Zakka v. Palladium Int'l, LLC

298 A.3d 319

Nizar ZAKKA, Appellant,

v.PALLADIUM INTERNATIONAL, LLC and Edward Abel, Appellees.

No. 21-CV-0690

District of Columbia Court of Appeals.

Argued October 20, 2022

Decided July 27, 2023

Adam H. Farra, with whom Richard Leveridge and Rachel Jennings were on the brief, for appellant.

Benjamin S. Boyd, with whom Mary E. Gately, Paul D. Schmitt, Washington, DC, and Sean Croft, New York, NY, were on the brief, for appellees.

John Paul Schnapper-Casteras filed a brief on behalf of law professors Danielle Keats Citron, New York, NY, Kate Sablosky Elengold, Jonathan Glater, Andrew Hessick, and David Rubenstein as amicus curiae in support of appellant.

Before Deahl and AliKhan, Associate Judges, and Glickman,^* Senior Judge.

Glickman, Senior Judge:

In connection with an economic and civil society development project funded by the U.S. State Department and managed by appellee Palladium International, LLC, appellant Nizar Zakka traveled to Iran in September 2015 to attend a conference. At the end of his planned visit, as he was on his way to the Tehran airport to fly home, Zakka was seized and detained. He spent the next four years in an Iranian prison. After he regained his freedom, Zakka sued Palladium and Edward Abel, the president of Palladium's U.S. business unit, in the District of Columbia Superior Court. Zakka's complaint asserted causes of action for negligence and intentional infliction of emotional distress. These claims were based on allegations that Palladium failed to warn Zakka of the "acute, peculiar, and unreasonable risks" he ran in going to Iran due to his association with Palladium, and that Palladium failed to take reasonable and foreseeably necessary precautionary measures to protect Zakka from those risks.

Appellees moved to dismiss the complaint for lack of subject matter jurisdiction pursuant to Superior Court Civil Rule 12(b)(1). They asserted that, under a line of cases stemming from the Supreme Court's decision in Yearsley v. W.A. Ross Construction Company ,¹ they were entitled to derivative sovereign immunity from suit because the complaint was based on conduct authorized by the United States pursuant to the State Department's agreement with Palladium. The Superior Court granted the motion to dismiss for lack of subject matter jurisdiction on this ground. In the alternative, the judge concluded that if derivative sovereign immunity is not jurisdictional in nature, but rather is simply an affirmative defense to liability, appellees were entitled to summary judgment based on that defense.

On appeal, Zakka argues that the judge erred in each of those rulings. First, he contends that Yearsley immunity is not jurisdictional. We agree with him; the derivative immunity is a qualified immunity that does not deprive the court of subject matter jurisdiction, but only furnishes the defendant with an affirmative defense. Second, Zakka argues that the judge misapplied the Yearsley defense in granting summary judgment to appellees. We agree with him on that, too; appellees were not entitled to summary judgment because they did not demonstrate the absence of a material dispute of fact as to whether the State Department had authorized and directed Palladium to commit the allegedly tortious conduct at issue in this case. We therefore vacate the judgment and remand for further proceedings.

I. Factual Background

The trial court's rulings are predicated on the following facts, which we take to be undisputed for present purposes unless we indicate otherwise. In 2015, the U.S. State Department granted an unsolicited application by Palladium (then known as Futures Group International, LLC) for a federal financial assistance award. This award, as set forth in a Cooperative Agreement between Palladium and the State Department, provided federal funding for Palladium to support the "Women's Alliance for Virtual Exchange (WAVE II)" network in Iran. The stated objectives of this eight-month project were to "engage Iranian women's CSOs [civil society organizations] in using ICT [information and communications technology] as a tool to develop their organizations, build alliances with international and regional organizations, and have their voices heard." According to the Cooperative Agreement, Palladium would undertake to achieve these objectives through online and third-country training (i.e., through activities conducted outside of Iran), and by service contracts with Iranian and regional civil society organizations for initiatives carried out inside Iran and elsewhere in the region.

Palladium explained to the State Department in its application for the WAVE II project award that its own staff would be unable to travel to Iran to observe activities there "[d]ue to access and security considerations" and "the sensitive nature of the project." Palladium would need to "maintain a low profile" so that "Iranian beneficiaries [would not be] put at additional risk due to being identified as recipients of U.S. government funding." Consequently, any "project-supported activities in Iran" and any "[c]ommunication with Iranian beneficiaries" had to be "solely" through Palladium's regional partners, without disclosure of Palladium's own involvement, in order to "maintain the safety of the beneficiaries and program staff." Palladium also stated in its application that it would "produce a comprehensive set of Security Standard Operating Procedures" for the project that "could include" such measures as "security training and regular briefings for all staff," "[e]ffective transport and movement plans," "[p]ersonal and accommodation security measures," and "[a] robust crisis management plan including appropriate response options."

Palladium advised the State Department that one of the regional partners it would rely on to implement the Cooperative Agreement would be IJMA3, "a well-established regional ICT association with networks across the Arab world, Iran and the United States." IJMA3 would "take the lead in all WAVE Alliance building and IT-related activities" and "all in-country coordination" under the daily guidance of Palladium's WAVE Program Director. Appellant Zakka was a founding member and senior official of IJMA3, and the chief executive officer of its sister organization, IJMA3-USA. IJMA3 and Zakka previously had provided assistance to the Women's Alliance for Virtual Exchange under an agreement between the State Department and a former State Department grantee.

The State Department's Cooperative Agreement with Palladium included provisions relating to Palladium's budgetary, reporting, and pre-approval obligations, to ensure that federal funds were used only for authorized activities, and to enable the State Department to monitor and evaluate Palladium's performance. The agreement stated that "[t]he Department of State's involvement in the operation of this project is considered to be substantial" and called for the State Department's "concurrence with" Palladium's Work Plans and "prior approval by the Grants Officer of all travel details (destination, number of participants, number of trips)." Palladium was required to "consult with the Grants Officer to ensure that all proposed travel is documented accordingly and that sufficient funds exist in the budget for such activities." However, among other limitations, the agreement specified that State Department representatives did not have the authority to "interfere[ ] with [Palladium]’s right to perform the terms and conditions of the award" or supervise Palladium's employees. Acknowledging the security concerns associated with the project, the agreement stated in general terms that Palladium would "keep a strict communication protocol," that "[v]etting is obligatory for anyone who takes part in this project," that access to project documents would be restricted, and that Palladium would "work closely with" the State Department and the Grants Officer Representative "regarding any project concerns whether programmatic or security related." However, the agreement did not require Palladium to implement or follow any particular security procedures for safe travel to Iran, to provide any warnings in connection with anticipated travel to Iran, or to obtain State Department approval of its arrangements for the safety and security of travel-related activities.

The Work Plan that Palladium submitted to the State Department after being awarded funding for the WAVE II project included a tentative calendar of events. Among the planned activities, the Plan listed a women's group conference scheduled to take place in Iran in September 2015. Palladium proposed to send attendees to that conference to participate in "events to sustain the WAVE alliance." Palladium's Work Plan did not address travel safety or security arrangements. On June 1, 2015, the State Department approved the proposed Work Plan without any changes and without addressing any security matters. Three months later, on August 31, 2015, Palladium's WAVE Program Director Nadia Alami sent an email to the Grants Officer Representative requesting "travel and country clearance" for Zakka and other IJMA3 personnel to attend the conference, which would be held in Tehran from September 15-18. This request also did not address any matters of safety or security.

The Grants Officer Representative, Shervin Hadjilou, responded with an unclassified email approving the travel request. The email stated:

Regarding the travel request referenced in the email below, travel authorization is granted for the individuals below with the understanding that they will be traveling with documents issued by their respective governments, and none of which are US. Please note that this travel authorization is issued for Palladium in accordance with the provisions of award. Authorization by US government personnel for travel does not supersede travel warnings issued by the USG for the destination country. US government travel warnings can be found at

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