As foreign governments do more business in the United States, questions about the intersection of sovereign immunity and U.S. law will undoubtedly arise. In this episode, host Alan Pierce talks with Boston litigator Ted Folkman about an important 1st Circuit case of theirs — Merlini v. Canada — that’s been winding its way through the federal courts for more than 11 years. The case involves what would otherwise be a fairly common workers compensation claim. The difference here is that the injured party is a U.S. citizen who was working in the Canadian consulate in Boston. Even though businesses in Massachusetts are required to carry workers compensation insurance, the Canadian government is asserting the U.S. courts don’t have jurisdiction under the Foreign Sovereign Immunities Act, which shields foreign governments from most actions in U.S. courts. Folkman is arguing that U.S. courts have jurisdiction under FSIA’s commercial activity exception because the employee, Cynthia Merlini, wasn’t conducting high-level Canadian business. Instead, she was working like any other administrative assistant at a U.S.-owned business.
Ted Folkman is the founder of Folkman LLC and was previously a partner at Pierce Bainbridge in Boston.
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Workers Comp Matters
Are Foreign Governments Responsible for Worker’s in the US
Intro: This is workers comp matters hosted by Attorney Alan S. Pierce. The only Legal Talk Network program that focuses entirely on the people and the law in workers’ compensation cases. Nationally recognized trial attorney, expert, and author, Alan S. Pierce, is a leader committed to making a difference when Workers Comp Matters.
Alan S. Pierce: Welcome again to Legal Talk Network and Workers Comp Matters. This is your host, Alan Pierce. I’m an attorney with Pierce, Pierce and Napolitano in Salem and we are happy to bring you another edition of Workers Comp Matters. Before we get to our guest and our topic, I want to thank our sponsor PInow. Find a local qualified private investigator anywhere in the United States, visit pinow.com to learn more.
Today, we’re going to discuss what I believe is an interesting case certainly from my perspective as a workers’ comp attorney. It is a case that both has workers comp issues as well as significant legal issues that transcend my areas of expertise and it involves international law and issues of sovereign immunity and very, very interesting concepts such as those.
My guest today is Attorney Ted Folkman of Folkman LLC, a law firm in Boston. Ted has been a practicing attorney since 2001. He is a member of the American Law Institute and also co-chair of the International Law Section of the Boston Bar Association where he also serves on the Amicus Committee. He is recognized as an expert on matters such as the matters we’ll be discussing today. And those involve the case of my client Cynthia Merlini who has become our client and we’re going to discuss her particular claim against the Government of Canada. Before we get into it, Ted, I want to welcome you to Workers Comp Matters and it’s been a pleasure to work with you on this case as it continues to proceed through the court system.
Ted Folkman: Thanks. It’s been fun to work with you too.
Alan S. Pierce: All right, so to get us started and to get our listeners acquainted, this case all started in January of 2009. So, it has really been 11 and a half years since the date of January 22 when Cynthia Merlini suffered an injury at work and what makes this case somewhat unusual at least from my perspective is that her employer on the date of injury was in Boston, Massachusetts. She worked in an office in downtown Boston and she worked as an administrative assistant at the Canadian Consulate. She was assistant to the consul general who was based in Boston, Massachusetts. So, she was an employee of the Government of Canada and she was in Massachusetts and continues to be a Massachusetts resident. Her particular category of work under the Canadian system of employment, she was known as locally engaged staff. So, when consulates or embassies have locations around the world, they are staffed both with the citizens of the country of origin starting with the ambassador or consul, down through whatever diplomatic or other personnel and then of course, they have clerical and other types of non-diplomatic personnel that they hire locally and Cindy was one of those.
So, on January 22, 11 and a half years ago, she tripped and fell at work and she suffered some fairly serious injuries to her neck and back and with the exception of trying to return to work shortly afterwards, she’s been unable to work ever since. So, that’s where the story begins. At some point, she contacted me to represent her at the Massachusetts Department of Industrial Accidents. It turns out that the Government of Canada as a federal employee of the Government of Canada, she as a locally engaged staff person did receive initially some benefits under their Federal Workers Compensation Law known as GECA, Government Employee Compensation
Act. They at some point, refused to pay her any further benefits after she was out of work for just a short number of weeks. Without going into the details of that, the rights of locally engaged staff to challenge claims decisions are significantly different than the rights enjoyed by Canadian citizens and she found some significant legal roadblocks in her way in contesting the decision of the appropriate claims examiner that worked for the Government of Canada.
So, being a Massachusetts resident, a Massachusetts citizen and because she was injured in the Commonwealth of Massachusetts, she sought a remedy under the Massachusetts Workers Compensation Act, which provides for workers comp coverage for anybody who’s hurt within the borders of the Commonwealth of Massachusetts. So, she initiated a claim herself without representation because the Government of Canada did not carry state workers comp insurance that other consulates or embassies might have carried or in fact did carry, nor did they register as a self-insured employer.
So, her and ultimately my position before the Department of Industrial accidents is that they were an uninsured employer and in Massachusetts like many other jurisdictions, we have a trust fund that pays benefits. It’s the trust fund that actually stands in the shoes of the employer and provides workers comp benefits as if there had been insurance. So, we brought a claim against the trust fund, the case went to a hearing or trial. She was indeed awarded workers comp benefits despite the fact that the Government of Canada and the trust fund’s attorneys contested whether the Massachusetts Industrial Board had any jurisdiction over a sovereign foreign nation and they asserted a lot of other defenses as well. The long short end of that story is that ultimately the award of workers compensation benefits was reversed by the Workers Compensation Reviewing Board. Again, among the issues of reversal is that the Government of Canada as a sovereign nation could not be held responsible for failing to provide workers comp insurance and that they could not be subjected to the jurisdiction of the industrial board and they might otherwise be immune under sovereign immunity. Ted was engaged once it became clear that this case had veered out of the traditional workers comp framework into a framework of international law, which at that time I knew almost nothing and now I just know a little more than nothing. But Ted knows all about that. So, he handled an appeal of the denial or the reversal of workers comp benefits before the Massachusetts Appeals Court and unfortunately, they did not see it our way and instead found that the Government of Canada could not be reached in a workers’ comp matter such as this.
So, at that point, Ted, my active involvement in arguing and advocating for Cindy, that Massachusetts as a matter of public policy and as a matter of law owed her benefits to the trust fund. You had another theory that you have since embarked upon. So, why don’t I turn it over to you from there and explain what your theory of
recovery for Sindy became.
Ted Folkman: Sure. Well, thanks for that good introduction to the case Alan. So, in Massachusetts, if you are an uninsured employer, you are liable to the employee without any proof of negligence for the harm basically and you can tell folks more about this than I can now Alan because it’s really a workers’ comp matter. Basically, the bargain that the statute creates is that workers give up their common law rights to sue their employers in return for access to sort of a very simple and straightforward system for getting benefits when they’re injured at work, but the flip side of the coin is if an employer does not get insurance, then not only is the employer liable for the injuries in the ordinary ways but the statute actually takes away a lot of the defenses that an employer otherwise would have.
So, for example, an employer who’s injured does not have to prove that the uninsured employer was negligent. The employer can’t put the blame for the accident back on the employee and say, you know, you yourself were careless. So, it’s a very strong statute in favor of employees and my thought was why don’t we just sue the Government of Canada under that statute. The thought being that there’s no question that they weren’t insured. The statute makes them strictly liable.
That’s it. The difficulty or the real issue in the case was what’s called foreign sovereign immunity. So, our courts have a rule and courts all around the world have a rule that says basically you can’t sue a foreign country in another country’s courts. That’s the general rule and you know, there’s a lot of good reasons to have that rule if you think about, you know, American embassies and consulates overseas, we really don’t want them to be dragged into foreign courts except in unusual cases and so in order to encourage other countries to treat our consulates and embassies the way that we think they should be treated, we give the same respect and what’s called comedy or cooperation to foreign governments that are doing things here. It’s not an absolute rule. There are a lot of exceptions to the rule and the exception that I focused on was what’s called the commercial activity exception. The idea here is that if you’re a foreign government acting like a foreign government doing governmental things, then you can’t be sued in another country’s courts. But if you’re a foreign government doing commercial things, things that anybody in the economy could do, then you’re not really acting as a government and you can be sued.
So, for example, if a certain country has a state-owned oil company and you know it’s selling oil in the United States and there’s an oil spill, well, it’s acting just like any oil company so it can probably be sued for injuries resulting from that commercial activity.
Or if a foreign country owns let’s say an apartment building somewhere in the United States and it uses part of it as an office and it rents out part of its tenants, it’s acting commercially just like any landlord and it can be sued for its commercial activity.
So, my thought was, well, Canada hasn’t bought insurance. It’s done pretty much exactly what any employer in Massachusetts might do, which is just fail to do what the law requires, failed to buy insurance and by the way, you know, Ms. Merlini is not a governmental-type employee. She’s not doing super secret work for the Canadian government. She doesn’t have a high level of responsibility within the hierarchy of the consulate. She is an administrative assistant just like any business might have an administrative assistant and in fact, when she was injured, she was putting out coffee and tea for meetings, doing the kinds of things that a secretary and an administrative assistant in any private business would do. So, my theory was that Canada was first of all acting as any commercial business might act when it failed to buy insurance and Merlini for her part was a commercial employee doing things that were very similar to what she might be doing if she were working for a private business.
So, I thought we had a very good case to say that Canada should not be immune from the jurisdiction of the US Court. That was the basic idea.
Alan S, Pierce: Okay. And before we take a break, Ted, brought a lawsuit, a civil lawsuit in US District Court which is the first circuit. We’re going to take you after our break through the interesting legal proceedings once that complaint was filed and an answer and a motion to dismiss was filed by the Government of Canada. But before we get there, we’re going to take a brief break and we’ll be back in a couple of minutes with our guest Ted Folkman. We’ll be right back.
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Alan S. Pierce: All right. Welcome back. We’re continuing our discussion with Ted Folkman. Ted, where we left off, you filed a civil complaint in US District Court and as part of the responsive pleadings by the Government of Canada, they obviously issued an answer to the complaint in the form of a denial of all the allegations and procedurally what did they next do to try to put an early end to your lawsuit or our lawsuit.
Ted Folkman: So, actually, Alan, they never answered the complaint in federal court if you say that the court lacks jurisdiction, you have the right to do that before you answer the complaint. So, Canada did not in fact answer the allegations and until today it has not answered the allegation. What it did instead was it filed a motion. The main point of the motion was to say that, we, the Government of Canada have foreign sovereign immunity and so the US court does not have jurisdiction over us to hear the case. So, they asked to have the case dismissed on that basis. Canada brought in a very large law firm, an international law firm to handle the case, I think because the community issues that they were raising were, you know, pretty far out of the realm of the ordinary for the workers compensation lawyers that had been representing them in the Department of Industrial Accidents. So, they filed that motion to dismiss saying that there was no jurisdiction and then the burden was on us to answer that.
Interestingly, Canada did not offer any evidence in support of its motion to dismiss and what I mean by that is that what they did was took the position that if even if everything Ms. Merlini said in her complaint were true, the court still lacks jurisdiction. And that I think was a kind of a risky move because we made very specific allegations about the nature of her duties that were meant to show that she was in essence a commercial employee and not a governmental employee. So, what Canada was doing in effect was saying even if that’s true, you still lose, which is you know, a sort of a high risk, high reward strategy. I think that Canada did have one very strong and good point and it was a new point. A point that you know, hadn’t really been developed in the earlier cases.
Basically, there are a lot of cases out there where employees not in the workers compensation context but in other sort of employment context where employees have sued consulates and have sued embassies on theories like age discrimination or sex discrimination or failure to you know, breach of a contract.
You know, wrongful termination. Those sorts of claims and in those cases, basically, the rule that emerged was if you’re a commercial employee doing things that ordinary employees that ordinary businesses do, then you can bring those claims and if on the other hand you’re a foreign civil servant or if you’re a governmental type employee, then you can’t. Canada, I think knew that that that was not going to be a fruitful avenue for them given what we had alleged about Ms. Merlini’s duties. So, what they did instead was something pretty new. They said your claim is not based on Ms. Merlini’s employment. It’s not based on the fact that she was a secretary rather than some other kind of employment. What it’s really based on is our decision to apply our own workers compensation law rather than Massachusetts workers compensation law in all of our embassies and consulates all around the world and that’s a governmental decision, that’s a sovereign decision. And so, that’s why we’re immune from suits.
So, that was really the challenge, Alan, that we had to meet in opposing the motion.
Alan S. Pierce: So, what did the judge at the district court level do to the motion to dismiss?
Ted Folkman: Well, the judge at the district court level granted it right away. There was no hearing. We did file our you know, a written opposition but the judge did grant Canada’s motion, which meant that we were in the position of having to appeal.
Alan S. Pierce: Okay. And so, if you didn’t appeal, she’s completely out of luck civilly and obviously, the workers comp claim had been disposed of in our industrial board and our commonwealth courts. So, you did appeal and it went to the US Court of Appeals and without getting into the whole history of it, there was an initial decision and then tell us about the subsequent decision.
Ted Folkman: Yeah. The Court of Appeals is a panel that hears cases in panels of three judges. We did prevail in the Court of Appeals. We got a decision by a two to one vote that said that, no, the case is not based on your governmental decision making Canada and the rationale for the decision really was that foreign governments are not allowed to point to the purpose of their activities when they’re talking about foreign sovereign immunity because you could always say something
as a governmental or a sovereign purpose. Instead, what they have to do is focus on the nature of what they did and we were able to persuade the court that the nature of what they had done failed to purchase workers compensation. It was entirely commercial. So, we did win in the Court of Appeals, which was a good victory for Ms. Merlini. Canada did bring what’s called a Petition for Rehearing by the entire court. So, rather than having the case heard by a three-judge panel, they wanted to have the case heard by all six of the active judges on the court and that motion or that petition was denied.
So, at the end of the day, we had won a decision from the Court of Appeals saying that there was no foreign sovereign immunity at least at this stage of the case and sending the case back to the district court for further proceedings.
Alan S. Pierce: And the Government of Canada took one last stab at trying to uphold or reverse the reversal of the dismissal and they have filed what’s known as a writ of certiorari to the US Supreme Court, which to me as a worker’s comp lawyer, I never thought I would have a case that started in a typical work injury fashion in any way have the type of international or constitutional issues that would ever get its way to the Supreme Court. So, tell us about their petition or writ of certiorari and the decision of the Supreme Court about that.
Ted Folkman: Yeah. So, Canada did as you say ask the Supreme Court to review the case. Supreme Court review is quite rare just statistically. You know, a very small percentage of cases get reviewed, but this case actually was I think it’s fair to say there was a significantly higher chance than usual that the court might have granted it and I say that first of all because the party seeking review was a foreign government, second of all because the decision of the Court of Appeals was a split decision, two judges to one and the judge who dissented from the decision, Judge Lynch is a well-regarded and very good judge. And thirdly, because when the first circuit denied the petition for a rehearing that I mentioned a minute ago, they did so in a three to three split vote, which is unusual and in which the judges who dissented from the decision said things like this is a case of exceptional importance. We believe this case should be heard by the Supreme Court et cetera. So, we did think that there was a significantly higher chance than usual that the Supreme Court would grant the petition or at least ask the US Government for its views before deciding what to do.
So, we did oppose the petition which is not something that you sort of routinely do in the Supreme Court. A lot of times it makes the most sense to let the court know that you’re simply waiving your right to respond, letting the court take a look at the case just on the strength of the other side’s papers. But in this case, we thought that a response may occur. So, we did file a response to the petition, the court process of deciding what cases to review and what cases not to review is a bit of a black box to outsiders. We don’t really know what the justices talk about when they have these conferences where they decide what cases to hear and what cases not to hear. We don’t know what the vote was. What we do know is that when they discussed the case when the case came up for discussion in May of this year, there weren’t at least four votes on the Supreme Court to hear the case. And so, the final decision from the Supreme Court was that the first circuit’s decision stands, which means that the case goes back now to the district court for the proceedings.
Alan S. Pierce: All right. So, you know for our listeners, unfortunately, there is not yet an end to the story. So, we’re going to leave the case of Cynthia Merlini versus the Government of Canada as a bit of a cliffhanger as to where it will go, but as of May of 2020 as Ted said, the Supreme Court of the United States denied certiorari, which puts the case back at the trial level before the district court judge for further proceedings whatever they may be. So, I guess all I can say is stay tuned and when this case finally reaches its resolution in one way or another, we will certainly update and have Ted back on Workers Comp Matters hopefully with a happy result from Ms. Merlini. But this is and has been a most unique case of the intersection between employment law and international law and how the foreign Sovereign Immunity Act interfaces with local United States Laws and this is not just could be a precedent for workers comp, but as Ted mentioned, these cases do arise in the setting of unfair employment practices. We know that certain foreign governments must comply with our minimum wage or other wage laws. They may be a consulate from a country in which they don’t have a 40-hour work week or allow for vacations or time and a half etcetera. So, at what point can a foreign government be held responsible for complying or not complying with local laws is one that is fraught with issues. So, any closing thoughts Ted as we proceed and wait for the next proceeding to take place and your thoughts about the principles that this case so far through the appellate process and the federal system is starting to shape your practice in regard to these issues?
Ted Folkman: Yeah. Well, I think it’s an important case Alan. I think that foreign governments do more and more business in the United States one way or another whether it’s state-owned enterprises, consular and diplomatic employees and so forth. I think that it’s important that foreign governments know that they do have some exposure to the US Courts when they are accused of violating employment laws or breaching contracts or doing other things that are you know, purely commercial. You know, there are a lot of other areas of foreign sovereign immunity law where things sort of more seemingly important on the global scale, you know, holocaust restitution or human rights cases and so forth, but these cases like Ms. Merlini’s case are really important because they address the rights of American workers and American businesses. Being a foreign government does provide a very very significant amount of protection from jurisdiction here, but it’s not all encompassing, it’s not a blanket protection and so, I think it’s important that that principle really be established.
I think that this is really what we call a case of first impression. In other words, it really hasn’t come up before when we talk about the interaction between the FSIA, the Foreign Sovereign Immunities Act and Workers Compensation Law. My hope is that workers compensation authorities around the country will take a look at it when they’re trying to decide what their policy is about foreign missions, foreign embassies, consulates, other foreign governmental employers complying with Workers Compensation Law.
Alan S. Pierce: And for all your efforts and your expertise, I want to thank you and our listeners I hope will thank you for educating us on a very unique set of facts and a very unique legal concept that hopefully will result in further clarification as to the roles and responsibilities of foreign governments that do business in the United States and how to protect our citizens who work therein. So, having said all of that, I want to thank Ted for joining us today on Workers Comp Matters and thank our listeners for listening and go out and make it a day that matters. Bye-bye
Outro: Thanks for listening to Workers Comp Matters today on the Legal Talk Network, hosted by Attorney Alan S. Pierce, where we try to make a difference in workers’ comp legal cases for people injured at work. Be sure to listen to other Workers Comp Matters shows on the Legal Talk Network; your only choice for legal talk.