Plaintiff Kato is a Japanese citizen and a public employee of the Tokyo Metropolitan Government. Plaintiff complained that she suffered sexual harassment while being stationed at Tokyo government's New York office. The district court dismissed based on foreign sovereign immunity.
The Second Circuit affirmed that Tokyo government's promotion of commerce is not equivalent to "commercial activity" that serves as an exception for foreign sovereign immunity.
This seems to be the correct result. A major part of modern governmental activity involves promotion of commerce; characterizing such promotion as "commercial activity" would cover quite a bit. It is a very important line of demarcation.