The Supreme Court/The Supreme Court.iso/pc/ascii/1991/91_522/91_522.zx1

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SUPREME COURT OF THE UNITED STATES
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No. 91-522
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SAUDI ARABIA, KING FAISAL SPECIALIST
HOSPITAL and ROYSPEC, PETITIONERS v.
SCOTT NELSON et ux.
on writ of certiorari to the united states court
of appeals for the eleventh circuit
[March 23, 1993]

  Justice Kennedy, with whom Justice Blackmun and
Justice Stevens join as to Parts I-B and II, concurring
in part and dissenting in part.
  I join all of the Court's opinion except the last para-
graph of Part II, where, with almost no explanation, the
Court rules that, like the intentional tort claim, the claims
based on negligent failure to warn are outside the subject-
matter jurisdiction of the federal courts.  These claims
stand on a much different footing from the intentional tort
claims for purposes of the Foreign Sovereign Immunities
Act (FSIA).  In my view, they ought to be remanded to
the District Court for further consideration.

                            I
                            A
  I agree with the Court's holding that the Nelsons'
claims of intentional wrongdoing by the Hospital and the
Kingdom of Saudi Arabia are based on sovereign, not
commercial, activity, and so fall outside the commercial
activity exception to the grant of foreign sovereign immu-
nity contained in 28 U. S. C. 1604.  The intentional tort
counts of the Nelsons' complaint recite the alleged unlaw-
ful arrest, imprisonment, and torture of Mr. Nelson by the
Saudi police acting in their official capacities.  These are
not the sort of activities by which a private party conducts
its business affairs; if we classified them as commercial,
the commercial activity exception would in large measure
swallow the rule of foreign sovereign immunity Congress
enacted in the FSIA.

                            B
  By the same token, however, the Nelsons' claims
alleging that the Hospital, the Kingdom, and Royspec
were negligent in failing during their recruitment of
Nelson to warn him of foreseeable dangers are based upon
commercial activity having substantial contact with the
United States.  As such, they are within the commercial
activity exception and the jurisdiction of the federal
courts.  Unlike the intentional tort counts of the com-
plaint, the failure to warn counts do not complain of a
police beating in Saudi Arabia; rather, they complain of
a negligent omission made during the recruiting of a
hospital employee in the United States.  To obtain relief,
the Nelsons would be obliged to prove that the Hospital's
recruiting agent did not tell Nelson about the foreseeable
hazards of his prospective employment in Saudi Arabia.
Under the Court's test, this omission is what the negli-
gence counts are -based upon.-  See ante, at 7.
  Omission of important information during employee
recruiting is commercial activity as we have described it.
See Republic of Argentina v. Weltover, Inc., 504 U. S. ___
(1992).  It seems plain that recruiting employees is an
activity undertaken by private hospitals in the normal
course of business.  Locating and hiring employees impli-
cates no power unique to the sovereign.  In explaining the
terms and conditions of employment, including the risks
and rewards of a particular job, a governmental entity
acts in -the manner of a private player within- the
commercial marketplace.  Id., at ___.  Under the FSIA,
as a result, it must satisfy the same general duties of care
that apply to private actors under state law.  If a private
company with operations in Saudi Arabia would be obliged
in the course of its recruiting activities subject to state
law to tell a prospective employee about the risk of
arbitrary arrest and torture by Saudi authorities, then so
would King Faisal Specialist Hospital.
  The recruiting activity alleged in the failure to warn
counts of the complaint also satisfies the final requirement
for invoking the commercial activity exception: that the
claims be based upon commercial activity -having sub-
stantial contact with the United States.-  28 U. S. C.
1603(e).  Nelson's recruitment was performed by Hospital
Corporation of America (HCA), a wholly owned subsidiary
of a U. S. corporation, which, for a period of at least 16
years beginning in 1973, acted as the Kingdom of Saudi
Arabia's exclusive agent for recruiting employees for the
Hospital.  HCA in the regular course of its business seeks
employees for the Hospital in the American labor market.
HCA advertised in an American magazine, seeking appli-
cants for the position Nelson later filled.  Nelson saw the
ad in the United States and contacted HCA in Tennessee.
After an interview in Saudi Arabia, Nelson returned to
Florida, where he signed an employment contract and
underwent personnel processing and application proce-
dures.  Before leaving to take his job at the Hospital,
Nelson attended an orientation session conducted by HCA
in Tennessee for new employees.  These activities have
more than substantial contact with the United States;
most of them were -carried on in the United States.-  28
U. S. C. 1605(a)(2).  In alleging that the petitioners
neglected during these activities to tell him what they
were bound to under state law, Nelson meets all of the
statutory requirements for invoking federal jurisdiction
under the commercial activity exception.

                           II
  Having met the jurisdictional prerequisites of the FSIA,
the Nelsons' failure to warn claims should survive peti-
tioners' motion under Federal Rule of Civil Procedure
12(b)(1) to dismiss for want of subject-matter jurisdiction.
Yet instead of remanding these claims to the District
Court for further proceedings, the majority dismisses them
in a single short paragraph.  This is peculiar, since the
Court suggests no reason to question the conclusion that
the failure to warn claims are based on commercial
activity having substantial contact with the United States;
indeed, the Court does not purport to analyze these claims
in light of the statutory requirements for jurisdiction.
  The Court's summary treatment may stem from doubts
about the underlying validity of the negligence cause of
action.  The Court dismisses the claims because it fears
that if it did not, -a plaintiff could recast virtually any
claim of intentional tort committed by a sovereign act as
a claim of failure to warn, simply by charging the defen-
dant with an obligation to announce its own tortious
propensity before indulging it.-  Ante, at 13-14.  In the
majority's view, -[t]o give jurisdictional significance to this
feint of language would effectively thwart the Act's
manifest purpose to codify the restrictive theory of foreign
sovereign immunity.-  Id., at 14.  These doubts, however,
are not relevant to the analytical task at hand.
  The FSIA states that with respect to any claim against
a foreign sovereign that falls within the statutory excep-
tions to immunity listed in 1605, -the foreign state shall
be liable in the same manner and to the same extent as
a private individual under like circumstances.-  28
U. S. C. 1606.  The Act incorporates state law and -was
not intended to affect the substantive law determining the
liability of a foreign state.-  First Nat'l City Bank v.
Banco Para el Comercio Exterior de Cuba, 462 U. S. 611,
620 (1983).  If the governing state law, which has not yet
been determined, would permit an injured person to plead
and prove a tortious wrong for failure to warn against a
private defendant under facts similar to those in this case,
we have no authority under the FSIA to ordain otherwise
for those suing a sovereign entity.  -[W]here state law
provides a rule of liability governing private individuals,
the FSIA requires the application of that rule to foreign
states in like circumstances.-  Id.,, at 622, n. 11.
  The majority's citation of United States v. Shearer, 473
U. S. 52, 54-55 (1985) (opinion of Burger, C. J.), see ante,
at 14, provides no authority for dismissing the failure to
warn claims.  Shearer refused to permit a plaintiff to
recast in negligence terms what was essentially an
intentional tort claim, but that case was decided under
the doctrine of Feres v. United States, 340 U. S. 135
(1950).  The Feres doctrine is a creature of federal com-
mon law that allows the Court much greater latitude to
make rules of pleading than we have in the current case.
Here, our only task is to interpret the explicit terms of
the FSIA.  The Court's conclusion in Shearer was also
based upon the fact that the intentional tort exception to
the Federal Tort Claims Act at issue there, 28 U. S. C.
2680(h), precludes -[a]ny claim arising out of- the speci-
fied intentional torts.  This language suggests that Con-
gress intended immunity under the FTCA to cover more
than those claims which simply sounded in intentional
tort.  There is no equivalent language in the commercial
activity exception to the FSIA.  It is also worth noting
that the Court has not adopted a uniform rule barring the
recasting of intentional tort claims as negligence claims
under the FTCA; under certain circumstances, we have
permitted recovery in that situation.  See Sheridan v.
United States, 487 U. S. 392 (1988).
  As a matter of substantive tort law, it is not a novel
proposition or a play on words to describe with precision
the conduct upon which various causes of action are based
or to recognize that a single injury can arise from multi-
ple causes, each of which constitutes an actionable wrong.
See Restatement (Second) of Torts 447-449 (1965);
Sheridan, supra, at 405 (Kennedy, J., concurring in
judgment); Wilson v. Garcia, 471 U. S. 261, 272 (1985).
In Sheridan, for example, this Court permitted an action
for negligent supervision to go forward under the FTCA
when a suit based upon the intentional tort that was the
immediate cause of injury was barred under the statute.
See 487 U. S., at 400.  As the Court observed, -it is both
settled and undisputed that in at least some situations
the fact that an injury was directly caused by an assault
or battery will not preclude liability against the Govern-
ment for negligently allowing the assault to occur.-  Id.,
at 398.
  We need not determine, however, that on remand the
Nelsons will succeed on their failure to warn claims.
Quite apart from potential problems of state tort law that
might bar recovery, the Nelsons appear to face an obstacle
based upon the former adjudication of their related
lawsuit against Saudi Arabia's recruiting agent, HCA.
The District Court dismissed that suit, which raised an
identical failure to warn claim, not only as time barred,
but also on the merits.  See Nelson v. Hospital Corp. of
America, No. 88-0484-CIV-Nesbitt (SD Fla., Nov. 1, 1990).
That decision was affirmed on appeal, see 946 F. 2d 1546
(CA11 1991) (Table), and may be entitled to preclusive
effect with respect to the Nelson's similar claims against
the sovereign defendants, whose recruitment of Nelson
took place almost entirely through HCA.  See generally
Montana v. United States, 440 U. S. 147, 153 (1979) (-a
final judgment on the merits bars further claims by
parties or their privies based on the same cause of
action-); Lawlor v. National Screen Service Corp., 349
U. S. 322, 330 (1955) (defendants not party to a prior suit
may invoke res judicata if -their liability was . . . `alto-
gether dependent upon the culpability' of the [prior]
defendants-) (quoting Bigelow v. Old Dominion Copper
Mining and Smelting Co., 225 U. S. 111, 127 (1912)); 18
C. Wright, A. Miller & E. Cooper, Federal Practice &
Procedure, 4463, p. 567 (1981) (recognizing general rule
that -judgment in an action against either party to a
vicarious liability relationship establishe[s] preclusion in
favor of the other-); Restatement (Second) of Judgments
51 (1982).
  But the question of claim preclusion, like the substan-
tive validity under state law of the Nelsons' negligence
cause of action, has not yet been litigated and is outside
the proper sphere of our review.  -[I]t is not our practice
to reexamine a question of state law of [this] kind or,
without good reason, to pass upon it in the first instance.-
Sheridan, 487 U. S., at 401.  That a remand to the
District Court may be of no avail to the Nelsons is irrele-
vant to our task here; if the jurisdictional requirements
of the FSIA are met, the case must be remanded to the
trial court for further proceedings.  In my view, the FSIA
conferred subject-matter jurisdiction on the District Court
to entertain the failure to warn claims, and with all
respect, I dissent from the Court's refusal to remand
them.