Case of the Day: Lasheen v. Loomis Co.

The case of the day is Lasheen v. Loomis Co. (E.D. Cal. 2017). Mohamed Lasheen, an Egyptian national, was a visiting scholar in the United States in 2000. He enrolled in the Egyptian Embassy’s health care plan. Loomis was the plan’s third-party administrator. He was diagnosed with liver cancer, but his claim for coverage for a liver transplant was denied on the grounds that his cancer arose from a preexisting condition. In late 2000 Lasheen died. His estate sued Egypt under ERISA, the statute governing employee benefit plans. He obtained a default judgment against Egypt after the Egyptian government failed to appear at a mandatory status conference (Egypt had no FSIA immunity in light of the commercial activity exception).

After the Ninth Circuit affirmed the default judgment, Lasheen’s estate sought to take discovery in aid of execution. The court granted the applications and Egypt was ordered to produce a witness for an examination. But Egypt objected and moved for a protective order, and although no order entered, it refused to produce a witness. The court then again ordered Egypt to produce a witness, and Lasheen’s estate served requests for the production of documents and interrogatories.

Egypt produced Prof. Mohamed S.A. Hamza, its Cultural Counselor and Director for the Cultural and Education Bureau. The examination proceeded, but Lasheen’s estate argued that the witness was unprepared to answer most of the questions. It moved to compel further testimony and to compel responses to the document request and interrogatories.

The discovery requests were overbroad, because they sought information about “all of Egypt’s extraterritorial commercial assets.” Under 28 U.S.C. § 1610, the property of a foreign state in the United States is generally immune from execution, with exceptions. The only potentially relevant exception is for property that is in the United States, used for commercial activity in the United States, and used for the particular commercial activity upon which the claim is based. The only such property, the court observed, would be the assets of the ERISA plan. The court agreed with Lasheen’s estate that Egypt should be compelled to provide further discovery about the assets of the ERISA plan. It rejected the argument that the estate was entitled to discovery about Egypt Air’s assets, on obvious grounds.

The Embassy was a defendant also, and a question arose as to whether it is a foreign state, for FSIA purposes, or the instrumentality of a foreign state. This question has a pretty settled answer: the embassy is treated as the foreign state itself. But the court, in the absence of guidance from the parties, treated it as an instrumentality—an aspect of the decision that should not be followed. Therefore, the court allowed a broader scope of discovery as to the Embassy. I expect this aspect of the decision will be appealed.

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