UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


INTL BNK RECONST

v.

DC GOVT


98-7055a

D.C. Cir. 1999


*	*	*


Randolph, Circuit Judge: The property, income, operations  and
transactions of the International Bank for Reconstruction  and
Development, commonly known as the World Bank, are  immune from
federal, state and local taxation. The question  in this appeal is
whether a private contractor, retained by the  Bank to provide food
services to individuals on the Bank's  premises, has derivative
immunity from District of Columbia  taxes on the contractor's sales of


I


The World Bank is an international, inter-governmental  organization,
with headquarters in Washington, D.C. Creat- ed by Articles of
Agreement drawn up at a conference held in  Bretton Woods, New
Hampshire in 1944, the Bank is corpo- rate in form, with all of its
capital stock owned by its member  governments. See Herbert Harvey,
Inc. v. NLRB, 424 F.2d  770, 773 n.20 (D.C. Cir. 1969). The United
States accepted  the Articles in the Bretton Woods Agreements Act of
1945, 22  U.S.C. ss 286-286m. The Bank is empowered to provide 
financial assistance for the development of member countries,  to
promote private foreign investment, to stimulate the bal- anced growth
of international trade, and "[t]o conduct its  operations with due
regard to the effect of international  investment on business
conditions in the territories of mem- bers." Articles of Agreement (as
amended Feb. 16, 1989),  Art. I. One of the treaty's provisions
(Article VII, s 9(a)),  which has "full force and effect" throughout
the United  States, see 22 U.S.C. s 286h, confers tax immunity on the 


The Bank, its assets, property, income and its operations  and
transactions authorized by this Agreement, shall be  immune from all
taxation and from all customs duties.  The Bank shall also be immune
from liability for the  collection or payment of any tax or duty.


Nearly forty years ago the Bank began providing food  services for its
employees and guests in its D.C. headquar- ters. Since 1970 it has
engaged an outside contractor for this  purpose. Initially, the
contractor received a fixed percentage  of food-service revenues and
the Bank provided a substantial  subsidy--which by the mid-1980s
amounted to $1.3 million  per year. In 1989, the Bank phased out the
subsidy, renego- tiated the agreement with its contractor--then the
Marriott  Corporation--and replaced the old management-fee contract 
with a "modified profit and loss" contract. Under the new 
arrangement, the contractor continued to receive a percent- age of
revenues and the Bank continued to provide equip- ment, space, and
utilities, but the burden of any financial loss  now fell on the


The District of Columbia imposes a tax on the retail sale of  food and
beverages. The vendor is responsible for paying the  tax to the
District, but "reimbursement for the tax imposed  upon the vendor
shall be collected by the vendor" from the  purchasers of the food and
drink. D.C. Code ss 47- 2002(3)(A), 47-2003(a). (The District's
compensating-use tax  on retail sales of food and beverages is
inapplicable when the  sales tax is "properly collected." s
47-2202(3)(A).) Until the  1990's, the District had not sought to
collect sales or use taxes  on food-service transactions at the Bank.
Matters changed  when, in 1991--shortly after the Bank's contract
renegotia- tion--Marriott twice requested letter rulings from the Dis-
trict's Department of Finance and Revenue regarding the tax  status of
its food-service operations at the Bank and at the  International
Monetary Fund. The District responded that  cafeteria and vending
sales by outside contractors on the  premises of international
organizations were subject to local  sales taxes when the sales were
made to employees of the  organizations rather than to the


Marriott's contract lapsed in 1992 and the Bank entered  into a new
arrangement with Gardner Merchant Food Ser- vices, Inc. This contract
slightly modified the profit-and-loss  arrangement the Bank had with
Marriott: Gardner Merchant  was to "be allowed profits not to exceed
2% of revenue";  anything in excess of 2% went to the Bank1; Gardner
Mer- chant was entitled to general and administrative costs not to 
exceed 3% of revenue, but it was to be responsible for  "pay[ing] out
all expenses" and it assumed the risk of "any  resultant losses." The
contract set forth Gardner Merchant's  independent status: "Contractor
will, in all its dealings, make  it clear that it is an independent
contractor to the Bank, and  the Contractor and its employees are
neither agents, repre- sentatives, nor employees of the Bank." Gardner
Merchant  was to maintain its own records and hold the Bank harmless 
for any losses arising out of its services.


A provision in the contract purported to extend to Gardner  Merchant
the Bank's immunity from the collection and pay- ment of taxes:


The Bank is exempt from payment of sales, use and  excise taxes and
shall provide Contractor with tax ex- emption certification as may be
required from time to  time. The Bank, and the Contractor acting on
the  Bank's behalf, are also exempt from collecting such taxes  from
staff and other user's [sic] of the Bank's food  services.


Relying on this provision, Gardner Merchant neither collected  nor paid
any District of Columbia sales or use taxes in  performing its
food-service contract.


In March 1996, the District's Department of Finance and  Revenue
conducted a general audit of Gardner Merchant's  records and
discovered a tax deficiency. For the tax years  1994 and 1995, the
District sought to recover from Gardner  Merchant back taxes of
$351,396.73, penalties of $158,128.55 




__________

n 1 The record does not disclose whether the Bank actually received 
any profits for the years covered by the Gardner Merchant con-


and interest of $179,212.33, for a total of $688,737.61. On  May 22,
1997, the Bank paid to the District approximately  $680,000.00 to
satisfy Gardner Merchant's deficiency and, on  the same day, filed
suit to recover that amount from the  District.2 On cross-motions for
summary judgment, the dis- trict court ruled in the Bank's favor.


The district court held that Gardner Merchant's operation  of the
food-service program fell within the scope of the  "operations and
transactions" for which the Bank enjoys tax  immunity. See
International Bank for Reconstruction &  Dev. v. District of Columbia,
996 F. Supp. 31, 35 (D.D.C.  1998). The Bank's president is empowered
to conduct "the  ordinary business of the Bank." Id. at 34 (citing
Article V,  s 5(b) of the Bank's Articles of Agreement). Although the 
Articles do not expressly state that providing on-site food  services
is part of the Bank's "ordinary business," the district  court thought
it must be: because the Bank's president has  responsibility over the
"organization, appointment and dis- missal of the [Bank's] officers
and staff," Article V, s 5(b),  "[i]t would make no sense to give the
President responsibility  for the 'organization ... of the officers
and staff,' but deny  him the authority to provide for the daily food
needs of that  staff." 996 F. Supp. at 35.


The court observed that the food program would enjoy tax  immunity if
the Bank itself had operated it. Id. The Dis- trict, while not
disputing this, takes issue with the conclusion  the court then drew:
if the District imposed a tax on the  Bank's food program simply
because the Bank chose to  engage an outside contractor rather than
run the program  itself, this would constitute an impermissible
intrusion into  the Bank's decision-making processes. Id. In the
court's  view, such interference would contravene the statutory inde-
pendence of the World Bank and other international organiza- tions,
see Articles of Agreement, Article V, s 5(c); 22 U.S.C.  s 288, an
independence this court recognized in Atkinson v. 




__________

n 2 The District makes nothing of the point that although the Bank 
paid the taxes and is suing to recoup its payment, the Bank itself 
incurred no liability under District law.


Inter-American Dev. Bank, 156 F.3d 1335, 1337 (D.C. Cir.  1998),
holding that an international organization was not  subject to a
garnishment proceeding. See also Mendaro v.  World Bank, 717 F.2d 610,
615 (D.C. Cir. 1983); Broadbent v.  OAS, 628 F.2d 27, 34 (D.C. Cir.


The district court seemed to believe, perhaps as an alterna- tive
ground of decision, that it would be inequitable for D.C.  to collect
taxes from Gardner Merchant retroactively for the  years 1994 and
1995. See International Bank, 996 F. Supp. at  38-39. According to the
court, "[t]he District has by its  inaction over the last thirty years
led the Bank to reasonably  believe that its tax immunity would
preclude the imposition of  tax liability on third party operators of
the Bank cafeteria."  Id. at 38. In the court's view, the District
produced no  credible evidence that either Gardner Merchant or the
Bank  itself had been on notice of the District's intention to impose 
such taxes for the years 1994 and 1995.


II


Like the Constitution and federal statutes, treaties made  under the
authority of the United States are the "supreme  Law of the Land."
U.S. Const. art. VI. Whether the World  Bank's tax immunity extends to
Gardner Merchant's retail  sales operations therefore depends on the
terms of the trea- ty--on the terms, that is, of the Articles of
Agreement.


As to Article VII, s 9(a), quoted earlier, we can put to one  side the
Bank's tax immunity regarding its "assets, property  and income." The
District is not seeking to impose taxes on  those items. We also can
disregard the Bank's immunity  from liability "for the collection or
payment of any tax or  duty." The liability for the collection and
payment of the  District's taxes, to the extent any exists, is Gardner
Mer- chant's alone. Thus, if Gardner Merchant shares the Bank's  tax
immunity, this can only be on the basis that the District  has imposed
its sales and use taxes on the Bank's "operations  and transactions
authorized by" the Agreement.


The District and the Bank quarrel about whether a cafete- ria in the
Bank's D.C. office building constitutes an "opera-


tion" of the Bank. For its part, the District points to Article  IV
entitled "Operations." This provision lays out in consider- able
detail the Bank's authority to make loans and borrow  funds, to set
terms and conditions on its loans, to relax the  schedule of payments,
to guarantee loans, to set aside a  special reserve and so forth.
Nothing in Article IV appears  to contemplate treating a cafeteria as
an "operation." On the  other hand, the Bank and the district court
stress the authori- ty given the Bank's president to "conduct, under
the direction  of the Executive Directors, the ordinary business of
the  Bank." Art. V, s 5(b). The Bank's president decided to  provide
in-house food and beverage service at the Bank's  headquarters. Food
service therefore must be considered  part of the Bank's "ordinary
business." If "ordinary busi- ness" constitutes an "operation" for
which the Bank is im- mune from taxation, then the District cannot


We think framing the dispute this way misses an essential  question.
The treaty provides that the "Bank, ... and its  operations and
transactions authorized by this Agreement,  shall be immune from all
taxation and from all customs  duties. The Bank shall also be immune
from liability for the  collection or payment of any tax or duty."
Art. VII, s 9(a)  (emphasis added). We may assume that having a
cafeteria on  its premises is within the Bank's authority under the
Articles.  We may also assume that the Bank, through its officers, may
 decide to provide this service in any way it sees fit. But the 
question remains--is the provision of food services an "opera- tion"
of the Bank? The answer depends not so much on how  essential the Bank
believes the activity to be, but on the  arrangements the Bank has
made to carry it out. Take for  instance janitorial services. The Bank
needs to have its  offices cleaned and maintained. Every business
does. Sup- pose the Bank hires an outside contractor to perform these 
services. Although the Bank itself is immune from the  National Labor
Relations Act, its cleaning contractor may not  be, and we so held in
Herbert Harvey, Inc. v. NLRB, 424  F.2d at 779. To take an example
closer to home, the opera- tions of the federal courts cannot be taxed


an outside contractor runs a cafeteria in the courthouse, state  sales
taxes may be imposed, and are.


Here, the district court found, and the Bank concedes, that  Gardner
Merchant is "a separate and independent entity."  International Bank,
996 F. Supp. at 34. It is responsible in  every respect for food
preparation and sales, and it bears any  losses that arise from those
sales.3 It hires its own employ- ees and maintains its own records. It
has its own commercial  objectives, including making a profit from its
contract with  the Bank. If the sales tax applied, the Bank would
neither  collect nor incur liability for paying any District of
Columbia  tax when a Bank employee or guest purchased food from 
Gardner Merchant. The Bank stands wholly outside these  transactions.
The legal incidence of the tax would not fall on  the Bank. Gardner
Merchant would be responsible for remit- ting the tax to the District
and Gardner Merchant would  collect the sales tax from its customers.
Whether the custom- ers would entirely bear the corresponding
reduction in wealth  is a question of economics, depending on another
law--that of  supply and demand. See Armen A. Alchian & William R. 
Allen, Exchange & Production: Competition, Coordination &  Control


As against this, the Bank stresses the general rule that  agreements
among nations should be construed more liberally  than private
agreements. See Brief for Appellee at 24 (citing  Eastern Airlines,
Inc. v. Floyd, 499 U.S. 530, 535 (1991);  United States v. Stuart, 489
U.S. 353, 368 (1989)). From this  it concludes that the tax immunity
provision should be under- stood to include third-party transactions
such as those in- volved here. We do not think the conclusion follows.
We  may not read international treaties so broadly as to create 
unintended benefits or to reach parties not within the scope  of a
treaty's language. See Maximov v. United States, 373  U.S. 49, 55-56
(1963). "Operations" and "transactions" may  have a broad sweep, but
the terms are qualified by the 




__________

n 3 Although the Gardner Merchant contract contains much detail  about
the nature of the food program and allows the Bank to  monitor closely
for compliance, these contractual provisions do not  affect our view
that the contractor is independent of the Bank.


pronoun "its," which refers to the Bank. The immunity  provision cannot
be read to include within its scope activities  conducted by any other
entity. Transactions conducted by  independent contractors are not
mentioned in Article VII,  s 9, and we have seen no evidence that the
Articles of  Agreement were meant to shield private entities from tax 
liability arising from their contracts with the World Bank. In  this
regard we view it as significant that the United States, as  a
signatory to the Articles of Agreement, has not seen fit to  support
the Bank's claim that Article VII would immunize its  private
contractors from the District's sales tax.4 We view as  not
significant the statements offered by the Bank--one from  an official
at the European Bank for Reconstruction and  Development and another
from an administrative services  manager at the Asian Development
Bank--attesting that the  governments of the United Kingdom and the
Philippines do  not tax cafeteria sales at those two banks. The
statements  contain no detail, and so we do not know whether, for 
instance, the Asian Development Bank uses an outside con- tractor,
whether there is a tax on food purchases in the  Philippines, whether
the authorities in London or Manila are  refraining on the basis of a
legal conclusion regarding the  applicable treaties, or whether the
treaties are comparable to  the Articles of Agreement.5




__________

n 4 In May 1997, the U.S. State Department informed the District  by
letter of the government's view that imposing the disputed taxes 
retroactively would be "inequitable and inconsistent with" Article 
VII, s 9. The idea appeared to be that the Bank had been lulled  into
believing that its contractor had tax immunity and so had  agreed to
hold Gardner Merchant harmless from tax liability. The  letter
concluded that it was "without prejudice to the views of the  United
States Government with respect to the question of whether  the
prospective collection of sales tax by a World Bank contractor  from
Bank staff and guests who do not enjoy personal sales-tax  privileges
is permissible under the Articles of Agreement." Al- though the United
States filed an amicus brief in the district court  taking the same
position, it has not presented its views to this court.


5 We also place no weight on the statement of the New York  Department
of Taxation and Finance that if the World Bank had an 


The Bank also invokes Carson v. Roane-Anderson Co., 342  U.S. 232
(1952). The state of Tennessee had collected sales  and use taxes from
independent contractors performing ser- vices for the Atomic Energy
Commission at Oak Ridge. The  Court allowed the contractors to recover
the amounts paid,  holding that their contracts entitled them to enjoy
the bene- fits of the Commission's tax immunity under the Atomic 
Energy Act of 1946.6 (Congress "overruled" the decision one  year
later, eliminating the tax immunity. See United States  v. Boyd, 378
U.S. 39, 40 (1964).) The Bank argues that since  the services of the
independent contractors in Carson fell  within the statutory term
"activities," Gardner Merchant's  operation of the food service
program falls within the treaty's  phrase "operations and


We do not find Carson dispositive. For one thing, Carson  involved
different language: "activities" are not "operations  and transactions
authorized by [the World Bank's] Agree- ment." To the Supreme Court,
the "meaning of 'activities' as  applied either to an individual or to
a government agency may  be broad enough to include what is done
through independent  contractors as well as through agents." Id. at
236. The case  thus turned on whether Congress meant the term to have 
that broader meaning. On this score, the Court relied on  other
provisions of the statute using "activities" in its broader  sense and
on the fact that Congress expressly authorized the  Commission to use
private contractors in managing its affairs:  "Certainly where the
pattern of conduct visualized by the Act  is the use of independent
contractors or agents from the field  of private enterprise, the
inference is strong that 'activities'  means all authorized methods of
performing the governmen- tal function." Id. No such "strong"




__________

n independent contractor operate a cafeteria for it within the head-
quarters of the United Nations, food sales would be subject to New 
York state and local sales tax.


6 Section 9(b) of the Act then provided that "[t]he Commission,  and
the property, activities, and income of the Commission, are  hereby
expressly exempted from taxation in any manner or form by  any
State.... " Carson, 342 U.S. at 233.


here. Indeed we see no basis for any inference, strong or  weak, that
the Bank's operations include the activities of  private contractors.
Nothing in the Articles of Agreement  indicates that the signatories
contemplated having the Bank  retain independent contractors to
perform its lending opera- tions.7


As against this, the Bank maintains that because it would  be immune
from the District's sales tax if it had run the food  program itself,
the same immunity attaches when it engages  an independent contractor
to perform the service. See Brief  for Appellee at 26. Otherwise, the
argument continues, local  taxes would interfere with the Bank's
"internal functions" and  affect its decisions about how best to serve
its workforce. Id.  The argument has a familiar ring, and there was a
time when  it might have carried the day. Chief Justice Marshall said
in  McCulloch v. Maryland, that "the power to tax involves the  power
to destroy." 17 U.S. (4 Wheat.) 316, 431 (1819).  Taking this
"seductive clich"8 to heart, the Supreme Court  early in this century
began conferring immunity from state  taxes on so-called
"instrumentalities" of the federal govern- ment, that is, on private
contractors performing work for the  government. This derivative tax
immunity rested partly on  the notion that if the federal government
had undertaken the  activity itself, the state could not have taxed
it, and partly on  the basis that tax immunity for private entities
was needed to  protect the United States from state interference. Many
of  the cases handed down in this era are discussed in James v.  Dravo
Contracting Co., 302 U.S. 134 (1937), and in Thomas  Reed Powell, The
Waning of Intergovernmental Tax Immu-




__________

n 7 The Bank attempts to broaden the reach of Carson by arguing  that
its outcome did not depend upon the Atomic Energy Act's  express
provision for the use of independent contractors. We  disagree with
such a reading. The Carson Court rested its decision  precisely on
that ground. As the Court interpreted the Act,  Congress anticipated
that the Commission would perform its func- tions through independent
contractors. See id. at 236.


8 Graves v. New York ex rel. O'Keefe, 306 U.S. 466, 489 (1939) 
(Frankfurter, J., concurring).


nities, 58 Harv. L. Rev. 633 (1945). In upholding a state tax  on the
gross receipts of a federal contractor, James v. Dravo  Contracting
Co. marked a turning point in the Court's ap- proach: henceforth,
application of non-discriminatory state  taxes on government
instrumentalities, with only a remote  influence on governmental
functions, would be sustained. 302  U.S. at 150.


The Supreme Court's modern jurisprudence on the tax  immunities of
government "instrumentalities" is instructive  for several reasons. It
seems to us doubtful that the Articles  of Agreement were intended to
confer on the World Bank a  wider immunity from state and local taxes
than that enjoyed  by the federal government.9 Under the terms of the
Bretton  Woods agreement, all concerned knew that the World Bank's 
headquarters would be located in the United States. Article  V, s 9,
provided that the "principal office of the Bank shall be  located in
the territory of the member holding the greatest  number of shares,"
and that member was the United States.  See Articles of Agreement,
Schedule A. In the mid-1940's,  when Article VII, s 9, was drafted and
accepted, those natu- rally interested in the analogous subject of
federal immunity  from state taxation would have discovered the line
of Su- preme Court decisions, such as James and Helvering v.  Mountain
Producers Corp., 303 U.S. 376 (1938), refusing to  maintain the tax
immunity of private contractors performing  work for the United
States. They would have known as well  that the United States had
taken the position that any  "attempt to distinguish between the
varying types of taxes  imposed on private persons, according as they
interfere with  the sovereign, is to perpetuate a rule which has
proved to be  unsatisfactory and inconsistent." Brief for the United
States  as Amicus Curiae, at p. 44, in James v. Dravo Contracting 




__________

n 9 The tax immunity of international organizations is based on a 
principle analogous to the one upon which Chief Justice Marshall 
relied in McCulloch--to protect against the destructive power of 
state interference. See, e.g., Broadbent, 628 F.2d at 34 ("[I]nterna-
tional organizations must be free to perform their functions and ... 
no member state may take action to hinder the organization.")


With all of this in mind, we return to the Bank's argument  that
Gardner Merchant should be free of the District's sales  tax because
the Bank would not have been subject to the tax  if it had operated
the cafeteria itself. If, instead of the World  Bank, the United
States had made this argument on behalf of  one of its contractors,
the Supreme Court would have reject- ed it--"tax immunity is
appropriate in only one circumstance:  when the levy falls on the
United States itself, or on an  agency or instrumentality so closely
connected to the Govern- ment that the two cannot realistically be
viewed as separate  entities, at least insofar as the activity being
taxed is con- cerned." United States v. New Mexico, 455 U.S. 720, 735 
(1982); see also Arizona Dep't of Revenue v. Blaze Constr.  Co., No.
97-1536, 1999 WL 100899 (U.S. Mar. 2, 1999). We  can think of no
reason--certainly none stemming from the  principles governing the
construction of international trea- ties--why similar logic should not
apply to the interpretation  of the Bank's Articles of Agreement. The
District of Colum- bia's sales and use taxes are not imposed upon the
Bank, but  upon Gardner Merchant and its customers. Gardner Mer- chant
is by no stretch an instrumentality of the Bank. Nor is  Gardner
Merchant "so closely connected to the [Bank] that  the two cannot
realistically be viewed as separate entities."10  Although the Bank
exercises close control over the terms of  the contract and Gardner
Merchant's performance under it,  that does not transform Gardner
Merchant into an instrumen- tality of the Bank. As we mentioned,
Gardner Merchant is  pursuing private ends for its own benefit. See
New Mexico,  455 U.S. at 739-40; Boyd, 378 U.S. at 48. Imposing the
tax  on Gardner Merchant will not impermissibly intrude on the  Bank's
freedom from local government control. On the con- trary, imposing the
tax will merely require the Bank to take  an additional factor into
account when it negotiates its food- service contract. Cf. Boyd, 378
U.S. at 48. It will exert "a  remote, if any, influence upon the
exercise of the functions of  [the Bank]." James v. Dravo Contracting
Co., 302 U.S. at  150 (internal quotation omitted). On the other hand,




__________

n 10. The Bank does not contend that the District's sales and use 
taxes are discriminatory.


that the Bank's tax immunity extends to Gardner Merchant's 
food-service transactions would create an ever-expanding tax  immunity
without any limiting principle. Must Gardner Mer- chant pay sales and
use taxes on purchases it makes pursuant  to its contract with the
World Bank? Should the company be  free from District income taxes?
Should the company's em- ployees? These and many other similar
questions continually  perplexed the Supreme Court after it ventured
onto the  slippery slope of derivative tax immunity. See, e.g., Cotton
 Petroleum Corp. v. New Mexico, 490 U.S. 163, 173-75, 187  (1989);
South Carolina v. Baker, 485 U.S. 505, 520 (1988).  We decline the
Bank's invitation to set out on the same  precipitous course.


III


The Bank has an alternative position: even if the District  of Columbia
has the power to impose the disputed taxes on  Gardner Merchant, it
would be inequitable under the Articles  of Agreement for the District
to impose them retroactively.  The Bank does not contend that the
District is equitably  estopped from collecting the taxes because of
its prior policy  of refraining from collecting them. See Brief for
Appellee at  36 n.9; see also Automobile Club v. Commissioner, 353
U.S.  180, 183 (1957). Rather, the Bank adopts the position of the 
United States in the district court that the retroactive imposi- tion
of the District sales tax would be inequitable under the  terms of the
Bank's treaty. The idea is that in relying in  good faith on its
interpretation of the Articles, and the  District's prior practice,
the Bank entered into the food- service contract promising tax
immunity to its contractor;  hence, retroactive taxation constitutes
taxation of the Bank  itself, in violation of Article VII, s 9. The
district court  seemed to agree, but it also appeared to base its
holding at  least in part on principles of equitable estoppel: the
court  noted that D.C. had refrained from imposing the tax on Bank 
food-service operators for thirty years, and that the Bank had  no
notice when the District changed course in the early 1990s.  See 996


We neither endorse nor reject the view of the United  States, as set
forth by the Bank. The district court rendered  its decision on
summary judgment. It is not clear whether  the factual predicate for
the Bank's argument exists. Given  the procedural posture of the case,
the District was entitled to  all justifiable inferences. See Anderson
v. Liberty Lobby,  Inc., 477 U.S. 242, 248-50 (1986). The district
court observed  that the District had cited "only two instances in
thirty years  where it claims to have informed an international
organization  that it would collect sales and use taxes for cafeteria
sales  recorded by a contractor." 996 F. Supp. at 39. Although the 
District may not have produced any evidence that the Bank  was aware
of the two letters it sent to Marriott, there is a  genuine issue of
material fact whether the Bank knew of the  District's policy with
regard to imposing the tax in such cases.  A February 1994 letter to
the State Department from an  attorney in the Bank's legal department
stated that the  attorney was aware as early as December 1993 of the
Dis- trict's "new position that the World Bank, and the catering 
firms that act on its behalf, should begin collecting sales tax  from
staff who purchase meals in the Bank's employee cafete- rias." From
this letter, one might reasonably infer that the  Bank knew of the
District's decision to impose the taxes  before 1994. This tends to
undercut the Bank's equitable  claim. The Bank complains that the
letter should not have  been included in the record; the District
counters that the  Bank cited the letter in its brief and therefore
should be  deemed to have waived any procedural objection to it. This 
is but one of several issues we must leave to the district court.


* * *


We therefore hold that Gardner Merchant, in performing  its food
service contract at the World Bank's headquarters,  did not share the
Bank's immunity from the District's sales  and use taxes. The order
granting summary judgment is  reversed and the case is remanded for
further proceedings on  the Bank's equitable argument.


So ordered.