Last week, Judge Matz of the Federal District Court for the Central District of California declined to dismiss Foreign Corrupt Practices Act ("FCPA") bribery claims against Lindsey Manufacturing Co. (“Lindsey”). In doing so, Judge Matz penned the first significant judicial opinion that recognizes employees of a state-owned company as “foreign officials” under the FCPA.

Because few FCPA cases reach the trial stage, many of the FCPA's terms remain open to judicial interpretation, including that scope of the term “foreign official.” In the Lindsey case, however, Judge Matz ruled that payments to employees of Mexico's government-owned utility company, Comision Federal de Electricidad (“CFE”), could violate the FCPA, even though CFE is not a government agency or department. Lindsey, a California electricity parts manufacturer, allegedly bribed CFE employees to obtain valuable contracts.

Lindsey argued that a state-owned company should not be viewed as government “instrumentality” for the purposes of the FCPA. Judge Matz rejected a blanket rule in favor of a case-by-case analysis of the similarities between state-owned companies and government agencies. Such an analysis will be critical for companies operating in countries where state-owned entities are the rule rather than the exception.