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Azima v. Rak Investment Authority

United States District Court, District of Columbia

March 30, 2018




         Plaintiff Farhad Azima (an American citizen and resident) is an international businessman who has worked for many years with Defendant Ras Al Khaimah Investment Authority (“RAKIA”), which is an investment organ of one of the emirates within the United Arab Emirates. Like many longstanding business relationships, the partnership between Azima and RAKIA has had its ups and downs. Not surprisingly, this lawsuit concerns one of the downs: Azima maintains that RAKIA commissioned the repeated surreptitious hacking of his personal and business laptops from October 2015 to August 2016, and then published disparaging material that was illicitly gleaned from Azima's computers during the hacking. Azima filed the instant lawsuit on September 30, 2016, claiming that RAKIA has violated the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030, et seq., and that RAKIA has also engaged in common law conversion and unfair competition.

         Before this Court at present is RAKIA's motion to dismiss Azima's first amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) and the doctrine of forum non conveniens. (See Mem. in Supp. of Def.'s Mot. to Dismiss (“Def.'s Mot.”), ECF No. 31-2, at 7-9.)[1] In its motion, RAKIA argues that this Court lacks subject matter jurisdiction over this case because the Foreign Sovereign Immunities Act (“the FSIA”), 28 U.S.C. § 1604, et seq., confers sovereign immunity upon RAKIA, and because none of the FSIA's limited exceptions apply. (See Def.'s Mot. at 21-35.) In particular, RAKIA asserts it enjoys immunity because it is an “agency or instrumentality of a foreign sovereign” (id. at 21), and neither the FSIA's commercial activity exception or non-commercial tort exception confers jurisdiction over RAKIA under the instant circumstances (id. at 24-35). RAKIA further contends that, even if this Court has jurisdiction under the FSIA, the United Kingdom is the proper forum to hear this lawsuit, not the District of Columbia, given the forum-selection clause that Azima and RAKIA executed as part of a March 2016 Settlement Agreement (see Id. at 35-37), and the fact that the balance of public and private interests favor litigating this matter in London (see Id. at 37-40).

         For the reasons explained fully below, RAKIA's motion to dismiss Azima's complaint will be DENIED. This Court concludes that it has subject matter jurisdiction over this case, because Azima has alleged that RAKIA engaged in foreign commercial activities in connection with an act that had a direct effect within the United States, such that this matter falls within the commercial activity exception to the FSIA. And because RAKIA has failed to demonstrate that the United Kingdom is an adequate and available forum to litigate Azima's claims, the Court also rejects RAKIA's contention that the doctrine of forum non conveniens requires that this case be brought in London. A separate Order consistent with this Memorandum Opinion will follow.


         A. The Commercial Dealings Of Azima And RAKIA

         Azima is an American businessman who resides in Kansas City, Missouri (see Am. Compl., ECF No. 28, ¶ 7), while RAKIA is a commercial investment entity that is part of the government of Ras Al Khaimah, one of the emirates in the United Arab Emirates (see Id. ¶¶ 8-9). Azima and RAKIA have worked together on a number of business matters over the past decade (see Id. ¶ 64), and throughout their association with one another, Azima and RAKIA have repeatedly discussed possible joint ventures in the aviation, hospitality, logistics, munitions, and steel industries (see Id. ¶ 21). These discussions have sometimes come to fruition; Azima and RAKIA have engaged in “multiple business ventures” through which RAKIA has paid Azima more than seven million dollars. (Id. ¶ 18.)

         In one such venture, one of Azima's businesses-known as “HeavyLift International Airline”-entered into a joint venture with RAK Airways to build and operate a flight training academy in Ras Al Khaimah. (See Id. ¶ 19.) RAKIA became involved with this arrangement as a guarantor, because it agreed to guarantee RAK Airways's performance in the event that RAK Airways failed to meet its contractual obligations. (See id.) A subsequent dispute arose with respect to this joint venture, when Azima claimed that RAK Airways owed HeavyLift for “investments HeavyLift made[.]” (Settlement Agreement, Ex. L to Def.'s Mot., ECF No. 31-15, at 3.) HeavyLift eventually turned to RAKIA as RAK Airways's guarantor, and the three principals (RAKIA, HeavyLift, and Azima) entered into a settlement agreement in March of 2016 to resolve that dispute. (See id.) Significantly for present purposes, the March 2016 Settlement Agreement contained the following forum-selection clause:

This Settlement Agreement and any dispute or claim arising out of, or in connection with, it or its subject matter or formation (including, without limitation, any contractual or non-contractual disputes, claims or obligations) is governed by and shall be construed in accordance with English law and the Parties agree to the exclusive jurisdiction of the courts of England and Wales.

         (Settlement Agreement at 5-6.)

         Notably, Azima contends that, in addition to doing business with RAKIA with respect to the HeavyLift joint venture and other business arrangements, he has also served as a mediator for RAKIA, helping it resolve disputes with other commercial entities. (See Am. Compl. ¶ 21.) RAKIA purportedly employed Azima in that capacity during the 2015 and 2016 calendar years, as RAKIA attempted to negotiate a settlement with its former CEO. (See Id. ¶ 23.) According to Azima's complaint, RAKIA asked Azima to step in as a mediator for this particular dispute, and Azima fully anticipated that RAKIA would compensate him for his services and expenses. (See id.) But Azima alleges that RAKIA never paid him for the services he provided when he mediated between RAKIA and its former CEO, and that RAKIA ultimately terminated his services in July of 2016. (See id at ¶ 34.)

         For its part, RAKIA vehemently contends that it never asked Azima to mediate between RAKIA and its former CEO. (See Decl. of James Buchanan, Attachment to Def.'s Mot., ECF No. 31-21, ¶¶ 6-7.) Instead, RAKIA recalls that Azima approached RAKIA and offered to serve as “an honest broker”-as distinguished from a neutral mediator-in the dispute between RAKIA and its former CEO. (See id.) Furthermore, RAKIA says that it did not offer to pay Azima for these services, nor did it enter into a contract with him for these services. (See Id. ¶ 8.) Indeed, throughout Azima's time as an “honest broker, ” RAKIA allegedly perceived him to be acting as an advocate for RAKIA's former CEO. (See Id. ¶ 12.)

         Thus, there is a disagreement between the parties regarding whether or not RAKIA actually hired Azima to mediate a conflict in or around 2015. However, it is beyond dispute that the aforementioned March 2016 Settlement Agreement-which both Azima and RAKIA signed-specifically references the fact that Azima had “recently provided negotiation assistance to RAKIA on an informal basis[, ]” and lists this service as one of the reasons for the payout that Azima received through that settlement. (Settlement Agreement at 3.)

         B. The Hacking And Its Aftermath

         Azima's complaint alleges that, during the time that Azima was allegedly mediating between RAKIA and its former CEO, computer hackers repeatedly accessed Azima's business and personal computers. (See Am. Compl. ¶¶ 26, 33, 78.) These digital assaults purportedly began on October 14, 2015, when the hackers accessed Azima's computers using two IP addresses; one that was based in Florida, and one that was based in New York. (See Id. ¶ 26.) Unbeknownst to Azima, the hackers then repeatedly accessed his computers over the next ten months, monitoring Azima's communications, deleting his data, and sending fake emails from his accounts. (See Id. ¶ 30.) And because Azima did not learn that hackers were accessing his computers until August of 2016 (see Id. ¶ 31), he continued to communicate with RAKIA and its former CEO electronically (see Id. ¶¶ 25, 31), and discuss privileged matters with his attorneys concerning his “commercial interactions with RAKIA” (id. ¶ 31). Thus, Azima has alleged that the hackers were watching while Azima engaged in sensitive and important business affairs. The hackers also allegedly left behind malware, which infected Azima's computers (see Id. ¶ 33), and ultimately damaged Azima's “U.S.-based business and personal laptops” (id. ¶¶ 75, 78).

         At the same time that the hackers were infiltrating Azima's computers, the negotiations between RAKIA and its former CEO started to break down. (See id. at ¶¶ 34-35.) Azima alleges that, in July of 2016, RAKIA threatened him directly, by saying that he would become “collateral damage” in the all-out war that RAKIA planned to wage against its former CEO at that time. (Id.) Then, a short time later, multiple websites disparaging Azima appeared on the internet. (See Id. ¶ 38.) The websites featured negative claims about Azima that RAKIA had allegedly made in the past (see id.), and also included links to BitTorrent sites that contained private documents from Azima's computer and information contained in Azima's iCloud account, including text messages, call history, calendar, photos, and voicemail recordings (see Id. ¶ 39).[3]

         On September 23, 2016, Azima's counsel in Washington D.C. received a letter from RAKIA demanding $4, 162, 500 if Azima wished to avoid a lawsuit. (See Id. ¶ 49.) That demand letter based its claims on information that RAKIA had “recently obtained . . . via publicly available internet sources.” (Id.) RAKIA attached several of the documents taken from Azima's computer to this demand letter, and those documents contained confidential information that Azima kept only on his computers. (See Id. ¶ 50.) RAKIA has since admitted to possessing around 30 GB of Azima's information (see Id. ¶ 57), but it claims that it accessed the data legally through publicly available BitTorrent websites.

         C. Procedural History

         Azima filed the instant action on September 30, 2016. His three-count complaint claimed that RAKIA (or one of its agents) hacked his personal and business computers, stole his data, and used that information both to blackmail him and to harm his reputation. (See Id. ¶ 60.) On December 12, 2016, RAKIA filed a motion to dismiss Azima's action on the grounds that (1) the FSIA deprives this Court of subject matter jurisdiction to hear Azima's case; (2) Azima has failed to state a claim upon which relief could be granted; and (3) the doctrine of forum non conveniens requires the dismissal of the lawsuit. (See Def.'s Mot. to Dismiss, ECF No. 13.) This Court held a motion hearing on April 24, 2017, and thereafter both denied RAKIA's motion without prejudice and granted Azima leave to file a First Amended Complaint. (See Order, ECF No. 27.)

         Azima has now filed an Amended Complaint, in which he repeats the assertion that RAKIA hacked his computers and used the resulting data to disparage and extort him in order “to gain an advantage in RAKIA's commercial relationship with Mr. Azima.” (Am. Compl. ¶ 65; see also Id. ¶¶ 66-68.) The amended complaint contains three counts, which claim that RAKIA's conduct violated the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030, et seq. (Count I), and also constituted common law conversion (Count II) and unfair competition (Count III). (See Id. ¶¶ 77-103.) To overcome the FSIA bar that would ordinarily block a claim against an arm of a foreign state, Azima has invoked two of the FSIA's provisions that authorize suits against sovereigns under specified circumstances: the commercial activity exception, 28 U.S.C. § 1605(a)(2), and the non-commercial tort exception, 28 U.S.C. § 1605(a)(5). (See Id. ¶¶ 63-76.) Therefore, Azima argues that RAKIA is not immune to the instant lawsuit, and he seeks statutory, compensatory, and punitive damages, as well as an injunction that requires RAKIA to return all of his data and to refrain from similar conduct in the future. (See id., Prayer for Relief.)

         In response to Azima's Amended Complaint, RAKIA has once again filed a motion to dismiss. (See Def.'s Mot.) RAKIA argues that this Court lacks subject matter jurisdiction under the FSIA, and that the Court should dismiss the action based on the doctrine of forum non conveniens. (See Id. at 24-40.) This Court held a motion hearing on October 27, 2017, and RAKIA's motion is now ripe for decision. (See Pl.'s Mem. in Opp'n to Def.'s Mot. to Dismiss (“Pl.'s Opp'n”), ECF No. 33; Reply Mem. of Law in Further Support of Mot. to Dismiss (“Def.'s Reply”), ECF No. 35.)


         A. Sovereign Immunity Under The FSIA

         When it enacted the FSIA, Congress made clear that foreign states are “immune from the jurisdiction of the courts of the United States . . . unless one of [the FSIA's] several statutorily defined exceptions applies.” Republic of Arg. v. Weltover, Inc., 504 U.S. 607, 610-11 (1992) (citation omitted). The FSIA defines a “foreign state” to include “a political subdivision of a foreign state or an agency or instrumentality of a foreign state.” 28 U.S.C. § 1603(a). And because the courts of the United States must “respect the independence and dignity” of foreign states, Bolivarian Republic of Venez. v. Helmerich & Payne Int'l Drilling Co., 137 S.Ct. 1312, 1319 (2017) (citation omitted), the FSIA's presumption of immunity serves to cut off litigation against foreign states at the earliest possible moment, see Id. at 1324.

         Notably, however, a foreign sovereign is not entitled to immunity when it acts in a commercial capacity, as opposed to a sovereign one. See Id. at 1320 (citation omitted) (“[W]e consequently began to limit our recognition of sovereign immunity, denying that immunity in cases ‘arising out of a foreign state's strictly commercial acts[.]'”); see also Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 487 (1983) (noting that the FSIA codifies the general presumption of foreign state immunity, which falls away if liability is based upon commercial activity). This general principle is expressly codified in a number of exceptions that appear in 28 U.S.C. § 1605(a), two of which purportedly bear on this case. The FSIA's commercial activity exception provides that

[a] foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case . . . in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States[.]

28 U.S.C. § 1605(a)(2). For its part, the non-commercial tort exception states in relevant part that

[a] foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case . . . not otherwise encompassed in [the commercial activity exception], in which money damages are sought against a foreign state for personal injury or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of that foreign state or of any official or employee of that foreign state while acting within the scope of his office or employment[.]

Id. § 1605(a)(5). If the circumstances set forth in either of these two statutory provisions-or in any of the other FSIA's statutory exceptions, for that matter-apply, then the defendant foreign sovereign will not be immune and the plaintiff's lawsuit can proceed. But any court grappling with these issues must bear in mind that these exceptions are “narrowly drawn[, ]” McKesson Corp. v. Islamic Republic of Iran, 672 F.3d 1066, 1075 (D.C. Cir. 2012) (citations omitted), and should be construed as such, see Schermerhorn v. State of ...

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