Readers, here is an interesting case to watch: Merlini v. Consulate General of Canada. It’s an appeal from a decision of the Massachusetts Department of Industrial Accidents Reviewing Board. The Appeals Court will hear argument in the case in a week or so. Full disclosure: I am counsel to the appellant, Cynthia Merlini, though I didn’t represent her in the DIA proceedings that are on appeal.
Ms. Merlini, an American national, was employed by Canada’s consulate in Boston. She suffered a workplace injury that, according to an administrative judge, resulted in her permanent and total disability. In Massachusetts, by statute, every employer is required to provide for payment of workers’ compensation either by obtaining insurance or by obtaining a license to self-insure. So in a more typical case, Ms. Merlini would have received workers’ compensation benefits either from her employer’s insurer or from her employer itself if it was a licensed self-insurer. But the consulate had not purchased a policy of workers’ compensation insurance or obtained a license as a self-insurer.
In Massachusetts, the Workers’ Compensation Trust Fund provides benefits to employees of uninsured employers. Under the statute, in order to obtain benefits from the Trust Fund, the employee must show (1) that the employer was uninsured in violation of the law; (2) that the employer is “subject to the personal jurisdiction of the commonwealth;” and (3) that the employee was not entitled to benefits under the law of another jurisdiction.
Although an administrative judge ordered the Trust Fund to pay Ms. Merlini benefits, the Reviewing Board rejected Ms. Merlini’s claim for three reasons. First, it held that only a federal court had the power to decide whether the Consulate was subject to the personal jurisdiction of the Commonwealth, because the question implicated the Consulate’s foreign sovereign immunity under the FSIA. Second (and surprisingly in light of its first holding), the Reviewing Board held that the Consulate was not required to obtain workers’ compensation insurance because it has immunity under the FSIA. Third, it held that because the Canadian government had paid benefits to Ms. Merlini for a time under the Government Employees Compensation Act, a Canadian statute, Ms. Merlini was entitled to benefits in Canada and thus had no claim against the Trust Fund.
The third point, while important to the appeal, is of very limited general importance—it will apply only to American employees of the Canadian government in Massachusetts. I’m only going to focus here on the points that I think will be of interest to you, namely, the points about the Consulate’s immunity and about the power of the DIA to decide questions of immunity.
The Reviewing Board’s holding that only a federal court can decide whether a party has immunity under the FSIA seems to be an obvious mistake. The FSIA confers original but not exclusive jurisdiction on the US District Courts. As the Supreme Court said in Verliniden B.V. v. Central Bank of Nigeria, 461 U.S. 480 (1983), the statute “expressly provides that its standards control in the courts of the United States and of the States … and thus clearly contemplates that such suits may be brought in either federal or state courts.” While the Trust Fund is right to say that one of the purposes of the FSIA is to take decisions about sovereign immunity out of the hands of the executive and put them in the hands of the judiciary, that doesn’t mean that an administrative law judge, whose decisions are subject to judicial review, can’t address such issues. Rather, the point of the FSIA was to take such decisions out of the hands of the State Department, where they were sometimes made on political or diplomatic grounds rather than on legal grounds.
The Board’s decision that the Consulate was not required to comply with Massachusetts’s workers’ compensation scheme because it had immunity under the FSIA also seems like an obvious mistake, and indeed, like a non sequitur. The FSIA provides the rules for immunity from suit, that is, immunity from the United States’s jurisdiction to adjudicate. It says nothing about a foreign state’s immunity from the United States’s jurisdiction to prescribe. Except in cases involving diplomatic or consular immunity (which the Trust Fund, wisely, has not argued), “[a] state is not immune from the jurisdiction to prescribe of another state.” Restatement (Third) of the Foreign Relations Law of the United States § 461. This was the issue I noted in Flaherty v. Royal Caribbean a few days ago.
The closest the Trust Fund comes to a sound argument is its claim that the Consulate was not within the personal jurisdiction of the Commonwealth (an odd phrase, which I read to mean “within the personal jurisdiction of a court of the Commonwealth”) because in the circumstances of the case it has foreign sovereign immunity under the FSIA. The issue here is whether the commercial activity exception to FSIA immunity applies.
On this point, I think Ms. Merlini has very strong arguments. Just to summarize the conclusion, I believe the law is clear in cases such as this, where the employee is not a national of the state whose government employs her and where her job could not possibly be categorized as public, governmental, or supervisory. In such cases, the foreign consulate is, in essence, acting as a private employer and is not immune from suits based on that employment, which is a commercial activity in the United States. But we will see.
Update (6/30/2106): Unfortunately, the Appeals Court, in a non-precedential decision, affirmed the decision of the Reviewing Board. Its decision rests entirely on the third point—the Trust Fund’s claim that Ms. Merlini was entitled to benefits under a Canadian statute. I believe the court’s decision is substantively incorrect, but the issue of Canadian law was clearly the closest issue in the case. The court did not reach the interesting questions of sovereign immunity. I’m not going to discuss possible next steps here for obvious reasons, but if there are further developments I will let you know.