Case of the Day: Woods Hole Oceanographic Institution v. ATS Specialized
Posted on April 1, 2019
The case of the day is Woods Hole Oceanographic Institution v. ATS Specialized, Inc. (D. Mass. 2019). WHOI agreed to loan the Deep Sea Challenger, a submarine, to Australian National Maritime Museum. During transit, the submarine caught fire and was damaged. WHOI sued the museum, which is wholly owned by the Australian government, for breach of contract and on a bailment claim. The Museum moved to dismiss on FSIA grounds. The magistrate judge recommended denying the motion, and the court overruled the Museum’s objection.
The Museum was an agency or instrumentality of Australia. The question was whether the commercial activity exception to FSIA immunity applied. The Museum argued that its acts were not commercial because the loan of the submarine was intended to be for cultural and educational purposes. But the judge correctly noted that under 28 U.S.C. § 1603, the whether an activity is commercial depends on the nature of the activity, not the sovereign’s purpose in undertaking it. As the magistrate judge wrote, “The Museum’s actions forming the base of this lawsuit are inherently commercial. They are acts that could be performed by private parties.” The acts involved contracting to transport the submarine. The purpose may have been “cultural and educational exchange,” but that’s irrelevant in the FSIA analysis.
The nature of the Museum’s objection isn’t entirely clear from the district judge’s decision, but it appears that the Museum argued that it was not subject to personal jurisdiction as it had not purposefully availed itself of the Massachusetts forum. It apparently argued that because it had agreed to arbitrate in London, the Massachusetts court could not exercise jurisdiction. But curiously, the Museum did not seek to compel arbitration or even move to dismiss for want of personal jurisdiction. The judge found that in any case the requirements of the Massachusetts long-arm statute were satisfied, but it seems to me it was a mistake to undertake this analysis. Under 28 U.S.C. § 1330(b), “Personal jurisdiction over a foreign state shall exist as to every claim for relief over which the district courts have jurisdiction …” In other words, if an exception to FSIA immunity applies, then personal jurisdiction necessarily exists. The Museum is an agency or instrumentality of Australia, not Australia itself, but for these purposes, the term “foreign state” includes a political subdivision of a foreign state or an agency or instrumentality of a foreign state, see 28 U.S.C. § 1603(a).