of Appeals concluded that the facts, as alleged by plaintiffs, precluded this court and the Court of Appeals from exercising jurisdiction over their claims in light of the holding in Transaero, Inc. v. La Fuerza Aerea Boliviana, 308 U.S. App. D.C. 86, 30 F.3d 148 (D.C. Cir. 1994). The Court of Appeals remanded the case to this court to determine whether plaintiffs should be allowed to amend their complaint to allege a different ground for jurisdiction, and if so, whether jurisdiction over these claims exists under the FSIA.
Plaintiffs moved this court to amend their complaint pursuant to Rule 15 of the Federal Rules of Civil Procedure and for jurisdictional discovery. Plaintiffs' motions are denied as it is this court's conclusion that jurisdictional discovery is unwarranted and any amendment to plaintiffs' complaint would be futile. This court does not have subject matter jurisdiction over the Republic of Turkey in this case, and this case shall therefore remain dismissed with prejudice.
Plaintiffs' Motion to Amend Their Complaint
Rule 15(a) of the Federal Rules of Civil Procedure states in relevant part that "a party may amend the party's pleading only by leave of court or by written consent of the adverse party . . . and leave shall be freely given when justice so requires." Fed. R. Civ. P. 15(a). In Foman v. Davis, 371 U.S. 178, 9 L. Ed. 2d 222, 83 S. Ct. 227 (1962), the Supreme Court defined the term "when justice so requires" and explained that "in the absence of any apparent or declared reason--such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party . . . futility of amendment, etc.--the leave sought should, as the rules require, be 'freely given.'" Id. at 182 (emphasis added). Accordingly, "within these bounds, a district court has discretion to grant or deny leave to amend under Rule 15(a)." Atchinson v. District of Columbia, 315 U.S. App. D.C. 318, 73 F.3d 418, 426 (D.C. Cir. 1996). See also Foman, 371 U.S. at 182 ("The grant or denial of an opportunity to amend is within the discretion of the District Court, but outright refusal to grant leave without any justifying reason . . . is not an exercise of discretion."); Firestone v. Firestone, 316 U.S. App. D.C. 152, 76 F.3d 1205, 1208 (D.C. Cir. 1996) (indicating that the granting or denial of leave to amend is committed to the district court's discretion).
As the Supreme Court stated in Foman, a motion to amend a complaint should be denied when such an amendment would be futile. "It has been repeatedly held that an amended complaint is 'futile' if the complaint as amended would not survive a motion to dismiss." Monroe v. Williams, 705 F. Supp. 621, 623 (D.D.C. 1988) (citing Massarsky v. General Motors Corp., 706 F.2d 111, 125 (3d Cir. 1983)). See also Graves v. United States, 961 F. Supp. 314, 317 (D.D.C. 1997) ("A motion to amend the Complaint should be denied as 'futile' if the complaint as amended could not withstand a motion to dismiss.").
In the instant case, the Republic of Turkey asserts that plaintiffs' motion to amend their complaint should be denied as futile. Specifically, the Republic of Turkey contends that plaintiffs' proposed amended complaint does not provide sufficient jurisdictional facts to support either subject matter or personal jurisdiction and thus, the Republic of Turkey is immune from suit under the FSIA. In light of these contentions, the Republic of Turkey filed a motion opposing plaintiffs' motion to amend and a motion to dismiss the complaint.
When considering a motion to dismiss, a district court must accept the allegations of the complaint as true and construe all inferences in the plaintiffs' favor. Jungquist v. Sheikh Sultan Bin Khalifa Al Nahyan, 325 U.S. App. D.C. 117, 115 F.3d 1020, 1027-28 (D.C. Cir. 1997); Foremost-McKesson v. Islamic Republic of Iran, 284 U.S. App. D.C. 333, 905 F.2d 438, 440 n.3 (D.C. Cir. 1990). "Where the motion to dismiss is based on a claim of foreign sovereign immunity, which provides protection from suit and not merely a defense to liability . . . the court must engage in sufficient pretrial factual and legal determinations to satisfy itself of its authority to hear the case before trial." Jungquist, 115 F.3d at 1027-28 (quotations omitted). In consideration of the arguments presented by the Republic of Turkey, plaintiffs' proposed amended complaint must be examined to determine whether it may withstand a motion to dismiss in light of the appropriate jurisdictional provisions of the FSIA.
A. The Retroactivity of the FSIA
The FSIA was enacted in 1976 and "provides the sole basis for obtaining jurisdiction over a foreign state in a federal court." Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 439, 102 L. Ed. 2d 818, 109 S. Ct. 683 (1989). The enactment of the FSIA reflects a substantial codification of the restrictive theory of sovereign immunity by Congress. Princz v. Federal Republic of Germany, 307 U.S. App. D.C. 102, 26 F.3d 1166, 1169 (D.C. Cir. 1994); Commercial Bank of Kuwait v. Rafidain Bank, 15 F.3d 238, 241 (2d Cir. 1994); Siderman de Blake v. Republic of Argentina, 965 F.2d 699, 706 (9th Cir. 1992) ("In essence, the FSIA codified the restrictive theory of sovereign immunity which had become widely accepted in international law."). Under the restrictive theory of immunity, immunity is confined to the sovereign or public acts undertaken by the sovereign and does not extend to its commercial or private acts.
In the instant case, the Republic of Turkey contends that if it is concluded that the FSIA does not apply retroactively, then Turkey should be immune from suit in this case according to the restrictive theory of jurisdiction that was in place at the time of the alleged expropriation of plaintiffs' property in 1974. Neither the Supreme Court nor the Court of Appeals for the District of Columbia Circuit has determined whether the FSIA is to be applied retroactively. The Court of Appeals has strongly suggested that the FSIA should be applied to all cases decided after its enactment. Princz, 26 F.3d at 1170 ("There is a strong argument in favor of applying the FSIA retroactively."). As the Court of Appeals noted, in declaring the purpose of the FSIA, Congress directed that "claims of foreign states to immunity should henceforth be decided by courts of the United States and of the States in conformity with the principles set forth in this chapter." Id. at 1170 (quoting 28 U.S.C. § 1602).
The Court of Appeals reasoned that retroactivity was further supported by the deletion from 28 U.S.C. § 1332 the provision for diversity jurisdiction over suits brought by a United States citizen against a foreign government. Id. The House Report on the FSIA specified that "since jurisdiction in actions against foreign states is comprehensively treated by the new section 1330, a similar jurisdictional basis under section 1332 becomes superfluous." H.R. Rep. No. 94-1487, 94th Cong. 2d Sess. 14 (1976). The Court of Appeals concluded:
Unless one is to infer that the Congress intentionally but silently denied a federal forum for all suits against a foreign sovereign arising under federal law that were filed after enactment of the FSIA, but based upon pre-FSIA facts, the implication is strong that all questions of foreign immunity, including those that involve an act of a foreign government taken before 1976, are to be decided under the FSIA.
Princz, 26 F.3d at 1170.
In light of the conclusions drawn by the Court of Appeals in Princz and a plain reading of the statutory language and legislative history of the FSIA, this court is satisfied that Congress intended the FSIA to be applied retroactively. Therefore, the alleged expropriation of plaintiffs' property must be examined under the statutory provisions of the FSIA.
B. Subject Matter Jurisdiction Under the Foreign Sovereign Immunities Act
The FSIA provides that "subject to existing international agreements to which the United States is a party at the time of the enactment of this Act a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 or this chapter." 28 U.S.C. § 1604. The FSIA "sets forth the general rule that foreign states are immune from the jurisdiction of both federal and state courts in the United States, subject to certain exceptions." Siderman de Blake, 965 F.2d at 706 (citing 28 U.S.C. §§ 1330(a), 1604). See also Jungquist, 115 F.3d at 1027; Princz, 26 F.3d at 1169 ("Under the Act, the general rule is that of sovereign immunity, subject to various statutory exceptions."). As such, federal courts lack subject matter jurisdiction over a claim against a foreign state unless the claim falls within a stated exception to immunity under the FSIA. 28 U.S.C. §§ 1330(a), 1603(a), 1605-1607. See also Argentine v. Amerada Hess Shipping Corp., 488 U.S. 428, 102 L. Ed. 2d 818, 109 S. Ct. 683 (1989); Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 76 L. Ed. 2d 81, 103 S. Ct. 1962 (1983) (indicating that a court must dismiss any case in which it cannot "satisfy itself that one of the exceptions applies"); Foremost-McKesson, 905 F.2d at 442 ("District courts in a civil action against a foreign state . . . lack subject matter jurisdiction unless one of the exceptions to immunity applies.").
It is presumed that "under the FSIA . . . actions taken by foreign states or their instrumentalities are sovereign acts and thus protected from the exercise of [the court's] jurisdiction, unless one of the exceptions to FSIA applies." West v. Multibanco Comermex, S.A., 807 F.2d 820, 824 (9th Cir. 1987) (citing 28 U.S.C. § 1605(a)(1-5) & (b)). Thus, once a defendant establishes that it is a sovereign state and that the plaintiffs' claims arise out of a public act, plaintiffs have the burden of going forward with the evidence by offering proof that one of the FSIA exceptions applies. After plaintiffs have presented such evidence, the defendant must prove its entitlement to immunity by a preponderance of the evidence.
In this case, it is undisputed that the Republic of Turkey is a foreign sovereign and that the acts complained of by plaintiffs were public acts. This establishes a presumption that Turkey is protected from suit under a grant of sovereign immunity. Under the burden-shifting process contemplated by the Act, plaintiffs are required to come forward with evidence that the foreign state is not entitled to immunity by invoking one of the exceptions to immunity found in the FSIA. Plaintiffs' proposed amended complaint asserts that the FSIA exception set forth in the first disjunctive of section 1605(a)(3), referred to as the "takings" or "expropriation" exception, applies to their claims and support this court's exercise of jurisdiction.
1. The "Takings" Exception Under Section 1605(a)(3)
The first disjunctive of section 1605(a)(3) of the FSIA provides that a foreign state shall not be immune from suit in any case:
in which rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by a foreign state.