The case of the day is Euclid Fish Co. v. Cape Florida Seafood (S.D. Fla. 2021). The plaintiffs, who are direct purchasers of farm-raised Atlantic salmon, sued the defendants for violations of Sections 1 and 3 of the Sherman Act, alleging that they had illegally coordinated prices. The plaintiffs served a subpoena on the Norwegian Seafood Council, which has an office in Boston, seeking documents relating to the pricing of marketing of salmon. The NSC moved to quash the subpoena on grounds of foreign sovereign immunity, personal jurisdiction, and comity. I’m just going to address the foreign sovereign immunity issue in this post.
Although the NSC was formerly a government agency, it was later incorporated under Norway’s Limited Liability Act. It is wholly owned by the Norwegian government, which appoints most of the directors (a few are elected by the NSC’s employees). The NSC’s sole source of funding is a duty imposed on exporters. The NSC’s job is to “increase value creation in the Norwegian fisheries and aquaculture industry through increased demand and knowledge of Norwegian Seafood at home and abroad,” by promoting Norwegian Seafood. The NSC’s headquarters are in Norway, but it has a single office in Boston, with one employee, Anne-Kristine Øen, who promotes Norwegian Seafood in the United States and reports to her government on trends in US seafood consumption. She attends trade shows throughout the United States to advertise Norwegian Seafood, and she is working with the Norwegian consulate in New York to plan events connected with the arrival of a Norwegian sailing ship in New York.
The NSC was obviously an instrumentality of the Norwegian state. The court therefore turned to the question whether the commercial activities exception to foreign sovereign immunity applied. It reasoned that the NSC was not acting commercially, because it was not promoting seafood for its own account, but for the account of private Norwegian Seafood concerns. The court relied on the Second Circuit’s Pablo Star decision. The decision is plausible, though not inevitable. A private business does not market a product for the benefit of others (though there are private industry grounds that do), but on the other hand, the FSIA provides that it is the nature of an activity, not its purpose, that determines whether the activity is or is not commercial. Thus in Segni v. Commercial Office of Spain, the Seventh Circuit came to a contrary conclusion in a foreign trade office case.
The NSC then deployed a further argument. Not only must a foreign state or instrumentality engage in a commercial activity, the case against it must be based on that commercial activity. This was the same move the Canadian government made in the Merlini case when it argued that even if the worker’s employment was commercial in nature, the case was not based on her employment, but rather on the Canadian government’s policy decision about how to provide worker’s compensation to its locally engaged staff abroad. The court agreed with Norway on this ground. I have to say that I think the “based on” analysis is a bad fit in cases involving subpoenas directed to foreign sovereigns. In this context, it’s highly artificial to ask whether the “action is based on a commercial activity,” 28 U.S.C. § 1605(a)(2). There is no “action” against the foreign sovereign, just a subpoena issued in another action.
The court probably came to the correct conclusion, based on the current state of the law, in holding that because the categories of documents requested had no relationship with the NSC’s limited activities in the United States, the “action” was not based on the NSC’s US commercial activities. But I think we need a broader re-think about proceedings that do not seek to impose liability on foreign states. The current text of the FSIA is not a good fit in such situations. I had the same reaction to US v. Assa, an in rem case where the real party in interest was a foreign state. The current text of the statute is not a great fit.