Okolo v. Cross River State Government

Background

Oranefo Okolo, as assignee of St. Luke’s Hospital Consortium, moved for a default judgment against Cross River State Government under Federal Rule of Civil Procedure 55(b)(2). Magistrate Judge Andrew E. Krause recommended denying the motion because the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. §§ 1602–1611, immunized Cross River State Government from suit and Okolo had not shown that an exception to that immunity applied.

Okolo objected to the recommendation. The district court granted him additional time to object and reviewed the challenged portions of the recommendation and the underlying record. The court stated that it reviewed all of Okolo’s objections de novo, meaning independently and without giving controlling weight to the magistrate judge’s conclusions.

Analysis

The court rejected Okolo’s general argument that the FSIA’s commercial-activity exception applied. Okolo argued that United States entities supplied most of the investment and technical expertise for the Obudu Hospital project, that Cross River State Government knew this before entering the concession agreement, and that the government’s conduct caused him to lose his investment and harmed his career in the United States. The court agreed with the magistrate judge that these facts did not establish the required direct effect in the United States.

The court also rejected Okolo’s objection concerning his tortious-interference-with-economic-relations claim. It explained that because Cross River State Government was immune from suit and the court therefore lacked subject-matter jurisdiction, the court could not reach the merits of that tort claim.

The court rejected Okolo’s arguments that the cases cited in the recommendation were distinguishable because some involved contract claims rather than tort claims. It held that the same FSIA commercial-activity standard applied regardless of whether the claim was based on contract, tort, or both: the relevant question was whether the foreign government’s commercial activity caused a direct effect in the United States. The court also agreed that the concession agreement did not require payments to a United States bank account and that the alleged breach occurred in Nigeria.

Finally, the court rejected Okolo’s argument that the magistrate judge’s jurisdictional conclusion may have been influenced by Cross River State Government’s response to a demand for arbitration. The recommendation had noted that the concession agreement required unresolved disputes to be submitted to arbitration under the Nigerian Arbitration and Conciliation Act, that Cross River State Government’s counsel denied liability, and that the dispute was not arbitrated. But the district court found no evidence that the magistrate judge improperly relied on those facts and noted that the recommendation expressly did not decide whether Okolo complied with the agreement’s arbitration requirements.

Disposition

The court overruled Okolo’s objections and adopted the report and recommendation in its entirety as the court’s opinion. It denied Okolo’s motion for default judgment and dismissed the case for lack of subject-matter jurisdiction. The clerk was directed to enter judgment and close the case. The opinion does not state whether the dismissal was with or without prejudice.