W. S. Kirkpatrick & Co., Inc. v. Environmental Tectonics Corp., International

493 U.S. 400 (1990)

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Nature of the Case

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Facts

Carpenter, who was then Chairman of the Board and Chief Executive Officer of D, learned that the Republic of Nigeria was interested in contracting for the construction and equipment of an aeromedical center. Benson 'Tunde' Akindele, a Nigerian citizen, would endeavor to secure the contract for D. If the contract was awarded to D, D would pay to two Panamanian entities controlled by Akindele a 'commission' equal to 20% of the contract price, which would, in turn, be given as a bribe to officials of the Nigerian Government. The contract was awarded and D paid the promised 'commission' and those funds were disbursed as bribes. Nigerian law prohibits both the payment and the receipt of bribes in connection with the award of a government contract. P learned of the 20% 'commission' and brought the matter to the attention of the Nigerian Air Force and the United States Embassy in Lagos. The United States Attorney for the District of New Jersey brought charges against both D and Carpenter for violations of the Foreign Corrupt Practices Act of 1977 and both Ds pleaded guilty. P sued Ds, and others, in the United States seeking damages. Ds moved to dismiss the complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure on the ground that the action was barred by the act of state doctrine. The District Court received a letter expressing the views of the legal adviser to the United States Department of State as to the applicability of the act of state doctrine. The Department of State professed that anything the court did would not interfere or cause a degree of embarrassment to it or its relationship with Nigeria. The court concluded that the act of state doctrine applies 'if the inquiry presented for judicial determination includes the motivation of a sovereign act which would result in embarrassment to the sovereign or constitute interference in the conduct of foreign policy of the United States.' It held that P would have to show that Ds intended to wrongfully influence the decision to award the Nigerian Contract by payment of a bribe, that the Government of Nigeria, its officials, or other representatives knew of the offered consideration for awarding the Nigerian Contract to D, that the bribe was actually received or anticipated and that 'but for' the payment or anticipation of the payment of the bribe, P would have been awarded the Nigerian Contract. The court ruled for Ds and P appealed. The court of appeals found application of the doctrine unwarranted on the facts of this case. It held that the Department's view that the interests of the Executive Branch would not be harmed by prosecution of the action meant that D had not met its burden of showing that the case should not go forward. The Supreme Court granted certiorari.