                 United States Court of Appeals
              for the district of columbia circuit
                                
                                
                                
No. 00-7157                                  September Term, 2001
                                         Filed On: January 11, 2002 [650226] 
McKesson HBOC, Inc., et al.,
          Appellees/Cross-Appellants

v.

Islamic Republic of Iran,
          Appellant/Cross-Appellee
                              


Consolidated with 00-7263


                                
         Appeals from the United States District Court
                  for the District of Columbia
                        (No. 82cv00220)
                                
                                
                                
                                
     Before: Edwards, Rogers and Tatel, Circuit Judges.

                                
                           O R D E R


     Upon consideration of the appellants' petition for rehearing, filed December 31, 2001, it
is 

     ORDERED that the opinion in McKesson HBOC, Inc. v. Islamic Republic of Iran, 271
F.3d 1101 (D.C. Cir. 2001), be amended as follows:

               (1)  The paragraph beginning "Iran argues that even if some elements of its
          expropriation . . . ." be deleted in its entirety.

               (2)  The following paragraph be inserted in its place:

               "Iran argues that even if some elements of its expropriation
          had direct effects in the United States, federal courts may not
          exercise jurisdiction over one particular aspect of that claim: Pak
          Dairy's withholding of McKesson's dividends.  In support of this
          proposition, Iran argues first that in Kingdom of Saudi Arabia v.
          Nelson, 507 U.S. 349 (1993), the Supreme Court established an
          exclusionary principle under which no fact that could not have
          independently served as grounds for jurisdiction may serve as a
          basis for a foreign state's liability, and second, that the "direct
          effects" exception to claims based on commercial transactions does
          not apply where, as here, the place of payment lies outside the
          United States.  In our view, the first argument has no merit, thus
          rendering the second irrelevant.  Nelson held that commercial-
          activity jurisdiction cannot exist unless the commercial activity that
          forms the basis for jurisdiction also serves as the predicate for the
          plaintiff's substantive cause of action.  See 507 U.S. at 357-58. 
          Here, McKesson's extensive showing of direct effects flowing from
          the commercial activity on which its cause of action rests
          establishes the nexus found lacking in Nelson.  Regardless of
          whether denial of dividends alone would give rise to federal court
          jurisdiction under the FSIA's commercial-activity exception,
          because the net effect of Pak Dairy's cut-off of commercial ties
          included not just nonpayment, but also the cessation of "the flow of
          capital, management personnel, engineering data, machinery,
          equipment, materials, and packaging," McKesson I, 905 F.2d at
          451, the district court rightly considered the dividends issue in both
          in determining that Iran had expropriated McKesson's equity
          interest and in awarding damages for that expropriation."
          
                                                                                
                                                                                Per Curiam
                                                                                FOR THE COURT:
Mark J. Langer, Clerk

BY:

Deputy Clerk