861 F.3d 354
2d Cir.2017Background
- Plaintiffs Zeltser (U.S. citizen) and Funk allege defendants Belneftekhim (BNTK) and Belneftekhim USA aided their 2008 abduction from London and detention in Belarus; plaintiffs sued in state court for torts and removed to federal court.
- Defendants asserted foreign sovereign immunity under the FSIA and moved to dismiss; district court found factual disputes about whether BNTK is an agency/instrumentality of Belarus and ordered limited jurisdictional discovery on ownership and structure.
- Defendants produced Belarusian legal materials (Gvozdev Declaration); plaintiffs submitted a Belarusian-law expert affidavit (Fishkin) and other evidence challenging completeness/translation and alleging private ownership components.
- District court found defendants willfully refused to comply with discovery orders, imposed per-day monetary sanctions and litigation costs, and ultimately (after continued noncompliance) struck defendants’ FSIA sovereign-immunity defense as a Rule 37 sanction and required payment of accumulated monetary sanctions.
- Defendants appealed; the Second Circuit held it had collateral-order jurisdiction to review striking of an FSIA immunity claim, affirmed the discovery order and monetary sanctions, but vacated the portion of the sanction striking the FSIA defense and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appellate jurisdiction to review sanction striking FSIA defense | Collateral-order inapplicable; discovery sanctions are interlocutory | Order is immediately appealable under collateral-order doctrine because striking FSIA claim is equivalent to denying immunity and irreparable | Court: collateral-order applies—striking FSIA immunity is separable, important, and effectively unreviewable on final judgment; appellate jurisdiction exists |
| Whether jurisdictional discovery on FSIA issue was proper | Plaintiffs: discovery warranted because factual disputes exist about BNTK’s ownership/structure | Defendants: their Belarusian-law submissions established FSIA immunity as a matter of law; discovery unnecessary | Court: discovery was proper and appropriately limited; plaintiffs raised sufficient contrary evidence to justify jurisdictional discovery |
| Whether monetary sanctions for discovery noncompliance were appropriate | Plaintiffs: sanctions justified for willful defiance and to coerce compliance | Defendants: sanctions excessive and precluded proper FSIA resolution | Court: daily monetary sanctions and award of accumulated sums were within discretion given willfulness, warnings, and ineffectiveness of lesser sanctions |
| Whether striking defendants’ FSIA defense as a Rule 37 sanction was permissible | Plaintiffs: striking restores plaintiffs to position absent discovery suppression and is an available Rule 37 sanction | Defendants: striking exceeded discretion and risked the court assuming jurisdiction where it may lack it | Court: striking FSIA defense exceeded Rule 37(b) discretion because it risks judicial assumption of subject-matter jurisdiction; lesser evidentiary sanctions should have been used first — that portion vacated |
Key Cases Cited
- Coopers & Lybrand v. Livesay, 437 U.S. 463 (collateral-order doctrine requirements)
- Rein v. Socialist People’s Libyan Arab Jamahiriya, 162 F.3d 748 (FSIA immunity as element of subject-matter jurisdiction)
- EM Ltd. v. Banco Central de la República Argentina, 800 F.3d 78 (limits on FSIA-related discovery; circumspect jurisdictional discovery)
- Cunningham v. Hamilton County, 527 U.S. 198 (limitations on appealability of most discovery sanctions)
- Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694 (personal-jurisdiction discovery sanctions discussion)
- World Wide Polymers, Inc. v. Shinkong Synthetic Fibers Corp., 694 F.3d 155 (striking claim as harsh sanction; abuse-of-discretion standard)