Celestin v. Caribbean Air Mail, Inc.
20-1412-cv (2022)
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Rule of Law:
The act of state doctrine bars U.S. courts from declaring an official act of a foreign sovereign invalid, but it does not preclude adjudication of a claim merely because the claim implicates the propriety or motivation of such an act, so long as the court is not required to deny the act's legal effect.
Facts:
- Odilon S. Celestin, Widimir Romelien, Goldie Lamothe-Alexandre, and Vincent Marazita are U.S. residents with relatives and friends in Haiti.
- Caribbean Air Mail, Inc., Western Union, Unitransfer USA, Inc., Unibank, S.A., Unigestion Holding, S.A., and Western Union Financial Services, Inc. (Corporate Defendants) are companies that facilitate remittances and phone calls between the U.S. and Haiti.
- Plaintiffs allege that before becoming President of Haiti in 2011, Michel Joseph Martelly orchestrated a far-reaching price-fixing agreement with the Corporate Defendants to raise prices on telecommunication and money transfer services.
- After taking office, President Martelly, as the alleged mechanism for implementing the agreement, issued a Presidential Order setting a $0.23 per minute floor price for incoming international calls and requiring $0.05 per minute to be turned over to the government.
- Two Circulars of the Bank of the Republic of Haiti 'memorialized' the agreement to add a $1.50 fee to remittances of food and money sent to Haiti from certain countries, including the United States.
- The Corporate Defendants and Natcom S.A., a telecommunications company partly owned by the Haitian government, collected these surcharges at the source in the United States as a condition of eligibility to provide services.
- Plaintiffs allege that President Martelly and his successors, Jocelerme Privert and Jovenel Moise, along with the Corporate Defendants, profited personally from these fees, despite publicly representing them as lawful taxes to support a Haitian compulsory education program that did not exist.
- Plaintiffs further allege that the Presidential Order and Circulars ran afoul of Haitian law because only the parliament may raise taxes and fees for the benefit of the state.
Procedural Posture:
- Odilon S. Celestin, Widimir Romelien, Goldie Lamothe-Alexandre, and Vincent Marazita, along with other plaintiffs, filed a putative class action in the U.S. District Court for the Eastern District of New York against Caribbean Air Mail, Inc., Western Union, Unitransfer USA, Inc., Unibank, S.A., Unigestion Holding, S.A., Western Union Financial Services, Inc. (Corporate Defendants), the Government of Haiti, Michel Joseph Martelly, Jocelerme Privert, Jovenel Moise, and Natcom S.A. (Government Defendants), alleging price-fixing under Section 1 of the Sherman Act and fifteen related state-law claims.
- The district court granted Corporate Defendants' motions to dismiss all claims based on (1) the act of state doctrine and (2) in the alternative, as to some Defendants, forum non conveniens (Celestin v. Martelly (Celestin I)).
- The district court subsequently dismissed all claims against the Government Defendants under the law of the case doctrine, following its earlier ruling based on the act of state doctrine (Celestin v. Martelly (Celestin II)).
- Plaintiffs timely appealed both rulings to the U.S. Court of Appeals for the Second Circuit, appearing as Plaintiffs-Appellants, with the various defendants appearing as Defendants-Appellees.
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Issue:
Does the act of state doctrine bar a price-fixing antitrust claim and related state-law claims where the alleged conspiracy was implemented through official acts of a foreign government (Haiti), but the claims do not require the court to declare those official acts invalid under Haitian law?
Opinions:
Majority - Park, Circuit Judge
No, the act of state doctrine does not foreclose Plaintiffs' antitrust claim because no official act of Haiti must be deemed invalid for liability to attach under federal law. The court reiterated that the act of state doctrine, as clarified by W.S. Kirkpatrick & Co. v. Env’t Tectonics Corp., Int’l, is a "rule of decision" that compels federal and state courts to treat foreign official acts as "valid"—meaning they are not null and void or without legal effect—when evaluating the merits of a claim. The doctrine does not serve as a general principle of abstention to avoid embarrassing foreign governments or to shield foreign official conduct from being 'impugned' or from inquiries into 'motivation.' The court rejected Defendants' arguments relying on pre-Kirkpatrick Second Circuit cases, which were largely abrogated by Kirkpatrick's narrower interpretation. For the antitrust claim, the court reasoned that it can give the Presidential Order and Circulars their full purported legal effect under Haitian law and still conclude that Plaintiffs have plausibly alleged illegal price-fixing under the Sherman Act. The antitrust claim depends on "whether the alleged acts occurred" in a way that creates liability, not on declaring the Haitian acts invalid. Regarding the fifteen state-law claims, the court vacated the dismissal and remanded for reanalysis under the proper act of state standard, as these claims may involve different inquiries regarding validity. Finally, on forum non conveniens, the court vacated the district court's dismissal, finding that it clearly erred by not giving due deference to the U.S.-resident Plaintiffs' choice of forum, as many named Plaintiffs are U.S. residents and some are citizens residing in the Eastern District of New York. The case was remanded for reconsideration of this issue.
Concurring - Newman, Circuit Judge
Yes, the act of state doctrine does not bar the Plaintiffs-Appellants’ antitrust claim, and the district court failed to give proper consideration to the Plaintiffs-Appellants’ choice of their home forum. Judge Newman concurred but argued the court should have gone further. He asserted that the act of state doctrine also does not bar the state-law claims because they are based on the state officials' diversion of the tax and fee proceeds for personal use, which is not contended to be lawful under Haitian law, rather than on the invalidity of the initial tax imposition itself. Therefore, no validity determination of the official acts is needed for these claims. He also contended that the district court's dismissal on forum non conveniens was an abuse of discretion that should be reversed outright, given the undisputed facts of U.S. residence for all plaintiffs (and local residence for some) and the strong presumption in favor of a plaintiff's home forum. Remanding these issues, he argued, would needlessly burden the district court and lead to inevitable reversals.
Analysis:
This case significantly reinforces the narrow interpretation of the act of state doctrine established in W.S. Kirkpatrick & Co. v. Env’t Tectonics Corp., Int’l. It clarifies that the doctrine is not a broad abstention principle to avoid embarrassing foreign governments or questioning their motivations, but a specific rule preventing U.S. courts from declaring foreign official acts invalid (i.e., null and void) when those acts are the subject of a legal dispute. This narrow scope ensures that U.S. courts can adjudicate claims, including antitrust and fraud, even if they implicate or rely on the existence of foreign government actions, as long as the legal theory of the case does not require overturning the foreign act's legal effect. The ruling further emphasizes the deference due to a U.S. plaintiff's choice of a U.S. forum in forum non conveniens analyses.
