The First Circuit, in a 3-3 vote, has denied Canada’s petition for a rehearing en banc in Merlini v. Canada, the FSIA case I’ve written about before in which I’m representing the plaintiff. I last wrote about the case in June 2019, when I reported on the First Circuit decision in Merlini’s favor. To recap, this is the case of the clerical worker at Canada’s consulate in Boston who was injured on the job when she tripped over an unsecured cord. We brought a claim under the Massachusetts statute providing that employers who, like the Canadian government, fail to purchase workers’ compensation insurance for their workers, are strictly liable in tort. The First Circuit rejected Canada’s argument that our case was “based on” its policy decision not to comply with local workers’ compensation laws at its foreign consulates but instead to apply its own statutory scheme. It also rejected the US State Department’s argument that our case was “based on” the negligence of the co-worker who failed to secure the cord to the carpet. Instead, the First Circuit said, correctly in my view, that the case was based on “the fact that [Merlini] is an employee who was injured during the course of her employment while her employer failed to possess” the insurance required by law. Once it reached that conclusion, the conclusion that Canada had acted commercially, both because Merlini’s employment was plainly on the “commercial” side of the line and because many private businesses also fail to buy insurance when required, was easy.

Judge Lynch, who had dissented from the panel decision, also dissented from the denial of the petition for rehearing, joined by Chief Judge Howard. Her dissent was strongly worded and invited the Supreme Court to review the case. I suppose it doesn’t help that Judge Torruella also dissented on the grounds that the case raises a question of exceptional importance. I am not going to steal my own future thunder, in case I have to write another brief, by addressing most of the points of the dissenters. Instead, let me restate why I continue to think this case was really pretty simple. Canada’s main point is that Merlini’s claim is “based on” its sovereign decisionmaking about how to provide workers’ compensation. Okay, what if Canada had made a sovereign decision to purchase Massachusetts workers’ compensation insurance, but the relevant clerks had failed to fill out the right forms or whatever, and Canada was inadvertently uninsured. Would the outcome of the case be different? It seems to me that the outcome in the two cases has to be the same, because the FSIA provides that you look at the nature of the foreign sovereign’s act, not its purpose, in deciding whether the act is commercial. So if the act is failing to buy insurance, it doesn’t matter whether the act was intentional or unintentional. That’s just another way of saying Canada’s reasons for not purchasing insurance can’t be the gravamen of the case.

Since the dissenters argue that the decision will have all kinds of bad consequences (I don’t think they’re right about that), it’s also important to understand the bad consequences of a decision in Canada’s favor. Take a case like Shih v. Taipei Economic & Cultural Representative Office, 693 F. Supp. 2d 805 (N.D. Ill. 2010), where an employee of the Taiwanese mission claimed that the Taiwan government had a policy of not hiring people over the age of 45 and that it had illegally discriminated on the basis of his age. If Canada is right, then the plaintiff in Shih would have to lose—as long as the foreign government claimed that the discrimination wasn’t just the work of a bad apple but was deliberate government policy! Or to take an example that the judges on the panel raised at oral argument, suppose Canada had failed to pay Merlini overtime. Can it be that Canada is immune from suit if it had a deliberate policy of applying the Canadian minimum wage law but not if it made a bookkeeping error?

Stay tuned for further developments.