Gemini on Question 48, Sep 18

Yes, Varghese v. China Southern Airlines Co., Ltd., 925 F.3d 1339 (11th Cir. 2019) is still good law. It has not been overruled, abrogated, or overturned by the Eleventh Circuit en banc or the U.S. Supreme Court.

It remains a frequently cited precedent regarding the Foreign Sovereign Immunities Act (FSIA), specifically regarding how employment contracts and wage payments interact with the FSIA's "commercial activity" exception.

Background Context

Because China Southern Airlines is majority-owned by the government of the People's Republic of China, it qualifies as a "foreign state" and is presumptively immune from lawsuits in U.S. courts under the FSIA. Mathew Varghese, a pilot, sued the airline for breach of contract and unpaid wages. The airline tried to dismiss the case by claiming sovereign immunity.

The legal question was whether the airline's actions fell under the third clause of the FSIA's commercial activity exception (28 U.S.C. § 1605(a)(2)), which strips a foreign state of immunity if the lawsuit is based upon an act outside the U.S. that "causes a direct effect in the United States."

The Holding

The Eleventh Circuit ruled in favor of the pilot, holding that the airline was not immune from the lawsuit. Applying the U.S. Supreme Court's precedent in Republic of Argentina v. Weltover, the Eleventh Circuit held that the airline's failure to pay the pilot's wages into his designated American bank account constituted a "direct effect" in the United States.

While courts often express their holdings across several paragraphs of reasoning, the operative holding of the Eleventh Circuit in this case is articulated as follows:

"We hold that Varghese's breach of contract claim falls within the third clause of the FSIA’s commercial activity exception. China Southern’s alleged failure to pay Varghese his owed compensation into his United States bank account caused a 'direct effect' in the United States. Therefore, China Southern is not entitled to sovereign immunity from this suit."

(Note: The court also held that because the district court properly had subject matter jurisdiction under the FSIA, it correctly denied the airline's motion to dismiss the case.)