Letelier v. Republic of Chile

Michael Moffitt (Moffitt), Ronni Moffitt, and former Chilean ambassador Orlando Letelier were riding to work in Washington, D.C., when a bomb planted in the car exploded. Letelier and Ronni were killed. The nine individuals identified as the assassins had connections to the Chilean government (Chile). Personal representatives of Letelier and Moffitt (collectively, Letelier) (plaintiffs) sued the assassins and Chile (defendants) in the United States District Court for the District of Columbia. Chile failed to appear. The district court held that Chile was not immune from suit under § 1605(a)(5) of the Foreign Sovereign Immunities Act (FSIA), which applied to tortious activity not encompassed by the commercial-activity exception set forth in § 1610(a)(2). Accordingly, the district court entered a default judgment against Chile for $5 million. Subsequently, Letelier filed the judgment in the United States District Court for the Southern District of New York, sought to execute on the property interest that Chile had in its national airline, Linea Aerea Nacional-Chile (LAN), and petitioned for the appointment of Moffitt as LAN’s receiver. LAN moved to dismiss, arguing that its assets were immune from execution. Letelier sought discovery from Chile. Chile refused to comply. As a result, the district court issued sanctions against Chile in the form of adverse findings of fact. The court found that Chile (1) directly controlled LAN’s assets, (2) could have dissolved LAN and taken over LAN’s assets, and (3) used LAN to transport the assassins and the explosives used in the assassination. In light of these findings, and relying on First National City Bank v. Banco Para El Comercio Exterior de Cuba (Bancec), the district court held that Chile abused LAN’s corporate form and, therefore, LAN’s separate corporate form should be disregarded. As a result, LAN’s assets were considered Chile’s assets under the FSIA. The district court then held that under § 1610(a)(2) of the FSIA, LAN’s assistance in the assassination constituted a commercial activity that subjected LAN’s assets to execution. The district court appointed Moffitt as LAN’s receiver. LAN appealed.