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Bad Bullets Brings Sixth Circuit in Line with Siblings: The Commercial Activity Exception to the Foreign Sovereign Immunities Act

On March 7, 2016, the Sixth Circuit Court of Appeals joined its sibling circuits by affirming a ruling from the Southern District of Ohio, which found that the design and manufacture of a product is a commercial activity under the commercial activity exception to the Foreign Sovereign Immunities Act.

Specifically, in the matter of Troy and Amanda Rote v. Zel Custom Manufacturing LLC, et al., Mr. Rote injured his right hand when a round that he loaded into a rifle unexpectedly exploded.  Mr. Rote alleged that Fabrica Militar Fray Luis Beltran a/k/a Direccion General Fabricaciones Militares (“DGFM”), an instrumentality of the Republic of Argentina, defectively designed and manufactured the round. DGFM moved to dismiss the claims against it for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), asserting that it was immune from suit under the Foreign Sovereign Immunities Act (“FSIS”), 28 U.S.C. § 1602 et seq.

In response, the Plaintiffs asserted that DGFM was not immune because their relevant activities met the “commercial activity” exception to the FSIS.  Pursuant to 28 U.S.C. § 1605(a)(2), the commercial activity exception provides that a foreign state, or instrumentality thereof, shall not be immune from suit in the United States if “the action is based…[i] upon an act outside the territory of the United States [ii] in connection with a commercial activity of the foreign state elsewhere and [iii] that act causes a direct effect in the United States.”  Troy and Amanda Rote v. Zel Custom Manufacturing LLC, et al., No. 15-3156, United States Court of Appeals for the Sixth Circuit, at p. 5 (6th Cir. March 7, 2016).

Ultimately, the primary issue was whether the design and manufacture of a product was the type of activity in which private individuals engage or whether such activity was sovereign in nature.  The Sixth Circuit Court of Appeals joined the Fifth, Ninth and Eleventh Circuits when it affirmed the District Court’s denial of DGFM’s motion and found that “the design and manufacture of a product is the type of activity in which private individuals engage” and, therefore, a “commercial activity” for purposes of 28 U.S.C. § 1605(a)(2).  Id. at p. 6.

C.E. Hunter Brush

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