Gemini on Question 48, Sep 16

Yes, Varghese v. China Southern Airlines Co., Ltd., 925 F.3d 1339 (11th Cir. 2019) is still good law. It remains binding precedent in the Eleventh Circuit. The U.S. Supreme Court denied the plaintiff's petition for a writ of certiorari the following year (Varghese v. China Southern Airlines Co., Ltd., 140 S. Ct. 850 (2020)), and the decision has not been overruled or abrogated by any subsequent rulings.

Context of the Case

The case involves the Foreign Sovereign Immunities Act (FSIA). The plaintiff, Mathew Varghese, was an American pilot who sued China Southern Airlines (a state-owned enterprise of the Chinese government) under the Florida Whistleblower Act and for breach of contract, alleging he was fired for reporting safety defects.

Because the airline is an instrumentality of a foreign state, it is presumptively immune from lawsuits in U.S. courts unless an exception applies. Varghese attempted to use the "commercial activity" exception (28 U.S.C. § 1605(a)(2)), which allows suits if the claim is either:

• 1."Based upon a commercial activity carried on in the United States" (Clause 1).
• 2.Based upon an act outside the U.S. that "causes a direct effect in the United States" (Clause 3).

The Holding

The Eleventh Circuit reversed the district court's decision and ruled in favor of China Southern Airlines, holding that the airline retained its sovereign immunity because neither clause of the commercial activity exception applied.

While the court addresses the two clauses across several pages, the definitive holding regarding the FSIA exceptions is encapsulated in the court's legal conclusions for each clause:

1. Regarding the First Clause ("based upon" commercial activity in the U.S.):
Applying the Supreme Court's rule that courts must look to the "gravamen" (the core) of the complaint, the Eleventh Circuit held:

"We conclude that the gravamen of Varghese's claims—the conduct that actually injured him—was his termination, which occurred in China. Because his lawsuit is not 'based upon' commercial activity carried on in the United States, the first clause of the commercial activity exception does not apply."

2. Regarding the Third Clause ("direct effect" in the U.S.):
Varghese argued that his termination caused a "direct effect" in the U.S. because he was a U.S. resident who stopped receiving his salary and benefits in his U.S. bank account. The Eleventh Circuit rejected this, holding:

"We hold that China Southern’s termination of Varghese did not cause a direct effect in the United States. ... [M]ere financial loss by a person in the United States is not, in itself, sufficient to constitute a 'direct effect.' ... Because Varghese's employment contract did not require China Southern to pay his salary or benefits into a bank account in the United States, the cessation of those payments did not cause a direct effect in the United States."

Ultimate Disposition:
Because neither exception applied, the court held that the district court lacked subject-matter jurisdiction to hear the case, formally concluding: "For the foregoing reasons, we reverse the district court’s order denying China Southern’s motion to dismiss for lack of subject matter jurisdiction and remand with instructions to dismiss the complaint."