insurance policy on the corporate

property, and that his interest is an insurable

one.”

Likewise, this circuit acknowledged in Nielsen v. Sec-

retary of tre Treasury that shareholders have a prop-

erty interest in assets of a corporation. There the

court agreed with the apparent shareholders that the

blocking of a corporation’s assets in the United States

6711 W. FLETCHER, CYCLOPEDIA OF THE LAW OF PRIVATE

CORPORATIONS §5100 (1971 ed.) (footnotes omitted); see

also H. HENN & J. ALEXANDER, LAWS OF CORPORATIONS 1052

(3d ed. 1983) (“Actions to enjoin a... sale of corporate

assets have been permitted as direct actions. They are hardly

actions to procure a judgment in favor of the corporation.”

(footnotes omitted) ).

34a

could constitute a deprivation of the shareholders’

property.”

The Supreme Court has accepted this proposition

that a shareholder may have a property interest in

the assets of a corporation which can support the

shareholder’s standing to sue over an injury to the

corporation’s assets. In Regional Rail Reorganization

Act Cases, the Court implicitly held that the sole

shareholder of a corporation has a constitutionally

protected property interest in corporate assets.” Not

a single Justice dissented from the Court’s finding

that the sole shareholder of Penn Central Transporta-

tion Co. had a sufficient interest in Penn Central’s

assets to be a property party in a challenge to an

alleged taking of the railroad company’s property

without just compensation. The facts of ownership in

the instant case are functionally equivalent: a sole

ultimate shareholder is suing for unlawful destruc-

tion of the corporate assets. Likewise, in Kaufman v.

Societe International Pour Participations Industrielles

et Commerciales, the Supreme Court permitted United

States shareholders to intervene in a suit seeking re-

covery of corporate property confiscated by the United

States under the Trading with the Enemy Act. Re-

jecting the dissent’s contention that the United States

shareholders had no present interest in the physical

property of the corporation, the Court held that

“when the Government seizes assets of a corporation

organized under the laws of .a neutral country, the

rights of innocent stockholders to an interest in the

assets proportionate to their stock holdings must be

68 424 F.2d 833, 843 (D.C. Cir. 1970).

6° 419 U.S. 102, 117 (1974).

35a

fully protected.” * The corporate ownership of the

land and property in the instant case does not deprive

the sole beneficial owners—United States citizens—of

a property interest for the purposes of the claims

asserted here.

The Supreme Court has consistently refused to

allow mere corporate formalities to dictate whether

the suing party in fact has a valid claim and a per-

sonal stake in the outcome of the case. In Bangor

Punta Operations, Inc. v. Bangor & Aroostook Rail-

road, the Supreme Court squarely rejected the argu-

ment that the Court may not “look behind the corpo-

rate entity to the trust substance of the claims and

the actual beneficiaries” when it evaluates a party’s

standing to sue.” In that case the Court determined

that a corporation should not be treated as a distinct

and separate entity for standing purposes when 99%

of the corporation’s stock was owned by a single

shareholder. Because the facts of that case showed

that the shareholder both owned and controlled the

corporation, the Court found that the shareholder

would be the actual beneficiary of any recovery by the

corporation. Thus, the Court disregarded the corpo-

rate form of ownership in determining whether the

suit could proceed. Similarly, in the recent case of

First National City Bank v. Banco Para El Comercio

Exterior de Cuba, the Court refused to give con-

clusive status to the act of incorporation in determin-

ing the status of the corporate party before the

Court.” There the Court stated that “an incorpor: ved

entity . . . is not to be regarded as legally separate

70 343 U.S. 156, 159-60 (1952).

1 417 U.S. 708, 713 (1974).

72 103 S. Ct. 2591 (1983).

36a

from its owners in all circumstances.” Applying

that approach to the instant case, it is clear that

Ramirez, the sole individual owner and controller of

the corporations, has a property interest in the cor-

porate assets that is real and protected for the pur-

poses of the claims alleged in the instant case.“

Secondly, in addition to his beneficial preperty in-

terest as a shareholder, Ramirez has a cognizable

possessory interest in the property allegedly seized,

by virtue of his continuous possession of his ranch

for more than twenty years. The Supreme Court

stated in Board of Regents v. Roth that the Court

“has ... made clear that the property interests pro-

tected by procedural due process extend well beyond

actual ownership of real estate, chattels, or money.” ”

78 Id. at 2601 (footnotes omitted).

74 We need not consider under what circumstances a share-

holder should be deemed to have ceded his right to sue to the

corporation by virtue of local law. It is sufficient to note that

a shareholder will not be deemed to have ceded constitutional

claims to an alien corporation which itself may be precluded

from bringing suit on behalf of its shareholders. Further-

more, this is not a case in which the rights of other share-

holders might be adversely affected by permitting a single

shareholder to sue, because Ramirez has alleged that he is the

sole ultimate beneficial owner.

7408 U.S. 564, 571-72 (1972). Judge Scalia’s dissent

agrees that Ramirez has standing to vindicate his possessory

interest in the ranch as a resident under Honduran law.

(Dissenting Opinion of Scalia, J., at 18). We question the

internal consistency of that concession with those portions of

the dissent which assert, incorrectly, that Honduran law must

define the scope of Ramirez’s United States constitutional

rights since the dissent has disclaimed any real knowledge of

Honduran law and has explained the existence of the “lawful

possessory interest under Honduran law” only by citing a deci-

37a

In Fuentes v. Shevin the Court applied that principle

and held that a purchaser of household goods under a

conditional sales contract had a possessory interest in

the goods sufficient to give rise to a constitutional

claim for a violation of due process when 2 noteholder

attempted repossession.’ Despite the purchaser’s lack

of legal title, the Court held that the purchaser had a

cognizable property interest in the continued use and

possession of the goods.

The facts alleged by Ramirez in his complaint give

rise to an analogous possessory interest. According to

the complaint, Ramirez has personally controlled and

managed his Honduran property for over 20 years,

during which time he developed the land from raw

jungle into viable business operations. He has spent

much of his life on the land allegedly seized. Prior

to the defendants’ alleged invasion of this cattle

ranch, Ramirez had full control and possession of the

ranch’s pastures and business operations. Now he

claims to have been ejected from portions of the land

he once possessed. Ramirez’s possessory interest is

constitutionally protected for the purposes of the

claims stated here.”

sion by the United States Supreme Court. Be that as it may,

it seems that the concession of standing must be read to encom-

pass all properties here in dispute, especially since the dissent

has not cited to anything which would indicate that Ramirez’s

own possessory interest is not owned through a corporate in-

termediary, as is the rest of the ranch.

76 407 U.S. 67 (1972).

7 That constitutional provisions protecting property ex-

tend to property interests not secured by actual legal title was

likewise made clear in Armstrong v. United States, 364 U.S.

40 (1960). In that case, the Court held that the plaintiffs had

a property interest protected by the fifth amendment’s just

88a

For decades United States investors abroad have

utilized the privilege of incorporation in the host

country in order to put themselves on a parity with |

indigenous corporations and other foreign investors

in regard to taxation, labor law, and other matters.

It has hitherto never been suggested that the consti-

tutional rights of United States citizen-investors, in

this case against unconstitutional seizures by United

States officials, were in any way lessened by the mere

utilization of such corporate vehicles. Furthermore,

the defendants’ contention is contrary to the policy

which the United States maintains world-wide with

respect to the confiscation abroad of assets owned

directly or indirectly by United States citizens; the

United States insists upon full compensation by the

confiscating nation as a condition of United States

foreign assistance.” It is astonishing for the United

States defendants to argue that confiscation of corpo-

rate assets is a deprivution of United States investors’

property when executed by a foreign government but

that it is an unrecognizable injury to United States

shareholders when it is carried out by the United

States itself. It is hard to imagine a more disingenu-

ous contention.”

compensation clause when the value of liens which they held

on boats and materials was destroyed by the government.

And in Mennonite Board of Missions v. Adams, 108 S. Ct.

2706 (1983), the Court held that a mortgagee possesses a

“substantial property interest” in the mortgaged property

which is protected by the due process clause.

78 See, e.g., 22 U.S.C. § 2370(e) (1) (1982) ; infra notes 169,

170.

79 Judge Scalia’s dissent adopts the defendants’ argument

and supports it by two evasive theories designed to avoid

United States jurisdiction at all costs. The first is the argu-

89a

V. RELIEF FOR THE STATED CLAIMS

Plaintiffs’ complaint is also attacked on the ground

that relief for the stated claims is not available in the

district court. The defendants contend that even if

ment refuted in the text above, that because Ramirez and his

two solely owned Puerto Rican corporations have chosen to

use wholly owned Honduran corporate vehicles in the owner-

ship and operation of the Ramirez enterprise in Honduras,

then American citizen Ramirez as a sole owner stockholder

is relegated to the law of Honduras to determine what rights

he can assert in a United States Court for violations allegedly

carried out solely by American officials, military and civilian.

We are familiar with the assertion that a party may properly

be required to assert its United States constitutional rights in

state rather than federal courts, since state courts are fully in-

tegrated in our nation’s uniquely federal judicial system and

are usually subject to review by the Supreme Court. But here-

tofore we never thought that a United States party could be

banished to the final and unreviewable forum of a foreign

nation for a conclusive adjudication of that party’s rights

under United States law.

As indicated in the text above, to allow this argument to

prevail would undermine the legal position of American multi-

national corporations around the world, as well as that of the

United States government when it comes to their defense.

For if the corporate form adopted can negate an American

investor’s rights against American officials, a fortiori the

adoption of a local corporate form might be interpreted to ne-

gate his rights under international or local law against the

actions of local officials.

The second evasive theory is the repeated assertion through-

out the dissent that this whole training operation is a Hon-

duran affair, that complaint should be made to the Honduran

goverment, and that United States citizen Ramirez’s rights

must be determined by Honduran law. This is answered by the

FACTS—undeniable as alleged by the plaintiffs after this

Rule 12(b) (6) disposition by the trial court—that plaintiffs

have alleged no wrongful acts by Honduran officials under

any law but have alleged wrongful acts by United States

40a

the plaintiffs prevailed on the merits of their consti-

tutional claims, the district court would abuse its eq-

uitable discretion if it ordered any form of declara-

tory or injunctive relief. Accordingly, the defendants

argue that dismissal of the complaint should be up-

held on the ground that the plaintiffs have failed to

state a claim for relief. Appropriate remedies for the

plaintiffs’ claims, however, must be determined in the

first instance by the district court, on the basis of

particular findings of fact as well as the nature of

any proved unlawful conduct. The doctrine of equi-

table discretion does not compel dismissal of the plain-

tiffs’ complaint at the outset of litigation. The plain-

tiffs have stated a claim for relief sufficient to with-

stand dismissal under Rule 12(b) (6), and that is all

that is now required.

We emphasize again that the procedural posture of

this case prevents us from relying on the defendants’

officials in violation of the United States Constitution, and

that plaintiffs have named no Honduran officials but have

named three United States officials within a five-mile radius

of this courthouse as defendants. The plaintiffs’ case against

the United States defendants must be tested by United States

law in a United States court.

All we decide here are the rights of a United States citizen,

Ramirez, and his 100% owned corporations. We do not pro-

nounce on the rights of a United States citizen owning .0001%

of the shares in a Honduran corporation. Most of Judge

Scalia’s standing discussion, resting on his analysis of share-

holders’ rights, is thus beside the point.

We do note, however, that his analysis would apparently

permit the United States Executive Branch literally to do

anything to the property and livelihood of a United States citi-

zen overseas, if the United States citizen were conducting his

business operations in the form of a foreign subsidiary corpo-

ration, without any recourse whatsoever to a United States

District Court to protect his rights. United States constitu-

tional rights are not so fragile.

4la

version of disputed facts. The defendants have re-

peatedly argued their version of the facts in their

effort to show that relief cannot be granted for the

stated claims. They have contended, for example,

that the military incursions onto the plaintiffs’ land

were conducted by the Honduran military, that the

RMTC is principally a Honduran project, and that

is “essentially a dispute between the plaintiffs and

the Honduran government.” * We decline to dismiss

the plaintiffs’ complaint on the basis of deliberate dis-

tortions of the plaintiffs’ case. While we express no

view on the weight or substance of the plaintiffs’ fac-

tual case as it might be developed, we roundly reject

the defendants’ efforts to involve this court in im-

proper fact-finding of controverted material issues on

appeal of a dismissal under Rule 12(b) (6).

A. Equitable Discretion of the District Court

The doctrine of equitable discretion might permit

the district court to grant some form of injunctive

relief for the stated claims. A trial court’s equitable

remedial powers are great.** The Supreme Court has

stated that “in shaping equity decrees, the trial court

8° Counsel for the Appellees, oral argument, 25 Apr. 1984;

see also Brief of Appellees at 5-8.

81 See, e.g., Swann v. Charlotte-Mecklenburg Bd. of Educ.,

402 U.S. 1, 15 (1971). Courts are, of course, more reluctant to

utilize their equitable powers for interim orders—when the

plaintiffs have not yet proved their claims—than they are to

grant equitable remedies for the correction of proved unlawful

conduct. In Adams v. Vance, 570 F.2d 950 (D.C. Cir. 1978),

for example, the court required the plaintiffs to make an ex-

traordinarily strong showing in order to justify a highly in-

trusive preliminary injunction against the Executive, when no

constitutional violation had yet been proved.

42a

is vested with broad discretionary power.” The

duty of the trial court is to decree relief that corrects

the condition offending the Constitution or U.S.

laws. In exercising its broad equitable powers, a

trial court must balance the nature of the proved vio-

lation against the affected public and private inter-

ests.* An equitable remedy is proper (1) when the

plaintiff lacks an adequate remedy at law and (2)

when a balancing of the rights and interests involved

as well as other prudential considerations permit in-

junctive or declaratory relief.* Plaintiffs’ complaint

shows that their stated claims may be irremediable

at law and that a balancing of the equities may favor

relief. We cannot now conduct the balancing for the

district court nor specify which remedies would be

most appropriate for the stated claims. We simply

demonstrate that the scales are not firmly and con-

clusively tipped for the defendants on the plaintiffs’

set of facts.

1. Adequacy of the Remedy at Law

If the district court determined that the actions of

the federal defendants were unlawful because they

were not authorized by an act of Congress or the

Constitution, the allegations in plaintiff Ramirez’s

82 Lemon v. Kurtzman, 411 U.S. 192, 200 (1973).

83 See Swann v. Charlotte-Mecklenburg Board of Educ., 402

U.S. 1, 15-16 (1971).

84 See Hecht Co. v. Bowles, 321 U.S. 321, 329-30 (1944)

(a court of equity has flexibility to mold decrees to the par-

ticulars of each case).

85 See Developments in the Law—Injunctions, 78 HARV. L.

REV. 996-1054 (1965) ; ef. RESTATEMENT (SECOND) OF TORTS

§ 936 (1977).

43a

complaint suggest that monetary relief for the con-

tinuing occupation and effective seizure of the plain-

tiffs’ property might‘be unavailable or inadequate.

First, monetary relief from the United States for

the stated claims may not be available to the plain-

tiffs. The Tucker Act provides that the Claims Court

shall have jurisdiction over claims against the U.S.

government in excess of $10,000 founded upon con-

tracts, or the Constitution or statutes of the United

States. It is unclear, however, whether the Tucker

Act would permit the plaintiffs to recover damages,

because the Supreme Court has held that monetary

relief for unauthorized Executive seizures is not avail-

able in the Claims Court. In Regional Railroad Re-

organization Act Cases, the Court stated:

“The taking of private property by an officer of

the United States for public use, without being

authorized, expressly or by necessary implication,

to do so by some act of Congress, is not the act

of the Government,” and hence recovery is not

available in the Court of Claims.”

Likewise, in Hooe v. United States, the Supreme

Court held that the Court of Claims did not have ju-

risdiction to award damages for the unauthorized

seizures of plaintiffs’ basement by U.S. officers. Jus-

tice Harlan, writing for the Court, rejected the plain-

tiffs’ argument that they were entitled to just com-

pensation for a taking in the Court of Claims. He

concluded that because the officers acted without legal

or constitutional authority their actions did not cre-

86 See 28 U.S.C. §§ 1346, 1491 (1982).

87419 U.S. 102, 127 n.16 (1974) (quoting Hooe v. United

States, 218 U.S. 322, 386 (1910) ).

44a

ate a claim against the government for relief in the

Court of Claims.”

It is important to remember that the plaintiffs do

not challenge the defendants’ actions merely because

just compensation has not been paid; plaintiffs deny

the existence of any constitutional or statutory power

of the defendants to seize their private ranch. While

courts may properly find that the only relief for an

authorized taking of private property is compensa-

tion in accordance with the just compensation require-

ment of the fifth amendment, injunctive relief is

available when the owner proves that government offi-

cials lack lawful authority to expropriate his prop-

erty. In the latter situation, the landowner is enti-

tled to equitable relief and need not rely on the as-

serted availability of a damages remedy.” When

government officials seize private property without

constitutional or statutory authority, the trial court

must apply general equitable principles to determine

whether injunctive relief is proper.” This involves

determining whether monetary relief is adequate and

whether a balancing of the equities favors relief.

Whether an action of Executive officials is suffi-

ciently authorized by congressional or constitutional

88 218 U.S. 322 (1910). In United States v. North American

Transp. Co., 253 U.S. 330, 334 (1920) ; Justice Brandeis held

for the Court that the actions of a federal official who took

land for military purposes were unauthorized and therefore

created no liability for com™ensation by the government in

the Court of Claims; see also Youngstown Sheet & Tube

Co. v. Sawyer,\343 U.S. 579, 585 (1952) ; sources cited supra

note 87; cf. The Paquete Habana, 175 U.S. 677, 710-11 (1900).

8° See Land v. Dollar, 330 U.S. 731, 738 (1947).

% See Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S.

579, 595-96 (1952) (Frankfurter, J., concurring).

45a

\

provision to permit a claim for relief under the

Tucker Act depends upon the nature of the facts of

the particular case and the scope of the defendants’

lawful powers. Not all illegal acts of government offi-

cials are considered unauthorized for the purpose of

determining the government’s liability to pay com-

pensation under the Tucker Act. The question in each

case is whether the defendants’ actions are substan-

tially in compliance with the powers granted to them

by congressional statute or constitutional provision.

Recovery under the Tucker Act has been permitted

when a taking by an officer is the natural consequence

of congressionally approved measures or the result of

an exercise of discretion granted to an official for the

implementation of a congressional statute.”

*! For example, in United States v. Causby, 328 U.S. 256

(1946) the Supreme Court held that a Tucker Act claim had

been stated when the Civil Aeronautics Board, acting within

the scope of authority granted to it by Congress, prescribed

an air traffic route that was found to result in the taking of an

easement over the plaintiff’s land. Although Congress itself

had not expressly put that particular airspace into the public

domain, the taking was held to be authorized by Congress be-

cause it was within the discretion of the Civil Aeronautics

Board, under the congressional statute, to prescribe an air

traffic route like the one at issue. Portsmouth Harbor Land

& Hotel Co. v. United States, 250 U.S. 327 (1922), also sup-

ports this principle. The Court stated that because the mili-

tary officials were authorized to build the fort in question and

to staff it with guns and men, it would be reluctant to find

lack of authority for the firing of the cannons which resulted

in the property damage. Nonetheless, it remanded the case

to the Court of Claims for a determination whether there was

in fact authority on the part of the military officials so to

fire the canons sufficient to bind the government to pay for the

property taken.

46a

However, when an officer acts wholly outside the

scope of the powers granted to him by statute or con-

stitutional provision, the official’s actions have been

considered to’ be unauthorized for the purposes of a

damages remedy under the Tucker Act.” In Southern

California Financial Corporation v. United States,”

for example, officers of the United States Air Force

used approximately 120 acres of the plaintiff’s land

as a buffer-zone for an Air Force base’s ammunition

dump and bomb storage area. An appellate panel of

the Court of Claims found that the defendant Air

Force officials were not authorized, explicitly or im-

plicitly, to take the plaintiff’s property and that there-

fore plaintiffs could not invoke the jurisdiction of the

Claims Court. In denying the plaintiff's claim for

monetary relief on the ground that the military offi-

cials’ taking of the plaintiff's property was unauthor-

ized and that therefore a Tucker Act remedy did not

lie, the unanimous appellate panel of the Court of

Claims stated:

Ordinarily, whenever there is no authority for a

taking or intrusion, the claimant, although un-

able to obtain sompensation, can seek an injunc-

tion or a declaration judgment against the un-

authorized governmental activities.”

Thus, if the plaintiffs prove that the acts of the de-

fendants in regard to their property are unauthorized

by law, it is not clear whether they could obtain

monetary relief in the Claims Court under the Tucker

* See sources cited supra notes 87 & 88.

*° 634 12d 521 (Ct. Cl. 1980), cert. denied, 451 U.S. 937

(1981).

* Jd. at 526 n.8.

47a

Act. Whether or not a Tucker Act claim will lie de-

pends upon facts not yet ascertained and the nature

of the congressional ard constitutional grants of

power to these defendants to make military acquisi-

tions.” The defendants’ allegedly unauthorized de-

* Judge Scalia’s dissent is largely in agreement with these

principles; it relies on Larson v. Domestic & Foreign Corp.,

337 U.S. 682, 696-705 (1949), which held that a challenge to

the actions of a government officer asserting either (1) that

the actions were “not within the officer’s statutory powers,”

or (2) that those statutory “powers, or their exercise in the

particular case, are constitutionally void” need not be brought

under the Tucker Act. 337 U.S. at 702. However, although

promising a “walk to the statutes and regulations and some

hard thought,” he never considers whether there exists any

statutory authorization for the kind of taking alleged to have

occurred here, or whether that authorization—if there is

any—would be consistent with the Constitution. Nowhere in

the entire dissenting opinion is there an attempt to show

that the Secretary of Defense, Secretary of State, or the Chief

of the United States Army Corps of Engineers has statutory

authority or constitutional power to move troops in on a

United States citizen’s property anywhere, conduc? life threat-

ening military exercises, destroy the existing business enter-

prise, and thus effectively seize his property—all without

notice to the citizen or the filing of any court or administrative

action. Although both of these issues were contested before

the district court and again on appeal, the dissent is willing

to assume, sub silentio, the requisite statutory and constitu-

tional authority.

That omission is particularly troublesome given the dis-

sent’s blanket sssertion that “there is no violation of consti-

tutional rights so long as just compensation is available.”

(Dissenting Opinion of Scalia, J., at 3). Apparently the dis-

sent endorses monetary ratification of unconstitutional and

unauthorized governmental! activities with no opportunity to

correct the constitutional breach through the traditional! in-

junctive powers of the courts. Under this approach the gov-

ernment can deprive a citizen of any possession, and the

| il

48a

struction of plaintiffs’ $13 million investment may or

may not be in substantial compliance with the de-

fendants’ lawful powers, and it is impossible for this

court at this stage of the case to determine that it is.”

More importantly, however, even if the district

court finds that the defendants acted wrongfully (al-

though pursuant to constitutional and statutory au-

thority to take property in a foreign country), trig-

gering the availability of monetary relief in the

Claims Court for unauthorized seizures of private

property by United States officials, injunctive relief

might still be a proper remedy for the stated claims.

Injunctive relief is available when the owner proves

that government officials acted wrongfully in expro-

priating his property, and money damages would not

citizen cannot challenge the government’s right to do it, but

only question how much the citizen is to receive for losing his

property.

This cannot be the law. On any type of taking by the gov-

ernment, the citizen can always raise the threshold question,

whether successfully or unsuccessfully, of the government’s

fundamental right to take his property. Then, and then only,

if the government establishes its constitutional right to seize

the property of the citizen, is the citizen relegated to the

second question, i.e., how much should the plaintiff be com-

pensated for the property which was taken. The fundamental

first question of constitutional! right to take cannot be evaded

by offering “just compensation.”

* Nor may Congress have intended so to tax the public

coffers under the Tucker Act for such unauthorized activities.

Congress has provided that acquisition of private property

is beyond the authority of military officials unless it is ex-

pressly permitted by law. “No military department may

acquire property not owned by the United States unless the

acquisition is expressly authorized by law.” 10 U.S.C. § 2676

(1982).

49a

justly redress the plaintiff’s injury, despite an asser-

tion that the Tucker Act would provide compensation.

The dissenting interpretation of the Tucker Act

offered by Judge Scalia has been repeatedly rejected

by this court. In Dronenburg v. Zech," a member of

the armed forces sought to overturn his discharge by

challenging the constitutionality of the regulations

wnder which he had been discharged. The govern-

ment argued that the action was essentially one for

money damages (i.e., back pay) which was precluded

by the assertedly exclusive Tucker Act remedy in the

Claims Court, In an opinion by Judge Bork, joined

unreservedly by Judge Scalia, the court squarely re-

jected this contention, holding that “[t]he United

States and its officers .. . are [not] insulated from

suit for injunctive relief by the doctrine of sovereign

immunity,” despite the asserted availability of a

Tucker Act remedy.” The court reasoned that 5

U.S.C. § 702 “was intended to waive the sovereign

immunity of the United States in suits for injunc-

tive relief.” Although the court recognized that 5

U.S.C. § 702 might retain the defense of sovereign

immunity when another statute “implicitly forecloses

judicial relief,” °° the Tucker Act was deemed not to

* No. 82-2304 slip op. (D.C. Cir. 17 Aug. 1984).

* Id. at 5 (quoting Schnapper v. Foley, 667 F.2d 102, 107

(D.C. Cir. 1981), cert. denied, 455 U.S. 948 (1982) ).

* Id. at 6. It is generally accepted that this waiver extends

to suits brought under 28 U.S.C. § 1331 (1982), one of the

jurisdictional bases asserted in this suit. See Dronenburg,

slip op. at 6 n.3 and authorities cited therein.

10° See Droneburg, slip op. at 6 (quoting S. Rep. No. 996,

94th Cong., 2d Sess. 7-8 (1976) ).

50a

be such a statute.’” Although the legislative history,

quoted by this court noted that the Tucker Act did

preclude “specific relief’ for “government contracts”

actions, limitations on the district courts’ powers to

issue injunctions to redress allegedly illegal govern-

mental conduct infringing core constitutional rights

were, by necessary implication, not so limited.*” The

decision in Dronenburg controls the case at hand.

Even aside from the issue of whether 5 U.S.C.

§ 702 waives the defense of sovereign immunity, the

Tucker Act’s “implicit limitation” on suits for spe-

cific relief has never been a complete bar to injunc-

tive remedies. The Supreme Court has never ex-

pressly held that an unlawful taking which could not

be justiy compensated by monetary damages is un-

redressable due to the bar of sovereign immunity.

Cases as ancient and venerable as United States v.

101 See also Megapulse, Inc. v. Lewis, 672 F.2d 959, 971

(D.C. Cir. 1982).

102 The Tucker Act confers jurisdiction over claims against

the United States “founded .. . upon the Constitution, or any

Act of Congress, ... or upon any .. . contract with the United

States,” 28 U.S.C. § 1491 (1982). Just as it might be argued

that the plaintiffs in Dronenburg and Megapulse did not assert

traditional contract claims within the scope of § 1491, (See

Megapulse, Inc. v. Lewis, 672 F.2d at 968, 971 (1982)), the

case at hand is not one seeking “just compensation” under

the fifth amendment or otherwise “founded upon” the Con-

stitution within the ordinary meaning of § 1491. Rather, it

asserts that there is no underlying authority for the taking

in either the Constitution or statutes of the United States. The

claim thus clearly “raises under the Constitution, laws, or

treaties of the United States.” 28 U.S.C. § 1831 (1982). Com-

pare Dronenburg (D.C. Cir. 17 Aug. 1984) (asserted viola-

tion of constitutional privacy and equal protection rights not

a claim subject to exclusive jurisdiction of Claims Court).

5la

Lee,’ suggest precisely the opposite. That case in-

volved an action for ejectment seeking to redress the

allegedly illegal and unauthorized occupation of the

plaintiff’s property, which had been seized by the

Government under pretext of nonpayment of taxes.

After the jury returned a verdict that the seizure

had been illegal, the Supreme Court refused to hold

that the suit was barred by sovereign immunity. Re-

buffing the argument that this doctrine was an abso-

lute bar to the ejectment of the defendants, the court

stated :

It is not pretended, as the case now stands,

that the President had any lawful authority to

do this, or that the legislative body could give

him any such authority except upon payment of

just compensation. The defense stands here

solely upon the absolute immunity from judicial

inquiry of every one who asserts authority from

the executive branch of the government, however

clear it may be made that the executive possessed

no such power. Not only no such power is given,

but it 1s absolutely prohibited, both to the execu-

tive and the legislative, to deprive any one of

life, liberty, or property without due process of

law, or to take private property without just

compensation.

Shall it be said, in the face of all this, and of

the acknowledged right of the judiciary to decide

in proper cases, statutes which have been passed

by both branches of Congress and approved by

the President to be unconstitutional, that the

courts cannot give a remedy when the citizen has

103 106 U.S. 196 (1882).

52a

been deprived of his property by force, his estate

seized and converted to the use of the govern-

ment without lawful authority, without process

of law, and without compensation, because the

President has ordered it and his officers are in

possession?

If such be the law of this country, it sanctions

a tyranny which has no existence in the mon-

archies of Europe, nor in any other government

which has a just claim to well-regulated liberty

and the protection of personal rights.

These principles were reaffirmed subsequently in

Land v. Dollar,’ in which the Supreme Court disal-

lowed any reliance on sovereign immunity when “the

right to possession or enjoyment of property under

general law is in issue, and. the defendants claim as

officers or agents of the sovereign.” As long as the

essential nature of the suit would neither deplete the

public treasury nor impermissibly interfere with pub-

lic administration, the Court specifically held that

“where [public officials] unlawfully seize or hold a

citizen’s real property or chattels, recoverable by ap-

propriate action in law or equity, he is not relegated

to the Court of Claims to recover a money judgment.

The dominant interest of the sovereign is then on the

side of the victim who may bring his possessory ac-

tion to reclaim that which is wrongfully withheld.” ™

104 Id. at 219-21 (emphasis added). With reference to tyran-

nical “monarchies,” see Dissenting Opinion of Scalia, J., at

1n.1; compare I Samuel 8:7-18, 12:17.

105 330 U.S. 731 (1946).

106 Td. at 737.

107 Td. at 738.

53a

Subsequent cases decided by the Supreme Court

have interpreted United States v. Lee and Land v.

Dollar to permit an injunction only where there was

a claim “that the taking of the property or the injury

to it was not the action of the sovereign because un-

constitutional or beyond the officer’s statutory pow-

ers.” Yet these cases did not dispute the bedrock

principle of United States v. Lee that “it is absolutely

prohibited . . . to deprive any one of life, liberty, or

property without due process of law, or to take pri-

vate property without just compensation.” *” Larson

v. Domestic & Foreign Corp. relied on Lee in holding

that sovereign immunity does not bar specific relief

“where there is a claim that the holding constitutes

an unconstitutional taking of property without just

compensation.” “° Thus, the availability of a suit for

just compensation will (if the taking was constitu-

tionally authorized and within the scope of the offi-

cial’s authority) quiet contentions that a taking is a

violation of the fifth amendment.’* United States v.

Lee was distinguishable under this principle, that

there was no tribunal where the plaintiff could seek

just compensation.” ,

But neither Larson nor any case since has over-

ruled Lee by holding that injunctive relief against the

United States is beyond the power of the courts when

just compensation for the seized property could not

108 Tarson v. Domestic & Foreign Corp., 337 U.S. 682, 698

(1949) ; Malone v. Bowdoin, 390 U.S. 643 (1963).

109 106 U.S. at 220.

110 337 U.S. at 697.

111 Jd, at 697 n.18.

112 Malone v. Bowdoin, 369 U.S. 648, 647 (1962) ; Larson v.

Domestic & Foreign Corp., 337 U.S. at 697 n.17.

54a

be obtained in the alternate tribunal. In Hurley v.

Kincaid,’ cited with approval in Larson, the Su-

preme Court held that governmental action taken

pursuant to an otherwise constitutionaily valid stat-

ute by officers acting wrongfully, although within the

scope of their authority, could be authorized when the

remedy at law was unclear or grossly inadequate:

“[A] court of equity acts with caution, and only upon

a clear showing that its intervention is necessary in

order to prevent an irreparable injury.”"* The

Court found that relief inapplicable since a sufficient

showing was not made."

It is clear, therefore, that when the monetary com-

pensation available through the Tucker Act remedy

is so inadequate that the plaintiff would not-be justly

compensated for the seizure of his property by the

United States, an injunctive remedy is not barred by

sovereign immunity."° For example, in Youngstown

—————— |

118 285 U.S. 95 (1982).

"4 Id. at 104 n.8 (citations omitted).

115 Jd.

46 In fashioning equitable remedies, the issue of whether

damages will adequately compensate plaintiffs for a claimed

unconstitutional seizure of private property by unauthorized

government officials is not equivalent to the fifth amend-

ment’s provision that the government lawfully may expro-

priate property for just compensation. The fifth amend-

ment’s requirement of just compensation for takings defines

the government’s lawful powers of eminent domain; it does

not embody a remedial principle applicable in equity that

monetary damages are fully adequate to redress injuries

to real property.

The Court’s opinion in Larson amply recognizes this

principle.

There are limits, of course [to the reluctance of courts to

invoke compulsive powers to restrain the Government

55a

Sheet & Tube Co. v. Sawyer, the Court declined to

accept the government’s contention that injunctive

relief was unnecessary since a damages remedy was

available through the Tucker Act; instead, the Court

held that even if such a remedy were available,

“seizure and governmental operation of these going

businesses were bound to result in many present and

future damages of such nature as to be difficult, if

not incapable, of measurement.” *” Other decisions

since Larson assume either explicitly or implicitly

that the adequacy of the Tucker Act remedy is an

issue; and that the gross inadequacy of money dam-

ages could justify injunctive relief when money alone

would not constitute just compensation.”

from affecting disputed property]. Under our constitu-

tional system, certain rights are protected against gov-

ernmental action and, if such rights are infringed by the

actions of officers of the Government, it ts proper that

the courts have the power to grant relief against those

actions. But in the absence of a claim of constitutional

limitation, the necessity of permitting the Government

to carry out its functions unhampered by direct judicial

intervention outweighs the possible disadvantage to the

citizen in being relegated to the recovery of money dam-

ages after the event.

337 U.S. at 704 (emphasis added). Thus, a statute may be

challenged as unconstitutional, and an injunction issued, when

the compensation available under the Tucker Act would not

rise to the level of just compensation required by the fifth

amendment. Such a claim would fall within Larson’s excep-

tion permitting injunctive relief if “the exercise fof statutory

powers] in the particular case . . . [is] constitutionally void.”

Id. at 702.

117 343 U.S. at 585.

118 See Ruckelshaus v. Monsanto County, 104 S. Ct. 2862

(1984) (“[A]n adequate remedy for the taking exists under

the Tucker Act”) ; Dugan v. Rank, 372 U.S. 609, 623-24 (1963)

56a

From the earliest times, courts in equity have con-

sidered an injury to real property to be irremediable

at law."® The uniqueness of land typically makes

damages an inadequate remedy. Equity will not hesi-

tate to enjoin an unconstitutional taking and even a

repeated trespass or other nuisance to land.” In the

instant case, the plaintiffs have alleged that the oc-

cupied land is the only available land in Honduras

capable of sustaining their cattle ranch and other

business operations, due to the topography and trans-

portation routes of Honduras.’ Ramirez’s claimed

loss of a unique parcel of land may prove to be im-

measurable in monetary terms and irremediable at

law. If the gap between such an injury and the mone-

tary compensation available through a Tucker Act

remedy is so great that an unconscionable injustice

would be worked, effectively denying just compensa-

tion, then injunctive relief can be appropriate.

(rejecting arguments that damages were inadequate since

they could not be reasonably ascertained) ; Malone v. Bowdoin,

369 U.S. 648, 648 (1962) (not reaching the issue, since the

plaintiff failed to assert that just compensation was unavail-

able) ; cf. Larson v. Domestic & Foreign Corp., 337 U.S. 682

(adequacy of Tucker Act remedy for asserted wrongful re-

tention of coal not questioned, since fungible personalty not

ordinarily the subject of extraordinary injunctive relief).

119 See, e.g., Belusko v. Phillips Petroleum Co., 198 F. Supp.

140 (S.D. Ill. 1961), af’d, 308 F.2d 882 (7th Cir. 1962),

cert. denied, 372 U.S. 980 (1963).

120 See Youngstown Sheet & Tube Co. v. Sawyer, 348 U.S.

579 (1952) ; Erhardt v. Boaro, 118 U.S. 587 (1885); Lucy

Webb Hayes Nat'l Training School for Deaconesses & Mis-

sionaries v. Geoghegan, 281 F. Supp. 116 (D.D.C. 1967); 6A

J. SACKMAN, NICHOLS’ THE LAW OF EMINENT DOMAIN § 28.38

(3d ed. 1981).

121 See supra note 15.

57a

Moreover, the loss of Ramirez’s business operations

in Honduras, if proved, may fall within another cate-

gory of injuries that equity considers irremediable at

law. In Semmes Motor Ine. v. Ford Motor Co., Judge

Friendly granted equitable relief for the threatened

loss of an individual’s company, noting that the owner

wanted to run his business, not to retire on a damages

award. Ramirez alleges that he has devoted more

than 20 years of his life to building and personally

managing his business in Honduras. The district

court might find that the loss of a life’s work would

not be adequately remediable at law.

Finally, the increased risk to plaintiff Ramirez’s

personal safety allegedly due to defendants’ unconsti-

tutional conduct may not be remediable by damages.

Life-threatening conditions and loss of personal se-

curity created by constitutional violations are not re-

dressed by payments of money. Depending upon the

facts, the district court might properly find that any

remedy at law would: be inadequate to correct the

constitutional violations alleged here.

We find it difficult to believe that a United States

citizen would be banished to a damages remedy in the

Claims Court if he were the victim of a similar ongoing

violation of his constitutional rights within the United

States. The contention that the plaintiffs really be-

long in the Claims Court is an empty argument.

Ramirez has a right to be in the district court, where

he has a right to ask for injunctive and declaratory

relief.

122 499 F.2d 1197 (2d Cir. 1980) (Judge Friendly found

that monetary relief would not be adequate and that injunc-

tive relief was proper to prevent the loss of a 20-year-old

business managed by the owners).

58a

2. Balancing the Equities and Prudential

Considerations

Not only could the district court conclude that

monetary relief would be inadequate under facts con-

sistent with the complaint, but the court might also

find that a balancing of the equities favors relief.

Plaintiffs’ complaint states claims for which equitable

relief cannot be declared improper on a balancing of

the equities and prudential considerations prior to any

factfinding by the district court. Although evaluation

of the propriety of remedies must await factual devel-

opment of the case on the merits,” the plaintiffs’

complaint and the related declarations do not support

a conclusion that injunctive or declaratory relief are

foreclosed.

If the plaintiffs prevailed on the merits of their

claims, the equities favoring relief might be quite

powerful. Plaintiff Ramirez claims an unconstitu-

tional intrusion onto his private property by military

officials of the United States, which threatens the loss

of his land, his 20-year-old investment, his labors, and

even his life. Plaintiffs’ case is not a routine trespass

action or a piddling boundary dispute; it is a claim

for relief from a deprivation of land, business, and

personal safety caused by an unconstitutional invasion

by officials of the United States. The federal Judi-

ciary has not hesitated to grant equitable relief to

individuals suffering similar injury both at home and

abroad due to constitutional violations by government

officials.’**

123 See Powell v. McCormack, 395 U.S. 486, 550 (1969).

124 See, e.g., Kent v. Dulles, 357 U.S. 116, 129-30 (1958) ;

Reid v. Covert, 354 U.S. 1 (1957) ; Youngstown Sheet & Tube ©

Co. v. Sawyer, 343 U.S. 579 (1952). While Judge Scalia’s dis-

59a

a. Location of the Land

The location of the plaintiffs land in a foreign coun-

try does not prevent the district court from granting

relief. Courts often properly issue equitable decrees

involving property outside the jurisdiction of the

court.’ Where, as here, the court adjudicating the

controversy has personal jurisdiction over the defend-

ants, the extraterritorial nature of the property in-

volved in the litigation is no bar to equitable relief.

Under such circumstances, courts in equity do not

hesitate to order the defendants, who are present be-

fore the court, to do or refrain from doing something

directly involving foreign property. As the Supreme

Court stated in Phelps v. McDonald:

sent relies principally on trying to characterize this case as a

land title dispute, to which Honduran law would apply to Hon-

duran land, at one point he does venture to go further to con-

front the alleged facts that the actions of United States officials

have not only been property taking but property destroying

and life threatening, Judge Scalia’s answer is: “As for the

risk to plaintiff Ramirez’s security: That is not a consequence

of the taking, but of the plaintiff’s refusal to acquiesce in it.”

(Dissenting Opinion of Scalia, J., at 29). If this is a fair

characterization of the government’s position, then the govern-

ment’s argument boils down to: “How dare the citizen’s nose

get in the way of the governmental fist?” As long as the

plaintiffs’ complaint plausibly alleges unconstitutional or un-

authorized actions by governmental defendants, we think it

ludricrous to suggest that the threat to plaintiff Ramirez’s

security is of his own making because he insists upon asserting

his United States constitutional rights—against governmental

actions which have never sought nor received the imprimatur

of any court, anywhere.

12511 C. WRIGHT & A. MILLER, FEDERAL PRACTICE & PRO-

CEDURE §§ 2942-45 (1973). See E. Messner, The Jurisdiction

of a Court of Equity Over Persons to Compel the Doing of

Acts, 14 MINN. L. REV. 494, 500 (1930).

60a

Where the necessary parties are before a court of

equity, it is immaterial] that the res of the con-

troversy, whether it be real or personal property,

is beyond the territorial jurisdiction of the tribu-

nal. It has the power to compel the defendant to

do all things necessary, according to the lex loci

rei sitae, which he could do voluntarily, to give

full effect to the decree against him.

Without regard to the situation of the subject-

matter, such courts consider the equities between

the parties, and decree in personam ... .™

The local action rule of common law as applied to

complaints seeking money damages for trespass to

land has no bearing on this case.

Second, courts are specially willing to grant equi-

table relief involving property outside the court’s jur-

isdiction when the law of the court’s jurisdiction

governs the controversy instead of the law of the

situs." Here the plaintiffs’ causes of action against

the United States officials named as defendants arise

under United States laws and the United States Con-

stitution, As such, federal law provides the rules of

decision for plaintiffs’ claim. If Honduran law be-

comes relevant to the dispute, it cannot operate of its

own force in this controversy but must apply only to

the extent the federal law adopts it or deems it rele-

vant. The occasional deference in equity to the courts

of the situs state in actions involving trespass brought

under the situs state’s law is inapposite here.

Third, courts will not hesitate to issue equitable

decrees involving foreign land when there is no com-

pelling reason to require that relief be sought in the

12899 U.S. (9 Otto) 298, 8308 (1879) (emphasis added).

127 See sources cited supra note 125.

6la

territory of the situs property.” It is difficult to con-

ceive of any plausible reason why the United States

plaintiffs should be forced to bring their claims in the

foreign courts of Honduras. Plaintiff Ramirez, a

United States citizen, has alleged violations of his

constitutional rights by officers of the United States.

A requirement that such a constitutional claim be

brought in Honduran courts would be a gross distor-

tion of the doctrine of equitable discretion.

b. Honduran Law

It cannot be concluded on the basis of the plaintiffs’

complaint that equitable relief would impugn foreign

law or determine the legality of the actions, if any, of

the Honduran military under Honduran law. An

equitable decree would not challenge the sovereignty

of Honduras because it would only adjudicate the

rights of plaintiffs under United States law vis-a-vis

the United States officials named as defendants.

Plaintiffs do not request relief against any Honduran

actors. Furthermore, according to the plaintiffs’

pleadings, there has not been any act by the Honduran

state that could be impugned by an equitable decree,

since Honduras has not claimed ownership rights to

Ramirez’s ranch. In addition, the extent to which

Honduran military forces are participating in the

military training exercises is a controverted fact and

cannot be considered in determining whether equi-

table relief is barred and dismissal is proper at this

time. Even if the plaintiffs’ set of facts could be

interpreted to imply at least some limited degree of

complicity by Honduran military officials in the al-

legedly unconstitutional seziure of plaintiffs’ ranch,

the mere fact of the defendants’ commingling United

128 Td.

62a

States with foreign troops or the acquiescence of for-

eign military officers cannot deprive this court of its

authority to correct constitutional violations by means

of properly tailored equitable relief against United

States officers. Any contention to the contrary is sim-

ply not consistent with the doctrine of equitable dis-

cretion.’”

c. Separation of Powers

It is not necessary to linger over the long line of

cases that permit judicial relief for unlawful or un-

constitutional action by officials of the Executive

Branch of the government, including relief against

unlawful actions taken in the context of foreign and

military affairs." As Chief Justice Taney stated in

Mitchell v. Harmony, the foreign affairs context of

Executive action cannot shield unlawful conduct from

judicial inquiry. “[A United States officer’s] distance

from home and the duties in which he is engaged can-

not enlarge his power over property of a citizen, nor

give to him, in that respect, any authority which he

would « ', under similar circumstances, possess at

home.” ** Those words of the Supreme Court are ap-

plicable—squarely, without distinction or modifica-

tion—to plaintiff Ramirez’s case here.

That unlawful and unauthorized military activity

is remediable by equitable relief has been reaffirmed

12° See, e.g., United States v. Caltex (Philippines), Inc., 344

U.S. 149 (1952) (adjudicating a claim that United States mili-

tary officials unlawfully destroyed private property in the

Philippines) .

1 See Reid v. Covert, 354 U.S. 1 (1957); Youngstown

Sheet & Tube Co. v. Sawyer, 348 U.S. 579 (1952) ; Duncan

v. Kahanamoku, 827 U.S. 304 (1946).

54 U.S. (13 How.) 115, 183 (1852) (emphasis added).

63a

by the Court on numerous occasions. In Gilligan v.

Morgan the Court noted that separation of powers

concerns cannot prevent military officers from being

accountable for specific unlawful conduct “whether

by way of damages or injunctive relief.” ‘* And in

upholding an injunction against the Brigadier Gen-

eral of the Texas National Guard for unlawfui inter-

ference with private property, the Court stated:

Whether or not the injured party is entitled to

an injunction will depend upon equitable prin-

ciples: upon the nature of the right invaded and

the adequacy of the remedy at law. If the court

finds that the limits of executive authority have

been transgressed, and that in view of the char-

acter of the injury equitable relief by injunction

is essential in order to afford the protection to

which the injured party is entitled, it can not be

said that the judicial power is fettered because

the injury is attributable to a military order.™

While Laird v. Tatum counsels against continuous

judicial monitoring of Executive policymaking, the

Court there stated that it is the role of the courts

within the constitutional scheme to adjudicate \and

remedy claims of actual injury resulting from specific,

unlawful Executive action.“ Such is the nature of

the claim presented here."”

182 413 U.S. 1, 11-12 (1978).

188 Sterling v. Constantin, 287 U.S. 378, 403 (1932) (fed-

eralism concerns and the context of executive action do not

bar relief).

184 408 U.S. 1, 15-16 (1972).

185 Tt is instructive to compare Judge Scalia’s doctrine of

equitable discretion with that suggested in the Youngstown

64a

Furthermore, the plaintiffs’ set of facts do not show

that the Executive’s conduct of foreign affairs would

be impaired by an equitable decree that required the

defendants to abide by United States constitutional

and statutory requirements. Plaintiffs do not seek to

prohibit the Regional Military Training Center from

operating in Honduras. They merely ask the federal

court to prevent the United States defendants from

case. In Youngstown the Supreme Court permitted the plain-

tiffs to attempt to establish an equitable basis for the requested

injunction, primarily through a showing that money damages,

if available, wouid not compensate for the injury. 343 U.S. at

584-85; Id. at 595-96 (Frankfurter, J., concurring). None of

the Justices who found the seizure unconstitutional sug-

gested that an inadequate damage remedy could substitute

for injunctive relief if constitutional authority for the taking

was not extant. In this case, however, Judge Scalia, in dissent,

would deny the plaintiffs even an opportunity to show that

damages could not fully compensate for their allleged loss;

he merely assumes, without any factual foundation whatso-

ever, that any loss which might be proved is compensable.

Apparently this does not trouble the dissent because it

asserts that money damages are always sufficient to remedy

an unconstitutional taking, and that, therefore, an “injunc-

tion is not available to prevent a taking by the United States”

—presumably even one which the United States has no consti-

tutional or statutory authority to make. Dissenting Opinion

of Scalia, J., at 29 (discussing Larson).

If this were the law, the Supreme Court had nothing to de-

cide in Youngstown, since the authority of the President

to make the seizure would have been an irrelevant issue, the

only question remaining being the extent of money damages

to be paid for the taking. Preferring to ignore what it can-

not overrule, the dissent thus takes a position even more ex-

treme than that propounded by the dissenters in Youngstown

who were willing to assume that the Government “was not

immune from judicial restraint and that the plaintiffs are

entitled to equitable relief if we find that the ... [taking] is

unconstitutional.” 348 U.S. at 678 (Vinson, C.J., dissenting) .

65a

running military training operations on their prop-

erty, which has not been lawfully expropriated. Care-

fully tailored equitable relief might correct the unlaw-

ful condition without challenging the United States’

relations with any Central American country or its

military policies in the region. Separation of powers

considerations do not fell the plaintiffs’ complaint.

d. Compliance and Monitoring

The suggestion that the enforcement of any equi-

table decree would present insurmountable problems

of compliance and judicial monitoring rests entirely

on wild speculation. It must be presumed that the de-

fendants, all officials of the United States government

present in Washington, D.C., will obey an order of the

district court. Furthermore, there is simply no

factual basis in the plaintiffs’ complaint for conclud-

ing that an equitable decree would involve this court

in numerous or even any monitoring problems. Courts

do not monitor compliance with decrees by personal,

on-site inspections. Even if the alleged violations

were occurring in the corridors of the Pentagon in-

stead of in Honduras, the district court would not

monitor its decree by personally inspecting the af-

fected area. If a dispute arises over compliance with

any remedial decree, the parties can introduce evi-

dence in the district court to establish whether a vio-

lation in fact has occurred. This is the only method

to determine a violation of a decree of which we are

aware; it is a method universally used no matter

where any acts occur or property is located. It is

absurd to suggest on the basis of the plaintiffs’ com-

plaint that judicial monitoring of relief would be so

66a

problematic that adjudication of the plaintiffs’ con-

stitutional claims is barred.”

136 Judge Scalia epitomizes the weakness of the govern-

ment’s position when he sums up his dissenting opinion argu-

ment against equitable relief:

[1] “Any system that would countenance judicial interfer-

ence in military operations abroad’”—are the United States

military when they operate abroad never subject to the courts

at the behest of United States citizens?

[2] “for a reason that simultaneously impugns the integrity

and fairness of a friendly nation”—a point never raised

directly or by implication by the plaintiffs here. No accusa-

tion has been levied nor redress asked in U.S. courts against

the Honduran government or any official thereof. Assuming

that a seizure has occurred, even the Honduran’s government’s

failure, to date, to make a lawful expropriation and pay due

compensation to the plaintiffs could be easily explained as the

Honduran government’s viewing this whole operation as a

United States affair with the United States obligated to com-

pensate its own citizen.

[3] “at the instance of a plaintiff who has not sought tradi-

tional judicial relief in the country where the real estate in

question is located”—again, no complaint has been levied by

the plaintiff against the Honduran government or any official ;

further, this is not a piddling land title dispute; and finally,

regarding a dispute between a United States citizen and his

own government, “traditional judicial relief” has never been

in Honduran courts.

[4] “and who in any event has a claim for money damages

in the courts of this country”—existence of monetary damages,

if they do exist in this case, cannot bar equitable relief, as

Judges Bork and Scalia have so recently stated. Dronenburg

v. Zech, No. 82-2304 slip op. (D.C. Cir. 17 Aug. 1984).

In his elaboration of these points Judge Scalia makes much

of the third, saying: “A further obstacle to issuance [of an

injunction] is the fact that they have made no effort .. . to

obtain protection in the ordinary quarter from the trespass

of which they complain—the courts of Honduras.” Dissent-

ing Opinion of Scalia, J., at 27-28. This emphasizes the evasive

67a

B. Declaratory Relief

The plaintiffs have also succeeded in stating a claim

for declaratory relief sufficient to withstand dismissal

under Rule 12(b)(6). The express purpose of the

Declaratory Judgment Act was to create a milder,

less coercive form of relief than the injunctive

remedy.*** Although in some contexts, a declaratory

judgment may have the same adverse effect on the de-

fendants and the public as injunctive relief,’* in most

situations a declaratory judgment is less intrusive

than a specific injunctive order.’ Such is the case

here. In assessing the propriety of declaratory relief,

the equities in favor of granting the plaintiffs relief

for constitutional violations remain equally strong,

while any prudential considerations that may detract

from the propriety of injunctive relief on the plain-

tiffs’ asserted facts are even weaker.

A declaration of the plaintiffs’ rights could provide

the defendants with options for compliance that a

specific injunctive order might not. If the district

court declared that the defendants’ occupation and

nature of the defense relied on by the government brief and

argument, which Judge Scalia supports. “The trespass of

which they complain” comes from the United States Army.

Relief from this particular trespass, and these particular tres-

passers, would not ordinarily be found in “the courts of

Honduras.”

18728 U.S.C. § 2201 (1982); E. BORCHARD, DECLARATORY

JUDGMENTS 3-15 (2d ed. 1941) ; 10A C. WRIGHT & A. MILLER,

FEDERAL PRACTICE & PROCEDURE § 2751 (2d ed. 1983); See

Developments in the Law—Declaratory Judgments, 62 HARV.

L. REv. 787, 787-90, 874 (1949).

138 See Samuels v. Mackell, 401 U.S. 66, 69-74 (1971) (where

state criminal prosecution had begun prior to federal suit,

injunctive and declaratory relief had same effect and must be

judged by the same standards).

139 See sources cited supra note 187.

68a

use of the plaintiffs’ property is unconstitutional, the

defendants might, depending on the violation and the

order, chocse to seek congressional authorization for

their action, or to cause a lawful expropriation of the

plaintiffs’ property, or to restrict activities to publicly

held land, or to settle with the plaintiffs, or to take

other appropriate action. That one of the defendants’

options might involve compensation to the plaintiffs

does not deprive the district court of jurisdiction to

declare the rights of the parties.

Furthermore, even if a declaration by the district

court could later be used as the basis for monetary

relief, that possibility does not deprive the district

court of authority to grant the requested relief.”

Declaratory relief is improper only if the plaintiffs’.

action is a mere pretext to avoid the exclusive juris-

diction of the Claims Court." In Megapulse, Inc. v.

Lewis this court held that declaratory relief may be

granted in the district court for unlawful government

activities regardless of whether damages might also

be available in the Claims Court.” Plaintiffs’ com-

plaint states a claim within the jurisdiction of the

district court that is neither insubstantial nor frivo-

lous. As such the district court must take jurisdiction

of the claim.

C. Relief for the Due Process Claims

Furthermore, it cannot now be concluded that relief

would be barred in the district court for any proved

140 See Laguna Hermosa Corp. v. Martin, 643 F.2d 1376,

1379 (9th Cir. 1981) (district court does not lose jurisdiction

simply because its declaratory judgment may later become

the basis for a monetary judgment).

141 See Amalgamated Sugar Co. v. Bergland, 664 F.2d 818,

823-24 (10th Cir. 1981).

142 672 F.2d 959, 966-69 (D.C. Cir. 1982).

69a

violation of the plaintiffs’ rights to due process of law.

The nature of an appropriate remedy would, of

course, turn on the practicabilities of the case. It

might be reasonable, depending on the facts, to order

the defendants to apprise the plaintiffs of their inten-

tions, as the plaintiffs claim not to know from day to

day what aciivities will take place on their land. Sec-

ondly, the peculiarities of the case might entitle the

plaintiffs to a hearing with United States officials at

which the plaintiffs could state in an effective way

their objections to the occupation and use of their

property. A determination of the appropriate relief

for the plaintiffs’ due process claim must be made

initially by the district court.

VI. AcT oF STATE

We turn now to the last of the defendants’ argu-

ments. After prompting by an order of the original

panel of this court,’* the defendants contend that the

district court’s judgment should be affirmed on the

ground that the act of state doctrine compels dis-

missal of the plaintiffs’ complaint. Although the

plaintiffs’ complaint challenges only the actions of

United States officials and seeks relief only against

the named United States defendants, the defendants

contend that two resolutions of the Honduran govern-

ment are acts of state which bar relief for the plain-

tiffs’ constitutional claims. Even accepting the verac-

ity of these resolutions, however, they do little more

than suggest that Honduras might expropriate the

148 On 28 September 1983 a panel of this court, sua sponte,

requested supplemental briefs by the parties on the applica-

bility of act of state doctrine to the facts of this case—an issue

which had not been raised previously by the parties or the

district court.

70a

plaintiffs’ property at some future date. These two

pieces of paper do not deprive the plaintiffs of the

opportunity to prove facts in support of their stated

claims.

The act of state doctrine prevents judicial relief for

certain claims that would require the court to pass on

the validity of acts of a foreign state. The traditional

formulation of the act of state doctrine is in Under-

hill v. Hernandez, decided in 1897:

Every sovereign State is bound to respect the

independence of every other sovereign State, and

the courts of one country will not sit in judgment

on the acts of the government of another done

within its own territory. Redress of grievances

by reason of such acts must be obtained through

the means open to be availed of by sovereign

powers as between themselves."**

In Banco Nacional de Cuba v. Sabbatino the Supreme

Court reaffirmed the act of state doctrine by refusing

to probe the validity of a foreign act. Sabbatino

held that full legal effect must be given to Cuba’s

expropriation of Cuban sugar companies owned by

United States nationals in a case involving a dispute

over the confiscated sugar between a Cuban bank and

a United States commodity broker. Separation of

powers concerns are the underpinnings of the act of

state doctrine; the defense bars adjudication when it

appears that relief “would interfere with delicate for-

eign relations conducted by the political branches.” *°

144 168 U.S. 250, 252 (1897).

145 376 U.S. 398 (1964).

146 See First Nat’l City Bank v. Banco Nacional de Cuba,

406 U.S. 759, 775 (1972) (Powell, J. concurring in the

judgment).

7la

Since Sabbatino, the scope of the act of state doc-

trine has been narrowed by statute and judicial fiat.

The Second Hickenlooper Amendment statutorily re-

versed the holding of Sabbatino by prohibiting the

application of the act of state defense to foreign con-

fiscations in violation of international law." In Al-

fred Dunhill of London, Ine. v. Republic of Cuba™

the Supreme Court held that the “interventors” (those

named to possess and occupy the seized businesses)

had failed to prove that their refusal to repay funds

constituted an act of state. Four of the Justices

(Burger, C.J. and White, Powell, and Rehnquist,

JJ.) were also of the opinion that the act of state

doctrine does not apply to purely commercial acts of

a foreign state.

The act of state defense requires the court to ana-

lyze the nature of the plaintiff’s claims and the facts

of the foreign act and to determine whether judicial

abstention is required in order to avoid interference

with the political branches’ conduct of foreign rela-

tions.” A successful act of state defense must rest on

a factual showing that an act of state has occurred,

coupled with a legal showing that no bar to the doc-

trine is applicable under the factual circumstances.

We consider each in turn.

A. The Factual Basis for Applying the Act of State

Doctrine on this Appeal

We cannot consider the act of state doctrine in a

factual or procedural vacuum; it must here, as al-

147 22 U.S.C. § 2870(e) (2) (1982).

148 425 U.S. 682 (1976).

149 See First Nat’l City Bank v. Banco Nacional de Cuba,

406 U.S. 759, 775-76 (1972) (Powell, J., concurring in the

judgment).

72a

ways, be applied to the facts in the procedural posture

of the case. When the defense is raised in connection

with a motion to dismiss under Rule 12(b) (6), the

court must be satisfied that there is no set of facts

favorable to the plaintiffs and suggested by the com-

plaint which could fail to establish the occurrence of

an act of state. To the extent crucial facts pertaining

to the defense are disputed, or not fully developed in

a complete record, the reviewing court must be cer-

tain that it does not leap to conclusions arguable

under the unelaborated pleadings but which could be

refuted through the ordinary process of discovery and

factfinding in the district court. To do otherwise is to

deny the claimant an opportunity to prove his case.

Interpreting the resolutions in light of the plain-

tiffs’ set of facts, it cannot be said without qualifica-

tion that the Honduran government has exercised an

act of state which could bar relief. Certainly, the two

Honduran resolutions submitted to this court do not

fell the plaintiffs’ claims prior to factfinding by the

district court. The first resolution submitted by the

defendants has nothing to do with expropriation of

the plaintiffs’ land, and the second is merely the first

step in a process which may or may not lead to ex-

propriation by the Honduran government. They were

issued many months apart. They are totally

unrelated.

The resolution of the National Congress of Hon-

duras on 20 June 1983 states that whereas the Gov-

ernment of the Republic of Honduras “did establish

a Regional Center for military training” in the De-

partment of Colon and whereas “the operation of the

mentioned Regional Center will require the technical

services of foreign military instructors,” the National

Congress decrees “[t]o authorize the admission of

73a

military instructors and students, coming from

friendly countries.” *° It does not specifically mention

the particular site of the RMTC or the plaintiffs’

property. The plaintiffs contend that the specific site

for the RMTC was neither presented to nor ratified

by the Honduran National Congress and that the

resolution cannot be read as a Honduran claim of

ownership to the plaintiffs’ ranch. The plaintiffs con-

tend that the first resolution is simply what it pur-

ports to be: “bienvenido,” a friendly welcome admit-

ting United States troops into Honduras to train

soldiers,

The second resolution submitted by the defendants

identifies the plaintiffs’ land. The document is a

Presidential decree signed by the Secretary of State

for National Defense and Public Security, dated 4

November 1983. It states that whereas the Chief of

the Armed Forces of Honduras has requested that an

order be issued for expropriation of certain property

in the Colon Department on which the RMTC is oper-

ating, that therefore, the President of the Republic

decrees that the property therein described “shall be

expropriated under the right of eminent domain on

account of public exigency and for the public good,”

and that “[e]stablished legal procedures shall

apply.” 151

The plaintiffs argue that this resolution does not

constitute an expropriation of plaintiffs’ property

under Honduran law. Plaintiffs do not question the

validity of the resolution under Honduran or any

other law; they simply argue that the resolution does

not purport to assert Honduran governmental title to

15° Brief of Appellees, Addendum A.

151 Brief of Appellees, Addendum C at c-5 to c-8.

T4a

the plaintiffs’ property. Plaintiffs contend that, as a

matter of Honduran law, the resolution of 4 Novem-

ber merely initiates a process which may or may not

result in expropriation of the plaintiffs’ property in

Honduras. In support of this contention, plaintiffs

placed in the record in the district court the opinions

of several Honduran legal experts stating that an

expropriation by the Honduran government is con-

summated only after certain legal proceedings have

been completed, which plaintiffs claim have not yet

taken place.” These include the payment of compen-

sation prior to the expropriation. However, no value

has been fixed and not one lempira has been paid or

even appropriated. Plaintiffs claim that expropriation

by the Honduran government is in fact a remote pos-

sibility; Honduras reportedly is reluctant to take the

final steps of expropriation because factions in the

Honduran military are skeptical about the value to

Honduras of a training center used by the United

States to train Salvadoran soldiers.” According to

the plaintiffs, Honduras has not asserted a claim of

ownership or possession of the plaintiffs’ property and

it is highly uncertain whether such a claim will ever

be made.*™*

82 See A. at 98-113.

188 Reply Brief of Appellants at 8 n.2.

1% We disagree with the dissent’s suggestion that one or

more steps in the uncompleted process of expropriation must

be accepted as evidence of an accomplished act of state. It is

generally recognized that a conclusive foreign act must be

completed before the doctrine is invoked. The doctrine has

never been applied when it was uncertain whether a foreign

expropriation had been effected. See, e.g., RESTATEMENT

(SECOND) OF THE FOREIGN RELATIONS LAW OF THE UNITED

STATES § 48 comment a (1965) (“[A)]ct of state doctrine...

75a

On the basis of the plaintiffs’ facts and the two

resolutions submitted to this court, we cannot say

that Honduras has expropriated or otherwise asserted

a claim of ownership to the plaintiffs’ property. A

determination of whether the Honduran government,

as a factual matter, has acted to take the plaintiffs’

property must be made in the first instance by the

district court on the basis of evidence submitted by

the parties.” Dismissal of the plaintiffs’ complaint

on the ground that the act of state defense bars relief

cannot be justified on the record at this time.

Sweeping aside the uncertain and unelaborated

state of the record on many crucial factual issues,

our dissenting colleague Judge Starr would reach out

and find whatever facts are necessary to create an act

of state sufficient to invoke the doctrine and avoid

any further review. This uncharacteristic disregard

for the ordinary limitations of appellate adjudication

is completely uncalled for under the circumstances.

The act of state defense was not raised by any of

the parties before the district court. The critical is-

sues of fact which the dissent raises and resolves—

the current status of the Honduran government’s un-

completed expropriatory gestures, and the extent of

Honduran troops’ occupation of the ranch—were

becomes applicable only when and if the act has been fully

executed.” (emphasis added)). Until it is shown that an

officially sanctioned physical seizure has in fact occurred, or

that the legal processes of expropriation have been terminated

by the foreign government, partial governmental action does

not necessarily result in an act of state.

185 See Compania Espanola de Navegacion Maritima v.

Navemar, 303 U.S. 68 (1938) (district court properly took

evidence on whether foreign government took possession of a

merchant vessel by an act of dominion or control).

76a

neither put in issue by the parties nor considered by

the district court. There was absolutely no factual

development on these issues before the case came to

this court. This appeal is not the proper forum to

find the facts necessary to settle the controversy.

The theory relied upon by the dissent to find these

purported facts is the automatic conversion of the dis-

trict court’s order granting the defendants’ motion to

dismiss under Rule 12(b)(6) into a grant of sum-

mary judgment in favor of the defendants. Although

nowhere expressly cited, the justification for this con-

version is apparently grounded in Rule 12(b):

If, on a motion . . . to dismiss for failure of the

pleading to state a claim upon which relief can be

granted, matters outside the pleading are pre-

sented to and not excluded by the court, the mo-

tion shall be treated as one for summary judg-

ment and disposed of as provided in Rule 56, and

all parties shall be given reasonable opportunity

to present all material made pertinent to such a

motion by Rule 56.”

There are numerous reasons why this rules does not

support the dissenting suggestion that summary judg-

ment be directed on the act of state issue. The con-

version contemplated is one primarily intended to

occur at the trial level, not on appeal. The quoted

language is an amendment to the Federal Rules of

Civil Procedure expressly authorizing the previous

practice by trial courts of considering extra-pleading

matters when ruling on 12(b)(6) motions. It pro-

vides a conceptual framework for the trial court to

resolve undisputed facts in conjunction with motions

18¢ Fed. R. Civ. P.12(b) (final sentence).

77a

to dismiss under Rule 12(b) (6), thus streamiining

pretrial proceedings.’

The procedurai safeguards in the rule also make it

clear that the conversion is intended to operate chiefly

at the trial level: all parties must be given an oppor-

tunity to present all material made pertinent to the

converted motion. It is the district court which takes

the motion under consideration; it is the district court

which assures that the parties have been notified of

the issue at stake; and it is the district court which

must guarantee that the parties have a chance to

respond fully.”

A few decisions recognize the conversion for the

first time on appeal, but these cases usually affirm the

trial court’s consideration of the issue after the trial

court admittedly relied on extra-pleading filings with-

out identifying its disposition as a summary judg-

ment grounded in Rule 12(b).*” In contrast, what

the dissent advocates is an appellate conversion of the

12(b) (6) order on one issue (the political question

doctrine) into a de novo ruling on an entirely new

issue never raised by the parties or the trial court

18T See generally 5 C. WRIGHT & A. MILLER, FEDERAL PRAC-

TICE & PROCEDURE § 1366 (1969).

‘8 Local rules usually recognize the proper role played by

the District Court. For example, United States District Court

Rules, D.C., provide that on each motion for summary judg-

ment, the movant must file a statement of the material facts

and the opposing party shall then file “a concise ‘statement of

genuine issues’ setting forth all material facts as to which it

is contended there exists a genuine issue necessary to be

litigated.” Rule 1-9(h). Plaintiffs were not afforded these

procedural rights.

188 F.g., Irons v. Schuyler, 465 F.2d 608 (D.C. Cir.), cert.

denied, 409 U.S. 1076 (1972).

78a

(the act of state doctrine). Rule 12(b) does not ex-

pressly authorize such a conversion; it contemplates

that the issue decided pursuant to Rule 56 will be the

same one submitted to the court for disposition under

Rule 12(b) (6). There is no language in the rule sug-

gesting that, once a trial court may have ruled on a

12(b) (6) motion on one issue without rejecting non-

pleading materials, an appellate court is free to con-

sider other entirely unrelated factual and legal issues

and find the necessary facts under the guise of re-

viewing a motion for summary judgment.

Ordinarily, in reviewing motions for summary

judgment, the appellate court considers only those

matters presented to the district court, disregarding

additional allegations raised for the first time on ap-

peal.** While certain cases may suggest that an ap-

pellate court can consider new issues on a converted

motion for summary judgment, this has never been

permitted when it would contravene the standards set

up in Rule 12(b). The Advisory Notes warn that

courts must “avoid taking a party by surprise

through the conversion of the [12(b)(6)] motion

into a motion for summary judgment.” ** To this

end, the rule requires courts to give “all parties [a]

reasonable opportunity to present all material made

pertinent to such a motion.” ** When the parties

have not even been notified that an issue will be con-

sidered by the court at the only point when they may

submit factual affidavits—the trial level—then there

160 Tarpiey v. Greene, 684 F.2d 1, 7 (D.C. Cir. 1982) ; Frank

C. Bailey Enter’s v. Cargill, Inc., 582 F.2d 338, 334 (5th Cir.

1978).

161 Fed. R. Civ. P. 12(b), 28 U.S.C.A.

162 Jd.

79a

is every likelihood that they have been denied the full

opportunity to present the applicable facts. Unless

the new issue uncovered by the appellate court was

one which was clearly framed by the proceedings be-

low so that the parties had a legitimate chance to

submit all relevant materials and argue their impli-

cations, it is clearly unjust for the appellate court to

direct the issuance of summary judgment on a new

issue raised sua sponte on appeal.’

The standard is a high one. In Fountain v. Fil-

son ‘* the Supreme Court previously admonished this

court when it attempted to raise and resolve an er-

tirely new issue by summary judgment on appeal.

Although this court ruled that the issue was extant

163 See Sadlowski v. United Steelworkers, 645 F.2d 1114,

1120 (D.C. Cir. 1981), rev’d on other g- ounds, 457 U.S. 102

(1982) ; Blackhawk Heating & Plumbing Co. v. Driver, 483

F.2d 1137 (D.C. Cir. 1970) ; Ithaca College v. NLRB, 623 F.2d

224, 229 (2d Cir.), cert. denied, 449 U.S. 975 (1980); E.C.

Ernst, Inc. v. General Motors Corp., 537 F.2d 105, 109 (5th

Cir. 1976). The cases cited in Judge Starr’s dissent permitted

a conversion only when the record and the issues as framed by

the parties squarely raised the dispositive issue. See Brookens

v. United States, 627 F.2d 494, 497-99 (D.C. Cir. 1980) (non-

prevailing party had challenged the defendant at the trial

court level to prove an admittedly dispositive fact, and subse-

quent affidavits responded to that challenge) ; Gager v. “Bob

Seidel,” 300 F.2d 727, 731 (D.C. Cir.), cert. denied, 370 U.S.

959 (1962) (complaint put the scope of defendants’ immunity

to suit precisely in issue). The suggestion that the court of

appeals may indiscriminately “treat the matter as one involv-

ing a grant of summary judgment, regardless of the charac-

terization by the district court of its disposition of the matter”

(Dissenting Opinion of Starr, J., at 2 n.2) has never been

the law in this Circuit, and certainly is not after our decision

today.

164 336 U.S. 681 (1949).

80a

on the record and pleadings, the Supreme Court re-

versed, since there was no opportunity for the oppos-

ing party to contest the applicability of the facts to

the legal issues relied upon.

This litigation is in the same posture. The act of

state defense—now said to be dispositive—was never

under consideration below by the court. Its potential

applicability was rot even hinted at by the parties.

The pleadings themselves certainly did not raise the

specter of act of state; the complaint alleges destruc-

tion and deprivation by United States defendants, not

the Honduran government. Thus it cannot be said

that the plaintiff must have recognized that the mo-

tions filed before the court triggered the act of state

defense.

Moreover, the crucial fact now said to resolve the

issue of whether an act of state has occurred—the

expropriatory decree of the Honduran government—

was not issued until after the case was submitted to

the first panel on appeal. The parties have had no

opportunity to submit factual affidavits on the extent

to which the announced expropriation may have been

completed. Rushing to judgment based on an incom-

plete record compiled in anticipation of other un-

related issues can only deprive the plaintiff of a

meaningful opportunity to present its case. Rule 12

(b) neither contemplates nor authorizes an appellate

summary judgment under those circumstances.’”

Even if it were proper to convert the district

court’s order into one for summary judgment, a sum-

165 Even Judge Tamm, in dissent, agrees that further factual

development is required before drawing any legal conclusions

on the occurrence of an act of state. See Dissenting Opinion of

Tamm, J., at 2n.8. Judges Starr and Scalia are alone in their

willingness to find the facts necessary to create an act of state.

Sila

mary judgment is not authorized unless there are no

disputed issues of material facts. The Supreme

Court has consistently held that in reviewing sum-

mary judgments on appeal, all inferences must be

made in the light most favorable to the opposing

party.’

Here, by its conception of dismissal under Rule 56,

the dissent has ignored the existence of disputed facts

and improperly slanted the factual statements toward

the defendants. Only speculation favorable to the de-

fendants allows the conclusion that Honduran troops

are now participating in the training activity at all,

let alone to such an extent that the Honduran govern-

ment could be said to have seized the ranch. Only

conjecture supportive of the defendants allows the

conclusion that the ranch has been or ever will be

expropriated by the Honduran government. The dis-

sent’s resolution of these unproved, disputed issues of

fact flies in the face of the district court’s own state-

ment that summary judgment was inappropriate be-

cause there were “essential disputes as to the mate-

rial facts in the case.”’** Summary judgment is

clearly impermissible under these circumstances.

While we take no view on the weight or substance

of the plaintiffs’ factual case as it might be developed,

the unique mode of analysis offered by the dissent to

dismiss the plaintiffs’ complaint under Rule 12(b)

(6) is deeply disturbing. It is nothing other than im-

proper factfinding of controverted material issues by

166 Fed. R. Civ. P. 56.

167 United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) ;

Poller v. Columbia Broadcasting Sys., 368 U.S. 464, 478

(1962) ; Ring v. Schlesinger, 502 F.2d 479, 490 n.16 (D.C.

Cir. 1974).

168 Transcript of 26 July 1983, at 11.

82a

an appellate court on review of a district court’s dis-

missal for lack of jurisdiction. As such, it would

visit great unfairness on these plaintiffs by depriving

them of the substantive and procedural rights to

which they are entitled when they bring an action in

the federal courts. |

B. Legal Obstacles of the Application of the Act of

State Doctrine

In their haste to find the existence of an act of

state barring any further judicial review of the plain-

tiffs’ claim, the appellees and Judge Starr in his dis-

sent fail to confront any of several established limi-

tations on the doctrine which caution against its in-

vocation. Not the least of these restrictions is the so-

called First Hickenlooper Amendment, which sets lim-

itations on United States foreign assistance to coun-

tries expropriating the property of United States citi-

zens without compensation. Under this statute Con-

gress has directed that “[t]he President shall sus-

pend assistance to the government of any country...

which has . . . expropriated or seized ownership or

control of property owned by any United States citi-

zen,” when the seizing country fails to take appro-

priate steps to compensate the citizen within six

months of the seizure.*®

If the dissenting opinion of Judge Starr is correct

in its factual finding that Honduran troops have

seized and occupied the plaintiffs’ ranch, then an ex-

propriation or seizure of ownership within the First

Hickenlooper Amendment has surely occurred. Be-

cause no compensatory steps have since been taken

by the Honduran government, under the reasoning

169 See 22 U.S.C. § 2370(e) (1) (1982).

83a

advanced by the dissent, the President is currently

derelict in his statutory duty to terminate all assist-

ance to the government of Honduras. Consequently,

while the United States appellees are no doubt de-

lighted to record Judge Starr’s dissent, they are prob-

ably appalled at the doctrine on which he has pitched

it. By refusing to permit any further factual devel-

opment in the plaintiffs’ suit, the dissent ascribes to

the present Administration a willingness to shield its

operations abroad by egregious abrogation of statutes

specifically designed to protect United States citizens

from expropriation such as that purportedly occur-

ring here, a situation found by the dissent to be

“manifestly and indisputably present.” *”

179 Dissenting Opinion of Starr, J., at 2.

With all respect to the dissent’s professed astonishment,

Judge Starr’s assertion that “[i]t cannot seriously be argued

that a cut-off of financial assistance is required” is answered

by the simple, unambiguous, and detailed terms of the statute

—and the whole purpose for which the statute was enacted.

The dissent adverts to no provision which would render the

statute inapplicable. It is inconsequential that the land may

be “hypertechnical[ly]” owned by the Honduran corporate

plaintiffs, since the full statute (not cited in the text supra

at note 169) prohibits foreign assistance when the corpora-

tion whose assets are seized is at least “50 per centum bene-

ficially owned by United States citizens.” 22 U.S.C. § 2370(e)

(1) (A) (1982). Here, it is undisputed that the Honduran

corporations are 100% beneficially owned by U.S. citizens.

Neither is it significant that an expropriatory decree may

have issued. The statute itself stipulates the time limits for

compensatory payment which must be met to avoid the man-

date to freeze foreign aid.

Finally, the dissent answers its own objection that “[t]his

is scarcely a Cuba-like retaliatory seizure of American assets”’:

the President himself may waive the strict standards of the

Amendment after a determination and certification to Con-

84a

We are loathe to recognize any governmental pre-

disposition to such conduct. We prefer to believe

that, to the extent the government has information on

the past and current state of activities on the plain-

tiffs’ ranch, the government’s own analysis would in-

dicate that there has not been any seizure by the

Honduran government, and therefore the Adminis-

tration is not in flagrant violation of the First Hick-

enlooper Amendment, where the dissent’s analysis

puts them. Of course, resolution of the extent of Hon-

duran involvement can only be completed through

further proceedings before the district court.

Beyond the First Hickenlooper Amendment, sev-

eral other potential legal barriers must be resolved

before the act of state doctrine may be applied. Anal-

ysis of these issues is inevitably affected by the rele-

vant factual circumstances in which the claim is

raised. Until the threshold showing has been made

of an actual confiscation or expropriation, there is no

need to resolve these issues. We pause only to note

that the dissenting opinion of Judge Starr fails ade-

quately to explain why several of these exceptions to

the act of state doctrine would not apply.

For instance, the doctrine was never intended to

apply when an applicable bilateral treaty governs the

legal merits of the controversy.’" As enunciated in

gress that a waiver is important to the national interests of

the United States. Dissenting Opinion of Starr, J., at 15 & n.8.

We would expect that provision to be invoked, rather than

ignored, if United States interests would be jeopardized by an

aid cutoff.

111 See Kalamazoo Spice Extraction Co. v. Professional Mili-

tary Government of Socialist Ethiopia, 729 F.2d 422 (6th Cir.

1984) ; American Int’l Group, Inc. v. Islamic Republic of Iran,

493 F. Supp. 522 (D.D.C. 1980).

85a

Sabbatino, the act of state doctrine is principally con-

cerned with minimizing judicial interference in the

political branches’ conduct of foreign affairs. Impro-

per interference with policymaking by the political

branches may occur when there is no codification or

consensus on the national interest in United States

foreign relations law or in United States treaties

with the foreign sovereign state. When, however, the

political branches have specified the controlling legal

principles in a treaty with the foreign sovereign or

when there are generally accepted tenets of interna-

tional law concerning the foreign act,’” the danger of

improper judicial interference with the Executive’s

responsibilities for foreign affairs is greatly reduced.

In Sabbatino the Court was careful to distinguish be-

tween judicial adjudication of the validity of a for-

eign act when there are no standards for adjudica-

tion from those cases in which United States treaties

or international law provide specific guidance to the

Judiciary in a particular area of foreign relations.

There the Court stated:

[R]ather than laying down or reaffirming an in-

flexible and all-encompassing rule in this case,

we decide only that the Judicial Branch will not

examine the validity of a taking of property

within its own territory by a foreign sovereign

government, extant and recognized by this coun-

try at the time of suit, in the absence of a treaty

or other unambiguous agreement regarding con-

trolling legal principles ... ™

112 See Banco National de Cuba v. Sabbatino, 376 U.S. 398

at 480 n.34.

178 Jd, at 428 (emphasis added).

86a

Thus, treaties between the United States and Hon-

duras may provide clear standards for adjudicating

the validity of any Honduran act of expropriation.

According to documents submitted to this court by

the defendants, the “General Treaty of Friendship,

Commerce and Consular Rights”’* between the

United States and Honduras requires “the provision

of just, adequate and effective compensation in all

instances of expropriation of property owned by na-

tionals and companies of the United States.” ** A let-

ter filed with the Court by the defendants from the

Honduran Ministry of Economy and Commerce to

The Honorable George P. Shultz, Secretary of State,

states that the Honduran government believes that

the Treaty’s requirement of just, adequate and effec-

tive compensation applies to any expropriation of

Ramirez’s property which may be undertaken by the

Honduran government.’* On the facts as now al-

leged, there has been no Honduran act of expropria-

tion, and the district court has not been required to

evaluate the extent of Honduran involvement on the

disputed property or to construe the treaty terms in

light of the facts. But@f the district court were to

find that a Honduran expropriation has occurred

without payment, calling into being the applicability

of this treaty, it appears to us at this stage that a

174 See 45 Stat. 2618, 2619.

115 See Brief of Appellees, Addendum E at e-2. “Just, ade-

quate, and effective compensation” is the standard of the

First Hickenlooper Amendment, supra, note 169.

116 See Brief of Appellees, Addendum E at e-2. Of course it

is possible that this fact may be disputed on remand by the

defendants.

87a

violation of this treaty would prevent the defendants

from raising the act of state defense in this case.*”

Apparently because it deems these treaty obliga-

tions to be no more than a troublesome nuisance,

Judge Starr’s dissent would never reach this question.

Instead, in what can only be characterized as an irony

of justice, the dissent goes to great lengths to find

that an uncompensated taking has occurred, but then

holds that it is premature to inquire into whether the

treaty obligations or accepted tenets of international

law have been violated. Because no further review

is contemplated, the dissent effectively denies the

existence of a treaty exception to the act of state de-

fense. We reject this implication and the concomitant

denial of an opportunity to the plaintiffs to argue this

point before the trial court on the new facts presumed

by the dissent.

This same dissent also fails to deal with the Second

Hickenlooper Amendment, which specifically ad-

dresses the use of the act of state defense in cases

involving a foreign state’s confiscation of private

property:

[N]o court in the United States shall decline on

the ground of the federal act of state doctrine to

make a determination on the merits giving effect

to the principles of international law in a case in

which a claim of title or other right to property

is asserted by any party including a foreign state

. . . based upon (or traced through) a confisca-

tion or other taking . . . by an act of that state

in violation of the principles of international law,

including the principles of compensation and the

other standards set out in this subsection... .’”

177 See supra note 172.

178 22 U.S.C. § 2370(e) (2) (1982).

88a

The statutory standards which the foreign state must

meet—before a court may apply the act of state doc-

trine—-include speedy compensation equivalent to the

full value of the confiscated economic interest.*”

An accomplished, uncompensated confiscation of the

plaintiffs’ ranch by the Honduran government would

squarely bring this statute into piay, foreclosing any

deference based on the act of state doctrine. The dis-

Sent prefers to ignore this clear congressional man-

date without any serious discussion of its terms.’

#7 The statute provides that the act of state doctrine may

not apply if a

country, government agency, or government subdivision

fails within a reasonable time (not more than six months

after such action .. .) to take appropriate steps, which

may include arbitration, to discharge its obligations under

international law toward such citizen or entity, including

speedy compensation for such property in convertible

foreign exchange, equivalent to the full value thereof, as

required by international law... .

Id. § 2370(e) (1).

#9 We reject the dissent’s suggestion that the word “prop-

erty” in the statute must invariably be limited to expropriated

personal property located in the United States. It is based

only on authority which has been overturned in the Supreme

Court. See Banco Nacional de Cuba v. First Nat’l City Bank,

431 F.2d 394, 399-402 (2d Cir. 1970), vacated and remanded,

400 U.S. 1019 (1971), aff'd on remand, 442 F.2d 530 (2d Cir.

1971), rev'd on other grounds, 406 U.S. 759 (1972) ; Compania

de Gas de Nuevo Laredo, S.A. v. Entex, 686 F.2d 322, 827 (5th

Cir. 1982), ce

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