Merlini v. Canada, 926 F.3d 21

Background

Cynthia Merlini, a U.S. citizen, worked as a clerical administrative assistant at the Canadian Consulate in Boston and was injured in 2009 after tripping on an unsecured cord.
Canada paid Merlini under its national workers’ compensation system for several months, then stopped; Merlini sought additional relief under Massachusetts law (Mass. Gen. Laws ch. 152).
Merlini filed an administrative claim with the Massachusetts Workers’ Compensation Trust Fund; an administrative judge awarded benefits, but the DIA Reviewing Board reversed, finding Canada was not "uninsured" because Canadian law provided benefits.
The Massachusetts Appeals Court affirmed the Board only on the ground that Merlini had entitlement to benefits in another jurisdiction; it expressly did not rule whether Canada was an "uninsured" employer or subject to Massachusetts jurisdiction.
Merlini sued Canada in federal court under the MWCA; the district court dismissed for lack of jurisdiction under the Foreign Sovereign Immunities Act (FSIA). The First Circuit reverses.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether FSIA commercial-activity exception (28 U.S.C. §1605(a)(2)) applies	Merlini: claim is based on employer conduct (employment without state-compliant insurance) — commercial activity	Canada: claim is based on sovereign acts (creation/administration of national compensation), not commercial activity; State Dept. urged tort framing	Held: commercial-activity exception applies; employment + failure to be insured is commercial in nature for a U.S. citizen clerical employee in the U.S.
Whether claim instead falls under FSIA noncommercial-tort exception (28 U.S.C. §1605(a)(5))	Merlini: alternative theory; but primary claim is employer liability under §66 of MWCA	Canada/State Dept.: injury caused by co-employee’s negligence -> noncommercial tort or discretionary sovereign acts exclude exception	Held: court reached commercial-activity conclusion, which precludes use of noncommercial-tort exception here
Whether Canada's prior administrative/state proceedings preclude Merlini’s federal suit (issue preclusion)	Merlini: prior MAC decision did not decide whether Canada was an uninsured employer or subject to MA jurisdiction	Canada: DIA Board/DIA Board reversal and MAC affirmation preclude relitigation that Canada was uninsured	Held: preclusion fails — MAC affirmed only on alternative ground (benefits available elsewhere) and did not resolve the uninsured/employer-jurisdiction issue
Whether comity / foreign-policy concerns defeat jurisdiction despite commercial nature	Canada/State Dept.: exposing foreign sovereigns to state-law insurance rules intrudes on sovereignty and harms comity and reciprocal U.S. interests	Merlini: FSIA exceptions reflect Congress’s judgment; comity cannot override an applicable statutory exception	Held: comity concerns insufficient to negate the statutory commercial-activity exception; jurisdiction proper to decide merits

Key Cases Cited

Saudi Arabia v. Nelson, 507 U.S. 349 (1993) (identify gravamen of suit; employment preceding tort does not automatically render claim commercial)
OBB Personenverkehr AG v. Sachs, 136 S. Ct. 390 (2015) (focus on the particular conduct the action is "based upon")
Republic of Argentina v. Weltover, 504 U.S. 607 (1992) (commercial nature determined by "nature" of conduct, not purpose)
Rush-Presbyterian-St. Luke's Med. Ctr. v. Hellenic Republic, 877 F.2d 574 (7th Cir. 1989) (government execution of contracts for health services can be commercial)
El-Hadad v. United Arab Emirates, 496 F.3d 658 (D.C. Cir. 2007) (employment-context focus for gravamen supports commercial characterization)
Jungquist v. Sheikh Sultan Bin Khalifa Al Nahyan, 115 F.3d 1020 (D.C. Cir. 1997) (administration of sovereign welfare program held noncommercial)
Anglo-Iberia Underwriting Mgmt. v. P.T. Jamsostek, 600 F.3d 171 (2d Cir. 2010) (state-run insurance administration not treated as commercial activity)