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Obagi Law attains historic win for woman sexually harassed by foreign state in New York, clarifying the way the FSIA is interpreted in employment law

MANHATTAN, N.Y. (August 19, 2020) — The Southern District of New York issued a historic decision this week regarding diplomatic immunity and employment law in the United States: When a foreign sovereignty chooses U.S. law to govern its employment contract in the U.S., that foreign sovereignty does not automatically retain legal immunity and can be subject to claims brought under those laws.

The ruling — an issue of first impression in the SDNY — is both a first of its kind and a major victory for the plaintiff, who is represented by Zein E. Obagi, Jr. and Tara Hattendorf of Obagi Law Group, P.C.

In the case of Fontaine vs. The Permanent Mission of Chile to the United Nations, et al., SDNY a district court judge denied the Mission’s request for immunity, ruling that when a foreign state agrees to adopt U.S. law in an employment contract, that entity waives its rights to immunity from employment claims under the Foreign Sovereign Immunities Act (FSIA), unless that entity expressly reserves its immunity in the contract.

In expressing the historic nature of the ruling, the District Court held, “The Court is not aware of any authority in the Second Circuit that has addressed the question of whether an implied waiver of sovereign immunity in an employment contract is limited to contract claims, or should apply to claims brought under other employment laws.”

At the heart of the case is Ms. Fontaine’s claims that she was subject to harassment for more than two years — starting with her job interview where she was asked questions about her ex-husband, and lasting beyond her unlawful termination, to the withholding of her final payment for nearly four months. Even after her employment, it is suspected that her diplomatic superiors at the Chilean Permanent Mission wrote an anonymous letter to her new employer calling her a troublemaker.  These individuals have been deemed protected by diplomatic immunity for their alleged acts.

Among the abuses to which Ms. Fontaine, a single mother, was subject were completely irrelevant questions about her marital status; being asked out on a date by her boss; numerous conversations about a female co-worker’s looks and an offer by a high-level diplomat to apply lotion to her hands.  When it became clear that Ms. Fontaine was not receptive to these abuses, the Mission’s employees began threatening and harassing her in an effort to lay the groundwork for Ms. Fontaine’s eventual wrongful termination.

Among the provisions in the signed contract was the Choice of Law Clause, which stated, “For all legal purposes, this contract shall be governed by the current legislation of the United States.”

The Mission claimed that any waiver of sovereign immunity implied in that Choice of Law Clause is limited only to contract-law claims, and does not extend to non-contract causes of action. However, in expressly stating U.S. laws governed “this contract” — and in citing U.S. law again when denying Ms. Fontaine’s request for two months of compensation following her termination — the Mission did not make it clear that it was not waiving immunity.

“The Contract states that United States law shall govern ‘this contract,’ not Plaintiff’s obligations,” Judge Analisa Torres stated in her Honor’s ruling. “In stating that the Contract would be ‘governed by’ United States law, the Choice of Law Clause mirrors almost exactly the language that courts have long held effects an implied waiver of sovereign immunity.”

“Opposing this immunity claim was one of the first assignments I gave Tara Hattendorf when she joined our firm in the fall of 2019,” Mr. Obagi said after the ruling. “It is clear that Ms. Hattendorf does impeccable and critical work for our clients.  Together with the very brave Ms. Fontaine, we have established the simple, clear step that Americans employed by foreign missions to the United Nations in New York need to follow to protect themselves from workplace abuses: ensure that your employment contract adopts U.S. or New York law.  Any employer who is not willing to do that is not bound by modern human rights standards for workplace decency. “

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