Summary

A group of nearly 100 U.S. citizen investors in a mixed-use development located in Honduras sued the government of Honduras and two state-run entities after squatters took over the land surrounding the development and effectively shut down the project. The plaintiffs claim that, by allowing the squatters to occupy the land and devalue their investment, the government of Honduras has expropriated their property in violation of international law. The district court disagreed and dismissed the case for lack of subject-matter jurisdiction under the Foreign Sovereign Immunities Act ("FSIA"). In the court's view, the plaintiffs failed to show that the FSIA's expropriation exception applied for two independent reasons: (a) the plaintiffs' property rights were not "taken in violation of international law,"; and (b) the defendants did not "engage[] in commercial activity in the United States." See 28 U.S.C. § 1605(a)(3). The plaintiffs challenge both rulings on appeal.