The case of the day is Merlini v. Canada (1st Cir. 2019). Merlini, an American citizen, was a clerical worker at the Consulate General of Canada in Boston. In 2009, while setting up coffee and tea for a meeting, she tripped and fell over a cord that a fellow worker had failed to secure to the floor. She suffered a serious injury that, according to the Massachusetts Department of Industrial Accidents (more on that below), rendered her permanently unable to work. Simple case, right? The worker files a workers’ compensation claim and is paid the statutory benefits due to any worker injured on the job.

Not so simple, actually. The Government of Canada had not purchased workers’ compensation insurance in Massachusetts. It preferred to administer its own workers’ compensation system in Canada, and while it paid Merlini benefits under that system for a few months, it stopped payments in late 2009. Thus began Merlini’s long odyssey through the complexities of administrative tribunals and Massachusetts and federal courts—a journey that is not yet over despite her victory in today’s case.

To understand the case, you need to know a little bit about Massachusetts workers’ compensation law. The statute has a carrot and a stick for employers. The carrot: it displaces workers’ common law remedies. In other words, if your employer has workers’ compensation insurance, then if you’re injured on the job, in general, you get the statutory benefits but you cannot sue your employer for more. The stick: if you fail to buy insurance, then your employee can sue you at common law; he or she doesn’t have to prove you were negligent; and you can’t assert the defenses employers could assert at common law (e.g., comparative negligence, the fellow-servant rule, etc.). In other words, if you don’t buy insurance, you are more or less strictly liable.

You also need to know a bit about the trust fund the Commonwealth has established to pay benefits to workers whose employers failed to buy insurance. To make a claim on the fund, three things have to be true: (1) the employer has to be uninsured in violation of the Massachusetts statutes; (2) the employer has to be subject to the “personal jurisdiction of the Commonwealth”—a very odd phrase that appears nowhere else in the General Laws; and (3) the employee cannot be entitled to benefits in any other jurisdiction.

Although an administrative judge had held that Merlini was entitled to benefits from the trust fund, the Department of Industrial Accidents Reviewing Board, the highest administrative tribunal in the Massachusetts workers’ compensation system, reversed, holding that Merlini’s claim failed on all three of the requirements listed above. The decision was not unreasonable to the extent it focused on Merlini’s receipt of benefits for a time under Canadian law. But I have to say that on the other two points, which in the Reviewing Board’s view turned on Canada’s foreign sovereign immunity, it was hopelessly muddled and wrong in every way. (I intend no disrespect to the members of the Reviewing Board, who after all were faced with an issue in an area of law that they rarely if ever have to confront).

It was after that decision that I came into the case. We took an appeal to the Massachusetts Appeals Court, which affirmed, in a non-precedential decision, solely on the grounds that Merlini had been entitled to benefits under Canadian law and thus could not obtain benefits from the trust fund. I thought we had good arguments to show that the benefits she received from the Canadian government were discretionary, not a matter of entitlement, but the court’s decision was at least reasonable.

We then decided to bring an action against Canada using the stick the statute provided. Canada was an uninsured employer, therefore it should be strictly liable for Merlini’s workplace injury. Simple again, right?

Not simple. Canada is presumptively immune from the jurisdiction of our courts, so we had to show that an exception to FSIA immunity applied. We argued two, in the alternative: either the action was based on a commercial activity, Canada’s employment of Merlini in the United States, or else it was based on a non-commercial tort, the fellow worker’s failure to secure the cord. The District Court very quickly granted Canada’s motion to dismiss for want of jurisdiction (it did not rule on Canada’s motion to dismiss for failure to state a claim, which argued that the Reviewing Board’s decision was preclusive), and in December 2017 we appealed to the First Circuit.

If everyone agreed that the case was based on Merlini’s employment and the question was whether her employment was commercial, the case would (in my view) have been an easy one. There are many precedents, as well as pretty clear legislative history, that support the view that the employment of clerical employees who are not nationals of the foreign state and who are clearly not civil servants is commercial. Sure, this requires some line-drawing, but no matter where one draws the line, Merlini was on the right side of it. But Canada was smart and decided to fight the case on another ground altogether. The case was not based on Merlini’s employment at all, but rather on Canada’s decision (it’s sovereign decision, it said again and again) to use its own compensation scheme instead of the Massachusetts scheme. That decision was not a commercial activity in the United States.

To put my view in an overly simplistic way, Canada has to be wrong for a simple reason. The reasons why Canada was uninsured, or how it came to be uninsured, are entirely irrelevant to Merlini’s claim. Suppose Canada had made a decision that it wanted to purchase Massachusetts workers’ compensation insurance, but that one of its bureaucrats had forgotten to put the check in the mail. Surely Merlini would have a claim then. And the nature of what Canada did is no different in that case than in this—only the purpose or reasons for its actions or omissions would be different. The FSIA commands courts to look to the nature of the defendant’s acts and omissions, not their purpose. Put another way, Canada’s policymaking couldn’t be the gravamen of Merlini’s claim. Things might be different if Merlini had to prove that Canada willfully or even negligently failed to purchase insurance. In a case like that, Canada could point to its decisionmaking and say that it hadn’t acted willfully. But under the Massachusetts statute an employer who is uninsured for any reason is liable, and so the policymaking or decisionmaking process was just irrelevant.

To complicate matters, the US government, at the Court’s invitation, submitted an amicus brief after the argument. The US government agreed that Merlini should win the case, but not on the grounds we wanted. The government agreed that the case might come within the non-commercial tort exception, but it rejected the theory that it could come within the commercial activity exception. So the court was faced with three possibilities: (1) the case was based on Canada’s commercial activity in the United States and should be remanded for further proceedings on Merlini’s claim under the statute; (2) the case was based on a noncommercial tort and should be remanded for further proceedings on Merlini’s claim under the statute, with the additional requirement that Merlini prove the negligence of her co-worker; or (3) the case was properly dismissed.

Yesterday the court decided in Merlini’s favor, rejecting the views of both the US government and the Canadian government. In a lengthy opinion by Judge Barron, with Judge Kayatta concurring, the court picked up on the ideas I outlined above—in a much more scholarly way than I have done here, of course, and with a thorough review of the precedents. The judges also rejected Canada’s preclusion argument, reasoning that under Massachusetts law, where a decision rests on more to one ground and a court affirms it on one ground only, only the one ground actually decided has preclusive effect.

The victory was not entire, as Judge Lynch dissented. In her view the action wasn’t just based on the failure to have insurance but on the whole process that led to the decision not to have insurance. Judge Lynch also worried that there was no real way to draw a line between those whose employment was commercial and those whose employment was not. The line-drawing may be difficult in later cases, but I think that’s a question for another case, as the answer was very clear here.

I did find one aspect of both opinions a bit puzzling. Everyone seemed to assume that Canada had good reason to want to administer its own system rather than be subject to the burden of complying with the Massachusetts law. The fact of the matter is that it is pretty easy to buy worker’s compensation insurance in Massachusetts, and once you do, the insurer does all of the claim administration. So it really would have been much easier simply to purchase insurance and not have the burden of administering injured workers’ claims.

I also think that Judge Lynch may have missed a key point. She worries about the bad consequences of requiring foreign sovereigns to comply with Massachusetts law. But today’s decision is only about jurisdiction to adjudicate, not jurisdiction to prescribe. The view of the State Department has long been that there is no rule of international law that exempts a foreign government from compliance with worker’s compensation laws when operating in the United States (though the government cast doubt on that view in its amicus brief). The question is simply whether the US courts could exercise jurisdiction over Canada in the absence of its consent. Put another way: suppose Canada had waived its FSIA immunity: would Merlini have stated a claim? I think the answer is yes. This shows that saying “foreign states must comply with US a law on this area” will not make the sky fall. They have always been obligated, just as they have always been obligated to pay the Massachusetts minimum wage.

Since the case is not finished, I am not going to comment here on what comes next. But I will let you know how it turns out.