The U.S. Court of Appeals for the Sixth Circuit has ruled a gun manufacturer operating as an instrumentality of the Republic of Argentina is not immune from product liability litigation under the Foreign Sovereign Immunities Act (FSIA).
The statute protects foreign governments (and by proxy, those serving on behalf of them, from tort litigation. However, in Rote v. Zel Custom Manufacturing, LLC, the appeals court decided that the design and manufacture of a product for sale amounts to “commercial activity,” which is one of the exceptions under the act. It doesn’t matter that the entity/foreign state had minimal contacts in the U.S. because the state’s action had a direct effect here.
The case involves an allegedly defective round of ammunition, which resulted in serious injury to the right hand of plaintiff.
According to court documents, plaintiff was invited to the house of a friend in his home state of Ohio. There, another guest had brought along a rifle as well as some ammunition. The guest invited several of the other guests to fire the rifle. He invited and encouraged plaintiff to do so as well, and provided him with loading and firing instructions.
Plaintiff loaded the rifle and before the bolt moved into a closed-and-secured position, the round exploded. Everyone heard the blast.
As a result, plaintiff suffered severe damage to his right hand.
The allegedly defective box of ammunition was purchased through a New Jersey company and was originally designed and manufactured by a company in Argentina called Dirección General Fabricaciones Militares. This firm is a Bueonos Aires arms manufacturer that is state-owned, thereby making it an instrumentality of the state.
Plaintiff filed a personal injury lawsuit against the company, alleging the firm designed, manufactured, sold and/or otherwise introduced into the stream of commerce the defective ammunition. He asserted the company defectively designed and manufactured the rounds so they would have something called a protruding primer, which made them more dangerous, and then failed to adequately warn consumers of this dangerous condition.
The company moved for dismissal for lack of subject matter jurisdiction, arguing that as an instrumentality of the Republic of Argentina, it was immune from liability under FSIA.
District court denied the motion. In support of this decision, the district court ruled that design and manufacture of this ammunition amounted to “commercial activity,” which invokes one of the exceptions of FSIA.
The company appealed to the U.S. Court of Appeals for the Sixth Circuit. Justices there affirmed.
Plaintiffs contended the commercial activity exception in 28 U.S.C. Section 1605(a)(2) indicates that a foreign state isn’t immune from U.S. courts’ jurisdiction when:
- The action occurred outside the territory of the U.S.;
- The action happened in connection with a commercial activity of the foreign state elsewhere;
- The action causes a direct affect in the U.S.
The law defines the term “commercial activity” as involving the regular course of commercial conduct or particular transaction or act.
Justices with the federal appeals court decided that design and manufacture of a product does indeed constitute as “commercial activity” under the statute. For this reason, the court didn’t need to find that defendant had minimal contacts in the U.S. in order to find the actions of defendant had a direct effect here, and therefore U.S. courts have jurisdiction.
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Rote v. Zel Custom Manufacturing, LLC, U.S. Court of Appeals for the Sixth Circuit