Case 1:20-cv-00928-JEB Document 69 Filed 11/09/20 Page 1 of 56
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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLUMBIA
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`
`RAMONA MATOS RODRIGUEZ, et al.,
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` Plaintiffs,
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`
`
`
`
`v.
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` Civil Action No. 20-928 (JEB)
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`PAN AMERICAN HEALTH
`ORGANIZATION, et al.,
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`
`Defendants.
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`
`
`
`
`MEMORANDUM OPINION
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`
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`Most public attention on human trafficking and forced labor understandably focuses on
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`destitute victims who live on the margins of society. In this case, however, those allegedly taken
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`advantage of were Cuban physicians, who assert that their government, through threats and
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`intimidation, coerced them into providing medical services in Brazil, restricted their movement
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`and contacts while abroad, and withheld and eventually confiscated the lion’s share of their
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`wages. Plaintiffs, four Cuban physicians now living in the United States, claim that they were
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`victims of the Mais Medicos program, a medical mission operated by the Brazilian government
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`in conjunction with Cuba, from 2013 to 2017. Plaintiffs, however, do not name Cuba or Brazil
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`as defendants in this lawsuit. Instead, they bring this putative class action against the Pan
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`American Health Organization, an international body affiliated with the World Health
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`Organization and tasked with advancing public health in the Western Hemisphere. Plaintiffs
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`charge that PAHO provided, or knowingly benefited from others having provided, their forced
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`labor, and they seek damages under the Trafficking Victims Protection Act and the Racketeer
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`Influenced and Corrupt Organizations Act.
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`PAHO now moves to dismiss, principally contending that it is immune from suit under
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`the International Organizations Immunities Act (IOIA) or, failing that, the United Nations
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`Charter or the World Health Organization Constitution. Until recently, this would have been an
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`easy issue, as it was generally accepted that international organizations like PAHO are absolutely
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`immune from suit under the IOIA. The Supreme Court, however, recently overruled that
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`approach, holding in Jam v. International Finance Corp., 139 S. Ct. 759 (2019), that the IOIA
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`provides international organizations the same (less-than-absolute) degree of immunity enjoyed
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`by foreign sovereigns under the Foreign Sovereign Immunities Act. PAHO’s Motion thus
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`presents several novel questions, including how to apply the FSIA’s exception for “commercial
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`activity” to an international organization like PAHO and whether the immunity-conferring
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`provisions of the U.N. Charter or WHO Constitution are binding domestic law capable of being
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`enforced by federal courts.
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`The Court ultimately concludes that it has jurisdiction over PAHO as to several, though
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`not all, of Plaintiffs’ claims against it. The Court also rejects PAHO’s alternative request that this
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`suit be dismissed for reasons of international comity and its argument that it has not been
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`properly served. The case will therefore proceed.
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`I.
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`Background
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`A. Factual Background
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`As this Opinion mainly concerns PAHO’s assertion of immunity, the Court need set out
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`only briefly the relevant facts as alleged by Plaintiffs. (There is no occasion to assess the
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`veracity of these factual assertions, which the Court must accept as true at this stage.) Plaintiffs
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`claim that they were recruited into the Mais Medicos program “under threat of harsh social,
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`economic, political personal, reputational, and legal repercussions” from the Cuban regime and
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`that they were not told where they would be sent or what work they would perform. See ECF
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`No. 50 (Second Amended Complaint), ¶ 2. As to PAHO in particular, Plaintiffs’ allegations
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`center on its role in facilitating Mais Medicos as an essential intermediary between the Cuban
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`and Brazilian governments.
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`Beginning in 2012, officials from both countries began discussing the possibility of
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`Brazil’s joining the many countries to which Cuba “export[s] . . . medical services.” Id., ¶ 40;
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`see id., ¶¶ 41–47. Per multiple State Department reports cited in the Complaint, “medical
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`missions” comprised of Cuban doctors “constitute a significant source of Cuban government
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`income,” and “[s]ome participants in [those] missions as well as other sources allege that Cuban
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`officials force or coerce participation in the program.” Id., ¶ 30. As relevant here, Cuban
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`officials proposed sending six thousand specialists in internal medicine to Brazil. Id., ¶ 41. As
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`discussions wore on, it became clear to Brazilian officials that any arrangement between the two
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`countries could not be implemented as an “intergovernmental agreement” because, if it were, it
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`would “have to be submitted to [Brazil’s] Congress” as well as other government ministries and
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`“would generate controversy.” Id., ¶ 45 (quoting remarks of Brazil’s ambassador to Cuba). The
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`need to arrive at a “legal framework” for the program that would avoid a “bilateral agreement,”
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`“which would require approval by the Brazilian Congress,” led Brazilian officials to “present[]
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`[to Cuba] the proposal to use the Pan American Health Organization as an intermediary,
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`characterizing the contracting of services as cooperation in the medical field.” Id., ¶ 47 (quoting
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`December 2012 diplomatic cable).
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`PAHO’s alleged conduct in that middleman role falls into two main buckets. First, and
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`Plaintiffs’ main focus, PAHO agreed to serve as a financial intermediary between the two
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`countries. Rather than having the Brazilian government pay Cuba directly as compensation for
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`the physicians, it would pay PAHO, which would then pay the Cuban regime. Id., ¶¶ 18, 38, 50–
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`51. This role fulfilled an earlier agreement between PAHO and Cuba, in which PAHO had
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`endeavored to help “triangulat[e] . . . health care cooperation and the moving of resources.” Id.,
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`¶¶ 19(c), 49. Formalizing its go-between status, PAHO entered into several agreements with the
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`Brazilian government and a Cuban government-affiliated firm, which “called for Brazil to make
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`payment to PAHO’s Citibank account in Washington, D.C.” Id., ¶ 18. “Pursuant to these
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`agreements, PAHO collected hundreds of millions of dollars every year from Brazil and it
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`remitted 85% to Cuba, paid 10% or less to the doctors, and kept 5% for itself.” Id. Over the life
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`of the Mais Medicos program, which terminated in 2018, that 5% fee amounted to over $75
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`million. Id. Plaintiffs claim that this money was not all used for legitimate administrative
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`expenses of PAHO’s program-related actions. Id., ¶¶ 87, 103.
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`Second, Plaintiffs allege that PAHO played an important role in “enforc[ing]” the terms
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`of the Mais Medico program and “cover[ing] up” its objectionable elements. Id., ¶ 38. The SAC
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`repeatedly asserts in general terms that, true to that role, PAHO helped “organize[], administer[],
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`and enforce[]” Mais Medicos. Id., ¶ 3; see also id., ¶¶ 15, 18, 57, 86. In addition, Plaintiffs
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`claim that PAHO officials proposed shaping the relevant agreements to hide the fact that Cuba
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`was also sending “consultants” (read: government minders) along with its physicians. Id., ¶ 52;
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`see also id., ¶ 85. PAHO also allegedly hired Cuban intelligence officers to provide on-the-
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`ground surveillance and help ensure doctors’ compliance with their harsh employment
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`conditions. Id., ¶¶ 5, 86, 100, 113. Among those conditions, Plaintiffs were not allowed their
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`passports and thus could not travel; their day-to-day movements were limited and subject to pre-
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`approval by their minders; their social-media presences were monitored; they were paid a
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`relative pittance; and they were required to propagandize for Cuba to their patients. Id., ¶¶ 27,
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`98, 113. PAHO’s pressure campaign was not limited to the Cuban doctors themselves; one
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`senior PAHO official allegedly “pressured the Brazilian Attorney General to intervene and shut
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`down, or divert,” cases brought in the Brazilian court system by Cuban doctors. Id., ¶ 19(e).
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`B. Procedural History
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`Plaintiffs filed this action in late 2018 in the U.S. District Court for the Southern District
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`of Florida. See ECF No. 1 (Complaint). After they filed an amended complaint, see ECF No. 9,
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`PAHO moved to transfer the case to this district on the ground that it is the only appropriate
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`venue under the IOIA. See ECF No. 18 (Mot. to Transfer) at 6–10. The Florida district court
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`agreed and transferred the case, see ECF No. 46, after which Plaintiffs filed their now-operative
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`Second Amended Complaint. That Complaint, styled as a putative class action on behalf of all
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`Cuban physicians allegedly forced into participating in the Mais Medicos program, contains two
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`counts, one asserting violations of the Trafficking Victims Protection Act (TVPA), 18 U.S.C.
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`§§ 1589–1590, and one of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18
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`U.S.C. §§ 1962(c)–(d). See SAC, ¶¶ 129–36, 139–44. Although both statutes are primarily
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`criminal in nature, each allows victims to obtain civil recovery of “damages and reasonable
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`attorneys fees.” Id. § 1595(a) (TVPA); see id. § 1964(c) (RICO). PAHO now moves to dismiss
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`for lack of subject-matter jurisdiction on the grounds that it is immune from suit under the IOIA,
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`the U.N. Charter, and the WHO Constitution. See ECF No. 54-1 (PAHO MTD) at 1. It also
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`argues that abstention principles favor dismissal under the doctrine of international comity and
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`that PAHO was not properly served. Id. at 2.
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`C. Plaintiffs’ Claims
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` Before assessing these arguments, the Court pauses to note an important wrinkle: while
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`the several alleged TVPA violations are all contained within “Count I” of the operative
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`Complaint, it is clear that Plaintiffs have really brought three separate TVPA claims,
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`corresponding with the three different sections of that statute that they assert PAHO violated.
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`See Matson Navigation Co., Inc. v. U.S. Dep’t of Transportation, No. 18-2751, 2020 WL
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`4816460, at *3 (D.D.C. Aug. 19, 2020) (“One count of a complaint can include multiple
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`claims.”) (cleaned up) (quoting Cassell v. Michaux, 240 F.2d 406, 407 (D.C. Cir. 1956)).
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`Recognizing as much is a key threshold step, as immunity under the FSIA (and thus the IOIA)
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`implicates the Court’s subject-matter jurisdiction, Peterson v. Islamic Republic of Iran, 563 F.
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`Supp. 2d 268, 272 (D.D.C. 2008), and must therefore be evaluated “on a claim-by-claim basis.”
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`Simon v. Republic of Hungary, 812 F.3d 127, 141 (D.C. Cir. 2016); see also Millen Indus., Inc.
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`v. Coordination Council for N. Am. Affairs, 855 F.2d 879, 885 (D.C. Cir. 1988) (remanding
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`because “[o]ne allegation of the complaint . . . may [have] be[en] sufficient to create jurisdiction”
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`even as most were barred by FSIA).
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`Plaintiffs first allege that PAHO “violated . . . 18 U.S.C. § 1589(a), which forbids
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`‘provid[ing]’ or ‘obtain[ing]’ human labor” by force, threats, or the like. See SAC, ¶ 129
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`(emphasis added). “Further,” Plaintiffs allege in the next paragraph, PAHO “knowingly
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`benefited financially . . . from trafficking of Plaintiffs . . . in violation of 18 U.S.C. § 1589(b),
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`which makes it a crime” to benefit “from participating in a venture which has engaged in the
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`providing or obtaining of [forced] labor or services.” Id., ¶ 130 (emphases added); see also id., ¶
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`131 (“PAHO’s . . . actions violated 18 U.S.C. §§ 1589(a) and (b).”); id., ¶ 132 (“PAHO[] . . .
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`knowingly provided and obtained the labor or services of Plaintiffs by threats . . . . In addition,
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`PAHO knowingly benefited financially by participating in the Mais Medicos venture.”). Third
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`and finally, Plaintiffs allege (again in a separate paragraph) that PAHO’s “actions also violate 18
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`U.S.C. § 1590,” id., ¶ 133, which imposes liability on any person who “knowingly recruits,
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`harbors, transports, provides, or obtains by any means, any person for labor or services in
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`violation of [section 1589].” 18 U.S.C. § 1590(a). Section 1590, courts have explained,
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`“imposes liability for trafficking . . . separate and distinct from liability for forced labor or
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`services.” Gilbert v. U.S. Olympic Comm., 423 F. Supp. 3d 1112, 1133 (D. Colo. 2019); accord
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`Baxla v. Chaudhri, 225 F. Supp. 3d 588, 593 (E.D. Va. 2016).
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`Each of these provisions proscribes distinct conduct — providing or obtaining forced
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`labor under 1589(a), knowingly benefiting from participation in a venture using forced labor
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`under 1589(b), and trafficking under 1590 — and Plaintiffs have set out each violation in
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`“[i]ndividual numbered paragraphs within the complaint,” making it “unmistakabl[e] that
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`plaintiffs seek relief on these” separate grounds. Save Our Sch. v. D.C. Bd. of Educ., No. 04-
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`1500, 2005 WL 8178067, at *2 (D.D.C. Jan. 12, 2005). Consistent with that conclusion, courts
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`appear to treat violations of sections 1589(a), 1589(b), and 1590 as separate criminal offenses
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`and separate bases for civil recovery. See, e.g., Gilbert, 423 F. Supp. 3d at 1133 (differentiating
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`1589(a) and 1590); Adia v. Grandeur Mgmt., Inc., 933 F.3d 89, 94 (2d Cir. 2019) (same); United
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`States v. Paz-Rodriguez, No. 20-82, 2020 WL 5607821, at *1 (N.D. Okla. Sept. 18, 2020)
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`(differentiating 1589(a) and 1589(b)); Paguirigan v. Prompt Nursing Employment Agency LLC,
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`No. 17-1302, 2019 WL 4647648, at *19 (E.D.N.Y. Sept. 24, 2019) (differentiating all three).
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`The Court will therefore construe the Second Amended Complaint as asserting three distinct
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`TVPA claims and within the Analysis below consider PAHO’s invocation of immunity
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`separately for each.
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`II.
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`Analysis
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`The bulk of the Court’s examination concerns immunity, but it will thereafter address
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`international comity, service of process, and Plaintiffs’ request for jurisdictional discovery.
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`A. Immunity
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`PAHO argues first and foremost that Plaintiffs’ claims must be dismissed for lack of
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`subject-matter jurisdiction because it is immune from suit. It expressly “contests only the legal
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`sufficiency of the plaintiff’s jurisdictional claims,” and, as a result, the applicable standard “is
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`akin to that applied under Rule 12(b)(6).” EIG Energy Fund XIV, L.P. v. Petroleo Brasileiro,
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`S.A., 894 F.3d 339, 345 (D.C. Cir. 2018). Now is therefore not the time for “a final
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`determination whether jurisdiction exists . . .; nor [does the Court] mak[e] any final factual
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`determinations.” Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438, 440 n.3
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`(D.C. Cir. 1990). Instead, it must “treat the complaint’s factual allegations as true . . . and must
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`grant plaintiff ‘the benefit of all inferences that can be derived from the facts alleged.’” Sparrow
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`v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (quoting Schuler v. United
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`States, 617 F.2d 605, 608 (D.C. Cir. 1979)) (internal citation omitted). The Court need not accept
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`as true, however, “a legal conclusion couched as a factual allegation,” or an inference
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`unsupported by the facts set forth in the Complaint. Trudeau v. Fed. Trade Comm’n, 456 F.3d
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`178, 193 (D.C. Cir. 2006) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).
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`PAHO claims immunity from suit principally under the IOIA, but also under the
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`immunity-related provisions of two international agreements: the U.N. Charter and the WHO
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`Constitution. The Court considers the three in sequence, recognizing that Defendant may escape
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`liability if it prevails under any.
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` IOIA Immunity
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`In considering the IOIA, the Court must rely almost exclusively on cases applying the
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`FSIA, given the dearth of IOIA precedents to date. This is because Jam, which was decided only
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`last year, has altered the playing field. After Jam, the IOIA no longer renders international
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`organizations to which it applies (among them PAHO) absolutely immune from suit. Instead,
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`like foreign sovereigns, covered international organizations are merely “presumptively immune
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`from the jurisdiction of United States courts,” and this Court has jurisdiction if “a specified
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`[FSIA] exception applies.” Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993); see Jam, 139 S.
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`Ct. at 771 (discussing application of FSIA exceptions under IOIA). Plaintiffs argue that their
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`claims fall within two such FSIA exceptions, namely: (1) claims based on the defendant’s
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`commercial activity; and (2) claims based on expropriation. See 28 U.S.C. § 1605(a)(1)–(2).
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`The Court now evaluates the applicability of those exceptions to each of Plaintiffs’ claims.
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` Commercial Activity
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`The FSIA provides that “[a] foreign state shall not be immune . . . in any case . . . in
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`which the action is based [1] upon a commercial activity carried on in the United States by the
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`foreign state; or [2] upon an act performed in the United States in connection with a commercial
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`activity of the foreign state elsewhere; or [3] upon an act outside the territory of the United States
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`in connection with a commercial activity of the foreign state elsewhere and that act causes a
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`direct effect in the United States.” 28 U.S.C. § 1605(a)(2). After Jam, all agree that the Court
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`must simply replace the words “foreign state” with “international organization.” Jam v. Int’l Fin.
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`Corp., 442 F. Supp. 3d 162, 170–71 (D.D.C. 2020).
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`As the text of the statute indicates, the Court’s first task when assessing a specific claim
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`is to “identify the particular conduct on which the action is ‘based,’” which requires determining
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`the “foundation” or “gravamen” of the claim by “zero[ing] in on [its] core.” OBB
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`Personenverkehr AG v. Sachs, 136 S. Ct. 390, 395–96 (2015); see also id. at 397 n.2 (suggesting
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`gravamen may be different for different claims); Devengoechea v. Bolivarian Republic of
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`Venezuela, 889 F.3d 1213, 1223 (11th Cir. 2018) (arguing that Sachs “expressly recognized that
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`the gravamina of different claims” may be different conduct). Once the act or acts forming a
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`claim’s “essentials” are identified, Sachs, 136 S. Ct. at 397, the question becomes whether that
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`conduct amounts to “commercial activity” or is “in connection with a commercial activity,” 28
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`U.S.C. § 1605(a)(2), and whether the conduct “ha[s] a sufficient nexus to the United States”
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`under the statute. Jam, 139 S. Ct. at 772. The nexus inquiry is relatively straightforward: the
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`conduct at issue must either be “carried on in the United States,” be “performed in the United
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`States,” or “cause[] a direct effect in the United States.” 28 U.S.C. § 1605(a)(2). The Act
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`clarifies (sort of) that commercial activity is “carried on in the United States” if it has
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`“substantial contact with the United States.” Id. § 1603(e).
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`Ascertaining whether the conduct at issue amounts to commercial activity is more
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`difficult, especially in the context of an international organization. As applied to foreign
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`sovereigns, courts have long deployed an intuitive distinction: “[A] state engages in commercial
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`activity . . . where it exercises only those powers that can also be exercised by private citizens, as
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`distinct from those powers peculiar to sovereigns.” Saudi Arabia v. Nelson, 507 U.S. 349, 360
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`(1993) (internal quotation omitted). “Put differently, a foreign state engages in commercial
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`activity . . . only where it acts ‘in the manner of a private player within’ the market.” Id.
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`(quoting Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 614 (1992)). Crucially, the
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`FSIA requires courts to examine “the nature of [the activity], rather than . . . its purpose.” 28
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`U.S.C. § 1603(d). The question is thus “not whether the foreign government is acting with a
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`profit motive or instead with the aim of fulfilling uniquely sovereign objectives,” but rather
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`“whether the particular actions that the foreign state performs (whatever the motive behind them)
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`are the type of actions by which a private party engages in trade and traffic or commerce.”
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`Weltover, 504 U.S. at 614 (internal quotation omitted).
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`As the district court in Jam recognized on remand from the Supreme Court, applying this
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`test to “international organizations . . . is fraught with difficulty.” Jam v. Int’l Fin. Corp., No.
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`15-612, 2020 WL 4933618, at *8 (D.D.C. Aug. 24, 2020). The core doctrinal dichotomy
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`between commercial and noncommercial activity — acting as a sovereign versus as a market
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`participant — cannot be easily applied to an entity like PAHO, which is, of course, not a nation
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`state. It is hard to imagine an action PAHO could take that would be of a type “exclusively
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`reserved for the sovereign.” Ghawanmeh v. Islamic Saudi Acad., 672 F. Supp. 2d 3, 9 (D.D.C.
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`2009).
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`Aware of this problem, PAHO suggests that the Court should analogize its way to a
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`different dichotomy for international organizations: “between conduct that falls within an
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`international organization’s mission,” which would be non-commercial and immune, and
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`“conduct in which the organization acts outside its mission,” which would be commercial
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`activity. See PAHO MTD at 26–27. That newfangled test, however, runs headlong into the
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`existing doctrinal rule that courts must “look only to the resemblance between ‘the outward
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`form’ of [the international organization’s] conduct . . . and th[at] of private citizens.” El-Hadad
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`v. United Arab Emirates, 496 F.3d 658, 667–68 (D.C. Cir. 2007) (emphasis added) (quoting
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`Weltover, 504 U.S. at 617). The FSIA itself, recall, clearly instructs that “[t]he commercial
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`character of an activity shall be determined by reference to [its] nature . . . rather than by
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`reference to its purpose.” 28 U.S.C. § 1603(d). PAHO’s doctrinal reformulation would require
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`discarding that analytical principle, as it would have courts look to the “mission or purpose,”
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`PAHO MTD at 27, behind an entity’s conduct in order to determine whether it fell within the
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`commercial-activity exception. Just as states cannot escape the conclusion that a “contract to
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`buy army boots or even bullets” is commercial activity on the ground that it “fulfill[ed] [the]
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`uniquely sovereign objective[]” of national defense, Weltover, 504 U.S. at 614, so too PAHO
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`cannot characterize conduct as commercial because it “help[ed] its member states provide public
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`health services to their citizens” “consistent with its public-health mission.” ECF No. 62 (PAHO
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`Reply) at 12–13; see El-Hadad, 496 F.3d at 668 (courts must “reject[] any argument that rests on
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`the foreign state’s reasons for undertaking the activity alleged”).
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`PAHO suggests that, the old rules notwithstanding, Jam foreshadowed a new approach
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`for international organizations. In that case, which was brought against an international
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`development bank known as the International Finance Corporation, the Supreme Court suggested
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`that “the lending activity of at least some development banks, such as those that make
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`conditional loans to governments, may not qualify as ‘commercial’ under the FSIA” and thus the
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`IOIA. See 139 S. Ct. at 772. Voilà, PAHO argues — what could be more commercial than
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`lending? But PAHO misunderstands the Court’s apparent point, which was that under the
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`standard approach, conditional loans to governments may not be commercial activity precisely
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`because they may not be “‘the type’ of activity ‘by which a private party engages in’ trade or
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`commerce.” Id. (citing Weltover, 504 U.S. at 614). “[A]s the Government [had] suggested at
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`oral argument,” id., “lend[ing] to sovereigns” on the condition that they “enact certain
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`restrictions . . . and change their . . . laws” is “not the sort of transaction that a private party can
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`enter . . . into.” Tr. of Oral Arg. at 30, Jam, 139 S. Ct. 759 (No. 17-1011). And since private
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`parties do not and cannot engage in that sort of conditional lending, it is not commercial under
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`the standard FSIA test. For international organizations, then, Jam did not discard the Weltover
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`rule — it retained it.
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`Courts must therefore apply the existing test as best they can to all international
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`organizations: if the conduct alleged is “the sort of action” “typically performed by participants
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`in the market,” it is commercial for purposes of the IOIA. See Mwani v. bin Laden, 417 F.3d 1,
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`16–17 (D.C. Cir. 2005). It must be admitted that this approach may, “[a]s Justice Breyer noted
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`in his lone dissent” in Jam, “largely swallow the general rule that they are presumptively immune
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`from suit.” Jam, 2020 WL 4933618, at *8 (cleaned up). Justice Breyer, however, did not
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`convince a majority of his colleagues on the Supreme Court to read the IOIA to avoid that
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`outcome. Indeed, the majority supplied several reasons why international organizations may still
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`often have immunity even for conduct that qualifies as commercial: there is still a domestic-
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`nexus requirement, there is still a requirement that the suit truly be “based upon” the commercial
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`activity at issue, and it is possible that an international organization could claim immunity under
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`a different legal instrument such as its charter, which last point the Court addresses vis-à-vis
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`PAHO later in this Opinion. See Jam, 139 S. Ct. at 771–72. At the end of the day, this Court is
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`not free to disregard the Supreme Court’s considered decision, whatever its consequences.
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`In any event, many international organizations are not banks or other institutions whose
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`activities are overwhelmingly commercial. One can imagine a number of actions that PAHO, for
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`example, might take that could hypothetically form the basis of a lawsuit against it but would not
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`qualify as “engag[ing] in trade and traffic or commerce,” Weltover, 504 U.S. at 614 — e.g.,
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`negotiating a multilateral agreement or providing vaccinations to poor, remote communities.
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`Here, however, it is alleged that PAHO acted quite like a bank insofar as it performed the role of
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`financial intermediary between Cuba and Brazil. Those actions suffice to bring one of Plaintiffs’
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`claims — its second claim: that PAHO knowingly benefited from its participation in the Mais
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`Medicos venture — within the commercial-activity exception. The Court begins by discussing
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`that claim, as it takes up the bulk of the analysis in this section, before looking at the other two.
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`Case 1:20-cv-00928-JEB Document 69 Filed 11/09/20 Page 14 of 56
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`i. TVPA Claim 2
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`Plaintiffs’ claim under section 1589(b) of the TVPA is their most straightforward one:
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`according to the operative Complaint, the Mais Medicos–related agreements into which PAHO
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`entered “called for Brazil to make payment to PAHO’s Citibank account in Washington, D.C.,”
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`SAC, ¶ 18, and for PAHO to “transfer [those] hundreds of millions of dollars to the Government
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`of Cuba.” Id., ¶ 51. Pursuant to those agreements, PAHO acted as a conduit for over $1.5
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`billion and retained 5%, or $75 million, for itself “in fees.” Id., ¶ 18; see also id., ¶¶ 87, 103
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`(alleging that money kept by PAHO was not all for administrative expenses of program). PAHO
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`acted in this role, per the Complaint, because for domestic political reasons the Brazilian
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`government did not want to directly compensate the Cuban government (or its fronts) for the
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`provision of its doctors. Id., ¶¶ 45, 47. Plaintiffs thus allege that PAHO knew that the Cuban
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`component of the Mais Medicos program was “engaged in the providing or obtaining” of forced
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`labor and received over $75 million for its “participati[on] in [that] venture.” 18 U.S.C. §
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`1589(b).
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`The gravamen of this claim, accordingly, is PAHO’s moving of money, for a fee,
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`between Cuba and Brazil. As Plaintiffs argue, even if PAHO had “played no other role in
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`Cuba’s trafficking scheme” other than as a financial intermediary, “its receipt of a financial
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`benefit from that scheme . . . would still” amount to conduct “for which Congress has afforded
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`Plaintiffs a private right of action.” ECF No. 58 (Opp.) at 20. PAHO’s alleged behavior as a
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`knowing money middleman is therefore at “the core” of Plaintiffs’ second TVPA claim — it is
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`conduct that, “if proven, would entitle [Plaintiffs] to relief under [their] theory of the case.”
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`Sachs, 136 S. Ct. at 396 (quoting Nelson, 507 U.S. at 357).
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`Case 1:20-cv-00928-JEB Document 69 Filed 11/09/20 Page 15 of 56
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`The Court concludes that such conduct qualifies as commercial activity under the FSIA
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`and thus the IOIA. “[I]t is a normal commercial function to act for another in collecting and
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`holding funds,” Transamerican S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998, 1002
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`(D.C. Cir. 1985), and it is also a normal commercial function to act as a financial intermediary
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`transferring funds, for a fee, from one entity to another. In Transamerican, the defendant Somali
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`embassy refused to accept a check made out to a Somali shipping company and instead directed
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`the plaintiff to electronically transfer the funds intended for the company into the government’s
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`bank account. Id. at 1001. The Circuit had little trouble concluding that, because the Somali
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`embassy’s activities were “essentially those of a collection agent, acting on behalf of its
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`principal,” those activities were commercial in nature under the FSIA. Id. at 1003. “Indeed,” the
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`court explained, “had the [shipping company] not used its own government in the transaction, it
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`could as easily have used a bank, a law firm, or any other commercial middleman.” Id. The
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`exact same observation can be made with regard to PAHO’s role in the alleged triangular scheme
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`with Cuba and Brazil: the financial services provided by PAHO could as easily have been
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`provided by typical market players. There were no doubt practical reasons why the two nations
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`chose to use PAHO rather than a bank or other institution — according to the operative
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`Complaint, doing so lent the enterprise a patina of legitimate medical cooperation — but that is
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`irrelevant to the question at hand. The key point is that the “nature” of PAHO’s alleged role was
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`commercial, see 28 U.S.C. § 1603(d), as “the particular actions” it is alleged to have performed
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`“are the type of actions by which a private party engages in . . . commerce.” Weltover, 504 U.S.
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`at 614; see also Mortimer Off Shore Servs., Ltd. v. Fed. Republic of Germany, 615 F.3d 97, 108
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`(2d Cir. 2010) (“Because private parties frequently take on . . . ‘transfer agent’ obligations,”
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`acting as such an agent qualifies as commercial activity.).
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`Case 1:20-cv-00928-JEB Document 69 Filed 11/09/20 Page 16 of 56
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`The final requirement — viz., that PAHO’s conduct amount to “commercial activity
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`carried on in the United States” — is easily met here. According to the Complaint, PAHO
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`carried out its agreed-to role as financial intermediary using its Citibank account in Washington,
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`D.C. See SAC, ¶¶ 18, 50–51, 54. Plaintiffs also allege that the Director-General of PAHO,
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`based out of PAHO’s headquarters in this city, approved the agreements committing PAHO to its
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`role as intermediary. Id., ¶¶ 51, 54. That is more than enough to establish that Defendant’s
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`conduct had “substantial contact with the United States” was therefore “carried on” here under
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`the statute. See 28 U.S.C. § 1603(e); cf. Odhiambo v. Republic of Kenya, 764 F.3d 31, 40 (D.C.
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`Cir. 2014) (to amount to “direct effect” under third clause of the FSIA commercial-activity
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`exception, “breaching a contract that establishes or necessarily contemplates the United States as
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`a place of performance causes a direct effect in the United States”). PAHO does not argue to the
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`contrary.
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`Inst