Petition for Writ of Certiorari — Gannett Co. v. DeRoburt

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~ Office-Suprems Court, U

7th se

84-772 i NOV 9 19e4

IN THE

ALEXANDER L. STEVAS,

Supreme Court of the United States

OcTOBER TERM 1984

GANNETT Co., INC.,

GUAM PUBLICATIONS, INC.

d/b/a Paciric Dai_ty NEws,

Petitioners,

vs.

HAMMER DEROBURT,

Respondent.

Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

* ARTHUR B. HANSON

ARTHUR D. MCKEY

GreGory P. SCHERMER

PAMELA J. BROWN

HANSON, O’BRIEN, BIRNEY

& BUTLER

888 Seventeenth Street, N.W.

Washington, D.C. 20006

(202 ) 298-6161

Davip J. DEZZANI

JAMES J. BICKERTON

GOODSILL, ANDERSON, QUINN

& STIFEL

1600 Castle & Cooke Building

Financial Plaza of the Pacific

Honolulu, Hawaii 96813

(808 ) 547-5600

Attorneys for Petitioners

* Counsel of Record

QUESTIONS PRESENTED

WHETHER THE ACT OF STATE DOCTRINE PRO-

HIBITS ADJUDICATION BY A UNITED STATES COURT

OF THE TRUTH OR FALSITY OF A STATEMENT THAT

A FOREIGN HEAD OF STATE, ACTING IN HIS OFFI-

CIAL CAPACITY, WAS RESPONSIBLE FOR A SECRET

AND ILLEGAL ACT BY HIS GOVERNMENT.

II.

WHETHER THE RIGHT TO PUBLICLY CRITICIZE

THE OFFICIAL CONDUCT OF FOREIGN HEADS OF

STATE IS CONSTITUTIONALLY PRIVILEGED UNDER

THE FIRST AND NINTH AMENDMENTS OF THE CON-

STITUTION.

* Pursuant to Supreme Court Rules 21.1(b) and 28.1 the

following were parties to the proceedings below:

Hammer DeRoburt, President of the Republic of Nauru

Gannett Co., Inc., a Delaware Corporation

Guam Publications, Inc. d/b/a Pacific Daily News, a

wholly owned subsidiary of Gannett Co., Inc.

INDEX

I ii sicsiccsseotiecrinicneccininetetinnabiaaliaiediaipabiasinlaiiatanaies

PRL IE ATLL LAR

Constitutional and Statutory Provisions Involved............

ON OE ED sscsestitiscsceisilienciieiiaiaialeitniatiiaih aa

SAGES cscciccsiitsiceetsineitnitadisil iiaiae lta

I. THE ACT OF STATE DOCTRINE PROHIB-

ITS ADJUDICATION BY A_ UNITED

STATES COURT OF THE TRUTH OR FAL-

SITY OF A STATEMENT THAT A FOREIGN

HEAD OF STATE, ACTING IN HIS OFFI-

CIAL CAPACITY, WAS RESPONSIBLE FOR

A SECRET AND ILLEGAL ACT BY HIS

COTO E ancicnscittvainbistviascctssneinillbdaplaetiiconses

II. THE RIGHT TO PUBLICLY CRITICIZE THE

OFFICIAL CONDUCT OF FOREIGN

HEADS OF STATE IS_ CONSTITU-

TIONALLY PRIVILEGED UNDER THE

FIRST AND NINTH AMENDMENTS TO

DR CR 6 er BEY venctecsineiinciniiiiainaciatinlaainatinni

A. Published Criticism of the Official Conduct

of the President of a Foreign State is

Protected by the First Amendment and

Cannot be the Basis of a Libel Action as a

DERE OE EIU seiisincischnccisistiadiicindtaplaiiaaidionies

B. The Immemonal Tradition of Criticism of

the Official Conduct of Foreign Heads of

State is a Fundamental Right Retained by

the People and their Representative the

Press Under the Ninth Amendment............

| DTS IN LR BETS TIRES SM

APPENDIX A:

APPENDIX B:

APPENDIX C:

APPENDIX D:

APPENDIX E:

APPENDIX F:

APPENDIX G:

iil

TABLE OF APPENDICES

DeRoburt v. Gannett Co., 733 F.2d 701

(9th Cir. 1984).

DeRoburt v. Gannett Co., 551 F. Supp. 973

(D. Hawaii 1982).

DeRoburt v. Gannett Co., 548 F. Supp.

1370 (D. Hawaii 1982).

ORDER of the United States Court of

Appeals for the Ninth Circuit denying peti-

tion for rehearing, date August 14, 1984.

The Unanimous Declaration of the Thir-

teen United States of America (U.S., July

4, 1776).

Newspaper Article Entitled “Marshalls

Separatist Movement Gets Secret Funds

from Nauru” as it appeared in the Pacific

Daily News on May 30, 1978.

Newspaper Article entitled “Nauru Offi-

cials Admit Lending Separatists Loan” as it

appeared in the Pacific Daily News on June

29, 1978.

TABLE OF AUTHORITIES

Page

CASES:

American Banana Co. v. United Fruit Co., 213 U.S.

SAT C 19D ) 0. -ncecccccssceseceensvensensovescessoosarccesesonesssoserasente 15

Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398

CRD ) ov ovcccennioninisiescstntsnsenssnacnovinastinaneomnseetnstnnsateonsanete 10, 11,

13,14

Bokkelen v. Grumman Aerospace Corp., 432 F. Supp.

329 (CE. D.N.Y. 1977) ..ccresccorsecscessecrscrcccscenscqseccoresssens 15

Buttes Gas & Oil Co. v. Hammer [1981] 3 W.L.R.

TOT COL. ) sevsicncosnsesvsvncersntsasinnpicninsicesianatenzeimemecmnvenewe 16, 17

Clayco Petroleum Corp. v. Occidental Petroleum

Corp., 712 F.2d 404 “oth Cir. 1983) cert. denied,

104s. Ce: FEB CSG) nacinsncascnsisertniiinscceinsecsinccsinpannsensce 15, 18, 19

Curtis Publishing Co. v. Butts, 388 U.S. 130 (1967).... 23

DeRoburt v. Gannett Co., 733 F.2d 701 (9th Cir.

RI scdcnitestnsinidnvncinivistninttnnticndnsenoncinannimianiticnitentatoiaeas 19, 20

DeRoburt v. Gannett Co. 551 F. Supp. 973 (D.

Bawah 19GB ) .cesccccoseseccevecccesarosesssocsnonsccccesconccoscnesees §, 13, 14

DeRoburt v. Gannett Co., 548 F. Supp. 1370 (D.

RITE TESTER P ancecccnccsesesicconsssessrscsonveicessneuiesncesornnosnsces 7,13

DeRoburt v. Gannett Co., 83 F.R.D. 574 (D. Hawaii

FY scscvctcntenitsceanpheuntedcidimraansceanincsiacimveanneitbenintaniatanees 4

General Aircraft Corp. v. Air-America, Inc., 482 F.

Supp. 2 (D.D.C. 1979) ..........ssccscccsessessscssencsesesences 15

Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974) ....... 22, 24

Griswold v. Connecticut, 381 U.S. 479 (1965) ............. 29

Hunt v. Mobil Oil Corp., 550 F.2d 68 (2d Cir. et

cert. denied, 434 U.S. 984 (1977) .......cccccsesseererrereees 15, 17

Hutchinson v. Proxmire, 443 U.S. 111 (1979) ..........++ 23

International Association of Machinists & Aerospace

Workers v. OPEC, 649 F.2d 1354 (9th Cir. 1981),

cert. denied, 454 U.S. 1163 (1982) ..........csssseseeeeeeeees 11

New York Times Co. v. Sullivan, 376 U.S. 254 (1964) Passim

Occidental Petroleum Corp. v. Buttes Gas & Oil Co.,

331 F. Supp. 92 (C.D. Cal. 1971), aff’d, 461 F.2d

1261 (9th Cir. 1972), cert. denied, 409 U.S. 950

C BRT Pvc teniiennitesnsensinneniionnnriinisinnintliaannetnieainnaieannonipiepiannns 11,15,16

17,18

Richmond Newspapers, Inc. v. Virginia, 448 U.S. 555

€ TIDY vieressnenissccesonsvismnesersnsichsntindsancininensinisiinieiadatsiteiimninhisiiies 29

Rosenblatt v. Baer, 383 U.S. 75 (1966) ....ccccccccceccseceeee

Sharon v. Time, Inc., No. 83 Civ. 4660 (ADS)

(S.D.N.Y., filed June 22, 1983) .................ccccscecsseeeee

Snyder v. Massachusetts, 291 U.S. 97 (1934) .o.eccccceeee

Timberlane Lumber Co. v. Bank of America N.T. &

ee ey) ee

Underhill v. Hernandez, 168 U.S. 250 (1897).............-

United States v. Nixon, 418 U.S. 683 (1974)...

CONSTITUTIONAL & STATUTORY AUTHORITIES:

5 SST es Siege aD Nee ee

OTHER AUTHORITIES:

The Unanimous Declaration of the Thirteen United

States of America (U.S., July 4, 1776) .....ccccceecseeee.

MUNVES, THOMAS JEFFERSON AND THE DECLARATION

SP BE © PUTED virascccncssnscescusnineeseccsvenencacececs

2 J. STORY, COMMENTARIES ON THE CONSTITUTION OF

THE UNITED STATES (6th ed. 1891) ......eecceccceceeseees

pe be THE CREATION OF AMERICAN REPUBLIC

Discs aii

| ANNALS OF CONGRESS (GALES & SEATON Ep. 1834)

(Rep. Jackson Of Georgia ) «..........<..scccceceosscesccccesecese

Dunbar, James Madison and the Ninth Amendment,

Te Ws eee GEE © POD vsvscceccnssvnsccscesnsndesnciticaseeans

The Federalist No. 84 (A. Hamilton) (Modern

hE SRE NS TR cree ae A RO ey Om

Redlich, Are There “Certain Rights... Retained By

The People?”, 37 N.Y.U.L. REv. 787 (1962) ..........

Note, The Ninth Amendment: Guidepost to

Fundamental Rights, Wm. & Mary L. Rev. 101

UR caiaiakeatusevateasntarvacabnatbamantaanistianatmetcrnorosnomenneencoea:

Wall Street Journal, September 22, 1983, § I, at 1.......

Washington Post, March 29, 1984, § A, at 31..............

Memorandum in Support of Time, Inc.’s Motion to

Dismiss and For Summary Judgment at 31-35,

Sharon v. Time, Inc., No. 83 Civ. 4660 (ADS)

CHEARIS. ©, Me PUNE Ba, CIE Vvcicinecicsdieiessccdesececses.

Page

25, 30

11, 13

10, 11

IN THE

Supreme Court of the United States

OCTOBER TERM 1984

GANNETT Co., INC.,

GUAM PUBLICATIONS, INC.

d/b/a Paciric DaiLy News,

Petitioners,

vs.

HAMMER DEROBURT,

Respondent.

Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

OPINIONS BELOW

The opinion of the United States Court of Appeals for the

Ninth Circuit is reported in Federal Reporter 2nd Series at 733

F.2d 701. The opinions of the District Court appear at 551

F.Supp. 973 and 548 F.Supp. 1370. All three opinic as are set

forth in their entirety in the Appendix at la, lb and lc

respectively.

JURISDICTIONAL STATEMENT

The opinion of the Ninth Circuit was issued cn May 22,

1984. Petitioners’ Petition for Rehearing and for Rehearing en

Banc was denied by an order filed by the clerk of the court of

appeals on August 14, 1984. A copy of that order is set forth in

its entirety in the Appendix at ld.

Jurisdiction over this matter and the important con-

Sstitutional issues herein is conferred upon this Court by 28

U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The First Amendment to the United States Constitution

provides in part:

Congress shall make no law... abridging the free-

dom of speech, or of the press...

The Ninth Amendment to the United States Constitution

provides:

The ent eration in the Constitution, of certain

rights, shall not be construed to deny or disparage

others retained by the people.

The Fourteenth Amendment to the United States Con-

stitution provides:

No State shall make or enforce any laws which shall

abridge the privileges or immunities of citizens of the

United States; nor shail any State deprive any person

of life, liberty, or property, without due process of

law: nor deny to any person within its jurisdiction the

equal protection of the laws.

STATEMENT OF THE CASE

in this case, a foreign head of state acting with the backing

of his government seeks to recover $40 Million in libel damages

from petitioners for published statements critical of his official

acts as the head of state and acts of the government which he

heads. To petitioners’ best knowledge, no foreign head of state

has previously sought to use the courts and laws of this country

to attack United States citizens for publishing statements about

a head of state’s official acts of state. Such a Jawsuit flies in the

face of the long-established act of state doctrine by drawing the

Judicial Branch into an area of foreign affairs reserved ex-

clusively to the Executive Branch. Moreover, this kind of

lawsuit is fundamentally inimical to the basic rights of free

speech and dissent guaranteed by the Bill of Rights.

This case arises against the backdrop of the movement

towards political independence of the islands of Micronesia in

the Western Pacific. Among these are the Marshall Islands

which, until recently, were part of the United States adminis-

tered Trust Territory of the Pacific Islands. In 1978, a vigorous

political debate developed in and between the various island

groups of the Trust Territory over whether the groups should

remain unified as a single Micronesian state after independence

or should split into separate independent nations.

The district legislature of the Marshall Islands had estab-

lished an entity, the Marshall Islands Political Status Com-

mittee (“MIPSC”), to negotiate with the United States in its

attempt to end the Trusteeship and establish self-government in

the Trust Territory. The MIPSC :zok the separation side in the

“Unity vs. Separation” debate, advocating that after in-

dependence the Marshall Islands should be a nation separate

from the res: of Micronesia.

Respondent is Hammer DeRoburt, President of the

Republic of Nauru, an independent island nation with close

cultural and geographic ties to the Marshall Islands. Nauru is

one of the world’s wealthiest nations, per capita. Virtually

made of guano, the island is in effect a single giant phosphate

deposit. The annual revenues from phosphate sales are approx-

imately $125 Million, or approximately $25,000 for each of the

5,000 Nauruans who inhabit the island. See Wall Street

Journal, September 22, 1983, § I, at 1. President DeRobur, in

the words of his complaint, is:

[T]he President of the Republic of Nauru, an office

he has held most recently since May Il, 1978.

Plaintiff was the first President of the Republic of

Nauru from the date of independence on May 18,

1968, until December 21, 1976. Plaintiff has been a

member of the Parliament of Nauru since May 17,

1968. Plaintiff is and has bee’ the Head Chief of the

Nauru Local Government Council since December

21, 1955.

Petitioners are the owners of the Pacific Daily News,

published on Guam. As President DeRoburt expressly ac-

knowledges, the Pacific Daily News is a “daily paper that is

virtually the only source of information for many islands in the

Western and Central Pacific.” The District Court below ob-

served that “it is the only newspaper providing regular cov-

erage of events in the various islands of the Western Pacific,

including the Trust Territory of the Pacific Islands, the Com-

monwealth of the Northern Islands and Nauru.” DeRoburt v.

Gannett Co., 83 F.R.D. 574, 575. (D. Hawaii 1979).1

In two 1978 news articles, the Pacific Daily News published

an account of Nauru’s and President DeRoburt’s interference in

the affairs of the United States-administered Marshall Islands.

The May 30, 1978, edition of the newspaper contained an

article about a loan by the Republic of Nauru to the MIPSC

under the headline “MARSHALLS SEPARATIST MOVE-

MENT GETS SECRET FUNDS FROM NAURU.” The ar-

ticle discussed the manner in which the loan had been made,

President DeRoburt’s official involvement in it, the secrecy

surrounding it and its illegality under Trust Territory law. On

June 29, 1978, a second article about the loan was published

under the headline “NAURU OFFICIALS ADMIT LEND-

ING SEPARATISTS’ LOAN.” The text of both articles is

reproduced in the Appendix at If and lg respectively.

" Although the Pacific Datly News occasionally publishes news articles

concerning Nauru, the newspaper is not circulated or distributed there.

On October 2, 1978, President DeRoburt filed the instant

libel action in the United States District Court for the District of

Hawaii, describing himself in the caption as “Hammer DeRo-

burt, President of the Republic of Nauru, plaintif.” His original

complaint, which was later amended three times and which his

attorneys sought to amend on a fourth occasion, alleged that

the May 30, 1978, article was “untrue in every significant

respect.”

In his Second Amended Complaint, President DeRoburt

specified some of the alleged falsities and meanings of the news

article. He alleged that “Nauru did not secretly back the

separation of the Marshall Islands from Micronesia.” He

further alleged that the May 30, 1978, article falsely meant,

inter alia:

(a) That Hammer DeRoburt as President of Nauru

and as High Chief and as member of Parliament of

Nauru was guilty of conduct intended to deceive the

people of Nauru and of the Marshall Islands and/or

those then responsible for the government of the

Marshall Islands, namely the United States of Amer-

ica as Trustee under the terms of a Trustee Agree-

ment with the United Nations approved by the

United States on July 18, 1947.

(b) That Hammer DeRoburt as President of Nauru

and as Head Chief and as « member of Parliament

violated the Constitution of uae Republic of Nauru.

In his Second Amended Complaint, President DeRoburt

still brought this action as “Hammer DeRoburt, President of

the Republic of Nauru.” At his deposition, he testified under

oath that “I sue as Hammer DeRoburt, President of the

Republic of Nauru.” And, when questioned on the damages he

had allegedly sustained, DeRoburt answered by claiming that

Nauru had been denied a loan by the Asian Development Bank

as a result of the articles.

Subsequently, in order to avoid dismissal on the grounds

that governments cannot sue for libel, President DeRoburt

altered the caption of his pleadings and filed an affidavit

claiming that he was suing as a “private individual”. He did

not, however, change a single allegation in his claim. More-

over, discovery has disclosed that the Republic of Nauru has

paid President DeRoburt’s costs and legal fees throughout this

action.

On June 30, 1982, President DeRoburt filed his Third

Amended Complaint, increasing his punitive damages and

compensatory damages prayers to $20 Million dollars each. At

that time, the case had been pending nearly four years.

President DeRoburt, with the aid of two American law firms

and a British barrister, had expended more than half a million

dollars in legal fees. Faced with this barrage of money and

legal talent, as well as President DeRoburt’s allegations that the

article was “false in every significant respect,” petitioners had

been forced to conduct hundreds of hours of depositions and

obtain documents in such far-flung places as Australia, New

Zealand, Saipan, Guam, Nauru, Majuro, Honolulu, Washing-

ton, D.C., Boston, New York and Topeka, Kansas.2

On August 6, 1982, after discovery under the Third

Amended Complaint had been completed, petitioners filed a

motion to dismiss based upon the act of state doctrine. The

thrust of the motion was that adjudication of President De-

Roburt’s allegations and petitioners’ defenses thereto would

inevitably involve judicial inquiry into and determination of

issues regarding the validity, propriety and motivation of acts

by the Republic of Nauru and that such issues are nonjusti-

ciable under the act of state doctrine.

In response to petitioner’s motion, President DeRoburt

suddenly made a complete about-face, jettisoning the allega-

tions of falsity which he had been pressing vigorously for

almost four years and claiming that “the validity, legality or

motivation of the acts of Nauru will never be be at issue in this

2 This discovery elicited substantial evidence of the truth of the news

articles. For example, documents clearly established that Nauru was backing

the Marshallese separatists and had in fact made the loan described. Other

documents, one of which is further described below, see infra note 5,

“indicated President DeRoburt’s involvement in that loan and in the earlier

1974 loan to the Marshall Islands. Marshall Islands government documents

established the loan’s secrecy and illegality.

ee a

Ng i wn At tte tn

case.” The District Court below was not persuaded by President

DeRoburt’s sudden change of position and viewed it as “dis-

ingenuous” under the circumstances of the facts and pleadings.

DeRoburt v. Gannett Co., 548 F.Supp. 1370, 1382 (D. Hawaii

1982). The District Court concluded that:

[D]espite plaintiffs position,... resolution of the

central issues in this case, either for or against the

plaintiff, will inevitably lead to this court’s examining

or “sitting in judgment on” the validity, legality and

motivation of the government of Nauru in making

the 1978 loan to the Marshall Islands, and... such

an examination is forbidden by the act of state

doctrine, its underlying policies and rationale.

Id. at 1383. Accordingly, the District Court dismissed the Third

Amended Complaint.

DeRoburt attempted to revive his claim by means of a

skillfully pleaded proposed fourth amended complaint which

purported somehow to challenge the truth of the news articles

without involving the acts of state of Nauru. Re-characterizing

his claim as a “misidentification” claim, President DeRoburt

alieged in the proposed fourth amended complaint that the

May 30, 1978, news article was false in the following respects:

(a) Plaintiff did not make the loan stated in the story

as made in 1978 (the “1978 loan”) at all.

(b) Plaintiff's predecessors as President did not turn

down any application for loans from the Marshall Islands;

the 1978 loan was made by the Governments of President

Dowiyogo and President Harris to which the Plaintiff was

in opposition while Plaintiff was out of office as President

and opposed to them; and

for any loan to Plaintiff after he took office on May 11,

1978, and Plaintiff did not approve of the 1978 loan or fly

to the Marshall Islands to deliver any check.

) The proposed amended complaint’s allegations concerning the

alleged false meanings, however, remained nearly identical to

the false meanings alleged in the earlier complaints.

Again, the District Court below rejected DeRoburt’s re-

pleaded claim as nonjusticiable under the act of state doctrine:

This is not a simple misidentification case, as De-

Roburt contends, in which A is reported to have

committed the crime perpetrated in fact by B. Here

the plaintiff is a high ranking government official and

the head of state, while the act of state involved was a

loan by the government of Nauru.

Under DeRoburt’s proposed amended complaint, a

verdict for the defendant would be tantamount to a

declaration that the current head of state of a sover-

eign republic instigated, arranged and delivered an

illegal, improper and secret loan to another sovereign

entity. The ramifications on this country’s foreign

policy and on the relation between the Judicial and

Executive Branches would be the same as [under the

Third Amended Complaint]. This the Court cannot

allow. :

DeRoburt v. Gannett Co., 551 F. Supp. 973, 976-77 (D. Hawaii

1982).

President DeRoburt appealed from the District Court’s

decisions dismissing his claim. The Ninth Circuit Court of

Appeals panel considering his appeal affirmed the District

Cuurt’s dismissal of the Third Amended Complaint, but some-

how concluded that the proposed fourth amended complaint,

not yet filed, is justiciable. On the basis of a gaumless analogy

between this deeply political lawsuit and a hypothetical suit by

a foreign leader to recover for the death of his horse, the Ninth

Circuit panel apparently concluded that resolution of this action

would not encroach on act of state concerns, despite the fact

that the news articles only mention DeRoburt’s official govern-

mental acts. Thus, in an opinion which failed to come to grips

with the significant and fundamenta! legal principles involved

in this case, the Ninth Circuit panel remanded the action for

tial.

In view of the far-reaching consequences which this case

will have on the freedom of the American people to criticize the

ii tie 8 a tt NN Me SI, he ll ae

official acts of foreign heads of state and on the separation of

judicial and executive power in the area of foreign relations, the

Ninth Circuit panel’s simplistic and superficial aualysis of this

case cannot be permitted to stand. For this reason and for

those set forth more fully below, petitioners respectfully urge

the Court to grant the present petition.

ARGUMENT

I. THE ACT OF STATE DOCTRINE PROHIBITS

ADJUDICATION IN A UNITED STATES COURT OF

THE TRUTH OR FALSITY OF A STATEMENT THAT

A FOREIGN HEAD OF STATE, ACTING IN HIS

OFFICIAL CAPACITY, WAS RESPONSIBLE FOR A

SECRET AND ILLEGAL ACT BY HIS GOVERNMENT

This action presents a libel claim by a foreign head of state

arising out of news articles charging him with responsibility for

his government’s secret and illegal loan to a separatist group in

a United States Trust Territory. The articles oniy describe his

official actions as head of state and do not mention any acts

performed by him in his private life.

As with all libel actions, the truth or falsity of the news

articles is in issue. Thus, the trial court will necessarily have to

determine whether the foreign head of state was responsible for

a secret and illegal act by his government. The act of state

doctrine, however, prevents United States courts from sitting in

judgment on the acts of a foreign sovereign. Underhill v.

Hernandez, 168 U.S. 250 (1897). Adjudication of this case is

therefore barred by the act of state doctrine and the case

accordingly must be dismissed as nonjusticiable.

The act of state doctrine rests on the constitutional under-

pinnings of the United States system of separation of powers.

Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 423

(1964). The doctrine derives from the judiciary’s concern that

it not interfere in the conduct of foreign affairs by the Executive

Branch:

It concerns the competency of dissimilar institutions

to make auc implement particular kinds of decisions

in the area of international relations. The doctrine as

formulated in past decisions expresses the strong

sense of the Judicial Branch that its engagement in

the task of passing on the validity of the foreign acts

of state may hinder rather than further this country’s

pursuit of goals both for itself and for the community

of nations as a whole in the international sphere.

Id. Thus, the doctrine is designed to avoid “judicial action in

sensitive areas,” International Association of Machinists &

Aerospace Workers v. OPEC, 649 F.2d 1354, 1359 (9th Cir.

1981), cert. denied, 454 U.S. 1163 (1982), by precluding

judicial decisions challenging “the sovereignty of another na-

tion, the wisdom of its policy, or the integrity and motivation of

its action.” Timberlane Lumber Co. v. Bank of America N.T &

S.A., 549 F.2d 597, 607 (9th Cir. 1976). Consequently, the

doctrine has been applied to dismiss such cases as: (a) an

action alleging that OPEC member nations were engaged in

price-fixing, International Association of Machinists & Aero-

space Workers, 649 F.2d at 1354; (b) an action alleging that

the Venezuelan government had illegally imprisoned the plain-

tiff, Underhill, 168 U.S. at 250; and (c) an action against an oil

company alleging that it had induced a foreign sovereign to

deprive another company of an oil concession, Occidental

Petroleum Corp. v. Buttes Gas & Oil Co., 331 F.Supp. 92 (C.D.

Cal. 1971), aff'd, 461 F.2d 1261 (9th Cir. 1972), cert. denied,

409 U.S. 950 (1972).

In Sabbatino, 376 U.S. at 398, this Court discussed the two

principal factors applied in determining whether an action is

nonjusticiable under the act of state doctrine. First, the Court

noted that:

It should be apparent that the greater the degree of

codification or consensus concerning a particular of

international law, the more appropriate it is for the

judiciary to render decisions regarding it,....

Id. at 428. Second, the Court observed that:

It is also evident that some aspects of international

law touch more sharply on national nerves than do

others; the less important the issues are for our

foreign relations, the weaker the justification for

exclusivity in the political branches.

Id.

Both factors are undeniably present in this case. First, the

news articles state that the Republic of Nauru and President

DeRoburt, as Nauru’s head of state, have interfered with the

internal self-determination process of another country. As the

current dispute between the United States and Nicaragua

shows, there are a few areas in which there is less international

consensus than the question of interference in the internal

affairs of another country. The intermeddler may be a hero

acting within the law to the people of one country and an

international outlaw to the people of another, while those of a

third country may disagree with the interference in principle but

approve of it in practice.

Despite the difficulty of establishing any international

consensus on the propriety of such acts, this libel action would

require a jury to decide whether it is defamatory to say that a

head of state of one country secretly lent money to a separatist

group in another country. President DeRoburt alleges that this

means, inter alia; “[t]hat Hammer DeRoburt was willing to

wrongfully meddle and by the 1978 loan did wrongfully

meddle in the internal affairs of Micronesia.” Can a United

States jury decide whether the news articles’ statements carry

such a meaning when experts on international law cannot reach

an agreement on this point? Petitioners respectfully submit that

this is precisely the kind of question which is left to the

Executive to answer and which the domestic courts of this

country are not equipped to resolve.

Similarly, there can be little doubt that the adjudication of

this action would “touch sharply on national nerves” and have

a significant impact on foreign relations. The Marshall Islands

in 1978 were part of a United States-administered Trust

Territory and are still in the process of negotiating their political

Status vis-a-vis the United States. President DeRoburt’s pro-

posed amended complaint alleges the news articles to mean

that he “was guilty of violating the laws of Nauru and of the

Trust Territory” and “secretly circumvented the proper and

lawful procedure for making loans by Nauru to other coun-

tries.” In light of these allegations, a judicial determination of

the truth or falsity of the news articles would have a significant

effect on foreign relations with both the Republic of Nauru and

the now-emerging Republic of the Marshall Islands.

The presence of these factors in this case necessarily bars

its adjudication. As the District Court below cogently expressed

it:

Under DeRoburt’s proposed amended complaint, a

verdict for the defendant would be tantamount io a

declaration that the current head of state of a sover-

eign republic instigated, arranged and delivered an

illegal, improper and secret loan to another sovereign

entity. The ramifications on this country’s foreign

policy and on the relation between the Judicial and

Executive Branches would be the same as [under the

Third Amended Complaint. ]

DeRoburt v. Gannett Co., 551 F.Supp. 973, 937 (D. Hawaii

1982).4

3 The District Court below observed that:

[T]he separation of the Marshall Islands from the United

States’ Trusteeship has been a “live” issue in recent months, with

negotiations often difficult and delicate. See Marshall Islands

Journal, Aug. 4, 1982, at 1 col. 1; id., Aug. 2, 1982, at 1, col. 3;

Honolulu Advertiser, July 23, 1982, at, col. 1; Honolulu Star

Builetin, July 15, 1982, at A-21, col. 1.

In addition, the defendants have provided the court with

several exhibits obtained by requests to the U.S. Department of

the Interior under the Freedom of Information Act. These

documents, from the files of the Office of Micronesian Status

Negotiations of the National Security Council, demonstrate that

the Executive has, at least, been monitoring the defendants’

reports of the loans made by Nauru to the.Marshall Islands.

Although the court does not know what position, if any, the

Executive has taken on the issues presented by this case, it is

evident nonetheless that these issues about areas of concern for

the nation’s foreign policy.

DeRoburt, 548 F.Supp. at 1384.

4 President DeRoburt has argued that the District Court should not have

considered the possibility of a verdict in favor of the defendants. Since the

District Court, however, was required by Sabbatino, 376 U.S. at 398, and

(footnote continues)

en dS Bi cs CR hie Ne

a a Na dh da

IL Mla St ORE LENA 5S bt

In an effort to avoid the required application of the ac: of

state doctrine, President DeRoburt argued to the Ninth Circuit

that this is a simple “misidentification” case.5 The proposed

amended complaint, however, in addition to alleging that

President DeRobert did not “make” the loan, also alleges that

two predecessor Presidents did not turn down the loan and in

fact ““made” it, that the Marshallese did not request DeRoburt

to make the loan and that he did not “approve” the loan and

deliver the loan check. Thus, at the very least a jury would

have to decide:

—Whether President DeRoburt was responsible for

the loan by the Republic of Nauru;

— Whether the two previous Presidents refused to

make the loan;

— Whether the two previous Presidents were respon-

sible for the loan;

—Whether the Marshallese requested President

DeRoburt to make the loan;

— Whether President DeRoburt approved the loan;

and

— Whether President DeRoburt personally delivered

any of the loan proceeds.

(footnote continued)

Timberlane, 549 F.2d at 597, to consider the “potential” for interfe.ence in

foreign relations which adjudication might entail, the court was duty-bound to

consider the ramifications of a defense verdict. Moreover, a verdict in

President DeRoburt’s favor could have an equally significant impact on

foreign relations. As this Court noted in Sabbatino, a judgment favorable to a

foreign sovereign can also interfere with the Executive Branch’s conduct of

foreign relations if the Executive Branch has taken a contrary position or has

not taken any position on the issue at all. Sabbatino, 376 U.S. at 434. In this

case, for example, the record contains an Executive Branch communication

between the Trust Territory High Commissioner and the Secretary of State

describing the May 30, 1978, news article and stating that “we are inclined to

think it generally accurate.”

5 President DeRoburt makes the claim that this is a “misidentification”

case even though the record contains documents linking him to the loan,

including a resolution by the loan recipients thanking DeRoburt for his

involvement in the loan. These documents were presented to the district court

on the Motion to Dismiss, but were not mentioned in the Ninth Circuit panel’s

(footnote continues)

President DeRoburt has argued that these are all “histor-

cal” facts whose adjudication will be “straightforward” and will

not require inquiry into acts of state. It is difficult, however, if

not impossible, to see how these issues can be resolved without

examining the loan and how it was made. The loan is, without

dispute, an act of state of the Republic Nauru.®

In any event, the act of state cases explicitly preclude

judicial inquiry into the first factual issue raised by President

DeRoburt’s allegations of falsity: whether President DeRoburt

was responsible for the loan or, as he puts it, whether he

“made” the loan.”

The line of cases expressly barring adjudication of this

issue remained unbroken until the Ninth Circuit panel ignored

them in this case.®

(footnote continued)

opinion. The Ninth Circuit Panel also ignored the District Court’s conclusion

that: “This is not a simple misideniification case, as DeRoburt contends in

which A is reported to have committed the crime serine in fact by B”

DeRoburt, 551 F.Supp. at 976.

®The “straightforward historical facts” argument, also overlooks a

crucial factor: the context in which these so-called “historical” facts would

have to be adjudicated. This is an action for an alleged defamation.

President DeRoburt brings it not because he was linked to a loan but because

he was linked to a secret and illegal government loan. Thus, in the context of

this libel case, a finding by a jury tnat President DeRoburt “made” the loan

would not be a simple “historical” determination—it would be a finding that

DeRoburt, acting in his official capacity, engaged in a secret and illegal

government act. This is precisely the kind of adjudication the act of state

doctrine seeks to avoid.

7 President DeRoburt’s use of the word “made” is imprecise. The loan

as “made” by the Republic of Nauru, a fact made clear in the news articles.

The articles state that DeRoburt acted as President of the Republic of Nauru

and there is no suggestion in the articles that President DeRoburt lent his own

personal funds. Thus, President DeRoburt’s claim would be more accurately

expressed by an allegation that he did not cause Nauru to “make” the loan.

8 American Banana Co. v. United Fruit Co., 213 U.S. 347 (1909); Clayco

Petroleum Corp. v. Occidental Petroleum Corp., 712 F.2d 404 (9th Cir. 1983),

cert. denied, 104 S.Ct. 703 (1984); Hunt v. Mobil Oil Corp., 550 F.2d 68 (2nd

Cir. 1977), cert. denied, 434 U.S. 984 (1977); Occidental Petroleum Corp. v.

Buttes Gas & Oil Co., 331 F.Supp. 92 (C.D. Cal. 1971), aff'd 461 F.2d 1261

(9th Cir. 1972), cert. denied, 407 U.S. 950 (1972); General Aircraft Corp. v.

(footnote continues)

Six NN OO eee Oe ee ee ee eee ee ee eee

There is no question that the act of state doctrine is

applicable to a defamation case. This has been clearly estab-

lished by an English House of Lords decision applying the

American act of state cases in the context of a defamation

action. In Buttes Gas & Oil Co. v. Hammer [1981] 3 W.L.R.

787 (H.L.), Armand Hammer, the chairman of Occidental

Petroleum Corporation, made statements at a press conference

accusing Buttes Gas & Oil Company of persuading the ruler of

a Persian Emirate to backdate a decree, thus effectively depriv-

ing Occidental of a valuable oil concession. When plaintiffs

sued for slander, Hammer and Occidental! raised the defense

of truth and asserted a counterclaim for conspiracy which

repeated the allegations made by Hammer at the press

conference.

After a discussion of the development of the modern act of

state doctrine based in large part on the precedent of American

cases, the House of Lords concluded that:

If Occidental is to succeed . . . in the slander action, it

is necessary to show that [foreign government] ac-

tions were brought about by Buttes, more exactly by a

fraudulent conspiracy between Buttes and Sharjah.

This certainly involves an examination of the motives

(exclusive or dominant?) for the action of Sharjah in

making, and, if proved, backdating the decree of

1969/70.

Id. at 809-10 (emphasis added). The House of Lords panel

unanimously held that tie act of state doctrine barred adjudica-

tion of those questions. Jd.

One American case relied on heavily by the House of

Lords, was a district court opinion by then District Judge

Pregerson which was adopted in full by the Ninth Circuit. See

Occidental Petroleum, 331 F.Supp. 92, (C.D. Cal. 1971), aff'd,

461 F.2d 1261 (9th Cir. 1972), cert. denied, 409 U.S. 950

(footnote continued)

Air America, Inc., 482 F. Supp. 2 (D.D.C. 1979); Bokkelen v. Grumman

Aerospace Corp., 432 F. Supp. 329 (E.D.N.Y. 1977). The common holding in

each of these cases is that courts may not decide whether a party to the action

caused, induced or was otherwise responsible for a foreign sovereign’s act of

state.

(1972). In that case, which involved essentially the same facts

as Buttes Gas & Oil Co., plaintiffs charged defendants with

“instigating a presently pending international dispute over

sovereign rights over a portion of the Gulf... with the result

that plaintiffs have been prevented from enjoying the fruits of

their concession.” Occidental Petroleum, 331 F.Supp. at 95.

The court held that:

To establish their claim as pleaded plaintiffs must

prove, inter alia, that Sharjah issued a fraudulent

territorial waters decree, and that Iran laid claim to

the Island of Abu Musa at the behest of the defend-

ants. Plaintiffs say they stand ready to prove the

former allegation by use of “internal documents.”

But such inquiries by this Court into the authenticity

and motivation of the acts of foreign sovereigns

would be the very sources of diplomatic friction and

complication that the act of state doctrine aims to

avert.

Occidental Petroleum, 331 F.Supp. at 110 (citations and foot-

note omitted, emphasis added).

Similarly, in Hunt v. Mobil Oil Corp., 550 F.2d 68 (24 Cir.

1977), cert. denied, 434 U.S. 984 (1977), the Second Circuit

was faced with a case in which the Plaintiff alleged that Libya’s

expropriation of its property had been caused by defendants’

acts. In a 2-1 decision, the Second Circuit panel concluded that:

It is true that traditional and textbook definitions of

the Act of State doctrine provide that courts in the

United States are precluded from inquiring into the

validity of the public acts of a foreign sovereign

committed in its own territory. However, while the

skilled pleader here has meticulously attempted to

avoid the issue of validity, its claim is admittedly not

viable unless the judicial branch examines the moti-

vation of the Libyan action and that inevitably

involves its validity.

Id. at 77.

There is no significant distinction between the above cases

and the present case. The alleged libel is that DeRoburt

instigated or brought adout a secret Nauru fvan ‘Or purpuses oi

promoting separation of the Marshall Islands from the Trust

Territory. Thus, as in Hunt, Occidental Petroleum and Buttes

Gas & Oil Co., an issue for decision here is whether the foreign

government’s secret and illegal acts were done “at the behest

of” or “were brought by” a party to the action, in this case,

President DeRoburt.

Clayco Petroleum Corp. v. Occidental Petroleum corp., 712

F.2d 404 (9th Cir. 1983), cert. denied, 104 S.Ct. 703 (1984),

vividly demonstrates this point. In Clayco, plaintiffs in an

antitrust action alleged that defendants had made secret pay-

ments which caused the ruler of Umm Al Qaywayn to grant

defendants an oil concession that otherwise would have gone to

plaintiffs. The court upheld the dismissal of the action, noting

that the act of state doctrine bars lawsuits based on a litigant’s

alleged inducement of foreign sovereign actions.

Plaintiffs in Clayco first became aware of the facts support-

ing their claim through a news article: /

The December 11, 1978 edition of the Oakland

Tribune contained a story which said that Occidental

had distributed about $30 million under “question-

able legal circumstances,” and that Dr. Armand

Hammer, Occidental’s chief executive officer, had

personally disbursed $217,000 to Sultan in a London

hotel room in 1969. The article also reported that a

second payment of $200,000 was made to Sultan in

Switzerland. The article stated, “Hammer paid the

initial $217,000 as part of a $1.7 million deal with

shiekdom (sic)... for an oil and gas concession.”

Id. at 405. The Clayco decision would have been the same if

Armand Hammer had sued the Oakland Tribune for libel on

the basis of the news article which attributed plaintiffs’ injury to

® Both Clayco and Occidental Petroleum make clear that the term

“motivation” refers not only to the “motives” or “intent” of the foreign

sovereign, but also to the cause or agent which impels it to act. Thus, in

Occidental Petroleum, the court held that the inquiry into whether Iran acted

“at the behest of the defendants” was a nonjusticiable inquiry into Iran’s

“motivation.” Occidental Petroleum Corp., 331 F. Supp. at 110.

Hammer’s inducement of the act of a foreign sovereign. That

hypothetical libel case would closely parallel the instant case,

since DeRoburt here alleges that the news articles falsely

accused him of causing an act by a foreign sovereign, specific-

ally the secret and illegal 1978 loan by the Republic of Nauru.

The court’s application of the act of state doctrine in Clayco

would have mandated dismissal of the hypothetical libel suit by

Armand Hammer and similarly compels the dismissal of Presi-

dent DeRoburt’s libel action.

The Ninth Circuit Court of Appeals panel in this case

totally disregarded the Ninth Circuit decision in Clayco. In

fact, the Ninth Circuit panel completely misunderstood the act

of state doctrine’s application to cases such as the instant one

involving claims that a foreign government act was caused or

induced by a party to the litigation. The Ninth Circuit panel

stated that:

{The district court] relied on a line of cases that

prohibited inquiry into the motivation as well as the

validity of acts of foreign states. See American

Banana Co. v. United Fruit Co., 213 US. 347

(1909); Hunt v. Mobil Oil Corp., 550 F.2d 58 (2nd

Cir. 1977); Occidental Petroleum Corp. v. Buttes Gas

& Oil Co., 331 F. Supp. 92, 110 (C.D. Cal., 1971),

aff'd, 461 F.2d 1261 ( 9th Cir. 1972), cert. denied, 409

U.S. 950 (1972). Because the court felt that plain-

tiffs’ motivation in making the loan, if it was in fact

made, would still be an issue in the case, the district

court felt that the act of state doctrine continued to

preclude judicial action.

DeRoburt, 733 F.2d at 703.

The Ninth Circuit panel erred in believing it was required

to determine the justiciability of “plaintiffs motivation in

making the loan.” This is not consonant with the act of state

cases cited above, which demonstrate that the “motivation” of

the foreign state is the issue giving rise to act of state concerns."'

'' The Ninth Circuit panel also apparently misunderstood the scope of

the term “motivation” as used in the act of state cases. See supra note 9.

The Ninth Circuit panel’s total misunderstanding of this

case is even more clearly demonstrated by its puerile perception

of the case as one involving the “private life” of President

DeRoburt:

The fourth amended complaint endeavors to separate

plaintiff's personal life from his officiai life. Most

rulers of state think they have no private life and it is

true they have only snatches. But, if a ruler of state is

out for exercise on his horse and if somebody shot his

horse deliberately, wouldn’t the ruler have a right of

action for the value of the horse?

DeRoburt, 733 F.2d at 704. This conception of the case is

absurd. The news articles describe President DeRoburt’s offi-

cial acts as President and only his official acts. The statements

about President DeRoburt’s acts are statements about the acts

of state of the Republic of Nauru. President DeRoburt

therefore cannot, no matter how artfully he pleads his claim,

separate his “personal life from his offical life” in this case.

Because adjudication of President DeRoburt’s claim must

inevitably involve adjudication on issues of DeRoburt’s “offi-

cial life” and the acts of state of Nauru, it is barred by the act of

state doctrine. The Ninth Circuit panel’s reversal of the District

Court was therefore error.

Il. THE RIGHT TO PUBLICLY CRITICIZE THE OFFI-

CIAL CONDUCT OF FOREIGN HEADS OF STATE IS

CONSTITUTIONALLY PRIVILEGED UNDER THE

FIRST AND NINTH AMENDMENTS TO THE CON-

STITUTION

A. Published Criticism of The Official Conduct of The

President of a Foreign State is Protected by the First

Amendment and Cannot be the Basis of a Libel Action as

a Matter of Law

President DeRoburt’s lawsuit is an attempt to recover

dariages from petitioners for published statements that he and

lus government secretly and illegally gave aid to a separatist

group in a United States-administered Trust Territory. A

review of the procedural history of this case clearly establishes

that President DeRoburt’s lawsuit, at its essence, is an attempt

to vindicate his official acts as President and those of the

Republic of Nauru which he heads. '2

As re-characterized by President DeRoburt in his proposed

fourth amended complaint, this libel suit is nothing more than

an artful device to use his ability to sue as a private citizen in

order to achieve these ends. The spectre raised by this libel

lawsuit and similar suits by other highly placed foreign officials

is that elemental rights of the public, guaranteed by the First

and Fourteenth Amendments, to speak freely on public affairs

will be subject to divestment by the United States Courts.

The axiom upon which First Amendment rights are based

is that “the people, not the government, possess the absolute

sovereignty.” New York Times Co. v. Sullivan, 376 U.S. 254,

274 (1964). “The right of free public discussion of the

stewardship of public officials was thus, in Madison’s view, a

fundamental principle of the American form of government.”

New York Times, 376 U.S. at 275. In order to preserve their

self-government, citizens must be free to debate vigorously

local, state and national political issues.'3 Yet the threat to a

people’s government is equally manifested by ignorance of

foreign affairs. The people must be free to debate foreign

12 Respondent's first two complaints were captioned as “Hammer De-

Roburt, President of the Republic of Nauru, Plaintiff.” After discovery

revealed that the lawsuit was being financed with Republic of Nauru

government funds, petitioners moved for dismissal on the ground that

President DeRoburt was suing as a government official on behalf of the

Nauru government, and that governments have no cause of action for libel.

See Rosenblatt v. Baer, 383 US. 75, 81 (1966) (prosecutions for libel on

government are not tolerated in any form.) President DeRoburt, in order to

avoid dismissal on that basis, filed a certificate stating he was suing as a

private individual and amended the caption by deleting his official title.

Nonetheless, President DeRoburt did not alter the allegations of his com-

plaint and subsequently filed a Third Amended Complaint identical to the

prior versions but with an increased prover “or damages.

'3“Those who won our independence believed ._ . that public discussion

is a political duty; and that this should be a fundamental principle of the

American Government... they knew... that it is hazardous to discourage

thought, hope and imagination; that fear breeds repression; that repression

breeds hate; that hate menaces stable government; that the path of safety lies

(footnote continues)

affairs in order to properly guide their country and elect their

officials. In this regard, it must be noted that the framers of our

Constitution lived in an era when the right to print and speak

freely was used to liberate us from distant controls. In that day,

tyranny could be resisted only by insuring ffeedom to speakers

and publishers.

The recognition of this vested right in the people for

rigorous, and robust debate on public issues characterizes each

of this Court’s decisions in the arena of libel law since New York

Times. It is only the “legitimate state interest in compensating

private individuals for wrongful injury to reputation.” Gertz v.

Robert Welch Inc., 418 U.S. 323, 348 (1974), that has pre-

vented this Court in the cases that have come before it from

embracing “the view that publishers and broadcasters enjoy an

unconditional and indefeasible immunity from liability for

defamation.” Jd. at 341. Moreover, in establishing the stan-

dards of liability which apply to various categories of libel

plaintiffs, the Court’s chore has been to “define the proper

accommodation between these competing concerns [while

assuring] to the freedoms of speech and press that ‘breathing

space’ essential to their fruitful exercise.” Id. at 342.

In this Court’s previous decisions the level of the state

interest in protecting the plaintiff's reputation rested in large

part on the plaintiff's access to other means of redressing his

injury. Thus, in Gertz, the Court stated:

The first remedy of any victim of defamation is

self-help—using available opportunities to contradict

the lie or correct the error and thereby to minimize its

adverse impact on reputation. Public officials and

public figures usually enjoy significantly greater ac-

cess to the channels of effective communication and

hence have a more realistic opportunity to counteract

false statements than private individuals normally

(footnote continued)

in the opportunity to discuss freely supposed grievances and proposed

remedies; and that the fitting remedy for evil counsels is good ones.” New

York Times, 376 U.S. at 270.

enjoy. Private individuals are therefore more vulner-

able to injury, and the state interest in protecting

them is correspondingly greater.

Id. at 344. Similarly, in Hutchinson v. Proxmire, 443 US. 111,

136 (1979), the Court held that defendant was not entitled to

the protections of New York Times, where plaintiff “did not

have the regular and continuing access to the media that is one

of the accoutrements of having become a public figure.” Accord

Curtis Publishing Co. v. Butts, 388 U.S. 130, 154-55 (1967)

(opinion of Harlan, J.) (whether plaintiff has “a legitimate call

upon the court for protection” turns on, whether he has

“sufficient access to the means of counterargument to be able

‘to expe’ . through discussion the falsehood and fallacies’ of the

defamatory statements” ).

In this case, the alleged libel describes President DeRo-

burt’s official acts, not his acts as a private citizen. As the

highest public official of a foreign state, DeRoburt enjoys

unique Opportunity to communicate his account of his official

acts to the world at large. Unlike any local or state domestic

public official, a President may plead his case to the court of

world opinion through his ambassadors, his ministers and his

government’s communications and information agencies.

Moreover, a head of state generally has ready access to the

courts of his own country and to international forums such as

the United Nations. A head of state’s unusual status as the

highest public official of his country and the attendant public

interest and high visibility enable him to provoke, participate in

and shape any controversy through his ready access to the

media.'4 This obviates his need to call upon United States

courts for assistance in defending the public image of his official

acts.

In contrast to the private individual who has a more

compelling call on the courts for redress of injury, President

DeRoburt and other heads of state have a diminished need for

4 In this case, the Pacific Daily News had published an interview with

President DeRoburt in Apmil, 1978, less than two months before the publica-

tion of the May 30, 1978, news article at issue. In fact, the interview is noted

in the May 30, 1978, news article.

protection since they have thrust themselves deep into the

international public arena by assuming the reins of national

power. See Gertz, 418 U.S. at 345. As this Court noted in New

York Times, 376 U.S. at 273, government officials “are to be

treated as men of fortitude able to thrive in a hardy climate.”

Foreign heads of state, to a far greater degree than lesser

officials, “have voluntarily exposed themselves to increased risk

of injury” from statements about their official acts. Gertz, 418

U.S. at 345. Thus, the state interest in protecting their official

reputations is correspondingly diminished.

In entertaining any libel action by a head of state, the

courts must balance the de minimus interest in judicial protec-

tion of the official reputation of such a plaintiff against the harm

that such suits inevitably cause to the public’s fundamental First

Amendment right to freely debate foreign affairs. That harm

has reveatedly been recognized by this Court to be “the pall of

fear and timidity imposed upon those who would give voice to

public criticism” caused by the burden and expense of litiga-

tion. New York Times, 376 U.S. at 278. Thus, “would-be critics

of [a foreign] official’s conduct may be deterred from voicing

their criticism even though it is believed to be true and even

though it is in fact true because of doubt whether it can be

proved in court, or fear of the expense of having to do so.” New

York Times, 376 U.S. at 278.

In a libel suit by a foreign head of state for statements

about his official acts to state, the burden and expense of

litigation are out of all proportion since such a plaintiff is able to

marshall the tremendous resources of his national treasury to

finance the lawsuit. At the same time, a head of state libel

plaintiff can control access to vital documents, information and

witnesses necessary to adequately defend the libel action. '5

Clearly, the factors to be balanced in a case where a

foreign head of state brings a libel suit for statements about his

1S Discovery is complicated by two factors: First, depending on the

sensitivity of the official act described in the publication, assertions of national

security interests will often come into play in defendant’s attempts to obtain

testimony and documentation on the truth or falsity of its publication. See

Memorandum in Support of Time, Inc.’s Motion to Dismiss and For

(footnote continues)

official acts are substantially different from those in libel cases

involving domestic public officials. Statements about the

official acts of a foreign government and its head of state serve

a vital public interest and accordingly should be given the

maximum possible protection. Against this fundamental First

Amendment right must be balanced the state’s interest in

protecting the official reputation of a foreign head of state. In

view of the factors discussed above, that interest is minimal

where the statements sued upon only mention the foreign head

of state’s official acts in his capacity as head of state.

For the foregoing reasons, it is respectfully submitted that

petitioner in this case should be granted a greater protection

than that provided by the “actual malice” standard. Where a

published statement discusses his official acts as President and

does not discuss his private life, a foreign head of state should

be given no remedy greater than the right to join the inter-

national public debate over those acts. This right to a hearing

in the court of world opinion adequately serves ine iimited state

interest in protecting President DeRoburt’s official reputation

while preserving the fundamental social values embodied in the

First Amendment.

B. The Immemorial Tradition Of Criticism Of The Official

Conduct Of Foreign Heads Of State Is A Fundamental

Right Retained By The People And Their Representative

The Press Under The Ninth Amendment

The history of the present King of Great Britain is a

history of repeated injuries and usurpations, all hav-

ing in direct object the establishment of an absolute

(footnote continued)

Summary Judgment at 31-35, Sharon v. Time, Inc., No. 83 Civ. 4660 (ADS)

(S.D.N.Y., filed June 22, 1983) (noting Minister Sharon’s repeated assertions

of national security in refusing to testify regarding the underlying facts of a

detailed analysis of the Kahan Commission report which appeared in Time

Magazine and which condemned his and other Israeli officials’ actions in the

massacres at Sabra and Shatilla, Lebanon.) Compare United States v. Nixon,

418 U.S. 683, 703-04 (1974) (certain documents were initially unavailable to

the special prosecutor given the President’s assertion of Executive Privilege. )

Second, as in this case, witnesses often reside outside of the subpoena powers

(footnote continues)

Tyranny over these States. To prove this, let Facts be

submitted to a candid world.... He has plundered

our seas, ravaged our Coasts, burnt our towns, and

destroyed the lives of our people.—He is at this time

transporting larger Armies of foreign Mercenaries to

compleat the works of death, desolation and tyranny,

already begun with circumstances of Cruelty & per-

fidy scarcely paralleled in the most barbarous ages,

and totally unworthy the Head of a civilized na-

tion.... A Prince, whose character is thus marked

by every act which may define a Tyrant, is unfit to be

the ruler of a free people ....

The Unanimous Declaration of the Thirteen United States of

America, July 4, 1776 (hereinafter cited as ““The Declaration of

Independence”’).

The Declaration of Independence is the well from which

have sprung the fundamental rights we possess as citizens of

this Republic. The role of this document in markedly altering

the course of American history is amply described in the

literature of the time and historical works concerning this

country. A review of the excerpt set forth above reveals a

scathing and libelous (were it not true) attack on King George

III, the then King of England. Yet the significance of this

document in our history was not due primarily to the scurrilous

nature of its attack on the King, but upon its embodiment of the

American people’s right to be free from the tyrannical domina-

tion of a foreign sovereign.'® It is poignant testimony to the

notion that this country’s political history was built upon the

(footnote continued)

of the court in which the libel action is lodged. Government officals who have

knowledge of the transaction reported and the underlying documentation are

frequently within the unique control of the foreign head of state.

16 King George III was not, before the Declaration of Independence was

signed, legally a “foreign” head of state, but he became one at the moment it

was signed. The political development of the American people, however, had

diverged so far from that of England, that King George III represented the

(footnote continues)

people’s self-declared right to freely criticize those foreign

leaders whose acts of state injure or offend American citizens.

The Declaration of Independence is not the sole evidence

of this tradition of criticism. This country has an uninterrupted

history of free public debate on foreign governmental acts

which offend our sense of justice and fair play. In colonial

times, public and press criticism focused upon the British

Crown. In the earlier part of this century, public outcry focused

upon the axis powers and upon the excesses of Stalinism. In

recent times our public debate has addressed the foreign

adventures of Fidel Castro and Muammar Qaddaffi, the in-

human practices of the present regime in Iran and authoritarian

repression by military dictators throughout the developing

world.

In view of this long tradition of criticism of acts by foreign

governments and their leaders, it is inconceivable that the

founders of this nation would have permitted a foreign head of

state to use the courts of this country to suppress such criticism.

This is demonstrated by the absence of any reported United

States cases in which a foreign government or foreign official

has sued for statements describing the official acts of that

government or official. Petitioners urge that such suits are

barred by the Ninth Amendment to the United States Con-

stitution, which guarantees and incorporates into the Bill of

Rights the long-standing rights of the people which are not

specifically enumerated in the other Amendments.

The Ninth Amendment was added to the Constitution to

preclude any risk that courts would apply the maxim expressio

unius est exclusio alterius to the Bill of Rights. Many state

conventions had opposed ratification of the orginal Con-

stitution unless a bill of nghts was included, but concern was

(footnote continued)

embodiment of principals and ideals antithetical to the founders of this

country. Moreover, the Declaration of Independence was published and

republished by handbills and newspapers throughout the thirteen states in the

years after Independence. See, e.g., MUNVES, THOMAS JEFFERSON AND THE

DECLARATION OF INDEPENDENCE 121 (1978).

expressed that inclusion of such a document would do more

harm than good. One opponent, for example, argued:

There is a maxim in law, and it will apply to bills

of rights, that when you enumerate exceptions, ex-

ceptions operate to the exclusion of all circumstances

that are omitted; consequently, unless you except

every right from the grant of power, those omitted

are inferred to be resigned to the discretion of the

Government.

1 ANNALS OF CONGRESS 747 (GALES & SEATON ED. 1834)

(Rep. Jackson of Georgia). See G. Woop, THE CREATION OF

AMERICAN REPUBLIC 537-40 (1969). Alexander Hamilton, as

well, had objected to the adoption of a bill of nghts on the

ground, inter alia, that to enumerate such rights might permit

the disparagement of others. See The Federalist No. 84 (A.

Hamilton), at 559 (Modern Library ed.)

Answering such objections on the floor of the House of

Representatives, James Madison stated:

It has been objected also against a bill of rights,

that, by enumerating particular exceptions to the

grant of power, it would disparage those rights which

were not placed in that enumeration; and it might

follow, by implication, that those rights which were

not singled out, were intended to be assigned into the

hands of the General Government, and were con-

sequently insecure. This is one of the most plausible

arguments that I have ever heard urged against the

admission of a bill of nghts into this system; but, I

conceive, that it may be guarded against. I have

attempted it, as gentlemen may see by turning to the

last clause of the fourth resolution.

1 ANNALS OF CONGRESS at 439. The result was the Ninth

Amendment. It was adopted simply to insure “that by enum-

eration of rights in the constitution nothing has been lost; that

the rights of the people would have rested on as firm ground

without enumeration, because they do not lie within the

purview of powers granted to Congress.” Dunbar, James

Madison and the Ninth Amendment, 42 Va. L. REv. 627, 643

(1956) (emphasis in original ).1'7

This Court recentiy acknowledged this purpose of the

Ninth Amendment in Richmond Newspapers, Inc. v. Virginia,

448 U.S. 555 (1980):

Madison’s comments in Congress also reveal the

perceived need for some sort of constitutional “saving

clause,” which, among other things, would serve to

foreclose application to the Bill of Rights of the

maxim that the affirmation cf particular mghts

implies a negation of those not expressly defined. See

1 ANNALS OF CONG. 438-440 (1789). See also, e.g. 2

J. STORY, COMMENTARIES ON THE CONSTITUTION OF

THE UNITED STATES 651 (Sth ed. 1891). Madison’s

efforts, culminating in the Ninth Amendment, served

to allay the fears of those who were concerned that

expressing certain guarantees could be read as ex-

cluding others.

Id. at 579 n.15.

Although in Richmond Newspapers this Court ultimately

concluded that the public right of access to criminal trials arises

from the First Amendment, it implicitly contenanced the eleva-

tion of a historical right to Constitutional dimensions even

though such a right was not explicitly included in the first eight

Amendments to the Constitution. The Court conducted a

historical review of public access to trials and concluded that:

From this unbroken, uncontradicted history, sup-

ported by reasons as valid today as in centuries past,

we are bound to conclude that a presumption of

openness inheres in the very nature of a criminal trial

under our system of justice.

Id. at 573.

17 Accord, e.g., 2 J. STORY, COMMENTARIES ON THE CONSTITUTION OF THE

UNITED STATES 626-27, 651 (6th ed. 1891); Redlich, Are There “Certain

Rights... Retained by the People?”, 37 N.Y.U.L. Rev. 787, 805 (1962);

Note, The Ninth Amendment: Guidepost to Fundamental Rights, 8 WM. &

Mary L. Rev. 101, 102-07 (1966).

One need. go no further than the Deciaration of In-

dependence to conclude that the night to speak out against the

official acts of a foreign head of state is “so rooted” in the

“traditions and collective conscience of our people ... as to be

ranked as fundamental.” Cf. Griswold v. Connecticut, 381 U.S.

479, 493 (1965) (Goldberg, J., concurring) (citing Snyder v.

Massachusetts, 291 U.S. 97, 105 (1934)). As such, it is

necessarily guaranteed to the people and their representative,

the press, by the Ninth Amendment.

If this action is allowed to proceed to tnal, American

courtroom doors will be thrown open to foreign leaders using

vast national treasury resources whose primary purpose is to

suppress published accounts of their and their country’s official

acts. Already, the Defense Minister of Israel has filed a libel

suit in the United States District Court for the Southern District

of New York against Time, Inc., for an article describing his

and Israel’s involvement in an international atrocity. Sharon v.

Time, Inc., No. 83 CIV-4660 (S.D.N.Y. filed June 22, 1983).

In the neighboring courts of Canada, the Prime Minister of the

Bahamas has filed a defamation action against NBC for a

television broadcast accusing his government of protecting drug

smugglers. See Washington Post, March 29, 1984 at A31.

If President DeRoburt is permitted to maintain this suit,

the basic Ninth Amendment right of United States citizens to

debate and criticize freely the acts of foreign heads of state will

be significantly eroded. That right, the exercise of which gave

birth to this Nation, should not now be sacrificed to permit

President DeRoburt to pursue this action.

For all the reasons stated above, we urge this Honorable

Court to take these historic questions and adjudicate same so

that the people of our country will be reinforced in their view

that foreign heads of state cannot use the judicial system of our

country to cast the chill winds of censorship upon our people

and their representative, the press of the Unitea States of

America.

* Counsel of Record

CONCLUSION

Respectfully submitted,

* ARTHUR B. HANSON

ARTHUR D. MCKEY

GreGory P. SCHERMER

PAMELA J. BROWN

HANSON, O’BRIEN, BIRNEY

& BUTLER

888 Seventeenth Street, N.W.

Washington, D.C. 20006

(202) 298-6161

Davin J. DEZZANI

JAMES J. BICKERTON

GOODSILL ANDERSON QUINN &

STIFEL

1600 Castle & Cooke Building

Financial Plaza of the Pacific

Honolulu, Hawaii 96813

(808) 547-5600

Attorneys for Petitioners

APPENDIX A

Unrrep STATES COURT OF APPEALS,

NINTH CIRCUTT.

Nos. 83-1518, 83-1847.

Hammer DeRosurt,

Plaintiff-Appellant,

Vv.

GANNETT Co., INC., GUAM PUBLICATIONS, INC.,

d/b/a Pacitric Damr_y News,

Defendants-Appellees.

Argued and Submitted Oct. 4, 1983.

Decided May 22, 1984.

John J. Walsh, Cadwalader, Wickersham & Taft, New

York City, for plaintiff-appellant.

David Dezzani, Goodsill, Anderson, & Quinn, Honolulu,

Hawaii, for defendants-appellees.

Appeal from the United States District Court for the

District of Hawaii.

Before CHAMBERS, SNEED and ANDERSON, Circuit

Judges.

CHAMBERS, Circuit Judge:

Appellant, Hammer DeRoburt, appeals the dismissal of

his libel suit wherein Gannett Co., Inc. and Guam Publications,

Inc., d/b/a Pacific Daily News allegedly published a libelous

article accusing appellant of making an illegal loan to the

Marshall Islands Political States Commission ( MIPSC).

Appellant is the president of Nauru, an island republic in

the Pacific. DeRoburt was first elected president in May, 1968,

but was replaced in January, 1977. He remained a member of

Parliament as leader of the opposition until reelected president

on May I1, 1978.

The article complained of alleged that DeRoburt made

secret and illegal loans to the MIPSC. In his complaint,

DeRoburt initially avered that he did not make the loan and

that in any event the loan was neither secret nor illegal. The

lower court dismissed the complaint applying the act of state

doctrine on defendants’ motion.‘

The act of state doctrine, although similar to the sovereign

immunity doctrine, is distinguishable in several significant

aspects. Where sovereign immunity addresses the jurisdiction

of the court, the act of state doctrine “is a prudential doctrine

designed to avoid judicial action in sensitive areas.” Inter.

Ass'n of Machinists, Etc. v. OPEC, 649 F.2d 1354, 1359 (9th

Cir. 1981). Further, in Banco Nacional de Cuba v. Sabbatino,

376 U.S. 398, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964), the Court

recognized that the doctrine was not compelled by the nature of

sovereignty, by international law, or by the text of the Con-

stitution. 376 U.S. at 421-23, 84 S.Ct. at 936-37.

Rather, it derives from the judiciary’s concern for its

possible interference with the conduct of foreign affairs by

the political branches of the government:

The doctrine as formuiated in past decisions ex-

presses the strong sense of the Judicial Branch that its

engagement in the task of passing on the validity of

the foreign acts of state may hinder rather than

further this country’s pursuit of goals both for itself

and for the community of nations as a whole in the

international sphere.

Timberlane Lbr. Co. v. Bank of America, N.T. & S.A., 549 F.2d

597, 605 (9th Cir. 1976) (quoting Sabbatino, supra, 376 U.S. at

423, 84 S.Ct. at 937).

The act of state doctrine, however, is not an “inflexible and

all encompassing rule.” Sabbatino, supra, 376 U.S. at 428, 84

S.Ct. at 940. Rather, it is a balancing test with the critical

' The Court notes that this case is unusual as generally this doctrine is

raised by the sovereign or the court on its own motion. In the instant case,

however, the plaintiff is arguing against its application. And in his individual

capacity?

element being the potential for interference with our foreign

relations. See Timberlane, supra, 549 F.2d at 607. As such, the

courts should seek to avoid passing on the validity of foreign

acts and similarly abstain from “challeng[ing] ...the wisdom

of its policy, or the integrity and motivation of its action.” Jd. at

607.

After considering plaintiffs original complaint and the

three subsequently filed amendments, it is clear the acts of state

doctrine would bar litigation. In the third amended complaint,

plaintiff alleges defendant falsely accused the Republic of

Nauru of secretly backing the separation of the Marshall

Islands from Micronesia, of making an illegal loan to the

Marshall Islands in 1974, and falsely accused himself of making

secret and illegal loans to the Marshall Islands in 1974 and

1978. As the trial judge correctly noted, litigation of those

claims would involve serious intrusion into the propriety of the

acts and policies of a foreign state and thus clearly call into play

the acts of state doctrine. The dismissal of the third amended

complaint was necessary and correct.

Thereafter, plaintiff moved for reconsideration and sought

leave to file a fourth amended complaint which he believed

would obviate the need for the courts to inquire into and decide

matters that would trigger the act of state doctrine. The

proposed fourth amended complaint was attached to the mo-

tion for reconsideration. The dismissal of the action necessarily

involved a ruling thereon adverse to DeRoburt.

In this latest complaint, plainiiff abandoned allegations

that contested defendant’s characterization of the loans or the

motives of Nauru and alleged only that he did not make the

loan which was the subject of the article. Simply put, plaintiff

wished to amend his complaint so that the thrust of the inquiry

rested on who made the loan instead of how and why the loan

was made. As a result, plaintiff argues resolution of the

litigation would not require the courts to pass on the validity of

the foreign acts or “challenge ... the wisdom of [Nauru’s]

policy or the integrity and motivation of [{Nauru’s] action.”

Timberlane, supra, 549 F.2d at 607.

The district court denied the motion for reconsideration

and leave to amend believing that regardless of the way

plaintiff framed his complaint, matters deemed non-justiciable

by application of the act of state doctrine would nevertheless

enter into the lawsuit. In so ruling, the court relied on a line of

cases that prohibited inquiry into the motivation as well as the

validity of acts of foreign states. See American Banana Co. v.

United Fruit Co., 213 U.S. 347, 29 S.Ct. 511, 53 L.Ed. 826

(1909); Hunt v. Mobil Oil Corp., 550 F.2d 68 (2nd Cir. 1977);

Occidental Petroleum Corp. v. Buttes Gas & Oil Co., 331 F.Supp.

92, 110 (C.D.Cal.1971), aff'd, 461 F.2d 1261 (9th Cir.1972),

cert. denied 409 U.S. 950, 93 S.Ct. 272, 34 L.Ed.2d 221 (1972).

Because the court felt that plaintiffs motivation in making the

loan, if it was in fact made, would still be an issue in the case,

the court felt the act of state doctrine continued to preclude

judicial action.

As previously stated, the act of state doctrine is a flexible

principle whose application turns upon the “balance of relevant .

considerations.” Sabbatino, supra, 376 U.S. at 428, 84 S.Ct. at

940. “The touchstone of Sabbatino—the potential for inter-

ference with our foreign relations—is the crucial element in

determining whether deference should be accorded in any

given case.” Timberlane, supra, 549 F.2d at 607.

After a review of the fourth amended complaint, this court

believes the balance tips in favor of the plaintiff and against the

application of the act of state doctrine. As pleaded, this case

has become one more akin to a misidentification situation.

Although resolution of the instant controversy might to some

degree encroach on areas best left untouched by the judiciary,

this court believes any such intrusion would be minimal and

plaintiff should not be barred by the application of the act of

state doctrine.

The fourth amended complaint endeavors to separate

plaintiff's personal life from his official life. Most rulers of state

think they have no private life and it is true they have only

snatches. But, if a ruler of state is out for exercise on his horse,

and if somebody shot his horse deliberately, wouldn’t the ruler

have a nght of action for the value of the horse?

We do not hold that plaintiff is home safe. A trial or

pretrial of this case may get so deeply involved in affairs of state

that the trial judge on his own motion might be able to

terminate the proceeding. But if Nauru’s chief of state wants to

prove his case with state documents, or evidence of state

transactions, maybe the court should then take a look at the

documents or other evidence. And wouldn’t defendant’s right

of discovery be impaired if it could not get full discovery? Has

there ever been a ruler who wanted to give an enemy a full

clearance to rummage through his papers in his lifetime?

The decision of the district court is therefore REVERSED

for now as to the application of the act of state doctrine and the

case is REMANDED so that the district court can consider

defendants’ other arguments in opposition to plaintiffs motion

for reconsideration and leave to file a fourth amended com-

plaint. Further, the award of costs is thereby VACATED.

APPENDIX B

UNITED STATES District Court,

D. HAwall

Civ. No. 78-0375.

HAMMER DEROBURT,

Plaintiff,

Vv.

GANNETT Co., INc., a Delaware corporation,

and Guam Publications, Inc., a Hawaii Corporation,

both dba Pacific Daily News,

Defendants.

Nov. 30, 1982.

Genevieve S. Richardson, A. Bernard Bays, Michael C.

Davis, Carlsmith, Carlsmith, Wichman & Case, George M.

Allen, Donald C. Williams, Honolulu, Hawaii, for plaintiff.

David J. Dezzani, James J. Bickerton, Goodsill, Anderson

& Quinn, Honolulu, Hawaii, for defendants.

DECISION AND ORDER

SAMUEL P. KING, Chief Judge.

BACKGROUND

This is the second of the Court’s decisions in this case

addressing the act of state doctrine. By its order of October 13,

1982, the Court dismissed the plaintiffs libel suit on the

grounds that the issues presented by the suit would require the

Court to pass judgment on the act of a foreign sovereign and

thereby raise issues made non-justiciable under the act of state

doctrine. DeRoburt v. Gannett, 548 F.Supp. 1370 (D. Hawaii

1982). The Court fully described the facts of the case and

explained the basis of its decision in that earlier order and will

not repeat them here, except to the extent necessary.

Briefly, this libei suit was brought by Hammer DeRoburt,

the President of the Republic of Nauru, against the defendants

[referred to collectively herein as “Gannett”] attacking two

articles published by Gannett in which DeRoburt allegedly was

tied to the making of an illegal, improper and secret 1978 loan

to the Marshail Islands Political Status Commission. DeRoburt

seeks $20 million in compensatory and $20 million in punitive

damages.

The October 13 order stated in part:

The court is convinced . . . that resolution of the

central issues in this case, either for or against the

plaintiff, will inevitably lead to this court’s examining

or “sitting in judgment on” the validity, legality and

motivation of the government of Nauru in making

the 1978 loan to the Marshall Islands, and that such

an examination is forbidden by the act of state

doctrine, its underlying policies and rationale. The

court finds that the issues raised by the defendants’

characterization of the loan are sufficient alone to

raise an effective act of state doctrine defense, and

therefore it need not decide whether the questions

surrounding DeRoburt’s involvement in the loan

implicate act of state considerations.23

Id. at 1383 (footnote in original).

As is apparent from the preceding, the act of state doctrine

entered the case along two separate paths: first, with respect to

the plaintiffs challenge to Gannett’s characterization of the

loan and, second, with respect to the plaintif’s reported in-

volvement in the making of the loan. The Court’s holding, as

stated, was limited to the first of these avenues. The order,

however, did address, without ruling on, the second issue at

footnote 23:

The court does note however that several of the

cases applying the act of state doctrine to bar suits

involved allegations that private parties induced for-

eign governments to act in wrongful or illegal

ways.... The court suggests, without holding, that

the principle might apply even more strongly when

the party accused of having induced the act of state is

himself a member of that government.

Id. (citations omitted; emphasis in original).

DeRoburt now has moved for leave to file a fourth

amended complaint and for reconsideration and vacation of the

Court’s prior judgment. In a nutshell, DeRoburt has redrafted

his complaint so as to excise any allegations challenging

Gannett’s characterizations of the 1978 loan. This, says

DeRoburt, cleanses the case of any act of state doctrine

concerns, as the Court would no longer be required to pass

judgment on the validity and legality of the loan. The only

issue remaining under the proposed amended complaint is

whether DeRoburt was involved in the making of the loan. On

the basis of his proposed fourth amended complaint, DeRoburt

also seeks to have vacated the Court’s order dismissing the suit.

The Court, then, is faced squarely with the question

whether the allegation that DeRoburt had nothing to do with

the 1978 loan raises issues non-justiciable under the act of state

doctrine. For the reasons stated herein, DeRoburt’s motions

are denied.

DISCUSSION

Preliminarily, the Court points out that the loan reported in

the articles was a loan by the government of Nauru from the

public funds of the Republic of Nauru. DeRoburt’s in-

volvement was reported to be that of an instigator and go-

between in the transaction.

Also, the Court is mindful of the fact that DeRoburt was at

all relevant times, and remains, a highly placed individual in

both the government and society of Nauru. From 1968 until

1977, he held the office of president, after which he became the

leader of the opposition in the Nauruan parliament. He was

reelected president on May 11, 1978. He has been Head Chief

of the Nauru Local Government Council since 1955.

Thus, although bringing this suit in his individual capacity,

DeRoburt is not one unconnected with the governmental affairs

of Nauru.

As the Court noted in its October 13 order, several cases in

the jurisprudence of the act of state doctrine have involved the

ceca i ii

inducement by a private party of the act of a foreign sovereign.

An early decision, American Banana Co. v. United Fruit Co.,

213 US. 347, 29 S.Ct. S11, 53 L.Ed.2d 826 (1909) ( Holmes,

J.), was written when the act of state doctrine was considered

primarily a choice of law principle. Nevertheless, the case held

non-justiciable the question whether a private defendant in-

stigated the government of Costa Rica to seize the plaintiff's

property in that country.

More recently, Occidental Petroleum Crop. v. Buttes Gas &

Oil Co., 331 F.Supp. 92 110 (C.D.Ca.1971), aff'd, 461 F.2d

1261 (9th Cir. 1972), cert. denied, 409 U.S. 950, 93 S.Ct. 272,

34 L.Ed.2d 221, followed American Banana in holding that

“inquiries by this court into the authenticity and motivation of

the acts of foreign sovereigns would be the very sources of

diplomatic friction and complication that the act of state

doctrine aims to avert.” (Emphasis added.) Occidental was an

antitrust suit in which the defendant was alleged to have

“induced and procured” various acts by certain sovereign states

along the Persian Gulf regarding oil drilling rights. In dis-

missing the suit, the court found the enduring holding of

American Banana tw be that “the act of state doctrine bars a

claim for antitrust injury flowing from foreign sovereign acts

allegedly induced and procured by the defendant.” 331 F.

Supp. at 110.

Hunt v. Mobil Oil Corp., 550 F.2d 68 (2d Cir. 1977), went

one step further in affirming .he dismissal of a suit in which the

defendants were alleged to have put the plaintiff in a position

from which it was unable to come to an understanding with the

Libyan government on an oil concession. The case was not so

much one of inducement as of manipulation of a sovereign’s

acts. Moreover, the plaintiff had carefully avoided making any

challenge to the validity of the acts of state involved. The court

nevertheless found that the excision of the Libyan government

from the suit did not eliminate its actions as a necessary element

of the action and, furthermore, that an examination of the

motivation of the Libyan action inevitably involved its validicy.

Id. 76-77.

Finally, Bokkelen v. Grumman Aerospace Corp., 432 F.

Supp. 329 (E.D.N.Y. 1977), was a suit alleging that the

Ce ee

defendant was responsible for the denial of import licenses by

the Brazilian government. The court there held that the case

could not

be resolved without an inquiry into why the Brazilian

government acted as it did in denying the licenses.

Such an inquiry would necessarily have to include the

question of whether Grumman, directly or indirectly,

improperly influenced that decision. The answer to

that question easily might “embarrass the Executive

Branch of our Government in the conduct of our

foreign relations.”

Id. 333 (citing Alfred Dunhill of London v. Republic of Cuba,

425 US. 682, 697, 96 S.Ct. 1854, 1862, 48 L.Ed.2d 301

(1976)). See also Northrop Corp. v. McDonnell Douglas Corp.,

498 F.Supp. 1112 (C.D.Ca.1980); General Aircraft Corp. v. Air

America, Inc., 482 F.Supp. 3 (D.D.C.1979).

These cases all involved suits in which the plaintiffs had

been harmed in some fashion by the acts of foreign states. The

Court has already held, however, that the obvious factual

differences between those cases and this one do not make the

act of state doctrine as such inapplicable here. Rather, the

case’s resolution depends upon the policies underlying the act of

state doctrine. 548 F.Supp. at 1382. And cases such as Buttes

Gas & Oil Co. v. Hammer, [1981] 3 W.L.R. 787 (House of

Lords), further persuade the Court that the act of state doctrine

may be applied to libel suits, despite the “inversion” of parties

that exists in such cases. See DeRoburt v. Gannett, 548 F.Supp.

at 1383.

The Court is also convinced that the act of state doctrine

bars examination into the motivation of foreign acts of state as

well as into the validity of those acts.

Based upon these principles, the Court finds that, although

DeRoburt attempts to excise from his complaint any allegations

that challenge Gannett’s characterization of the 1978 loan, the

Court (or jury) would still be forced to decide how and, by

implication, why the government of Nauru loaned $A600,000

{Australian dollars] to the Marshall Islands in 1978.

This is not a simple misidentification case, as DeRoburt

contends, in which A is reported to have committed the crime

perpetrated in fact by B. Here, the plaintiff is a high-ranking

government official and head of state, while the act of state

involved was a loan by the government of Nauru. Although

DeRoburt has sued in his individual capacity, he was reported

to have acted in his official capacity. Moreover, the heart of the

defamation alleged is that the improper motives attributed to

the loan were imputed to DeRoburt by association. Yet

governments are not people. They are of people. Governments

cannot have improper motives, only the people who constitute

governments can. The articles in question named DeRoburt as

a prime mover behind the 1978 loan. Thus, his motives were

also being imputed to the government of Nauru. Whether

DeRoburt was a party to the loan or not therefore unavoidably

implicates the motivation of the government of Nauru. To

explore judicially whether DeRoburt was involved in the loan,

and perhaps find that he was, would inevitably cast a shadow

of innuendo across the reputation of the Republic of Nauru.

Also, in a sense, the proposed fourth amended complaint

raises more intractable ac: of state difficulties than the dismissed

complaint, for here there is no attempt to vindicate the 1978

loan—DeRoburt virtually concedes that the loan was illegal,

secret and improper. Compare Frazier v. Foreign Bondholders

Protective Council, 283 App. Div. 44, 125 N.¥.S.2d 900, 905

(1953), in which the court said: “Perhaps our courts should be

even more sensitive to the involvement of a sovereign’s action

when the sovereign is not a party to the action, and the

adjudication as it affects its prestige and dignity partakes of the

nature of an ex parte proceeding.”

As in its earlier order, the Court looks to a possible verdict

in favor of the defendant as a gauge. 548 F.Supp. at 1383-

1384. Under DeRoburt’s proposed amended complaint, ver-

dict for the defendant would be tantamount to a declaration

that the current head of state of a sovereign republic instigated,

arranged and delivered an illegal, improper and secret loan to

another sovereign entity. The ramifications on this country’s

foreign policy and on the relation between the Judicial and

Executive Branches would be the same as before. This the

Court cannot allow.'

The Court may deny leave to amend when the proposed

amendment would not cure the infirmity of the dismissed

complaint.2 3 J. Moore, Moore’s Federal Practice 4 15.10 (2d

ed. 1982). The Court finds that the proposed amendment in

this case would be futile.

Accordingiy, [TT IS HEREBY ORDERED AND AD-

JUDGED that the plaintiff's Motion for Leave to File

Amended Complaint is DENIED. For the reasons stated

herein, IT IS FURTHER ORDERED AND ADJUDGED that

plaintiff's Motion to Reconsider Order and Vacate Judgment is

also DENIED.

' Again, nothing in the act of state doctrine prevents the plaintiff from

secking relief in the courts of his own country.

2 Gannett has offered several other grounds in opposition to DeRoburt’s

motions, but owing to the Court's disposition herein, they will not be

addressed.

APPENDIX C

UNITED STATES DistTRICT COuRT,

D. HAWAIL

Civ. No. 78-0375.

HAMMER DEROBURT,

Plaintiff,

Vv.

GANNETT Co., INC., a Delaware corporation,

and Guam Publications, Inc., a Hawaii corporation,

both dba Pacific Daily News,

Defendants.

Oct. 13, 1982.

Genevieve S. Richardson, A. Bernard Bays, Carlsmith,

Carlsmith, Wichman & Case, George M. Allen, Honolulu,

Hawaii, Donald C. Williams, Agana, Guam, for plaintiff.

David J. Dezzani, James J. Bickerton, Goodsill, Anderson

& Quinn, Honolulu, Hawaii, for defendants.

ORDER GRANTING MOTION

TO DISMISS

FACTS

SAMUEL P. KING, District Judge.

Plaintiff Hammer DeRoburt, on October 2, 1978, filed this

suit against Gannett Company, Inc., and its subsidiary, Guam

Publications, Inc. [collectively referred to as “Gannett”.

Jurisdiction is premised on diversity of citizenship: Gannett

Company, Inc. is a Delaware corporation with its principal

place of business in New York; Guam Publications, Inc. is a

Hawaii corporation with its principal place of business in

Guam; DeRoburt is a citizen of Nauru.'

1 Nauru is an island republic in the Pacific, approximately eight and one-

half square miles in area with a population of about 4000 citizens. Its vast

phosphate deposits rake Nauru one of the wealthiest nations, per capita, in

(footnote continues)

Plaintiff alleges that defendants have libeled him in two

articles published in the Pacific Daily News, a daily newspaper

printed in Guam by Guam Publications. A May 30, 1978,

Pacific Daily News article (the “May 30 article”), written by

Cisco Uludong and headlined “Marshalls Separatists Move-

ment Gets Secret Funds from Nauru,” reported that President

DeRoburt personally delivered to the Marshall Islands Political

Status Commission (“MIPSC”) 2 a loan made by Nauru in

support of separation of the Marshall Islands from Micronesia.

(footnote continued)

the world. Hammer DeRoburt, in addition to being a citizen of Naury, is also

its President; however, he brings this suit in his individual rather than

representative capacity.

DeRoburt was first elected president in May 1968, but he was replaced in

January 1977. He remained a member of Parliament, as the leader of the

opposition, until reelected president on May 11, 1978. He has been Head

Chief of the Nauru Local Government Council since 1955.

DeRoburt has alleged that the 1978 loan to the Marshall Islands, in

which he was reported to have been involved, actually was made by his

predecessor in office on May 10, 1978—the day before DeRoburt reassumed

the office of president.

2 The Marshall Islands Political Status Commission is a statutory body

created by the legislature of the Marshall Islands in 1973 to represent the

people of the Marshail Islands in the process of negotiation to end the U.S.

trusteeship over those islands.

The Trust Territory of the Pacific Islands is one of eleven trusteeships set

up pursuant to agreements between the United Nations and various nations

after World War II. It is a “strategic trust” administered by the United States

and contains six island districts. See People of Saipan v. United States Dep’t

of the Interior, 356 F.Supp. 645, 647-48 (D.Hawaii 1973), aff'd, 502 F.2d 90

(9th Cir. 1974).

At the time the articles were written, the political status of the Trust

Territory of the Pacific Islands was in the process of change. Its local

governmental body, the Micronesian Congress, had devised a Constitution for

a Unified Micronesian Nation that was to be voted on by the people of the

Trust Territory in a referendum scheduled for July 12, 1978. A significant

number of the Marshall Islanders perceived great disadvantage in becoming

part of the Nation because the Micronesian Congress had promulgated tax

policies detrimental to their interests in the past. For these reasons, the

government of the Marshail Islands sought funds to assist the MIPSC in its

efforts to gain independence. DeRoburt v. Gannet Co., Inc., 83 F.R.D. 574,

576 n.5 (D.Hawaii 1979).

3 The May 30 article reads as follows:

SAIPAN-The Republic of Nauru secretly is backing the separa-

tion of the Marshalls from Micronesia.

(footnote continues)

The second story, written by Paul Addison and published

on June 29, 1978, (“the June 29 article”) in the Pacific Daily

(footnote continued)

The phospate-rich country has loaned thousands of dollars

to finance a campaign by the Marshalls Political Status Commis-

sion, which supports separation, to reject the proposed Micro-

nesian constitution, according to reliable sources in the Trust

Territory.

Another loan from Nauru to the Marshalls in 1974 was

ruled illegal by T.T. officials.

Sources say that shortly after his re-election earlier this

month, Nauru President Hammer Deroburt [sic], a personal

friend of Congress of Micronesia Sen. Amata Kabua, gave the

separatists $600,000 of the $1 million they originally requested.

; Kabua is chairman of the status commission.

The loan’s term and conditions are not generally known and

7 few people in the Marshalls are aware of it, sources said.

The sources said Marshallese separatist leaders had earlier

approached Deroburt’s predecessors about the loan but were

politely turned down because Nauru officials did not want to be

accused of “meddling” in Micronesia’s internal affairs.

The Marshallese renewed their request to Deroburt after he

took office. He approved it and flew to the Marshalls to

personally deliver the check, sources said.

This is not the first time that Nauru has loaned money to the

Marshallese. In 1974 Deroburt loaned $600,000 to the Marshall

Islands Development Authority to build a copra plant and

construct some docks. That loan was ruled illegal by the T.T.

Attorney General’s Office.

Nauru, whose people resemble Marshallese, has more at

stake in the district than ethnic affinity. In an interview with the

Daily News last April, Deroburt said the Nauru local govern-

ment council, which he heads, already has $5 million in business

j investments in the Marshalls.

Before the commission received the $600,000 illegal loan,

the Marshalls Legislature tried on two occasions earlier this year

to go around existing attorney general laws and rulings barring

the T.T. district legislature and their creatures from borrowing

money.

The first attempt gave the commission blanket authorization

; to borrow money but the legislation was vetoed by Marshalls

District Administrator Oscar Debrum on instructions from the

T.T. attorney general.

The second attempt, which trimmed down the authorization

4 to no more than 50 percent of all revenues collected by the

Marshalls Legislature in 1977, was also vetoed by Debrum on

orders from Saipan.

Sn A DRAM

(footnote continues)

News, was headed “Nauru Officials Admit Lending Separatists’

Loan.” It reported the angry reactions of Nauru officials to the

first story, as well as repeating the statements made in that

story.4

(footnote continued)

“He (Debrum) was advised that the position of the attorney

general has not changed—that the legislatures and their creatures

do not have the power to borrow money,” said Scotte Stege, T.T.

assistant attorney general.

Commenting on the $600,000 loan, acting Attorney General

Rod Johnson said: “The district administrator knows our position

and we hope that he would prevent any repayment o* the loan

with public funds.”

4 The June 29 article reads:

NAURU-The Republic of Nauru Finance Corp. made a loan

recently to persons in the Marshall Islands but senior Nauruan

officials are unwilling to say to whom the loan was made or for

how much.

Nauruan officials reacted angrily to a May 30 Daily News

article tht said the phosphate-rich republic secretly was backing

the separation of the Marshalls from Micronesia.

President Hammer Deroburt’s [sic] chief secretary, Peter

Jones, admitted a loan had been made but added: “We’ve no

obligation to tell you who to or for how much.” Nauruan

Secretary for Justice David Lang said, “As far as we're con-

cerned, it’s not a secret loan. It’s a straightforward loan.”

Lang said the Republic of Nauru Finance Corp. was a

separate statutory company not connected to the government.

Deroburt is not a member of the company’s board, Lang said.

Although Land and Jones said the Daily News article was

“a distortion of the truth,” they refused to answer any questions

about the loan.

Four inquiries to interview Deroburt brought no response

from the president.

Sources have said that shortly after his reelection in early

May, Deroburt flew to the Marshalls to deliver the separatist

Marshalls Political Status Commission a $600,000 check.

Nauru has extensive business investments in the Marshalls

and made loans previously to the Trust Territory district to build

a copra plant and docks.

Nauruan investment and loans abroad are not new. With

less than 15 years before all the island’s phosphate is scheduled

to be mined, most families are investing their money in nest eggs

overseas.

(footnote continues)

Plaintiff DeRoburt alleges that the stories falsely and

maliciously accused him of committing serious crimes under

Nauru law and of interfering with the internal political affairs of

a foreign nation in violation of accepted standards of inter-

national diplomacy. His complaint also includes an allegation

that the stories were published by defendants “with actual

malice, that is, with actual knowledge of their falsity and/or

with reckless disregard for whether they were false or not.”

Third Amended Complaint § 21, at 16 (filed June 30, 1982).5

DeRoburt seeks $20 million compensatory and $20 million

punitive damages for allegedly having been exposed to criticism

and ridicule both within Nauru and elsewhere in the world.

The present Motion to Dismiss by defendants is the latest

in a long line of motions that have raised often intricate and

difficult issues of law. See, e.g., DeRoburt v. Gannett Co., Inc.,

507 F.Supp. 880 (D.Hawaii 1981); id, 83 F.R.D. 574 (D.

Hawaii 1979). For the reasons discussed herein, the court

grants the defendants’ motion.

DISCUSSION .

The defendants’ motion to dismiss the suit is founded on

the act of state doctrine. Their contention, in brief, is that the

(footnote continued)

The Nauruan government also has built a $7 million

complex in Saipan and a 53-story office building in Melbourne,

Australia.

Concern about the future is the dominant island issue and

has been partly responsible for major political changes this year

and last.

The well-respected Deroburt, who was largely responsible

for securing political independence for Nauru in 1963, was

ousted as president in January 1977 by a young group of

educated Nauruans led by former law student Bernard Do-

wiyogo.

Dowiyogo resigned in April after his budget failed to win

government support.

5 By order of September 14, 1982, the court dismissed Count I of the

Third Amended Complaint because it failed to allege the “actual malice”

required by the first amendment to the United States Constitution. The court

assumes, however, that the factual allegations of the count remain by

incorporation into Count II.

doctrine, when applied to this case, requires that the court

dismiss for failure to state a claim upon which relief may be

granted. Plaintiff, of course, asserts that the doctrine is

inapposite to the instant suit.

1. Which law applies?

Initially, the court must decide which law applies to the

issues presented by defendants’ motion.

Ordinarily, a federal court exercising its diversity jurisdic-

tion must apply the choice of law rules of the state in which it

sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61

S.Ct. 1020, 85 L.Ed. 1477 (1941). Applying what it held

wouid be the rule under Hawaii law, the court previously has

ruled that the defamation law of Nauru would apply to this

case, subject to the limitations of the First Amendment, specifi-

cally the “actual malice” standard of New York Times v.

Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964).

The law of Nauru, moreover, has been determined to be

essentially the same as the common law applied in England.

Therefore, in determining what Nauru law is, the court would

look to English common law for guidance.

The issues raised by the instant motion require a contrary

result for present purposes, however. The Supreme Court has

spoken specifically to this question. In Banco Nacional de Cuba.

v. Sabbatino, 376 U.S. 398, 427, 84 S.Ct. 923, 939, 11 L.Ed.2d

804 (1964), a diversity case, the Court held that “the scope of

the act of state doctrine must be determined according to

federal law.” Touching on the fundamental policies underlying

the act of state doctrine, the Court stated: “[WHJe are con-

strained to make it clear that an issue concerned with a basic

choice regarding the competence and function of the Judiciary

and the National Executive in ordering our relationships with

other members of the international community must be treated

exclusively as an aspect of federal law.” Jd. at 425, 84 S.Ct. at

938.

Sabbatino, then, requires the court to apply federal law to

the present motion, notwithstanding any prior ruiing.

In any case, the parties agree that, with respect to the act of

state doctrine, federal and Nauru/English law are very nearly

identical. In fact, many of the cases applying the doctrine rely

on cases decided on both sides of the Atlantic. As a result, the

court may cite English law for persuasive, if not binding,

authority.§

2. The Act of State Doctrine

The classic statement of the act of state doctrine in the

United States was rendered by the Supreme Court in Underhill

v. Hernandez, 168 U.S. 250, 252, 18 S.Ct. 83, 84, 42 L.Ed. 456

_( 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.

The Supreme Court has consistently reaffirmed the general

principle in every case in which it has been at issue, see Alfred

Dunhill of London v. Cuba, 425 U.S. 682, 96 S.Ct. 1854, 48

L.Ed.2d 301 (1976); First Nat’l City Bank v. Banco Nacional de

Cuba, 406 U.S. 759, 92 S.Ct. 1808, 32 L.Ed.2d 466 (1972);

Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S.Ct.

923, 11 L.Ed.2d 804 (1964); United States v. Pink, 315 US.

203, 62 S.Ct. 552, 86 L.Ed. 796 (1942); United States v.

Belmont, 301 U.S. 324, 57 S.Ct. 758, 81 L.Ed. 1134 (1937);

Shapleigh v. Mier, 299 U.S. 468, 57 S.Ct. 261, 81 L.Ed. 355

(1937); Ricaud v. American Metal Co., 246 U.S. 304, 38 S.Ct.

312, 62 L.Ed. 733 (1918); Oetjen v. Central Leather Co., 246

8In addition, the Sabbatino Court explicitly left open the question

“whether a state court might, in certain circumstances, adhere to a more

restrictive view concerning the scope of examination of foreign acts than that

required by this Court.” Jd. 376 U.S. at 425 n.23, 84.S.Ct. at 939 n.23. While

the court does not now need to decide the question, arguably the court might

apply English law that is more restrictive than federal law on this issue.

US. 297, 38 S.Ct. 309, 62 L.Ed. 726 (1918); American Banana

Co. v. United Fruit Co., 213 U.S. 347, 29 $.Ct. S11, 53 L.Ed.

826 (1909), although it has not always been clear whether the

doctrine was based on the Constitution, principles of inter-

national law, or choice of law principles.’

More recently, the doctrine has been stated as barring any

examination by the courts into the validity, legality or motiva-

tion of the sovereign acts of a foreign state. See Banco

Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S.Ct. 923, 11

L.Ed.2d 804; International Ass'n of Machinists & Aerospace

Workers v. OPEC, 649 F.2d 1354, 1359 (9th Cir. 1981);

Timberlane Lumber Co. v. Bank of Am. Nat'l Trust & Sav.

Ass'n, 549 F.2d 597, 607 (9th Cir. 1976).

In Banco Nacional de Cuba v. Sabbatino, the Court spelled

out in explicit terms the underlying rationale and policies of the

act of state doctrine. Sabbatino involved the expropriation by

instrumentalities of the Cuban government of American-owned

sugar located in Cuba. Cuba then sold the sugar to another

American company for resale. When the purchaser of the

sugar, acting under an agreement with the original expropriated

owner, refused to make payment on the goods, the national

bank of Cuba brought suit in federal district court seeking

payment.

The district court, affirmed by the court of appeals, found

that the original expropriation by the Cuban government was

illegal under international law and refused to enforce the

plaintiff's claim. The Supreme Court reversed, agreeing with the

plaintiff that the federal courts could not inqure into the legality

’ For example, in Ricaud, the Court stated that the act of state doctrine

requires “only that” when a foreign government has acted in a certain way,

the “details of such action or the merit of the result cannot be questioned but

must be accepted by our courts as a rule for their decision.” 246 US. at 309,

38 S.Ct. at 313. The doctrine has moved considerably beyond this relatively

limited “rule of decision” view, though it is still reflected in the Court's

decision in Banco Nacional de Cuba v. Sabbatino, 376 US. at 438, 845.Ct at

945.

it is clear however that the act of state doctrine is not a jurisdictional bar

to adjudication but rather a prudential limitation on the courts’ exercise of its

otherwise established subject matter junsdiction.

oe ee ee

Te ly

i a Te

of a sovereign act of the government of Cuba. The limited

holding of the case was that the courts will not examine the

validity of a taking of property within its own territory by a

foreign sovereign, recognized by this country at the time of suit,

even if the taking allegedly violates international law. 376 U.S.

at 428, 84 S.Ct. at 940.

More illuminating for present purposes than the holding is

the route by which the Court arrived at its conclusion. First, it

established that the act of state doctrine was compelled neither

by principles of sovereign immunity, which go to the courts’

jurisdiction, nor by international law. Jd. at 421-22, 84 S.Ct. at

936. Although the act of state doctrine is not required by the

“text of the Constitution,” it does have “constitutional under-

pinnings.” Jd. at 423, 84 S.Ct. at 937. Specifically, the act of

state doctrine

arises out of the basic relationships between branches

of government in a system of separation of powers. It

concerns the competency of dissimilar institutions to

make and implement particular kinds of decisions in

the area of international relations. The doctrine as

formulated in past decisions expresses the strong

sense of the Judicial Branch that its engagement in

the task of passing on the validity of foreign acts of

state may hinder rather than further this country’s

pursuit of goals both for itself and for the community

of nations as a whole in the international sphere.

Id.

Within the Court’s analysis can be discerned at least two

amplectant strands of policy. One acknowledges that judicial

declarations regarding the invalidity of the sovereign act of a

foreign government would be “likely to give offense to” that

foreign state, thereby hampering the Executive's ability to carry

out our nation’s foreign policy. Jd. at 431-32, 84 S.Ct. at 941-

42. By contradicting, or even by concurring in, the Executive's

position on a particular issue of international relations, a court’s

decision might have adverse consequences both in terms of our

10c

relations abroad and relations between the branches of govern-

ment.®

Even were it clear that the foreign state has violated

standards of international law, “it would still be unwise for the

courts so to determine. Such a decision now would require the

drawing of more difficult lines in subsequent cases and these

would involve the possiblity of conflict with the Executive

view.” Id. at 433, 84 S.Ct. at 943. Thus, this aspect of the

doctrine is essentially a rule of comity, or of respect for

coordinate branches of government.®

The other facet of policy enunciated by Sabbatino reflects

the “proper distribution of functions between the judicial and

political branches.” Jd. at 427-28, 84 S.Ct. at 939-40. As such it

is concerned with the institutional competence of the courts to

decide questions touching on the nation’s foreign relations and

on the relations among states qua states.!° The act of state

* The Court further suggested that danger of conflict with the Executive

Branch exists even when the Executive has remained silent on the issue

involved. 376 US. at 432-34, 84 S.Ct. at 942-43.

* One commentator has said that the United States courts, in contrast to

the English cases, have extended the act of state doctrine from a “doctrine of

respect” for sovereign states to a “doctrine of embarrassment” based on the

separation of powers. Singer, The Act of State Doctrine of the United

Kingdom: An Analysis, with Comparisons to United States Practice, 75 Am. J.

Int'l L. 283, 291 (1981).

the courts and the peculiar requirements of successful foreign relations. To

participate adeptly in the global community, the United States must speak

with one voice and pursue a careful and deliberate foreign policy. The

political branches of our government are able to consider the competing

economic and political considerations and respond to the public will in order

to carry on foreign relations in accordance with the best interests of the

country as a whole. The courts, in contrast, focus on single disputes and make

decisions on the basis of legal principles. The timing of our decisions is

largely a result of our caseload and of the random tactical considerations

which motivate parties to bring lawsuits and to seek delay or expedition.

When the courts engage in piecemeal adjudication of the legality of the

sovereign acts of states, they risk disruption of our country’s international

judicial decisions challeging the acts of foreign states could aullify these tools

and embarrass the United States in the eyes of the world.

International Ass'n of Machinists & Aerospce Workers v. OPEC, 649 F.2d

1354, 1358 (9h Cir. 1981).

eS ee

Se A A

lle

doctrine, in this sense, resembles the political question doctrine

applied in domestic law. International Ass’n of Machinists &

Aerospace Workers v. OPEC, 649 F.2d 1354, 1358 (9th Cir.

1981).

In particular, this concern focuses on the absence of

judicially manageable standards for resolving challenges to acts

of state.'' See Buttes Gas & Oil Co. v. Hammer, [1981] 3

W.L.R. 787, 810 (House of Lords).

The Fifth Circuit has expressed this idea by stating that:

In their external relations, sovereigns are bound by

no law; they are like our ancestors before the recogni-

tion or imposition of the social contract. A pre-

requisite of law is a recognized superior authority

whether delegated from below or imposed from

above—where there is no recognized authority, there

is no law. Because no law exists binding these

sovereigns and allocating rights and liabilities, no

method exists to judicially resolve their dis-

agreements.

Occidental of Umm al Qaywayn, Inc. v. A Certain Cargo of

Petroleum, 577 F.2d 1196, 1204-05 (5th Cir. 1978) (emphasis

in original ).*2

1! The Sabbatino Court indicated that a type of sliding scale should be

applied in judging the accessibilitiy of the particular problem to judicial

review:

It should be apparent that the greater the degree of codification

or consensus concerning a particular area of international law,

the more appropriate it is for the judiciary to render decisions

regarding it, since the courts can then focus on the application of

an agreed principle to circumstances of fact rather than on the

sensitive task of establishing a principle not inconsistent with the

376 US. at 428, 84 S.Ct at 940.

Although this statement would appear to permit a court to avoid the act

of state doctrine when it finds that the violation of international law is clear,

the Court nevertheless elsewhere eschewed this approach as potentially

embarrassing to the Executive. /d at 433, 84S.Ct at 943; see text following

note 8, supra.

2 Actually, the Fifth Circuit affirmed the dismissal of the suit on the

basis of the political question doctrine, which deprives the court of jurisdic-

tion. The district court had dismissed on the act of state doctrine.

12¢

In sum, Banco Nacional de Cuba v. Sabbatino exposed the

policies underlying the act of state doctrine, in particular

deferring to the Executive the pursuit of the nation’s foreign

affairs and, on the other side of the coin, recognizing the courts’

inferior competence in such areas.

3. The Present Motion

This brings the court to consideration of the arguments

made in the present motion.

There is little dispute between the parties that the 1978

loan was an act of state of the type covered by the act of state

doctrine. Plaintiffs briefs suggest that the loan falls into the

“commercial activities” exception to the doctrine, but the court

finds little merit to the argument. Indeed, plaintiff makes little

of the point himself. Alfred Dunhill of London vy. Cuba, 425

U.S. 682, 96 S.Ct. 1854, 48 L.Ed.2d 301 (1976), which

established a commercial activity exception,’ itself turned on

the absence of any “statute, decree, order or resolution of the

Cuban Government itself’ approving of or authorizing the

challenged act in holding that the act of state doctrine did not

apply to the purely commercial activities of a state or its agents.

Id. at 695, 96 S.Ct. at 1861.

Plaintiff's contention is based primarily on the ground that

the 1978 loan was made not by the Government of Nauru but

by the Republic of Nauru Finance Corporation (“RONFIN”),

and therefore was not an act of state. Yet, Plaintiff himself

characterizes RONFIN as “a separate statutory corporation

wholly owned by the Government of the Republic of Nauru and

which operates as the commercial lending arm of the Govern-

ment.... Because the liabilities of RONFIN are ultimately

guaranteed by the Republic of Nauru, Cabinet approval is

required for loans above a certain amount....” Plaintiff's

Memorandum in Opposition at 11 n. 6, filed August 23, 1982

(emphasis added). And defendants have submitted as an

exhibit, among other things, a document entitled “Republic of

"3 In fact, only four justices joined in finding a broad, general commercial

activities exception. The actual holding was narrower and limited to the facts

of the case.

13c

Nauru, Cabinet Submission No. 41/1978, Republic of Nauru

Finance Corporation, Proposed Loan of $A600,000 to Marshall

Islands Nitijela [Legislature],” dated March 4, 1978, and

bearing the name of the Minister for Island Development &

Industry. The document recommends to the Cabinet of Nauru

that it approve RONFIN making the loan to the Marshall

Islands, and at paragraph 4 states: “Apart from purely com-

mercial lending considerations there are considerations relating

to the relationship, both current and in the future, between

Nauru and the people of the Marshall Islands.” (Emphasis

added. )

Certainly, these facts compel a finding that the 1978 loan

by RONFIN was effectively an act of the state of Nauru.

Furthermore, in International Ass’n of Machinists & Aero-

space Workers v. OPEC, 649 F.2d 1354, 1360 (9th Cir. 1981),

the Ninth Circuit held:

While purely commercial activity may not rise to the

level of an act of state, certain seemingly commercial

activities will trigger act of state considerations... .

When the state gua state acts in the public interest, its

sovereignty is asserted. The Courts must proceed

cautiously to avoid an affront to that sovereignty... .

[We find that the act of state doctrine remains

available when such caution is appropriate regardless

of any commercial component of the activity in-

volved.

That holding eliminates any doubts regarding the classification

of the 1978 loan as an act of the state of Nauru.

Plaintiff's primary argument is that this case raises no act

of state concerns, or that any that it arguably raises are

insignificant and peripheral to the central issues of the case.

The principal relevant allegations in the plaintiffs Third

Amended Complaint are set out in the margin. '*

4 The Third Amended Complaint, filed June 30, 1982, reads in relevant

part:

{%] 9. The words contained in the May 30, 1978 story were false

in the following respects:

(footnote continues)

14c

Plaintiff's suit alleges essentially that the defendants’ arti-

cles accused him of having been primarily responsible for the

(footnote continued)

(a) The Republic of Nauru did not secretly back the

separation of the Marshall Islands from Micronesia;

(b) No loan from Nauru to the Marshall Islands in 1974

was ruled illegal;

(d) The loan of $600,000 referred to in the story (the

seported loan) was not made at all. A loan of $600,000 (the

actual loan) was made prior to Plaintiff's re-election to the office

of President on May 11, 1978;

(¢) The actual loan was not secret but in fact the terms and

conditions of the actual loan were well known and in particular in

the Marshall Islands where such a loan was publicly resolved to

be taken by both the Nitijela (legislature) and by the Marshall

Islands’ Constitutional Convention on February 28, 1978, and

further the making of the actual loan was broadcast by radio and

widely publicized;

(f) Plaintiff's predecessors as President did not turn down

the said loan or any such applications for loans from the Marshall

Islands; the actual loan was made during the presidency of

Plaintiff's immediate predecessor,

(g) The Marshallese did not renew or make a request to

Plaintiff after he took office on May 11, 1978 for any loan, nor

did Plaintiff approve of any loan or fly to the Marshall Islands to

deliver the said or any check; and

(h) No loan was made by the Republic or Government of

Nauru to the Marshall Islands in 1978 at all; the actual loan of

$600,000 was made by the Republic of Nauru Finance Corpo-

ration, a legal entity separate from the Government of Nauru, on

May 10, 1978.

(%]10. The words contained in the May 30, 1978 story by <ueir

natural and ordinary meaning or by innuendo meant and were

understood to mean the following:

(a) That Hammer DeRoburt as President of Nauru and as

Head Chief and as a member of Parliament of Nauru was guilty

of conduct intended to deceive and which did deceive the public

of Nauru and of the Marshall Islands and/or those then respon-

sible for the government of the Marshall Islands, namely the

United States of America as Trustee under the terms of a

Trusteeship Agreement with the United Nations approved by the

United States on July | 4. 1947;

(b) That Hamme: DeRoburt as President of Nauru and as

Head Chief and as a member of Parliament of Nauru violated

the Constitution of the Republic of Nauru;

(footnote continues)

lSc

making of a loan from the government of Nauru to the

Marshall Islands, which loan the defendants have characterized

(footnote continued)

of the criminal laws of Nauru and of the laws of the Trust

Territories;

(d) That Hammer DeRoburt’s motives for making or

agreeing to make or authorizing the making of the reported or

actual loan was the furtherance of the private commercial

interests of a section of the citizens of Nauru and/or public

commercial interests of Nauru and not the welfare of the citizens

of the Marshall Islands nor the furtherance of their best political

interests;

(¢) That Hammer DeRoburt was improperly interfering

with and subverting the free election and self determination of

the peoples of the Marshall Islands in respect of a referendum to

be held on July 12, 1978;

(f) That Hammer DeRoburt covertly circumvented the due

proper and lawful process of making loans by Nauru to other

countries and/or the receiving of such loans by the Marshall

Islands;

(g) That Hammer DeRoburt covertly, criminally and/or

unlawfully caused or was party to the misuse of the public funds

of Nauru;

(h) That Hammer DeRoburt caused or was party to the

making of an irrecoverable loan to the Marshall Islands out of

the public funds of Nauru;

(i) That Hammer DeRoburt caused or was party to the

making of the reported or actual loan for the purpose of bribing

the separatist movements in the Marshall Islands and/or all those

who might support or oppose it for the purpose of applying

financial pressure and incentives in order unfairly and

undemocratically to attain the separatists’ political objectives;

(j) That Hammer DeRoburt debased his office as Head of

State by personally carrying funds unlawfully obtained and

illegally to be used to subvert an election to be held under the

supervision of the United States and the United Nations to

determine the future of peoples who were the subject of a United

Nations Trust;

(k) That Hammer DeRoburt engaged in illegal activity and

interfered in the internal political processes of the Marshall

Islands by him as Head of State of the government of Nauru in

breach of international law and of established international

standards of diplom.<y and international relations; and

(1) That Hammer DeRoburt was guilty of such gross

misconduct as to be unfit and unworthy to hold public office.

(footnote continues)

l6c

as being secret, illegal and improperly motivated. He further

alleges that the articles were false in every significant respect,

admitting only that an entirely legal, proper and public loan of

$A600,000 [Australian dollars] was made by his predecessors

(footnote continued)

[9] 14. The words contained in the June 29, 1978 story were

false in each respect set forth in Paragraph 9 above....

[9] 15. The words contained in the June 29, 1978 story by their

natural and ordinary meaning or by innuendo meant and were

intended to mean the following:

(a) Hammer DeRoburt realleges and incorporates herein by

reference the meanings set forth in Paragraph 10 of this Com-

plaint;

(¢) That Hammer DeRoburt sought improperly to influence

or interfere with the internal affairs of the Marshall Islands by the

use of the wealth of Nauru for the ulterior motive of prospering

and safeguarding the private investments of the citizens of Nauru

or some of them in the Marshall Islands;

(f) That the conduct set forth in paragraph 15(e) above

was part of the overall strategy and course of dealing of Hammer

DeRoburt (and under his Presidency of Nauru) in dealing with

other countries;

(g) That Hammer DeRoburt despotically and wrongfully

reversed the decision to refuse such a loan made by the educated

and conscientious members of the previous government; and

(h) That Hammer DeRoburt was guilty of such gross

miscounduct as to be unfit and unworthy to hold public office.

[9] 17. By reason of the aforesaid, Hammer DeRob« has been

greatly injured in his character, credit, and reputation, both

personally and in his office, and has been brought into public

scandal, odium, and disrepute in Nauru and elsewhere in the

world.

[7] 20. The stories of May 30, 1978 and June 29, 1978 are

defamatory in the manner set forth in paragraphs 10, 11, 14, 15

and 16 above and in accusing Plaintiff DeRoburt of engaging in

illegal activity and inverfering in the internal political processes of

the Marshall Islands by him as Head of State of the government

of Nauru in breach of international law and of established

international standards of diplomacy and international relations.

17c

in Office. The significant allegations, therefore, are that (1)

DeRoburt had nothing whatsoever to do with the making of

any loan to the Marshall Islands and (2) any loan that was

made by Nauru in 1978 was neither secret, illegal nor for

improper purposes.

The defendants, in their motion, point primarily to the

plaintiff's challenge to the manner in which the articles charac-

terized the loan. They say that the act of state doctrine forbids

inquiry into whether the loan made by Nauru was what the

articles said it was, namely secret, illegal and for improper

purposes. This, says Gannett, would directly contravene the

policies underlying the act of state doctrine possibly by offend-

ing the sovereign state of Nauru, by contradicting and/or

embarrassing the Executive in its exercise of foreign policy, and

by steering the court into uncharted judicial waters. Defend-

ants also argue that the question whether DeRoburt was

involved in the loan is itself a forbidden inquiry into the

motivation of the government of Nauru.

Plaintiff argues pervicaciously that the act of state doctrine

does not apply to situations such as that presented by this

litigation. His principal point appears to be that past cases have

applied the doctrine only when the validity, legality or motiva-

tion of the act of state in question is the central issue in the case.

He then asserts, without admitting, that the validity, legality

and motivation of the 1978 loan are at most issues peripheral to

what is contended to be the central question: whether De-

Roburt was involved in arranging and making the loan.

It is true that many, if not most, of the cases applying the

act of state doctrine differ in some significant respect from the

present case. These cases have involved usually either ex-

propriations of American-owned property by foreign states,

e.g., Alfred Dunhill of London v. Cuba, 425 U.S. 682, 96 S.Ct.

1854, 48 L.Ed.2d 301 (act of state argument rejected); First

Nat’l City Bank v. Banco National de Cuba, 406 U.S. 759, 92

S.Ct. 1808, 32 L.Ed.2d 466 (same); Banco Nacional de Cuba v.

Sabbatino, 376 U.S. 398, 84 S.Ct. 923, 11 L.Ed.2d 804 (act of

state argument successful); Shapleigh v. Mier, 299 U.S. 468, 57

S.Ct. 261, 81 L.Ed. 355 (same); Ricaud v. American Metal Co.,

18c

246 U.S. 304, 38 S.Ct. 312, 62 L.Ed. 733 (same); Oetjen v.

Central Leather Co., 246 U.S. 297, 38 S.Ct. 309, 62 L.Ed. 726

(same); Hunt v. Mobile Oil Corp., 550 F.2d 68 (2d Cir. 1977)

(same), or antitrust and contractual claims alleging inter-

ference with overseas business interests, e.g., American Banana

Co. v. United Fruit Co., 213 U.S. 347, 29 S.Ct. 511, 53 L.Ed 826

(act of state argument successful); International Ass’n of

Machinists & Aerospace Workers v. OPEC, 649 F.2d 1354 (9th

Cir. 1981) (same); Occidental of Umm. al Qaywayn, Inc. v. A

Certain Cargo of Petroleum, 577 F.2d 1196 (Sth Cir. 1978)

(same); Hunt v. Mobil Oil Corp., 550 F.2d 68 (2d Cir. 1977),

cert. denied, 432 U.S. 904, 97 S.Ct. 2947, 53 L.Ed.2d 1076

(same); Timberlane Lumber Co. v. Bank of Am. Nat’l Trust &

Sav. Ass’n, 549 F.2d 597 (9th Cir. 1976) (act of state argument

rejected ); Occidental Petroleum Corp. v. Buttes Gas & Oil Co.,

461 F.2d 1261 (9th Cir. 1972), aff’g, 331 F.Supp. 92 (C.D.Ca.

1971), cert. denied, 409 U.S. 950, 93 S.Ct. 272, 34 L.Ed.2d 221

(1972) (act of state argument successful); Bokkelen v. Grum-

man Aerospace Corp., 432 F.Supp. 329 (E.D.N.Y.1977)

(same); Buttes Gas & Oil Co. v. Hammer, [1981] 3 W.L.R. 787

(House of Lords) (same).

Thus, the usual act of state doctrine case is one in which

the plaintiff (or counter-claimant) has been harmed by some

action of a foreign state that is induced by or taken in

conspiracy with a private third party who is made the defend-

ant. These cases entail more or less direct challenges to the acts

of foreign states. In other words, these are cases in which the

foreign sovereigns, had they been private parties, probably

would have been joined. '5

Yet, there are significant exceptions to this general pattern.

Hunt v. Mobil Oil Corp., 550 F.2d 68 (2d Cir. 1977), cert.

denied, 432 U.S. 904, 97 S.Ct. 2947, 53 L.Ed.2d 1076, an

1S The act of state doctrine, as a result, is usually raised as a defense to

the claim being made. Sabbatino and Buttes Gas & Oil Co. v. Hammer are

notable exceptions. Sabbatino was a case in which the foreign state was the

plaintiff and raised the doctrine to prevent a defense based upon the alleged

illegality of the expropriation on which the plaintiff's claim was founded. But

the case still involved someone harmed by and challenging the validity of an

act of state.

19¢

antitrust suit, involved the nationalization by Libya of Hunt’s

oil lease and other assets in that country. Hunt alleged that an

agreement into which he had entered with the defendants,

several major oil companies, was in reality a tool by which the

defendants had placed Hunt in position from which he would

be unable to continue his amicable relations with Libya, and

that as a result he lost his business in that country. The

complaint thus was not that Libya had been a co-conspirator

with the defendants, but that Libya had become the unwitting

instrument of the defendants’ illegal purposes.

Saying that the excision of Libya from the suit did not

eliminate its actions as a necessary element of the cause

pleaded, the Second Circuit affirmed the dismissal of the claim

on the basis of the act of state doctrine. Jd. 76. The court

noted, in particular, that an examination of the motivation of

the Libyan action “inevitably involves its validity.” Id. 77.

This, said the court, was forbidden by the act of state doctrine.

Thus, Hunt stands for the proposition that the act of state

doctrine extends to situations in which the act of state in

question is an element of the claim being made but does not

require a direct challenge to the legality of the sovereign act;

for, in fact, Hunt had not challenged the Libyan action at all.

Another case, upon which the defendants rely heavily, is

Buttes Gas & Oil Co. v. Hammer, [1981] 3 W.L.R. 787 (House

of Lords). In the case, two United States oil companies, Buttes

Gas & Oil Co. (“Buttes”) and Occidental Petroleum Corp.

(“Occidental”), had been granted oil concessions near the

island of Abu Musa in the Persian Gulf. Occidental had

received its concession from the ruler of Umm al Qaiwain (or

Qaywayn) in November 1969, while Buttes had received its

concession from the ruler of Sharjah in December 1969. Umm

al Qaiwain and Sharjah are neighboring Arab Emirates on the

Persian Gulf. When oil was discovered under the seabed near

the island, a dispute arose between Buttes and Occidental

regarding rghts to the oil deposits.

Ultimately, after a series of events too complicated to

repeat here, see Occidental of Umm al Qaywayn, Inc. v. A

Certain Cargo of Petroleum, 577 F.2d 1196 ‘Sth Cir. 1978);

20c

Occidental Petroleum Corp. v. Buttes Gas & Oil Co., 331 F.Supp.

92 (C.D. Cal. 1971), Occidental was divested of its concession

in the area.

The Hammer suit arose initially as a defamation action.

Occidental’s president, Armand Hammer, stated at a London

press conference that a decree by the ruler of Sharjah, declaring

new territorial limits that included the disputed area, had been

unlawfully and fraudulently backdated to September 1969.

Hammer also stated that the backdating had occurred at Buttes’

instigation, in order to give Buttes the exclusive concession in

the area. Buttes then sued Occidental and Hammer for slander.

Occidental pleaded justification in defense of the slander,

promptly counterclaimed in conspiracy, alleging the same facts

that formed the basis of Buttes’ slander claim, and salvoed with

a libel claim of its own.

The case went before the House of Lords on Buttes’ motion

to strike the counterclaims and the defense on the basis of the

act of state doctrine. After an extensive exegesis on the act of

state and related doctrines, the House of Lords agreed with

Buttes and dismissed the defense and counterclaims. Because

of the procedural posture of the case, the Lords also dismissed

Buttes’ slander suit.

The Lords, per Lord Wilberforce, first parsed the act of

state doctrine into what it found to be its various versions under

English law. Having concluded that none of these applied to

the case, Lord Wilberforce stated that he did not “regard the

case against justiciability of the instant disputes as validated by

the rule itself. If it is to be made good it must be upon some

wider principle.” 3 W.L.R. at 804. “In my opinion,” he

continued, “there is, and for long has been, such a genera!

principle, starting in English law, adopted and generalised in

the law of the United States of America which is effective and

compelling in English courts. This principle is not one of

discretion, but is inherent in the very nature of the judicial

process.” Id.

2lc

Lord Wilberforce then went on to analyze and compare

United States cases applying the act of state doctrine '§ and

ultimately concluded:

If Occidental is to succeed in either its counterclaim

for conspiracy, or in the slander action, it is necessary

to show that these actions were brought about by

Buttes, more exactly by a fraudulent conspiracy

between Buttes and Sharjah. This certainly involves

an examination of the motives (exclusive or domi-

nant?) for the action of Sharjah in making and, if

proved, backdating the decree of 1969/70. It in-

volves establishing that the actions at least of Shar-

jah, and it appears also of Iran and of Her Majes:y’s

Government, were at some point unlawful. “Unlaw-

ful” in this context cannot mean unlawful under any

municipal law (I remind that Occidental does not

contend that the Sharjah decree was unlawful under

the law of Sharjah), but under international law. ...

It would not be difficult to elaborate on these

considerations, or to perceive other important inter-

state issues and/or issues of international law which

would face this court. They have only to be stated to

compel the conclusion that these are not issues upon

which a municipal court can pass. Leaving aside all

possibility of embarrassment in our foreign relations

8 Lord Wilberforce also noted:

The constitutional position and the relationship between the

executive and the judiciary in the United States is neither

identical with our own nor in itself constant. Moreover the

passages which I have cited lay emphasis upon the “foreign

relations” aspect of the matter which appeared important to the

United States at the time. These matiers I have no wish to

overlook or minimize. I appreciate also Mr. Littman’s [Occiden-

tal’s counsel] argument that no indication has been given that

Her Majesty’s Government would be embarrassed by the court

entering upon these issues. But, the ultimate question what issues

are capable, and what are incapable, of judicial determination

must be answered in closely similar terms in whatever country

they arise, depending, as they must, upon an appreciation of the

nature and limits of the judicial functior. This has clearly

received the consideration of the United States courts.

3 W.L.R. at 809.

22¢

... there are—to follow the Fifth Circuit Court of

Appeals [in Occidental of Umm al Qaywayn, Inc. v. A

Certain Cargo of Petroleum|—no judicial or man-

ageable standards by which to judge these issues, or

to adopt another phrase .. ., the court would be in a

judicial no-man’s land: the court would be asked to

review transactions in which four sovereign states

were involved, which they had brought to a pre-

carious settlement, aftcr diplomacy and the use of

force, and to say that at least part of these were

“unlawful” under international law.

Id. 810 (emphasis added).

The opinion concluded by holding that: “The plea of

justification made by Occidental in the slander action raises the

same issues as the conspiracy counterclaim and is for the same

reason not capable of being entertained by the court.”

Recognizing thai the Hammer case involved the conspiracy

counterclaim, the case represents nevertheless persuasive au-

thority for the proposition that the act of state doctrine may

apply, when otherwise appropriate, to cases like the one

presently at bar.

In amy case, whether the act of state doctrine applies

should not turn on the issue being raised in an unusual factual

setting. The crucial question before the court is whether to

proceed to the merits of plaintiff's claims would do violence to

the policies underlying the act of state doctrine, and not

whether this case falls within some formulaic definition of the

“type” of cases in which the doctrine applies. As a general

proposition, facts and circumstances rarely, if ever, appear in

precisely the same pattern. Strict adherence t. fact patterns

would hamper the forward development of the law. The

question presented by this motion must be decided by reference

to other, more fundamental considerations.’

"la Timberlane Lumber Co. v. Bank of Am. Natl Trust & Sav. Ass'n,

$49 F.2d 597, 607 ( Mh Cir. 1976), a case in which the doctrine was found not

to apply because no “act of state” had occurred, the Ninth Circuit said that

the “touchstone” of the act of state doctrine is “the potential for interference

with our foreign relations.... |W je do not wish to challenge the sovereignty

of another nation, the wisdom of its policy, or the integrity and motuvation of

its action.”

23¢

In the present action, plaintiff DeRoburt has pleaded libel.

A necessary element of any libel action is that a defamatory

statement be published. Without the sting of the defamatory

statement, there can be no libel. See W. Prosser, Handbook of

the Law of Torts § 111, at 739-40 (4th ed. 1971) [hereinafter

cited as “Prosser on Torts”]. DeRoburt says he was libeled by

Gannett’s articles because he didn’t have anything to do with

the loan, which was characterized as being secret, illegal and

for improper purposes. This is not a case of per se libel. It is

not libelous as such to say that a certain individual was involved

in the making of a loan from one country to another, even if it is

further stated that he personally delivered the check, for

countries make and receive loans regularly and legally. What

DeRoburt complains of is that the articles accused him of

having made a loan that was secret, illegal and improperly

motivated. If his character and reputation were besmirched, it

was not because he was said simply to have made a loan, but

because that loan was said to be an evil thing.

In this light, the court views as disingenuous the plaintiff's

argument that the validity, legality and motivation of the loan

will not be an issue in the case."

In the first place, the Third Amended Complaint itself

alleges the falsity of the characterization of the loan. See Third

Amended Complaint at 4 9, filed June 30, 1982. Thus, plaintiff

himself has placed the issue into dispute.’® In addition, as

* Plaintiff argues in his brief in opposition w the motion that he will

present no evidence regarding the validity, legality or motivation for the 1978

loan. This assertion puzzles the court. Throughout the four-year course of

this litigation, the plaintiff has appeared ready to present evidence on

this issue. In pre-trial statements, witness lists and offers of proof,

has noted

the Gannett stories, and the making of and circumstances surround-

ing the “actual” Moréover, at oral argument on this motion, plaintiff's

counsel conceded that whether the loan was in fact secret, illegal and for

improper purposes.

its complaint. 331 F.Supp. at 1'0.

24c

defendants rightfully point out, the characterization of the loan

remains a crucial element of the alleged damages. Jd. { 10,

715. This is true under the pleadings, see Third Amended

Complaint at 47 10, 15, 17, 20, and factually as well. For

example, if the jury were to find that DeRoburt, in fact, made

the loan, they might find nevertheless that he was libeled by the

false characterization of the loan. The less accurate the

characterization, the more damage would have been done to

DeRoburt’s reputation.

More telling than these is Gannett’s correct assertion that,

whatever DeRoburt intends vel non to prove, the defendants are

entitled to raise as a defense the truth of the stories. Under the

applicable Nauru/English law, this is stated as the defense of

justification. Truth in this sense may refer to the “substantial”

truth of the stories.2' In order to prevail, defendants need not

prove the truth of every detail of their articles, only the

substantial truth. Therefore, defendants may attempt to prove

that DeRoburt made the loan and that the loan was secret,

illegal and improperly motivated.

Plaintiffs argument—that proving the secretiveness, ille-

gality and impropriety of the loan would only strengthen Ais

2 Compare:

Because a private antitrust claim requires proof of damage

this court to “sit in judgment” upon the sovereign acts pleaded,

whether or not the countries involved are considered co-

conspirators.... [S]uch inquiries by this court into the authen-

ticity and motivation of the acts of foreign sovereigns would be

the very sources of diplomatic friction and complication that the

act of state doctrine aims to avert.

Occidental Petroleum Corp. v. Buttes Gas & Oil Co., 331 F.Supp. at 110

(citations omitted ).

2" Under English law:

The defendant may make out the truth of so much of the libel as

he can, and though he will be liable in damages for any

statements which add to the sting of the libel and which he has

not proved true, he can still rely on his partial justification in

mitigation of damages.

Gatley on Libel & Slander § 357 (1981). See also Prosser on Torts § 116, at

798-99.

25¢

hand by making the libel that much worse—misses the point.

He assumes that the jury will find that he had nothing to do

with the loan. If parties could argue both sides of a case, courts

would have nothing to decide. Defendants’ position appears to

be that, even if DeRoburt did not personally deliver the check,

as reported, he was in such a position within the government

and society of Nauru that a jury might find it reasonable to

infer that he had something to do with the making of the loan.22

If the defendants can so convince the jury, they might well

prove the substantial truth of the articles and thereby defeat

liability. Under these circumstances, the defendants would be

well within their rights to attempt to prove that the loan made

by Nauru to the Marshall Islands was indeed secret, illegal and

for improper purposes.

The court is convinced, despite plaintiff's position, that

resolution of the central issues in this case, either for or against

the plaintiff, will inevitably lead to this court’s examining or

“sitting in judgment on” the validity, legality and motivation of

the government of Nauru in making the 1978 loan to the

Marshall Islands, and that such an examination is forbidden by

the act of state doctrine, its underlying policies and rationale.

The court finds that the issues raised by the defendants’

characterization of the loan are sufficient alone to raise an

effective act of state doctrine defense, and therefore it need not

decide whether the questions surrounding DeRoburt’s in-

volvement in the loan implicate act of state considerations.237__-

22 The court notes, in this regard, that the government of Nauru was

reported also to have made a loan to the Marshall Islands in 1974, while

DeRoburt was then president of Nauru. But DeRoburt, in his complaint,

states only that: “Plaintiff made no loan to the Marshall Islands in 1974.”

Third Amended Complaint at 7 9(c).

2 The court does note however that several of the cases applying the act

of state doctrine to bar suits involved allegations that private parties induced

foreign governments to act in wrongful or illegal ways. See, ¢.g., American

Banana Co., 213 US. 347,29 S.Ct S511, 53 L.Ed. 826; Occidental of Umm al

Qaywayn, Inc. v. A Certain Cargo of Petroleum, $77 F.2d 1196; Occidental

Petroleum Corp. v. Buttes Gas & Oil Co., 331 F Supp. 92, aff'd, 461 F.2d 1261

(%h Cir. 1972), cert. denied, 409 US. 950, 93 S.Ct 272, 34 L.Ed.2d 221;

Northrop Corp. v. McDonnell Douglas Corp., 498 F Supp. 1112 (C.D.Cal.

(footnote continues)

26c

Generally, in act of state doctrine cases, the act of state in

question in a sense gives rise to or instigates the cause of action.

In a strict sense, then, the acts of the government of Nauru did

not give rise to the libel cause of action pleaded herein, as they

would have if, for example, Gannett under some theory sued

DeRoburt for having made the loan. This is a difference

without a distinction, however, for proof of the elements of the

libel cause of action invariably would require the court, with the

finder of fact, to inquire into areas that would violate the

policies of the act of state doctrine.2* That is, the elements of

the alleged libel in this case so thoroughly implicate the

underlying facts surrounding the making of the 1978 loan that

the court would be forced to examine them as though they had

been brought directly into controversy. That such an exam-

ination must be prevented can be discerned simply by suppos-

ing that the jury will find in defendants’ favor on all relevant

issues. Nothing might embarrass the Executive more,?5 nor

(footnote continued)

1980); General Aircraft Corp. v. Air America, Inc., 482 F Supp. 3

(D.D.C.1979); Bokkelen v. Grumman Aerospace Corp., 432 F.Supp. 329

E.D.N.Y.1977). The court suggests, without holding, that the principle might

apply even more strongly when the party accused of having induced the act of

state is himself a member of that government.

24 For example, among the issues that the court and/or jury would be

called upon to decide are: whether Nauru was secretly backing the separation

of the Marshall Islands from Micronesia; whether the loan was illegal under

Nauru law, “Micronesian” law or international law; whether the loan was

motivated by the commercial self-interests of Nauru, in disregard of the best

interests of the Marshall Islands; and whether the loan was intended to

subvert and undermine the normal democratic processes of the Marshall

Islands.

25 The court takes judicial notice of the fact that the separation of the

Marshall Islands from the United States’ Trusteeship has been a “live” issue

in recent months, with negotiations often difficult and delicate. See Marshall

Islands Journal, Aug. 4, 1982, at 1, col. 1; id, Aug. 2, 1982, at 1, col. 3;

Honlulu Advertiser, July 23, 1982, ai , col. 1; Honolulu Star-Bulleyn, July

15, 1982, at A-21, col. 1.

In addition, the defendants have provided the court with several exhibits

obtained by requests to the U.S. Department of the Interior under the

Freedom of Information Act. These documents, from the files of the Office of

Micronesian Status Negotiations of the National Security Council, demon-

strate that the Executive has, at least, been monitoring the defendants’ reports

of the loans made by Nauru to the Marshall Islands.

Although the court does not know what position, if any, the Executive

has taken on the issues presented by this case, it is evident nonetheless that

these issues abut areas of concern for the nation’s foreign policy.

27¢

offend the Republic of Nauru more, nor be less appropriate for

resolution by a jury sitting in Honolulu, than a determination

that the loan made by Nauru to the Marshall Islands in 1978

was made secretly, illegally and with improper or wrongful

purposes.26 The act of state doctrine seeks to prevent precisely

this kind of judicial action.@’

Accordingly, based upon the foregoing, IT IS HEREBY

ORDERED AND ADJUDGED that defendants’ Motion to

Dismiss is GRANTED and that Plaintiff's suit is therefore

DISMISSED for failure to state a claim upon which relief may

be granted.28

Furthermore, given the court’s ruling herein, IT IS HERE-

BY ORDERED that all other motions, appeals from magis-

trate’s decisions, etc., now pending before the court are at this

time DISMISSED as moot.

28 The court also notes the potential ramifications following the court’s

finding that an incumbent head of state of a foreign state was guilty of illegal

and improper activities.

27 The court does not lay down, as plaintiff has argued, a rule of blanket

press immunity for statements published about foreign officials. Clearly, the

act of state doctine will not apply in every case in which a foreign official may

have been libeled. But where, as here, resolution of a libel action will tread

upon the policies forming the basis of the act of state doctrine, the court will

be foreclosed from hearing such a case.

Moreover, nothing in the act of state doctrine prevents a plaintiff seeking

relief in the courts of his own country or through diplomatic channels. See

Banco Nacional de Cuba v. Sabbatino, 376 U.S. at 422-23, 84 S.Ct. at 937;

Ricaud v. American Metal Co., 246 US. at 310, 38 S.Ct. at 314; Oetjen v.

Central Leather Co., 246 U.S. at 304, 38 S.Ct. at 311; Occidental Petroleum

Corp. v. Buttes Gas & Oil Co., 331 F.Supp. at 109 (quoting American Banana

Co. v. United Fruit Co., 166 F. 261, 266 (2d Cir. 1908), aff'd, 213 U.S. 347,

29 S.Ct. 511, 53 L.Ed. 826 (1909).

28 See Occidental Petroleum Corp. v. Buttes Gas & Oil Co., 331 F.Supp.

92, 113 (C.D.Cal. 1971), aff'd, 461 F.2d 1261 (9th Cir. 1972), cert. denied,

409 U.S. 950, 93 S.Ct. 272, 34 L.Ed.2d 221.

APPENDIX D

UNITED STATES CourRT OF APPEALS

For THE NINTH CIRCUIT

HAMMER DEROBURT,

Plaintiff-Appellant,

Nos. 83-1518

vs. 83-1847

GANNETT Co., INC., GUAM PUB- ORDER DENYING

LICATIONS, INC., d/b/a/ PETITION For

PaciFic DaILy NEws, REHEARING

(filed August 14, 1984)

Defendants-Appellees.

Before: CHAMBERS, SNEED AND ANDERSON, Circuit Judges.

The panel as constituted in the above case has voted to

deny the petition for rehearing. Judges Sneed and Anderson

have voted to reject the suggestion for a rehearing en banc, and

Judge Chambers has recommended rejection of the suggestion

for rehearing en banc.

The full court has been advised of the suggestion for en

banc hearing, and no judge of the court has requested a vote on

the suggestion for rehearing en banc.

The petition for rehearing is denied, and the suggestion for

a rehearing en banc is rejected.

APPENDIX E

The Unanimous Declaration of the

Thirteen United States of

America (U.S., July 4, 1776)

When, in the course of human events, it becomes necessary

for one people to dissolve the political bands which have

connected them with another, and to assume, among the

powers of the earth, the separate and equal station to which the

laws of nature and of nature’s God entitle them, a decent

respect to the opinions of mankind requires that they should

declare the causes which impel them to the separation.

We hold these truths to be self-evident. that all men are

created equal; that they are endowed by their Creator with

certain inalienable rights; that among these, are life, liberty,

and the pursuit of happiness. That, to secure these rights,

governments are instituted among men, deriving their just

powers from the consent of the governed; that, whenever any

form of government becomes destructive of these ends, it is the

right? Of the people to alter or to abolish it, and to institute a new

government, laying its foundation on such principles, and

organizing its powers in such form, as to them shall seem most

likely to effect their safety and happiness. Prudence, indeed,

will dictate that governments long established, should not be

changed for light and transient causes; and, accordingly, all

experience hath shown, that mankind are more disposed to

suffer, while evils are sufferable, than to right themselves by

abolishing the forms to which they are accustomed. But, when

a long train of abuses and usurpations, pursuing invariably the

same object, evinces a design to reduce them under absolute

despotism, it is their right, it is their duty, to throw off such

government ana to provide new guards for their future security.

Such has been the patient sufferance of these colonies, and such

is now the necessity which coustrains them to alter their former

systems of government. The history of the present King of

Great Britain is a history of repeated injuries and usurpations,

all having, in direct object, the establishment of an absolute

tyranny over these States. To prove this, let facts be submitted

to a candid world: —

He has refused his assent to laws the most wholesome and

necessary for the public good.

He has forbidden his governors to pass laws of immediate

and pressing importance, unless suspended in their operation

till his assent should be obtained; and, when so suspended, he

has utterly neglected to attend to them.

He has refused to pass other laws for the accommodation

of large districts of people, unless those people would relinquish

the right or representation in the legislature: a right inestimable

to them, and formidable to tyrants only.

He has called together legislative bodies at places unusual,

uncomfortable, and distant from the depository of their public

records, for the sole purpose of fatiguing them into compliance

with his measures.

He has dissolved representative houses repeatedly for

opposing, with manly firmness, his invasions on the rights of the

people.

He has refused, for a long time after such dissolutions, to

cause others to be elected; whereby the legislative powers,

incapable of annihilation, have returned to the people at large

for their exercise; the state remaining, in the meantime, exposed

to all the danger of invasion from without, and convulsions

within.

He has endeavored to prevent the population of these

States; for that purpose, obstructing the laws for naturalization

of foreigners, refusing to pass others to encourage their migra-

tion hither, and raising the conditions of new appropriations of

lands.

He has obstructed the administration of justice, by refusing

his assent to laws for establishing judiciary powers.

He has made judges dependent on his will alone, for the

tenure of their offices, and the amount and payment of their

salaries.

He has erected a multitude of new offices, and sent hither

swarms of officers, to harass our people, and eat out their

substance.

He has kept among us, in time of peace, standing armies,

without the consent of our legislatures.

He has affected to render the military independent of, and

superior to, the civil power.

He has combined, with others, to subject us to a jurisdic-

tion foreign to our Constitution, and unacknowledged by our

laws; giving his assent to their acts of pretended legislation:

For quartering large bodies of armed troops among us:

For protecting them by a mock trial, from punishment, for

any murders which they should commit on the inhabitants of

these States:

For cutting off our trade with all parts of the world;

For imposing taxes on us without our consent:

For depriving us, in many cases, of the benefit of trial by

jury:

For transporting us beyond seas to be tried for pretended

offenses:

For abolishing the free system of English laws in a

neighboring province, establishing therein an arbitrary govern-

ment, and enlarging its boundaries, so as to render it at once an

example and fit instrument for introducing the same absolute

rule into these colonies:

For taking away our charters, abolishing our most valuable

laws, and altering, fundamentally, the powers of ou’ govern-

ments:

For suspending our own legislatures, and declaring them-

selves invested with power to legislate for us in all cases

whatsoever.

He has abdicated government here, by declaring us out of

his protection, and waging war against us.

He has plundered our seas, ravaged our coast

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